About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Eastern Cape High Court, Bhisho
SAFLII
>>
Databases
>>
South Africa: Eastern Cape High Court, Bhisho
>>
2012
>>
[2012] ZAECBHC 3
|
|
Department of Economic Development and Environmental Affairs v JGL Forensic Services Ltd (805/09) [2012] ZAECBHC 3 (27 March 2012)
IN THE HIGH COURT OF
SOUTH AFRICA
(EASTERN CAPE –
BHISHO)
Case mo: 805/09
Date Heard: 28/02/2012
Date
Delivered:27/03/12
In the matter between:
DEPARTMENT
OF ECONOMIC DEVELOPMENT
AND
ENVIRONMENTAL AFFAIRS
APPLICANT
AND
JGL
FORENSIC SERVICES LTD
RESPONDENT
JUDGMENT
SMITH J:
INTRODUCTION
[1]
This matter is somewhat peculiar. The applicant, who is the Head of
the Department of Economic Development
and Environmental Affairs,
Eastern Cape, seeks an order reviewing and setting aside the decision
of his predecessor, Dr Nkem-Abonta,
taken on 22 January 2009, to
appoint the respondent to conduct forensic investigations into the
department’s supply chain
management function. Dr Nkem-Abonta’s
services as Head of the Department have terminated on 31 January 2009
and he is no
longer in the employ of the department.
THE FACTS
[2] The
applicant apparently first became aware of the existence of the
contract on 3 September 2009 when he received
a letter from the
respondent’s senior manager, Ms Rhoda York, to the effect that
she had been informed that the department
wished to review the
contract and wherein she requested “
a mutually satisfactory
resolution to the matter
”.
[3] The
applicant thereafter called for the file relating to the aforesaid
contract and realized that the information
was “
patchy
”.
The file contained only correspondence between the Department and the
respondent. On the 28
th
of September 2009 he requested Ms
York to furnish him with copies of all the relevant documents. This
she did on 29 September 2009.
[4] The
applicant has stated that the aforesaid documents evinced the
following:
(a)
That the department had, apparently during
January 2009, invited written proposals for a forensic investigation
to be conducted
into its supply chain management functions. (In this
regard the applicant has initially averred in his founding affidavit,
that
Dr Nkem-Abonta had invited only the respondent to submit a
quotation. When however the respondent averred in its answering
papers
that other two service providers, namely PWC and KPMG were
also requested to submit quotations, the applicant admitted that PWC
had submitted a quotation but averred that he had made enquiries with
KPMG and had established that “
KPMG
has no record of either an invitation or that it submitted such a
proposal to th
e
Department.”).
(b)
That Dr Nkem-Abonta did not record his
reasons for diverting from the usual tender procedures and;
(c)
Has not submitted a report to the
Provincial Treasury as he was required to do in terms of the law.
[5] Mr
Bloem SC
, who appeared for the Applicant, submitted that it is
nowhere apparent from the documents which the department had at its
disposal
(as well as those which had been provided by the
respondent), that Dr Nkem-Abonta had valid reasons for departing from
the department’s
supply chain management policy, more
particularly to dispense with the requirement that competitive bids
must be invited. He argued
that the fact that no such reasons have
been recorded and submitted to the Provincial Treasury in accordance
with the relevant
statutory provisions, simply mean that they do in
fact not exist. Under these circumstances, so he argued, the decision
to award
the contract to the respondent was fundamentally flawed. He
submitted further that the respondent has not been able to proffer
any information to support its contention that the deviation was
rationally considered by Dr Nkem-Abonta and that the decision was
taken on the basis of valid reasons which could have led him to
conclude that the calling of competitive bids should be dispensed
with on the basis of impracticality or urgency.
[6] The
respondent is unsurprisingly at a considerable disadvantage in this
regard. It is unlikely that the respondent
would have been aware of
the reasons for Dr Nkem-Abonta’s decision to dispense with the
calling of competitive bids. These
reasons are ordinarily within the
peculiar knowledge of the functionary or public body who took the
impugned administrative decision.
The respondent has however, through
Ms York, attempted to provide some factual basis for its assertion
that Dr Nkem-Abonta’s
decision was based on urgency.
[7] In
this regard she has stated that:
(a)
The department’s invitation to submit
written proposals stated that the
(b)
forensic investigation would run concurrent
to the preparations of the 2008 -2009 audit for the financial year
ending on 31 March
2009:
(c)
The investigations had to commence on 11
January 2009, the onsite investigation had to be completed by 20
March 2009 and the final
report had to be submitted to the Head of
Department by 20 March 2009.
(d)
The invitation to submit proposals stated
the following:
“
Due
to the nature and urgency in finalizing the forensic
audit/investigation, written proposals together with the price
quotations
and a Valid Tax Clearance Certificate must be submitted to
Mrs Candy Brandav before 16:00 on Tuesday, 6 January 2009”.
(e)
The required forensic investigation was
pursuant to previous investigations conducted by the respondent on
the instructions of the
Provincial Treasury. The terms of reference
for the original investigations were not wide enough to include the
investigation into
the department’s supply chain management
function, hence the invitation to submit a further proposals;
(f)
The respondent actually commenced its
investigation on the 2
nd
of February 2009 and had deployed an investigation team for those
purposes within the department.
THE LAW
[8] It
is common cause that Dr Nkem-Abonta, in deciding not to call for
competitive bids, purported to have acted
in accordance with section
16 A.6.4 of the Regulations promulgated under the Public Finance
Management Act, 1 of 1999 (read with
paragraph 3.4.3 of the National
Treasury Practice Notice (no.8 of 2007/2008) issued by the Minister
in accordance with section
76 (4) (c) of the PFMA).
[9]
These provisions read as follows:
Regulation 16 A.6.4:
“
If
in a specific case it is impractical to invite competitive bids, the
accounting officer or accounting authority may procure the
required
goods or services by other means, provided that the reasons for
deviating from inviting competitive bids must be recorded
and
approved by the accounting officer or accounting authority.”
Paragraph 3.4.3 of the
practice notice provides as follows:
“
Should
it be impractical to invite competitive bids for specific
procurement, e.g. in urgent or emergency cases or in case of a
sole
supplier, the accounting officer/authority may procure the required
goods or services by other means, such as price quotations
or
negotiations in accordance with Treasury Regulation 16A6.4. The
reasons for deviating from inviting competitive bids should
be
recorded and approved by the accounting officer/authority or his/her
delegate. Accounting officers/authorities are required
to report
within ten (10) working days to the relevant Treasury and the
Auditor-General all cases where goods and services above
the value of
R1 million (VAT inclusive) were procured in terms of Treasury
Regulation 16A.6.4. The report must include the
description of the
goods or services, the name/s of the supplier/s the amount involved
and the reasons for dispensing with the
prescribed competitive
bidding process.”
[10] The
jurisdictional facts for a proper deviation from the tender
procedures in terms of these provisions therefore are:
(a)
There must be valid and rational reasons
for the decision to deviate from the usual tender procedures;
(b)
The deviation must be approved by the
accounting officer; and
(c)
The reason should be recorded and reported
to the relevant treasury.
Both counsel were in
agreement that while the requirement in (a) and (b) are peremptory
and the absence of valid reasons would visit
the award with
invalidity, the recording of those reasons is a formal requirement
which is meant only for administrative purposes.
(Chief Executive
Officer, African Social Security Agency and others v Cash Paymaster
Services (PTY) LTD
2012 (1) SA 216
(SCA) at 224, para8).
[11] It has been
held in a number of cases that the failure by a public body to comply
with peremptory competitive tender
procedures, visits any contract
concluded pursuant thereto with invalidity, despite possible harsh
consequences for the innocent
party. See in this regard:
Municipal
Manager: Qaukeni Local Municipality and Another v FV General Trading
CC
2010 (1) SA 356
(SCA) at 361, para 15.
See also:
Eastern
Cape Provincial Government v Contractprops 25 (PTY) LTD
2001 (4) SA
142
(SCA), at 148, para 9.
[12] While the
respondent has initially challenged the
locus standi
of the
applicant to attack the validity of the decision, this point was
understandably abandoned by its counsel,
Mr Hefer
in his heads
of argument. It is trite law that a public body is entitled, and in
certain circumstance duty bound, to approach a
court of law to set
aside its own irregular administrative acts.
(Municipal Manager:
Qaukeni (supra) at 364 E-H).
DISCUSSION
[13] Rule 53 of the
Uniform Rules of Court provides for the usual situation where the
validity of administrative action is
assailed by a member of the
public. In such a case the relevant functionary or public body which
took the administrative decision
is required to produce the record of
the proceedings and the reasons for it. The reviewing court or
tribunal would therefore have
before it all the necessary information
to enable it to judiciously pronounce on the validity of the impugned
administrative action.
The onus is then on the party who alleges the
invalidity to convince the court that there are valid grounds for
review. The public
functionary would in such a case be assisted by
the presumption of validity contained in the maxim
omnia
praesumumtur rite esse acta
. There is in my view no reason why
the approach should be different, where in a case such as this, a
public functionary has assailed
the validity of its own
administrative act. The above-mentioned legal presumption would still
be applicable and the onus remains
on the party who alleges
invalidity to establish the facts required to prove that the act was
indeed irregular.
[14] The respondent
has contended in this regard that Dr Nkem-Abonta, whose decision is
being impugned, should have been cited
as an interested party to
these proceedings. I do not believe it is necessary for me to decide
this issue, suffice it to say that
I agree with Mr
Hefer’s
submission that at the very least his affidavit should have been
placed before the court. No attempt has been made by the applicant
to
approach Dr Nkem-Abonta to file an affidavit wherein he explains the
basis on which he had taken the decision to depart from
the usual
tender procedures. The applicant elected instead to approach the
court on the basis of its inability to establish the
reasons for his
decision.
[15] On the
respondent’s version its services had indeed been procured on
an urgent basis. The deadlines which the department
had prescribed
for the submission of proposals, as well as the prescribed
commencement and completion dates, are all indications
that, at least
in Dr Nkem-Abonta’s mind, the services were to be rendered on
an urgent basis. There is nothing before me
to suggest that this
decision was arbitrary or that there were no objective reasons
justifying the departure from the usual prescribed
tender procedures.
Paragraph 3.4.3 of the Treasury Practise Note clearly sanctions a
departure from the usual tender procedures
on this basis. There is
therefore a presumption that the said administrative act was regular
and it was incumbent on the applicant,
who is the party alleging the
invalidity, to place the relevant facts before the court in order to
prove the contrary. He has failed
to do so.
[16] Regarding Dr
Nkem-Abonta’s alleged failure to call for three quotations in
accordance with paragraph 3.4.3 of the
Treasury Practice Note, I
agree with Mr Hefer that it is not apparent from the aforesaid
provision that this is in fact a requirement.
However, even if this
were to be read into the aforesaid provision by virtue of the wording
of paragraph 3.3.3 (which relates to
transactions, the value of which
are R10 000.00 but not exceeding R500 000.00), this issue
must still be decided on the
basis of the facts as averred by the
respondent, namely that three quotations had in fact been called for.
[17] In the result
I am of the view that the applicant has not been able to prove that
Dr Nkem-Abonta did not have valid reasons
for his decision to depart
from the usual tender procedures and to procure the applicants’
services in accordance with paragraph
3.4.3 of the Treasury Practice
Note.
ORDER
[18] In the result
the application is dismissed with costs.
J SMITH
JUDGE OF THE HIGH
COURT
APPEARANCES:
Counsel
for the Applicant:
Adv
G Bloem SC instructed by
Attorney
for the Applicant:
State
Attorney
Cnr
Oxford & Terminus
EAST
LONDON
Tel:
043 722 0926
Ref:
1295/09/P3 (Mr Mgujulwa)
Counsel
for the Respondent:
Adv
Hefer
Attorneys
for the Respondent:
Messrs
B. H Botha Hefer Inc.
Bloemfontein