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[2015] ZANCHC 27
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Tshenolo Resources (Pty) Ltd v MEC: Northern Cape Provincial Government: Department of Roads and Public Works and Another (1721/2015) [2015] ZANCHC 27 (18 September 2015)
HIGH COURT OF SOUTH
AFRICA
[NORTHERN CAPE HIGH
COURT, KIMBERLEY]
Case No: 1721/2015
DATE: 18 SEPTEMBER 2015
In the matter between:
TSHENOLO RESOURCES(PTY)
LTD
...........................................................................
APPLICANT
AND
THE MEC:
NORTHERN
......................................................................................
1ST
RESPONDENT
CAPE PROVINCIAL GOVERNMENT:
DEPARTMENT OF ROADS AND PUBLIC WORKS
NUCON ROADS AND
CIVILS
............................................................................
2ND
RESPONDENT
(PTY) LTD
Heard: 04-09-2015
Supplementary Heads: 09-09-2015
Delivered: 18-09-2015
JUDGMENT
KGOMO JP
1 This opposed application for an
interdict was brought on urgency by the applicant company, Tshenolo
Resources (Pty) Ltd, based
in Randburg Gauteng Province. Tshenolo
Resources seeks to interdict and restrain the Member of the Executive
Council of the Northern
Cape Provincial Government for Roads and
Public Works (the MEC/ the Department) as First Respondent and Nucon
Roads and Civils
(Pty) Ltd, qua Second Respondent, from performing
the acts set out below.
2 Pending the finalisation of a review
to be instituted in accordance with the prayer captured in para 3
below, in terms of which
Tshenolo Resources will seek the review and
setting aside of the decision taken by the MEC or his Department to
award the contract,
styled DRPW003/2014 – Project: Upgrading of
Road MR 950 from N14 intersection Dithakong (Phase 2, 10 km) in the
Joe Morolong
Local Municipality in the John Taolo Gaetsewe District
Municipality, to Nucon Roads:
2.1 That the MEC and Nucon Roads be
and are hereby interdicted and restrained from in any way further
implementing the road upgrading
decision;
2.2 That these respondents be and are
hereby barred from executing or performing the works commensurate
with the said decision,
alternatively those works that are to be
executed in terms of the Service Level Agreement (SLA) believed to be
concluded between
the MEC and Nucon Roads consequent upon the taking
of that decision;
2.3 That the MEC pays the costs of this
application but should Nucon Roads join issue it too pay the costs
jointly with the MEC
in the conventional manner.
3 Tshenolo Resources then seeks the
indulgence that it be ordered to institute review proceedings with
5(five) days of this order
to set aside the MEC’s road
upgrading decision, to prosecute the review application on an urgent
basis, and to arrange the
first available and suitable date with the
Registrar of this Court for the hearing of such urgent review relief.
4 That the order contained in prayers
(paragraphs) 2.1 and 2.2 above, shall serve as an interim interdict
with immediate effect.
5 Two interlocutory matters were raised
for prior adjudication. The first of which was lack of urgency. It is
common cause between
the parties that no competitive bidding process
was followed prior to the award of the road upgrading contract to
Nucon Roads by
the MEC. Urgent review and interlocutory remedies are
available to challengers to the outcome and process of a state
tender. See
Steenkamp NO v Provincial Tender Board Eastern Cape,
2007(3) SA 121 (CC) at 142H-143A (para 51). It is therefore not only
prudent
but also necessary for challengers of non-observance of the
constitutionally ordained processes, the state organ and the
defenders
of the award to adjudicate their dispute before the Court
before any significant progress on the contract has been made. In
Darson
Construction (Pty) Ltd v City of Cape Town and Another 2007(4)
SA 488(C) the Court stated at 506E-H:
“On the facts of this matter,
applicant could, indeed, have sought an interdict immediately after
the award of the contract
to second respondent on 17 December 2004.
It is true that applicant was invited to appeal, but, objectively
seen, the appeal was
the incorrect remedy. In any event, when
applicant became aware that second respondent was on site and had
begun work in terms
of the contract, it could immediately have
approached the Court to interdict second respondent pending the
outcome of its appeal.
By that time it was clear that first
respondent was going ahead and allowing second respondent to execute
the contract despite
applicant's appeal. An application for an
interdict would, in all probability, have brought to the fore that
the decision of 17
December 2004 was invalid and would have prevented
the loss which applicant seeks to recover had applicant, in addition,
been able
to show its entitlement to the contract. An examination of
the correspondence sent by or on behalf of applicant from 10 February
until the launch of the application demonstrates that applicant knew
that it had the right to approach the court for relief. It
regularly
threatened to do so but failed to follow up on its threats.”
6 Over a short few days all papers and
concise Heads were filed, even though some processes reached me
during the morning of the
hearing, resulting in supplementary heads
on one issue being subsequently filed. The issues were relatively
fully ventilated. There
was no prejudice perceived or claimed. I was
satisfied that urgency was established.
7 The second preliminary issue related
to Tshenolo Resources’ legal standing. This issue is only
persisted in by Nucon Roads.
The historical background will
facilitate the determination of this issue and also bring us closer
to whether Tshenolo Resources
have made out a Prima facie case for
the interim relief sought. I therefore interweave it with the merits.
8 Tshenolo Resources submitted a bid
for the construction and/or upgrading of Phase 1 of the road already
described, but was not
a “responsive bidder” (meaning the
company was unsuccessful). Phase 1 was in fact awarded to another
company named
Down Touch Investments (Pty) Ltd, and has by now
basically completed it. Down Touch is not a party to these
proceedings.
9 After the awarding of the Phase 1
tender to Down Touch Investments by the MEC, Nucon Roads filed review
proceedings in Case 1797/2014
on 15 October 2014 and impugned that
the awarding process in Phase 1 to have been attended by material
irregularity and/or illegality
(in the administrative sense) or some
malfeasance. The respondents cited were the MEC (First Respondent)
and Down Touch (Second
Respondent). Down Touch did not oppose the
Case 1797/2014 review application. It must be added that emanating
from what has already
been mentioned as regards who the parties were,
it can be safely inferred that Tshenolo Resources was not a party to
the Case 1797/2014
proceedings.
10 The further relief that Nucon Roads
sought in Case 1797/2014 went as follows:
“B2. That the First Respondent’s
decision to award the tender, being
“Upgrading of Road MR950 from N14
intersection towards Dithakong (Phase 1 10km) in Joe Morolong Local
Municipality in John
Taolo Gaetsewe District Municipality”
(“the project”), to the Second Respondent, be reviewed
and set aside;
B3. That the subsequent conclusion of
the contract and/or service level agreement between the First
Respondent and the Second Respondent
for rendering of the services
and works in terms of the tender, be set aside;
B4. That the First Respondent be
ordered to award and give the tender to the Applicant and to conclude
a contract and/or service
level agreement with the Applicant in
respect of the rendering of the services and works in terms of the
tender;
B5. Alternatively, that the First
Respondent be ordered to re-evaluate and adjudicate all bids/tenders
submitted in respect of the
project within 14 days from the date of
granting of this order.”
11 On 20 February 2015 (four months
after Case 1797/2014 was filed on 15 October 2014) Phatshoane J and
Lever AJ in that matter
ordered the following:
“Having heared Adv Danzfuss SC
assisted by Adv Pienaar for the Applicant and Adv Mphaga SC assisted
by Adv Pheto for the respondents
and having read the other documents
filed of record;
IT IS ORDERED: (BY AGREEMENT)
1. That the decision of the First
Respondent [THE MEC] to award the tender as referred to in paragraph
B2 of the Notice of Motion,
is declared unlawful and invalid;
2. That the parties will furnish
factual information on affidavit, to be filed on or before 4 March
2015, as well as further submissions
on:
2.1 What would be in the public
interest when determining a just and equitable remedy;
2.2 Whether there is any other remedy
available to the Applicant to protect and enforce its private
interest other than a new tender
process;
2.3 Any other information considered
relevant.
3. That the matter is set down for
further hearing on 11 March 2015 at 09.30”.
12 Three months after the Phatshoane J
et Lever AJ order quoted in para 11 hereof Erasmus AJ ordered on 29
May 2015 (in the same
Case No.1797/2014) that:
“Having heared Adv Sieberhagen
for the Plaintiff and having read the other documents filed of
record;
IT IS ORDERED: (BY AGREEMENT)
1
1.1 Nucon will be appointed within a
period of 30 days to execute the upgrade in respect of what is known
as Phase 2 of the upgrade
process of road MR950 from the N14
intersection towards Dithakong comprising the next 10 km section of
said road. With “next
10 km section of the said road” the
section of the road following the section which is currently under
construction by Down
Touch Investments (Pty) Ltd of the said road, is
meant.
1.2 The said appointment will be on the
terms, conditions and rates (including) preliminaries and generals)
as contained in Nucon’s
tender of Phase 1 on the aforesaid
project, adjusted in accordance with the terms and conditions of
aforesaid tender, subject thereto
that the scope of work will be
adjusted appropriately to give effect to the aforesaid.
2
Nucon will renounce the costs order
granted in its favour on 20 February 2015 upon fulfilment of the
following conditions:
2.1 Receipt of the letter of
appointment as envisaged by clause 2 above; and
2.2 Receipt of payment of an amount of
R35 000.00 within a period of 30 days from date hereof, as part of
contribution towards the
costs under Case Number 1797/14.”
13 It is common cause, or at least not
disputed, nor is it material to the outcome of this application, that
the Notice of Set Down
for the hearing of 29 May 2015 in Case
1797/2014 was not served on Down Touch, neither did the latter oppose
the proposed and resultant
order. It may have been by design because
Down Touch retained the Phase 1 project which was apparently 95%
complete at that stage.
14 Early during his argument I enquired
from Adv S Grobler, counsel for Tshenolo Resources, why the agreement
between Nucon Roads
and the MEC, which Erasmus AJ made an order of
Court on 29 May 2015 (para 12 above), was not dealt with in the
applicant’s
(Tshenolo Resources’) founding papers. His
response was that Tshenolo Resources was unaware of the application
and/or the
order. This is incorrect because Tshenolo Resources was
indeed aware thereof, because it has appended as Annexure FA9 an
instrument
directed to “Nucon Roads and Civils (Pty) Ltd”
dated 24 July 2015 which reads in part:
“Appointment Letter: Tender
No.DRPW 003/2014
Project name: Upgrading of Road MR950
from N14 intersection towards Dithakong (Phase 2 10km) in Joe
Morolong Local Municipality
in John Taolo Gaetsewe District
Municipality.
Contract price: R54 878 686-15 (Fifty
Four Million and Eight Hundred and Seventy Eight Thousand Six Hundred
and Eighty Six Rand
Fifteen Cents)
We refer to the above matter and wish
to confirm your appointment to carry out the above mentioned works
under the above mentioned
tender and in terms of the settlement
agreement, which was made an order of court on the 29th of May 2015
under case number 1797/14.
The document was written by Mr K
Nogweli, Head of Department (HOD), in the MEC’s Department. So
all that Tshenolo Resources
had to do was to uplift and copy the
contents of the file from the Registrar’s office.
15 Asked what effect Erasmus AJ’s
order has on the current interim interdictory relief sought, Mr
Grobler invoked the decision
of Master of the Supreme Court (North
Gauteng High Court, Pretoria v Motala NO 2012(3) SA 325 (SCA). The
headnote captures the
ratio succintly at 325C-D in these terms:
“It is so that all orders of
court, whether correctly or incorrectly granted, have to be obeyed
until they are properly set
aside. However, as stated in Lewis &
Marks v Middel
1904 TS 291
, when an order is ‘null and void;
and upon proof of invalidity the decision may be disregarded….without
the necessity
of a formal order setting it aside’. Where, in
making an order, a judge usurps a power expressly reserved, by
statutory
enactment, for the master of the high court, such order is
a nullity and pronouncement to that effect is unnecessary. It is,
after
all a fundamental principle of our law that a thing done
contrary to a direct prohibition of law is of no force and effect. It
follows that the court a quo’s conclusion that the appellant
had acted in contempt of such order cannot be supported”.
16 From p331J-333E (paras 12-14) of the
Motala NO decision the gravemen of the decisions cited there relate
to cases in which an
order was given against or affecting a party
adversely who has not been cited in the proceedings. Per contra, Down
Touch was cited
in the Case Number 1797/2014 proceedings. It was the
company’s choice not to join issue. It has no demur.
17 The thrust of the other cases in
Motala NO implicate a situation where a statute repose certain powers
in particular functionaries
and a Court goes ahead and arrogate to
itself the powers it did not possess or it usurped such powers. See
cases cited in the aforementioned
paras 12-14 of the Motala NO
judgment. See further Minister of Home Affairs and others v Somali
Association of South Africa and
Another 2015(3) SA (SCA) para 27; and
Jayiya v Member of the Executive Council for Welfare Eastern Cape,
and Another 2004(2) SA
611 (SCA) para 17.
18 What is troubling in this matter is
that the applicant, Tshenolo Resources:
18.1 Appears to have studiously avoided
dealing with Erasmus AJ’s order in its Founding Affidavit,
where it should make out
a proper case for the relief sought. In
Lewis & Marks v Middel
1904 TS 291
, cited with approval at
p332B-D of the Motala NO judgment the following situation must, at
least, arise: “upon proof of invalidity
the decision may be
disregarded”. This step Tshenolo Resources did not take;
18.2 The Phatshoane J et Lever AJ
order, pursuant to the parties’ agreement, envisaged:
2.1 What would be in the public
interest when determining a just and equitable remedy pursuant to the
nullification of the awarding
of the tender to Down Touch and not to
Nucon Roads.
2.2 Whether there was any remedy
available to the Nucon Roads to protect and enforce its private
interest other than a new tender
process;
2.3 Any other information considered
relevant.
18.3The process culminated in the
Erasmus AJ’s order granted by consent on 29 May 2015.
19 In his Answering Affidavit, on
behalf of the Department, Mr Kholekile Nogwili, the HOD, justify the
Erasmus AJ Court Order route
as follows:
19.1 “6.2 I attach hereto as
Annexures AA1-AA4, copies of 4[Four] newspaper articles relating to
the public violence and protests
that arose during August 2014 due to
the community’s dissatisfaction with the establishment of roads
and infrastructure in
the Joe Morolong Municipal area. There is a
real concern that the violence will again erupt, with the same damage
and threat to
the lives and disruption of education if the interim
relief is granted”.
19.2 “9.1 I deny that the Phase
2 project would have gone out on tender during the beginning of 2015
as the Department did
not have an approved budget for the Phase 2
project to commence with any tender process.
9.2 No tender specifications for the
construction process of Phase 2 has even been drafted and no
advertisement has been approved
by me in my capacity as the head of
the department, as is required in terms of policy.
9.3 The Phase 2 project that forms the
basis of this dispute was an ad hoc project initiated due to public
interest as well as the
court order granted on 29 May 2015.
9.4 The Phase 2 project was therefore
dealt with in an ad hoc manner pursuant to the application filed by
Nucon under Case Number
[1797/2014]”.
19.3 “11.3 I confirm that the
Department is authorised by the National Treasury Practice Guidelines
to procure services by
other means than invitations for competitive
bids in, for example, cases of urgency, emergency or where early
delivery is of critical
importance or where immediate action is
necessary in order to avoid a dangerous and risky situation. The
accounting officer of
a department is then authorised to procure
services per quotation and negotiations or otherwise in any manner to
the best interest
of the State.
11.4 I submit that the agreement
entered into with Nucon, and the granting of the subsequent court
order, was necessitated by urgency
and where early delivery is of
critical importance and where immediate action was necessary in order
to avoid a dangerous and risky
situation”.
PRIMA FACIE RIGHT
20 Mindful that I am not here seized
with the mooted or impending review proceedings, I must therefore be
astute to say only enough
for purposes of the interim interdict
application. Therefore the final word on whether or not,
administratively speaking, the process
was attended by invalidity
will come from the review itself, which Tshenolo Resources postulated
it would lodge in a matter of
five days of a successful order.
21 It is in that context that the
procurement process must be viewed. In Allpay Consolidated Investment
Holdings (Pty) Ltd and Others
v Chief Executive Officer, South
African Social Security Agency, and Others 2014(1) SA 604 (CC) in
para 56 the Court held:
“F Approach to remedy
56. Once a finding of invalidity under
PAJA review grounds is made, the affected decision or conduct must be
declared unlawful and
a just and equitable order must be made. It is
at this stage that the possible inevitability of a similar outcome,
if the decision
is retaken, may be one of the factors that will have
to be considered. Any contract that flows from the constitutional and
statutory
procurement framework is concluded not on the state
entity’s behalf, but on the public’s behalf. The
interests of those
most closely associated with the benefits of that
contract must be given due weight. Here it will be the imperative
interests of
grant beneficiaries and particularly child grant
recipients in an uninterrupted grant system that will play a major
role. The rights
or expectations of an unsuccessful bidder will have
to be assessed in that context”.
See also Judicial Service Commission
and Another v Cape Bar Council and Another 2013(1) SA 170(SCA) at
177A-G (para13). Issues of
practicality may yet militate against the
setting aside of the agreement endorsed by Erasmus AJ.
22 There were vague rumblings, no more
than that, that Erasmus AJ may have been deliberately misled. I did
not get a whiff of that
in the papers. The applicant may have to
produce that evidence in the proposed review proceedings in due
cause, if it exists. This
case is certainly, at least on the facts
before me, a far cry from what has been stated in City of Tshwane
Metropolitan Municipality
v RPM Bricks (Pty) Ltd, 2008(3) SA (SCA) at
paras 14 and 15 where Ponnan JA remarks:
“[14] Moreover, s 38(5)
specifically prohibited the defendant’s council from delegating
or assigning those functions.
Here, of course, we are dealing not
merely with the form in which the statute requires a transaction to
be clothed, but with something
more fundamental. The statute
expressly confers sole power upon a specified entity, to the
exclusion of any other person or entity,
to extend or vary an
existing tender agreement. The linguistically plain meaning of the
section severely restricts the power (vires)
to enter into a
transaction of that kind to the defendant’s council.
[15] Section 217 of the Constitution
requires contracts for services or goods by an organ of state such as
the defendant to accord
with a system that is fair, transparent,
competitive and cost-effective. Against that backdrop, the mischief
that s 38 of the Act
seeks to prevent is plain. It is to eliminate
nepotism, patronage, or worse, and to entrust the council of the
defendant with a
sole power which is to be exercised independently by
it to achieve those ends. If the conclusion of contracts were to be
permitted
without any reference to the defendant’s council and
without any sanction of invalidity, the very mischief which the
legislation
seeks to combat could be perpetuated”.
23 As far as Tshenolo Resources’
locus standi is concerned, I am satisfied, on the facts and the
jurisprudence, that it was
entitled to bring this application. Mr
Wandile Bozwana, the deponent for Tshenolo Resources, states that he
was aware of the court
battle pertaing to Phase 1 and knew that Phase
2 would go on tender in due course. He intended to tender but the
wait was to be
in vain. If s 217 of the constitution has not been
complied with the citizenry is entitled to ask questions and if need
be to impugn
the circumvented process and by so doing to eliminate
nepotism, patronage or even corruption. See Ersofranki Pipelines
(Pty) Ltd
and One Onother v Mopani District Municipality and Eight
Others,
(2014) ZASCA 21
[2014] 2 All SA 493
(SCA).
24 In my view, for the aforegoing
reasons, the applicant, Tshenolo Resources, has not succeeded in
satisfying the requirements
of an interim interdict set out Setlogelo
v Setlogelo
1914 AD 221
at 227; and Knox D’Archy Ltd v Jamiesen
1996(4) SA 348 (SCA) at 360G-362G; and cases there cited.
25 Going forward, the remedy lies in
the hands of Tshenolo Resources. As far as the respondents are
concerned the interim prohibition
to implement the Phase 2 project of
the road construction/upgrade that I imposed when I reserved judgment
on 04 September 2015
hereby dissipates or is discharged with this
order.
26 In view thereof that Tshenolo
Resources is unsuccessful with its application, the costs will follow
the result. Although it was
mooted that I should order that the costs
of this application be costs in the review application such order
would not be competent
now that the interim relief is refused.
27 In the result I make the following
order:
The application by Tshenolo Resources
(Pty) Ltd, the applicant, for an interim interdict is dismissed with
costs.
F DIALE KGOMO
JUDGE PRESIDENT
Northern Cape High Court, Kimberley
Counsel:
For the Applicant: Adv. S Grobler
Instructed by: Duncan & Rothman
For the 1st Respondent: Adv. A
Stanton
Instructed by: Office of the State
Attorney
For the 2nd Respondent: Adv. C.D
Pienaar
Instructed by: Haarhoffs