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[2016] ZAGPPHC 641
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Afrisake NPC and Others v The City of Tshwane Metropolitan Municipality and Others (74192/2003) [2016] ZAGPPHC 641 (22 July 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
Case
No: 74192/2003
22/7/2016
In
the matter between
AFRISAKE
NPC First
Applicant
AFRIFORUM
NPC Second
Applicant
CORNELIUS
JANSEN VAN
RENSBURG Third
Applicant
And
THE
CITY OF TSHWANE METROPOLITAN
MUNICIPALITY First
Respondent
Second
to Ninth Respondents are respondents linked to the First Respondent.
PEU
CAPITAL PARTNERS (PTY)
LTD Tenth
Respondent
TOTAL
UTILITY MANAGEMENT SERVICES (PTY) LTD Eleventh
Respondent
JUDGMENT
BAM
J
Appearences:
Applicants:
Adv C Puckrin SC and Adv Q Pelser SC.
First
to Ninth respondents: Adv W Mokhari SC, Adv K Tsatsawane and Adv P
Managa. Tenth and Eleventh respondents: Adv JP Daniels
SC and Adv JB
Currie.
INTRODUCTION
1.
On 5 July 2016 the applicants, by way of an urgent application,
applied for the extension of an interdict restraining the First
Respondent, “
CoT"
from paying certain monies to the
Eleventh Respondent, and “
TUMS",
pending
finalization of a review application concerning the validity of a
terminated agreement called
Master Services Agreement, “MSA",
between
CoT
and Tenth Respondent
"PEU"
which
agreement had been ceded to
"TUMS".
The application
was opposed by all the respondents.
2.
When the matter came before me I deemed it expedient, and in the
interests of justice and the parties, that the matter should
be
finalised on the same day. Fortunately I have had sufficient time and
opportunity to peruse the papers beforehand, despite the
more than 40
other applications also on the urgent roll. Accordingly, and after
having heard counsel, I was satisfied that the
interdict had to be
granted as prayed for in prayers 1, 2, 3 and 4 of the Notice of
Motion, but with an amended costs order. I
added that the applicants
should approach the Deputy Judge President for a preferential date
for the hearing of the pending review
application. Due to time
constraints, however, I did not deliver a reasoned judgment at the
time.
REASONS
3.
On 6 June 2013
CoT
and
PEU
entered into the
MSA
for
the installation of a smart electric meter system in the city. On 30
October 2013
PEU
ceded the
MSA
to
TUMS.
It was
common cause that subsequently about R1 Billion had already been paid
by
CoT to PEU/TUMS.
On 12 August 2015, after about 1200 smart
meters of the more than 400 000 had been installed, the
MSA
was
terminated by
CoT.
On 20 August, however,
CoT
entered
into another agreement, the
"Interim Services and Termination
Agreement", “ISTA",
with
TUMS.
In terms of
the latter agreement
TUMS
agreed to sell the pre-paid smart
meter system, awarded in terms of
MSA,
to CoT for the amount
of R950M.
CoT
has agreed to pay that amount to
TUMS
by
15 July 2016. Pending payment of this amount,
TUMS
further
agreed to continue maintaining and operating the prepaid smart meter
system at a service fee of 9.5 cents per Rand.
CoT
intends
selling the system to a new service provider, who has agreed to
purchase the system for the same amount.)
4.
The main issue between the parties turns upon the validity of the
initial contract,
MSA,
and, directly flowing from that
agreement, according to the applicants, payment of
the purchase price of
R950M by
CoT
to
TUMS
for the
purchasing of the system. In this regard the applicants have lodged a
review application which is pending. One of the applicants'
concerns,
addressed in the present application is the payment of the R950M. The
termination of the
MSA
and the agreement that
TUMS
should,
in the meantime, proceed to operate the system, are not at stake.
5.
Although the matter concerning the challenged validity of the
MSA
has a history, the applicants stated that it was only at the end
of May 2016 that they became aware of the payment of the first amount
to the two respondents in terms of the
MSA.
The applicants
then attempted to seek information from
CoT
concerning that
payment.
CoT,
however, according to the applicants, did not
respond, but, instead, on 13 June 2016, the attorneys of
PEU/TUMS
informed the applicants that a further amount of almost R950M was
earmarked by the
CoT to
be paid to their clients.
6.
At the time the applicants were aware that the infrastructure of the
project in terms of the
MSA
was incomplete and that that
agreement had been terminated by
CoT.
7.
When the applicants were informed that the payment of the R950M to
TUMS
was imminent, they lodged an urgent application to
prevent it. This application came before Tuchten J. On 15 June 2016,
upon an
agreement between the parties, an interim order was made
which included a temporary interdict - effective up till 5 July 2016
-
stopping the payment of the amount in question. It is this
interdict that the applicants sought to have extended.
8.
The Applicants contended that the
MSA
is constitutionally
invalid, and that any payment in terms of that agreement is flawed.
The respondents, on the other hand, contended
that the
MSA
was
lawful and valid. It was also contended by the respondents that the
proposed second payment of R950M is unrelated to the issue
of the
validity of the
MSA.
9.
Taking into consideration all relevant facts, including that the City
of Tshwane Municipality bears a huge responsibility towards
the
residents, and that the issues are of
"extreme importance to
the residents of Tshwane"
(as submitted by the applicants) I
was convinced that the application was indeed of sufficient urgency
justifying its adjudication.
10.
From what follows it should appear clearly that the applicants, in my
view, complied with all the formal requirements pertaining
to an
interim interdict.
11.
It is trite that the applicants were obliged to show that they had a
prima facie
right, that they may suffer irreparable harm if
the interdict was to be refused, and that the balance of convenience
favoured the
granting of the application. See
SOUTH AFRICAN
INFORMAL TRADERS FORUM AND OTHERS vs CITY OF JOHANNESBURG AND OTHERS
2014(4) SA 371 CC.
12.
The pending review application of the
MSA
appears to involve
several material issues. It is mainly contended by the applicants
that the
MSA
is
"constitutionally invalid in that it
was concluded without a competitive bidding process",
and
that it did not comply with the
"applicable legislation".
The applicants also pointed out that
PEU
was appointed as
consultant, which created a conflict, especially when
PEU
was
awarded the contract despite
"warnings from Treasury".
Another allegation made by the applicants is that here was no
"proper financial feasibility study".
Although most
of these allegations are contested, or explained by the respondents,
this court was not called upon to determine whether
the applicants
will indeed succeed with the review. What had to be considered is
whether the applicants have shown a
prima facie
right
"that
is likely to lead to the relief sought in the main application"
and that irreparable harm will follow if the interdict would be
refused.
13.
The issues raised by the applicants are serious in nature, and at the
time I made the order I remarked that the more I read
the more I
became concerned.
14.
Concerning the review the applicants' case is that this application
is
"a sequel to a review brought by the Applicants to have
the decisions and the subsequent award of the tender and the
agreements
which flowed therefrom, set aside.
. ." which
includes the issue of the payment of the R950M to
TUMS.
The
applicants aver that the latter fell outside the scope of the
recommendation and resolution adopted by the City Counsel.
15.
As to be expected, the respondents contended that the proposed review
is moot and that the payment of the R950M is not in any
way connected
or related to the questioned validity of the
MSA.
In this
regard it was further pointed out by Mr Mokhari that in view thereof
that
CoT
never intended to keep the system but that it was
going to sell same to another contractor for the same amount of
R950M, there was
no prejudice to any party.
Mr
Daniels supported these arguments.
16.
However, I agree with Mr Puckrin's contention that the R950M,
earmarked to be paid to
TUMS,
is interlinked with the
MSA.
It is clear that the relationship between
CoT
and
PEU/TUMS
originated in the
MSA,
and although the
MSA
had
been terminated,
TUMS
and the system, for which
CoT
agreed
to pay R950M to
TUMS,
are intrinsically linked to the
MSA.
The present relationship between
CoT
and
TUMS,
in
terms of
ISTA,
obviously, flowed directly from the
MSA.
It
is therefore unescapable, if the review court should find that the
MSA
was indeed unlawful and invalid, that such finding would
have a direct bearing on the payment of the R950M to
TUMS.
The
fact that the new contractor would be prepared to repay
CoT
has
nothing to do with the issue whether the
MSA
was lawful or
not. Accordingly it follows that no subsequent re-selling of the
system, for whatever amount, would validate the payment
to
TUMS.
In any event, in view thereof that
TUMS
has agreed, in
terms of
ISTA,
to continue the required services, with which
the applicants have no quarrel, it seems that the balance of
convenience favours the
applicants.
17.
It was further emphasised by Mr Mokhari that the applicants, already
in February 2014, by way of an interim interdict, failed
in their
endeavours to stop the initial phase of the project. That application
was dismissed by Fabricius J . Mr Mokhari submitted
that the present
proposed review application is based on the same allegations and
submissions considered and ruled upon by Fabricius
J, and,
accordingly, that the pending review is doomed to failure. The
applicants, on the other hand, submitted that it subsequently
transpired that certain vital information, including correspondence
between, amongst others, the Minister of Finance and the Executive
Mayor of the
CoT,
that was not placed before the Council when
the tenders were considered, had not been disclosed to Fabricius J.
This information
includes advice by National Treasury in a letter
dated 15 May 2015 addressed to the municipal Manager, Mr Ngobeni,
which reads
as follows:
(Page
207 of the founding papers.)
"National Treasury
advises you to halt the payment of any settlement amount agreed with
the service provider pending the National
Treasury's detailed review
of the entire procurement process, implementation and the ultimate
cancellation of the project."
There
is no indication in writing what the
CoT's
response to the
Minister was. Instead, it appears that
CoT
actually
disregarded the advice. In that regard the following appears in the
respondents' answering affidavit signed by Mr Ngobeni:
(Page 434, par
47.1)
"The letter of the
Minister of Finance was received after the Council has already
approved the tender. However, the municipality
was in consultation
with Treasury officials throughout the whole process of tender."
(A
more vague form of answering the implication that Treasury's letter
was ignored, can hardly be imagined.)
18.
In respect of the decision of Fabricius J, Mr Mokhari, reluctantly,
conceded that since that application, the
"situation"
has somewhat changed. This concession, in my view, is an
understatement. It is clear that the papers before my learned
colleague
were, to say the least, incomplete.
19.
The reference to the letter of Treasury in paragraph 17 was but one
aspect that will be addressed in the review application.
Others
include that a competitive bidding process recommended by Treasury
was allegedly not considered, and that
CoT
was paying more
than R800M for the installation of about 12000 to 13000 meters. There
are several more contentious issues which
I do not deem necessary to
repeat. They are addressed in the applicants' founding affidavit.
20.
In conclusion Mr Puckrin submitted that the applicants have made out
a strong case
"in seeking to protect the public's rights and
interest"
and that they have established that they have a
prima facie
case in that they sought
"to prevent any
further irregularity and unlawfulness."
Both
Mr Mokhari and Mr Daniels vehemently submitted that the applicant's
failed to show that they are entitled to the interim relieve
sought.
21.
For the reasons set out above, I agreed with Mr Puckrin.
______________________
AJ
BAM JUDGE
22
July 2016