About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Free State High Court, Bloemfontein
SAFLII
>>
Databases
>>
South Africa: Free State High Court, Bloemfontein
>>
2016
>>
[2016] ZAFSHC 34
|
|
HT Pelatona Projects (Pty) Ltd v Dihlabeng Local Municipality and Others (5606/2015) [2016] ZAFSHC 34 (4 February 2016)
FREE
STATE
HIGH
COURT, BLOEMFONTEIN
REPUBLIC
OF
SOUTH AFRICA
Case
No.: 5606/2015
In
the matter between:
HT
PELATONA PROJECTS (PTY)
LTD
Applicant
and
DIHLABENG
LOCAL
MUNICIPALITY
1
st
Respondent
SINETHEMBA
CONSTRUCTION JV KLUS
CIVILS
2
nd
Respondent
HEARD
ON:
4
FEBRUARY 2016
JUDGMENT
BY:
DAFFUE,
J
REASONS
FOR JUDGMENT
I
INTRODUCTION
[1]
Applicant sought interim relief pending the outcome of review
proceedings. On 4 February 2016 I dismissed the application
with costs and mentioned that my reasons would follow in due course.
These are my reasons.
II
THE
PARTIES
[2]
Applicant is HT Pelatona Projects (Pty) Ltd a company duly registered
and incorporated in terms of the relevant statutes of
the Republic of
South Africa with its main place of business at Welkom, Free State
Province.
[3]
First respondent is Dihlabeng Local Municipality, an
organ
of state
as mentioned in s 239 of the Constitution and properly established as
a municipality in terms of the Local Government: Municipal
Structures Act, 117/1998. First respondent is situated in
Bethlehem, but carries out statutory and executive functions, not
only in Bethlehem, but also in surrounding towns such as
inter
alia
Paul Roux, Rosendal and Fouriesburg.
For
the sake of convenience I shall refer herein later to first
respondent as “the municipality”.
[4]
Second respondent is Sinethemba Construction JV Klus Civils, a joint
venture comprising of Sinethemba Construction CC and Klus
Civils
(Pty) Ltd, the first partner being a close corporation and the second
a company. I shall refer herein later to second
respondent as
“the JV”.
III
THE
RELIEF CLAIMED
[5]
Save for a prayer for condonation based on urgency which is not
repeated, applicant sought the following relief
ex
facie
the notice of motion:
“
2.
Pending the finalisation of the proceedings contemplated in prayer 3
below:
2.1
the first and second respondents are interdicted and restrained from
in any way further implementing the first
respondent’s decision
to award Public Tender Contract No.
PW47B/2014
– Construction of Bulk Water Pipeline and Appurtenant Works
Between Paul Roux and Rosendal
to
the second respondent;
2.2
The first and second respondents are likewise interdicted and
restrained from giving further effect to any
Service Level Agreement
which may have been concluded between them and pertaining to the
works mentioned in prayer 2.1 above.
2.3
The first and second respondents are interdicted and restrained from
performing any construction related activity
related to either the
decision, or the contract already concluded between them.
3.
The order contained in prayer 2.1 to 2.3 above, is to serve as in
(
sic
)
interim interdict with immediate effect, pending the finalisation of
urgent review proceedings to be embarked upon by the applicant
in
terms of Rule 53.
4.
The applicant is ordered to institute said review proceedings within
five days after the granting
of this order, failing which the
interdict order granted in terms of prayers 2 and 3 above will lapse.
5.
The first respondent is ordered to pay the costs of this
application. Alternatively, and
should the second respondent
oppose, then and in that case, the second respondent is to pay the
costs of the application, together
with the first respondent, payment
by one, the other to be absolved.”
IV
MATERIAL
UNDISPUTED FACTS
[6]
I shall briefly set out the factual background which appear from the
undisputed facts.
[7]
During
November 2014 and in compliance with its constitutional mandate the
municipality called for tenders for the construction
of a bulk water
pipe line and appurtenant works between Paul Roux and Rosendal. In
future the pipe line will be extended to the
neighbouring town,
Fouriesburg. There can be no doubt that the municipality had to
attend to the construction of the pipe
line in order to comply with
its statutory and constitutional obligations to provide the community
with basic water services.
Rosendal obtained its water from
boreholes and a dam situated near the town, but these water sources
became insufficient.
Problems were exacerbated as a result of
the extreme drought experienced in the Free State. The
boreholes and dam have dried
up and water tankers are used at present
to transport water from Bethlehem to Rosendal. It is apparent
that the community
is in dire need of water and water services.
Rosendal is for more than a year without sufficient water supplies.
[8]
The aforesaid tender process was completed and Gridon Trading CC,
trading as Sinethemba Construction, was awarded the tender.
However an application for review followed and on 22 June 2015 the
award was set aside and the matter referred back to the municipality
to re-advertise the tender.
[9]
New tenders were invited and the tender was awarded to the JV.
The municipality’s internal project manager as responsible
agent for the preliminary evaluation of the tenders, Mr. Machongoane
compiled a report on 16 September 2015 and recommended that
the
tender be awarded to the JV. However the municipality’s
bid evaluation committee (“BEC”) disqualified
the JV as
it did not provide the necessary audited financial statements.
Another tenderer, Seripele Trading, was ranked first
and applicant
second. Hereafter the municipality’s bid adjudication
committee (“BAC”) considered the tenders
and ranked the
JV first, Seripele Trading second and applicant third. On 1
October 2015 the BAC recommended that the tender
be awarded to the JV
and on 5 October 2015 the acting municipal manager of the
municipality approved such recommendation.
Following this
decision the acting municipal manager informed applicant in writing
on 9 October 2015 that its bid was unsuccessful.
The applicant
was informed that it
“…
did
not achieve the highest points under Financial Offer and
Preference.”
The
letter indicated that the JV outscored applicant. It was
furthermore advised of its right of appeal within 21 days of
the date
of receipt of the notification of the decision.
[10]
Correspondence followed hereafter, the first letter by applicant’s
attorneys dated 22 October 2015, eleven days after
applicant
allegedly received notification on 11 October 2015 that its bid was
unsuccessful. Full and adequate reasons were
requested by
applicant as to why the tender was not awarded to it. The
municipality did not respond positively and it was
necessary for
applicant’s attorneys to institute proceedings in order to
obtain the required documentation which were eventually
provided
without the necessity to obtain a court order. By then the time
for the lodging of an internal appeal in terms of
s 62 of the Local
Government: Municipal Systems Act, 32/2000 has lapsed.
[11]
On 6 November 2015, i.e. after expiry of the appeal period and
without any appeal against the award being lodged, but
notwithstanding
the correspondence between the parties, the
municipality issued a letter of appointment to the JV. On 17
November 2015 a
service level agreement was entered into between the
municipality and the JV and site hand-over was done on 20 November
2015.
The JV also complied with its other preliminary
obligations and started with commencement of the contracts works
thereafter.
[12]
On 25 November 2015 applicant issued the present application to be
heard on 3 December 2015. On that day urgency was
argued, but
the matter was struck off the roll by Ebrahim, J for want of urgency.
[13]
The application for
interim
relief
was again set down for hearing on 4 February 2016. In the
meantime, as informed from the bar, the review application
had been
issued on 8 December 2015. The parties agreed to the hearing of
the review application on 7 March 2015, subject
to approval of and
directions by the Judge President.
V
THE
DISPUTES
[14]
Both the municipality and JV are of the view that the applicant
failed to allege and prove that it has complied with the four
requisites
for
interim interdicts and therefore it is not entitled to the relief
claimed. I shall herein later deal with the four
requisites
for
interim relief under separate headings.
[15]
Contrary to the respondents’ version applicant submitted that a
material irregularity in the bidding process occurred
and this was
truly the heart of the dispute between the parties. I quote
from paragraph 1 of applicant’s heads of argument
which were
filed before I allowed the supplementary affidavits referred to in
paragraph 17
infra
:
“
The
Municipality took a decision to award a state contract to the JV on
an incorrect guess of the law. It was entirely unaware
–
or chose to ignore – the provisions of section 58 of the Close
Corporations Act, read with sections 30 and 30(2A)
of the Companies
Act. It opined that no matter what the extent of a CC’s
business, it is in law not obliged to have
financial statements
audited. It so excused the JV’s bid for material
non-compliance with a requirement to submit three
years financial
statements. This is a material irregularity in the bidding
process, and is truly the heart of the dispute.”
Notwithstanding
the filing of the supplementary affidavits it was pertinently argued
by applicant that the JV’s reliance on
Sinethemba
Construction’s Public Interest (“PI”) score, which
is such that no audit is required of its annual
financial statements,
is an afterthought which was calculated to
“
rationalise
a bad decision by the municipality”
.
[16]
In support of its argument applicant referred in reply to Schedule M
to the bid documents, it being the JV’s declaration
for
procurement in respect of contracts with values in excess of
R10 million and in particular questions 1 and 1.1 which read
as
follows:
“
1.
Are you by law required to prepare annual financial statements for
auditing?
1.1
If
yes, submit audited annual financial statements for the past three
years or since the date of establishment if established during
the
past three years.”
In
respect of both questions the bidder is required to respond by either
marking the “Yes” or the “No”.
The JV
encircled the “Yes” in both instances. Next to the
last question someone wrote “in file”.
Contrary to
the BEC’s finding that “
(O)nly
one set of audited financial statements was attached”
,
the BAC adjusted the BEC’s report, finding as follows
pertaining to the two partners of the JV:
“
Klus
Civil (Pty) Ltd: Attached
audited AFS from 2013 – 2015. Sinethemba CC is not
required by law to be audited as it is a close corporation.”
The
financial statements of Gridon Trading CC, trading as Sinethemba
Construction, were attached to the bid documents. Each
set of
financial statements contained a report by its Chartered Accountants,
Reyneke Erasmus and the relevant part of the one in
respect of the
2014 financial year reads as follows:
“
We
have performed the duties of Accounting Officer to Gridon Trading CC
for the year ended 28 February 2014, as required by
Section 62
of the
Close Corporations Act, 1984
. No audit is required by the Act
to be carried out and no audit was conducted.”
[17]
On 22 January 2016 the JV caused a notice of motion to be issued,
intending to apply at the hearing of the application on 4
February
2016 for leave to file a supplementary affidavit. Thereupon and
in anticipation that the application might be granted,
applicant
filed a response thereto and this triggered the JV to file a further
affidavit in response to applicant’s new affidavit.
At
the hearing of the application I granted leave for filing of all
three affidavits notwithstanding applicant’s objection
to the
third and final of these affidavits. In the first supplementary
affidavit the JV
dealt
in particular with the fact that the close corporation was not
required by law to be audited on the basis of the auditors’
report attached to the financial statements. It relied on the
calculation dated 11 December 2015 as to how the PI score of
the
close corporation was calculated which was confirmed under oath as
correct by the auditor, Mr Erasmus. Applicant did
not accept
the calculation of the PI score, but did not tender any evidence to
contradict the factual or other basis on which the
auditor’s
calculation was done. Bearing in mind the PI score of the close
corporation, respondents submitted that it
was not required to file
audited financial statements.
VI
REQUISITES
FOR AN
INTERIM
INTERDICT
[18]
The requisites for an
interim
interdict are the following:
(a)
A
prima
facie
right, although open to some doubt;
(b)
a
well-grounded apprehension of irreparable harm if
interim
relief is not granted and ultimate relief is eventually granted;
(c)
the
balance of convenience favours the granting of an
interim
interdict and
(d)
applicant
has no other satisfactory remedy.
As
mentioned
supra
the evidence and submissions will be considered under separate
headings to ascertain whether these requisites have been met. It
must
be mentioned at this stage that the court has a wide discretion and
may dismiss an application for an
interim
interdict even if all four requisites have been met. E M
Grosskopf JA stated in this regard that
“…
.
the Court is entitled to have regard to a number of disparate and
incommensurable features in coming to a decision”.
Knox
D’Arcy Ltd and Others v Jamieson and Others
[1996] ZASCA 58
;
1996 (4) SA 348
(AD) at 361 I and further.
VII
ADJUDICATION
OF FACTUAL DISPUTES IN THE CONTEXTS OF
INTERIM
INTERDICTS
[19]
In
Simon
NO v Air Operations of Europe AB and Others
[1998] ZASCA 79
;
1999
(1) SA 217
(SCA) at 228G-H the Supreme Court of appeal confirmed the
well-known test to be applied in adjudicating a
prima
facie
right
in the context of an application for an
interim
interdict in the following
dictum
:
“
The
accepted test for a
prima
facie
right in the context of an interim interdict is to take the facts
averred by the applicant, together with such facts set out by
the
respondent that are not or cannot be disputed and to consider
whether, having regard to the inherent probabilities, the applicant
should on those facts obtain final relief at the trial. The
facts set up in contradiction by the respondent should then be
considered and, if serious doubt is thrown upon the case of the
applicant, he cannot succeed.”
VIII
A
PRIMA
FACIE
RIGHT
[20]
The test to be applied in an application for an
interim
interdict pending the outcome of a review application was stated
recently by Moseneke DCJ in
National
Treasury and Others v Opposition to Urban Tolling Alliance and Others
2012 (6) SA 223
(CC) (“the
OUTA
case” ) in the following terms:
“
[43]
A little less than 40 years before the advent of our Constitution, in
Gool, a full bench
of the Cape Provincial Division was called upon to
grant an interdict restraining the minister pendente lite from
exercising certain
powers vested in him by a statute.
Ogilvie-Thompson J, writing for a unanimous court, considered the
requirements for an
interim restraining order announced in Setlogelo,
and said the following: ‘The present is however not an
ordinary application
for an interdict. In the first place, we
are in the present case concerned with an application for an
interdict restraining
the exercise of statutory powers. In the
absence of any allegation of mala fides, the court does not readily
grant such an
interdict … The various considerations which I
have mentioned lead, in my opinion, irresistibly to the conclusion
that the
Court should only grant an interdict such as that sought by
the applicant in the present instance upon a
strong
case
being made out for that relief. I have already held that the
Court has jurisdiction to entertain an application such as the
present, but in my judgment that jurisdiction will, for the reasons I
have indicated,
only
be exercised in exceptional circumstances
and when a
strong
case
is made out for relief.
44.
… Beyond the common law, separation of powers is an even more
vital tenet
of our constitutional democracy. This means that
the Constitution requires courts to ensure that all branches of
government
act within the law. However, courts in turn must
refrain from entering the exclusive terrain of the executive and the
legislative
branches of government unless the inclusion is mandated
by the Constitution itself.
45.
… However, now the test (the Setlogelo test) must be applied
cognisant
of the normative scheme and democratic principles that
underpin our Constitution. This means that when a court
considers
whether to grant an interim interdict it must do so in a
way that promotes the objects, spirits and purport of the
Constitution.
49.
… The Constitution makes it plain that ‘(e)veryone has
the right
to administrative action that is lawful, reasonable and
procedurally fair’ and in turn PAJA regulates the review of
administrative
action.
50.
Under the Setlogelo test the
prima
facie right
a claimant must establish
is
not merely the right to approach a court in order to review
an administrative decision.
It
is a
right
to which, if not protected by interdict, irreparable harm would
ensue. An interdict is meant to prevent future conduct
and not
decisions already made. Quite apart from the right to review
and to set aside impugned decisions, the applicants
should have
demonstrated a prima facie right that is threatened by an impending
or imminent irreparable harm. The right to
review the impugned
decisions did not require any preservation pendente lite.
(emphasis
added)
[21]
In
Allpay
Consolidated Investment Holdings (Pty) Ltd and Others v Chief
Executive Officer of the South African Social Security Agency
and
Others
2014 (1) SA 604
(CC) (“the
1
st
Allpay
case”) the Constitutional Court laid down the following test in
dealing with irregularities in procurement processes at para
[28]:
“
Under
the Constitution there is no reason to conflate procedure and merit.
The proper approach is to establish, factually,
whether an
irregularity occurred. Then the irregularity must be legally
evaluated to determine whether it amounts to a ground
of review under
PAJA.
This
legal evaluation must, where appropriate, take into account the
materiality of any deviance from legal requirements, by linking
the
question of compliance to the purpose of the provision, before
concluding that a review ground under PAJA has been established
.”
(emphasis
added)
The
court went on at para [58] to state:
“
The
materiality of irregularities is determined primarily by assessing
whether the purposes the tender requirements serve have been
substantively achieved. …”
The
purpose of the tender requirement in
casu,
i.e.
that audited financial statements had to be filed by certain bidders,
has been achieved insofar as the tender requirement was that
only
those that had to furnish audited financial statements by law had to
submit them. The close corporation was not required
by law to
audit its financial statements and its alleged “non-compliance”
could not be material.
[22]
During argument on behalf of first respondent, applicant’s
counsel handed copies of an unreported judgment by Landman,
J in the
matter of
Cross
Border Development Consultants (Pty) Ltd v MEC: North West Provincial
Government: Department of Local Government and Human
Settlements and
Others
,
case number M253/15, a judgment dated 7 August 2015, to his
colleagues and to the court. Respondents’ counsel did
not
have an opportunity to study the judgment, although they made certain
submissions in respect thereof. In reply applicant’s
counsel tried to rely on this judgment to show that the
OUTA
judgment of the Constitutional Court should not be followed insofar
as in the case of
OUTA
,
the purpose was to prevent the legislature from enacting
legislation. Therefore the
OUTA
judgment could not serve as binding authority in
casu
.
This submission is wrong. In para [44] of the
OUTA
judgment the court referred to both the legislative and executive
branches of government.
[23]
In para [20] of the
Cross
Border Development Consultants
judgment, Landman, J summarised the elements and considerations which
he distilled from the
OUTA
judgment regarding the test for
interim
interdicts where a temporary restraint or interdict is sought against
the exercise of statutory power well ahead of the final adjudication
of the applicant’s case in review. I deem it
apposite to refer to some considerations, even though the other
three
requisites for
interim
interdicts
are tabulated as well:
“
(f)
When a court weighs up where the balance of convenience rests, it
must consider the probably impact
of the restraining order
on
the constitutional and statutory powers
and
duties of the state functionary
or organ of state against which the interim order is sought;
(g)
The balance of convenience enquiry must now carefully probe whether
and to which extent the restraining
order
will probably intrude
into the exclusive terrain of another branch of Government.
The
enquiry must, alongside other relevant harm, have proper regard to
what may be called separation of powers harm;
(h)
A court must keep in mind that a temporary restraint against the
exercise of statutory power well ahead
of the final adjudication of a
claimant’s case may be granted only in the
clearest of cases
and after a careful consideration of separation of powers harm.
(i)
Under the Setlogelo test, the
prima facie
right a claimant
must establish
is not merely the right to approach a court in
order to review
an administrative decision;
(j)
The
prima facie
right is thus a right to which, if not
protected by an interdict, irreparable harm will ensue;
…
(l)
…. The right to review the impugned decisions does not require
any preservation
pendente lite
;
…
(r)
In evaluating where the balance of convenience rests, a court must
recognise that it is invited
to restrain the exercise of statutory
power within the
exclusive terrain of the Executive or Legislative
branches of Government
. It must assess carefully how and to
what extent its interdict will disrupt executive or legislative
functions conferred
by the law and thus whether its restraining order
will implicate the tenet of division of powers.”
[24]
In para [21] Landman, J stated that the
OUTA
judgment shifted the approach to be adopted by emphasising the
mindset to be adopted where a temporary interdict is launched to
curb
a statutory power properly belonging to another branch of
government. He then relied on
Allpay
Consolidated Investment Holdings (Pty) Ltd and Others v Chief
Executive Officer of the South African Social Security Agency
and
Others
2014 (4) SA 179
(CC) (“the
2
nd
Allpay
case”) and the following
dictum
by
Froneman J in para [42]:
“
There
can be no doubt that the separation of powers attributes
responsibility to the courts for ensuring that unconstitutional
conduct is declared invalid and that constitutionally mandated
remedies are afforded for violations of the Constitution. This means
that the Court must provide effective relief for infringements of
constitutional rights.”
Landman,
J then concluded in para [22] that without an
interim
interdict securing some space for the remedy in the main application,
a hollow judgment may follow, but emphasized that
“
the
preservation of the space for an appropriate remedy is governed by
the considerations set in the OUTA judgment.”
[25]
Landman, J’s judgment serves as a true reflection of the legal
principles and I fail to follow applicant’s argument
that this
court should not follow
OUTA
based on any authority laid down by Landman, J. The learned
judge’s conclusions and orders granted must be seen in
proper
context. The application for an
interim
interdict was dismissed in respect of second to sixth respondents,
but granted in respect of first, seventh and eighth respondents
and I
respectfully agree with the reasoning. The department in that
matter made use of a data base on which the applicant
was also
listed. Therefore it was found in para [51] that applicant was
prima
facie
entitled
to complain about illegality. The court was prepared to accept
that the applicant had established on a
prima
facie
basis that the decisions to award contracts to seventh and eighth
respondents were contrary to the requirements of the Construction
Industry Development Board Act, 38 of 2000 (“the CIBD Act”)
and thus irregular and invalid. It found that notwithstanding
the probable impact of the restraining order on the constitutional
and statutory powers and duties of the department, an
interim
order had to be granted in respect of first, seventh and eighth
respondents notwithstanding a housing shortage experienced in the
province. The
“
prima
facie glaring illegality”
in
respect of the contracts awarded to seventh and eighth respondents
was sufficient for the court to find that the applicant had
shown the
“
clearest
case”
in
respect of first, seventh and eighth respondents. Pertaining
to second to sixth respondents, the court found
that applicant had
not made out the clearest of cases for an interdict as regards their
contracts, and in any event. insofar as
the contracts of these
respondents were far advanced, the balance of power favoured them.
See paras [57] to [59] and para
[61].
[26]
The municipality’s constitutional and statutory powers and
duties in respect of service delivery in the relevant field
are
beyond doubt. Section 156(1) of the Constitution reads as
follows:
“
A
municipality has executive authority in respect of, and has the right
to administer -
a.
the
local government matters listed in Part B of Schedule 4 and Part B of
Schedule 5; and
b.
any
other matter assigned to it by national or provincial legislation.”
One
such matter listed in Part B of Schedule 4 is
“
water
and sanitation services limited to potable water supply systems and
domestic waste water and
sewage
disposal systems.”
[27]
It must be made clear that in order to evaluate the evidence and the
submissions of the parties in order to establish whether
a
prima
facie
right has been established, it is not required of the court to
adjudicate the application as if it is confronted by a review
application.
It is true that the parties have dealt in detail
with their versions and that these would probably be put up again in
the review
application. The application papers in the matter
before me consist of 809 pages and I doubt whether much more can be
said
by the parties on review in support of their respective cases.
Although I am mindful of not adjudicating a review application,
I may
come to certain conclusions which will obviously not bind the review
court.
[28]
Applicant failed to allege and prove anything other than a
prima
facie
right
to review the decision of the municipality. It, for example,
does not content that it should have been awarded the tender.
On its own version, if the JV was excluded, applicant would have
achieved the second highest points as Seripele Trading would have
scored the most points. Applicant has therefore failed to
satisfy the applicable test set out in para [50] of the
OUTA
judgment and the first requirement for a interdict has not been met.
See also the unreported judgment of Makgoba, J in
Goodhope
Textile Corporation (Pty) Ltd and Others v Government of the Republic
of South Africa
case number 63108/2012 delivered on 27 November 2012 where the
learned judge said at para [21]:
“…
that,
had the contract items not been awarded to the fourth respondent, the
applicant would still not have received any of the contract
items.”
Hence
there was
“…
no
realistic prospect of it being successful in being awarded the tender
should the assailed tender award be set aside.”
The
court eventually found that the applicant failed to establish a
prima
facie
right.
[29]
I also take into consideration that the only material complaint
lodged against the award of the tender to the JV is that
its one
partner, the close corporation, did not furnish audited financial
statements. Fact of the matter is that financial
statements
were furnished and based on the overall context of the tender
documents, the municipality, acting through the BAC and
eventually
its acting municipal manager was entitled to accept the report of the
auditor to the effect that the financial statements
of the particular
close corporation did not have to be audited. In any event not
every “administrative slip”
will be met with judicial
sanction. See
Moseme
Road Construction CC and Others v Kind Civil Engineering Contractors
Pty Ltd and Another
2010 (4) SA 359
SCA at para [21]. When the review is eventually
considered issues such as public interest, pragmatism and
practicality will
become relevant in exercising a judicial discretion
whether or not to set aside the award of the tender. The
consequences
of the setting aside of the award will play no part
where the award is void because of fraud and/or corruption, or
seriously tainted
by illegality. However, there is no
suggestion of such behaviour
in
casu.
[30]
I’m not satisfied that applicant has established that a
material irregularity had occurred during the tender process
which
constitutes a ground for review in terms of PAJA. I’m also not
prepared to find that a
prima
facie
case has been made out that applicant should succeed with its claim
in the review proceedings. Based on the facts presently
before
me, there is no reason to find that the review court would be
compelled to declare the award of the tender unlawful and
in any
event, the review court may in case that unlawfulness is proven,
suspend the declaration of invalidity until after completion
of the
works on the basis that it is just and equitable and in the public
interest that the works be completed by the JV.
Initially there
has been a long delay caused by the first application for review and
thereafter by the further litigation instituted
by the applicant.
I’ve been told that the parties agreed on a date for a hearing
of the review application, being 7
March 2016, subject to the
approval of the Judge President. However it is possible that
the matter may not be heard during
this term, bearing in mind that
the term roll has been finalised long ago. If applicant
simultaneously with the issue of
the application for an
interim
interdict issued its review application, which could have been done
in one application, the review application might have been
heard by
now. However, applicant decided to wait for approximately six
weeks since having been informed of the award before
it pursued its
legal remedies by way of litigation. In the meantime the
residents of Rosendal suffer due to a lack of water
and huge extra
costs have to be incurred by the municipality to transport water to
the affected town. These and other factors
mentioned by
respondents will certainly be considered by the review court when its
discretion is exercised. See:
Moseme
loc
cit
and
the 1
st
and 2
nd
Allpay
cases.
[31]
One final point to be raised in respect of Schedule M, the
declaration for procurement, which is heavily relied upon by
applicant,
is the following: The bidder is clearly a joint
venture, i.e. a partnership between two legal
persona
.
Strictly speaking the JV is the one that should have responded to
questions and submit audited financial statements.
Insofar as
it was only established a few months before the tenders closed, it
would not be in a position to file any audited financial
statements.
It was argued on behalf of the municipality that schedule M does not
distinguish between the partners of a joint
venture and does not make
provision for a separate declaration in respect of each partner.
This is indeed true. The
municipality, having been provided
with the financial statements of partners of the JV, the one
partner’s statements being
audited and the other’s not,
would have been perfectly within its rights to accept the report of
the close corporation’s
auditor that it was not required by law
to prepare audited financial statements. The reason advanced by
the BAC, if it is
read in isolation, that a close corporation does
not have to prepare audited financial statements, would be wrong
although the
conclusion arrived at was correct. The full bid
documents must be considered and read in context, particularly the
report
of the close corporation’s accounting officer and
auditors referred to
supra.
IX
A
WELL-GROUNDED APPREHENSION OF IRREPARABLE HARM
[32]
I referred to the
OUTA
judgment
supra
and wish to repeat that the issue of irreparable harm was dealt with
in para [50] thereof. I reiterate that according to
the
Constitutional Court, the right to review an impugned decision does
not require any preservation
pendente
lite
unless an applicant demonstrates a
prima
facie
right that is threatened by an impending or imminent harm. Another
bidder scored the second most points and even if the award
of the
tender to the JV is set aside on review, there is no reasonable
likelihood that the tender might be awarded to applicant,
especially
bearing in mind that the JV will during a further tender process be
entitled to bid again.
[33]
In the event of (a) the review application being successful; (b) the
setting aside of the decision of the municipality; (c)
a new tender
process be ordered; and (d) applicant eventually successful and
appointed as contractor, it would be possible to re-measure
the
contract to calculate what has been done by the JV up till then and
what is the amount of the work still to be executed.
In such an
event applicant as the successful bidder will then be entitled to
execute the remainder of the contract and paid
pro
rata
according
to the contract price agreed upon.
X
BALANCE
OF CONVENIENCE
[34]
I take into consideration that the contract which has been entered
into with the JV was concluded in essence on behalf of the
public.
It is the public of Rosendal who will remain without sufficient water
the longer this whole process is allowed to
drag on and it is the
public that will benefit if the contract can be finalised within the
period of twelve months agreed upon
between the municipality and the
JV in November 2015.
[35]
Long before the severe drought that the Free State is experiencing
this summer, the municipality resolved to set out tenders
to
construct a bulk water pipe line to towns like Paul Roux, Rosendal
and Fouriesburg. The pipe line to Paul Roux has been
finalised
and the one to Rosendal is in the process of being constructed.
Thereafter the extension to Fouriesburg will follow.
I have no
doubt that a real need for the construction of the pipe line was
established long ago. The community of Rosendal
is in dire need
of water and at present water has to be transported to Rosendal by
means of water tankers at great expense.
[36]
If the execution of the work is suspended the municipality will
become liable to the JV for standing time. According
to
applicant’s submissions this is of no concern. In arguing
in this manner, applicant shows insincerity as it will
eventually be
the Rosendal public that will have to settle the bill.
[37]
The JV’s tender is significantly lower, about 10%, than the
applicant’s tender. The value of the Rand has
declined
over the last few months and there is no prospect that it will
improve in the foreseeable future. The decline in
the value of
the Rand, not to speak of a possible future decline, will have a
serious and detrimental effect on the public purse
in the event of
further delays in the completion of the works. Materials needed
to execute the contract have to be imported
from overseas and it is
highly likely that, in the event of a fresh tender process in four to
six months from now, bidders will
increase their bids.
[38]
It is true that the stronger the prospects of success, the less need
for the balance of convenience to favour the applicant
and the
converse is also true; the weaker the prospects of success, the
greater the need for the balance of convenience to favour
applicant.
As is apparent from paras [46] and [47] of the
OUTA
judgment a court must in this context carefully consider to
which extent an
interim
order
will intrude into the exclusive terrain of another branch of
government. I take into consideration that an interim
interdict
as prayed for shall be granted only in the clearest of cases and
after a careful consideration of what the Constitutional
Court
referred to as separation of powers harm. If the facts before
me are properly considered, I am satisfied that the balance
of
convenience does not favour applicant.
XI
NO
OTHER SATISFACTORY REMEDY
[39]
Applicant had the right to file an internal appeal and it could and
should have done that
in
casu
.
It had 21 days to act accordingly and even if the municipality
refused and/or failed to forward it with proper reasons and/or
the
relevant documents immediately, it could have applied to the High
Court on an urgent basis for an order directing the municipality
to
act accordingly. In fact, it issued an urgent application to
obtain documents and information, but dragged its feet and
by the
time it obtained the relevant documents, the period of 21 days had
lapsed. Applicant has only itself to blame for
the fact that a
satisfactory remedy was not pursued.
XII
THE
COURT’S DISCRETION
[40]
I have mentioned
supra
the
court’s discretion to refuse an
interim
interdict even if all the requisites for the granting thereof have
been established. I am satisfied that, bearing in mind
all the
features of the case referred to above, I should exercise my
discretion against the applicant. At best for applicant
and
even if it is accepted that it has proven a
prima
facie
right which I found not to be the case, there is merely a possibility
of injury in the event of applicant eventually being
successful
with the review and when a fresh tender process is embarked upon.
I take cognisance of the possible consequences,
to applicant and the
respondents, which will ensue if an interdict is granted or
withheld. I have already referred to the
fact that it is not
the municipality’s rights in particular that maybe negatively
affected, but the public of Rosendal that
the municipality serves.
Insufficient reasons have been advanced as to why the public should
be allowed to suffer any further
whilst an unsuccessful bidder wants
to prove that the municipality embarked upon an improper process in
awarding the tender.
In this regard I also take cognisance of
the well-known and often quoted judgment of Holmes JA in
Eriksen
Motors (Welkom) Ltd v Protea Motors, Warrenton and Another
1973 (3) SA 685
(AD) at 691C where the learned Judge of Appeal
stated:
“
The
granting of an interim interdict pending an action is an
extra-ordinary remedy within the discretion of the Court.”
Refer
again to
Knox
D’Arcy Ltd and Others v Jameson and Others
loc
cit
at 360C – 362D.
XIII
CONCLUSION
[41]
I conclude therefore by confirming that applicant has failed to prove
any, some or all of the requisites for an
interim
interdict and therefore the application has to be dismissed.
However, if I am wrong in this regard, I am still satisfied,
even on
the basis that the four requisites have been proven, that I should
exercise my discretion against the applicant and dismiss
the
application on that ground as well. There is no reason why
applicant should not be ordered to pay the costs of the application
which includes the costs of opposition of the two respondents.
XIX
ORDER
[42]
Therefore I dismissed the application with costs as set out in
paragraph 1
supra.
.
________________
J.P.
DAFFUE, J
On
behalf of the applicant:
Adv. S. Grobler
Instructed
by:
Peyper
Attorneys
BLOEMFONTEIN
On
behalf of the 1
st
respondent: Adv. D. J.
van der Walt SC
Instructed
by:
Symington
& De Kok
BLOEMFONTEIN
On
behalf of the 2
nd
respondent: Adv. X.
Stylianou
Instructed
by:
Lovius
Block
BLOEMFONTEIN
/eb