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[2011] ZAECELLC 1
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Freedom Stationery (Pty) and Another v MEC for Education, Eastern Cape and Others (59/2011) [2011] ZAECELLC 1 (16 March 2011)
REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE – EAST LONDON)
Case No: 59/2011
Date
Heard: 07/03/11
Order
Delivered: 10/03/11
Reasons
Available: 16/03/11
In
the matter between:
FREEDOM
STATIONERY (PTY) LTD
…..........................
First
Applicant
AFROPULSE
46 (PTY) t/a
POWER
STATIONERY
…..........................................
Second
Applicant
and
THE
MEMBER OF THE EXECUTIVE COUNCIL
FOR
EDUCATION, EASTERN CAPE
….........................
First
Respondent
THE
SUPERINTENDENT-GENERAL,
DEPARTMENT
OF EDUCATION,
EASTERN
CAPE GOVERNMENT N.O.
…..................
Second
Respondent
IMPALA
STATIONERY (PTY) LTD
….........................
Third
Respondent
PREMIER
STATIONERY (PTY) LTD
….....................
Fourth
Respondent
CENTRE
FOR CHILD LAW
….........................................
Amicus
Curiae
REASONS FOR JUDGMENT
REVELAS J
[1] The applicants sought an urgent
interim interdict pending the finalisation of a review application,
which was instituted on
the same day as this application, challenging
two decisions of the first and second respondents. The first decision
is the decision
sought to be set aside on review to cancel a tender
for the provision of stationery to schools in the Eastern Cape, and
the second
is the decision to award that tender or part thereof, to
the third and fourth respondents. The applicants also seek to set
aside
any contracts as may have been concluded with these respondents
and a directive that the second respondent adjudicate afresh on
the
tender for the contract concerned, or to advertise the tender afresh.
[2] On 10 March 2011, I granted the
urgent interdict in favour of the applicants and made certain costs
orders against the first
and second respondents. At the hearing I
indicted that I would make my reasons for the order granted at a
later stage. These are
my reasons.
[3] The interim relief sought in
this application was for an order interdicting the first and second
respondents from concluding
any agreements with the third and fourth
respondents in respect of or performing in any way, in terms of the
tender for contract
SCMU6-10-11-0005, until such time as the review
is finalised. The urgency of the matter is evident from the
allegations contained
in the affidavits filed by all the parties
before me.
[4] The applicants are confident
that the review application could be heard as early as 17 March 2011,
during the ordinary motion
court and have set shortened time periods
in their notice of motion for the dispatch of the record by the first
and second respondents
and the filing of further affidavits in their
application for review which is brought in terms of the provisions of
Section 6 (2)
(c) and (d); 6 (2) (f) (i) and (ii), and 6 (2) (i) of
the Promotion of Administrative Justice Act 3 of 2000. (“PAJA”).
[5] The tender in question concerns
an agreement for the manufacturing packaging and supply of scholastic
stationary for grades
R-12 in a large number of schools in the
Eastern Cape.
[6] At the onset of the hearing of
the application, I granted a request by the Centre for Child Law
(“the Centre”) to
intervene as
amicus curiae
in
the matter. The Centre represented by the Legal Resources Centre,
elected not to file any affidavits in this matter, but I was
given a
letter addressed to the State Attorney and to the applicants’
attorneys of record, tabling its position. Ms Sarah
Sephton of the
Legal Resources Centre, the author of the letter, raised the concern
that the relief sought made no provision for
the scholars affected by
the dispute between the parties which raised important constitutional
issues.
[7] The affected schools (those
which formed the basis for the tender) are 2380 in number, are
typically “no fee” schools
and are of the poorest schools
in the province. The parents of these learners are therefore not
likely to provide stationary for
their children. According to the
Centre, the misfortune of these approximately 688 482 learners is
caused by and perpetuated by
the litigation under consideration.
[8] The Centre submitted that,
should the third and fourth respondents be interdicted from supplying
the schools with these materials,
the learners will be without
stationary for a further three weeks on the applicants’
“optimistic view of the time that
the review process would
take”, thus severely prejudicing their right to education which
is enshrined in Section 29 of the
Constitution.
[9] In this urgent application, the
right to education had to be weighed up against the right to fair
administrative action, also
protected in the Constitution, as well
and the provisions of sections 217 (1) of the Constitution which
protect those who contract
with the Government if the process is not
“fair equitable, transparent competitive and costs effective”.
[10] The applicants’ prospects
of success in the review application would have to be strong if their
rights were to be given
preference to the right of access to
education. In determining this question it was necessary to
scrutinize the factual background
of the alleged violations of both
parties’ rights, and the applicable principles. These are set
out in the following paragraphs.
[11] During 2010, the Department
advertised a tender under contract no SCMU6-10-11-005. The closing
date for the submission of the
tender was 2 September 2010. Both
applicants submitted tenders. The contract advertised was for the
“manufacture, packaging
and supply of scholastic stationary for
Grades R-12 to local distribution centres in the Eastern Cape
(2010-2011)”. The applicants
allege that on 1 December 2010 an
official of the Department forwarded a recommendation that the tender
be awarded
inter alia
to the first and second applicant. The
applicants state that a copy of this recommendation is to be
discovered by the second respondent.
[12] On 2 December 2010 the second
respondent requested the applicants to hold their bids valid in all
respects, i.e. by not introducing
any escalation in prices for the
period 2 December 2010 to 2 February 2011, which request was adhered
to and the bids were kept
open until 2 February. On 17 December 2010
Mr Mannya of the first respondent notified the first applicant that
it, along with five
other tenders had received the first respondent’s
support for the award of a tender in an amount of no less than
R42 002 205.13.
It later transpired that the third
respondent was also part of this group. The fourth respondent was
not. A copy of a letter containing
this notification is attached to
the applicants’ papers. A meeting to be held with the group of
tenderers on 20 December
2010 was however cancelled.
[13] On 7 January 2011, just before
pupils started to get ready to start the new school year, the first
applicant wrote to the first
respondent to enquire about the progress
of the awarding of the contract, based on its understanding that the
all processes of
the bids in question have been completed by the
Department as it had received no instructions yet.
[14] On 11 January 2011 a notice
appeared in the news papers cancelling the tender process. Mr Cassim,
who deposed to the first
applicant’s founding affidavit, stated
that he received reliable information on 8 February that it was the
second respondents
intention to award the contract to the third and
fourth respondents. (This has in fact occurred since and has been the
case since
25 February 2011. Counsel for the first and second
respondents informed Hartle J of this development in open court on
that day
and I was also so advised when the matter came before me).
[15] Through its attorneys, the
first applicant, on 8 February 2009 posed the very relevant question
to the first respondent, after
a period of approximately seven
months, why it was not possible for the Department to acquire
scholastic stationary by way of the
tender process, and why yet it
was awarding the contract to the third and fourth respondents, who
both belong to the Caxton Group
companies while excluding the
applicants and three other short-listed suppliers. Reasons for the
aforesaid decisions were requested
but none were furnished and the
urgent proceedings were launched. The second applicant aligned itself
with this communication and
the entire court application.
[16] The main complaint raised by
the applicants against the tender process was its non-adherence to
the provisions of
section 10
(4) of the
Preferential Procurement
Policy Framework Act 5, of 2000
and its regulations, which permits
for cancellation of a tender only in the following circumstances:
1. If due to changed circumstances
there is no longer a need for the goods required.
2. There are no longer funds to
cover the total expenditure.
3. No acceptable tenders are
received.
[17] The first and second
respondents relied on the third ground, that no acceptable tenders
were received in their answering affidavit
where the first respondent
for the first time advised the applicants that they, and other
members of the group, were disqualified
because they were not in
possession valid tax certificates as of 5 January 2011. Their bid was
rejected by the second respondent,
who said he acted in accordance
with the prescripts of
Regulation 16
A 9.1 (a) of the Treasury
Regulations which were promulgated under the Public Finance
Management Act 1 of 1999. A further reason
advanced was that because
there were no remaining recommended bidders.
[18] The first applicant then made
enquiries with the South African Revenue Services who responded that
it had withdrawn the first
applicant’s tax certificate issued
on 16 March 2010 because there (a) was a debit balance in respect of
PAYE, UIF and SDL
and (b) the first applicant’s EMP 201 for the
period November 2010 was still outstanding. The applicant was able to
provide
proof that for the period March 2010 it had made a total
payment of R463 280.34 in respect of the aforesaid items and
therefore
there was no debit balance. An official receipt of this
payment was issued by SARS and attached to the applicants’
papers.
The first applicant also attached a copy of its EMP 201 form
for the period November 2010 which was duly submitted to, and
officially
received by SARS. It was therefore fully tax compliant for
the relevant period and a copy of a letter by SARS to that effect was
attached to its papers.
[19] It was argued by the applicants
that the second respondent had a legal duty to contact the applicants
as to the validity of
their tax clearance certificate and to allow
them to make representations with regard thereto, or alternatively,
bring their tax
affairs in order before rejecting its bid. Had the
second respondent given the first applicant an opportunity to explain
itself
in accordance with the
audi alteram partem
rule, the
first applicant would have proved that it was tax compliant for the
relevant period and that its tax certificate had been
erroneously
withdrawn. That should have effectively disposed of the first and
second respondents’ complaint that the bid
was unacceptable.
Consequently, the tender allocation would then not have been made
solely in favour of the third and fourth respondents,
to the
exclusion of the first and second applicants. Accordingly, the
applicants’ argument continued, the cancellation of
the tender
was invalid and unlawful.
[20] In
Du Bois v
Stompdrift-Kamanassie Besproeiingsraad
2002 (5) SA 186
(C), the
applicant had been hiring a camping and picnic site from the
respondent when the latter decided to put the lease out to
tender.
The applicant and two other tenderers submitted their tenders and
none were accepted. This decision was based on a report
regarding the
applicant’s managing of the site, which was never conveyed to
the applicant, as well as a water control officer’s
report,
prepared some two years earlier. Both reports were very critical of
the applicant’s management of the site. The respondent
refused
to provide the applicant with its reasons for not accepting his
tender. The applicant successfully applied for a review
of the
respondent’s decision. The decision not to accept the
applicant’s tender was set aside on the basis that it
was
procedurally unfair, as the applicant (a) had not been informed of
the information obtained by the respondent who relied on
it to make
an adverse against him, and (b) had not been given an opportunity at
least to respond to that information.
[21] In his judgment in
Du Bois,
Griesel J adhered to the
audi alteram
partem
doctrine
,
as also expressed in PAJA (Sections 3 (2) (b) (ii) and 3 (3) (b)).
The learned judge also deferred at 194 F-H of his judgment to
the
following passage from Lord Mustill in
Doody v Secretary of State
for the Home Department and Other Appeals
[1993] 3 All ER 92
(HL)
at 106 d-h:
‘
[5]
Fairness will very often require that a person who may be adversely
affected by the decision will have an opportunity to make
representations on his own behalf either before the decision is taken
with a view to producing a favourable result, or after it
is taken,
with a view to procuring its modification, or both.
[6] Since the person
affected usually cannot make worthwhile representations without
knowing what factors may weigh against his
interests fairness will
very often require that he is informed of the gist of the case which
he has to answer’.
[22] With regard to a person’s
right to be informed of information adverse to him, the following
dictum
in
Foulds v Minister of Home Affairs and Others
1996
(4) SA 137
(W), was also relied upon in
Du Bois
at 195 B-C:
“
In
these circumstances, and having regard to the provisions of the Act,
it was a reasonable and legitimate expectation that the
Board, being
a body created by the Legislature to consider applications for
permanent residence, would properly and fairly consider
the
applicant’s application and give him an opportunity to deal
with adverse information obtained by it and with adverse
policy
considerations insofar as there were no special circumstances or
reasons justifying the non-disclosure of such information
and policy
considerations to him and insofar as they had not already been dealt
with by the applicant in his application.
In the circumstances of
this case, the Board was obliged to disclose to the applicant adverse
information obtained and adverse policy
considerations and to give
the applicant an opportunity to respond thereto. Because of its
failure to do so its decision was fatally
flawed.”
[23] Griesel J at 195 D – 196
C and 193 E-F in
du Bois
, rejected the argument that the
audi
rule is not applicable to tender process because it will make the
procedure cumbersome and unmanageable. The learned judge held
that
the requirements of procedural fairness would depend on the
circumstances of each case. That much is provided for in section
3
(2) (a) of PAJA and corresponds with the common law approach.
[24] The SCA also followed the same
line of reasoning in
Logbro Properties CC v Bedderson NO and
Others
2003 (2) SA 480
(SCA), where it was held that the tender
process constituted ‘administrative action’ under the
Constitution, which
entitled a tenderer to a lawful and procedurally
fair process, and, where its rights were affected or threatened, to
an outcome
which was justifiable in relation to the reasons given for
it.
[25] In
Logbro,
Mr
Marcus
for the appellant, raised the point (for the first time in the
appeal) that the tender committee, before deciding not to award the
tender in question, should have given the aggrieved appellant in that
case the opportunity to make representations, at least in
writing, on
the significance of the price increase therein. Cameron JA (as he
then was) said the following with regard to that
proposition at
paragraph [25], 472 B-C:
“
Procedural
fairness, in my view, demanded that the committee in reconsidering
tenders would afford compliant tenderers an opportunity
to make
representations at least in writing, on any factor that might lead
the committee not to award the tender at all”.
[26] In
Metro Projects CC and
Another v Klerksdorp Local Municipality and Other
2004 (1) SA 16
(SCA), the Court at paragraph [13] referring with approval to the
Logbro
judgment held the following:
“
It
may in given circumstances be fair to also a tenderer to explain an
ambiguity in its tender; it may be fair to allow a tenderer
to
correct an obvious mistake; it may, particularly in a complex tender,
be fair to ask for clarification or details required for
its proper
evaluation. Whatever is done may not cause the process to lose the
attribute of fairness or, in the local government
sphere, the
attributes of transparency, competitiveness and cost-effectiveness”.
[27] In
casu,
the applicants
should likewise have been given the opportunity to advise the second
respondent that they were indeed tax compliant.
[28] The tender process was not only
procedurally flawed, but also substantially unfair. The applicants
contended that because no
competitive tender process was followed in
terms of the
Preferential Procurement Policy Framework Act, the
award
of the tender to the third and fourth respondents was as unlawful as
the cancellation of the tender, as said earlier, the
tender was
cancelled because the group of short-listed tenderers were not tax
compliant. The third respondent was one of this group
of tenderers
being considered for the award of the tender which was cancelled. The
third respondent was also from the first and
second respondents’
stated point of view, an unacceptable bidder because it did not have
a valid tax clearance certificate.
The first and second respondents
then appointed the third respondent to perform all or any of the
obligations under the tender
which was cancelled because of those
very income tax transgressions. This decision certainly gave the
third respondent an unlawful
advantage. The fourth respondent was
even disqualified and not short-listed under the cancelled tender.
The appointment of the
fourth respondent to perform the same
obligations as under that cancelled tender, similarly gave the fourth
respondent an unlawful
advantage. In my view, the awarding of the
tender to the third and the fourth respondents is irrational and
unreasonable in relation
to the reasons given therefore.
[29] In
Sidumo and Another v
Rustenberg Platinum Mines Ltd and Others
2008 (2) SA 24
(CC) the
court held in paragraph [10], that the basic test for administrative
review, was whether the decision reached is one that
no reasonable
decision-maker could reach; See also
Bato Star Fishing (Pty) Ltd v
Minister of Environmental Affairs and Others
[2004] ZACC 15
;
2004 (4) SA 490
(CC)
at paragraphs [42]-[47] and
Thebe Healthcare v NBC, Road Freight
Industry
2009 (3) SA 187
(WLD).
[30] By cancelling the tender,
followed by awarding the contracts in question to the third and
fourth respondents in the aforesaid
circumstances, the decisions of
the first and second respondents clearly flouted the aforesaid
principles and fall within the ambit
of the provisions of PAJA, from
which the applicants’ entitlement for relief would emanate.
[31] I will now deal with the case
presented by the
amicus
. The case for the Centre, who in
effect opposed the relief sought by the applicants, rested on two
propositions. The first is that
the Court had a duty to consider the
interests of the learners in weighing up the rights of the parties to
the dispute. Secondly,
that the access to scholastic material, such
as stationery is a critical part to the right to basic education in
terms of Section
29 (1) (a) of the Constitution. Reliance was also
placed on to Section 28 (2) of the Constitution which holds that a
child’s
best interests “are of paramount importance in
every matter concerning a child”.
[32] The intervention of the Centre
in this matter was hardly surprising. The Department of Education in
the Eastern Cape (“the
Department”) has virtually ceased
all operations. School transport and feeding programmes have been
scrapped. Many schools
are without teachers. As is so often the case
when a government fails to deliver, the poorest people suffer the
most. The collapse
of the feeding programmes must have had disastrous
consequences for many children, because the meals provided at some
schools were
often the only meals those children received. This
problem not only affects the right to education, but also the right
to life,
which is one of the primary rights protected in the
Constitution.
[33] The protection of access to
education is of prime importance with regard to the public interest,
and based thereon the Centre
urged me to dismiss the applicant’s
urgent application for an interdict pending the review, or make an
order compelling the
first and second respondents to appoint either
of the competing bidders to deliver stationary to the schools in
terms of the contract.
To follow those suggestions would unduly
benefit some parties at the expense of others. To compel performance
by the first and
second respondent to appoint either of the competing
bidders or a third party to perform in terms of the tender, offends
one of
the most logical and basic principles in our law, namely that
courts should not write contracts for the parties before it. Another
solution had to be found.
[34] Trampling on the rights of the
applicants is not the only course open to assist with the scholastic
needs of the learners.
The absence of stationary, transport, and in
some cases food, at so many of the schools, is directly attributable
to the actions
(or inaction) of the Department. It was with a note of
irony that I listened to the proposition that the applicants’
review
and the urgent interdict which it seeks, was the sole cause of
the learners’ constitutional rights being infringed. The
problems
that have beset the Department, is of its own making.
[35] Some interim plans, one must
assume, would have been made with regard to the food programmes that
were cancelled since there
have been no court applications that I was
aware of, emanating from those dire problems. Similarly, some interim
plans could be
made with regard to the provision of stationary, at
least in some schools. Hopefully charities could be approached for
interim
assistance in providing stationary. The possibility that
stationary stocks may have been left in various departmental depots,
should
also be explored. The first and second respondent are in the
best position to provide information in this regard and to assist
with the dissemination of any of the stock left.
[36] To protect the rights of all
those involved, was not entirely possible. By granting the urgent
interdict sought, the applicants’
rights would not be ignored,
but the learners would have to wait a while longer for stationary. By
burdening the court roll with
an expedited date for set down of the
hearing of the review, the learners would be spared waiting unduly
long for their stationary.
The first and second respondents would
also then be given the opportunity to award the contracts in
question, lawfully.
[37] In the event, the urgent
interdict was granted, the date for the hearing of the review was set
down to be heard within a week
or two and the first and second
respondents were ordered to pay the costs of this application.
[38] Since the first respondent was
unsuccessful in its opposition at the proceedings on 17 and 25
February 2011, on which days
costs were reserved, and there was no
reason before me, why costs should not follow the result, the first
and second respondents
were ordered to pay also the costs incurred on
those two days.
____________________
E REVELAS
Judge of the High Court
Counsel for Plaintiffs: Adv T
Paterson
Adv Watt
Instructed by: Neville Borman &
Botha
Grahamstown
c/o Smith Tabata Inc.
King Williams Town
Counsel for Respondents: Adv SM
Mbenenge
Adv AM Da Silva
Instructed by: State Attorney’s
c/o Shared Legal Services Office of
the Premier
32 Alexandra Road,
King Williams Town
Amicus Curiae’s Counsel: Adv
CA Renaud
Grahamstown
Date Heard: 7 March 2011
Order Delivered: 10 March 2011
Reason Available: 16 March 2011