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[2016] ZAKZDHC 14
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Secureco (Pty) Ltd v Ethekwini Municipality and Others (1100/2015) [2016] ZAKZDHC 14 (1 April 2016)
In
the High Court of South Africa
KwaZulu-Natal
Local Division, Durban
Case
No : 1100/2015
DATE:
01 APRIL 2016
In the matter
between :
Secureco (Pty)
Ltd
.....................................................................................................................
Applicant
And
Ethekwini
Municipality
................................................................................................
First
Respondent
Affirmative
Portfolios
CC
........................................................................................
Second
Respondent
Pierian Services
(Pty)
Ltd
..........................................................................................
Third
Respondent
Cadwel Trading
Enterprise
......................................................................................
Fourth
Respondent
Naidu Consulting
(Pty)
Ltd
.........................................................................................
Fifth
Respondent
Rich Rewards
Trading 34 t/a Sigma
Int
.....................................................................
Sixth
Respondent
Staffing Direct
Training
Academy
.........................................................................
Seventh
Respondent
Total Labour
Force
CC
.............................................................................................
Eighth
Respondent
Foundation for
Professional Development (Pty)
Ltd
...............................................
Ninth
Respondent
Judgment
Lopes J
[1] This is an
application to review and set aside the award of a tender by the
first respondent, the Ethekwini Municipality, to
the second
respondent, Affirmative Portfolios CC.
[2] The history of
this matter is summarised as follows :
(a) for fifteen
years, the applicant, Secureco (Pty Ltd, conducted business with the
Municipality, supplying to it payroll services.
(b) In February
2012, the Municipality advertised for tenders under tender number
WS.6160, headed ‘Preparation of Payroll
for Staff Earning a
weekly wage in terms of the Expanded Public Works Programme.’
Secureco submitted a bid prior to the
closing date which was the 12th
March 2012.
(c) In terms of
tender WS.6160, the tenders remained open for acceptance by the
Municipality for 85 calendar days following the
date upon which the
bids were opened. No tender was accepted, and the tender process
lapsed.
(d) On the 31st May
2013 the Municipality advertised for new tenders under tender number
S.4028. It is common cause that that tender
was for precisely the
same services sought under tender number WS.6160.
(e) Tender number
S.4028 closed on the 29th June 2013. Secureco was not aware of this
call for tenders, having not been aware of
the advertisement.
(f) Tender S.4028
came to the attention of Secureco on the 2nd July 2013 when an
employee of the Municipality enquired of an employee
of Secureco why
it had not submitted a tender. It is common cause that no-one
contacted Secureco to inform them that the process
under tender
number WS.6160 had been abandoned and was now the subject of tender
S.4028.
(g) As none of the
tenders submitted under tender S.4028 were accepted within 85
calendar days, the process lapsed on the 21st September
2013.
(h) Almost one year
later, on the 21st August 2014 the Municipality notified Affirmative
Portfolios CC that its tender had been
accepted.
(i) On the 14th
November 2014 Secureco appealed against the decision to award the new
contract in terms of tender number S.4028.
(j) On the 24th
November 2014 the Municipality notified Secureco that its services
were terminated. Presumably pursuant to representations
by
Secureco’s attorneys, Secureco’s services were extended
to the 31st December 2014.
(k) On the 8th
January 2015 Secureco was notified that its appeal had been
dismissed.
[3] When the matter
was argued before me, Ms Steinberg, who appeared for Secureco
together with Ms Pudifin-Jones, submitted that
tender number S.4028
had lapsed after the 85 days had expired – i.e. on the 21st
September 2013. The subsequent award of
the lapsed tender was
invalid and fell to be reviewed and set aside. Ms Steinberg also
submitted that the decision to dismiss the
appeal of Secureco fell to
be reviewed and set aside.
[4] Mr Topping SC,
who appeared on behalf of the Municipality took only one point, viz
that Secureco had no standing to seek the
relief which it claimed.
[5] With regard to
the lapsing of tender number S.4028 :
(a) It is common
cause that the tender process would have lapsed on the 21st September
2013 unless extended from time to time by
the Municipality until the
date the tender was awarded – i.e. the 21st August 2014. It is
evident from the records of the
Bid Adjudication Committee that the
Municipality was of the view that the tenders expired in November
2013.
(b) In answer to the
allegations that the tender had lapsed for failure to extend it, the
Municipality denied the allegations, and
alleged that the tender
validity had been extended from November 2013 to April 2014, ‘before
expiry’. The Municipality
further pointed out that no invalid
tenders are approved, and no letters awarding contracts pursuant to
such tenders are issued,
without proof of such validity.
(c) In apparent
support of this is an extract from the minutes of the Bid Evaluation
Committee held on the 10th March 2014 recording
that an item relating
to the turnover of Affirmative Portfolios CC was deferred at a
meeting held on the 15th January 2014. The
minute states :
‘The
department was requested … to extend the transfer validity as
it expired in November 2013 …’
This item was then
simply deferred to the next meeting of the Bid Evaluation Committee.
It evidences the fact that the Municipality
was of the view that the
tender had expired in November 2013. This is evidently why it
claimed to have extended the tender from
November 2013 to April 2014.
[6] Ms Steinberg
submitted that on the Municipality’s version, even if the
tender had been validly extended and had not lapsed
after the 21st
September 2013 and before November 2013, the tender lapsed before the
award on the 21st August 2014.
[7] Ms Steinberg
submitted that the only defence put up by the Municipality is that
Secureco lacks standing because it did not participate
in the tender
process, and that the facts in the case relied upon by Mr Topping,
Trans Creations KZN CC v City of Cape Town and
Another (19367/2014)
[2015] ZAWCHC 32
(23 March 2015) are distinguishable from the facts
in the present case. In Trans Creations, the applicant was an
unsuccessful
tenderer. It did not seek to impugn the City of Cape
Town’s decision to reject its own tender, but instead sought an
order
reviewing and setting aside its decision to award the tender to
a competitor. This was on the basis that a particular clause in
the
tender bid was ambiguous and misleading. The court in Trans
Creations rejected the submissions of ambiguity. Ms Steinberg
submitted that in Trans Creations the tender process had been a
lawful and valid tender process, whereas in the present case the
tender did not exist when it was awarded. Here the award of the
tender was unlawful because the tender process had lapsed.
[8] Ms Steinberg
also referred me to Tactical Security Services CC v Ethekwini
Municipality and Others an unreported decision of
this Court (Case No
7553/2014) which considered the question whether the validity of bids
can be extended by agreement after they
had expired. For the reasons
set out in his judgment, Ploos van Amstel J held that they could not.
The learned judge pointed
out that a tender is defined in the
Preferential Procurement Regulations as ‘a written offer in the
prescribed or stipulated
form in response to an invitation by an
organ of state for the provision of services, works or goods, through
price quotations,
advertised competitive tendering processes or
proposals’. Without an extension, the tender, like any other
offer, falls
away if it is not accepted in time.
[9] In my view the
Municipality has put up no defence to the allegation that the tender
had lapsed prior to its acceptance. Mr
Topping conceded that tender
number S.4028 had not been continuously extended, and could not have
been extended retrospectively.
Mr Topping submitted, however, that
the unlawful issue here, the lapsing of the tender, was not a
material one. He submitted
that as there is no suggestion of
impropriety, and, as the contract is continuing, no-one has been
prejudiced. The harm to Secureco
occasioned by the tender acceptance
period not having been extended, occurred after Secureco knew that it
had missed the advertisement.
[10] Mr Topping
further submitted that only persons involved in a tender after the
submission of bids, have standing to apply for
the review of a
decision to accept a tender. He also submitted that the appeal
process of the Municipality was not relevant.
If the Municipality is
successful in its objection the standing of Secureco, it could not
have been part of an appeal process.
If the Municipality was
unsuccessful on the point of standing, the appeal process would also
be rendered unnecessary.
[11] Ms Steinberg
submitted that in determining the standing of an applicant, the
court must assume that the allegations made by
the applicant are true
or correct. (See : Zulu and Others v Ethekwini Municipality and
Others
2014 (4) SA 590
(CC) para [21].)
[12] Ms Steinberg
also relied upon the dictum in Giant Concerts CC v Rinaldo
Investments (Pty) Ltd and Others
2013 (3) BCLR 251
(CC) where Cameron
J stated at para [41] :
‘These cases
make it plain that constitutional own-interest standing is broader
than the traditional common law standing,
but that a litigant must
nevertheless show that his or her rights or interests are directly
affected by the challenge of law or
conduct. The authorities show :
(a) To establish
own-interest standing under the Constitution a litigant need not show
the same “sufficient, personal and
direct interest” that
the common law requires, but must still show that a contested law or
decision directly adversely affects
his or her rights or interests,
or potential rights or interests.”
(b) This requirement
must be generously and broadly interpreted to accord with
constitutional goals.
(c) The interests
must, however, be real and not hypothetical or academic.
(d) Even under the
requirements for common law standing, the interests need not be
capable of monetary valuation, but in a challenge
to legislation
purely financial self-interest may not be enough – the
interests of justice must also favour affording standing.
(e) Standing is not
a technical or strictly-defined concept. And there is no magical
formula for conferring it. It is a tool a
court employs to determine
whether a litigant is entitled to claim its time, and to put the
opposing litigant to trouble.
(f) Each case
depends of its own facts. There can be no general rule covering all
cases. In each case, an applicant must show
that he or she has the
necessary interest in an infringement or a threatened infringement.
And here a measure of pragmatism is
needed.’
(Footnotes omitted).
[13] In the present
matter, the following considerations are relevant :
(a) Secureco
participated in the first tender process under tender number WS.6160;
(b) that tender
process was allowed to lapse by the Municipality. No explanation
whatsoever is given why the Municipality allowed
it to lapse. Having
put the tenderers to the expense and trouble of preparing tenders and
submitting them, the Municipality allowed
the process to lapse, and
apparently failed to communicate its reasons for so doing to any of
the tenderers.
(c) A new tender
process was then started without notifying any of the previous
tenderers (or at least not notifying Secureco).
Ms Steinberg
abandoned any reliance on a reasonable expectation in this regard.
Some criticism may be levelled against Secureco
for not being alert
to the fact that the first tender had lapsed and for not enquiring as
to what had occurred. The lapsing of
the first tender is not
explained by the Municipality, nor is any reason given for not
notifying tenderers of the lapsing. This
would not only have
benefitted Secureco, but also the Municipality. It is obviously to
its benefit that the maximum number of
parties who wish to tender be
notified. This is the purpose of the advertising process. However,
in circumstances where a tender
has simply been abandoned, it seems
odd, to say the least, that the previous tenderers were not notified.
(d) The facts
alleged by Secureco are the ones to be considered in applying the
test for standing. An employee of Secureco alleges
that he was told
by an employee of the Municipality that instructions were given to
another Municipal employee to notify all the
tenderers for WS.6160
that a new tender process would begin. This was not done.
(e) There is also
the question of public interest to be considered. It is not in the
public interest that such a manifest waste
of time and effort by
Municipal officials should simply be ignored. This is particularly
so when the decision ultimately made
by the Municipality is one which
is invalid. Indeed, as pointed out by Ms Steinberg, there is an
obligation on the Municipality
to approach a court to undo its
mistakes. (See MEC for Health, Eastern Cape and Another v Kirkland
Investments (Pty) Ltd t/a Eye
and Lazer Institute
2014 (3) SA 481
(CC), para 65.) The challenge by Secureco goes to the lawfulness of
the Municipality’s conduct.
[14] The attitude of
the Municipality in opposing the standing of Secureco is puzzling. I
say this because it allowed the first
tender to lapse and then
re-commenced the process. Had the Municipality simply wanted to
extend the first tender process, they
would have had to have given
notice to each of the tenderers. It would surely have been cheaper
and easier to have requested the
initial tenderers to extend the
tender acceptance period.
[15] As is made
clear in para 34 of Giant Concerts, an own-interest litigant may be
denied standing even though the result is that
an unlawful decision
stands. It is really a question of the correct remedy being sought
by the correct person in the correct proceedings.
Cameron J however
cautions that courts should be hesitant to dispose of cases on
standing alone, where there are broader concerns
of accountability
and responsiveness which may require investigation and determination
of the merits.
[16] In these
circumstances I find that the decision of the Municipality to award
the tender to Affirmative Portfolios CC was an
unlawful one. It is
in the public interest to set that decision aside. To do otherwise
would be to non-suit Secureco because
it failed to notice the lapse
of the 85 day period when, on the Municipality’s version, it
also failed to notice it.
[17] In view of the
decision at which I have arrived, there is no need to deal with the
appeal against the award of the tender.
[18] I make the
following order :
1. The decision of
the Ethekwini Municipality to award a tender for the provision of
cheque printing services to the Municipality
under tender S.4028 is
reviewed and set aside.
2. The tender
process S.4028 is declared to be unlawful and invalid.
3. Any contract
concluded pursuant to the award of tender S.4028 is set aside.
4. The Municipality
is directed forthwith to commence a fresh tender process in respect
of the Preparation of Payroll for Staff
Earning a weekly wage in
terms of the expanded Public Works Programme and to comply with all
legal requirements including the Local
Government : Municipal Finance
Management Act, 2003, Municipal Supply Chain Regulations and
EThekwini Supply Chain Management policy.
5. The first
respondent is directed to pay the applicant’s costs of this
application on an opposed scale, including the costs
of two counsel.
Date of hearing :
11th March 2016
Date of judgment
: 1st April 2016
Counsel for the
Applicant : Ms C Steinberg with Ms S Pudifin-Jones
(instructed by
Blake Bester de Wet & Jordaan)
Counsel for the
Respondent : Mr I Topping SC
(instructed by S
D Moloi & Associates)