About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Kwazulu-Natal High Court, Durban
SAFLII
>>
Databases
>>
South Africa: Kwazulu-Natal High Court, Durban
>>
2013
>>
[2013] ZAKZDHC 16
|
|
WJ Building & Civil Engineering Contractors CC v Umhlathuze Municipality and Another (4139/2013) [2013] ZAKZDHC 16; 2013 (5) SA 461 (KZD) (6 May 2013)
In
the KwaZulu-Natal High Court, Durban
Republic
of South Africa
Case
No : 4139/2013
In
the matter between :
WJ
Building & Civil Engineering Contractors CC
..............................................
Applicant
and
Umhlathuze
Municipality
.......................................................................
First
Respondent
PMPZ
Construction CC
...................................................................
Second
Respondent
Judgment
Lopes J
[1] During 2012 the first
respondent, the Umhlathuze Municipality, called for tenders for a
project known as ‘Mzingazi Village
Sewer : Phase 1’ (‘the
project’). The second respondent, PMPZ Construction CC, was the
successful tenderer.
[2] In this application
the applicant, W J Building & Civil Engineering Contractors CC,
who was an unsuccessful tenderer, seeks
an interdict restraining the
first respondent from giving effect to its award of the contract to
the second respondent and interdicting
the second respondent from
commencing or carrying out any work on the site. The relief is sought
pending the finalisation of the
applicant’s objection to the
appointment of the second respondent as the successful tenderer for
the project.
[3] The legal requisites
for an interim interdict, such as is sought by the applicant, were
set out in
Olympic Passenger Service (Pty) Ltd v Ramlagan
1957
(2) SA 382
(N). They are :
a prima facie right,
though open to some doubt;;
an injury actually
committed or a reasonable apprehension of irreparable harm;
that the balance of
convenience favours the applicant;
the absence of similar
protection by any other ordinary remedy.
With regard to the
balance of convenience, Holmes J stated at page 383 E - G :
‘
In
such cases, upon proof of a well grounded apprehension of irreparable
harm, and there being no adequate ordinary remedy, the
Court may
grant an interdict – it has a discretion,
to
be exercised judicially upon a consideration of all the facts.
Usually this will resolve itself into a nice consideration of
the
prospects of success and the balance of convenience – the
stronger the prospects of success, the less need for such balance
to
favour the applicant : the weaker the prospects of success, the
greater the need for the balance of convenience to favour him.
I need
hardly add that by balance of convenience is meant the prejudice to
the applicant if the interdict be refused, weighed against
the
prejudice to the respondent if it be granted.’
See also:
National
Treasury v Opposition to Urban Tolling Alliance
2012
(6) SA 223
(CC)
[4] The facts of this
matter may be summarised as follows :
tenders for the project
were called for at the beginning of 2012;
tenders were to be
evaluated on a 90/10 point scoring system in terms of the
Preferential Procurement Policy Framework Act, 2000
(‘the
PPPFA Act’);
the tender closing date
was the 23
rd
March 2012;
it is not disputed that
the applicant attended the requisite site meeting and delivered its
tender timeously;
the applicant’s
tender was the second lowest, in the price of R8 771 192,62,
but the lowest tenderer was disqualified
for delivering a
non-responsive tender;
on the 24
th
July 2012 the first respondent wrote to the applicant advising it
that the tender had been awarded to the second respondent whom
it
described as ‘the second highest contender’ at a price
of R9 654 683,64;
aggrieved at this award,
the applicant’s managing member, Willem Breedt wrote to the
respondent requesting a written explanation,
in terms of the
Promotion of Administrative Justice Act, 2000
, as to why the second
respondent’s tender offer had been accepted when it was not
the lowest tender. Various details such
as the name of the person
who carried out the evaluation of the tenders, the manner in which
the evaluation was done, etc were
requested by Breedt;
the first respondent
replied on the 20
th
August 2012 providing some of the
details requested. They recorded the basis, for the recommendation
by the evaluation committee,
that the project be awarded to the
second respondent as being :
‘
Council
found that the contractor is professional in their work and has the
capacity to deliver. Secondly, the National Treasury
database was
checked and it was found that the company is not registered as a
defaulter. Thirdly, due to the fact that the contractor
met the
minimum CIBD requirements as per the specifications in the tender, no
risk assessment was required.’
on the 21
st
August 2012 Breedt replied requesting certain documentation in order
to enable him to clarify the reasons why the tender of the
applicant
was not accepted;
Breedt records in his
founding affidavit that at that stage he intended pursuing an
internal appeal or objection on the applicant’s
behalf once he
had received the documents referred to in his letter of the 21
st
August 2012;
the first respondent
then wrote to Breedt on the 11
th
December 2012, curiously
referring to his letter of the 31
st
July 2012. That
letter appears to be a repeat of the letter sent to Breedt on the
20
th
August 2012 save that the date was altered to read
the 11
th
December 2012;
the next communication
between the parties was on the 19
th
March 2013 when
Endecon (Zululand) Trust, the supervising engineers on the project
wrote to Breedt recording that on the 13
th
March 2013 the
first respondent had instructed them to proceed with the tender
award to the second respondent at an inclusive
amount of
R8 771 192,62. Following a meeting with the second
respondent the site handover took place on the 18
th
March
2013;
on the 3
rd
April 2013 Breedt again wrote to the first respondent recording;
that the first
respondent had unilaterally lowered the bid of the second respondent
to an amount equal to the bid made by the
applicant as the lowest
tenderer;
the applicant had
formally objected in writing on the 31
st
July 2012 and
requested reasons for its non-appointment;
the first respondent had
replied, but failed to reply to the questions raised;
that the first
respondent had failed to provide some of the information sought by
the applicant, including a copy of the tender
evaluation report, an
explanation of how the evaluation report was prepared, etc;
that the first
respondent had not dealt with the applicant’s objection to the
original award and that the conduct of the
first respondent was
unlawful. The letter continues that unless the first respondent
replied to the applicant by the 5
th
April 2013 the
applicant would seek an interdict to suspend construction;
the applicant’s
attorneys then addressed the first respondent on the 17
th
April 2013 and the 19
th
April 2013 notifying them of the
pending application to be heard on Monday 22
nd
April
2013. The applicant contends that :
the project should have
been awarded to it;
the award by the second
respondent was in conflict with the 90/10 points system and the
invitation to tender, and was accordingly
irrational and unlawful;
on the 8
th
April 2013 representatives of the applicant became aware that the
second respondent was establishing itself on site. Despite
requesting an undertaking from the first respondent that work would
cease forthwith pending the outcome of this application,
no such
undertaking was given. The applicant accordingly brings this
application to interdict the first and second respondents
from
proceeding with the project.
[5] With regard to the
first requirement of an interdict, a prima facie case,though open to
some doubt, the applicant submits that
the award of the tender to the
second respondent was not in compliance with the 90/10 evaluation
scoring system. Ms
Annandale
SC who appeared for the applicant
submitted that it was important for me to consider the extent of the
breach because, on the test
as formulated in
Olympic Passenger
Services
, the stronger the applicant’s prospects of
success, the less the need for it to establish that the balance of
convenience
favours it.
[6] The first respondent
acknowledges that the second respondent was not the lowest bidder. It
appears, however, to have awarded
the tender on the basis that the
accounting officer of the first respondent would, in terms of the
Supply Chain Management Policy
of the first respondent, negotiate the
difference between the first respondent’s tender and the
applicant’s tender
– i.e. that the second respondent
would only get the tender if it agreed to do the job for the same
price as the applicant.
[7] In the invitation to
tender put up by the first respondent, it indicates that tenders will
be evaluated in terms of the 90/10
method for amounts above
R1 000 000 as set out in the PPPF Act. A further document
was put up, signed by the city manager
which purports to notify
tenderers that the request for tenders is subject to the first
respondents’ Preferential Procurement
Policy and will be
evaluated in terms of the 90/10 method as set out in the PPPF Act.
[8] Immediately following
the tender application in the annexures to the first respondent’s
answering affidavit, is an extract
from the Preferential Procurement
Regulations which were published under Government Notice R725 in
Government Gazette 22459 of
the 10
th
August 2001.
Regulation 9 of those regulations is quoted by the first respondent
which provides that a contract may, on reasonable
and justifiable
grounds, be awarded to a tenderer that did not score the highest
number of points.
[9] The invitation to
tender was apparently published on the 5
th
March 2012. This followed
a resolution of the Bid Specification Committee on the 27
th
February 2012,
that the tender be
approved and published. However, pursuant to the provisions of a
judgment in this division declaring certain
of the Preferential
Procurement Regulations of 2001 to be invalid, new Preferential
Procurement Regulations were published under
Government Notice R502
in Government Gazette 34350 of the 8
th
June 2011, which came
into effect on the 7
th
December 2011
1
.
The first respondent was accordingly bound to apply only those
regulations in inviting and considering tenders. The former
regulation
9,
referred
to by the first respondent as support for its right not to award the
tender to the tenderer scoring the highest total number
of points,
does not appear in the
new regulations. Instead, clause 7 of the new regulations provides :
‘
7.
Award of contracts to tenderers not scoring the highest number of
points
A contract may be
awarded to a tenderer that did not score the highest total number of
points, only in accordance with section
2(1)(f) of the Act.’
The Act referred to was
the PPPF Act, and s 2 provides :
‘
(1)
An organ of state must determine its preferential procurement policy
and implement it within the following framework :
...
the specific goals may
include
contracting with
persons, or categories of persons, historically disadvantaged by
unfair discrimination of the basis of race,
gender or disability;
implementing the
programmes of the Reconstruction and Development Programme as
published in Government Gazette No 16085 dated
23 November 1994;
any specific goal for
which a point may be awarded, must be clearly specified in the
invitation to submit a tender;
the contract must be
awarded to the tenderer who scores the highest points, unless
objective criteria in addition to those contemplated
in paragraphs
(d) and (e) justify the award to another tenderer;’
[10] The extract of the
minutes of the Bid Adjudication Committee, put up as an annexure by
the first respondent to its answering
affidavit, does not deal with
the factors which were considered by the Bid Adjudication Committee,
but rather the result at which
the committee arrived. The Bid
Adjudication Committee clearly relied upon the recommendation of the
Bid Evaluation Committee, which
recorded that the applicant had been
the highest scoring tenderer with the lowest price, but should not be
awarded the contract
because :
the applicant had
benefitted over the last five years on two major projects worth
approximately R49.5 million; and
the council had
expressed the need to encourage the rotation of service providers
who carry out work for the council.
It accordingly
recommended that the tender be awarded to the second respondent as
‘
the second highest contender scorer’
,
but only on the basis that it would effectively do the job at the
same price as the applicant.
[11] In its letter to the
applicant dated 20
th
August
2012 the first respondent recorded that the second respondent was
professional in its work and had the capacity to deliver.
The second
respondent was not registered as a defaulter with the National
Treasury,
and in addition,
that
as it met the minimum CIDB requirements as per the specifications in
the tender, no risk assessment was required. These matters
were set
out in order to attempt to comply with the provisions of clause 29 of
the Supply Chain Management Policy.
[12] The first
respondent’s rationale for not awarding the contract to the
applicant although it was the highest scoring tenderer,
must
be based on objective criteriawhich are reasonable and justifiable.
The reasons put forward by the evaluation committee are
arbitrary,
and do not appear in the tender invitation advertisement, nor in the
PPPF Act or regulations. They are not evident from
the first
respondent’s Preferential Procurement Policy. In addition the
arbitrary use of any measure to determine the success
or failure of a
bid is contrary to the functions required of the Bid Evaluation
Committee by the first respondent’s Supply
Chain Management
Policy. The fact that the applicant may have benefitted from previous
projects is not, of itself, a reason for
rejecting its bid. The
deciding number of previous projects, for example, is an arbitrary
decision by the Bid Evaluation Committee.
The need to encourage the
rotation of service providers, which may be a legitimate objective of
the first respondent, is nowhere
expressed as a factor which it will
take into account in determining the successful bidder. It should
have been reflected in the
invitation to bid, otherwise tenderers
would not have been able to consider and deal with that item. Other
factors are catered
for in the weighting system provided for in the
PPPF, the regulations thereto, and the first respondent’s
Preferential Procurement
Policy. In the circumstances,
the
award of the project to the second respondent seems to have been made
on an unfair premise, and the applicant has established
its
prima
facie
case.
[13] Mr
Kuboni,
who appeared for the first respondent,
submitted
that the applicant was precluded from bringing the application
because it was out of time, having failed to lodge a written
objection as required by paragraph 50 of the Supply Chain Management
Policy,
which requires that persons aggrieved by
decisions taken in the implementation of that system may lodge
written objection or complaint
against the decision within 14 days
thereof.
[14] Mr
Kuboni
submitted that the letters of the 31
st
July 2012 and the 21
st
August 2012 do not constitute written complaints. They
were rather requests for information. In particular he pointed out
that the
letter of the 21
st
August 2012 concluded with the following :
‘
W
J Construction requires the above-mentioned documentation to inform
us of the specific reasons why our tender was not accepted
to ensure
that we will be able to compete on future tenders for the
Municipality.’
While there is some merit
in that submission, Ms
Annandale
pointed out that each of the letters concerned was
headed, inter alia, ‘
Objection to
appointment of PMPZ Construction and reasons for non-appointment’
.
[15] In addition, the
letter of the 31
st
July
2012 warns the first respondent,
that its failure
to provide information within the time stipulated by it,
would
leave the applicant with no option other than to pursue alternative
causes of action.
[16] In my view the
applicant has established that it lodged a written complaint within
the 14 day period as provided for in paragraph
50.
[17] With regard to an
injury actually committed or a reasonable apprehension of irreparable
harm, the applicant points to the fact
that the right which it had to
be treated fairly in the adjudication of the tender bid, and which
was frustrated by the conduct
of the first respondent’s
representatives. I have no difficulty that this requirement has been
established.
[18] With regard to the
absence of any similar protection by any other ordinary remedy, the
applicant’s ability to recover
damages from the first
respondent, were it to be found that the tender was improperly
awarded to the second respondent, is limited.
Where an unsuccessful
tenderer suffers delictual damages that are purely economic in nature
and those damages are suffered because
of a bona fide and negligent
failure to comply with the requirements of administrative justice in
awarding a tender, it has no
claim for delictual damages.
See
:
Steenkamp
NO v Provincial Tender Board, Eastern Cape
2006 (3) SA 151
(SCA)
para 46.
[19] The pursuit of
damages was not, however, the only remedy which was available to the
applicant. There were internal processes
which it could have
followed. Indeed, that is what Ms
Annandale
submits should
have happened. She submits that the applicant lodged a proper
objection in writing on the 31
st
July 2012, as was
required by the Supply Chain Management Policy document of the first
respondent, and nothing was done by the
first respondent. This
submission seems to be a correct reflection of what happened.
[20] With regard to the
balance of convenience, Ms
Annandale
submits that the
applicant acted in accordance with the Supply Chain Management Policy
of the first respondent, and any delays
in the process were solely
attributable to the conduct of the first respondent in not supplying
the particulars of their decision
as were sought by the applicant.
She submits that in reality the award of the tender took place when
Endecon were instructed by
the first respondent to proceed with the
tender award which had been made to the second respondent. This
instruction was given
on the 13
th
March 2013.
[21] Mr
Kuboni
referred to the allegations in the first respondent’s answering
affidavit concerning the inevitable delays which would be
occasioned
by an interdict and a review process of the decision to award the
tender to the second respondent. These include :
the fact that there was
no sewer system in the area, the construction of which was the
object the tender, and which was of growing
concern to the
community;
in the Mzingazi Village
people were sub-dividing their plots and selling them without title
deeds to third parties causing pressure
on the system of pit toilets
used by the local community. There was the concomitant danger that
Mzingazi Lake alongside which
the village exists, could become
contaminated by human waste. This is particularly concerning because
the lake provides the drinking
water to Richards Bay and surrounding
areas;
in addition, the project
is financed through funding from the National Treasury as part of
the municipal infrastructure grant
and it was contemplated at the
time of the award of the contract that the money from National
Treasury would be used during the
2012 and 2013 financial years.
There is a danger that the money may not be re-allocated for the
purpose of the sewer project
if it is not used by the end of June
2013.
[22] It is common cause
that the second respondent is already on site and has moved some
materials on site. There is also some concern
that the local
community may react unfavourably to the removal of the tender from
the second respondent, because the second respondent
is wholly
comprised of historically disadvantaged individuals and the community
has been informed of the project through the necessary
consultations
conducted by ward councillors. These problems are, however, of the
first respondent’s making.
[23] The conduct of the
applicant in pursuing its complaint is relevant to deciding the
question of the balance of convenience.
Relevant aspects of its
conduct are :
although the applicant
registered its complaint within the 14 day period – i.e. on
the 31
st
July 2012 – it did not follow through on
its objections in a manner which should have been adopted by an
individual concerned
that their legal rights had been ignored;
the Supply Chain
Management Policy document clearly provides for the appointment of
an independent person to adjudicate complaints,
and paragraph 51 of
the policy requires that the accounting officer appoint such a
person to resolve any dispute. In the event
that such a dispute is
not resolved, a complainant may refer the matter to the relevant
provincial treasury if no response is
forthcoming within 60 days.In
the present instance, having addressed its concerns on the 31
st
July 2012, the applicant eventually launched this application for an
interdict as a matter of urgency on the 19
th
April 2013,
some nine months after the award of the tender;
Ms
Annandale
has
pointed to the first respondent’s refusal fully to answer the
queries of the applicant as a cause of any delay. Both
parties share
some blame here. The first respondent did not, despite repeated
requests, provide the reasons for its decision,
and the applicant
could have acted with greater promptitude.
[24] In assessing the
harm which would be caused to the first respondent if the interdict
were to be granted, there is no doubt
that the exhausting of the
internal remedies available to the applicant and any subsequent
possible legal procedures would take
some time to be finalised. The
delays in the project, occasioned by various factors, have seen it
drag on since the original plans
in 2008, and were not due to any
fault on the part of the applicant. The second respondent has only
been on site since the latter
half of March 2013, approximately a
month ago.
[25] Ms
Annandale
provided me with two draft orders and invited me to insert strict
time limits so as to alleviate any such prejudice. I agree that
the
procedural conduct of a review can be accelerated to minimise any
prejudice caused by the delay of the implementation of the
project.
[26] I am mindful of the
fact that the applicant’s right to pursue a review or other
remedy against the first respondent may
be cold comfort in
circumstances where the project will probably already have been
completed by the time those steps are finalised.
Where there has been
an injustice and the matter can be remedied by a review, the
applicant should be given the opportunity. In
my view the balance of
convenience favours a solution ensuring a just result.
[27] In the circumstances
I make the following order :
1. The applicant is
directed to institute a review application against the proceedings
relating to the evaluation and adjudication
of tenders in respect of
contract 8/2/1/151: Mzingazi Village Sewer : Phase 1 and the award of
that contract, within five days
of the date of this order.
2. The first respondent
is directed to produce a record of the proceedings referred to in
paragraph 1 above within ten days of delivery
of the review
application.
3. The applicant may
supplement its review application within five days of delivery of the
record.
4. The respondents in the
review application are directed to deliver their answering
affidavits, if any, within ten days of the
expiry of the time period
referred to in paragraph 3.
5. The applicant is
directed to deliver its replying affidavit, if any, in the review
proceedings within five days of the receipt
of the answering
affidavits.
6. Pending the
finalisation of the review referred to in paragraph 2 above:
6.1 the first respondent
is hereby interdicted from giving effect to its award of the contract
to the second respondent and allowing
the second respondent to
proceed or carry on with any work on site;
6.2 the second respondent
is interdicted from commencing or carrying on any work on site.
7. In the event of the
applicant failing timeously to institute review proceedings as
directed in terms of paragraph 2 above, this
interdict will ipso
facto lapse and be of no further force and effect.
8. The costs this
application are reserved for decision by the court hearing the review
application.
Date of hearing : 26
th
April 2013
Date of judgment : 6
th
May 2013
Counsel for the Applicant
: A M Annandale SC (instructed by Cox Yeats)
Counsel for the
Respondent : W S Kuboni (instructed by Ngcaweni Attorneys)
1
Sizabonke
Civils CC t/a Pilcon Projects v Zululand District Municipality and
others
2011 (4) SA 406
(KZP)