Basadi Joint Venture and Others v MEC of Education for the Province of the Free State and Others [2004] ZAFSHC 74 (29 July 2004)

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[2004] ZAFSHC 74
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Basadi Joint Venture and Others v MEC of Education for the Province of the Free State and Others [2004] ZAFSHC 74 (29 July 2004)

IN THE HIGH
COURT OF SOUTH AFRICA
(ORANGE
FREE STATE PROVINCIAL DIVISION)
Case
No.: 1455/2004
In the
matter between:
BASADI JOINT VENTURE
1
st
Applicant
ZIPHAKAMISE
CAPITAL CATERERS
2
nd
Applicant
(PTY) LTD t/a CAPITOL CATERERS
BAIKEMETSENG BOMME CC
3
rd
Applicant
a nd
THE
MEC OF EDUCATION FOR THE
st
Respondent
PROVINCE OF THE FREE STATE
THE
CHAIRPERSON OF THE CENTRAL
2
nd
Respondent
PROCUREMENT
EVALUATION
COMMITTEE
FOR THE FREE STATE
PROVINCE
MDC CATERING SERVICES
3
rd
Respondent
DEE
DEE ENTERPRISES
4
th
Respondent
AUTUM
STAR
5
th
Respondent
SILVER
SOLUTION t/a BACHA TSWELOPELE
6
th
Respondent
JOTT
GENERAL SUPPLIES
7
th
Respondent
BAIKEMETSENG
BOMME CC
8
th
Respondent
SUH
SEM TRADING
9
th
Respondent
MAMZWAKHE
10
th
Respondent
BOLATA
WHOLESALERS
11
th
Respondent
ETHOS
TRADING 13
12
th
Respondent
_____________________________________________________________________
CORAM:
CILLIé,
J
_____________________________________________________________________
HEARD
ON:
22 JULY 2004
_____________________________________________________________________
DELIVERED
ON:
29 JULY 2004
_____________________________________________________________________
This is an application for the review and setting aside
of 1
st
and or 2
nd
respondents exclusion of the 1
st
applicant’s tender for the supplying of certain presently
irrelevant items to the 1
st
respondent. The exclusion of the 1
st
applicant’s tender was based on the latter’s failure to support
the tender with a tax clearance certificate from the South African
Revenue Service confirming 1
st
applicant’s good standing with the revenue service. First
applicant also prays for an order directing 1
st
and 2
nd
respondents to accept and consider the 1
st
applicant’s tender as complying with the tender conditions.
I consider the application on the basis that what
follows is either common cause or cannot really be disputed:
1. The 1
st
and 2
nd
respondents are governmental institutions who are expected to deal
with tenders open and transparent in a fair and judicial manner.
2. First applicant is a joint venture consisting of 2
nd
and 3
rd
applicants.
3. First applicant is not registered with the South
African Revenue Service as a taxpayer and in fact need not be.
4. First respondent’s Department of Education, invited
tenders in the Provincial Tender Bulletin of 19 December 2003.
5. The conditions of tender required tenderers to submit
tax clearance certificates with the tender, i.e. before the closing
time
and date of the tender and specify that failure to do so would
invalidate the tender.
6. Regulation 16 of the Preferential Procurement
Regulations specify that no contract may be awarded to “a person”
who has failed
to submit a tax clearance certificate.
7. “A person” is defined in the said regulations as
including a juristic person.
8. The conditions of tender require each party to a
joint venture to complete and submit a separate tax clearance
certificate.
9. First applicant’s tender was submitted to 2
nd
respondent under cover of the letter which is Annexure “B” to the
1
st
respondent’s
answering affidavit (p.229 of the papers).
10. That letter indicates that 1
st
applicant has a VAT registration number, namely 4590141323.
11. The tender lacked a tax clearance certificate in
respect of 1
st
applicant.
12. Tax clearance certificates in respect of 2
nd
and 3
rd
applicants, however, accompanied the 1
st
applicant’s tender.
13. Per letter dated 25/3/2004 1
st
applicant enquired whether any tender had been awarded to it and, if
not, to supply a list of winners.
14. First respondent responded by referring the 1
st
applicant to the provisions of the Promotion of Access to Information
Act, Act 2 of 2000.
15. Thereupon the 1
st
applicant requested to be advised of the reason why its tender was
rejected.
16. Per letter dated 6 April 2004, 1
st
respondent stated that the reason for the rejection was 1
st
applicant’s failure to supply a tax clearance certificate.
17. First applicant replied to the effect that it was
not registered for tax purposes and that the aforementioned VAT
registration
number was applicable to some other instance.
18. First applicant had in the past been awarded tenders
in its own name without a tax clearance certificate being furnished.
Mr Koen, on behalf of the applicants; argument is
twofold. I shall deal with the first submission first. He submits
that as a joint
venture is not a juristic person nor a natural person
it cannot be classified as “a person” to whom the tax clearance
certificate
requirement is applicable. As Regulation 16 excludes
only “a person” who failed to submit a tax clearance certificate
from being
awarded a tender, the 1
st
applicant’s exclusion on this basis was therefore ill-conceived, so
the argument goes. He submits that the fact that both parties
to the
joint venture furnished tax clearance certificates ought to have been
sufficient compliance with the conditions of tender.
The problem with this submission, however, is that 1
st
applicant himself brought the tender committee under the impression
that it was in fact registered for tax purposes by submitting
its
tender under cover of a letter with the applicant’s letterhead
quoting a VAT registration number. It is not the responsibility
of a
tender committee under such circumstances to enquire about the
applicant’s juristic nature. Such a tender committee would
be
justified to accept and to act on the information that the applicant
himself supplied. If the applicant himself holds out that
it has a
VAT registration number the 1
st
respondent is entitled to accept that the applicant is, despite its
real juristic nature, in fact registered for tax purposes and
that a
tax clearance certificate is therefore a prerequisite for awarding a
tender to it. Mr Koen inasmuch concedes that if the
applicant was in
fact registered for tax purposes, that it’s tax clearance
certificate would be a prerequisite for a valid tender.
What the 1
st
applicant in essence asks this Court to do is to undo the completed
process of considering, awarding and implementing the tenders
as 2
nd
respondent acted on wrong information but which information was
furnished by the applicant himself. That the Court will not do and
the applicant has only himself to blame for that.
Mr Koen submitted that this approach is akin to the
principles of estoppel. That he says is a defence which should be
pertinently
raised by a party who wants to rely on it. He argues
that first and second respondents did not avail themselves of this
defence.
Mr Koen is correct in that the respondents did not mention
the defence specifically by its name, but in the 1
st
respondent’s opposing affidavit more than sufficient facts are
stated to support such a defence. As a matter of fact, the opposing
affidavit is hardly susceptible of any other impression than that the
tender committee accepted that 1
st
applicant is registered with the South African Revenue Service and
that for that reason ruled that a tax clearance certificate was
necessary.
In its letter of 15 April 2004 the 1
st
applicant responded that the allegation that 1
st
applicant was registered for VAT purposes could not have been the
reason for rejecting the 1
st
applicant’s tender since this information was not placed before the
tender committee. To that the 1
st
respondent reacted that the information in the tender submitted by
1
st
applicant does
not support the 1
st
applicant’s allegation. In the answering affidavit the 1
st
respondent pertinently states that the letterhead of the covering
letter of the 1
st
applicant’s tender indicated a separate VAT registration number. A
copy of that letter is annexed to the opposing affidavit as
Annexure
“B”. That letter clearly states the applicant’s VAT
registration number to be 4590141323.
To that the 1
st
applicant in it’s replying affidavit explained that
“
the
VAT registration number on Annexure “B” to the answering
affidavit is likewise one of a party to a previous joint venture
…
it is not the VAT registration number of either 2
nd
or 3
rd
applicant.”
Why the specific VAT registration number was supplied
under the letterhead of 1
st
applicant is, however, not explained.
Mr Koen’s second submission is based on the legitimate
expectation principle. He says that it is evident from the papers
that tenders
have previously been submitted to 1
st
respondent by joint ventures with only the joint venture parties and
not the joint venture itself submitting tax clearance certificates.

To this allegation in the founding affidavit by the 1
st
applicant the 1
st
respondent in it’s opposing affidavit reacted rather confusingly as
follows:
“
It
is denied that tenders had been awarded to 1
st
applicant in the past on the basis as alleged by the 1
st
applicant. Such tenders were indeed wrongly awarded to 3
rd
applicant.”
Earlier in the opposing affidavit the 1
st
respondent however seems to admit the
allegation but explains that such tenders were
“completely incorrect and the officials concerned who approved such
submissions have subsequently been shown that such submissions
were
not in order.”
I will therefore consider the argument based on
legitimate expectation as if joint venture tenders supported by the
tax clearance
certificates of only the partners to the joint venture
were acceptable to 1
st
respondent in the past. However, it is completely unknown whether
such tenders were submitted by joint ventures which were in fact
registered as such with the South African Revenue Services. If that
was the case, and all other requirements for a legitimate expectation
had been satisfied, the submission might have been valid. In the
present matter the ambit and exact nature of the existing practice
on
which the legitimate expectation is to rely for validity is
uncertain. There is not even a suggestion in the papers that in the
past tenders of such joint ventures were submitted and accepted under
cover of a letter stating the joint venture’s VAT registration
number as was done in this instance.
Mr Hefer, assisted by Mr Merabe on behalf of the 1
st
and 2
nd
respondents, emphasised that for the representation underlying the
expectation to be legitimate, it must be clear, unambiguous and
devoid of relevant qualification. I agree with that. See
NATIONAL
DIRECTOR OF PUBLIC PROSECUTIONS v PHILLIPS AND ANOTHER
2002 (4) SA 60
(W)
. See also
SA
VETERINARY COUNCIL AND ANOTHER v SZYMANSKI
2003 (4) SA 42
(SCA) on 49E
. In both these
judgments this requirement was highlighted. For that reason the 1
st
applicant’s defective tender cannot be validated by the legitimate
expectation doctrine.
The 3
rd
,
4
th
and 12
th
respondents filed opposing affidavits although they did not appear at
the hearing. The 1
st
respondent appeared on 20 May 2004 when urgent interim relief, which
was subsequently abandoned, was asked by 1
st
applicant. First respondent should be awarded the costs of that
appearance. Mr Hefer asked that costs should include the costs
of
two counsel. The matter is of sufficient substance to warrant this
and Mr Koen did not raise serious objection to that. Part
of the 1
st
respondent’s opposing affidavit is a copy of a judgment of the
Supreme Court of Appeal in a matter dealing with delictual damages
resulting from a tender process. Mr Koen’s objection to the 1
st
respondent’s annexing hereof is justified. The costs of that must
therefore be excluded from any order of costs in 1
st
respondent’s favour.
The
following order is therefore made:
The application is dismissed with costs, such costs to
include the costs of two counsel as well as the appearance on 20 May
2004 on
behalf of 1
st
respondent, but excluding the costs occasioned by annexing pages 231
to 246 (Annexure “C”) of the opposing affidavit.
________________
C.B. CILLIé, J
On
behalf of Applicants:
Adv. P.A. Koen SC
Instructed
by
McIntyre
& Van der Post
On
behalf of 1
st
Respondent:
Adv. J.J.F. Hefer
Assisted
by:
Adv.
M.J. Merabe
Instructed
by
State
Attorneys
/scd