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[2016] ZAFSHC 68
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Down Touch Investments (Pty) Ltd v Matjhabeng Local Municipality and Another (1172/2016) [2016] ZAFSHC 68 (29 March 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Case
Number: 1172/2016
In
the matter between:
DOWN
TOUCH INVESTMENTS (PTY)
LTD
Applicant
and
MATJHABENG
LOCAL MUNICIPALITY
1st Respondent
REMBU
CONSTRUCTION (PTY) LTD
2nd Respondent
HEARD
ON:
24 MARCH 2016
JUDGMENT
BY:
PIENAAR,
AJ
ORDER
ON:
29 MARCH 2016
REASONS
FOR JUDGMENT
DELIVERED
ON:
8 APRIL 2016
INTRODUCTION:
[1]
The applicant has applied on an urgent basis for an interim interdict
pending the finalisation of a review application which
the applicant
intends to launch in respect of the first respondent’s decision
to award Bid 22/2015: Upgrading of Dr
Ngoma Road and
Storm Water Management to the second respondent.
[2]
The first respondent opposed the application.
[3]
The application was heard on the 24
th
of March 2016,
whereafter I granted the following order on the 29
th
of
March 2016:
‘
1.
The Applicant’s failure to adhere to the court’s rules
relating to time
periods and service is condoned and the application
is heard as an urgent application in terms of Rule 6(12).
2.
Pending the finalisation of the proceedings contemplated in paragraph
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 Bid 22/2015: Upgrading of Dr Ngomo Road and Storm
Water Management
to the Second Respondent;
2.2
the First and Second Respondents are likewise interdicted and
restrained from concluding
and/or giving any further effect to any
service level agreement which may have been concluded between them,
pertaining to the works
mentioned in paragraph 2.1 above and by the
time this application is heard;
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.
3.
The order contained in paragraphs 2.1 to 2.3 above, is to serve as an
interim
interdict with immediate effect, pending the finalisation of
the urgent review proceedings to be embarked upon by the Applicant
in
terms of Rule 53.
4.
The Applicant is ordered to institute such review proceedings within
five days
after the granting of this order, failing which the
interdict order granted in terms of paragraphs 2 and 3 above will
lapse.
5.
The costs of this application stand over for adjudication during the
review proceedings.
’
BACKGROUND:
[4]
The applicant is a construction company that specialises in all
fields of general construction and civil engineering works.
It
has a Contract Industry Development Board (‘CIDB’)
grading of 8CEPE and a certified BBBEE status of Level 2.
[5]
During or about September 2015, the First Respondent, being a
municipality established in terms of the
Local Government:
Municipal Structures Act, 117 of 1998
and with its head office
situated in Welkom, Free State Province, called for tenders for
the upgrading of a street situated
in the Matjhabeng area, Free State
Province under the tender and contract styled as “
Contract
No. 22/2015: Upgrading of Dr Ngomo Road and Storm Water
Management”
.
[6]
The closing date for the submission of the tenders was the 9
th
of November 2015. The prospective tenderers were also invited
to attend a compulsory clarification meeting on the 16
th
of October 2015.
[7]
The applicant and the second respondent were two of the total of 43
tenderers that submitted bids in respect of the tender.
[8]
The second respondent was the successful bidder and was as such
appointed as contractor by the first respondent in terms of
a letter
of appointment issued and signed by the first respondent’s
municipal manager on the 3
rd
of February 2016.
[9]
The appointment was made on account of the evaluation of the
respective bids by the Bid Evaluation Committee (‘BEC’),
its recommendation to the Bid Adjudication Committee (‘BAC’)
and the BAC’s subsequent recommendation to the first
respondent’s municipal manager.
[10]
It is evident from the minutes of the BEC’s meeting that was
held on the 7
th
of January 2016, that:
i.
the
bid amount of the second respondent amounted to R9 076 138-19, which
is also the contract amount at which the second respondent
was
appointed, and that the applicant’s bid amounted to
R8 228 470-43;
ii.
the
applicant submitted a responsive bid, but was disqualified on
functionality as it did not score any points for the company
experience criteria and therefore did not meet the minimum threshold
of 60% for functionality. It only scored a total of 30%
for
functionality;
iii.
at
the last stage of evaluation, being in respect of price and BBBEE
status, the second respondent was the lowest in price of the
14 bids
that advanced to this stage of evaluation and, having regard to its
BBBEE status level, scored the highest points; and
iv.
the
BEC therefore recommended that the tender be awarded to the second
respondent as ‘
they
are fully complaint with the requirements of the Bid and scored the
highest preference points.’
[11]
At the BAC’s meeting of the 28
th
of January 2016, the BAC resolved that it concurs with the
recommendation of the BEC and recommended that the tender be awarded
to the second respondent.
THE
APPLICANT’S APPLICATION FOR INTERIM RELIEF:
[12]
The applicant heard on the 15
th
of February 2016 that the tender was awarded. As it was dissatisfied
with the outcome, a request for formal reasons was addressed
to the
first respondent.
[13]
Although not relevant to this application, the applicant had to
launch an urgent application for the provision of the reasons
and
certain other relevant documents, as the giving thereof were delayed
by the first respondent. An order in respect of that application
was
issued in favour of the applicant on the 2
nd
of March 2016. The first respondent was,
inter
alia
,
order to give reasons for its decision within 21 days. When this
application was heard, the applicant was not yet provided with
the
said reasons as the 21 day period has not yet lapsed.
[14]
The first respondent was further ordered to provide the applicant
within five days of that order with the BEC’s evaluation
reports, the minutes of the BEC and BAC meetings and recommendations
and the second respondent’s letter of appointment. The
applicant was provided with the said minutes and letter of
appointment, but has not received a copy of the evaluation report
from
the first respondent.
[15]
Based on the documents that the applicant received from the first
respondent, and as a result of the information it gathered
from those
documents, the applicant launched this application on the 14
th
of March 2016.
[16]
The applicant intends to take the first respondent’s decision
in awarding the tender to the second respondent on review
as:
‘
Down
Touch should have been given the contract described in the Notice of
Motion. Its rights to administrative action that
is just, fair
and equitable and its rights to partake in the procurement process
that is transparent and fair, have been violated.
The decision
does violence to several provisions of
section 6
of the
Promotion of
Administrative Justice Act, 3 of 2000
(‘PAJA’) and is
unlawful
.’
[17]
The Applicant’s attack against this decision is premised on the
irregularities in the scoring and evaluation of its bid
in respect of
functionality.
[18]
At the functionality stage of evaluation, bidders had to meet the
minimum threshold of 60% in order to advance to the final
stage of
evaluation. At the evaluation of the bidders’ functionality,
bidders were scored on their ‘
company
experience’, ‘plant and equipment’
and ‘
bank
rating’.
The
maximum points for these criteria were 35 points for company
experience, 5 points for plant and equipment and 10 points for
bank
rating. A bidder will be disqualified if the bidder does
not meet the minimum threshold and will then not be considered
at the
last stage of evaluation.
[19]
It is common cause that the applicant was awarded zero points for its
company experience by the BEC. The applicant avers
that this
scoring exercise is seriously tainted by irregularity as the
applicant submitted proof of its company experience in the
form of
schedules that contained the information of its ‘
contracts
in progress
’
and ‘
contracts
completed’
.
In confirmation of this, the applicant attached screenshots of a
video recording that was made of the pages to its bid.
[20]
The Applicant avers that if the scoring exercise had been done
correctly, it would have advanced to the final stage of evaluation,
at which it would have received 90 points for price, being the lowest
in price of all the bidders that advanced to that stage,
and 9 points
for its BBBEE status. It would have received a total of 99 points,
with the second respondent at 95 points. The contract
should
therefore have been given to the applicant.
THE
DISPUTES:
[21]
The first respondent raised a point of law as well as
in
limine
points in its opposing affidavit. However, the first respondent did
not persist with all the
in
limine
points
during argument.
[22]
The first respondent relied on the applicant’s failure to
satisfy the requirements for an interim interdict, more so
as the
applicant seeks to temporarily restrain the first respondent from
exercising statutory power and that there are no prospects
of success
in the applicant’s envisaged review application.
[23]
Before I deal with these contentions, it is apposite to summarise the
essential factual disputes between the parties in respect
of the
relevant tender requirements.
[24]
The first respondent denies that the applicant’s bid showed
that it has the company experience requisite for the successful
submission of the project as the applicant failed to submit and
provide completion certificates in respect of the completed projects,
which was essential for the functionality requirement of the bid.
[25]
According to the first respondent, all bidders, including the
applicant, have been advised at the briefing session about the
importance of the completion certificates, which were required to
satisfy the functionality requirement.
[26]
As this issue, and the reason for the applicant’s
disqualification, was only raised in the opposing affidavit, the
applicant
took issue with the alleged requirement in its replying
affidavit. The applicant denies that the tender data and requirements
for
the bids required the submission of any completion certificates.
The applicant further denies that the bidders were informed
at
the compulsory site clarification meeting of such a requirement.
It is therefore fundamentally irregular to have disqualified
the
applicant’s bid because of a non-existent tender requirement.
[27]
The applicant further avers that it in any event submitted with its
bid a company profile document, which contains many completion
certificates of work done in the past. This profile document is
inserted in all the bids it submits.
REQUIREMENTS
FOR AN INTERIM INTERDICT:
[28]
It is trite that the requisites for an
interim
interdict are the following:
i.
a
prima
facie
right,
although open to some doubt;
ii.
a well-grounded apprehension of irreparable harm if interim relief is
not granted and ultimate
relief is eventually granted;
iii.
the balance of convenience favours the granting of the interim
interdict, and
v.
the
applicant has no other satisfactory remedy.
[See:
Webster
v Mitchell
1948 (1) SA 1186
(W)]
PRIMA
FACIE
RIGHT:
[29]
The test to be applied in adjudicating a
prima
facie
right in the context of an application for an interim interdict is
well-known. Having regard to the facts averred by the applicant,
together with those facts put up by the respondent that are not
disputed, it must be considered whether, having regard to the
inherent probabilities, the applicant should obtain final relief on
those facts at the trial. The facts set up in contradiction
by the
respondent should then be considered and, if serious doubt is thrown
upon the applicant’s case, it cannot succeed.
[See:
Simon
No v Air Operations of Europe AB and Others
[1998] ZASCA 79
;
1999 (1) SA 217
(SCA) at 228G]
[30]
However, where a temporary interdict is sought against the exercise
of statutory power by an organ of state, it may be granted
only in
the clearest of cases and after a careful consideration of the
separation of powers harm. The
prima
facie
right
that must be established is not merely the right to approach the
court for the review of an administrative decision, but a
right to
which, if not protected by an interdict, irreparable harm would
ensue.
[31]
This test was recently stated in
National Treasury and Others
v Opposition to Urban Tolling Alliance and Others
2012
(6) SA 223
(CC) as follows:
‘
[44]
The common-law annotation to the
Setlogelo
test is that courts grant temporary restraining orders against the
exercise of statutory power only in exceptional cases and when
a
strong case for that relief has been made out. 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 intrusion is mandated by the Constitution itself.
[45]
It seems to me that it is unnecessary to fashion a new test for the
grant of an interim interdict. The
Setlogelo
test, as adapted by case law, continues to be a handy and ready guide
to the bench and practitioners alike in the grant of interdicts
in
busy magistrates' courts and high courts. However, now the 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, spirit and purport of the
Constitution.
[46]
Two ready examples come to mind. If the right asserted in a claim
for an interim interdict is sourced from the Constitution
it would be
redundant to enquire whether that right exists. Similarly, when a
court weighs up where the balance of convenience
rests, it may
not fail to consider the probable 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.
[47]
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. 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. It is neither prudent nor
necessary to define 'clearest of cases'. However,
one important
consideration would be whether the harm apprehended by the claimant
amounts to a breach of one or more fundamental
rights warranted
by the Bill of Rights. This is not such a case.’
and
‘
[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 an 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.’
[32]
When concerned with an application for an interdict restraining the
exercise of a statutory power, a Court should therefore
only grant
the interdict on a strong case being made out for the relief.
[33]
However, the
OUTA-
judgment made it clear that organs of state
are not immunised from judicial review:
‘
[64]
In a dispute as the present one, this does not mean that an organ of
state is immunised from judicial review only on account
of separation
of powers. The exercise of all public power is subject to
constitutional control. In an appropriate case an
interdict may
be granted against it.’
[Also
see:
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) par [42];
Gross
Border Development Consultants (Pty) Ltd v The MEC: North West
Provincial Government: Department of Local Government and Human
Settlements and Others
unreported judgment by Landman, J
[2015] ZANWHC 42]
The
OUTA
-judgment
also does not imply that the process for the procurement of goods and
services by an organ of state is not anymore regulated
by section 217
of the Constitution of the Republic of South Africa, 1996 or any of
the relevant legislation and the settled procurement
dispensation.
The first respondent’s decision in awarding tenders and
contracts in terms of its procurement policy therefore
still has to
meet the requirements of a lawful administrative action.
[34]
The first respondent contends that the tenders were called for and
the work has to be executed in discharging its statutory
functions
and constitutional mandate to promote the objects, spirit and purport
of the Constitution. The project is meant
to achieve the
legitimate compelling, rational and objective of promoting social and
economic development of the Thabong community.
There is therefore a
close relationship between the right to have the upgrade project not
interdicted and other socio-economic
rights, like the right to
education, the right to health care, food, water, human dignity etc.
[35]
The first respondent therefore contends that the applicant has to
satisfy the test and considerations as enunciated in the
OUTA
-judgment,
which it failed to do.
[36]
I do agree that the test and principles enunciated in the
OUTA
-judgment
must be satisfied and considered in determining whether the applicant
is entitled on the temporary relief. However, having
done so, I am
satisfied that the applicant has established a
prima
facie
right,
being a right to which irreparable harm will ensue if not protected.
[37]
It is in dispute whether the tender data indeed required that
completion certificates must have been submitted in order to
satisfy
the company experience criteria. The Applicant avers that it
was not part of the tender requirements. It only
had to provide
information about its previous company experience, which it did.
The facts set up by the first respondent
in contradiction, have not
thrown serious doubt upon the applicant’s case. It is also
evident from the report of Tsela Tsweu
Consulting Engineers, who has
also evaluated the bids on behalf of the first respondent, that the
applicant scored 35 points for
company experience during their
evaluation of the bids and obtained the maximum points for
functionality. Although the first respondent
disputes the correctness
of this report and evaluation, the dispute is not substantiated by
any facts or grounds.
[38]
It is also not disputed that the applicant has a CIDB grading of
8CEPE, which certifies that the applicant can do work to the
value of
R130 million and that the applicant has concluded many successful
contracts in the past. During argument, it was
also conceded on
behalf of the first respondent that the applicant is one of the
finest in the industry but that does not mean
that the applicant was
exempted from complying with the alleged tender requirement, being
the submission of completion certificates.
Because of its
failure to do so, it was disqualified.
[39]
As the applicant has
prima
facie
shown that it was not required by the tender data and requirements to
submit completion certificates, which was in any event
submitted as
part of its company profile document, its disqualification and the
subsequent decision to award the tender to the
second respondent
constitutes an irregularity, which justifies interference on review.
[See:
GVK
Siyazama Building Contractors (Pty) LTD v Minister of Public Works
and Others
[2007]
4 ALL SA 992
(D) at para [68] and [69];
South
African National Roads Agency v Toll Collect Consortium
2013
(6) SA 356
(SCA) at 362 – 364.]
[40]
Had the applicant’s bid been correctly scored, it would have
advanced to the final stage of evaluation. As the applicant
would
have been the lowest in price of all the bidders that advanced to the
last stage of evaluation, it would have obtained the
highest points
and ought to have been awarded the contract.
[41]
However, the first respondent contends that even if the applicant
scored the highest points, the applicant did not show that
it should
have been awarded the contract.
[42]
It is evident from the minutes of the BEC that the second respondent,
being the successful tenderer, scored the highest points
at the last
stage of evaluation. Based on that, it was recommended that it
be awarded the tender. To contend that the
same principle would
not have been applied to the applicant is implausible and in any
event not supported by any facts or evidence.
[See:
Trencon
Construction (Pty) Ltd v Industrial Development Corporation of South
Africa Ltd and Another
2015
(5) SA 245
(CC) at par [65].]
[43]
The applicant’s constitutional right to administrative action
that is just, fair and equitable and its right to take
part in a
process that is transparent and fair have therefore been violated.
[44]
I am therefore satisfied that the Applicant has established a
prima
facie
right in terms of the test as set out in the
OUTA
-judgment
as well as a
prima
facie
right
to review the impugned decision.
WELL-GROUNDED
APPREHENSION OF IRREPARABLE HARM AND BALANCE OF CONVENIENCE:
[45]
The first respondent contends that the applicant did not show that it
will suffer any prejudice if the order is not granted
and the review
eventually succeeds and has also not demonstrated the possibility of
irreparable harm.
[46]
It is indicated in Tsela Tsweu’s evaluation report that the
total construction period of the project is 6 months. When
the order
was granted, no work of any value has been executed by the second
respondent. The respondents have also not yet concluded
a service
level agreement.
[47]
Without a temporary interdict, the respondents will continue to
implement and execute the contract and the works. At the time
the
intended review application is adjudicated, the works might have
reached an advanced stage which probable could have the result
that,
notwithstanding the finding of unlawfulness, the respondents may be
allowed to complete the work. The applicant will then
be left with a
hollow judgment. [SEE:
Moseme
Road Construction CC And Others v King Civil Engineering Contractors
(Pty) Ltd And Another
2010 (4) SA 359
(SCA) at 361;
Joubert
Galpin Searle Inc v Road Accident Fund and Others
2014
(4) SA 148
(ECP) at para [93] – [101];
Gross
Border Development Consultants (Pty) Ltd v The MEC: North West
Provincial Government: Department of Local Government and Human
Settlements and Others,
supra,
at
par [22]].
[48]
That, in itself, constitutes an apprehension of irreparable harm.
[49]
The temporary interdict will restrain the first respondent from
immediately implementing the contract and works, but will not
do so
irreparable. Thus, it will not irreparable disrupt the executive
functions conferred by the law. The interdict will however
ensure
that the first respondent’s exercise of its statutory power and
its administrative actions taken in the procurement
process be
subjected to the required constitutional control, as the applicant
prima
facie
showed
that the first respondent’s decision infringed upon the
applicant’s rights envisaged in section 217 of the Constitution
and also violated the legislative provisions and principles relevant
to the procurement process.
[50]
The order will also not irreparably harm the community, as there is
no evidence before this court that without the immediate
upgrading of
the said road, the community will not have access to the
socio-economic centres in the adjacent sub-urban localities.
[51]
The first respondent contends that if the project is not concluded by
the 30
th
of June 2016, the grant it received from the National Treasury for
the project has to be returned. It also avers that, from
the
implementation plan of the project, it was directed by the National
Department of COGTA that the project had to start during
1 July 2015
and has to be finalised by 30 June 2016. The first respondent
however does not aver that if the grant is returned,
it will not be
entitled to any further funding for the project after the 30
th
of June 2016.
[52]
It is also evident that the second respondent has not yet commenced
with any work of value. The respondents have at this
stage not
even concluded a service level agreement. It is therefore, in
any event, improbable that the work could be completed
by the 30
th
of June 2016, whether the order is granted or not.
[53]
Finally, the first respondent also contends that the community has
been employed for the project. However, in the opposing
affidavit, the municipal manager only avers that the project ‘
also
provides employment opportunities for the communities within the area
of the First Respondent’s jurisdiction as the labour
of such
community members is needed.’
[54]
The temporary interdict will not adversely affect the employment
opportunities. Once the review proceedings has been adjudicated
and
the contract is lawfully awarded to the successful tenderer, the
employment opportunities will still be available to the community
members. There is no evidence before this Court that any member
of the community has already been employed and is presently
conducting any work in respect of the project.
[55]
I am therefore satisfied that the applicant demonstrated a
prima
facie
right that is threatened by pending or imminent harm and that the
balance of convenience favours the applicant.
NO
OTHER SATISFACTORY REMEDY:
[56]
The applicant does not have any other satisfactory remedy. The
applicant acted immediately upon receipt of the documents
from the
first respondent. If the temporary interdict is not granted, the
applicant may still proceed with the intended review
application.
But, as stated above, if the interdict is not granted, the applicant
may be left with a hollow judgment and will therefore
not be able to
vindicate its rights.
CONCLUSION:
[57]
For these reasons, I am satisfied that the applicant satisfied all
the requisites for an interim interdict in terms of the
Setlogelo-test as well as the
OUTA
-judgment.
[58]
Therefore, I made the order set out in paragraph 3
supra
.
_____________________________
C.D PIENAAR, AJ
On
behalf of the Applicant:
Adv S Grobler
On
instructions of:
Peyper
Attorneys
BLOEMFONTEIN
On
behalf of the First Respondent: Adv S Lebala SC
Adv N
Khooe
On
instructions of:
Maroka Attorneys
BLOEMFONTEIN