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[2012] ZAFSHC 5
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Jorian Constructions CC v Mangaung Local Municipality and Others (476/2011) [2012] ZAFSHC 5 (2 February 2012)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No: 476/2011
In the matter between:
JORIAN CONSTRUCTION
CC
…..............................................
Applicant
and
MANGAUNG LOCAL
MUNICIPALITY
…........................
1
st
Respondent
THE CHAIRMAN: BID
ADJUDICATION
…....................
2
nd
Respondent
COMMITTEE: CONTRACT
W0906
Q-CIVILS (PTY) LTD
…..................................................
3
rd
Respondent
_____________________________________________________
CORAM:
KRUGER
et
MOCUMIE JJ
_____________________________________________________
JUDGMENT BY
:
KRUGER, J
_____________________________________________________
HEARD ON:
30 JANUARY 2012
_____________________________________________________
DELIVERED ON
:
2 FEBRUARY 2012
_____________________________________________________
[1] The applicant seeks
to review and set aside the decision by the first respondent on 26
November 2011 to award a tender under
contract number W0906 for the
Estoire Race Course Sewer mains and connections to the third
respondent, Q-Civils (Pty) Ltd. The
second respondent is the chairman
of the Bid Adjudication Committee, who did not file papers and who
was not represented at the
hearing. Mr Grobler appeared for the
applicant, Mr Manye for the first Respondent and Mr Snellenburg for
the third respondent.
[2] The site was handed
over to the successful bidder, the third respondent in January 2011
and work commenced in February 2011.
It was a 32-week contract. In
January 2011 the attorneys of the applicant sent a letter to the
third respondent stating that applicant
intended taking legal action
and informing third respondent that if it proceeded with the contract
it would do so at its peril.
No interdictory relief was applied for.
The Notice of Motion and Founding Affidavit were served on the first
and second respondent
on 4 February 2011, and 14 March 2011 on the
third respondent. The third respondent signed its Answering Affidavit
on 19 May 2011
and its deponent stated that at that time it was 15
weeks into the contract, and 3
rd
respondent had already
incurred costs of R3.5 million to date and a contract with a
subcontractor had been concluded.
[3] At the outset of the
hearing before us on 30 January 2012 Mr Grobler, for the applicant
informed us that the contract forming
the subject matter of this
review application has been 98% completed. On the basis of
practicalities he conceded that the court
could not set aside the
award of the tender. He did however contend that, because of the
conduct of the first respondent, it should
be ordered to pay
applicant’s costs. The thrust of this argument is that the
first respondent did not respect applicant’s
procedural rights.
First respondent did not give applicant an opportunity to respond to
the allegations that Ms Elizabeth Mojatau,
the managing member of the
applicant, was merely fronting, and was not a truly historically
disadvantaged person. Mr Manye, for
the first respondent, said that
the first respondent, and in particular its deponent, Mr Msibi, the
City Manager, had sufficient
reason to disqualify the tender of the
applicant. There are time frames within which tenders must be awarded
and the work done.
There was no time to embark upon a further
investigation before the tender was awarded. That is a persuasive
argument. The onus
is on the applicant to show that it acted
expeditiously and that it was not due to its inaction that the
litigation became academic.
The dates of handing over of the site and
commencement of the contract were known to the applicant at the
latest in March 2011,
and the applicant took no steps to obtain
interdictory relief or, apparently, to expedite the review
application.
The applicant must have
realised from the outset that the situation was developing day by day
and was aware at the latest in March
2011 that the contract was being
performed by the third respondent, which would lead to this
application becoming academic (see
SEBENZA KAHLE TRADE CC v
EMALAHENI LOCAL MUNICIPALITY COUNCIL AND ANOTHER
[2003] 2 All
SA 340
(T) at 351g – i).
[4] A declaration of
invalidity cannot be considered in isolation. One must consider the
possible consequences (
MOSEME ROAD CONSTRUCTION CC AND OTHERS v
KING CIVIL ENGINEERING CONTRACTORS (PTY) LTD AND ANOTHER
2010
(4) SA 359
(SCA) 359 (SCA) par [12]). The court must consider the
practicalities (par [16]). The court must have regard to the position
of
the innocent successful tenderer, here the third respondent. Where
on the facts, the contract has practically been concluded, as
here,
even if the administrative process was not perfect, the review will
not readily succeed. Mr Grobler appreciated as much,
and for that
reason limited his argument to one of costs.
[5] The reason why the
applicant’s tender was not considered, is that first respondent
had reason to suspect that the applicant
was not a historically
disadvantaged individual, but that its member, Ms Elizabeth Mojatau
(“Elizabeth Mojatau”) was
fronting for a certain Mr HJP
Steyn (“Steyn”). As is set out below, and as was found by
Musi JP (with whom Naidoo AJ
concurred in an unreported judgment
given in case no 513/2011 delivered on 22 December 2011 between the
same parties in respect
of a different tender) there were well
founded reasons for the belief of fronting.
[6] In the supplementary
Founding Affidavit the deponent, Elizabeth Mojatau says in para 3.4
that she is unaware that the applicant
was being investigated for
fraud by a special task force of the Mangaung Local Municipality. In
answer hereto the first respondent,
through Mr Msibi, the City
Manager, in para 14 of the Answering Affidavit refers to a statement
which Elizabeth Mojatau made in
Sesotho to the South African Police
Service, and attaches a copy thereof with a translation (AA paras
14.1 – 14.5).
[7] In the statement
Elizabeth Mojatau says:
“
I would like
to explain about the issue of work, that I stated in March 2007. I
did not have enough experience, until I met a white
man Mr Steyn with
whom I previously worked and I made him the manager.
We worked together, but the moneys
that were paid I did not know how they were dealt with. I am being
paid R6 000,00 per month.
I went with him to where he had found
the jobs and he showed me. I even went to the surrounding towns. But
when payments were made
– I would not be told as to how much
money were paid and how much was outstanding.”
[8] In the Replying
Affidavit Elizabeth Mojatau
inter alia
says:
“
4.1 I am the
100% shareholder in the applicant CC. It is correct that Mr
HPJ
Steyn
is one of the managers of the applicant’s business. I am to a
large extent a businesswoman and Mr
Steyn
has the necessary knowhow as far as engineering works and
construction works in general are concerned. I am however the
de
facto
and
de
jure
100% shareholder of the applicant CC.
4.2 I receive a salary from the
applicant on a monthly basis, together with a dividend paid out at
the end of the fiscal year if
the applicant decides to declare a
dividend and secondly obviously if there are dividends available.
4.3 I have on several occasions
received dividends in the past.
4.4 Between
2007
and
2008
,
I had fallen extremely ill. This necessitated that I to a large
extent (in that period) hand the management of the entire business
to
Mr
Steyn
. The only reason for this was because of my illness.
4.5 It is correct that during that
time, I was visited by three officials of first respondent. I cannot
recall their names.
4.6 They enquired on how the business
of the applicant works and it is correct that I had provided
documentation appended to the
opposing affidavit to them. One of
these officials however – after I briefly told him of my
illness and what at that stage
was going on in the applicant company
– dictated to me precisely what I must write and I followed his
instructions to the
letter.
4.7 It is correct that at that stage I
was unsure as to precisely what was going on in the business, how
much money had been made,
etc. The reason for this was obvious
because of my inaction at that stage, which ensued primarily because
of my illness. These
gentlemen informed me that they have reason to
believe that monies are being stolen in the applicant CC, and if I am
of assistance,
they will launch a full investigation and see to it
that all monies due and payable to me are paid.
4.8 Furthermore, it is quite evident
that the letter itself or the “
affidavit”
does not
expose precisely what the first respondent wishes to rely hereon. I
repeat that this letter was written by me sometime
ago and as is
evident from the stamp affixed by the South African Police Service
(which obviously is also incorrect) this letter
had been written by
me long before the calling of any germane tenders herein. The
relevance of this will appear below.”
[9] She says the
affidavit attached by the first respondent was signed by Steyn by
mistake, it was a
bona fide
error (p 126, para 10.3). She says
she is an employee of the applicant and holds a 100% interest, and is
“obviously”
assisted by persons like Steyn. In the
Answering Affidavit of the first respondent the following is stated,
and not denied in reply:
“
14.3 The
deponent to the Applicant’s affidavit, further, claimed that
she only receives a monthly salary of R6 000.00 from
the Applicant
and that seldom would she accompany the manager of Applicant, one
Steyn, to places where Steyn would have sourced
new projects for the
Applicant.
14.4 She further indicated that she
did not know how the finances of the Applicant were administered and
that because of being illiterate
she never asked anything but only
received remuneration on a monthly basis.
14.5 A copy of the said statement and
an English translation thereof are attached hereto as (“
Annexure
SM 3
and
SM 4
”), respectively.”
[10] In the Replying
Affidavit Elizabeth Mojatau says that she does not know precisely
what the first respondent wishes to rely
on in the affidavit (with
the signature of Steyn, her name struck out) or in the letter in
which she says she was not fully aware
of the business activities of
the applicant. There are many uncertain aspects of the case put up by
the applicant, and in particular
the Founding and Replying Affidavits
of Elizabeth Mojatau. She does not state what her illness was
“between 2007 and 2008”;
she does not state what her
exact role and knowledge of the affairs of the applicant now are. In
any event the question as to whether
the first respondent’s
suspicion regarding fronting was based on reasonable grounds is
comprehensively dealt with by Musi
JP in his judgment in case no
513/2011, referred to in para [5] of this judgment. The court in that
matter found Elizabeth Mojatau,
on the basis of the affidavit,
statement and affidavit “clearly untruthful and unreliable”.
Musi JP points out (para
[20]) that in her Replying Affidavit in that
case “she has literally left the contents of her incriminating
statement undisturbed”.
She does not provide any details of her
role in the operations of the business. The same criticism applies
here. In para 4.1 of
the Replying Affidavit she says she is “to
a large extent a businesswoman.”
[11] Further, Elizabeth
Mojatau complains about a “quantum leap” which Msibi, the
deponent to the first respondent’s
Answering Affidavit, makes
because he refers to a strong suspicion in para 5.1 of the affidavit,
and in para 5.5 to a fraudulent
basis. Read in context, all Msibi is
saying is that there was a reasonable suspicion, which was sufficient
to disqualify the applicant,
as set out in the reasoning by Musi JP.
[12] In this case, the
substance of the complaint against the applicant was serious. The
municipality had reason to doubt the veracity
and
bona fides
of Elizabeth Mojatau and the applicant (see
VIKING PONY AFRICA
PUMPS (PTY) LTD t/a TRICOM AFRICA, AND ANOTHER v HYDRO-TECH SYSTEMS
(PTY) LTD
2010 (3) SA 365
(SCA) para [13]).
[13] Regulation 15 of the
Preferred Procurement Regulations (GN R725 in GG22549 of 10 August
2001) is relevant. In terms of regulation
15(1) the municipality must
act against a person who was awarded a contract on a fraudulent basis
(see (
VIKING PONY (SCA)
supra,
par [3]). The
first respondent detected that preference was obtained by the
applicant in a fraudulent manner, as contemplated in
regulation 15.
“Detect” here connotes the discovery or awareness of a
certain state of affairs, not a conclusion. “Detect”
refers to a provisional or unilateral opinion (
VIKING PONY
(SCA)
supra,
par [31]).
[14] Apart from the
practicalities, which dictate that the application be dismissed
because the tender has been completed, it appears
that there was no
basis for applicant to assail its exclusion. There was no need to
call for an answer from the applicant. In these
papers Elizabeth
Mojatau created more questions than answers as to the HDI
(historically disadvantaged individual) status of the
applicant. The
application was without merit, and the applicant took no steps to
ensure that the application was not academic by
the time of the
hearing. There was no obligation on the first respondent to delay the
completion of the contract and there is no
reason why the applicant
should not be ordered to pay all the costs. The review application
must be dismissed with costs.
[15]
ORDER
1. The application is
dismissed.
2. The applicant is
ordered to pay the costs of the first and third respondents.
____________
KRUGER, J
I concur.
________________
C. MOCUMIE, J
On behalf of the
applicant: Adv. S. Grobler
Instructed by:
Moroka Attorneys
BLOEMFONTEIN
On behalf of the 1
st
respondent: Adv. L. Manye
Instructed by:
Gous Vertue &
Associates Inc.
BLOEMFONTEIN
On behalf of the 3
rd
respondent: Adv. N Snellenburg
Instructed by:
Rossouws Attorneys
BLOEMFONTEIN
/EB/wm