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[2020] ZASCA 122
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Altech Radio Holdings (Pty) Limited and Others v City of Tshwane Metropolitan Municipality (1104/2019) [2020] ZASCA 122; 2021 (3) SA 25 (SCA) (5 October 2020)
Links to summary
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
no: 1104/2019
In
the matter between:
ALTECH
RADIO HOLDINGS (PTY) LIMITED
FIRST
APPELLANT
THOBELA
TELECOMS (RF) (PTY) LIMITED
SECOND APPELLANT
ABSA
BANK LIMITED
THIRD APPELLANT
and
CITY
OF TSHWANE METROPOLITAN
MUNICIPALITY
RESPONDENT
Neutral
citation:
Altech
Radio Holdings (Pty) Limited and Others v City of Tshwane
Metropolitan Municipality
(1104/2019)
[2020] ZASCA 122
(5 October 2020)
Bench:
PONNAN,
WALLIS, DAMBUZA and MOLEMELA JJA and SUTHERLAND AJA
Heard:
24
August 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 10:00 am on 5 October 2020.
Summary:
Legality
review – delay – whether delay unreasonable –
whether delay should be condoned.
ORDER
On
appeal from
:
Gauteng Division of the High Court, Pretoria (Baqwa J sitting as
court of first instance):
(a) The appeal is
upheld with costs, including those of two counsel.
(b) The order of the
court below is set aside and replaced by:
‘
The
application is dismissed with costs, including those of two counsel.’
JUDGMENT
Ponnan
JA (Wallis, Dambuza and Molemela JJA and Sutherland AJA concurring)
[1]
State self-review is a novel, but burgeoning, species of judicial
review that has occupied the attention of our courts in a
number of
recent decisions.
[1]
Although
it seems axiomatic that unlawful conduct must be undone, to borrow
from Dr Seuss ‘simple it’s not’. Particularly
worrisome are public procurement cases, where, as here, an organ of
state seeks to undo its own prior decisions.
[2]
In this matter, the respondent, the City of Tshwane Metropolitan
Municipality (the City), has sought to review its own decisions,
because, so it asserts, it failed to comply with its own rules,
misinterpreted certain statutory prescripts and maladministered
its
own tender process in respect of the appointment of a service
provider for a municipal broadband network project (the project).
[3]
As at 2013 the City owned an existing communications network
infrastructure of approximately 500 km of fibre. However, that
was
considered inadequate. The City accordingly embarked upon the project
with a view to developing a smart city. The primary objective
of the
envisaged smart city was to improve service delivery as well as lower
the costs of government services and operational requirements.
According to the City, the purpose of building a carrier grade
broadband network (the network) was to support and accelerate the
delivery of municipal services, provide socio-economic development
and bridge the digital divide.
[4]
The project was spearheaded by Mr Jason Ngobeni, the then City
Manager, and Mr Dumisani Otumile, the Chief Information Officer
of
the City. At a special Mayoral Committee meeting held on 15 May 2013
a business case for undertaking the project was presented
and
approved. The initial public tender, which was advertised on 27 May
2013, had to be aborted. During August 2014 the tender
process for
the project re-commenced. On 3 September 2014, Mr Otumile sent a
draft Request for Proposal (RFP) to the chair of the
Bid
Specification Committee and on 15 September 2014 the RFP together
with an invitation to bidders was published.
[5]
By the closing date for the submission of tenders, namely, 14 October
2014, eight submissions were received by the Bid Evaluation
Committee
(BEC) of the City. On 11 May 2015 the BEC resolved to recommend the
first appellant, Altech Radio Holdings (Pty)
Limited (Altech),
as the successful bidder. The City awarded the tender to Altech on 9
June 2015. That very day, Mr Ngobeni recorded
in a letter to Altech
that any agreement ‘will likely be through a special purpose
vehicle to be incorporated . . . for [the]
successful funding of the
project’. In due course, a special purpose vehicle (SPV) was
established for the project in the
guise of the second appellant,
Thobela Telecoms (RF) (Pty) Limited (Thobela).
[6]
Upon the award of the tender, the third appellant, ABSA Bank Limited
(ABSA) and the Development Bank of Southern Africa (the
DBSA) (the
lenders) committed to providing Thobela with financing for the
project. On 30 March 2016, ABSA, Thobela and the City’s
attorney, Kunene Ramapala Inc (KR Inc) held a conference call with a
view to the preparation of a draft agreement. ABSA thereafter
furnished KR Inc with certain suggested revisions to the draft
agreement, whereafter the Council of the City (the Council) approved
the draft agreement. On 28 April 2016 the Council passed a
resolution approving the conclusion of a Build Operate and
Transfer
agreement (the BOT agreement) with Thobela. On 20 April 2016,
KR Inc provided ABSA with the final version of
the BOT agreement. The
BOT agreement was signed by the City and Thobela on 5 May 2016.
[7]
In the meanwhile, KR Inc had provided ABSA with a draft
Tripartite agreement (the Tripartite agreement) on 18 April
2016.
The next day, the City, KR Inc, Thobela and ABSA met to
negotiate and finalise the terms of the Tripartite agreement. On 4
August 2016, and following extensive negotiations, ABSA, Thobela and
the City concluded the Tripartite agreement, in which ABSA
(with the
support of the DBSA) agreed to grant loans and make funds available
to enable Thobela to meet its obligations under the
BOT agreement to
the City.
[8]
The BOT and Tripartite agreements provided for the funding,
construction, operation and maintenance of 1500 km of fibre-optic
cable known as the Tshwane broadband network. In accordance with the
City’s developmental goals, the network was intended
to cover
currently underserviced areas, which are principally in the poorer
parts of the City. The duration of the project was
to be for 18
years, split into a 3-year build phase and a 15-year maintenance
phase. In terms of the BOT agreement, Thobela was
required to build,
operate and maintain the network for a period of 18 years from
the effective date of the agreement (namely
31 August 2016) and to
fund the capital cost of doing so. Ownership of the network would
transfer to the City for R1 at the end
of the 18-year period or on
termination of the BOT agreement, if terminated earlier. In the event
of early termination, payments
might be due depending on the reason
for the termination as set out in the early termination clauses of
the BOT agreement.
[9]
The capital costs were to be principally funded by loans from the
lenders. The total funding for the project was R1,335 billion.
The
total senior debt funding commitment by ABSA and the DBSA on the
project was R934 million (being 70% of the total funding),
the
balance being equity and loan funding to the tune of R401 million.
[10]
There were two key aspects to the project’s commercial
viability. The first was that the City had committed to being
the
‘anchor customer’ of the network. It had agreed to pay a
service fee to Thobela for the duration of the BOT agreement
in
exchange for the level of service specified therein. The fee was
described as the ‘offtake amount’, being an annual
service fee of R244 million, payable on a monthly basis once all 400
of the City’s designated service sites, termed CPEs,
had been
installed. The service fee was to be phased-in in proportion to the
number of CPEs installed. The second key aspect was
the potential for
the future commercialisation of the network’s surplus capacity.
[11]
On the day prior to the signing of the Tripartite agreement, the 2016
South African municipal elections were held to elect
councils
for all district, metropolitan and local municipalities in each of
the country’s nine provinces. Although the ruling
political
party, the African National Congress (ANC), secured the highest
number of votes overall nationally, it lost control of
three
metropolitan municipalities, including the City. The official
opposition party, the Democratic Alliance (the DA), became
the
head of a coalition government of the City’s municipality. The
municipal elections ushered in a new Municipal Council,
Speaker,
Mayor and Mayoral Committee. On 19 August 2016 the new municipal
councillors were sworn in and Mr Solly Msimanga of the
DA became the
Executive Mayor of the City.
[12]
Having won control of the City, the DA set its sights on a number of
procurement contracts, including the BOT agreement, which,
so it
stated, had been targeted for ‘review and possible
cancellation’. But at least a year was to pass before the
City
applied on 22 August 2017 to the Gauteng Division of the High Court,
Pretoria for an interdict coupled with a review application.
Relief
was sought in two parts. Under Part A, the City sought to urgently
interdict the implementation of the agreements. Under
Part B, the
City sought to review certain decisions taken by its own officials
over the period September 2014 to April 2016. The
target of the
application under Part B was the tender process and the subsequent
contracts concluded by the City including the
BOT and Tripartite
agreements. Altech, Thobela and ABSA, who were cited by the City as
the first to third respondents respectively,
opposed the application.
The remaining respondents, who were cited by virtue of their interest
in the matter, took no part in the
proceedings.
[13]
The urgent application served before Brenner AJ on 19 and
21 September 2017. On the latter date, the learned judge
struck the application from the roll for want of urgency and ordered
the City to pay punitive costs on the scale as between attorney
and
client.
[14]
Part B was enrolled as a special motion and heard by Baqwa J over a
period of four days from 22 to 25 May 2018. The application
succeeded. On 16 July 2019 the learned judge issued the following
order:
‘
1) The
award of the tender, with tender number GICT 01/2014/15, for the
provision of a municipal broadband network project to ARH,
which
decision was communicated to it on June 2015 in a letter dated 9
June 2015 including any purported amendment of such
letter is
declared invalid and set aside.
2) The decision of the Municipal
Council of the Tshwane Metropolitan Municipality, in its entirety to
inter alia
, approve the terms and sign-off of the build,
operate and transfer agreement (“the BOT agreement”) of
the Tshwane Broadband
Network for the City of Tshwane taken on 28
April 2016 is declared invalid and set aside.
3) The decisions of the erstwhile
Group Chief Information Officer and City Manager to amend clause 4.1
of the BOT Agreement which
was subsequently entered into between the
City of Tshwane and Thobela on 5 May 2016, the effect of
which was to extend
the period provided for the fulfilment of the
suspensive conditions alternatively, their purported waiver of such
conditions is
declared unlawful and set aside.
4) The following contracts
concluded pursuant to the tender award have lapsed and are
unenforceable, alternatively, are invalid
and are set aside, -
4.1 the BOT agreement
4.2 The Tripartite Agreement
entered into between the City of Tshwane, Thobela, and Absa Bank
Limited, signed on 4 August 2016.
5) The first,
second and third respondents are ordered to pay the costs of the
application, which costs include the employment of
three counsel.’
[15]
The appeal by Altech, Thobela and ABSA is with the leave of Baqwa J
granted on 17 September 2019. Their case is that the delay
by the
City in launching the review application is so manifestly and
egregiously unreasonable that it cannot be overlooked or condoned.
That, so the argument goes, is dispositive of the appeal in their
favour. In the alternative, it is contended that if the delay
falls
to be condoned and if any of the grounds of review advanced by the
City are upheld, then it would not be just and equitable
for the BOT
and Tripartite agreements to be set aside and that in the exercise of
our remedial discretion under s 172 of the Constitution,
we should
decline to do so.
[2]
[16]
The delay rule is a principle that flows directly from the rule of
law and its requirement for certainty. The Constitutional
Court has
held that there is a strong public interest in both certainty and
finality.
[3]
The
City asserts that it was compelled as a matter of constitutional duty
to bring the review application. Whilst this may be so,
there
nonetheless was a duty on it to do so expeditiously.
[17]
Despite concerns having been expressed about the increasing reliance
on legality review at the expense of the constitutionally
mandated
legislation, the Promotion of Administrative Justice Act of 2000
(PAJA), it is now settled that an organ of state seeking
to review
its own decision must do so under the principle of legality and
cannot rely on PAJA.
[4]
Prof
Hoexter observes that ‘the development of the principle of
legality is another illustration of the vigour and fecundity
of the
rule of law’. She does add however that ‘in short, the
courts made the principle of legality mean whatever they
wanted it to
mean as they went about creating a sort of common law for the
constitutional era’.
[5]
[18]
A legality review, unlike a PAJA review, does not have to be brought
within a fixed period. However, whilst the 180-day bar
set by s 7(1)
of PAJA (which may be extended under s 9) does not apply to a
legality review, in both, the yardstick remains reasonableness.
It is
a long-standing rule that a legality review must be initiated without
undue delay and that courts have the power (as part
of their
inherent jurisdiction to regulate their own proceedings) to
either overlook the delay or refuse a review application
in the face
of an undue delay.
[6]
[19]
The test for assessing undue delay in the bringing of a legality
review application is: first, it must be determined whether
the delay
is unreasonable or undue (this is a factual enquiry upon which a
value judgment is made, having regard to the circumstances
of the
matter); and, second, if the delay is unreasonable, whether the
court’s discretion should nevertheless be exercised
to overlook
the delay and entertain the application.
[7]
[20]
As it was recently put in
Valor
IT v Premier, North West Province and Others
:
[8]
‘
Whether
a delay is unreasonable is a factual issue that involves the making
of a value judgment. Whether, in the event of the
delay being
found to be unreasonable, condonation should be granted involves a
‘factual, multi-factor and context-sensitive’
enquiry in
which a range of factors – the length of the delay, the reasons
for it, the prejudice to the parties that it may
cause, the fullness
of the explanation, the prospects of success on the merits –
are all considered and weighed before a
discretion is exercised one
way or the other.
’
[21]
The City appears not to dispute that there has been a delay, but
suggests that the delay is not unreasonable. The application
was
launched more than two years after the decision to award the tender
to Altech, some 16 months after the Council had approved
the BOT
agreement and a year after the Tripartite agreement had been signed.
[22]
It was incumbent on the City to provide a full explanation covering
the entire period of the delay.
[9]
The
explanation, such as it is, for the most part, is superficial and
unconvincing. The City does not raise any allegations
of
corruption or fraud. Although various conjectural and speculative
hypotheses of malfeasance were initially advanced in the founding
affidavit, the City appears to have confined itself in reply to
complaints of ‘serious mismanagement’. But it makes
no
case that any of the appellants are responsible for or connived in
such maladministration or mismanagement. The procurement
process
commenced during September 2014. Many of the City’s key
personnel, who had been involved in the tender process and
the
conclusion of the agreements, remained in the employ of the City
after the August 2016 Municipal elections. They were thus
in a
position (and ought) to have provided explanations for the delay.
[23]
The City does not rely on a cover-up or contend that documents or
information was destroyed or concealed by officials loyal
to the
previous administration. There is no evidence of what steps, if any,
were taken in order to obtain the necessary information;
on what
dates and by whom such steps were taken; what sources were accessed
or why any of these attempts proved unsuccessful. Nor,
when, how and
who allegedly did not co-operate. The City chose not to ask officials
such as Mr Ngobeni or Mr Otumile to assist
with their
investigation. It says that it decided not to ask them for any
information because the investigation was ‘sensitive’
and
consulting with them ‘may well compromise the investigation’.
Those two individuals, who deposed to confirmatory
affidavits in
support of the appellants’ case, said that they were available
and willing to assist the City, but were never
contacted.
[24]
The core contention advanced by the City is that the delay is
justified because the DA only won control of the City in August
2016
and thereafter required time to investigate the alleged
irregularities perpetrated under the previous ANC-controlled
administration.
That contention appears to have found favour with
Baqwa J, who held:
‘
. . .
officials of the previous administration who vacated their positions
with the [City] were no longer there to account for their
omissions
and the new officials had to find their way virtually in the dark to
establish the correctness or otherwise of the decisions
of their
predecessors. . . .’
[25]
I cannot agree with the learned judge. At the level of law, a change
in political control of an organ of state, such as the
City, is
irrelevant. The City is a single juristic entity. It accepts that the
change in political administration did not make
it a different
juristic entity. In any event, at the level of fact, as I shall show,
in this case much of the evidence relied on
was known (or ought to
have been known) to the DA well before it assumed control of the
City.
[26]
As early as 25 February 2015, Mr Msimanga had labelled the project ‘a
dodgy deal’. On 16 February 2016 he and the
DA spokesperson for
finance, Mr Lex Middleberg, declared at a press conference
that the BOT agreement and broadband project
were irregular. On 28
April 2016 a comprehensive report spanning 288 pages was tabled
before the Council. It highlighted many of
the issues subsequently
relied upon by the City in its review application. Those issues were
debated during the Council meeting,
whereafter the BOT agreement was
approved. The DA participated in the debate and its councillors,
including Mr Middleberg, requested
that their dissenting votes be
recorded.
[27]
During December 2014, the City engaged a firm of external
consultants, SekelaXabiso (SkX) to conduct an assurance review of
the
procurement process followed for the project. It has since emerged
that even prior to the award of the tender, on 6 March 2015,
the City
had received a draft probity report prepared by SkX. In the report,
SkX identified issues that, as it was put, may have
a negative impact
on the next stage of the tender process, which could pose
reputational damage or financial risk to the City.
[28]
Despite this, on 26 May 2015 the BEC recommended that Altech be
appointed as the successful bidder for the project. The
recommendation
came after SkX had published its final probity report
on 20 March 2015, which recorded that the concerns raised could be
addressed
during the contractual negotiation phase. Notwithstanding
the two SkX probity reports, the City proceeded to the next phase of
the project. Importantly, the City retained SkX as it advisors on the
project even after the DA took over the administration.
[29]
Shortly after the DA took over the administration of the City, KR Inc
was mandated in August 2016 to conduct an in-depth due
diligence
exercise in relation to the procurement process. KR Inc produced a
detailed 161-page due diligence report. In the meanwhile,
on 30 June
2016 the Auditor General (AG) had prepared a report as part of the
annual audit of all state entities. This report was
communicated to
the City on 14 November 2016. As the City has pointed out ‘the
report is extremely critical of the broadband
project to the point
that it states that all expenditure on the project constitutes
irregular expenditure.’ There is no doubt
that the DA was aware
of the report, which it publicised on 15 December 2016.
[30]
On the basis of the information that the City then had at its
disposal, namely, the council report, the SkX probity report,
the KR
Inc due diligence report and certainly by no later than the receipt
of the AG’s report in November 2016, all of the
grounds
ultimately relied upon in the review application, were well within
the DA-led City’s knowledge. Despite this, the
City continued
with the project.
[31]
What is more, the City blew hot and cold. On 13 July 2016, KR Inc
addressed a letter to Thobela indicating that the City regarded
the
finalisation of the project as critical and that it would not allow
any further extensions of the date for the fulfilment of
the
suspensive conditions beyond 31 August 2016. This caused Thobela to
waive the outstanding suspensive conditions in the BOT
agreement,
which had been inserted for its benefit.
[32]
On 14 October 2016 the then Acting City Manager, who had been
appointed under the new DA regime, addressed a letter to Thobela
emphasising that the BOT agreement was binding on it and took issue
with the delays in ordering equipment necessary for the project.
The
letter stated that ‘both parties have contractual obligations
imposed on them by the BOT agreement which was entered
into after 10
months of intense negotiations. The BOT agreement was then signed . .
. after both parties were satisfied with its
terms and we can confirm
that no party signed under duress’.
[33]
On 21 November 2016 the City wrote to Thobela demanding that it
‘commence performance and proceed in terms of the agreement
immediately’ and threatened cancellation of the agreement if it
failed to do so. However, less than a month later,
in the
course of his 100-day speech on 12 December 2016, Mayor Msimanga
announced that the City would ‘submit the broadband
contract to
a transactional advisor to check legality and value for money of the
contract’.
[34]
Following on Mr Msimanga’s announcement, on 14 December 2016, a
DA member of Council, Mr Brink, directed a letter to
the Acting City
Manager that ‘the broadband contract be placed on hold pending
the outcome of the aforesaid transactional
audit’ and required
confirmation ‘that this instruction will be given, and
executed’. On 20 December 2016 Mr
Brink issued a similar
instruction to the new Acting City Manager. Whilst his first
instruction had not been acted upon, his second
had the desired
effect. The new Acting City Manager instructed Mr Otumile to ensure
that the ‘decision of the Executive Mayor
is adhered to and
implemented and that the broadband rollout is immediately put [on]
hold until such time that the said audit is
completed’.
[35]
Mr Otumile, in turn, informed Altech that the project had to be put
on hold until the transactional audit had been completed.
On 21
December 2016 Thobela responded to Mr Otumile’s email. It
indicated that whilst it supported the transactional audit,
it would
not consent to the suspension of the agreements. On the same day, the
City proceeded to deny Thobela, Altech and their
sub-contractors
access to the sites. This continued into January 2017. On 13 January
2017 Thobela served a notice of breach on
the City itemising damages
and demanding that the latter forthwith allow it access to the site
for the purposes of performing its
contractual obligations.
[36]
Whilst this was playing itself out, Mr Brink despatched an email to
various councillors and City officials on 15 January 2017
in which he
inter alia stated that: he had ‘put the brakes on the project’;
‘the direct parties to the agreement
are tenderpreneurs’
and when ‘we were in opposition we had serious reservations
about this agreement’.
[37]
The City eventually only agreed to allow Altech and Thobela to return
to the site after they had threatened on 1 February 2017
to institute
urgent proceedings to enforce their rights under the BOT agreement.
On 9 February 2017 the City advised that Thobela
‘may
immediately continue with the project and that it will be granted
access to the premises to enable it to continue with
the
implementation of the Tshwane broadband network’. The letter
was attached to an email from Mr Brink dated 10 February
2017, in
which he recorded that a meeting had been held between the
administration officials of the City and representatives of
Altech
and Thobela the previous day and the City had decided to allow the
project to continue ‘in tandem’ with the
audit.
[38]
Minutes of a steering committee meeting held four days later record
that the City required the project to be fast-tracked to
make up for
the two months lost. The project then proceeded with only minor
disruptions, but evidently not fast enough for the
City. On 22 May
2017, the City directed four letters to Thobela. It was clear from
these letters that the City wanted the project
expedited and demanded
a revised fast-track plan from Thobela for this purpose.
[39]
The fact that the City had commenced with the preparation of its
review application was not disclosed to any of the appellants.
When
precisely it resolved to do so, is unclear. As the City put it: ‘at
the end of April 2017, and pursuant to persistent
demands by Thobela,
the City decided that it had little choice but to seek legal redress’
and briefed its attorneys in ‘about
May 2017’.
[40]
That notwithstanding, at the management and steering committee
meetings of 6 and 7 July 2017, the City agreed to a new
expedited schedule, which provided for the completion of the project
by 31 March 2019. During July 2017, when there were delays
caused by
community unrest, which prevented contractors accessing the site, the
City requested Thobela to ‘redirect work
to a different
site in the interim while the City endeavours to resolve the
community unrest issue in order to avoid delays
on the project’.
[41]
By 31 August 2016 all of the conditions precedent to the BOT
agreement had been fulfilled or waived. The BOT agreement accordingly
became unconditional. Financial close, namely the stage when all of
the conditions have been met or waived and the lenders authorise
the
drawdown of the funds, occurred on 9 December 2016. Before allowing
Thobela access to the funds, the lenders specifically required
comfort from KR Inc. Without such comfort, they would not have
allowed Thobela access to the funds. On 9 December 2016, KR Inc
provided ABSA with the comfort sought, in the form of an opinion,
which, inter alia, stated that the BOT and Tripartite agreements
‘constitutes legal, valid and binding obligations of the [City]
enforceable against the [City] in accordance with its terms’
and that the [City] complied with all relevant laws, regulations and
policies, including but not limited to, its procurement framework
and
policies . . . in connection with the tender’.
[42]
As a direct result of KR Inc’s opinion, the lenders signed the
financing agreements relating to the project and, on 15
December
2016, ABSA provided Thobela with the first drawdown to fulfil part of
its obligations to the City under the BOT agreement.
According to
Thobela, to facilitate the fast-tracking of the project demanded by
the City, it was forced to draw down on the facility
with the
lenders.
[43]
The appellants were not privy to the various reports or the internal
workings of the City and had arranged their affairs on
the strength
of the fact that the tender had been lawfully awarded and the BOT
agreement validly concluded. As at 15 January
2018, Altech and
Thobela had incurred costs and liabilities to the tune of
approximately R610 million. And, by the time that the
review
application was launched, the build phase of the project was 34%
complete.
[44]
The project has since been frozen. It cannot be salvaged or
repurposed because it was specifically designed to meet the City’s
requirements. What has been constructed thus far can provide no
service to the City and is effectively useless. Altech and Thobela
have also parted with possession of the equipment and materials
installed at the various sites. There is every possibility that
some
of the equipment may since have been lost or damaged or simply
diminished in value. Given that the equipment is specifically
marked
and branded for the City, to the extent that it may be recoverable,
it is likely to be of little or no value to Altech and
Thobela. The
prejudice to the appellants as well as the residents of the City, who
remain saddled with a dysfunctional municipal
IT network for which
the City currently pays R226 million per annum, is manifest. The
City is forced at a substantial additional
annual cost to supplement
its existing network, because its ability to render services on the
existing network is severely restricted.
[45]
The high court failed entirely to have regard to the position of the
lenders. The lenders had no involvement until the award
of the
tender. They only became involved after Altech’s appointment.
There then followed extensive negotiations, before the
Tripartite
agreement was concluded. At no stage did the City disclose any
concerns to the lenders. The City’s failure to
communicate with
the lenders is important because in the event of a material adverse
effect event, including the threatened cancellation
of the tender or
BOT agreement by the City, the lenders would have been entitled to
refuse to extend further financing to Thobela.
The City was aware of
these terms affording the lenders protection but did nothing to alert
them that it entertained concerns and
was contemplating challenging
the BOT agreement. The City thereby denied the lenders the
opportunity to mitigate the potential
adverse consequences of the
cancellation of the BOT or Tripartite agreements.
[46]
The position of the DBSA is most telling. On 8 December 2016 the DBSA
wrote to the Acting City Manager, noting with some concern
the
statements that had been attributed to the new Mayor regarding
transactions that may be up for review by the City. The letter
stated:
‘
[W]e .
. . request that you please advise the DBSA should there be any
reason for the bank not to proceed with its financing
of this project
in its current form. Should such grounds exist we would highly
appreciate, given that drawdown on the project facility
is imminent,
if the DBSA could please be finished therewith within the next week.’
That
letter went unanswered.
[47]
On 22 February 2017 the DBSA despatched another letter to the City,
in which it recorded that: (i) a further drawdown on the
loan
facility was imminent; (ii) it had, in the past received and relied
on various communications from or on behalf of the City
that the
tender and BOT agreement was valid and enforceable; (iii) the works
were progressing under the BOT agreement, lending
further support to
the view that the BOT agreement and underlying procurement processes
were valid; and (iv) seeking confirmation
by 24 February 2017, before
it advanced the second drawdown, that the City still regarded the BOT
agreement as valid, binding and
enforceable and that there were no
threatened administrative law challenges and no other reason for it
not to continue.
[48]
Once again there was no response from the City and so the DBSA
despatched yet a further letter on 27 February 2017, which recorded
that, in addition to the prior assurances received from the City, the
DBSA would also rely, in effecting payment to Thobela, on
the City’s
failure to respond negatively to the earlier letter of 22 February.
On 28 February 2017 the DBSA received
a response, in which the Acting
City Manager said no more than he had received the DBSA’s
letter of 22 February and would
reply by 3 March 2017. On 1 March
2017 the DBSA wrote again drawing attention to the City’s
failure to respond timeously
to its correspondence and intimated
that, in consequence, it had effected payment of the second tranche
due to Thobela, as it was
obliged to do.
[49]
Eventually, on 8 March 2017 the DBSA received a response from the
City, which was dated 3 March 2017. The City did not provide
the DBSA
with the requested assurances. What it said was the following:
‘
1. The
current administration of the [City] has commissioned an audit of all
major existing procurement contracts awarded by the
[City]. The
contract between the [City] and Thobela is one of the contracts
currently under audit.
2. There is
currently no pending judicial review of the decision by the [City] to
award the contract to Thobela and/or the contract
concluded between
it and the [City].’
[50]
There appears to be no acceptable explanation for the City’s
excessive delay, as well as inconsistent and vacillating
conduct,
which has caused extensive hardship to the appellants and other
interested parties. On the City’s own version, the
facts
relevant to some of the grounds of review were known to the City and
its new political masters long before the BOT agreement
was even
signed. The facts relevant to most of the other grounds of review
were known to them before the rollout of funds on the
project
commenced in December 2016. It is not correct that a bright line can
simply be drawn between what happened before the municipal
elections
and what happened thereafter.
[51]
Moreover, despite having knowledge of some of the alleged
irregularities for more than two years, the City both encouraged
and
demanded that Altech and Thobela accelerate the project and make up
for lost time, thereby causing them to take a multitude
of steps and
to incur huge expenditure. It is noteworthy that in his
correspondence, Mr Brink identified a number of the grounds
relied
upon by the City in support of its review application, which did not
require investigation of the sort undertaken by the
City over the
course of the next nine months. He also emphasised the position of
innocent third parties as well as the constitutional
obligation
resting on the City to act immediately.
[52]
The City was also fully aware of the involvement of ABSA and the DBSA
as lenders, the terms on which they were lending money
and the
possible risk of loss to them. At no stage prior to 22 August 2017,
when the review application was launched, did the City
give any
indication to the lenders that the award of the tender was tainted
with irregularities or that the transactions in which
the lenders had
become involved were susceptible to being impugned. This, despite the
fact that the City knew of the alleged irregularities
of which it now
complains either at about the time of their occurrence or, at the
very latest, certainly before any of the funds
were advanced. Had the
City acted with proper expedition and been candid about its intention
to review the award of the tender,
the bulk of the expenditure
incurred could have been avoided.
[53]
It nonetheless remains to consider whether the prospects of success
on the merits, tips the scales in the City’s favour.
The City’s
grounds of review turned, in the first place, on alleged
irregularities and discrepancies in the tender documents
and the
evaluation of the bids and, in the second, on the alleged failure in
concluding the BOT agreement to follow the mandatory
processes
required by the Local Government: Municipal Finance Management Act 56
of 2003 (the MFMA), particularly s 33 and the provisions
regulating
public-private partnerships.
[54]
Search hard enough in public procurement cases, such as this and one
will surely find compliance failures along the way. There
will seldom
be a public procurement process entirely without flaw. But,
perfection is not demanded and not every flaw is fatal.
Nor does
every flaw in a tender process amount to an irregularity, much less a
material irregularity. Public contracts do not fall
to be invalidated
for immaterial or inconsequential irregularities. Indeed, as it has
been put, ‘[n]ot every slip in the
administration of tenders is
necessarily to be visited by judicial sanction’.
[10]
[55]
In this case, counsel for the City appeared to accept the difficulty
in setting aside the BOT agreement on the basis of the
original
irregularities in the tender process. It is accordingly only to the
second leg, namely the City’s failure to comply
with s 33 of
the MFMA, that one need turn.
[11]
The
high court held that the City had not understood that the BOT
agreement did not include Altech/Thobela assuming responsibility
for
the existing network and the financial implications of this. But, the
draft BOT agreement that was considered by the City plainly
stated as
much. The high court held that ‘the best way to afford the new
network was for the service provider to be responsible
for both the
existing budget to be “reprioritised” and the extended
network’.
[56]
The City currently pays R226 million per annum for its outdated and
dysfunctional network. In the course of his 100-day speech,
Mr
Msimanga acknowledged that ‘[t]he ICT infrastructure we
inherited was dilapidated and overrun with outdated software,
service
out of warranty, and the city’s entire network left vulnerable
and exposed’. The project committed the City
to an annual cost
of R244 million for a network that would replace the dysfunctional
existing network and greatly extend its capacity
and range of
coverage. The BOT agreement provided the City with a 30% share of the
net profit after tax that Thobela would derive
from the
commercialisation of the excess capacity on the network. It was
envisaged that this would materially reduce the actual
cost and might
even allow the City to offset the offtake amount in its entirety. It
would almost inevitably cover the difference
of R18 million between
what the City was paying for its dysfunctional network, which ought
to have been replaced years ago, and
the R244 million offtake amount.
[57]
The fact that the offtake amount had been provided for in the City’s
budget was specifically confirmed in a letter dated
14 October 2016,
which was addressed by the Acting City Manager to Thobela. The letter
pointed out that the ‘costs have already
been fixed and
factored into the budget’. Further, KR Inc expressly
recorded in the due diligence report that: (i) the
tender was
correctly awarded; (ii) the project had been budgeted for; and, (iii)
the City would not seek special funds for the
project, but leverage
funds from its existing budget. The City adduced no acceptable
factual evidence to dispute the correctness
of these previous
communications. Importantly, the City was not paying for the build
phase of the project. It is thus unclear how
they were supposed to
budget for the future in respect of the project, any more than they
budget for other future items of expenditure.
It follows that on this
score the high court erred.
[58]
A consideration that appeared to have weighed with the high court in
setting aside the BOT agreement, is that Altech ‘failed
to
identify itself appropriately in its bid documents’. It is
plain from the documents that Altech had submitted a bid on
the basis
that if successful, the project would be performed by a project
company or SPV established for that purpose. There was
no confusion
or ambiguity in that regard. The then City Manager, Mr Ngobeni,
understood as much.
[59]
Altech framed its bid in that fashion, because it anticipated that in
a project financing transaction of this kind, it would
inevitably be
necessary to house the project in a project company or SPV. Thobela
and ABSA explained in their affidavits why this
was necessary and
that this is the usual practice, even in contracts with organs of
state arising from public procurement processes.
As a special purpose
project finance vehicle, Thobela’s sole purpose and business
was the building and operating of the network
for the City and the
ultimate transfer of that network to the latter. The lenders
confirmed that this is common in BOT and similar
project finance type
transactions, including transactions involving state owned
enterprises and organs of state.
[60]
The draft BOT agreement circulated for comment expressly provided
that the envisaged service provider would be a project company
and
not Altech itself. The proposed shareholding in the project company
was specified in the report that served before the Council
on 28
April 2016. The City took no issue with this. Nor, did the other role
players including the National and Provincial Treasury,
who commented
on the draft agreement during the s 33 process.
[61]
Further, KR Inc recorded in the due diligence report that:
‘
. . .
the project was eventually awarded to Altech . . . Who indicated in
their tender response letter that in order to run the
project, they
would form a consortium which may consist of individuals from
[various named entities] It envisaged at the tender
stage that the
parties would form a SPV for purposes of the project. Subsequently,
the SPV was formed and finally named Thobela
Telecoms Proprietary
Limited.’
Well
aware that the BOT agreement was with Thobela and not Altech, KRI Inc
certified that the agreement constituted ‘legal,
valid and
binding obligations of the City’. This disposes of the s 33
ground.
[62]
Turning to the public-private partnership (PPP) ground: In terms of
the MFMA Regulations –
‘
public-private
partnership means a commercial transaction between a municipality and
a private party in terms of which a private
party –
(a) performs a municipal function
for or on behalf of a municipality, or acquires the management or use
of municipal property for
its own commercial purposes, or both
performs a municipal function for or on behalf of a municipality and
acquires the management
or use of municipal property for its own
commercial purposes; and
(b) assumes substantial
financial, technical and operational risks in connection with –
(i) the performance of the
municipal function;
(ii) the management of use of the
municipal property; or
(iii) both; and
(c) receives a
benefit from performing the municipal function or from utilizing the
municipal property or from both . . . .’
[12]
[63]
The project was not a PPP because it did not involve the performance
of a municipal function or the provision of a municipal
service, and
it did not involve the use of municipal property for commercial gain.
Municipalities have no constitutional competence
in relation to
telecommunications.
[13]
The
obligation of Thobela to build and operate the network and to provide
services to the City did not therefore amount to the performance
of a
municipal function or the provision of a municipal service.
[64]
The BOT agreement did not involve the management or use of municipal
property for Thobela’s own commercial purposes.
Under the BOT
agreement, Thobela would use its own network. It is only at the end
of the operating period that the network would
be transferred to the
City. At no stage whilst Thobela would be deriving commercial profit,
would the network be municipal property.
Nor does the fact that the
network would run on or over municipal land bring it within the
definition of a PPP. It follows that
the high court erred in finding
that the City ought to have followed the procedures for a PPP.
[65]
The high court failed to weigh-up the consequences of setting aside,
against not setting aside, the BOT and Tripartite agreements.
As this
court observed in
Millennium
Waste Management (Pty) Ltd. v Chairperson of the Tender Board:
Limpopo Province and Others
:
[14]
‘
The
difficulty that is presented by invalid administrative acts, as
pointed out by this court in
Oudekraal
Estates
, is
that they often have been acted upon by the time they are brought
under review. That difficulty is particularly acute
when a decision
is taken to accept a tender. A decision to accept a tender is almost
always acted upon immediately by the conclusion
of a contract with
the tenderer, and that is often immediately followed by further
contracts concluded by the tenderer in executing
the contract. To set
aside the decision to accept the tender, with the effect that the
contract is rendered void from the outset,
can have catastrophic
consequences for an innocent tenderer, and adverse consequences for
the public at large in whose interests
the administrative body or
official purported to act. Those interests must be carefully weighed
against those of the disappointed
tenderer if an order is to be made
that is just and equitable.’
[66]
It is so that in
Millennium
Waste
this court ordered that the tender be evaluated afresh. It did so,
because a tender had been unlawfully disqualified and had not
been
evaluated. Importantly, this is not as simple a contract as was the
case in
Millennium
Waste
.
It is a substantial contract, with implications for millions of the
City’s residents.
Millennium
Waste
recognised that following upon the acceptance of a tender, parties
usually proceed to implement the tender and that further agreements
are concluded. That is precisely what has occurred here. The high
court failed to consider the indivisible nature of these
arrangements,
which renders the setting aside of the BOT agreement
completely impracticable.
[15]
[67]
The high court ignored the fact that the build phase of the project
was 34% complete and that in excess of R610 million had
already been
expended on the project. It also ignored the fact that following upon
the conclusion of the BOT and Tripartite agreements,
further
agreements had to be concluded for the engineering, procurement,
construction, operation and maintenance of the network.
During
December 2016, three batches of equipment with a total value of R184
million arrived in South Africa, the first on the 13
th
,
the second on the 19
th
and the third on the 21
st
.
On 14 December 2016, Thobela purchased 850 km of fibre duct from
Dark Fibre Africa Proprietary Limited for an amount of
R114 million. These are by no means exhaustive. When the
proceedings were brought, Thobela owed Altech R220 million in respect
of work done by the latter on the project and its capital exposure to
the lenders stood at R258 million. These debts attract
interest.
Thobela will no doubt be confronted with claims from the lenders and,
in turn, will presumably look to the City to make
good those losses.
Should the lenders come short, they may well also set their sights on
the City. The upshot of all of this is
that one way or another the
setting aside of the BOT and Tripartite agreements will not be the
end of the matter.
[68]
I think that the court was far too receptive to the City’s
case. In focusing as closely as it did on the asserted
irregularities,
it lost from sight that it was engaged in a
‘multi-factor and context-sensitive’ enquiry. The court
accordingly ignored
almost entirely the other considerations alluded
to in
Valor
IT v Premier, North West Province and Others
.
[16]
[69]
When all is said and done, there is no escape from the facts. Even
though armed with the evidence upon which it now relies,
the City,
both under its previous administration and also the present
administration, sat back over a protracted period, but wants
this
indifference to be disregarded entirely. The City had several
opportunities to have alerted the appellants to its misgivings
or
brought review proceedings. It did neither. This inaction has left
the appellants, financially exposed. The appellants, who
were
entirely removed from the tender, could not second-guess the
regularity of the procurement process of an organ of state. The
funders and the other appellants were entitled to assume that the
City would have acted in a manner that is fair in all the
circumstances.
[17]
They
were also entitled to assume that the City would have complied with
its own internal arrangements and formalities.
[18]
[70]
There seems much to be said for the suggestion that the City is not
truly trying to vindicate the rule of law, but using the
review to
evade, rather than assert its constitutional obligations. The City
has not jettisoned the idea of a broadband project.
What it
envisages, should the BOT and Tripartite agreements be set aside, is
‘the provision of a network as envisaged by
the BOT Agreement,
but on such terms [as] are more favourable to the COT and the
conclusion of which would be lawful’.
In a similar vein, in his
email of 15 January 2017, Mr Brink stated: ‘[t]he end
result is to provide an auditing
firm with a concise brief as to what
suspicions to confirm, and questions to answer as to the validity of
the agreement, and its
possible renegotiation’. The City thus
seemed intent on invoking administrative law remedies to strike what
it hoped would
be a better bargain for itself. In this regard it is
noteworthy that none of the unsuccessful tenderers challenged the
outcome.
In any event, the expert evidence adduced by the appellants
was that the Altech ‘solution offered provides the City with
the best value proposition’. It is indeed so that the evidence
of an expert, tendered because of his (or her) special knowledge,
skill or experience, must of course be regarded with a measure of
caution. But here, there was simply nothing to gainsay the evidence.
[71]
The objective of state self-review should be to promote open,
responsive and accountable government. The conduct of the
City
renders the delay so unreasonable that it cannot be condoned without
turning a blind eye to its duty to act in a manner that
promotes
reliance, accountability and rationality and that is not legally and
constitutionally unconscionable.
[19]
Here,
the delay is stark and the egregious conduct on the part of the City,
even starker. The City has a ‘higher duty to respect
the law’.
It is not ‘an indigent and bewildered litigant, adrift in a sea
of litigious uncertainty, to whom the courts
must extend a
procedure-circumventing lifeline’.
[20]
[72]
Given the excessive delay, the absence of a reasonable and
satisfactory explanation for the delay, the unconscionable and highly
prejudicial conduct of the City and the lack of merit in the review
the court below ought not to have condoned the delay.
[73]
Before closing it is necessary to pass some comments about: first,
the role of KR Inc; and, second, the record and the approach
of the
legal practitioners in compliance with the rules of this court. Of
the first: The conflict is plain. KR Inc has acted throughout
for the
City. They were immersed in the procurement process from the outset.
They represented the City with regard to the award
of the tender, the
conclusion of the BOT agreement and the conclusion of the Tripartite
agreement. Throughout that process, they
engaged on behalf of the
City with Thobela, Altech and the lenders.
[74]
They had also undertaken an in-depth due diligence exercise and
signed off on the project in a detailed report and furnished
the
lenders with the comfort that they had sought. It was obviously
furnished in the knowledge that it would be acted upon. Indeed,
it
was. The lenders proceeded to advance funds to Thobela for the
project. KR Inc were particularly well placed to provide the
assurances sought. And, as officers of the court, they would
undoubtedly have been aware of the implications and weight of their
opinion. This is especially so, since they specifically acknowledged
that:
‘
the
opinion . . . may be disclosed by [ABSA] in connection with any due
diligence or other defence advanced or made by you in any
court
proceedings, arbitration, action or other legal proceedings . . .
arising in relation to the proposed financing provided
to the Service
Provider as set out in the [BOT agreement]’.
For
all this, KR Inc continues to act for the City in these proceedings.
It should not have done so especially as members of the
firm were
clearly potential witnesses in the proceedings.
[75]
As to the second: The parties evidently made no real attempt to
comply with the rules of this court in preparing the record.
How else
can one make sense of a record in excess of 5000 pages, consisting of
12 volumes, sixteen 16 core bundle volumes and two
index volumes?
Inexplicably, the core bundle exceeds the main record of the
proceedings by some 750 pages. ‘Sub-rule 8(7)(c)
makes it plain
that the core bundle is to be prepared as an adjunct to the appeal
record.’
[21]
It
should have consisted of a conveniently arranged and accessible
collection of those documents to which it was anticipated special
reference would be made during the hearing of the appeal. Although
the correspondence exchanged between the attorneys in purported
compliance with Rules 7, 8 and 9 was included in the record, it is
difficult to discern how they fixed on the portions considered
essential to the determination of the appeal.
[76]
Those rules are augmented by the requirement of a practice note in
terms of rule 10A(ix). One of the items to be dealt with
in the
practice note, which is to accompany counsel’s heads of
argument, is ‘a list reflecting those parts of the record
that,
in the opinion of counsel, are relevant to the determination of the
appeal.’ As Harms JA explained in
Caterham
Car Sales & Coachworks Ltd v Birkin Cars (Pty) Ltd and
Another
:
[22]
‘
The
object of the note is essentially twofold. First, it enables the
Chief Justice in settling the roll to estimate how much reading
matter is to be allocated to a particular Judge. Second, it assists
Judges in preparing the appeal without wasting time and energy
in
reading irrelevant matter. Unless practitioners comply with the
spirit of this requirement, the objects are frustrated and this
in
turn leads to a longer waiting time for other matters.’
[77]
In addition, rule 10A(b) requires ‘a certificate signed by the
legal practitioner responsible for the heads of argument
that rules
10 and 10A(a) have been complied with’. Although certificates
in accordance with rule 10A(b) were filed in this
matter, it was
clear that rule 10A(ix) had initially been observed only in the
breach.
[23]
It
was accordingly, necessary to call for revised practice notes to be
filed by counsel. Counsel were informed that they were required
to
indicate with greater specificity the portions of the record
considered necessary for the determination of the appeal. The revised
practice notes filed in response to the directive from the judges
hearing the appeal are instructive. Three of the four counsel,
made
no reference whatever to the main record. The fourth referred only to
a total of 76 of the 2327 pages. The upshot is that,
on any basis,
little regard could have been had to the rules of this court in the
preparation of the record.
[78]
Should there be a sanction? This court has previously emphasised that
practitioners may in appropriate circumstances be penalised
if the
rules are ignored.
[24]
Whilst
the primary obligation to prepare the record rested with the
appellants, in this case it is apparent that all parties were
equally
to blame for the non-compliance. I have considered whether some or
other punitive order for costs should not be made, but
in view of the
fact no one party can be singled out and that all parties were at
fault in respect of the preparation of the record,
it seems to me, on
reflection, that a special cost order is not clearly warranted. I am
also alive to the fact that, on account
of the project having been
brought to an abrupt halt because of the litigation, a significant
measure of urgency attached to the
appeal, which had to be heard on
an expedited basis.
[79]
In the result:
(a) The appeal is
upheld with costs, including those of two counsel.
(b) The order of the
court below is set aside and replaced by:
‘
The
application is dismissed with costs, including those of two counsel.’
_________________
V M Ponnan
Judge of Appeal
APPEARANCES
For
First Appellant: A Subel SC (with him E Kromhout)
Instructed
by:
Lowndes
Dlamini Attorneys, Sandton
Phatshoane
Henney, Bloemfontein
For
Second Appellant: M Chaskalson SC (with him I Currie)
Instructed
by:
ENSafrica,
Sandton
Webbers,
Bloemfontein
For
Third Appellant: G Marcus SC (with him M Musandiwa)
Instructed
by:
Norton
Rose Fullbright, Sandton
Webbers,
Bloemfontein
For
Respondent: M Rip SC (with him R Raubenheimer and
L
Nyangiwe)
Instructed
by:
Kunene
Ramapala Inc., Braamfontein
Blair
Attorneys, Bloemfontein
[1]
Buffalo
City Metropolitan Municipality v Asla Construction (Pty) Limited
[2019] ZACC 15
;
2019 (4) SA 331
(CC) para 111.
[2]
See inter
alia
State
Information Technology Agency SOC Ltd v Gijima Holdings (Pty) Ltd
[2017] ZACC 40
;
2018 (2) SA 23
(CC) and
Buffalo
City Metropolitan Municipality v Asla Construction (Pty) Ltd
(
Asla
Construction
)
[2019] ZACC 15
;
2019 (4) SA 331
(CC) paras 65-71.
[3]
Khumalo
and Another v Member of Executive Council for Education:
KwaZulu-Natal
[2013]
ZACC 49
;
2014 (5) SA 579
(CC) para 47.
[4]
Gijima
fn
2 above.
[5]
C Hoexter
‘South African Administrative Law at a Crossroads: The Paja
and the Principle of Legality’ adminlawblogorg
28 April 2017.
[6]
Khumalo
and Another v Member of the Executive Council for Education, KwaZulu
Natal
[2013]
ZACC 49
;
2014
(5) SA 579
(CC) para 44.
[7]
Ibid.
[8]
Valor IT v
Premier, North West Province and Others
[2020] ZASCA 62
;
[2020] 3 All SA 397
(SCA) para 30; See also
Aurecon
South Africa (Pty) Ltd v City of Cape Town
[2015] ZASCA 209
;
2016
(2) SA 199
(SCA) para 17;
City
of Cape Town v Aurecon South Africa (Pty) Ltd
[2017] ZACC 5
;
2017
(4) SA 223
(CC) para 46.
[9]
Asla
Construction
para 80.
[10]
Moseme
Road Construction CC and Others v King Civil Engineering Contractors
(Pty) Ltd and Another
[2010] ZASCA 13
;
2010 (4) SA 359
(SCA) para 21.
[11]
Section 33 of
the MFMA headed ‘Contracts having future budgetary
implications’, provides:
‘
(1) A
municipality may enter into a contract which will impose financial
obligations on the municipality beyond a financial year,
but if the
contract will impose financial obligations on the municipality
beyond the three years covered in the annual budget
for that
financial year, it may do so only if -
(a) the municipal manager, at
least 60 days before the meeting of the municipal council at which
the contract is to be approved
–
(i) has, in accordance with
section 21A of the Municipal Systems Act –
(aa) made public the draft
contract and an information statement summarising the municipality’s
obligations in terms of
the proposed contract; and
(bb) invited the local community
and other interested persons to submit to the municipality comments
or representations in respect
of the proposed contract; and
(ii) has solicited the views and
recommendations of –
(aa) the National Treasury and
the relevant provincial treasury;
(bb) the national department
responsible for local government; and
(cc) if the contract involves
the provision of water, sanitation, electricity, or any other
service as may be prescribed, the
responsible national department;
(b) the municipal council has
taken into account –
(i) the municipality’s
projected financial obligations in terms of the proposed contract
for each financial year covered
by the contract;
(ii) the impact of those
financial obligations on the municipality’s future municipal
tariffs and revenue;
(iii) any comments or
representations on the proposed contract received from the local
community and other interested persons;
and
(iv) any written views and
recommendations on the proposed contract by the National Treasury,
the relevant provincial treasury,
the national department
responsible for local government and any national department
referred to in paragraph (a)(ii)(cc); and
(c) the municipal council has
adopted a resolution in which –
(i) it determines that the
municipality will secure a significant capital investment or will
derive a significant financial economic
or financial benefit from
the contract;
(ii) it approves the entire
contract exactly as it is to be executed; and
(iii) it authorises the
municipal manager to sign the contract on behalf of the
municipality.
(2) The process set out in
subsection (1) does not apply to –
(a) contracts for long-term debt
regulated in terms of section 46(3);
(b) employment contracts; or (c)
contracts –
(i) for categories of goods as
may be prescribed; or
(ii) in terms of which the
financial obligation on the municipality is below –
(aa) a prescribed value; or
(bb) a prescribed percentage of
the municipality’s approved budget for the year in which the
contract is concluded.
(3) (a) All contracts referred
to in subsection (1) and all other contracts that impose a financial
obligation on a municipality
–
(i)
must
be made available in their entirety to the municipal council; and
(ii) may not be withheld from
public scrutiny except as provided for in terms of the Promotion of
Access to Information Act, 2000
(Act No. 2 of 2000).
(b) Paragraph (a)(i) does not
apply to contracts in respect of which the financial obligation on
the municipality is below a prescribed
value.
(4) This section may not be read
as exempting the municipality from the provisions of Chapter 11 to
the extent that those provisions
are applicable in a particular
case.
[12]
‘
Municipal
Public-Private Partnership Regulations
GN
R309,
GG
27431, 1 April 2005.’
[13]
City of
Tshwane Metropolitan Municipality v Link Africa (Pty) Ltd and Others
[2015] ZACC
29
;
2015
(6) SA 440
(CC) para 186.
[14]
Millennium
Waste Management (Pty) Ltd. v Chairperson of the Tender Board:
Limpopo Province and Others
[2007] ZASCA 165
;
2008 (2) SA 481
(SCA); para 23.
[15]
Moseme
Road Construction CC and Others v King Civil Engineering Contractors
(Pty) Ltd and Another
[2010] ZASCA 13
;
2010 (4) SA 359
(SCA) paras 16 – 20.
[16]
Valor IT v
Premier, North West Province and Others
[2020] ZASCA 62
;
[2020] 3 All SA 397
(SCA) para 30; See also
Aurecon
South Africa (Pty) Ltd v City of Cape Town
[2015] ZASCA 209
;
2016 (2) SA 199
(SCA) para 17;
City
of Cape Town v Aurecon South Africa (Pty) Ltd
[2017] ZACC 5
;
2017 (4) SA 223
(CC) para 46.
[17]
Minister
of Health and Another v New Clicks South Africa (Pty) Ltd and Others
[2005] ZACC 14
;
2006 (2) SA 311
(CC) paras 152 -155.
[18]
City of
Tshwane Metropolitan Municipality v RPM Bricks Proprietary Ltd
[2007] ZASCA 28
;
2008 (3) SA 1
(SCA) para 12.
[19]
KwaZulu-Natal
Joint Liaison Committee v MEC Department of Education, KwaZulu-Natal
and Others
[2013]
ZACC 10
;
2013 (4) SA 262
(CC) paras 57 and 63.
[20]
MEC for
Health, Eastern Cape and Another v Kirland Investments (Pty) Ltd
[2014]
ZACC 6
;
2014 (3) SA 481
(CC) para 82.
[21]
Africa
Solar (Pty) Ltd v Divwatt (Pty) Ltd
2002
(4) SA 681
(SCA)
paras 39 to 45.
Sub-rule
8(7) provides as follows:
‘
(7)(a)
A core bundle of documents shall be prepared if to do so is
appropriate to the appeal.
(b) The core bundle shall
consist of the material documents of the case in a proper,
preferably chronological, sequence.
(c) Documents contained in the
core bundle shall be omitted from the record, but the record shall
indicate where each such document
is to be found in the core
bundle.’
[22]
Caterham
Car Sales & Coachworks Ltd. v Birkin Cars (Pty) Ltd. and
Another
[1998] ZASCA 44
;
1998
(3) SA 938
(SCA)
para 36.
[23]
Van Aardt
v Galway
[2011]
ZASCA 201
;
2012 (2) SA 312
(SCA) paras 32-38.
[24]
Premier,
Free State, and Others v Firechem Free State (Pty) Ltd
[2000]
ZASCA 28
;
2000
(4) SA 413
(SCA)
paras 40-44.