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[2020] ZASCA 70
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Madibeng Local Municipality v DDP Valuers and Another (1284/2017) [2020] ZASCA 70 (19 June 2020)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 1284/2017
In
the matter between:
MADIBENG
LOCAL
MUNICIPALITY APPLICANT
and
DDP
VALUERS (PTY)
LTD FIRST
RESPONDENT
ACTIVA
VALUATION SERVICES (PTY) LIMITED SECOND
RESPONDENT
Neutral
citation:
Madibeng Local Municipality v DDP Valuers and
Another
(1284/2017)
[2020] ZASCA 70
(18 June 2020)
Coram:
PONNAN, VAN DER MERWE and MOKGOHLOA JJA and GORVEN and MATOJANE
AJJA
Heard:
13 May 2020
Delivered:
This judgment was handed down electronically by circulation to
the parties' representatives by email, publication on the Supreme
Court of Appeal website and release to SAFLII. The date and time for
hand-down is deemed to be 10h00 on 18 June 2020.
Summary:
Appeal – application for leave to appeal to Supreme Court
of Appeal referred for oral argument in terms of s 17(2)
(b)
of
Superior Courts Act 10 of 2013 (the Act) – judges considering
application should not refer it to the court for determination
of
whether or not proposed appeal would have practical effect or result
within meaning of ss 16(2)
(a)
and 17 (1)
(b)
of the Act
– matter moot and raised no legal issue requiring adjudication.
ORDER
On
appeal from:
Gauteng Division of the High Court, Pretoria
(Pretorius J sitting as court of first instance):
The
application for leave to appeal is dismissed with costs.
JUDGMENT
Van
der Merwe JA (Ponnan and Mokgohloa JJA and Gorven and Matojane AJJA
concurring)
[1]
This application for leave to appeal was referred to the court for
oral argument, in terms of
s 17(2)
(d)
of the
Superior Courts
Act 10 of 2013
. However, as shall presently become apparent, the
first order of business is to determine whether a decision on the
proposed appeal
would have any practical effect or result, within the
meaning of
s 16(2)
(a)
(i) of the
Superior Courts Act. This
question must be answered against the background that follows.
[2]
Section 229(1)
(a)
of the Constitution empowers a municipality
to impose rates on property. Section 30 of the Local Government:
Municipal Property
Rates Act 6 of 2004 (the Rates Act) provides that
a municipality intending to levy a rate on property must cause a
general valuation
to be made of all rateable properties in the
municipality and a valuation roll to be prepared in respect of all
those properties.
Section 31 of the Rates Act obliges a municipality
to determine a date of valuation that may not be more than 12 months
before
the start of the financial year in which the valuation roll is
to be first implemented. In terms of s 32, the valuation roll takes
effect from the start of that financial year and remains valid for
such subsequent financial years as the municipality may decide,
but
in total for not more than five financial years.
[3]
Section 33 provides that a municipality must before the date of
valuation designate a person as municipal valuer. It may designate
a
person in private practice, after having followed an open,
competitive and transparent process in accordance with Chapter 11
of
the Local Government: Municipal Finance Management Act 56 of 2003
(the MFMA). Section 34 of the Rates Act sets out the functions
of a
municipal valuer. Subsections 34
(a)
-
(d)
provide for the
valuation of all rateable properties within a municipality, as well
as for the preparation and submission of the
general valuation roll.
In terms of subsec 34
(e)
-
(i)
, a municipal valuer has
additional subsidiary duties (residual services). These include: to
consider and decide on objections to
the valuation roll; to attend
meetings of an appeal board and to prepare a supplementary valuation
roll whenever this becomes necessary.
[4]
During May 2013 the applicant, the Madibeng Local Municipality (the
Municipality) invited tenders for the compilation of a new
valuation
roll and residual services in respect of the period from 1 July 2014
to 30 June 2018 (the tender). Bidders were required
to tender a fixed
price for the compilation of the valuation roll, as well as fees to
be charged per individual item of residual
services required. Amongst
the 15 bids submitted in response to the invitation to tender, were
those of the first respondent, DDP
Valuers (Pty) Ltd (DDP) and the
second respondent, Activa Valuation Services (Pty) Ltd (Activa).
[5]
The Municipality awarded the tender to an entity known as Dijalo
Property Valuers (Dijalo), despite the fact that the fixed
price
tendered in its bid had been approximately three times that of DDP
and twice that of Activa. The Municipality appointed Dijalo
to render
the services envisaged in the tender in terms of a service level
agreement entered into during September 2013.
[6]
DDP approached the Gauteng Division of the High Court, Pretoria (the
high court) for the review and setting aside of the Municipality’s
decision to award the tender to Dijalo. The Municipality and Dijalo
opposed the application. The matter came before Makgoba JP.
After
hearing full argument, he upheld a point
in
limine
to the effect that DDP had failed to exhaust its internal remedies
prior to approaching the court. He dismissed the application
with
costs. DDP successfully appealed against this order to this court.
This court substituted the order of Makgoba JP with
an order
dismissing the point
in
limine
with costs and remitted the matter for a decision on the merits.
[1]
Upon a consideration of the merits, Makgoba JP held that the
evaluation of the bids had been affected by material irregularities.
On 13 November 2015 he made an order reviewing and setting aside the
decision to award the tender to Dijalo and remitting the matter
to
the Municipality ‘for reconsideration in terms of
section
8(1)
(c)
(i)
of the
Promotion of Administrative Justice Act 3 of 2000
’. He
directed the Municipality and Dijalo to pay the costs of the
application jointly and severally.
[7]
In the meantime, the Greater Taung Local Municipality (Taung
Municipality) also invited tenders to compile a valuation roll.
The
tender was awarded to Activa. In terms of a service level agreement
entered into on 21 June 2013, Taung Municipality appointed
Activa to
provide the services ‘detailed in Schedule 1 hereto and in the
Service Provider’s submission attached hereto
as Annexure “A”’.
No Annexure ‘A’ was, however, attached to the agreement.
According to Schedule
1 to the agreement, Activa only had to compile
a valuation roll in respect of the period from 21 May 2013 to 30 June
2018, at a
fixed price.
[8]
By the date of Makgoba JP’s remittal order, Dijalo had
submitted the valuation roll to the Municipality. Thus, the latter
only required residual services for the remaining period of the
tender, that is until 30 June 2018. In these circumstances, so
the
Municipality said, it decided to cancel the tender and to invoke reg
32 of the
Municipal Supply Chain Management Regulations promulgated
in terms of
s 168
of the MFMA under GN R868,
GG
27636, 30 May
2005 in respect of residual services.
[9]
Regulation 32
provides:
’
32. Procurement
of goods and services under contracts secured by other organs of
state
(1) A supply chain
management policy may allow the accounting officer to procure goods
or services for the municipality or municipal
entity under a contract
secured by another organ of state, but only if –
(a)
the contract has been secured by that other organ of state by means
of a competitive bidding process applicable to that organ of
state;
(b)
the municipality or entity has no reason to believe that such
contract was not validly procured;
(c)
there are demonstrable discounts or benefits for the municipality to
do so; and
(d)
that other organ of state and the provider have consented to such
procurement in writing.
(2) Subregulation (1)
(c)
and
(d)
do not apply if –
(a)
a municipal entity procures goods or services through a contract
secured by its parent municipality; or
(b)
a municipality procures goods or services through a contract secured
by a municipal entity of which it is the parent municipality.’
[10]
In terms of
ss 111
and
112
of the MFMA each municipality must have
and implement a supply chain management policy which must be fair,
equitable, transparent,
competitive and cost-effective.
Regulation 32
gives effect to
s 110(2)
(c)
of the MFMA. This section exempts
a municipality from following a competitive tender process if a
municipality ‘contracts
with another organ of state for . . .
the procurement of goods and services under a contract secured by
that other organ of state,
provided that the relevant supplier has
agreed to such procurement.’
[11]
The Municipality obtained documentation from Taung Municipality in
respect of the tender process that had been followed prior
to the
appointment of Activa, as well as the service level agreement with
Activa. The Municipality said that there was no reason
to believe
that the contract with Activa had not been validly procured by Taung
Municipality in accordance with its supply chain
management policy.
Per letter dated 24 February 2016, the Municipality appointed
Activa to perform residual services for
the period from 25 February
2016 to 30 June 2018. According to the appointment letter, Activa
would be remunerated in accordance
with the service level agreement
between it and Taung Municipality. As I have said, this agreement did
not provide for fees for
residual services. Activa accepted the
appointment in writing on 29 February 2016. This appointment took
place with the consent
of Taung Municipality, but no contract was
entered into in respect thereof between it and the Municipality.
[12]
When the Municipality’s appointment of Activa became known, DDP
again approached the high court. It essentially contended
that
Makgoba JP’s order had obliged the Municipality to reconsider
the award of the tender and that the Municipality failed
to do so. It
also argued that, in any event, the appointment of Activa could not
validly have been made under reg 32. It accordingly
sought the review
and setting aside of the ‘failure to reconsider the awarding’
of the tender and of the decision to
appoint Activa to execute the
tender. DDP also claimed an order that the tender be awarded to it.
The Municipality opposed the
application mainly on the basis that the
tender had been cancelled and that Activa had been validly appointed
under reg 32 to perform
only residual services.
[13]
The court a quo (Pretorius J) held, in essence, that the tender had
not been cancelled, that the award thereof had to be reconsidered
by
the Municipality and that it had failed to do so. In respect of the
Municipality’s reliance on reg 32 it held,
inter alia
,
that the services that Activa had to provide to the Municipality fell
outside the scope and ambit of its service level agreement
with Taung
Municipality. It held that in terms of the service level agreement
with Taung Municipality, Activa only had to compile
a valuation roll
whereas in terms of its appointment by the Municipality, it had to
render only residual services. The court a
quo declined to award the
tender to DDP and on 19 September 2017 ordered the following, with
costs to be paid by the Municipality:
‘
2. The first
respondent’s failure to reconsider the awarding of Tender
Number RFT 10/3/2013 for the Compilation of a New General
and
Supplementary Valuation Roll for the period 2014-2018 (hereinafter
“the Tender”) is reviewed and set aside;
3. The first respondent’s
decision to appoint the second respondent as Municipal Valuer and/or
to execute the Tender is reviewed
and set aside;
4. The awarding of the
tender is remitted to the first respondent for reconsideration in
terms of
section 8(1)(c)(i)
of the
Promotion of Administrative
Justice Act 3 of 2000
.’
[14]
Pretorius J dismissed the Municipality’s application for leave
to appeal. The order of the judges that considered its
petition to
this court included the following:
‘
2. The application
for leave to appeal is referred for oral argument in terms of
s
17(2)(d)
of the
Superior Courts Act 10 of 2013
.
3. At the hearing of the
application for leave to appeal, the parties must, apart from other
issues, address with reference to s
16(2) of the Act, the question
(a)
whether a decision on appeal would have any practical effect or
result;
(b)
if not, whether the application for leave to appeal should be
dismissed on this ground.
(c)
The parties must be in a position to argue the appeal itself if the
court hearing the application for leave so directs.’
[15]
As the appointment of Activa expired on 30 June 2018, the matter is
now clearly moot. With reference to the decisions of this
court in
Qoboshiyane NO and Others v Avusa Publishing Eastern Cape (Pty)
Ltd and Others
[2012] ZASCA 166
;
2013 (3) SA 315
(SCA) paras 5-6
and
Centre for Child Law v The Governing Body of Hoërskool
Fochville
[2015] ZASCA 155
;
[2015] 4 All SA 571
;
2016 (2) SA 121
(SCA) paras 11-14, the Municipality urged us to nevertheless
determine the appeal. These decisions state that despite the mootness
of a matter, this court has a discretion to determine it where such
matter presents a discrete legal issue of public importance
that
would affect matters in the future and on which the adjudication of
this court is required.
[16]
During argument counsel for the Municipality experienced considerable
difficulty in formulating the legal issues that would
require
determination under this test and, in the process, deviated from the
heads of argument. As I understood the argument, however,
the
determination of the following legal points was proposed:
(a) whether an organ of
state’s decision to cancel a tender is reviewable under the
Promotion of Administrative Justice Act
3 of 2000 (PAJA);
(b) whether, after
the cancellation of a tender that had been awarded, an organ of state
may procure the same goods or services
under reg 32;
(c) the proper
interpretation of the phrase ‘under a contract secured by
another organ of state’ in reg 32, particularly
whether the
first organ of state had to be a party to a contract with the second
organ of state;
(d) the proper
interpretation of the phrase ‘demonstrable discounts or
benefits’ in reg 32(1)
(c)
.
[17]
In respect of (a) the Municipality argued that divergent views had
been expressed by this court, on the one hand, in
Head of
Department, Mpumalanga Department of Education v Valozone 268 CC and
Others
[2017] ZASCA 30
and on the other, in
City of Tshwane
Metropolitan Municipality and Others v Nambiti Technologies (Pty) Ltd
[2015] ZASCA 167
;
[2016] 1 All SA 332
(SCA);
2016 (2) SA 494
(SCA) and
SAAB Grintek Defence (Pty) Ltd v South African Police
Service and Others
[2016] ZASCA 104
;
[2016] 3 All SA 669
(SCA).
This is not correct. The question cannot be determined in the
abstract. In
Nambiti
and
SAAB
this court held that the
cancellation of a tender by an organ of state prior to its
adjudication does not constitute administrative
action under PAJA.
The
ratio
common to these judgments was that in such
circumstances, the cancellation of the tender constitutes the
exercise of executive authority.
The court reasoned that the decision
of an organ of state to procure goods or services is an executive act
and the reversal of
that decision, without more, is of the same
nature. (See
Nambiti
paras 25 and 31 and
SAAB
paras
18-21.) Both these judgments recognised, however, that the position
would be different when a public tender is cancelled
during the
tender process, as would be the case on the Municipality’s
version. On its case, the Municipality cancelled the
tender after the
award thereof had been set aside and it was ordered to reconsider the
matter. This was also the factual position
in
Valozone
. In
such a case ‘principles of just administrative action are of
full application’ (
Nambiti
para 32) or, put differently,
principles of administrative justice continue to govern the
relationship between the organ of state
and the tenderers (
SAAB
paras 16-18 with reference to
Logbro Properties CC v Bedderson NO
and Others
[2003] 1 All SA 424
(SCA);
2003 (2) SA 460
(SCA)).
Thus, a decision of an organ of state to cancel a tender after it was
awarded, would generally be reviewable under PAJA.
[18]
The point mentioned in (a) also does not arise on the factual
findings of the court a quo. It held, rightly or wrongly, that
as
matter of fact, the tender had not been cancelled. The same applies
to (b), which is also premised on a cancellation of the
tender. In
addition, the court a quo held on the facts that Activa was not
appointed to render the same services to the Municipality
as those
that it had been contracted to render to Taung Municipality. It is
not controversial that on the latter factual finding,
reg 32 could
find no application. It follows that the interpretation of reg 32
envisaged in (c) and (d), is not implicated.
[19]
For these reasons the application for leave to appeal falls to be
dismissed with costs. There is, however, a further aspect
that I am
constrained to address.
[20]
As I have mentioned at the outset,
s 16(2)
(a)
(i)
of the
Superior Courts Act provides
that when at the hearing of an
appeal the issues are of such a nature that the decision sought will
have no practical effect or
result, the appeal may be dismissed on
that ground alone. In terms of
s 16(2)
(a)
(ii)
this question must be determined without reference to any
consideration of costs, save in exceptional circumstances.
Subsections
16(2)
(b)
-
(d)
are aimed at eliminating appeals that would have no practical
effect or result, where leave to appeal has already been granted.
[2]
[21]
Section 17(1)
, in turn, reads as follows:
‘
17. Leave to
appeal
.
(1) Leave to appeal
may only be given where the judge or judges concerned are of the
opinion that—
(a)
(i) the
appeal would have a reasonable prospect of success; or
(ii) there is some other
compelling reason why the appeal should be heard, including
conflicting judgments on the matter under consideration;
(b)
the decision
sought on appeal does not fall within the ambit of
section 16(2)
(a)
;
and
(c)
where the
decision sought to be appealed does not dispose of all the issues in
the case, the appeal would lead to a just and prompt
resolution of
the real issues between the parties.’
In
terms of
s 17(1)
(b)
therefore,
the judges considering the application for leave to appeal are
required to satisfy themselves that the proposed appeal
would have a
practical effect or result. Subsections 17(2)
(b)
-
(f)
deal specifically with applications for leave to appeal directed to
this court.
[3]
[22]
These provisions give effect to a principle of long standing. See
Coin Security Group (Pty) Ltd v SA National Union for Security
Officers and Others
[2000] ZASCA 137
;
2001 (2) SA 872
(SCA) para 7. This court has
said that the object of the principle is to reduce the heavy workload
of appeal courts. See
Premier, Provinsie Mpumalanga, en ‘n
Ander v Groblersdalse Stadsraad
1998 (2) SA 1136
(SCA) at 1141D.
I venture to say that the principle also serves another equally
important purpose, namely to ensure that matters
that truly deserve
the attention of appeal courts, especially of this court, are not
delayed by the burdening of these courts with
matters that fall
within the ambit of
s 16(2)
(a)
(i) of the
Superior Courts Act.
[23
]
It goes without saying that these objects would be defeated when an
application for leave to appeal is referred to the court for
determination of the question of whether or not the contemplated
appeal would indeed have any practical effect or result. And such
a
referral would negate the safety net provided for in subsec
16(2)
(b)
-
(d)
.
As a general rule the judges of this court that consider an
application for leave to appeal should have little difficulty in
determining whether the appeal would have any practical effect or
result. And in terms of the rules of this court they could, in
case
of doubt, request that the record of the court below or any part
thereof be placed before them.
[4]
Finally,
s 17(2)
(d)
provides the judges with the option to order that this question be
argued before them at a time and place appointed, if they are
of the
opinion that the circumstances so require. Save in exceptional
circumstances, therefore, an application for leave to appeal
should
not be referred to the court under
s 17(2)
(d)
for it to determine whether an appeal would have any practical effect
or result. As I have said, that is an issue that the two
judges
should first satisfy themselves of before either granting leave or
referring the application for leave to the court for
determination.
To refer that anterior question to five judges of this court for
determination, as occurred here, is plainly counter-intuitive.
For,
as Navsa JA observed in
Radio
Pretoria v Chairperson of the Independent Communications Authority of
South Africa and Another
[2004] ZASCA 69
;
[2004] 4 All SA 16
(SCA) para 41:
‘
Courts of appeal
often have to deal with congested court rolls. They do not give
advice gratuitously. They decide real disputes
and do not speculate
or theorise (see the
Coin Security
case, supra, at
para [7] (875A-D)).’
[24]
The application for leave to appeal is dismissed with costs.
_______________________
C
H G VAN DER MERWE
JUDGE
OF APPEAL
APPEARANCES
For
applicant: L Kutumela (heads prepared by T Motau SC and L Kutumela)
Instructed
by: Gildenhuys Malatji Attorneys, Pretoria
Honey
Attorneys, Bloemfontein
For
1
st
respondent: B C Stoop SC
Instructed
by: Kotze & Roux Attorneys, Pretoria
Botha
De Jager Attorneys, Bloemfontein
[1]
DDP
Valuers (Pty) Ltd v Madibeng Local Municipality
[2015] ZASCA 146.
[2]
Superior Courts Act 10 of 2013
s 16(2)
(b)-(d)
:
‘
(b)
If, at
any time prior to the hearing of an appeal, the President of the
Supreme Court of Appeal or the Judge President or the
judge
presiding, as the case may be, is
prima facie
of the view
that it would be appropriate to dismiss the appeal on the ground set
out in paragraph
(a)
, he or she must call for written
representations from the respective parties as to why the appeal
should not be so dismissed.
(c)
Upon receipt
of the representations or, failing which, at the expiry of the time
determined for their lodging, the President
of the Supreme Court of
Appeal or the Judge President, as the case may be, must refer the
matter to three judges for their consideration.
(d)
The judges
considering the matter may order that the question whether the
appeal should be dismissed on the ground set out in
paragraph
(a)
be argued before them at a place and time appointed, and may,
whether or not they have so ordered—
(i) order that the
appeal be dismissed, with or without an order as to the costs
incurred in any of the courts below or in respect
of the costs of
appeal, including the costs in respect of the preparation and
lodging of the written representations; or
(ii) order that the
appeal proceed in the ordinary course.’
[3]
Superior Courts Act s
17(2)
(b)
-
(f)
:
‘
(b)
If
leave to appeal in terms of paragraph
(a)
is refused, it may
be granted by the Supreme Court of Appeal on application filed with
the registrar of that court within one
month after such refusal, or
such longer period as may on good cause be allowed, and the Supreme
Court of Appeal may vary any
order as to costs made by the judge or
judges concerned in refusing leave.
(c)
An
application referred to in paragraph
(b)
must be considered
by two judges of the Supreme Court of Appeal designated by the
President of the Supreme Court of Appeal and,
in the case of a
difference of opinion, also by the President of the Supreme Court of
Appeal or any other judge of the Supreme
Court of Appeal likewise
designated.
(d)
The
judges considering an application referred to in paragraph
(b)
may dispose of the application without the hearing of oral argument,
but may, if they are of the opinion that the circumstances
so
require, order that it be argued before them at a time and place
appointed, and may, whether or not they have so ordered,
grant or
refuse the application or refer it to the court for consideration.’
(e)
Where
an application has been referred to the court in terms of paragraph
(d)
, the court may thereupon grant or refuse it.
(f)
The
decision of the majority of the judges considering an application
referred to in paragraph
(b)
, or the decision of the court,
as the case may be, to grant or refuse the application shall be
final: Provided that the President
of the Supreme Court of Appeal
may in exceptional circumstances, whether of his or her own accord
or on application filed within
one month of the decision, refer the
decision to the court for reconsideration and, if necessary,
variation.’
[4]
SCA
rule 6(6):
‘
Request for further documents
.
-
(6)
The judges considering the application may call for
(a)
submissions or further affidavits;
(b)
the record or portions of it; and
(c)
additional copies of the application.’