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[2015] ZAFSHC 57
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Nucon Roads And Civils (Pty) Ltd v Mangaung Metropolitan Municipality and Others (4493/2013) [2015] ZAFSHC 57 (2 April 2015)
IN THE HIGH COURT OF
SOUTH AFRICA
FREE STATE DIVISION,
BLOEMFONTEIN
Case No: 4493/2013
DATE: 02 APRIL 2015
In the matter between
NUCON ROADS AND CIVILS (PTY)
LTD
..........................................................................
Applicant
And
MANGAUNG METROPOLITAN
MUNICIPALITY
..................................................
1st
Respondent
SXB CIVILS and PROPERTY DEVELOPERS
CC
..................................................
2nd
Respondent
MOVE-IT PLANT HIRE
CC
........................................................................................
3rd
Respondent
CORAM: NAIDOO, J
JUDGMENT: NAIDOO, J
HEARD ON: 5 FEBRUARY 2015
DELIVERED ON: 2 APRIL 2015
[1] This is an application to determine
costs arising out of two previous applications.
[2] The applicant and others submitted
tenders for certain road works to be undertaken for and on behalf of
the first respondent.
The applicant’s tender was rejected; the
first respondent awarded the tender to the second respondent and
concluded a contract
with it accordingly. The third respondent was
sub-contracted by the second respondent to perform the works in
accordance with the
contract.
[3] The applicant brought an urgent
application (the interdict application) and obtained a court order on
22 August 2013 which,
inter alia, granted a rule nisi interdicting
the first respondent from giving effect to the contract awarded to
the second respondent
and directed the first respondent to give
written reasons with regard to the evaluation and adjudication of the
tender and award
of the contract. Costs of that application were
reserved for determination by the court hearing the review
application referred
to hereafter. On the return day of that
application, being 12 September 2013, an order was taken by agreement
between the parties
regarding the further conduct of the matter and
the costs of that hearing were also reserved for determination by the
court hearing
the review application. The court also directed that
the rule nisi (the interim order) issued on 22 August 2013 continue
to serve
as an interim interdict.
[4] As directed in the court order
dated 22 August 2013, the applicant subsequently, on 6 November 2013,
applied for the review
and rescission of the first respondent’s
decision to reject the applicant’s tender and its decision to
award the tender
to the second respondent, as well as for the setting
aside of the contract that the first respondent concluded with the
second
respondent for completion of the works in terms of the tender
(the review application). The applicant cited a number of grounds
for
such review, including the fact that the second respondent was under
provisional liquidation at the time of the submission
of its bid and
the award of the tender. Although the first respondent opposed the
review application on 19 November 2013, it did
not file an opposing
affidavit, leaving the applicant’s averments and allegations
unchallenged. The second respondent also
opposed the application but
withdrew its opposition some ten months later. The third respondent
did not oppose the application
and it appears that no relief was
sought against it.
[5] The first respondent made a
settlement offer to the applicant in January 2014, which the latter
did not accept, mainly because
the first respondent disclaimed any
liability for the applicant’s costs and presumably also because
it did not deal with
all the grounds on which the review application
was premised. The first respondent thereafter filed a notice in terms
of Rule 34(1)
and 34(5)(d) of the Uniform Rules of Court, on 14 April
2014, in terms of which it made a settlement offer, essentially in
the
same terms as it did in January 2014. The applicant’s
response was to bring an application to compel the first respondent
to deliver a proper and complete record of proceedings concerning,
inter alia, the evaluation and adjudication of all the bids
of
tenderers and the award of the tender to the second respondent. The
court granted such an order on 31 July 2014 and the first
respondent
thereafter delivered the complete record of proceedings. Upon receipt
of the record, the applicant, on 1 September 2014,
filed a
supplementary affidavit in terms of Rule 53(4), in order to point out
the shortcomings in the second respondent’s
bid, which rendered
such bid non-compliant with the first respondent’s procurement
policies and tender requirements. The
applicant’s purpose was
to demonstrate that the first respondent did not properly consider
the bid documents and did not
properly apply the procurement policies
and tender requirements to the second respondent’s bid, thus
rendering the award
of the tender to the second respondent irregular
and erroneous, hence my conclusion that this is one of the reasons
that the applicant
did not accept the offer in January 2014. The
applicant persisted in the relief sought in the notice of motion
relevant to the
review application referred to in paragraph [3]
above.
[6] The first respondent’s
response was to bring an interlocutory application on 29 September
2014, in which it sought an
order declaring that the dispute between
it and the applicant in the review application has been resolved,
that the second respondent
pay its costs and that of the applicant up
to 15 April 2014 (referring presumably to the day after the offer in
terms of Rule 34
was made by the first respondent), that the
applicant pay its costs from 15 April 2014 to the date of the order
in the interlocutory
application. After that application was heard
the court ordered as follows:
“1. It is declared that the
dispute between applicant and the first respondent in the review
application under case number
4493/2013 has been resolved.
2. No order is made as to the costs of
this application;
3. The applicant (first respondent in
this application) is ordered to set down the review application
number 4493/2013 on the question
of costs only within Thirty (30)
days from date hereof, failing which the second respondent must do so
within Fifteen (15) days
after the expiry of the Thirty (30) days
referred to above.
4. The applicant is ordered to remit
the outstanding tenders including that of the first respondent for
re-evaluation and adjudication
within Thirty (30) days of the
finalisation of the costs hearing under case number 4493/2013.”
It seems to me that the reference to
second respondent in paragraph 3 of the court order may well be an
error and that the court
in all likelihood was referring to the first
respondent (applicant in this matter), as paragraph 1 of the court
order refers only
to these parties, and the second respondent had
already withdrawn its opposition to the review application by the
time the interlocutory
application was heard. In any event, this
hearing to determine costs was set down for hearing by the applicant
in the current matter,
after the respondent failed to do so in terms
of the court order set out above. I also pause to mention that both
counsel indicated
in their Heads of Argument that the interdict
application was made final on 12 September 2013. The order in fact
directs that the
interdict will continue to operate as an interim
interdict. The court order in the interlocutory application would,
therefore,
have had the effect of discharging the rule nisi.
[7] Both counsel correctly pointed out
that the determination of costs in a matter is within the discretion
of the court, which
discretion must be exercised judicially so that
it is fair to all parties. The general principle is that the
successful party is
awarded costs, but the court can deviate from
this after consideration of the circumstances of the case before it.
Mr Pienaar, for the applicant,
correctly pointed out that the allegations and averments made by the
applicant in the founding affidavit
in the review application were
unchallenged by the first respondent, on account of it not filing an
opposing affidavit after it
served its notice of opposition to the
application. Mr Phalatsi attempted to explain the non - filing of an
opposing affidavit
by the first respondent on the basis that the
issue of the provisional liquidation of the second respondent should
be regarded
as a point in limine, which effectively disposed of the
matter and therefore there was no need to oppose the application on
the
other grounds raised. I do not agree.
[8] Subsequent to the issuing of the
rule nisi, the applicant attempted to obtain the written reasons from
the first respondent
for the rejection of the applicant’s bid
and the award of the tender to the second respondent, which the court
order of 12
September 2013, directed it to furnish to the applicant.
From the correspondence attached to the founding affidavit, it is
clear
that the applicant had great difficulty in obtaining those
reasons and that the first respondent’s legal representative
handed
to the applicant a file of documents relating to the bids,
certain reports, minutes and the like. As a result of the difficulty
in extracting from these documents what could amount to reasons by
the first respondent for its decisions, its legal representative
was
then obliged to point out to the applicant’s legal
representative certain documents which he claimed constituted the
first respondent’s reasons. It transpired, however, that these
records were not complete. The applicant thereafter launched
its
review application in November 2013, raising a number of grounds upon
which the application was based, one of which was the
provisional
liquidation. The latter was not raised as a point in limine.
[9] The fact that the applicant averred
that this ground alone was sufficient to set aside the first
respondent’s award of
the tender to the second respondent would
not have entitled the first respondent to refrain from answering the
other grounds raised.
It must be borne in mind that it chose not to
file an opposing affidavit, and therefore appeared to acquiesce in
all the allegations
made by the applicant. The point that the
provisional liquidation should be regarded as a point in limine only
arose after the
application before me was launched. It, therefore,
does not appear to have been within the contemplation of the first
respondent
at the time that it opposed the review application,
contrary to what Mr Phalatsi argued. In the founding affidavit to the
interlocutory
application, the first respondent simply alleges that
the Rule 34 offer resolved all disputes between the parties. This is
not
so, as the issue of costs still remained (which the first
respondent was aware of, after the applicant rejected the January
2014
offer), prompting the court in the interlocutory application to
order that the matter be set down for hearing on costs only.
[10] The offer made in terms of Rule 34
disclaimed all liability for costs and indicated that costs should be
recovered from the
second respondent, at least up to the date of the
offer. In my view this is unreasonable, as the first respondent
evidently did
not conduct proper investigations into the status of
the second respondent and in any event awarded the tender to it,
without properly
complying with its own procurement policies and
tender requirements. It can hardly be expected that the applicant
should be visited
with the consequences of the first respondent’s
negligent and/or improper conduct in awarding the tender as it did.
The applicant
was obliged to take steps to establish and enforce its
rights in respect of the first respondent’s decision, in which
the
applicant played no part. If the second respondent improperly
induced the first respondent into making the decision it did (as it
seems to suggest), then the latter will have a right of recourse
against the second respondent for appropriate relief, without
being
absolved from liability for the costs of the applicant. In making the
offer it did, the first respondent rendered the applicant
successful
in its review application, entitling the applicant to recover its
costs from the first respondent. The court order in
any event
provided, in the alternative, for any respondent opposing the
application to pay the costs. The first respondent opposed
the review
application.
[11] The refusal to tender the
applicant’s costs, in my view, precipitated the actions of the
applicant subsequent to the
offer being made. The latter successfully
brought an application to compel the first respondent to deliver a
complete record of
proceedings, and did in fact receive such a
record, enabling it to properly elaborate on the grounds it earlier
raised in the founding
papers. It was only after the filing of the
supplementary affidavit that the second respondent withdrew its
opposition to the review
application. Had the first respondent
tendered the applicant’s costs in the Rule 34 offer (which it
reasonably ought to have
done), it would have been unnecessary for
the applicant to have taken the subsequent steps it did, including
setting down this
matter for a costs determination, which the first
respondent failed to do, even though it was directed to do so by the
court hearing
the interlocutory order.
[12] In the circumstances, I make the
following order:
12.1 The first respondent is ordered to
pay the applicant’s costs of the review application under case
number 4493/2013.
12.2 The first respondent is ordered to
pay the applicant’s costs in respect of the interdict
application under case number
3311/2013
S. NAIDOO, J
On behalf of the Applicants: Adv. C.
D. Pienaar
Instructed by: Rossouws Attorneys
BLOEMFONTEIN
(Nuc2/0036 -1 (JHC/KJ)
On behalf of the 1st Respondents: Mr
NW Phalatsi
Instructed by: NW Phalatsi &
Partners
BLOEMFONTEIN
(Phalatsi/MAN/0001/NW)