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[2009] ZAGPJHC 113
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Electro-Motive Sibanye Joint Venture v Transnet Ltd and Others (2009/3994) [2009] ZAGPJHC 113 (11 March 2009)
SOUTH GAUTENG HIGH COURT, JOHANNESBURG
Case No. 2009/3994
Date:11/03/2009
ELECTRO-MOTIVE SIBANYE JOINT
VENTURE
...........................................
Applicant
and
TRANSNET
LIMITED
..............................................................................
First
Respondent
GE TRANSPORTATION SOUTH
AFRICA
........................................
Second
Respondent
SIEMENS SOUTHERN
AFRICA
............................................................
Third
Respondent
JUDGMENT
MEYER, J
[1] The applicant seeks an interim interdict pending the finalisation
of an application for final relief that it intends to launch.
[2] The applicant’s
locus standi
is in issue. It is
cited as ‘a joint venture partnership’ between Sibanye
Trade & Services (Pty) Limited (‘STS’)
and
Electro-Motive Diesel and Locomotive Company (Pty) Ltd (‘EMD-SA’),
which came into being pursuant to a written
‘joint venture
agreement’ concluded between them on 20 March 2007 (“the
joint venture”). EMD-SA is a wholly
owned subsidiary of
Electro-Motive Diesel Inc., which is a company incorporated in the
United States of America (“EMD”),
and it is common cause
that EMD “is currently one of the two largest and leading
builders of railway locomotives in the world
in terms of overall
sales.”
[3] The question is whether the joint venture agreement constituted a
partnership between STS and EMD-SA. The joint venture agreement
is
not vague or indefinite in its terms. It stipulates that there is no
partnership between them and that the joint venture shall
have no
separate legal personality. Contracting parties are, as a rule,
bound by their agreements. If the agreement states that
there is no
partnership, a party to the agreement cannot claim that there is one
in fact. See:
Hart v Pickles
1909 TH 244
at p 247;
Le
Voy v Birch’s Executors
1913 AD 102.
Third persons, on the
other hand, are not necessarily bound by the description which
contracting parties give to their agreement.
At their instance a
court will declare the transaction a partnership if it is one in
fact. See:
Joubert v Tarry & Co
1915 TPD 277
; cf
Zandberg v Van Zyl
1910 AD 302
, at p 309;
Pezutto v Dreyer
& Others
[1992] ZASCA 46
;
1992 (3) SA 379
(A).
[4] The first respondent (“Transnet”) takes no issue with
the description which EMD-SA and STS have given to their
joint
venture agreement. Even though a joint venture may in law and in a
particular factual situation be in the nature of a partnership
as was
contended for by Adv M Hellens SC on behalf of the applicant, EMD-SA
and STS have expressly disavowed that kind of relationship
between
themselves and effect must be given to their expressed intention.
[5] The parties to the joint venture agreement should accordingly
have brought this application. The joint venture itself does
not
have legal personality capable of suing and being sued in its own
name. The application falls to be dismissed on this ground.
[6] Adv P Kennedy SC, who appeared with Adv K Tsatsawane for
Transnet, requested that I also deal with the merits of the
application
irrespective of my finding on the issue of
locus
standi
. I consider it appropriate to accede to this request.
[7] On 18 September 2006, Transnet issued tender number EWS677. This
tender is referred to in the papers as “the first tender”.
It was for the manufacture, supply, delivery and commissioning of a
combination of 212 new 3000 horsepower (“3000HP”)
and
4000 horsepower (“4000HP”) diesel-electric locomotives,
with an option to use either DC or AC traction motors,
for Transnet’s
general freight business. The value of the first tender was
approximately R 6 billion. It closed on 7 November
2006. It is in
issue whether the submission of a tender on 31 October 2006 was a
response by STS or by the joint venture to the
first tender.
Transnet awarded “preferred bidder status” to the joint
venture during August 2007. This was announced
on 21 August 2007 at
a meeting attended by a delegation of senior executives from
Transnet, members of the board of managers of
the joint venture, and
a representative of EMD. It was also confirmed in a letter dated 28
August 2007.
[8] The joint venture avers that Transnet’s CEO at the time, Ms
Maria Ramos, requested execution to commence immediately
before the
conclusion of a contract due to Transnet’s urgent need for the
locomotives. I accept this version. Transnet’s
letter dated
28 August 2007 sets out a “tight” negotiation programme
and Transnet’s Group Chief Operating Officer,
Mr Louis van
Niekerk, confirms “that Transnet advised that they would
reimburse EMD for all reasonable costs in the event
that no contract
was concluded…” Senior executives of Transnet,
including Ramos and Van Niekerk, visited EMD’s
facilities in
the USA and negotiations regarding the terms of the written contract
to be concluded between Transnet and the joint
venture followed.
[9] Transnet’s internal auditors, Ernst & Young, in the
interim conducted an investigation into certain alleged
irregularities
in the first tender process as a result of a complaint
received on 9 November 2007 by the Public Service Commission’s
national
anti-corruption hotline. It is common cause that Mr
Christopher Wells, who is the Chief Financial Officer of Transnet and
the
deponent to its answering affidavit, invited Mr Gustav Adams, who
is a director of STS, a member of the joint venture’s board
of
managers, and the deponent to the joint venture’s affidavits,
to a meeting during March or April 2008. Adams was advised
that
Transnet had “a problem” with the contract and that a
number of issues needed to be discussed concerning the first
tender.
The meeting was attended by Messrs Koekemoer and Oates from Ernst &
Young, a Mr van Rensburg, who is an attorney from
Hofmeyrs, and
Adams. They advised Adams that they were investigating alleged
“irregularities” in the first tender
process and he was
informed of an anonymous complaint of a “corrupt relationship”
between himself and Mr Percival Mosweu,
who was the Chairman of the
Adjudication Steering Committee, which committee had to make a
recommendation in respect of the tenders
to the Spoornet Acquisition
Council. Adams was asked various questions aimed at ascertaining the
nature of his relationship with
Mosweu and of the business
association between Adams, Mosweu and their respective wives within
the context of Mosweu’s position
at Transnet and of Adams’s
interest, through STS, of obtaining contracts from Transnet.
[10] It is common cause that Ramos and Wells met with representatives
of EMD and the joint venture, namely Mr John Hamilton (EMD’s
CEO and President), Mr Albert Enste (EMD’s Vice President,
Marketing and a member of the joint venture’s board of
managers) and Mr Tom Rissman (EMD’s Vice President and General
Counsel and a member of the joint venture’s board of
managers),
on 8 July 2008 at EMD’s facility at Legrange, Illinois, USA.
Adams is the only other member of the joint venture’s
board of
managers. Adams, in the joint venture’s founding affidavit,
states this: “At this meeting Ramos advised
that the
respondent will not be signing the contract and that an anonymous
complaint had been received of wrongdoing in the procurement
process.” Transnet “discovered” that Adams “had
an irregular or improper relationship with Mosweu.”
Adams also
states that “[t]he two reasons advanced by the respondent for
the discontinuation of the first tender were, firstly,
alleged flaws
in the tender process and, secondly, that the respondent’s
locomotive requirements had changed.” It
is also stated that
“Ramos advised at the meeting that the respondent “needs
to close off this process and put a new
process in place.” It
is in dispute whether Hamilton “made it clear that the JV did
not accept the stance adopted
by Transnet” and whether he said
“that the withdrawal of the tender was not accepted…”.
Transnet’s
version is that the joint venture acquiesced in the
cancellation of the first tender. It is common cause that the
investigations
into the alleged irregularities resulted in a contract
not being concluded between Transnet and the joint venture.
[11] Following the meeting, negotiations were undertaken between
Transnet and EMD regarding the purchase of locomotives from EMD
without the involvement of STS. EMD had quoted a price of R2.494
billion for the supply of 96 “like-new” (refurbished)
locomotives, but the price was considered excessive by Transnet’s
Capital Investment Committee at its meeting on 17 September
2008.
EMD was notified that Transnet “was considering instead the
possibility of a confined tender for 100 locomotives
for delivery in
2009”.
[12] During November 2008, Transnet issued tender number
GSM08/10/0142. This tender is referred to in the papers as “the
second tender”. It is for the procurement of 100 new or “like
new” (refurbished) 3000HP diesel-electric locomotives
with AC
traction motors. Three original equipment manufacturers (“OEM’s”)
were invited to tender. They are
EMD, the second respondent, and
third respondents. The second tender should have closed on 17
November 2009, but its closing date
was finally extended to 17 March
2009 as a result of these proceedings.
[13] The order that is presently sought is aimed at interdicting
Transnet from closing the second tender pending the finalisation
of a
review application that the joint venture intends to launch.
[14] A Court’s approach in a matter for an interim interdict
pending the finalisation of an action or application for final
relief
and the requirements that need to be established by an applicant for
the interim interdict, was thus formulated in
Eriksen Motors
(Welkom) Ltd v Protea Motors, Warrenton, and Another
1973 (3) SA
685
(A), at p 691C-G:
‘The granting of an interim interdict pending an action is an
extraordinary remedy within the discretion of the Court. Where
the
right which it is sought to protect is not clear, the Court’s
approach in the matter of an interim interdict was lucidly
laid down
by Innes JA in
Setlogelo v Setlogelo
1914 AD 221
at 227. In
general the requisites are-
(a) a right which, “though
prima facie
established, is
open to some doubt”;
(b) a well grounded apprehension of irreparable injury;
(c) the absence of ordinary remedy.
In exercising its discretion the Court weighs,
inter alia
, the
prejudice to the applicant, if the interdict is withheld, against the
prejudice to the respondent if it is granted. This
is sometimes
called the balance of convenience.
The foregoing considerations are not individually decisive, but are
interrelated; for example, the stronger the applicant’s
prospects of success the less his need to rely on prejudice to
himself. Conversely, the more the element of “some doubt”,
the greater the need for the other factors to favour him. The Court
considers the affidavits as a whole, and the interrelation
of the
foregoing considerations, according to the facts and the
probabilities…”
[15] The approach in deciding whether the applicant for an interim
interdict pending final relief has established a
prima
facie
right
, especially where there are disputes of
fact, is as follows according to
Webster v Mitchell
1948 (1)
SA 1186
(W), at p 1189:
“The proper manner of approach I consider is to take the facts
as set out by the applicant, together with any facts set out
by the
respondent which the applicant cannot dispute, and to consider
whether, having regard to the inherent probabilities, the
applicant
could on those facts obtain final relief at the trial. The facts set
up in contradiction by the respondent should then
be considered. If
serious doubt is thrown on the case of the applicant he cannot
succeed in obtaining the temporary relief, for
his right,
prima
facie
established, may only be open to “some doubt”.
But if there is mere contradiction, or unconvincing explanation, the
matter should be left to trial and the right be protected in the
meanwhile, subject of course to the respective prejudice in the
grant
or refusal of interim relief.”
The criterion for the first branch of the enquiry was considered too
favourable towards an applicant for an interim interdict in
Gool v
Minister of Justice and Another
1955 (2) SA 682
(C), at p 688E,
and accordingly qualified to
“should (not could) the applicant on those facts obtain final
relief at the trial.”
[16] It is undisputed that Transnet is an organ of State and subject
to the provisions of the Constitution relating to such bodies.
See
Goodman Bros (Pty) Ltd v Transnet Ltd
1998 (4) SA 989
(WLD),
at pp 994G – 996C,
per
Blieden J. Transnet’s act
of cancelling the joint venture’s preferred bidder status and
the first tender process is
an administrative one. It falls within
“the true meaning of an administrative act”, which,
according to the
Goodman
case, “means any act relating
to the management of the affairs” of the relevant body.
[17] Transnet is also a major public entity listed in schedule 2 to
the Public Finance Management Act 1 of 1999 (“PFMA”).
In
terms of s 217 of the Constitution of the Republic of South Africa
Act 108 of 1996, and also s 51(1)(a)(iii) of the PMA, it
is required
to conduct its procurement activities in accordance with a process
which is fair, equitable, transparent, competitive
and cost
effective.
[18] The joint venture contends that it should have been given an
opportunity to make representations before Transnet took any
decision
relating to the cancellation of the first tender.
[19] Adv Hellens SC submitted that there are inconsistencies and
vagueness in Transnet’s answering affidavit
inter alia
relating to when the decision was taken to cancel the first
tender process and the preferred bidder status of the joint venture
and when it was conveyed. Much emphasis, both in the joint venture’s
replying affidavit and in argument on its behalf, was
also placed on
an invitation in a letter from Transnet’s attorneys, dated 15
January 2008, extended to the joint venture
to make written
representations as to why Transnet should not terminate the
appointment of the joint venture as the preferred bidder
and start
the first tender process afresh. Such invitation was withdrawn in a
subsequent letter dated 2 February 2009. It is
explained in
Transnet’s answering affidavit that such invitation was
extended in error. This explanation is consistent with
an earlier
communication from Transnet’s General Manager, Group Finance,
Mr Anoj Singh, dated 17 December 2008, in which
he advised Rissman of
EMD that the first tender was cancelled in its entirety.
[20] On the joint venture’s version, as stated in its founding
affidavit, the conclusion seems inescapable that Transnet’s
decision to cancel the first tender process, and accordingly the
preferred bidder status of the joint venture, was taken and conveyed
at the meeting on 8 July 2008. According to the version advanced by
Adams as to what transpired at the meeting, Transnet indicated
that
it would “not be signing the contract” and that the first
tender was being “discontinued” or “withdrawn”.
Adams’ version in this regard is consistent with various
statements made by Wells on behalf of Transnet. He states that
Transnet took steps to terminate the appointment of the joint venture
as preferred bidder during July 2008, and, as a result of
the
termination of the first tender process, a new procurement strategy
had to be developed in August 2008. He also states that
the reasons
for that decision were communicated to the joint venture on 8 July
2008. That the first tender and the joint venture’s
preferred
bidder status were cancelled at the 8 July 2008 meeting, is also
consistent with the subsequent events. Following that
meeting, EMD
stopped executing in terms of the first tender process and
negotiations were entered into between EMD and Transnet
aimed at
Transnet purchasing locomotives directly from EMD without the
involvement of STS.
[21] Accepting that the requirement to give an opportunity to make
representations is flexible and depends on the circumstances
of each
case as was submitted by Adv Kennedy SC, I am unable to find on the
papers that Transnet in all the circumstances acted
in a fair manner
by giving the joint venture sufficient information and a reasonable
and effective opportunity to make representations
before the decision
to cancel the first tender was taken. At best for Transnet, Adams,
at the meeting with him during March or
April 2008, and the other two
members of the joint venture’s board of managers at the meeting
on 8 July 2008, were notified
of the substance of Transnet’s
concerns arising from the relationship between Adams and Mosweu, and
were afforded an opportunity
to address Transnet on the matter. But
there were other alleged irregularities on which Transnet also relies
for its decision
to cancel the first tender process. It is not
suggested that the members of the joint venture’s board of
members were informed
of those alleged irregularities before the
decision to cancel the first tender process was taken. Insofar as an
opportunity to
make representations was given after the decision was
taken, such invitation was considered erroneously given and
withdrawn, and
the joint venture was accordingly also not given the
opportunity to procure a modification of Transnet’s decision to
cancel
the first tender process and the joint venture’s
preferred bidder status.
[22] The application which the joint venture intends to bring is
aimed at reviewing and setting aside Transnet’s decision
to
cancel the first tender and the preferred bidder status of the joint
venture in terms of the provisions of the Promotion of
Administrative
Justice Act 3 of 2000 (“PAJA”). S 7(1) of PAJA provides
that any proceedings for judicial review must
be instituted without
unreasonable delay and not later than 180 days after the date on
which the applicant for review was informed
of the administrative
actions and the reasons for it. Transnet contends that the joint
venture has been aware of the decision
to cancel the first tender for
more than 180 days and has not in its affidavits made out a case on
the basis upon which its late
filing of the review application can be
condoned.
[23] In the as yet unreported judgment of
The New Reclamation
Group (Pty) Ltd v Eskom Holdings Ltd & Kwanda Ferro-Alloy African
Resources (Pty) Ltd
(WLD Case No. 07/27391, delivered on 14 May
2008), Blieden J referred to the following principles relating to the
exercise of a
court’s discretion in matters of judicial review:
“[47] As submitted by Kwanda’s counsel, it is a
well-established principle of judicial review that a court exercises
a discretion whether to set aside an invalid administrative act.
According to the Supreme Court of Appeal:
“
It is that discretion that accords judicial review its
essential and pivotal role in administrative law, for it constitutes
the
indispensable moderating tool for avoiding or minimizing
injustice when legality and certainty collide.”
Oudekraal Estates (Pty) Ltd of Cape Town
2004 (6) SA 222
(SCA)
at par 3
[48] As has already been stated, in terms of PAJA, the yardstick
against which this discretion is to be exercised is what is
“just
end equitable”
.
[49] Our courts have identified a number of rationales for this
discretionary feature of administrative law:
49.1 prejudice caused to the respondent by any delay in bringing the
review;
Wolgroeiers Afslaers (Edms) Bpk vs. Munisipaliteit van
Kaapstad
1978 (1) SA 13
at 41
49.2 the public interest element in the finality of administrative
decisions and the exercise of administrative functions:
Associated
Institutions Pension Fund and Others v Van Zyl
2005 (2) SA 302
(SCA) at par 46.
49.3 considerations of pragmatism and practicality.
The
Chairperson: Standing Tender Committee and Others v JFE Sapela
Electronics (Pty) Ltd and Others
[2005] 4 All SA 487
(SCA) (‘JFE
Sapela’) at par 28.
49.4 In the specific context of tenders, our courts have further held
that there will be cases where by reason of the effluxion
of time
(and intervening events) an invalidly awarded tender must be
permitted to stand.
JFE Sapela
at par 29.
[50] In the Constitutional Court decision in
Pharmaceutical
manufacturers Association: In re Ex Parte President of the Republic
of South Africa
2000 (2) SA 614
(CC) at par 51. Chaskalson P held
that judicial review of administrative actions was inevitably a
constitutional matter.
[51] As a consequence of the constitutionalisation of judicial
review, the discretionary nature of the Courts’ power when
reviewing administrative action has been given further constitutional
entrenchment in section 172(1)(b)(ii) of the Constitution,
which
empowers a court, when deciding a constitutional matter, to make an
order that is just and equitable, including an order
suspending the
declaration of invalidity of any conduct for any period and on any
conditions.
Tantoush v Refugee Appeal Board and others
[2007] ZAGPHC 191
;
2008
(1) SA 232
(T) at par 4.”
[24] Review proceedings have yet not been launched by the joint
venture. The joint venture’s delay in bringing the review
and
the other considerations referred to by Blieden J are factors that
will be taken into account by the review court in the exercise
of its
discretion whether or not to set aside Transnet’s decision to
cancel the first tender and the preferred bidder status
of the joint
venture. In the present application for an interim interdict these
considerations open the joint venture’s
prima facie
right
to doubt.
[25] Relevant to the issue whether or not final relief will in due
course be granted to the joint venture is also the alleged
irregularities on which Transnet relies for its decision to cancel
the first tender process and the joint venture’s preferred
bidder status. Transnet contends that the irregularities that came
to light resulted in the tender process not being fair as is
required
by law,
inter alia
under s 217 of the Constitution of South
Africa Act 108 of 1996 and s 51(1)(a)(iii) of the PMA. S 50(1)(b)
of the PMA enjoins
Transnet’s Board to act with fidelity,
integrity and in Transnet’s best interests in managing its
financial affairs,
and s 51(1)(b)(ii) enjoins it to take effective
and appropriate steps to prevent irregular expenditure.
[26] Transnet relies on the following alleged irregularities in the
first tender process:
- STS obtained the tender document long before it was made available
to the general public. Other bidders did not get the same
opportunity and the luxury of time to prepare their submissions.
This was unfair to the other bidders and rendered the process
irregular.
- The tender which was submitted in response to the first tender was
submitted by only one of the parties to the joint venture,
being STS.
The joint venture itself did not exist on the date when the first
tender was submitted and could not have any rights
from a tender
process in respect of which it did not submit a tender. See
Steenkamp NO v Provincial Tender Board
2006 (3) SA 151
(SCA),
paras 48 and 51.
- Adams had a business relationship with the Chairman of Transnet’s
Adjudicating Steering Committee, Mosweu. The Chairman
did not
disclose such relationship and did not withdraw from participating in
the evaluation of the tenders.
- There was an error in the evaluation of the joint venture’s
BBBEE status, which mistake resulted in the joint venture being
awarded more points than it should have been awarded and which led to
Transnet deciding to award preferred bidder status to the
joint
venture. Had the points been correctly calculated and allocated, the
joint venture would not have been awarded preferred
bidder status.
[27] It is common cause that a business relationship or
acquaintanceship existed between Adams and Mosweu. They had both
been
directors and shareholders of a company known as Finishing Touch
Trading 239 (Pty) Ltd (“FT”). Upon resigning as a
director of this company in December 2006, Adams transferred his
shareholding to the remaining directors, including Mosweu. The
transfer of the shareholding occurred during the adjudication process
and prior to the joint venture’s nomination as the
preferred
bidder. Adams explains:
“A company was purchased, which was a shelf company, for the
purpose of participating in a offer made through Dale Hayes
who is of
considerable golfing fame in this country, in terms of which
timeshare or fractional title could be obtained in several
glof
estates. The thought was that a few business associates of which
Mosweu was one, would all become shareholders in a shelf
company,
which shelf company in turn would acquire the frational title or
timeshare in that which was on offer from Dale Hayes.
Ultimately,
and upon investigation, the project was found to be not viable and in
December 2006 I resigned, automatically transferring
my shareholding
in FT which was the company which was to be used to house the
interests in the fractional title or timeshare to
the remaining
directors. The shares have no value.”
Adams and the wives of Mosweu and Adams were directors of Sovereign
Seeker Investments 110 (Pty) Ltd, which company in turn was
a
shareholder in Sharp Move Trading 207 (Pty) Ltd, of which Adams was
also a shareholder and of which Mosweu’s wife was a
director.
Adams explains:
“My wife and Mosweu’s wife wanted to go into business
together to take up any opportunities that might come along with
regard to government or other tenders. To that end they participated
in becoming directors and shareholders in these companies.
No
business was ever done in these companies and Mrs Mosweu ultimately
resigned on the 19
th
June 2007. … I was a
director simply to give a helping hand to the two ladies who thought
they might be successful in
business together.”
[28] Transnet’s procurement is
inter alia
governed by
the provisions of the
Public Finance Management Act 1 of 1999
. The
regulations made under this Act provide that a supply chain
management official, such as Mosweu, or other role player must
recognise and disclose any conflict of interest that may arise.
These regulations inter alia provide as follows:
“If an official or other role player, or any close family
member, partner or associate of such official or other role player,
has any private or business interest in any contract to be awarded,
that official or other role player must ~
disclose that interest; and
withdraw from participating in any manner whatsoever in the process
relating to the contract.”
[29] Mosweu did not disclose that a person with whom he had a
“business acquaintanceship” had an interest in the first
tender and Mosweu did not withdraw from participating in the first
tender process. At the meetings of the Adjudicating Steering
Committee everybody, including Mosweu, present were minuted to have
“declared that they had no interest in or any relationship
with
any of the tenderers / suppliers / agents involved with the tenders
being tabled …” This is not disputed. Adams
in reply
states that Transnet has failed to set out any indication of a
decisive or significant role played by Mosweu in the process
of
evaluating the tenders. He, however, in his capacity of Chairman of
the Adjudicating Steering Committee, held a key position.
[30] Adv Kennedy SC submitted that the existence of the undisputed
“business acquaintanceship” that Mosweu had with
Adams
gives rise to a reasonable apprehension of bias by Mosweu in favour
of the joint venture and this alone has tainted the entire
first
tender process. See
Bam-Mugwanya v Minister of Finance and
Provincial Expenditure, Eastern Cape
2001 (4) SA 120
(Ck), par
34. This failure, in my view, also opens the joint venture’s
prima facie
right to doubt.
[31] Transnet avers that the tenders received in the first tender
process were to be evaluated against three criteria, namely their
technical, financial, and socio-economic components. These three
criteria were allocated evaluation weightings of 50, 40 and 10
respectively. The socio-economic component included Broad-Based
Black Economic Empowerment (“BBBEE”), legal requirements
and the national industrial participation policy, which were
allocated weightings of 45, 45 and 10 respectively. A mistake
occurred
in the evaluation of the joint venture’s BBBEE status
in that the score for that was only calculated with reference to the
BBBEE status of STS only and not with reference to the BBBEE status
of both STS and EMD-SA. It is common cause that EMD constitutes
70%
of the joint venture. The joint venture achieved a 100% score (5
points) in respect of the BBBEE criterion. Transnet maintains
that
the joint venture ought to have achieved 1.8 points instead, which
would have resulted in the second respondent achieving
higher overall
scores than the joint venture. Transnet accordingly concluded that
the adjudication of the tenders in the first
tender process was
flawed, unfair to the other tenderers and particularly the second
respondent, and that the first tender had
to be discontinued.
[32] Adams on behalf of the joint venture in reply says the following
on this issue:
“I am not convinced at all that the manner in which the matter
was scored was incorrect. The bid was put in on behalf of
STS
declaring that it intended to form a SPV to accommodate the bid.
STS, when adjudged from its BBBEE status would score one
hundred
percent because it has that status. The fact that a SPV would at a
later stage accommodate the JV in terms of which there
would be a
split, as it turned out 70/30, was not a factor to be taken into
account at the time that the points were awarded.”
Applying the criterion on which Transnet relies, Adams, in the joint
venture’s replying affidavit, concedes that the second
respondent would have achieved a higher overall score in respect of
the 4000HP locomotives, but not in respect of the 3000HP locomotives.
[33] The fact remains that the preferred bidder status was awarded to
the joint venture and not to STS. The joint venture has
accordingly,
in my view, failed in its replying affidavit to show the basis upon
which it could rationally be found that the matter
was scored
correctly.
[34] The findings made so far in respect of the requirement of a
prima facie
right make it unnecessary to consider all the
other facts set up in contradiction or submissions advanced on behalf
of Transnet.
The applicant has, in my judgment, established a
prima
facie
right, but it is, at the very least, open to “some
doubt”. There is not “mere contradiction or unconvincing
explanation” on the part of Transnet.
[35] The joint venture in these proceedings seeks the preservation of
Transnet’s requirement for new or refurbished locomotives
as it
existed at the time of the cancellation of the first tender and the
joint venture’s status as the preferred bidder.
I accept that
it has satisfied the requirement that it has
no other satisfactory
remedy
.
[36] The joint venture must further establish, as an objective fact,
an actual or well grounded apprehension of irreparable loss
if
the interdict is not granted. See
Ruskin NO v Appleson
1951
(3) SA 800
(W), at p 813B-C.
[37] Adams says the following on this issue in paragraph 105 of the
joint venture’s founding affidavit:
“If an award is made under the second tender be that to the
applicant, EMD or anyone else, the respondent may then raise
the
argument that it has fulfilled its traction requirements, for the
time being, under the first tender by means of the second
tender: in
so doing the respondent would have created its own reality and
avoided its obligations to the applicant under the first
tender.”
[38] An award under the second tender will, on the undisputed facts,
not fulfill Transnet’s traction needs. Transnet says
that it
intends to procure a total of 460 diesel locomotives to replace
elements of its existing fleet. Its stated intention is
supported by
its actions. On 1 May 2007, an agreement in respect of the
acquisition of 50 locomotives was concluded between Transnet
and the
joint venture. These units will, according to Admas, be delivered
before the end of 2009. On 21 August 2007, Transnet
awarded
preferred bidder status to the joint venture for 212 locomotives.
This tender was cancelled. However, that Transnet required
in excess
of 400 locomotives was emphasised at the meeting on 8 July 2008.
Ramos advised the meeting that Transnet “still
intended to
procure up to 400 locomotives and a new tender process would, in due
course, be conducted for that purpose.”
During November 2008,
Transnet issued another tender for the procurement of 100
locomotives. This tender is called for to fulfill
Transnet’s
urgent and “short-term short-fall” and delivery is
required by the end of 2009.”
[39] Whether or not the second tender is in substitution of the first
tender is a matter of serious dispute between the parties.
I need
not consider this issue. It seems inherently probable on the papers
that Transnet is in need of more than 400 locomotives
and that it
intends to acquire at least 212 more locomotives in addition to the
50 “like-new” locomotives forming the
subject-matter of
its “like-new” agreement with the joint venture and the
100 locomotives forming the subject-matter
of the second tender.
[40] In paragraph 148.2 of the answering affidavit, Wells, on behalf
of Transnet, states this:
“Transnet states categorically that it will not raise the
argument, once an award is made under the Second Tender, that it
has
fulfilled its traction requirements under the First Tender.
Accordingly, EMSJV will not be met with such a defence and is
at
liberty to institute legal proceedings against Transnet for whatever
rights it believes it has in terms of the First Tender.”
[41] In paragraph 238 of its replying affidavit the joint venture
added the possibility of Transnet not being able to afford more
locomotives than those provided for in the first tender. Such is,
however, mere speculation and not the case that Transnet was
required
to answer.
[42] The joint venture has, in my judgment, failed to establish that
its apprehension of loss should this interim interdict not
be
granted, is reasonable under all the circumstances.
[43] I now turn to the requirement whether the
balance of
convenience
favours the granting of the interim interdict. In
assessing the balance of convenience, a court is required to weigh
the prejudice
which an applicant will suffer if the interim relief is
not granted against the prejudice which a respondent will suffer if
the
interim interdict is granted. See
Eriksen Motors (Welkom) Ltd
v Protea Motors, Warrenton, And Another
1973 (3) SA 685
(A), at p
691C-G.
[44] The final resolution of the intended proceedings for final
relief that the joint venture intends to institute may potentially
take a few years to complete. Once the review application is heard
the matter may or may not be referred back to Transnet to afford
the
joint venture a proper hearing. The outcome of such hearing may or
may not result in further review proceedings. Then there
is also the
potential of appeal proceedings.
[45] Transnet’s immediate and urgent need to procure
locomotives is common cause. On the joint venture’s version,
Ramos at the meeting on 27 August 2007 indicated that Transnet’s
need for the 212 locomotives was urgent and the joint venture
was
accordingly required to commence work as soon as possible even though
the contract had not been finalised. The second tender
also seeks
urgent satisfaction of Transnet’s urgent tractive requirements.
[46] Any delay in the procurement of the locomotives will seriously
inconvenience and detrimentally affect Transnet and the country
at
large. Wells
inter alia
thus describes Transnet’s need
for locomotives in its answering affidavit:
“144.3 The fact that up to 240 locomotives of Transnet may be
withdrawn from active duty, is completely irrelevant. The
average
age of TFR’s locomotive fleet is 28 years, compared with a
class-1 railway benchmark of between 14 and 18 years.
There is a
strong correlation between age and reliability which is compounded by
the under-investment in maintenance over the
years and the general
lack of investment into the TFR fleet. The last batch of locomotives
was purchased more than 16 years ago.
The problem is that the ageing
fleet is characterized by high maintenance costs, low reliability and
availability figures, as
well as a high number of component failures.
The control technology used in TFR locomotives is of an early
generation and does
not provide the improved train handling, safety
controls, protection mechanisms and fault logging features of modern
control systems.
144.4 The fact is that Transnet urgently needs to acquire additional
locomotives if its business objectives are to be achieved.
Unless
this materializes, there will be a reduction in its fleet with a
corresponding reduction in volume aspirations.
144.5 Transnet’s diesel locomotives are significantly older,
with an average age of 32 years. The current reliability of
diesel
locomotives is at an average of 98 faults per million kilometers,
against an industry norm of between 15 and 25 faults per
million
kilometers. It should be noted that faults are measured per
locomotive, but locomotives are operated in consists of up
to 6
locomotives. This means that a failure in 1 locomotive has a
significant impact on the operations, which is far more pronounced
than the statistics for reliability would indicate. With a life
expectancy of 30 years, Transnet should theoretically be replacing
3.3% of its locomotives every year.
144.6 By increasing capacity and providing more reliable locomotives,
this will enable Transnet to provide a more reliable capacity
to
customers and to improve its service level. Adhering to customer
promises is the number 1 requirement of Transnet’s customers.
The reality is that business opportunities will be graded by improved
service levels in that additional demand should result,
resulting in
higher tariffs being negotiated.
144.7 There are also significant benefits to be had to the country as
a whole in that the greater usage of rail as opposed to road
results
in fewer accidents and less damage to our roads. All of this will be
significantly impacted on if there is a delay in
finalizing the
Second tender.”
[47] On the other hand, the joint venture remains at liberty to
institute its intended proceedings for final relief whether or
not
this interim interdict is granted. The court reviewing Transnet’s
administration action is empowered to make an order
that is just and
equitable in all the circumstances.
[48] It has not been established that any relief that may ultimately
be granted to the joint venture would be rendered nugatory
if interim
relief is not presently granted. The mere possibility, speculative
though it is, that Transnet will “not require
or …
cannot afford” more locomotives than those forming the
subject-matter of the first tender process by the time
the joint
venture’s intended proceedings for final relief are finalised
is far outweighed by the definite prejudice which
Transnet and the
public will suffer if the interim interdict is granted.
[49] The balance of convenience, in my judgment, does not support the
interim relief sought.
[50] The notice of motion in this matter was issued on 10 February
2009. The relief was required by way of urgency since the second
tender was at that time due to close on 17 February 2009. The matter
appeared before the urgent court on 13 February 2009. It
was, by
consent, postponed to 3 March 2009, time limits for the filing of the
answering and replying affidavits were set, and the
issue of costs
was reserved. This arrangement was made possible, because Transnet
agreed to a further extension of the date for
the closure of the
tender. Adv Hellens SC submitted that the appearance in the urgent
court on 13 February 2009 would not have
been necessary had Transnet
before that date agreed to a further extension of the date for the
closure of the second tender. I
agree with this submission and
consider it appropriate to order Transnet to pay the costs of 13
February 2009.
[51] In the result the following order is made:
1. The application is dismissed.
2. The applicant is ordered to pay the costs of Sibanye Trade &
Services (Pty) Ltd and of Electro-Motive Diesel and Locomotive
Company (Pty) Ltd for the appearance before this court on 13 February
2009, which costs shall include the costs attendant upon
the
engagement of the services of senior counsel.
3. Sibanye Trade & Services (Pty) Ltd and Electro-Motive Diesel
and Locomotive Company (Pty) Ltd are ordered to pay to the
applicant
the costs of this application jointly and severally, which costs
shall include the costs attendant upon the engagement
of the services
of two counsel, one of whom a senior counsel, except for the costs
referred to in paragraph 2 of this order.
4. Sibanye Trade & Services (Pty) Ltd, Electro-Motive Diesel and
Locomotive Company (Pty) Ltd, and the first respondent are
hereby
given leave to approach this court, upon notice given to all other
parties within fifteen days of the date of this order,
to recall and
to vary the costs orders made in terms of paragraphs 2 and 3 of this
order.
P.A.
MEYER
JUDGE OF
THE HIGH COURT
11 March
2009