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[2018] ZAKZDHC 35
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KwaDukuza Municipality v Skillful 1169 CC and Another (11060/2017) [2018] ZAKZDHC 35 (6 July 2018)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, DURBAN
REPORTABLE
Case
no: 11060/2017
In
the matter between:
KWADUKUZA
MUNICIPALITY
APPLICANT
and
SKILLFUL
1169
CC
FIRST
RESPONDENT
TECHNOLOGIES
ACCEPTANCES (PTY) LIMITED
SECOND
RESPONDENT
JUDGMENT
MADONDO
DJP
:
Introduction
[1]
The applicant seeks an order declaring and setting aside as null and
void
ab
initio,
alternatively
reviewing, the agreements appointing the first and second respondents
as the maintainer and supplier respectively
of office automation
equipment for the applicant.
[2]
The applicant is the KwaDukuza Municipality, a municipality as
defined in terms of the
Local Government Municipal Structures Act,
117 of 1998
and established in terms of such Act.
[3]
The first respondent is Skillful 1169 CC, a close corporation with
limited liability, duly incorporated in accordance with the
Close
Corporations Act, trading as Capital Office Automation at 24/26
Reynolds Street, Port Shepstone, KwaZulu-Natal.
[4]
The second respondent is Technologies Acceptances (Pty) Limited, a
company with limited liability, duly incorporated in accordance
with
the company laws of South Africa of Fintech Building, Stone Ridge
Office Park, 8 Greenstone Place, Greenstone Hill, Gauteng.
Factual
Background
[5]
The applicant, in terms of the written agreements entered into
between the parties on 5 December 2016, appointed the first
respondent to service and maintain office automation equipment (being
copiers, scanners, fax machines and the like) and the second
respondent to supply such equipment to the applicant.
[6]
In concluding such contracts, the applicant purportedly relied on the
provisions of s 110 of the Local Government: Municipal
Finance
Management Act 56 of 2003 (the LGMFMA) read with reg 32 of the
Municipal Supply Chain Management Regulations. It
is common cause
between the parties that the contracts in question were concluded
without there having been a competitive bidding
process. There was
therefore non-compliance with the provisions of s 217 of the
Constitution read with s 112 of the LGMFMA.
[7]
Prior to the conclusion of the agreements between the parties, the
practice at the applicant municipality had been that each
and every
department of the applicant was entitled to procure its own
respective office automation equipment independently from
one
another. This exercise resulted in a multitude of rental and
maintenance contracts being entered into between the various
departments of the applicant and numerous suppliers of the required
equipment. As a result of such multiply agreements, deadlines
in
respect of renewals were often missed and this resulted in
termination of services. According to the applicant it was becoming
a
nightmare to keep a track of agreements.
[8]
As such, the applicant took the decision to investigate the
possibility of concluding one agreement for the supply, service
and
maintenance of all its office automation equipment. The applicant
thought that such an agreement would be more cost-effective
than the
current multitude of agreements, would allow better monitoring of the
services rendered and, would also reduce the administrative
costs
involved in the processes of securing the services.
[9]
During its investigation, the applicant discovered that the Greater
Kokstad Municipality had secured such a contemplated supply
agreement, after a competitive bid process. The applicant took the
decision to explore the possibility of utilising the mechanism
of reg
32 of the
Municipal Supply Chain Management Regulations read
with
s
112(1)
(o)
of the LGMFMA in an
effort to satisfy its procurement needs for office automation
equipment.
[10]
On 25 August 2016, the applicant, through its municipal manager,
directed a letter to the municipal manager of the Greater
Kokstad
Municipality, requesting the latter’s authorisation to utilise
their competitive bidding procedure for the procurement
of the
applicant’s office automation equipment. In reply thereto, the
acting municipal manager of Greater Kokstad Municipality
consented to
the appointment of the service provider by the applicant under reg.
32 of the
Municipal Supply Chain Management Regulations through
the
competitive bidding process of Greater Kokstad Municipality. The
applicant also sought and obtained the consent of the service
provider involved, who was the first respondent in this case.
[11]
Following the obtaining of such consent, the applicant placed the
matter before its Tender Evaluation Committee for its recommendation,
which in turn recommended that the applicant proceed with concluding
the agreement with the first respondent. The services to be
procured
from the first respondent was the supply and delivery of office
machines on a full maintenance lease as per Greater Kokstad
bid GKM
16-13/14, taking into consideration technology advancements and
change of rates.
[12]
On 3 October 2016 the applicant’s Tender Adjudication Committee
met, considered the matter and unanimously resolved to
appoint the
first respondent utilising the mechanism of reg 32 of the
Municipal
Supply Chain Management Regulations.
>[13]
On 4 October 2016 the applicant delivered a letter of appointment to
the first respondent in terms of which the applicant’s
council
procured the services of the first respondent in accordance with the
specifications of Greater Kokstad Bid GKM 16-13/14.
Such services
were purported to be procured in accordance with
s 110(2)
(c)
of the LGMFMA read with
reg 32 of Supply Chain Management Regulations .
[14]
In such letter it was recorded that the first respondent had
confirmed its willingness to contract with the applicant municipality
at the same rates charged to Greater Kokstad Municipality. The
applicant municipality and the first respondent thereby entered
into
a contract for the supply and delivery of office machinery on a full
maintenance lease for a period of three years from the
date of
appointment.
[15]
It was further recorded in the letter of appointment that it was in
the best interests of the applicant council to dispense
with the
calling of separate tenders but rather to exercise the then existing
contract between the Greater Kokstad Municipality
and the first
respondent . The applicant municipality also entered into the
agreement with the second respondent for the supply
of automation
equipment.
[16]
Both contracts concluded were subject to the provision of certain
documents by the respondents and an audit by the applicant’s
Internal Audit Department. However, on receipt of the internal audit
report, it became apparent to the applicant that the conclusion
of
the agreements referred to above was contrary to the approvals and
the correct implementation of the reg 32 procedure.
[17]
The following aspects in the agreement entered into between the
applicant and the first respondent were highlighted in the
internal
audit report as being in violation of the reg 32 procedure:
(a) The agreement between
the first respondent and the Greater Kokstad Municipality had already
expired by the effluxion of time
when the agreement between the
applicant and the fist respondent was entered into. The
contract between the first respondent
and the Greater Kokstad
Municipality expired on 30 September 2016 and the agreement between
the applicant and the first respondent
was concluded on 5 December
2016;
(b) The price between the
two agreements, ie, the agreements between the Greater Kokstad
municipality and the first respondent and
the agreement between the
applicant and the first respondent was different. The projected cost
of the agreement with the Greater
Kokstad Municipality was R1 034 208
over a period of two years whereas with the applicant the projected
cost was R15 251 892
over a three year period;
(c) The nature of the two
agreements differed in that the first respondent contracted with
Greater Kokstad Municipality for the
supply, service and maintenance
of equipment whereas supply is not part of the agreement concluded
with the applicant. The applicant
entered into a rental agreement for
the supply of office machinery with the first respondent whereas
rental for supply of office
machinery was not part of the agreement
with the Greater Kokstad Municipality.
(d) The type and nature
of the office automation to be supplied differed; and
(e) The second respondent
did not form part of the agreement with Greater Kokstad Municipality
and there was no basis, using the
reg 32 procedure, that the
agreement with the second respondent could be concluded.
[18]
The Internal Audit Committee concluded that the applicant did not
derive any financial benefit from the transaction allegedly
entered
into in terms of reg 32 of the
Municipal Supply Chain Management
Regulations, instead
, it was in a worse off financial position.
Accordingly, the Committee recommended the immediate termination of
the agreement in
question in its internal audit report.
[19]
The applicant avers that it is therefore apparent that the procedure
and its conduct in taking the decision to contract and
the resultant
agreements were irregular and illegal. According to the applicant it
was on this basis that it requested the respondents
to uplift their
machines from its premises, but the respondents failed to do so. The
respondents dispute that the applicant has
at any time requested that
they uplift the machines.
[20]
The respondents contend that the provision of services of Capital
Office Automation’s equipment was done in terms of
reg 32 of
the
Municipal Supply Chain Management Regulations read
with
s
110(2)
(c)
and
s 112(1)
(o)
of the LGMFMA. The
respondents therefore deny that the agreements in question were
concluded contrary to the
Municipal Supply Chain Management
Regulations and
that they were illegal and invalid. The respondents
have also argued that such agreements could only be terminated three
years
after their conclusion on 5 December 2016, on ninety (90) days’
notice.
Issues
for determination
[21]
The issues for determination in this matter are:
(a) The validity of the
agreements appointing the first and second respondents as the
maintainer and supplier of automation equipment
respectively, ie,
whether the agreements are null and void
ab initio
;
(b) Whether the
applicant’s decision to appoint the respondents is reviewable
under the Promotion of Administrative Justice
Act 3 of 2000 (the
PAJA); and
(c) Whether this court,
on a just and equitable basis, may allow the agreements in terms of
which the respondents were appointed,
to stand or grant such other
alternative relief which this court deems appropriate in the
circumstances.
[22]
In its contention the applicant places much reliance on the
provisions of the empowering legislation s 110(2) of the LGMFMA
read
with reg 32 of the
Municipal Supply Chain Management Regulations. The
applicant alleges that there were irregularities in the reg 32
procedure, in that the
Municipal Supply Chain Management Regulations
were
followed. In support of these allegations the applicant relies
on its Internal Audit Committee report.
[23]
The respondents deny that there were irregularities relating to the
reg 32 procedure during the conclusion of the agreements
between the
applicant and the respondents respectively. Mr
Kissoon Singh
for the respondents argued that in evaluating the alleged
irregularities, if any are found to exist, this court must also
determine
whether they amount to the grounds of review under the
PAJA.
(a)
Validity of the
agreements in terms of which the respondents were appointed as
service providers
[24]
In deciding the first question whether there have been irregularities
in the applicant’s procurement of goods and services
from the
respondents which had the effect of rendering the resultant
agreements between the parties null and void, this court must
first
analyse the provisions of
s 110
of the LGMFMA and reg 32 and
interpret same.
[25]
In terms of
s 110
,
Part 1
of the Supply Chain Management applies to
the procurement by a municipality or municipal entity of goods and
services. The relevant
wording of
s 110
of the LGMFMA is as follows:
‘
(1)This Part, subject to
subsection (2), applies to –
(a)
the procurement by a municipality or
municipal entity of goods and services;
(b)
the disposal by a municipality or
municipal entity of goods no longer needed;
(c)
the selection of contractors to
provide assistance in the provision of municipal services otherwise
than in circumstances where
Chapter 8 of Municipal Systems Act
applies; and
(d)
the selection of external mechanisms
referred to in section 80 (1)
(b)
of the Municipal Systems Act for the
provision of municipal services in circumstances contemplated in
section 83 of that Act.
(2)This Part, except where
specifically provided otherwise, does not apply if a municipality or
municipal entity contracts with
another organ of state for –
(a)
the provision of goods or services to
the municipality or municipal entity;
(b)
the provision of a municipal service
or assistance in the provision of a municipal service; or
(c)
the procurement of goods and services
under a contract secured by that other organ of state, provided that
the relevant supplier
has agreed to such procurement.’
[26]
Where an organ of state has procured goods or services under a
contract preceded by due processes in compliance with the prescribed
supply chain management policy, then another organ of state which
requires the same goods may contract with the first organ of
state
for the supply of such goods or services but, the supplier must agree
to such procurement. See s 112(1)
(o)
of the
LGMFMA.
[27]
Regulation 32
of the
Municipal Supply Chain Management Regulations
reads
thus:
‘
32 Procurement of goods and
services under contracts secured by other organs of state –
(1)
A
supply chain management policy may allow the accounting officer to
procure goods or services for the municipality or municipal
entity under a contract secured by another organ of state, but only
if –
(a)
the contract has been secured by that
other organ of state by means of a competitive bidding process
applicable to that organ of
state;
(b)
the municipality or entity has no
reason to believe that such contract was not validly procured.
(c)
there are demonstrable discounts or
benefits for the municipality or entity to do so; and
(d)
that other organ of state and the
provider have consented to such procurement in writing.’
[28]
Section 217(1) of the Constitution provides that ‘when an organ
of state in the national, provincial or local sphere
of government,
or any other institution identified in national legislation,
contracts for goods or services, it must do so in accordance
with a
system which is fair, equitable, transparent, competitive and cost
effective’.
[29]
Section 112(1) of the LGMFMA provides that the supply chain
management policy of a municipality or municipal entity must be
fair,
equitable, transparent, competitive and cost effective and comply
with a prescribed regulatory framework for municipal supply
chain
management, which must cover at least certain items listed in the
section.
[30]
The object and purport of the exemption under s 110(2)
(c)
and reg
32 is to prevent a costly and time-consuming duplication of tender
procedures whilst retaining the constitutional imperatives
under s
217 of the Constitution read with s 112 of the LGMFMA. This procedure
also removes the complication of costs relating to
bureaucratic red
tape from the tender process. See
Blue
Nightingale Trading 397(Pty) Ltd t/a Siyenza Group v Amathole
District Municipality
2017
(1) SA 172
(ECG) para 48
.
This is
achieved by allowing an exemption if the procurement is in respect of
goods and services under contract with another organ
of state.
[31]
The words ‘under a contract secured by another organ of state’
in the regulation can only refer to the contract
with another organ
of state as contemplated by s 110(2) of the empowering legislation
(the LGMFMA). See
Blue
Nightingale
above
para 36.
[32]
The first requirement under s 110(2) is that the municipality must
contract with another organ of state for the procurement
of such
goods or services. In the present case, the applicant, having
obtained permission to participate in the agreement between
the
Greater Kokstad Municipality and the first respondent, concluded an
agreement directly with the service provider (the first
respondent)
by substituting itself in the place of the Greater Kokstad
Municipality as the contracting party. The applicant thereafter
proceeded to amend the material terms and conditions of the agreement
between Greater Kokstad and the first respondent. The applicant
went
on to contract further with the second respondent without both
respondents having been subjected to any prescribed legislative
tender procedure or process, in breach of the provisions of s 217 of
the Constitution, s 110 of LGMFMA and reg 32. The constitutional
imperative was therefore not met.
[33]
The applicant by means of written agreements with the respondents
purported to appoint them to supply and maintain office automation
equipment for it. In so doing, it relied on the exclusionary
provisions of s 110(2)
(c)
of the LGMFMA read with
reg 32 of the
Municipal Supply Chain Management Regulations. The
first respondent had concluded a contract for the supply and
maintenance of office automation equipment with the Greater Kokstad
Municipality upon which the parties purported to rely as a founding
basis for the exemption. The parties believing that they were
entitled to rely on the exemption did not comply with
s 217
of the
Constitution read with s 112 of the LGMFMA.
[34]
For the exemption to operate, the contract between the supplier and
another organ of state must be extant, resulting from a
competitive
bidding process. The second organ of state must become a party to the
same contract, in other words, the terms and
conditions of the second
contract must be the same as that of the first contract. When the
parties entered into an agreement on
5 December 2016, the contract
between the Greater Kokstad Municipality and the first respondent had
already expired on 30 September
2016. In the premises, such a
contract could not be relied upon as the founding basis for the
operation of the exemption in terms
of s 110(2)
(c)
of the LGMFMA when
concluding the contract between the applicant and the first
respondent.
[35]
The exemption in s 110(2)
(c)
of the LGMFMA is not
applicable where the applicant does not become a party to, either
directly or as a third party receiving benefits,
the existing
contract between a first organ of state and the supplier. The
applicant did not become a party to the contract between
the first
respondent and the Greater Kokstad Municipality; instead, it
concluded two independent agreements, on different terms,
with the
first and second respondents respectively. It therefore follows that
even if the contract between the Greater Kokstad
Municipality and the
first respondent had not expired, the applicant and the second
respondent were not parties to such contract,
and as such the
applicant could not avail itself with the contract in question as the
founding basis for an exemption. Furthermore,
the applicant did not
receive any benefits from the contract between the Greater Kokstad
Municipality and the first respondent
as reg 32(1)
(c)
provides, instead it was
in a worse off financial position. Section 110(2)
(a)
,
(b)
and
(c)
refers to the situation
where a municipality contracts with another organ of state for the
provision of goods or services to such
municipality. In these
instances, the other organ of state becomes the supplier who supplies
the municipality. This will happen
for instance, where the other
organ of state has an excess of goods procured by it in terms of its
approved procurement policy
and tender processes, has no further use
for such excess products, and now provides the municipality with such
goods at the same
price it procured same.
[36]
Further, for the exemption to operate under s 110(2) of LGMFMA, the
goods or services procured by the second organ of state
must be the
same as those required by the first organ of state and the contract
price as well as the terms and conditions of the
contracts must be
the same.
[37]
The contract between the applicant and the respondents is
characterised by material differences between the levels of service
agreed to in the contract between the first respondent and the
Greater Kokstad Municipality as opposed to the applicant’s
agreement with the respondents. The two agreements differed
materially in terms of the goods and services to be delivered, terms
and conditions of the contract and pricing for goods to be delivered
and services to be rendered.
[38]
The first respondent contracted with Greater Kokstad Municipality for
the supply, service and maintenance of automation equipment
whereas
supply is not part of the agreement the first respondent concluded
with the applicant. In the latter, the respondents contracted
to
deliver and service office automation machinery on a full maintenance
lease whereas lease of office machinery was not part of
the agreement
with Greater Kokstad Municipality.
[39]
The terms and conditions between the applicant municipality and first
respondent differ markedly from the contract between
the Greater
Kokstad Municipality and the first respondent. The duration of the
contract between the first respondent and
the Greater Kokstad
Municipality was two (2) years whereas in the contract between the
applicant and the first respondent was
three years.
[40]
There were also deviations in respect of price and equipment. The
price in the contract between the Greater Kokstad Municipality
and
the first respondent was R1 034 208 over a two year contract period
whereas with the contract between the applicant and the
first
respondent it is R15 251 892 over a three year period.
Pricing would also change for various reasons which included
deterioration of the value of the land, inflation and the passage of
time, newer models with more advanced features and benefits
replacing
the equipment that was supplied to the Greater Kokstad Municipality
and the number of units required by the applicant
was different to
that of the Greater Kokstad Municipality, 66 items as compared to 20.
[41]
None of the incidents in the present matter triggered the operation
of the exemption. The evidence establishes that the agreements
between the parties were not validly procured in terms of reg 32 read
with the exclusionary provisions of s 110(2). There was therefore
a
need for the applicant to prepare a tender document, call for tenders
and evaluate same.
[42]
In
Municipal
Manager: Qaukeni Local Municipality & another v FV General
Trading CC
2010
(1) SA 356
(SCA) para 13, the court held that the statutory precepts
oblige a municipality concluding a service delivery agreement with an
external supplier at a contract amount in excess of R200 000 to
act openly and in accordance with a fair, equitable, competitive
and
cost effective system and in terms of supply chain management policy
designed to have that effect.
[43]
The award of government tenders is governed by s 217(1) of the
Constitution. Accordingly, awards must be made in accordance
with a system that is fair, equitable, transparent, competitive and
cost effective. See
Moseme
Road Construction CC & others v King Civil Engineering
Contractors (Pty) Ltd & another
2010
(4) SA 359
(SCA) para 2.
[44]
It is common cause between the parties that no competitive bidding or
procurement process as envisaged in s 217 of the Constitution
read
with s 112 of the LGMFMLA and reg 32 took place prior to the making
of the purported appointments. In the circumstances,
the
inevitable conclusion I come to is that the agreements and the
resultant appointments in question were null and void
ab initio
and that they were therefore invalid.
(b)
Do the decisions of the applicant to procure office equipment and to
appoint the respondents constitute an administrative action?
[45]
Mr
Kissoon
Singh
for
the respondents has argued that the decision taken by the applicant
to procure office equipment and the decision to conclude
agreements
with the first and second respondents to supply, service and maintain
such equipment, were administrative actions which
fall within the
provisions of s 6 of the PAJA.
[46]
Section 6(2) provides –
‘
(2) A court or tribunal has the
power to judicially review an administrative action if –
(a)
the
administrator who took it -
(i)
was not authorised to do so by the
empowering provision;
(ii)
acted under a delegation of power
which was not authorised by the empowering provision; or
(iii)
was biased or reasonably suspected of
bias.’
[47]
It is apparent from the provisions of s 6 that unfairness in the
outcome or result of an administrative decision is not, apart
from
unreasonableness, a ground for judicial review of an administrative
action. It is a long-held principle of our administrative
law that
the primary focus in scrutinising administrative action is based on
the fairness of the process, not the substantive correctness
of the
outcome. In
Qaukeni
Municipality
above,
the court held that a public body may not only be entitled but also
duty-bound to approach a court to set aside its own irregular
administrative act.
[48]
Section 1 of the PAJA defines administrative action as meaning:
‘
. . . any decision taken, or
any failure to take a decision, by –
(a)
an
organ of state, when –
(i)
exercising a power in terms of the
Constitution or a provincial constitution; or
(ii)
exercising a public power or
performing a public function in terms of any legislation; or
(b)
a
natural or juristic person, other than an organ of state, when
exercising a public power or performing a public function in terms
of
an empowering provision,
which adversely affects the rights of
any person and which has a direct, external legal effect. . .’
[49]
An administrative action entails a decision, or failure to make a
decision, by a functionary, and which has a direct legal
effect on an
individual. See
Nedbank Ltd v Mendelow & another NNO
2013
(6) SA 130
(SCA) para 25
.
In
Grey’s Marine Hout Bay
(Pty) Ltd & others v Minister of Public Works & others
[2005] ZASCA 43
;
2005
(6) SA 313
(SCA) para 24 Nugent JA said:
‘
Whether particular conduct
constitutes administrative action depends primarily on the nature of
the power that is being exercised
rather than upon the identity of
the person who does so.’ (Footnote omitted)
[50]
When the applicant contracted with the respondents it was not
exercising public power or performing a public function having
a
legal effect on an individual but rather procuring goods or services
for itself. Its conduct cannot be said to fall within the
ambit of
the definition of an administrative action. Though there were
irregularities in the applicant’s procurement of goods
and
services for itself, the conclusion of the agreements could not be
described as administrative action capable of review under
the PAJA.
(c)
Just and equitable relief
[51]
I now turn to consider whether a just and equitable remedy may be
afforded in this case instead of setting aside the procurement
process or the appointments. Mr
Kissoon
Singh
has
contended that once a finding of invalidity is made, the affected
decision or conduct must be declared unlawful and a just and
equitable order must be made. In support of this contention Mr
Kissoon
Singh
referred
me to the legal approach adopted in
All
Pay Consolidated Investment Holdings (Pty) Ltd & others v Chief
Executive Officer, South African Social Security Agency,
& others
2014
(1) SA 604
(CC)
.
[52]
If irregularities are found to amount to the grounds of review under
the PAJA, the court is then enjoined to consider just
and equitable
relief which may be granted, instead of setting aside the contracts.
See
All
Pay Consolidated
para
45. In the present case, the central focus of the inquiry has been
whether the decisions were correct and whether the process
is
reviewable as set out in the PAJA. The irregularities found in this
case could not be described as constituting administrative
action
capable of review under the PAJA. The applicant municipality’s
procurement of the automation equipment through the
contract between
the first respondent and the Greater Kokstad Municipality has been
declared unlawful, void and invalid and as
such it could not be
enforced. It is not that when making such procurement the applicant
failed to take relevant considerations
into account. The agreements
have been declared unlawful and void
ab
initio
on
the basis that the provisions of s 217 of the Constitution and of reg
32 have not been complied with.
[53]
It has been argued on behalf of the respondents that if the contracts
with the respondents are terminated, the first respondent
will suffer
losses which are substantial and which will result in the closure of
its business and the unemployment of some thirty
five people. In
addition, according to the first respondent, the second respondent is
its integral business associate which fairly
finances transactions in
which the first respondent is a party, and, it is one of only a few
financial entities which is prepared
to offer financing, on computer
and allied equipment.
[54]
The first respondent avers that the cancellation of the contract
between the applicant and the respondents will deleteriously
affect
future business relations between the respondents since the second
respondent is likely to decline financing the first respondent
in
future. The first respondent does not have the means to pay off the
balance of the debt owing to the second respondent arising
from the
contract it concluded with the applicant.
[55]
It is trite that contracts concluded without complying with
prescribed processes are invalid. In
Premier, Free State &
others v Firechem Free State (Pty) Ltd
2000 (4) SA 413
(SCA) para
36, the court held that the province (the applicant) was not duty
bound to submit itself to an unlawful contract and
was entitled,
indeed obliged, to ignore the delivery contract and to resist the
respondent’s attempts at enforcement. This
position was
affirmed in
Qaukeni Municipality
para 16 when Leach AJA said:
‘
I therefore have no difficulty
in concluding that a procurement contract for municipal services
concluded in breach of the provisions
. . . which are designed to
ensure a transparent, cost-effective and competitive tendering
process in the public interest, is invalid
and will not be enforced.’
[56]
It is now therefore settled that a procurement contract for municipal
services concluded in breach of the relevant provisions
is invalid
and cannot be enforced. All parties have conceded that it was
inappropriate for the respondents to refuse to remove
the automation
equipment at the request of the applicant and equally so, for the
applicant to continue using the equipment without
paying for such
use. Mr
Kissoon Singh
has argued on behalf of the respondents
that notwithstanding the date of the contracts, the equipment was
delivered, installed
and utilised by the applicant as from November
2016. In the circumstances I deem it just and equitable to order the
applicant to
pay to the first respondent for the use of equipment
from the date the applicant requested the respondents to remove it
from its
premises until the date of its removal from the applicant’s
premises.
Order
[57]
In the result the following order shall issue
(a) The application is
granted with costs, such costs to include the costs
consequent upon the employment of two
counsel;
(b) The agreements
appointing the respondents by the applicant as the maintainer and
supplier of automation equipment respectively,
are declared null and
void, and set aside; and
(c) The applicant is
directed to pay to the first respondent for the use of equipment from
the date the applicant requested the
respondents to remove the
equipment from its premises until the date of its removal
______________
MADONDO
DJP
Appearances
Date
reserved: 25 May 2018
Date
delivered: 6 July 2018
For
the Applicant: Mullens SC
Instructed
by: Livingston Leandy
Glass
House Office Park
309
Umhlanga Rocks Drive
Durban
For
the Respondents: Kissoon-Singh SC
Instructed
by: Singh & Gharbaharan
c/o
Ramrachiasingh & Associates
Triveni
House
407
Lena Ahrens Road
Glenwood
Durban