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[2012] ZAGPPHC 50
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ZTE Mzanzi (Pty) Ltd v Telkom SA Ltd and Others (72499/2011) [2012] ZAGPPHC 50 (30 March 2012)
NOT
REPORTABLE
IN
THE NORTH GAUTENG HIGH COURT. PRETORIA /ES
(REPUBLIC
OF SOUTH AFRICA)
CASE
NO: 72499/2011
DATE:30/03/2012
IN
THE MATTER BETWEEN
ZTE
MZANZI (PTY)
LTD
.........................................................................................
APPLICANT
AND
TELKOM
SA
LIMITED
...................................................................................
1st
RESPONDENT
HUAWEI
TECHNOLOGIES AFRICA (PTY) LTD
........................................
2nd RESPONDENT
ALCATEL-LUCENT
(PTY)
LTD
.....................................................................
3rd
RESPONDENT
JUDGMENT
PRINSLOO.
J
[1]
This application for interim interdictory relief was initially
enrolled to be heard as an urgent application on 24 January 2012.
[2]
The application was removed from the roll and brought before me, on 9
March 2012, as a special motion, presumably because of
the voluminous
nature of the documentation.
[3]
The question of urgency remained in issue on the papers and in terms
of the heads of argument filed, but at the commencement
of the
proceedings before me, I was informed that it would no longer be
argued on behalf of the first respondent that the matter
was not
urgent. The third respondent never indicated that it was attacking
the question of urgency and the second respondent is
abiding the
outcome of this case and was not represented during the hearing.
[4]
Where the case undoubtedly has an element of urgency about it, and
where large amounts of money are involved, both flowing from
the
tender process (forming the subject of this case), and from the work
to be done pursuant to the tender process, an attempt
will be made to
prepare this judgment on an urgent basis.
[5]
Before me, Mr Dreyer SC, assisted by Mr Mphaga SC appeared for the
applicant. Mr Swart SC, assisted by Ms Chabedi, appeared
for the
first respondent and Mr Vetten appeared for the third respondent.
Introduction
and background
[6]
According to allegations made in the founding affidavit, the first
respondent ("Telkom"), through the years, developed
a
specification for two-wire analogue
Plain
Old Telephone Service ("POTS") services. The specification
is generally referred to as Telkom Spec 1607 version
4.1 ("Telkom
Spec"). The specification was developed especially for Telkom,
and consists of certain characteristics including
those applying to
pay phones, normal phones and so-called "loop impedance".
[7]
The telecommunication infrastructure and technology of Telkom has
over the years been overtaken by the advances in telecommunication
technology when compared to its peers locally and worldwide. Telkom's
infrastructure has aged and cannot be of more use in creating
new and
advanced telecommunication services and products for its current and
future customers. In order to compete with other local
and
international telecommunication service providers, Telkom experienced
the need to upgrade and standardise its telecommunication
infrastructure.
[8]
In order to achieve the above-named objective, Telkom issued a
so-called Request For Proposals ("RFP") in about July
2011
with closing date in August 2011. A first RFP was cancelled and
replaced with another one. Nothing turns on this.
[9]
RFP 0328/2011 was accompanied by all the necessary specifications and
requirements to enable interested Bidders to submit their
proposals
in order to enter into a service level contract to render the
required services. The particular services required go
under the name
of Technical Specification for Multi-Service Access Node ("MSAN").
[10]
The relevant documentation includes the Standard Terms and
Conditions, RFP conditions for RFP no 0328/2011 (volume 1 part 3),
information schedule for RFP no 0328/2011 and the RJFP conditions for
the first RFP, no 0323/2011 were also attached to the founding
affidavit. However, the relevant documentation and conditions are
those relating to the second RFP, no 0328/2011, dated July 2011.
The
closing date for this second RFP was 8 August 2011.
[11]
The applicant lodged its bid timeously.
[12]
On 21 November 2011 Telkom informed the applicant in writing that its
bid was unsuccessful.
[13]
On 25 November 2011 the applicant's attorney wrote to Telkom
challenging the applicant's disqualification and asking Telkom
to
undertake not to proceed to allow "those that are regarded as
successful Bidders" to conclude laboratory tests and
also not to
allow such Bidders to demonstrate their solution in the Telkom
network in order to achieve Technical Operational Readiness
until
such time as an envisaged arbitration process to decide the
correctness (or lack thereof) of the applicant's disqualification
had
been finalised.
[14]
The undertakings were requested to be provided by 1 December 2011
failing which this application for interim relief would be
launched.
[15]
On 8 December, Telkom wrote to the applicant declining to furnish the
undertaking and advancing an argument that the proposed
arbitration
proceedings were not available to the applicant, as the procedure was
not applicable to the non-acceptance of a Bidder's
submission.
[16]
This application for urgent interim interdictory relief pending
fmalisation of the arbitration process relied upon by the applicant
was launched at the end of December 2011 and served on or about 3
January 2012. As I have pointed out, the application was removed
from
the roll on 24 January 2012 and came before me as a special motion on
9 March 2012.
[17]
In their heads of argument, counsel for the applicant pointed out
that the tender was still in a pilot phase which is part
of the
tender evaluation process. The second and third respondents, as
"successful short-listed Bidders" are still required
to
demonstrate their solution. Should they fail to achieve readiness
within the time scales, this will afford Telkom the right
to instruct
the second and third respondents to remove their equipment and to
restore the site to its original position at their
own cost and risk.
This much appears to be supported by documentation attached to the
opposing affidavit filed on behalf of the
third respondent.
I
add that during the proceedings before me. I was informed by counsel
for the third respondent that a service level agreement had
in the
meantime been entered into. No details were provided, neither were
any details mentioned in the opposing papers or in the
heads of
argument submitted on behalf of any of the respondents.
The
last formal allegation on the subject as contained in the opposing
affidavit of the third respondent, dated 13 January 2012.
and with
reference to the supporting documentation which I mentioned, reads as
follows:
"...
the first respondent has already invited the third respondent to
proceed with the pilot project ... the third respondent
has already
invested time, money and personnel and would be severely prejudiced
if this process is to grind to a halt if the relief
is granted to the
applicant."
The
relief sought
[18]
The relevant paragraphs in the notice of motion read as follows:
"2.
That the first respondent be interdicted and restrained from
implementing tender and/or request for proposal 0328/2011
forthwith,
in any manner whatsoever, including concluding any service level
agreements with the second and third respondents. 3.
That prayer 2
shall operate as an interim interdict with immediate effect pending
the finalisation of the dispute resolution process
that has been
commenced by the applicant in terms of clause 43.3 and 43.4 of the
Standard Terms and Conditions (volume 1 part 4)
read with clause
1.2.2 of the RFP 0328/2011."
[19]
There is also a prayer for costs against any party opposing the
application.
[20]
The relief sought is not aimed at obtaining final relief amounting to
tenders awarded to the second and third respondents being
set aside
and awarded, instead to the applicant. The interim relief sought is
aimed at ultimately succeeding in a dispute resolution
process
resulting in the applicant's disqualification from the tender process
being reversed so that the applicant can compete
further with the
view to ultimately achieving success as a tenderer.
The
central issue between the parties
[21]
The central issue is whether or not the relief sought by the
applicant is legally competent. Differently put, whether or not
the
dispute resolution process which the applicant wishes to embark upon
whilst protected by the interim interdict sought, is available
to the
applicant and can lawfully be implemented under these circumstances.
[22]
It is convenient to quote the provisions of clause 43 of the Standard
Terms and Conditions mentioned in prayer 3 of the notice
of motion:
"43. Dispute resolution
43.1
If any dispute arises out of or in connection with this Agreement, or
related thereto, whether directly or indirectly, the
Parties must
refer the dispute for resolution firstly by way of negotiation and in
the event of that failing, by way of mediation
and in the event of
that failing, by way of arbitration. The reference to negotiation and
mediation is a pre-condition to the Parties
having the dispute
resolved by arbitration.
43.2
A dispute within the meaning of this clause exists once one Party
notifies the other in writing of the nature of the dispute
and
requires the resolution of the dispute in terms of this clause.
43.3
Within 10 (ten) business days following such notification the Parties
shall seek an amicable resolution to such dispute by
referring such
dispute to designated representatives of each of the parties for
their negotiation and resolution of the dispute.
The representatives
shall be authorised to resolve the dispute.
43.4
In the event of the negotiation between the designated
representatives not resulting in an agreement signed by the parties
resolving the dispute within 15 (fifteen) business days thereafter,
the Parties must refer the dispute for resolution by way of
mediation
in accordance with the then current rules of the Arbitration
Foundation of Southern Africa ('AFSA').
43.5
In the event of the mediation envisaged in 43.4 failing in terms of
the rules of AFSA, the matter must, within 15 (fifteen)
business days
thereafter, be referred to arbitration as envisaged in the clauses
below.
43.6
The periods of negotiation or mediation may be shortened or
lengthened by written agreement between the parties.
43.7
Each party agrees that the Arbitration will be held as an expedited
arbitration in Sandton in accordance with the then current
rules for
expedited arbitration of AFSA by 1 (one) arbitrator appointed by
agreement between the parties, including any appeal
against the
arbitrator's decision. If the parties cannot agree on the arbitrator
or appeal arbitrators within a period of 10 (ten)
business days after
the referral of the dispute to arbitration, the arbitrator and appeal
arbitrators shall be appointed by the
Secretariat of AFSA.
43.8
The provisions of this clause shall not preclude any party from
access to an appropriate court of law for interim relief in
respect
of urgent matters by way of an interdict, or mandamus pending
finalisation of this dispute resolution process for which
purpose the
parties irrevocably submit to the jurisdiction of a division of the
high court of the Republic of South Africa.
43.9
The references to AFSA shall include its successor or body nominated
in writing by it in its stead.
43.10
This clause is a separate, divisible agreement from the rest of this
agreement and shall remain in effect even if the agreement
terminates, is nullified or cancelled for whatsoever reason or
cause."
[23]
It is clear from a general reading of the Standard Terms and
Conditions that the dispute resolution process prescribed in clause
43 is intended to find application between parties to a service level
agreement, once entered into. This much was also common cause
between
counsel during the debates before me.
[24]
On this basis, of course, the dispute resolution process prescribed
in clause 43 is not available to the applicant, who has
not concluded
a service level agreement with Telkom as a final successful tenderer.
[25]
However, one has to have regard to certain provisions to be found in
the RFP conditions for RFP no 0328/2011.
[26]
Clause 1.2.2 of these RFP conditions (under the heading
'interpretation of requirements') reads as follows:
"1.2.2
Should any dispute arise as a result of this RFP and/or the
subsequent contract, which cannot be settled to the mutual
satisfaction of the Bidders and Telkom, it shall be dealt with in
terms of clause 43 of the Standard Terms and Conditions (volume
1
part 4)."
[27]
In my view, clause 1.2.2 ("1.2.2") can and should be
interpreted as providing for, inter alia, the following:
(i)
Any dispute arising as a result of the RFP between a Bidder and
Telkom, which cannot be settled, shall be dealt with in terms
of
clause 43 of the Standard Terms and Conditions ("clause 43").
(ii)
This is quite apart from any dispute which may arise from the
"subsequent contract" which must be the service level
agreement and the dispute must then be between the contracting
parties, ie Telkom and the service provider.
(iii)The
dispute arising as a result of the RFP must, clearly, involve the
Bidders, or an individual Bidder on the one side and
Telkom on the
other side. A Bidder taking part in the RFP is not yet a contracting
party.
Where clause 43 provides for the dispute resolution process
between the contracting parties, this is clearly a deviation from
that
provision in the sense that 1.2.2 opens the door for a dispute
resolution process conducted along the lines of the clause 43
procedure
between Bidders and Telkom and before the "subsequent
contract" has been entered into. This must be so, because the
dispute
here applicable arises from the RFP which is a process
conducted well before the "subsequent contract" is entered
into.
(iv)
In my view, therefore, the only reasonable interpretation to be
attached to1.2.2, is that provision is made for two separate
dispute
resolution procedures: the one flowing from any dispute arising as a
result of the RFP between Bidders and Telkom and the
other flowing
from the subsequent contract between the ultimate service provider
and Telkom. Both these processes are to be conducted
along the lines
and in terms of the time frames to be found in clause 43.
[28]
It is against this background that the applicant's attorney wrote a
long letter to Telkom on 25 November 2011 within days of
having been
informed officially by Telkom, on 21 November, that, regrettably, the
applicant "was unsuccessful in this RFP".
[29]
In his letter, annexure "TM17" to the founding affidavit,
the applicant's attorney described the disqualification
of the
applicant as "unlawful" and provided a lengthy motivation
for making this allegation. I don't propose dwelling
on all the
details.
[30]
Towards the end of the lengthy letter, the applicant's attorney
states the following: "Notification in terms of clause
43 of the
Standard Terms and Conditions
39.
We hereby advise that, our client hereby declares a dispute, as
stated above, and Telkom is hereby notified of the provisions
of
clause 43.1 of the Standard Terms and Conditions (volume 1 part 4).
40.
We further advise that our Mr Temba Langa is the designated person
who has the authority to negotiate and to enter into resolution
of
the dispute, in compliance with clause 43.3 of the Standard Terms and
Conditions."
This
is the "dispute resolution process that has been commenced by
the applicant" as described in prayer 3 of the notice
of motion.
[31]
In a lengthy letter dated 8 December 2011 Telkom's attorneys defend
their client's decision to disqualify the applicant and
also, as I
have mentioned, declines to furnish the undertakings which I have
described. The letter also contains an allegation
that clause 43 "is
not applicable to the non-acceptance of a Bidder's submission".
[32]
In my view it is clear from these exchanges that a dispute ("any
dispute" will suffice) has arisen as a result of
the RFP between
the applicant as a Bidder and Telkom. In my view, this is a dispute
as intended by the provisions of 1.2.2.
I
am also of the view that the "dispute" now7 exists because
it was duly declared in the letter of 25 November 2011, as
I
described, in compliance with the requirements of clause 43.2.
[33]
It is on this basis that the applicant contends that it is entitled
to invoke the clause 43 procedure and also to obtain interim
interdictory relief pending finalisation of this particular dispute
resolution process as provided for in clause 43.8.
[34]
In attacking the applicant's stance that it is entitled to invoke the
clause 43 procedure, Mr Swart, firstly, argued that in
order to rely
on 1.2.2, the applicant's case must necessarily be that there is a
contractual relationship between it and Telkom
in terms of which the
parties are contractually obliged to follow the clause 43 process in
the event of a dispute arising between
them. He argued that there are
only two sources of the right to go to arbitration namely a statutory
provision (which does not
apply here) or a contract. Mr Swart also
referred to the following passage to be found in LA WSA 2nd ed volume
1 para 561:
"Before
an arbitral tribunal can have jurisdiction, there must be a dispute
covered by a valid arbitration agreement."
[35]
In developing his argument further, Mr Swart referred me to clause
1.1.3 of the information schedule for RFP no 0328/2011 volume
1 part
2 which reads as follows:
"The
Bidders accepts that this document and its associated documents do
not constitute any contractual relationship between
Telkom and the
Bidders and the acceptance of any RFP/s by Telkom will not constitute
any contractual relationship between Telkom
and any Bidders. The
acceptance of any RFP/s will only indicate without any obligations on
the part of either Telkom and/or a Bidders,
the willingness of such
Parties to enter into negotiations, which may or may not result in a
contract."
Accordingly,
so the argument went, where there is clearly no contract between the
applicant and Telkom, the last remaining source
for referring a
matter to arbitration is absent so that the matter cannot go on
arbitration in terms of the clause 43 procedure.
[36]
I cannot accept this argument. The RFP information schedule only
states the obvious, namely that at RFP stage there is no contract
yet
between Telkom and any Bidder, neither was such a contract alleged or
relied upon by the applicant. The only "contract"
or
"contractual relationship" applicable is the clear
stipulation in 1.2.2 that "any dispute" arising as a
result
of the RFP which cannot be settled will be dealt with in terms of
clause 43. Both Telkom and the applicant, as a Bidder,
must be bound
by this stipulation or "contract" which, in my opinion,
constitutes a valid "arbitration agreement"
on which either
Telkom or a Bidder in the position of the applicant can base its
demand for the matter to go on arbitration (preceded
by negotiation
and mediation) along the lines of the clause 43 procedure and time
frames.
[37]
Under these circumstances I cannot agree with Mr Swarfs argument that
there is no basis in law to compel Telkom to go the clause
43 route
and that, in the circumstances, I should make nothing of 1.2.2
because it is meaningless.
[38]
Mr Swart argued that the applicant's remedy is to go on review. There
may well be something to say for this submission, but
it seems to me
that it was the intention of the authors of 1.2.2 to create a cost
effective and speedy dispute resolution mechanism
presumably not to
unduly delay the whole tender process. Moreover, 1.2.2 is couched in
mandatory language where it provides that
"any dispute"
arising as a result of the RFP shall be dealt with in terms of clause
43.
In
any event, I consider it highly unlikely that a court of review will
be able to decide this dispute without the benefit of hearing
expert
evidence: the record contains hundreds of pages of documents brimming
with the most technical of subjects which, in my respectful
view,
will be very difficult for a court of law to digest and understand
without the benefit of expert testimony. I refer, for
example, to
annexures "TM6" to "TM12" on ppl 31-323 of the
record.
[39]
The second (and alternative) leg of Mr Swart's argument was that if a
"limited contract", to coin the phrase used
in the heads of
argument, came into existence between Telkom and the Bidders (a
reference to 1.2.2) such an agreement must be interpreted
in the same
manner as any other written agreement, namely by following the
contextual approach.
[40]
It was argued that Telkom is an organ of state, whose award of
tenders is governed by section 217 of the Constitution, 1996.
This
requires the tender procedure to be in accordance with a system which
is fair, equitable, transparent, competitive and cost
effective. It
was argued that 1.2.2 should be interpreted to mean that "the
Bidders" referred to are to be seen as a
unit and the dispute
contemplated in 1.2.2 must be between all the Bidders as a group and
Telkom. If it were otherwise, and only
a particular Bidder having a
dispute with Telkom were to be allowed to embark on the clause 43
procedure it would mean that Telkom
and this disgruntled Bidder are
at liberty to settle the dispute to their mutual satisfaction, for
example, by agreeing that Telkom
will retract its disqualification of
the applicant's bid and its award of the bid to the second and third
respondents. In my debate
with Mr Swart he conceded that the relief
sought is not aimed at and will not result in the award of the bid
(however far it may
have progressed up to now) to the second and
third respondents being retracted. It was argued that on the
applicant's interpretation
of 1.2.2, Telkom and the applicant will be
at liberty to seek amicable solutions to their dispute to the
exclusion of the other
Bidders. I cannot agree with this submission.
It seems to me that the other Bidders, as interested parties, ought,
and probably
will, be allowed to be heard and to make representations
in support of their own cause. It was argued that such a state of
affairs
will fly in the face of the requirements of section 217 of
the Constitution. In my view, it is equally arguable that to close
the
door to a disgruntled bidder who may have a valid complaint, may
also offend against the requirements of section 217 of the
Constitution.
The
main thrust of this alternative leg of Mr Swarfs argument, if I
understand it correctly, is that on his interpretation of 1.2.2
(which I have attempted to briefly illustrate) the clause 43
procedure is also not open to the applicant. For the reasons
mentioned,
I can also not accept the second leg of the argument. On a
general reading of the RFP conditions (which contain 1.2.2) it is
clear
that reference to "the Bidders" which is found in
many clauses, relates primarily to an individual Bidder and not to
all the Bidders as a group or a unit. For example, clause 1.4.5
provides that "Telkom may request documentary proof of any
information supplied by the Bidders. Failure to comply with request
will lead to disqualification." Clause 1.4.6 provides
that
"Should Telkom consider it necessary, Telkom will visit the
Bidder's customer sites." There are many other examples.
[41]
I turn briefly to Mr Vetten's argument on this central issue and his
proposed interpretation of 1.2.2.
[42]
Mr Vetten also, as did Mr Swart, relied on the provisions of clause
1.1.3 (already quoted) of the RFP information schedule
which
stipulates that the acceptance by a Bidder of the RFP and associated
documents does not constitute any contractual relationship
between
Telkom and the Bidders and the acceptance of any RFP/s by Telkom will
not constitute any contractual relationship between
Telkom and any
Bidders.
I
have already dealt with this argument.
[43]
The main thrust of Mr Vetten's argument, if I understood it
correctly, was that where clause 43 presupposes the existence of
a
contract between Telkom and a service provider, and where this does
not yet exist at RFP stage, a disgruntled Bidder and party
to a
dispute arising as a result of the RFP cannot invoke the clause 43
procedure.
I
have already dealt with this subject when interpreting 1.2.2 as
providing for two occasions when clause 43 can be invoked, namely
when any dispute arises as a result of the RFP (where no contract is
yet in existence) and/or when any dispute arises as a result
of the
"subsequent" contract which, if I understand the
definitions contained in the Standard Terms and Conditions, of
which
clause 43 forms part, correctly, would be the eventual service level
agreement entered into between Telkom and the selected
service
provider. The reasons for coming to this conclusion, appear from my
interpretation, supra, of 2.1.1. In my view, Mr Vetten's
approach
cannot be reconciled with the provisions of 1.2.2 which allow for
clause 43 to come into play should any dispute arise
as a result of
the RFP on the one hand and/or the "subsequent contract" on
the other hand. To me, these are two different
situations, the one
providing a dispute resolution procedure to solve a pre-contract
dispute and the other to solve a dispute arising
after the contract
has been entered into.
Moreover.
Mr Vetten's argument, in my view, contains no explanation for the
provision, in 1.2.2, of a dispute between the Bidders
and Telkom
being referred for resolution in terms of clause 43. The Bidders are
clearly not yet parties to the final service level
agreement.
[44]
In the circumstances, I cannot accept the submissions of Mr Vetten on
this central issue.
[45]
It follows from the aforegoing that I have come to the conclusion
that this central issue is to be decided in favour of the
applicant,
namely that there is a dispute within the meaning of 1.2.2 which can
be referred for resolution in terms of the mechanisms
prescribed by
clause 43.
[46]
At this point it is also convenient to revisit the provisions of
clause 43.8 which stipulate that a party to such a dispute
may
approach a court for interim relief by way of interdict or mandamus
pending finalisation of the dispute resolution process.
A
prima facie right and "the merits" of the disqualification
of the applicant by Telkom which is to form the subject of
the
dispute resolution process
[47]
It was submitted on behalf of the applicant, correctly in my view,
that there is a clear, live dispute between the parties
as to the
merits of the disqualification of the applicant's tender, and whether
or not Telkom was justified in so disqualifying
the applicant. The
existence of such a dispute is not denied on behalf of the
respondents.
[48]
I also agree with the submission by counsel for the applicant that if
it is found that the applicant is entitled to embark
on a dispute
resolution process as intended by clause 43, it is for the arbitrator
to resolve the dispute and to decide whether
or not the
disqualification was merited. Counsel for the applicant submit in the
heads of argument that it is clear that the merits
relating to the
disqualification of the applicant's bid deal with complex technical
issues which cannot finally or conclusively
be decided on these
papers, particularly not at interim interdict stage.
[49]
In the letter of 8 December 2011 containing Telkom's attempted
justification of the disqualification in the face of the applicant's
declaration of a dispute in the spirit of clause 43 in a letter of 25
November, Telkom's attorney points out that the tender complied
with
the commercial Critical Criteria but did not comply with the
Technical Critical Criteria as set out in clause 2.1.2 of the
RFP
conditions.
[50]
A mere glance at the wording of clause 2.1.2 reveals the technical
nature of the dispute and the need to refer it to a suitably
qualified mediator or arbitrator for resolution:
"2.1.2.1
The POTS interface shall conform to the DC feed
Characteristics
and input impedance specifications as per SP 2461 paragraph
7.2.2(a)(ii) and (iii). Supporting document needs to
be provided.
Suitable supporting documentation would include, equipment
specifications, equipment manuals or test reports.
2.1.2.2
The MSAN shall support BRI, ADSL2+ and SHDSL point bis interfaces as
per SP-2461 paragraph 6.2.1a(ii), 6.2.1a(x) and 7.2.4a.
Supporting
document needs to be provided. Suitable supporting documentation
would include, equipment specifications, equipment
manuals or test
reports.
2.1.2.3
The EMS must have a single North Bound interface that exposes all
functionality; Fault, Configuration. Performance and Security
Management of the EMS system as per SP-2066 paragraph 3.2.6. The
above criteria shall be supported by the configuration manuals
of the
EMS system."
[51]
The main thrust of the purported justification for the
disqualification of the applicant's tender seems to be an argument
that insufficient supporting documentation (as required by clause
2.1.2) was supplied by the applicant and test results were not
quantified.
[52]
In the founding affidavit, comprehensive allegations are made to the
effect that the technical criteria were complied with.
An example of
such an allegation is to be found in 5.19 of the founding affidavit:
"The
applicant submitted a comprehensive response to the second RFP which
included the requested suitable supporting documentation
namely,
equipment specifications, equipment manuals and test report from
Maroc Telecom Projects Laboratory dated 24 March 2011.
attached
hereto as annexure TM7. Also included in the submission was a
detailed test report of the applicant's equipment which
was conducted
by one of the leading Telecommunications Multinational Operators,
VODAFONE, attached hereto as annexure TM8. This
test was conducted at
VODAFONE ESPANA in Spain in December 2010. The results clearly show
that the applicant's equipment has passed
the test and has been
certified to be utilised in the VODAFONE group networks worldwide."
[53]
Paragraph 5.26 of the founding affidavit reads as follows:
"The
class B feed-bridge (7.2.2a(ii)) is required in normal POTS services,
so it would have been deemed reasonable for Bidders
to provide normal
industry-standard responses, like Maroc Telecom and Vodafone test
reports. The applicant's proposal was compliant
or responsive at
submission date because instead of submitting only the equipment
specifications, or equipment manuals, the applicant
went further by
supplying the test reports from Maroc Telecom and Vodafone group."
[54]
After preparing its answering affidavit, Telkom served a rule 35(12)
notice on the applicant, specifically requiring the applicant
to make
available the following documents referred to in paragraphs 5.19 and
5.26 of the applicant's founding affidavit:
1.
equipment specifications;
2.
equipment manuals.
[55]
In a prompt response to this rule 35(12) notice, the applicant duly
made these documents available and included same in the
record as
annexures "D", "E" and "F". These
documents are to be found in pages 461 to 759 of the
record. They
contain matter of the most technical nature. There are tables,
configurations and sketches which make the untrained
mind boggle.
[56]
In a comprehensive replying affidavit, and more particularly in
paragraph 11 thereof, the applicant deals with these documents
which
it was required to provide in terms of rule 35(12). It is not
necessary to dwell upon the details of the allegations contained
in
paragraph 11, other than to observe that there are compelling
statements to the effect that the technical criteria were complied
with, supporting documentation supplied and test measurements
adequately quantified.
[57]
The valid allegation is also again made to the effect that the
question whether the applicant complied with the Technical Critical
Criteria should be the subject-matter of arbitration.
[58]
For its part, Telkom also made a series of submissions, of a
technical nature, to the effect that the disqualification was
justified.
It
was confirmed in the Telkom opposing affidavit that the reason for
the disqualification (as per the letter of 8 December 2011)
is that
it was not possible to validate compliance with the Critical Criteria
from the supporting documentation furnished by the
applicant.
[59]
It was then contended in the Telkom opposing affidavit that it was
incumbent upon the applicant to indicate in its founding
papers which
portions of the relevant test reports constituted compliance with the
criteria under discussion. The submission was
made that the applicant
had failed to provide such evidence in its founding papers.
[60]
This obviously inspired the applicant to make annexures "D",
"E" and "F" [called for in the rule
35(12)
notice] part of the record and to deal with extracts from those
weighty annexures in the comprehensive replying affidavit.
The clear
allegation is also made that the required measurements appear from
annexure "F" and Telkom should have been
able to establish
those measurements from that annexure had it read and considered the
documents properly.
[61]
The third respondent, perhaps wisely and understandably, did not make
any allegations in its opposing affidavit aimed at illustrating
why
the disqualification was justified. The third respondent only makes
the sweeping statement that "On the evidence that
it has
presented in its founding affidavit, the applicant is the author of
its own predicament."
[62]
Telkom, not to be outdone, even prepared a "second supplementary
affidavit" to deal with some of the allegations
made by the
applicant in the replying affidavit and, more particularly, paragraph
11 thereof. This affidavit was only presented
to me during the
hearing. It contains even more technical allegations to illustrate
why supporting evidence supplied was not sufficient
to establish
compliance with the Critical Criteria.
[63]
The applicant filed an opposing affidavit to the "second
supplementary affidavit" of Telkom. This reached me before
the
"second supplementary affidavit" reached me during the
hearing. This is so, because the latter affidavit was served
on the
applicant a few days before the hearing whereupon the applicant's
prompt opposition thereto was filed before the hearing
as well. In
this opposing affidavit, the arguments of Telkom were addressed.
[64]
In this opposing affidavit, the applicant also makes the following
compelling submission: the documents contained in annexures
"D",
"E" and "F" form part of the applicant's bid
documents presented at the outset. The fact that
Telkom,
surprisingly, called for these documents in terms of rule 35(12)
despite them having been submitted at the outset, justifies
a
reasonable inference that Telkom did not consider these documents for
the purpose of determining whether the applicant's equipment
and
supporting documents complied with the Technical Critical Criteria.
It therefore appears as if Telkom adjudicated the bid without
considering these annexures and the information referred to in
paragraph 11 of the replying affidavit. In the process, the bid
was
not properly and fully adjudicated upon so that the granting of the
interim relief sought becomes even more compelling.
[65]
On a general reading of all the papers, and without claiming to
understand any of the technical issues referred to, I have
come to
the conclusion that the applicant has established a prima facie right
as intended by the requirements for interim interdictory
relief. As
it was put by the learned judge in Webster v Mitchell
1948 1 SA 1186
(WLD)at 1189:
"From
the Appellate Division cases to which I have referred I consider that
the law which I must apply is that the right to
be set up by an
applicant for a temporary interdict need not be shown by a balance of
probabilities. If it is 'prima facie established
though open to some
doubt1 that is enough."
[66]
Moreover, the prima facie right applicable to this application for
interim relief is informed by the question as to whether
or not the
applicant has made out a case for an entitlement to embark on the
dispute resolution process prescribed by 1.2.2 read
with clause 43
rather than by the technical "merits" of the case. I have
already found in favour of the applicant in
this regard and 1 have
pointed out that clause 43.8 specifically foreshadows an application
for an interim interdict pending fmalisation
of the dispute
resolution process.
Two
applications to strike out
[67]
Telkom launched two applications to strike out which I have to
briefly deal with.
[68]
The first application (which was never handed up during the hearing)
was aimed at striking annexures "D", "E"
and "F"
from the record on the ground that these documents were not dealt
with in the founding affidavit and therefore
did not become part of
the evidence. The attitude adopted by the applicant was that it was
entitled to include the documents in
the record after they were made
available in response to the rule 35(12) request.
[69]
This application was not proceeded with on the ground, if I
understood counsel correctly, that the issue had become moot.
[70]
The second application to strike out was aimed at the striking out of
the entire paragraph 11 of the replying affidavit on
the basis that
"such paragraphs contain allegations that are fresh in nature
and ought to have been incorporated in the founding
affidavit".
This
application was not accompanied by an affidavit setting out Telkom's
complaint in respect of all the subparagraphs of paragraph
11 and, in
any event, I am of the view that the subjects covered by paragraph 11
were indeed referred to in the founding affidavit,
and more
particularly paragraph 5 thereof In my view the applicant was
entitled to deal with these aspects more fully in the replying
affidavit, more particularly after receipt of the rule 35(12) request
and the opposing affidavit presented by Telkom.
[71]
The issue was in any event overtaken by events when Telkom was
allowed to present the "second supplementary affidavit"
dealing with the contents of paragraph 11 of the replying affidavit.
[72]
Inasmuch as it may be necessary, I order that the applications to
strike out are dismissed, costs to be costs in the application.
The
balance of convenience
[73]
I must weigh the prejudice the applicant will suffer if the interim
interdict is not granted against the prejudice the respondents
will
suffer if it is.
[74] In my view, one of the main
considerations is the fact that if the relief is not granted, the
applicant will remain disqualified
from the process. If the relief is
granted, the respondents will not be disqualified as a result
thereof.
[75]
The third respondent, in its opposing affidavit, suggested that
nothing prevents the applicant from tendering for subsequent
phases
of the project. The applicant counted this in a comprehensive
supplementary affidavit by stating that it will not be able
to
participate in future opportunities that arise from the current
tender. The technical reason for this was fully explained in
paragraph 5.4 of the supplementary affidavit. The applicant submitted
that if Telkom is allowed to conclude the process of awarding
the
tender to the short-listed Bidders, it would not make sense, both
from the technology integration and from a financial implication
perspective to award the expansion phase of the project (MSAN to
FTTx) to a third supplier such as the applicant. From the technology
integration point of view, the same process that Telkom is going
through currently in the evaluation of this RFP, will have to
be
duplicated with any new supplier that it wishes to contract with.
Therefore, so the applicant argues, not being part of this
tender at
the beginning has serious implications in the form of loss of future
revenue prospects for the applicant. Considering
that the first phase
is estimated at R5 billion over three years, increasing to Rl3
billion over five years, the financial implications
to the applicant
by not being part of the project roll-out are massive compared to
that of Telkom.
[76]
The applicant also argues that an amount of approximately R4 million
already spent on the tender by Telkom would have had to
be spent in
any event "as it pertains to the lay-out of Telkom's
infrastructure". Even if the MS AN solution of the successful
Bidder fails in respect of technical operational readiness, Telkom
will still remain with its infrastructure network and can still
invite other Bidders to supply the MSAN products or solutions which
will connect the system.
[77]
In addition, the applicant alleges that it has already incurred
expenses amounting to approximately R24,8 million in preparations
for
a tender which started in about October 2010. These expenses are not
refundable. The applicant had to assemble a team of more
than ten
product specialists from China to assist the local team in making
preparations for the tender as well as the presentation
and
clarification sessions that followed.
[78]
Telkom provided figures relating to the total budget for the project.
I fail to see how this impacts on the balance of convenience.
There
may be costs flowing from undue delays but it should not be
overlooked that clause 43.7 provides that the parties agree that
the
arbitration will be held as an expedited arbitration in accordance
with the current rules for expedited arbitrations of AFSA.
[79]
On a general reading of the submissions on the question of balance of
convenience I have come to the conclusion that the balance
of
convenience favours the applicant, if only because the refusal of the
interim relief could eliminate the applicant from the
process
altogether, including participation in future phases of the tender
whereas granting of the relief will not have the same
effect on the
second and third respondents.
Irreparable
harm
[80]
For the reasons mentioned in the discussion on balance of
convenience, supra, I am of the view that the applicant has made
out
a case that it will suffer irreparable harm or there is at least a
reasonable apprehension that it will do so through continuance
of the
alleged wrong on which its case is based.
No
alternative remedy
[81]
I have already pointed out that clause 43 specifically provides for
obtaining interim relief pending finalisation of the dispute
resolution process. With regard to the suggestion, supra, that the
applicant's remedy may lie in a review application, I have also
pointed out that 1.2.2 is couched in peremptory language in that it
provides that any dispute arising as a result of the RFP shall
be
dealt with in terms of clause 43. It therefore appears that there is
no suitable alternative remedy available to the applicant.
[82]
In the result, I have come to the conclusion that a proper case was
made out for the interim relief sought by the applicant.
Costs
[83]
It was argued by counsel on behalf of both the respondents that, in
the event of the application being upheld, it would be
inappropriate
to grant costs against the respondents at this stage.
[84]
In this regard I was referred by Mr Swart to the case of EMS Belling
Co of South Africa v Lloyd
1983 1 SA 641
(ECD) at 644G-H where the
following is said:
"There
are sound reasons for not granting the costs of an interdict pendente
lite to a successful applicant in the absence
of exceptional
circumstances. While it can be said that such an applicant has
achieved substantial success, such success is of
a limited and
temporary nature, often based upon a balance of convenience, and even
despite a serious dispute of facts on the papers.
It is implicit in
an order granting a temporary interdict that such order, and the
relief consequent thereon, will fall away should
the applicant be
unsuccessful in the trial. It would, in such a case, be unjust to
compel the defendant in the trial to bear the
costs of an interdict
to which the plaintiff may subsequently be shown to have been not
entitled."
[85]
These observations were quoted with approval in Airoadexpress (Pty)
Ltd v Chairman, Local Road Transportation Board, Durban,
and Others
[1986] ZASCA 6
;
1986 2 SA 663
(AD) at 682I-683A.
[86]
This is not a case where the relief is to be granted pending the
outcome of a trial or an application for final relief, in which
event
it would be convenient to order that the costs of this application be
costs in the cause.
[87]
I am reluctant to impose on the arbitrator the duty to decide the
question of costs incurred in this court during these preliminary
proceedings. It follows, that I will regrettably have to reserve the
costs for later adjudication, if necessary, although one would
generally be slow to do so. This is the order urged upon me by
counsel for both respondents and not seriously contested by Mr Dreyer
for the applicant.
The
order
[88]
I make the following order:
1.
The first respondent is interdicted and restrained from implementing
tender and/or request for proposal 0328/2011 forthwith,
in any manner
whatsoever, including concluding any service level agreements with
the second and third respondents.
2.
The order in paragraph 1 above shall operate as an interim interdict
with immediate effect pending the finalisation of the dispute
resolution process that has been commenced by the applicant in terms
of clause 43.3 and 43.4 of the Standard Terms and Conditions
(volume
1 part 4) read with clause 1.2.2 of the RFP conditions for RFP no
0328/2011.
3.
The costs flowing from this application are reserved.
WRCPRINSLOO
JUDGE
OF THE NORTH GAUTENG HIGH COURT
72499-2011
HEARD
ON: 9 MARCH 2012
FOR
THE APPLICANT: J H DREYER SC ASSISTED BY M MPHAGA SC INSTRUCTED BY:
LANGA ATTORNEYS
FOR
THE 1st RESPONDENT: B H SWART SC ASSISTED BY M P D CHABEDI INSTRUCTED
BY: MATHOPO MOSHIMANE MULANGAPHUMA INC FOR THE 3rd RESPONDENT:
D
VETTEN
INSTRUCTED
BY: DAVID H BOTHA, DU PLESSIS & KRUGER INC