Actaris South Africa (Pty) Ltd v Sol Platjie Municipality and Another (213/2008) [2008] ZANCHC 6; [2008] 4 All SA 168 (NC) (29 February 2008)

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[2008] ZANCHC 6
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Actaris South Africa (Pty) Ltd v Sol Platjie Municipality and Another (213/2008) [2008] ZANCHC 6; [2008] 4 All SA 168 (NC) (29 February 2008)

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IN
THE HIGH COURT OF SOUTH AFRICA
(Northern
Cape Division)
Case
No: 213
/2008
Heard:
22/02/2008
Delivered:
29/02/2008
In
the matter between:
ACTARIS
SOUTH AFRICA (PTY) LTD Applicant
and
SOL
PLAATJE MUNICIPALITY First Respondent
INTELLIGENT
METERING SYSTEMS
(PTY)
LTD Second
Respondent
JUDGMENT
BOSIELO
AJP
INTRODUCTION
The parties hereto are embroiled in
what promises to be a fierce and bruising legal war over a
multimillion rand tender issued by
first respondent (a Municipality
as defined in terms of the applicable legislation).
This epic legal war will, in due
course, be fought out in this court in the review application
brought by the applicant under case
number 1357/07 to have the
decision to award the tender to second respondent reviewed and set
aside.
This application was brought by
applicant on urgency with the primary objective of restraining and
interdicting both first and second
respondents, temporarily and
pending the hearing of the review of the awarding of the tender,
from installing any further meters
in terms of the tender which
forms the subject of the review application. It is clear that the
applicant’s main focus or intention
is to preserve the status quo
pending the final determination of the review application.
THE PARTIES
The applicant is a company duly
incorporated in accordance with the company laws of the Republic of
South Africa with its principal
place of business at 2
nd
Floor, Waterside Place, Southgate, Carl Cronjé Drive, Tiger Valley,
Cape Town.
The first respondent
is a municipality duly established in terms of the applicable local
government laws and having its offices
at Jan Smuts Boulevard,
Kimberley.
The second respondent
is a company duly incorporated in terms of the company laws of the
Republic of South Africa and having its
principal place of business
at 99 Van Riebeeck Avenue, Edenvale, Gauteng.
BACKGROUND FACTS
In order to place this application
in its correct and clear perspective and to facilitate easy
comprehension, I deemed it imperative
and necessary to give a brief
history of this matter, in particular, the events which led to this
application. During or about
December 2006 the first respondent
issued invitations to tender for four tenders. What is particularly
relevant to this case ,
is the tender for the supply, delivery and
installation of pre-payment electricity meters or compatible
software and devices for
revenue protection under tender numbers
CEE/T2006. The applicant, second respondent and other tenderers
submitted tenders for
this contract which closed on 8 December 2006.
I find it necessary to mention that prior to this invitation to
tender, a company
called Actaris Measurement and Systems (Pty) Ltd
(Actaris M&S) of which applicant is a subsidiary was in charge
of the supply
to the first respondent of measurement and metering
equipment systems and facilities for the supply of electricity to
households
falling within the first respondent’s jurisdiction. To
my understanding, this included amongst others, the provision of
hardware,
software, data communications and data management
facilities to facilitate, amongst others, vending to pre-paid
meters, receipting
of payment bills, operational management of
metering assets, installation, connection, disconnection,
reconnection of metering
and payment equipment and systems, data
management, data processing and data warehousing, procurement of
connectivity and customer
data access, reporting related services.
It is not in dispute that this contract commenced on 1 November 2003
and expired during
October 2006 but, with the mutual consent of both
parties, continued on a month to month basis until second respondent
took over
on or about 4 July 2007. Self-evidently, this was
intended to avert any unnecessary disruption of electricity supply
to the residents
of first respondent during the transition period.
It is common cause that the new
tender closed on 8 December 2006. Both applicant and second
respondent had submitted their tenders.
The applicant avers that,
contrary to para 23 of first respondent’s own supply chain
management policy, when the tenders were
opened in public on 8
December 2006, quite inexplicably, the prices of the respective
bidders were not read which conduct, applicant
avers, seriously
undermines the critical principle of openness and transparency which
of all public tenders, in particular those
administered by
government, public institutions and organs of state must adhere to.
According to the applicant, until
it wrote a letter of enquiry to first respondent on 29 June 2007,
there had been no communication
from first respondent as to who had
won the tender. In the same letter applicant requested to be
advised of who has won the tender
and quite significantly, the
reasons therefore. See Annexure “H”. First respondent
responded by a letter dated 4 July 2007
marked annexure “I” to
the effect that the tender had recently been awarded to second
respondent (IMS). It is worth noting
that, notwithstanding a clear
request for reasons embodied in annexure “H”, first respondent
furnished no reasons for its decision.
According to the applicant, it had
heard rumours through the rumour-mill that the ultimate price of the
tender awarded to second
respondent was a princely amount R94
million as opposed to its meagre price of R36 million. This caused
it considerable disquiet
which prompted another letter to first
respondent dated 9 July 2007, annexure “J” in terms whereof they
lodged an appeal against
the award of the tender in terms of the
Local Government Municipality Systems Act, 32 of 2000 (“the
Systems Act”). Furthermore
applicant made a request for access to
information in terms of the Promotion of Access to Informaiton Act,
2 of 2000 (“PAIA”),
in particular, the various to reports
submitted by the bid adjudication committee in terms of paragraph 5
of the Policy. The applicant
also requested adequate reasons for
the award of the tender as well as the appointment of an independent
and impartial person to
attempt to resolve the dispute between
applicant and first respondent in terms of paragraph 49 of the
Policy. Quite importantly,
the applicant requested first respondent
to cease taking any further steps in appointing second respondent
(IMS) before the outcome
of the appeal. First respondent, responded
through their legal representatives, Routledge Modise (RM), by
facsimile dated 24 July
2007, annexure “K”, wherein they stated,
quite unequivocally, that they would not cease to implement the
tender with second
respondent (IMS). Furthermore, first respondent
refused to furnish the information requested in terms of “PAIA”
on the basis
that the request “does not comply with the provisions
of PAIA”. Concerning the request for reasons the first respondent
responded
that it would be regarded as a request in terms of the
Promotion of Administrative Justice Act, 3 of 2000 (“PAJA”) and
would
be responded to within 90 days of receipt of the request. The
appeal in terms of section 62 of the Systems Act could not be
entertained
as first respondent claimed that it did not contain
sufficient information.
Far from being deterred by first
respondent unco-operative attitude, applicant was galvanized into
more action as will become more
clearer hereunder. On 3 August
2007, applicant, through its legal representatives, Edward Nathan
Sonnenberg (ENS) sent a formal
request for access to information in
the prescribed form in terms of PAIA to first respondent and
specifically requested all letters,
reports and technical or
financial evaluations compiled by representatives of first
respondent; all recommendations by KES (Khatima
Engineering Services
CC) which was a technical consultant employed by first respondent to
evaluate the various tenders; all minutes,
documents, draft
documents, correspondence, assessments, transcripts and calculations
by the first respondent and point calculations
of all tenders
received from the various contracts. By another facsimile dated 3
August 2007, annexure “L”, applicant expressed
the view to first
respondent, that even if its initial request for information may not
have complied strictly with PAIA, first
respondent was obliged in
terms of the PAIA not to be unnecessarily pedantic and obstructive
but to assist applicant in its quest
for essential information.
Furthermore the applicants request for reasons and information was
repeated. Quite interestingly, first
respondent replied by
facsimile on 7 August 2007 annexure “M” to the effect that
insofar as the request for access to information
is concerned, the
first respondent will adhere to the time-frames prescribed by PAIA
and further that the reasons for the award
of the tender will be
furnished in accordance with section 5(2) of PAJA (i.e. within 90
days of receipt of the request).
On 2 October 2007, first
respondent, under cover of a letter, annexure “N” supplied the
applicant, in response to request for
access to information of 3
August 2007, with, amongst others a document entitled “Final
Technical Report for Kimberley Sol Plaatje
[sic] Municipality for
Technical Evaluation of Prepaid Electricity Metering System
FIN/INC-VEND; CE/R/1/12006; CEF/RE/1/2006; CEE/T/2006;
prepared by
KES with annexures; the
“Agenda
& Minutes”
of the
Evaluation Committee held on 6 September 2007 annexure “P”; and
a letter dated 7 May 2007 addressed to Actaris. The
applicant
complains bitterly that many essential documents relating to all
letters, reports, and technical or financial evaluations
complied by
representatives of first respondent; all minutes, documents, drafts
documents, correspondence, assessments, transcripts
and calculations
made by first respondent and more importantly point calculations of
all tenders received in respect of this tender
were still excluded.
On 22 October 2007, the applicant
served the review application on the respondents. The applicant did
this as it believed that
whatever essential documents which the
first respondent had failed to deliver, it would be obliged to
deliver to them as part of
the record in terms of Rule 53(1)(b) of
the Uniform Rules of Court. On 16 November 2007, the first
respondent delivered the original
record to the applicant which
comprised of two arch-lever files. According to the applicant this
record was woefully incomplete.
It excluded the following crucial
documents viz. recordings and transcripts of various proceedings and
crucial meetings of the
bid evaluation committee held on 25 May 2007
and 11 July 2007 as well as meetings of the bid adjudication
committee held on 25
May 2007 and 6 September 2007; correspondence
relating to the tenders addressed to first respondent from members
of its own internal
departments (which applicant had reason to
believe did exist) and correspondence between the first respondent
and KES (the techinal
consultants) pertaining to the tenders.
In a desperate attempt to obtain
these essential documents, the applicant served notice in terms of
Rule 35 on first respondent,
annexure “Q” on 29 November 2007.
It was only on 20 December 2007 that the first respondent responded
and delivered the following
documents to applicant viz. their reply
to the Rule 35 notice; the first respondent additional reasons,
annexure “S”; first
respondents’ supplementary record in terms
of Rule 53 of the Uniform Rules. It is worth noting that for the
first time the supplementary
record included an internal memorandum
by one Pretorius (the first respondent’s engineer) annexure “T”;
letter of appointment
of KES which embodied its instructions and all
three technical reports submitted by KES. Based on these essential
documents the
applicant prepared and filed a supplementary affidavit
on 17 January 2008. Based on the information available to it at
this stage
applicant wrote a letter to first respondent on 25
January 2008 requesting an undertaking to delay the implementation
of second
respondent’s system. On 4 February 2008, first
respondent, once again refused to delay the implementation of second
respondent’s
system through a very lengthy letter which raised
various other issues. One of the critical and crucial issues raised
in the letter
is the allegation that in terms of the contract
between first and second respondents, second respondent was supposed
to commence
with the manufacture of the new meters on 3 September
2007. All in all there were 33000 meters to be manufactured.
According
to this letter which allegation was repeated in the
respondents’ answering affidavit, second respondent had already
manufactured
and delivered 16400 single meters to first respondent.
According to the respondents the manufacture of the remaining meters
is
in progress and second respondent intends to complete this phase
by 17 February 2008. The installation of the meters was scheduled
to commence on 7 February 2008. Based on this, the respondents aver
that as second respondent has already manufactured and delivered
some of the meters, it would be impractical to stop further
implementation of the contract at this stage.
It is clear form their opposing
papers, that the attitude of the respondents to this application is
that it has no merit and that
it is an abuse of the court process.
In fact, the respondents pertinently attacked the alleged urgency of
this application and
alleged that, given the history of the matter,
whatever urgency may be seen to exist in the matter, is
self-created. In addition
hereto, both respondents aver that by
virtue of the fact that second respondents has commenced to perform
in terms of the contract,
the relief sought by the applicant is not
competent nor practical. They furthermore dispute the fact that
applicant has no alternative
remedy as it still intends to proceed
with the main review application. It was also alleged by both
respondents that as the second
respondent has already started to
implement the contract for which the first respondent is legally
liable to pay, the balance of
convenience weighs heavily against the
granting of the relief sought by the applicant as this would result
in a waste of first
respondent’s resources, particularly because
what has been done cannot realistically be undone.
LEGAL SUBMISSIONS
As a starting point, Mr Newdigate
SC (duly assisted by Mr Hugo) for the applicant argued with force
that the peculiar history of
this matter makes it patently and
inherently urgent. He submitted that whatever ultimate delay
occurred herein, is solely due
to the evasive and obstructive
tactics adopted by first respondent. In a very clinical fashion, he
set out in clear terms all
the various diligent steps taken by
applicant, first to enquire if the tender was awarded, followed by
various appropriate steps
to protect its interests. This included
amongst others, the request for reasons for the award of the tender,
as well as access
to essential information which had a direct
bearing on the award of the tender, as well as access to essential
information which
had a direct bearing on the award of the tender.
Mr Newdigate set out in great detail the various stages from the
informal letters
of request, to the formal letters in terms of PAIA,
the request for reasons in terms of PAJA, the Rule 53 review
application followed
by the notice in terms of Rule 35 all of which
constitute diligent attempts by the applicant to obtain crucial
information and
documents which would put it in a position where it
could properly assess its legal position. Mr Newdigate contended
that applicant
was furnished with sufficient knowledge to enable it
to finalise its review application only during 20 December 2007,
which incidentally
was during the festive period. He submitted
further that when respondent made it clear by letter dated 4
February 2008 that it
will not suspend or delay the implementation
of the tender by second respondent, the applicant had no choice but
to prepare an
urgent application to restrain or interdict any
further implementation of the tender, in particular the installation
of the meters.
Mr Newdigate argued with zeal that, given the facts
of this case, it would be unconscionable to allow the respondents to
deny
the applicant its remedies when they are responsible for the
delay which occurred.
With regard to the existence of a
prima facie right Mr Newdigate submitted that the applicant, being a
corporate citizen, is like
everybody else legally entitled to
administrative action which is lawful, reasonable and procedurally
fair as envisaged by section
33(1) of the Constitution. He argued
further that this right is further bolstered by section 217(1) of
the Constitution which
requires an organ of state either at
national, provincial or the local sphere of government when
contracting for goods or services
to do so
“in
accordance with a
system
which is fair, equitable, transparent, competitive and cost
effective
.”
He argued that it is not an accident that the same principles are
encapsulated in the
Local Government: Municipal Finance Management
Act, 56 of 2003
. In addition, Mr Newdigate submitted that the
applicant’s right to procedural fairness in adjudicating the
tender was infringed
in that certain facts were considered against
applicant without giving applicant the opportunity to respond
thereto i.e. the fact
that first respondent allegedly had difficulty
to understand Actaris’ financial costing, whilst certain relevant
facts were not
considered e.g. the price and applicant’s previous
track record. Furthermore, Mr Newdigate was critical of the fact
that second
respondent saw it fit to award this tender to second
respondent at an astronomical amount of R94 million and rejected the
applicant’s
tender of a mere R36 million. He was furthermore
critical of what he termed bald and unsubstantiated allegations that
applicant’s
tender amounted to R70 million and not the R36 million
reflected in its tender documents. He submitted that if these
allegations
are correct, then first respondent was obliged to bring
this to applicant’s attention and give it an opportunity to
explain before
rejecting its bid in terms of the
audi-principle
.
Mr Cassim SC (assisted by Mr
Maenetje) for the first respondent unleashed a scathing attack
against the applicant for having delayed
to launch its application
earlier. He submitted that according to the applicant, as early as
9 July 2007, applicant knew that
the awarding of the tender was
irregular and even threatened to obtain an interdict to stop the
implementation of the tender, if
first respondent failed to give an
undertaking not to proceed with the implementation of the tender.
He submitted that when first
respondent refused to grant such an
undertaking in July 2007, the applicant should have issued its
application immediately and
not wait until January 2008. Mr Cassim
submitted that with the effluxion of time the respondents signed a
formal agreement and
preceded to implement the contract. As a
result it has become impractical to stop the implementation as it
has already taken place.
In other words, he submitted that the
granting of an interdict by this court would be a futile and
academic exercise and would
have disastrous financial consequences
for both respondents. Concerning a
prima
facie
right, he
submitted that the review application launched by the applicant is
doomed to fail as it has no merit. He argued that
the tender was
correctly awarded to second respondent as it beat the applicant on
functionality, which is one of key and strategically
important
aspects for considering the tender. With regard to the price
difference, Mr Cassim argued without elaboration and without
much
conviction that first respondent discovered certain hidden costs in
the applicant’s tender which would make it more expensive
in the
long term. On the crisp issue of balance of convenience and
irreparable harm, Mr Cassim argued that as second respondent
has
already started to implement the tender, any action intended to halt
further implementation of the tender would have disastrous
consequences for both first and second respondents, particularly as
first respondent might be forced to pay some R82 million to
second
respondent for work already done.
To a large extent, Mr Khoza SC
(assisted by Mr Mokoena) for the second respondent echoed Mr
Cassim’s sentiments for obvious reasons.
He argued with force and
zeal that second respondent who was the innocent party in this
entire saga stand to suffer irreparable
harm should it be restrained
from continuing with the implementation of the tender in terms of
the Project Plan Summary, Annexure
“AA”. He submitted that the
second respondent has already manufactured and delivered 16400 of
the 33000 meters which were
ordered at a cost of a princely R82
million. As a result, he contended that any order to stop any
further implementation of the
tender by second respondent would
bring about irreparable harm to second respondent whose financial
position is very precarious.
He furthermore argued that applicant
is the author of its own misfortune having known as far back as 9
July 2007 that it was not
happy with the fact that it had lost the
tender. He submitted that when first respondent refused to furnish
applicant with reasons
and essential documents during July-August
2007, applicant should have issued its application forthwith.
Furthermore, he submitted
that having lodged an appeal in terms of
section 62 of the Municipal Systems Act, applicant should have
followed it with an urgent
interdict to stop any further
implementation of the tender. As a result, he submitted that the
long and inordinate delay by the
applicant should be held against
the applicant, as it basically allowed the proverbial horse to bolt
out of the stable.
CONCLUSION
I have found the following facts to
be common cause i.e. first and second respondents are fierce rivals
in the field of supply,
installation and management of metering
equipment and facilities for the supply of electricity; that during
2003 to July 2007,
the applicant’s holding company Actaris M&S
had a contract with first respondent for the supply , installation
and management
of the metering equipment and facilities for the
supply of electricity for households within the first respondent’s
jurisdiction;
that during 2006 after the expiry of the Actaris
contract, first respondent put up tenders for a new contract; that
applicant
and second respondent put in their tenders for the
contract; that this tender was awarded to second respondent during
May 2007;
that applicant knew of this fact during July 2007 after it
had written a letter of an enquiry to first respondent; that
applicant
had requested to be furnished with reasons for the award
of the tender to second respondent which request was not complied
with
and further that applicant was denied access to crucial and
essential information and documents which had a direct bearing on
the
award of the tender in issue.
It is abundantly clear from
applicant’s founding affidavit which is fully amplified by his
supplementary affidavit filed on
17
January 2008
that
from the beginning second respondent was not willing to be of any
assistance to the applicant. Second respondent used every
conceivable strategy to frustrate applicant in its quest for reasons
and for essential information surrounding the award of the
tender.
It is furthermore clear that even after first respondent decided to
comply with the applicant’s request, for some inexplicable
reasons, first respondent became very selective concerning the
information which it made available to the applicant. Firstly,
the
first respondent prevaricated to furnish reasons for the award of
the tender. This is notwithstanding the fact that section
33(2) of
the Constitution makes it crystal clear that
“everyone
whose rights have been adversely affected by administrative action
has the right to be given reasons.”
In response to this request, first respondent sought refuge under
section 5(1) of PAJA. I regret to state that this move was
ill-conceived as section 5(1) does not necessarily prescribe that
reasons shall be furnished only after 90 days of the request.
All
that this section does, is to give the aggrieved person who has not
been furnished with reasons for any action which adversely
and
materially affect his/her rights, the mechanism to use and the time
period within which such a person can apply for such reasons.

Speaking for myself I can think of no cogent or logical reason why
first respondent was not willing to furnish reasons to the
applicant
as early as July 2007 if it had nothing to conceal from the
applicant.
To compound this problem further
when it ultimately gave reasons, it gave two sets of different if
not conflicting reasons. It
is interesting to note that in the
first reasons it is alleged, without any proof, that applicant was
disqualified due to the fact
that first respondent had received a
number of complaints, apparently from members of the public (i.e.
users), about the support
and functionality of its services. This
is however directly contradicted by the letter by first respondent
dated 4 July 2007 wherein
it is stated that
“Sol
Plaatje and its staff had a wonderful and pleasant experience
working with Actaris Metering Systems and its staff hence would
like
to take this opportunity to extend our gratitude and sheer
appreciation of the services that your company has offered through
out the years.”
As Mr
Newdigate correctly pointed out these serious allegations were never
taken up with the applicant to give it the opportunity
to respond.
Faced by a similar problem in
Logbro
Properties CC v Bedderson N.O and Others
2003(2) SA 460 (SCA) at p472B para [25] Cameron JA stated as
follows:
“
Procedural
fairness, in my view, demanded that the committee in reconsidering
the tenders would afford the 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. That opportunity
not having been afforded, the committee's 1997 decision must be set
aside, and the matter remitted to the appropriate
authority to afford
the appellant and the other compliant tenderers the opportunity to
make representations, at least in writing,
on any supervening
consideration relevant to the committee's exercise of its powers in
relation to the award or non-award of the
tender.
”
Self-evidently this dictum lends
authority to the hallowed principles of natural justice as
encapsulated in the
audi
alteram-partem rule
.
Of even great significance is the
refusal by first respondent to grant applicant access to certain
essential information which was
pivotal to the deliberations of both
the bid evaluation committee, the bid adjudication committee, as
well as the most importatnt
technical reports and recommendations
compiled by KES (the technical consultants). I find it extremely
perplexing if not mind-boggling
that the first respondent alleges
that very crucial meetings of the bid evaluation committee and bid
adjudication committee were
not recorded and no minutes thereof were
kept. It requires to be emphasized that these are the two
critically important committees
which evaluated and finally
adjudicated over the various tenders. The importance of the
reports, assessments and recommendations
made by KES, the technical
consultants, are self-evident. As the technical consultants, this
is the agency which had the duty
to analyse the technical data and
help first respondent to reach the ultimate decision regarding which
of all competing tenders
was the best. Their reports and
recommendations are patently relevant and significant. How first
respondent can be content with
oral representations on such an
important and strategic aspect, defies my logic. It deserves to be
mentioned that applicant had
to resort to the machinery of Rule 53
followed by a notice in terms of Rule 35 to compel the first
respondent to make the necessary
information available to it. It is
both noteworthy and seriously disconcerting that it was only after
the Rule 35 notice that
additional reasons for the award of the
tender together with a reply to Rule 35 notice were furnished to
applicant. This only
took place as late as 20 December 2007. What
I found even seriously confounding and disturbing is the allegation
by first respondent
that the advice it received from the National
Treasury Consumer Advisor in respect of this tender was oral and
that therefore there
are no records of such advice.
I agree with the applicant’s
assertion that first respondent’s conduct of not keeping records
and minutes of such important
meetings is seriously suspicious to a
point where, in my view, it attracts seriously negative inferences.
It is worth noting that
under pressure from the applicant and in
response to Rule 35 notice, the minutes of the meetings of the bid
evaluation committee
and the bid adjudication committee including
some three technical reports from KES were surprisingly produced.
Although the minutes
were not complete, at least they served one
crucial purpose of exposing second respondent to have lied when it
initially alleged
that no minutes or records of such meetings and
presentation by KES were kept. However what sticks out like a sore
thumb is that
it is these dilatory, evasive and obstructive tactics
by first respondent which delayed and seriously hampered applicant
in preparing
its application. To my mind, the first respondent’s
conduct described above is subversive of the basic and fundamental
principles
of openness, transparency and accountability which should
underpin the actions of all organs of state.
Concerning the crisp legal issue of
urgency, I am satisfied that first respondent is solely to blame for
the invidious position
in which applicant found itself. The first
respondent is obliged by law to furnish reasons to any aggrieved
party who applies
for such reasons. As
Pickard
JP
correctly found in
Cash Paymasters
Services (Pty) Ltd v Eastern Cape Province
1999(1) SA 324 (CK CH) at p 353G.
“It
is almost standard practice that an independent tribunal such as the
Tender Board would in review proceedings comply with
the
requirements of Rule 53 of the Uniform Rules of Court by making
available the record of its proceedings and its reasons and
such
documentation as the court may need to adjudicate upon the matter
and, if necessary, to file and affidavit setting out the
circumstances under which the decision was arrived at
.”
In my view, any conduct falling short of this threshold requires to
be seriously deprecated as it militates against the constitutionally
protected principles of openness, transparency, justness, fairness
and accountability.
I venture to say that the reasons to
be furnished must be full, and adequate and must be furnished as
expeditiously as the circumstances
permit to enable the aggrieved
party to investigate its case in order to determine what legal
recourse he/she intends to take. It
is clear
in
casu
that first
respondent deliberately failed to do that. In fact first respondent
proved itself to be dishonest by giving different
reasons. I
furthermore find that the first respondent’s refusal to grant
applicant access to essential information which was pivotal
to the
final decision not to award the tender to applicant is seriously
reprehensible and requires to be seriously deprecated. It
forces one
to infer that first respondent had something to hide form scrutiny.
I find it seriously disconcerting that applicant
had to resort to
PAIA, PAJA, Rule 53 and later Rule 35 to obtain information to which
it is in law entitled. In the context of this
case, I find that
first respondent was unnecessarily and deliberately obstructive.
Accordingly, I find that this matter is indeed
urgent and further
that the applicant, at all times, acted with extraordinary diligence
and laudable expedition against all odds.
[26] Reverting to the question of
prima facie
right, I am of the view that what is in issue herein is the
applicant’s right to a procedurally fair administrative action.
Section
217(1) of the Constitution commands all organs of state even
in the sphere of local government wherever they enter into contracts
for goods or services to do so
“in
accordance with a system which is fair, equitable, transparent,
competitive and cost-effective.”
Quite importantly section 65(2) (ii) read with chapter 11 of the
Local Government Municipal Finance Management Act 56 or 2003 calls
for policies of procurement which are
“fair,
equitable, transparent, competitive and cost-effective.”
In my view, it is beyond dispute that the applicant was entitled to
a lawful and procedural fair process. It follows logically
that the
decision by first respondent which clearly affected its rights
materially and adversely must be justifiable in relation
to all the
facts put before first respondent and the reasons proferred by first
respondent. See
Logbro
Proberties CC v Bedderson N.O and Others
2003(2)
SA 460 (SCA) at 465G. I have already alluded to the fact that the
reasons advanced by first respondent in its first reply
and the
so-called additional reasons appear to be seriously contradictory and
therefore open to serious criticism. Clearly the applicant
is
entitled to take this matter on review so that this entire tender can
be exposed to scrutiny. The veil of secrecy which first
respondent
cast around this tender is a source of grave concern to me. As the
learned
Ebrahim AJ
correctly found in
Cash
Paymaster Services
(supra) at 357J:
“
One of the
fundamental requirements of democracy is that the affairs of
Government be open to public scrutiny and that it may be held
accountable for its actions.”
Much energy was spent on the
controversial aspect of irreparable harm and balance of convenience.
Both respondents submitted that,
should the contract be halted or
suspended, they stand to suffer irreparable harm as the second
respondent has already commended
implementing the contract. The
facts of this case make it patently clear that as early as July
2007, first respondent knew that
applicant was aggrieved by the
award of the tender to the second respondent – in fact, applicant
requested first respondent in
writing as early as July 2007 not to
commence with the implementation of this contract. Applicant went
further to lodge an appeal
in terms of section 62 of the Municipal
Systems Act, which the first respondent ignored. Furthermore, the
applicant made it perfectly
clear that it intended to approach court
for an interdict to stop the implementation of the contract. The
attitude of first respondent
at all times was sheer intransigence
and arrogance. Notwithstanding the request for reasons in terms of
PAJA, request for access
to information in terms of PAIA, the Rule
53 review application followed by notice in terms of Rule 35, first
respondent proceeded
with the implementation of the contract which
it knew fully well, applicant was not happy with. Quite curiously,
the events
in casu
are analogous to the events in
Chairperson
– Standing Tender committee v JFE Sapela Electronics
[2005]
4 ALL SA 487
(SCA) at p 497 paras [25] and [26] where the Scott JA
expressed himself eloquently as follows:
“
[25] Counsel for
the appellant submitted that the court a quo ought to have declined
to set aside the contracts, if for no other reasons
because it was
not possible to reverse what had already been done, and because by
the time judgment was delivered it was no longer
practicable to start
the tender process over again for the outstanding work. It was
submitted further that this state of affairs
was attributable to the
respondents’ failure to institute review proceedings timeously and
to seek an interim interdict preventing
the work from proceeding.
[26] There is no merit in
counsel’s further submission. Within a day or two of becoming
aware of the award of the Helderstroom
tender the respondents wrote
to the Ministry expressing their concern over the tender process. As
early as 26 January 2004 they
wrote to the DPW requesting the
documents necessary to enable them to ascertain their rights with
regard to a possible review. The
request was refused. A subsequent
attempt to invoke the provisions of the Promotion of Access to
Information Act was similarly unsuccessful.
Ultimately they were
obliged to institute proceedings even before they were fully apprised
of the facts necessary to substantiate
the review. The documents
they sought were eventually furnished to them on 23 March 2004,
almost two months after their initial
request. It was only then that
they were able to file a supplementary affidavit properly
substantiating the relief they sought.
In my view they were not in
any way to blame for a delay in initiating proceedings or bringing
them to finality. Nor were they
at fault for failing to stop the
work from proceeding. The DPW made it quite clear in correspondence
that it was not prepared to
suspend the work or to withhold from
Nolitha access to any of the installations. It is true that the
respondents did not proceed
with their threatened interdict but, as
explained in the replying affidavit, access to all the installations
had by then (10 April
2004) been granted to Nolitha. Any application
for an interdict would in any event have been opposed by the
applicants.”
[28] However in my view, the
distinguishing aspect of the two cases is that, unlike
in
casu
, in JFE Sapela’s
case the work performed by Nolitha was so far advanced that the court
took the view that it would not be practical
to stop the work. On
the contrary, I was given very little and scanty information of the
extent of the work already done by second
respondent. Too much
reliance was put on the figure of R82 million which was seductively
bandied around as a magic wand. The only
real information I have is
the one sketched out in the PROJECT PLAN SUMMARY Annexure AA, coupled
with the allegation that 16 400
of the 33 000 meters to be
manufactured have already been manufactured and delivered. There was
simply no clear evidence that the
meters have already been installed
or not. To my mind and in accordance with PROJECT SUMMARY PLAN “AA”,
I can safely accept
that second respondent has just commenced with
the first phase of the contract. Undoubtedly, this makes this matter
different from
Sebeza
Kahle Trade v Emalahleni Local Municipal Council
[2003] 2 ALL SA 340
(T) at p348 where
Kirk-Cohen
J
held that:
“
Should an order be made in
terms of prayer 1 of the declaration it would be meaningless and have
no practical effect for the simple
reason that the contract in
question has not only been awarded but completed. A court will not
decide abstract, academic or hypothetical
questions unrelated to a
right…”
[29] On the facts before me, I am
constrained to find, as I hereby do, that it is in fact in the
interests of all the parties, including
the communities falling under
first respondent’s jurisdiction that the interim interdict be
granted to avert any further unnecessary
possible wastage of the
municipality’s scant and rare capital resources which, in any
event, come from the public purse. Any further
delays would
invariably give the second respondent the unfair advantage to
continue to finish off the project. In the long run and
by the time
the main application for review is heard in all likehood the project
will be finished and both first and second respondents
would then
argue, correctly so, that the contract has been fully executed and
any relief would therefore be merely academic and therefore
not
capable of practical application.
[30] The applicant severely
criticized first respondent for rejecting its tender of some R36
million and opting for a more expensive
one of an astronomical figure
of some R94 million. Manifestly the huge disparity in the pricing of
the two competitors should be
of some grave concern to all
right-thinking people blessed with a modicum of economic sense. This
becomes critically important when
due regard is had to the contents
of “Annexure T”, the report by Mr Pretorius who expressed serious
criticism particularly regarding
the price and financial implications
of the second respondent’s tender both to first respondent and the
people of Sol Plaatje.
In essence, he asserted that the tender by
second respondent had no financial benefits for first respondent. It
was therefore not
good value for money. In any event both section
217(1) of the Constitution and section 65(2)(i) of the Municipal
Finance Management
Act (MFMA) prescribe
inter
alia
that any process
involving tenders or procurement should be
competitive
and cost-effective.
The
emphasis on cost-effectiveness is further bolstered by sections
112(1) and 120(4) of MFMA both of which speak of
“affordability
and value for money”
in
any bids or tender or public-private partnership entered into by a
municipality. This is clearly intended to ensure that municipalities
do not whimsically embark on wasteful and fruitless expenditure, to
the grave prejudice of the tax-payers. It is clear to me that
the
issue of price looms large in the applicant’s case and is one of
the issues it wishes to raise during the review application.
I am
unable to say that there is no merit on this aspect. This aspect was
dealt with in the minority judgment of
Ebrahim
AJ
in
Cash
Payments Services (Pty) Ltd v Eastern Cape Province
,
(supra) at p357F-G where the learned judge clearly stated:
“It
is trite that one of the crucial factors in the awarding of a tender
is the question of costs. While the Tender Board is not
necessarily
obliged to accept the lowest tender, it is required, where it rejects
such a tender, to provide adequate and cogent reasons
for its
decision based on the relevant facts before it.”
The learned judge
proceeded to conclude with the following thought-provoking if not
poignant statement at p359J:
“It
is manifestly clear that the reconstruction of South African society
is a task of enormous magnitude and will tax the financial
resources
of the country to its limits. Whatever funds are available must be
allocated prudently and utilised in such a manner that
it results in
the greatest number of people reaping the maximum possible benefits
from it. Those in public office, at every level
,
must constantly be aware
of their responsibilities in this regard.”
I can only hope that first
respondent will take heed of these wise words in all its future
dealings concerning tenders and procurement
of goods and services.
Having given this matter careful
and anxious consideration, I am satisfied that the applicant has no
other alternative remedy than
an interim interdict. The argument
that the review application would be adequate in the circumstances
is simply fallacious. If
the respondents are not interdicted now,
by the time the review application is heard, it will be water under
the bridge for the
applicant as the contract will be fully
implemented. In the circumstances the respondents must take full
blame for the position
in which they find themselves. I have found
some comfort and support for my view in the matter of
Coruim
(Pty) Ltd v Myburg Park Langebaan (Pty) Ltd
1993(1)
SA 853 (CPD) at page 858; where
Conradie
J
stated:
“
The first
respondent, on the other hand, had been warned as early as May 1991
that it was proceeding with the development at its peril.
It must
have been aware of the risks involved in proceeding with the
development. In particular I believe that the first respondent
should
have stopped to think that the development was bound to provoke a
good deal of criticism from many quarters, not least from
people who
had had no advance notice of it. In this regard I should say that I
have the uneasy feeling that the applications for
rezoning and
subdivision were dealt with in an alarmingly secretive fashion. I
cannot for the life of me understand how the second
and fourth
respondents could have thought (as they say they did) that the grant
of permission to develop a township in an area as
sensitive as this,
an area which forms part of our national heritage and which might
well one day be incorporated into the West Coast
National Park, would
be uncontentious; and that notice to nearby landowners was not
required since no person could maintain that
he was detrimentally
affected thereby. I think that from the time that the first rumblings
of discontent which, as I have said, the
first respondent should have
anticipated, were heard, it should have proceeded very cautiously. By
plunging headlong into the development
without the sensitivity to its
neighbours which it professes to display for the environment, the
first respondent was to an extent
the author of its own misfortune.”
Consequently and for reasons
adverted to above I hereby grant the following order:
The forms and
service provided for in the Uniform Rules of Court are dispensed
with for the purpose of this interim application
which I have found
to be urgent.
An interim interdict
restraining an/or interdicting first and second respondents,
pending the finalization of the review application
under case
number 1357/07, from installing any meters in accordance with
respondents PROJECT PLAN SUMMARY “AA”, copy whereof
is attached
to the Notice of Motion is hereby granted.
Both first and second
respondents are ordered to pay the costs of this application on a
party and party scale jointly and severally,
the one paying the
other to be absolved, such costs to include the costs consequent
upon the employment of two counsel.
_____________________
L
O BOSIELO
ACTING
JUDGE PRESIDENT
Northern
Cape Division
On behalf of the Applicant
:
Adv. J.A. NEWDIGATE
SC
Assisted
by:
Adv. HUGO
Instructed
by: EDWARD NATHAN SONNENBERG ATTORNEYS
On
behalf of the First Respondent
:
Adv. M. CASSIM SC
Assisted
by:
Adv. N.H MAENETJE
Instructed
by: MESSRS. ROUTLEDGE MODISE
On behalf of the Second
Respondent
:
Adv.
M.KHOZA SC
Assisted
by:
Adv. P. MOKOENA
Instructed
by: MESSRS. MATHOPO ATTORNEYS