IN THE HIGH COURT OF SOUTH AFRICA ,
MPUMALANGA DIVISION , MIDDELBU RG (LOCA L SEAT)
CASE NUMBER: A59/2024
(1) Reportable: NO
(2) or interest to other Judges: NO
(3) Revised Yes
30 June 2026 LESO AJ
Date Signature
In the application between:
GERT SIBANDE DISTRICT MUNICIPALITY
And
BONGINKOSI TECHNOLOGIES (PTY) LTD t/a NASHUA
JUDGMENT
LESO AJ (PHAHLAMOHLA J AND MATIME AJ CONCURRING)
INTRODUCTION
Appellant
Respondent
[1) This is an appeal against the judgment and order of Langa J ("the court a quo")
handed down on 4 November 2024. The court a quo dismissed the appellant's
application for self-review and granted the counterclaim in the amount of R2 465
252.21 in favour of the respondent. The appeal is with leave of the court a quo.
(2] In this appeal, the municipality will seek an order reversing the orders of
Langa J in their entirety, including the counterclaim, which was granted in favour of
the respondent.
PRELIMINARY ISSUE
W/1el/1er the appeal /Jas lapsec/
[3] The respondent raised a point in fimine that the appeal had lapsed on account
of the lats3 filing of the notice of appeal, record and security.
[4] It is common cause that the notice of appeal was filed one day outside the
prescribed period. The appellant applied for condonation and furnished an explanation
for the delay. The appellant further filed an application for condonation in respect of
the late filing of the appeal record and security.
[5] The judgment of the court a quo was delivered on 4 August 2025. The notice
of appeal was filed on 2 September 2025. Although the record was subsequently filed,
security was only furnished on 1 O February 2026.
Cone/on a/ion
[6] The filing of security was not in strict compliance with Rule 49. However, the
irregularity did not result in the lapsing of the appeal and caused no demonstrable
prejudice to the respondent.
[7] In the circumstances, condonation was granted and the point in fimine falls to
be dismissed.
FACTUAL BACKGROUND
[8] The dispute arises from a tender awarded by the appellant to the respondent
for the supply and installation of a vel1icle tracking system.
[9] The tender was awarded for a period of thirty-six (36) months and was
approved within a budget allocation of R1 580 480.49.
['I OJ The Bid Evaluation Committee ("BEC") and Bid Adjudication Committee
("BAC") recommended the appointment of the respondent. Following the award of the
tender, the parties concluded a service level agreement consistent with the tender
specifications and bill of quantities. On 9 December 2021 t11e respondent signed a
further appointment letter.
[11] That Nashua does not dispute the BAC conditional recommendations for
renegotiating pricing to H 600 per vehicle.
[12] The Bid Adjudication Committee conditions were not complied witli,
notwithstanding the fact that the Municipal Manager, on the following
day, approved the recommendations of the BAC subject to the conditions imposed,
[13] The appellant initiated an internal investigation after a discrepancy was found
in the second appointment letter. The municipal manager was directed not to honour
lhe invoices submitted subsequent to the second appointment letter.
GHOUNDS OF APPEAL
[14] The appellant contends that the court a quo erred by:
14.1 not finding that t11e respondent ought not to have been awarded t11e
tender in the first instance because the respondent failed to meet the minimum
threshold and was awarded points incorrectly.
14.2 not finding that the respondent did not comply with the conditions of the
BAC and the Municipal Manager for the price to be renegotiated at H600 per
vehicle.
14.3 not finding that the respondent did not provide t11e three traceable project
experiences as required.
14.4 not finding that the budget for this tender is H 1 580 480, 49 provided
for under budget vote: 099263750.
14.5 Failing lo declare the material amendment of the contractual terms
after the aware! of the tender unlawful.
14.6 Granting the respondent's counterclaim in its entirety, notwithstanding
the alleged unlawfulness of the amended contractual arrangement; and
·14. 7 Making a punitive costs order against the appellant.
SUMMARY OF SUBMISSIONS
Appellants submission
[15) Aclv Maphutha, appearing for the appellant, submittecl that the revised
contractual arrangement concluded between the parties fell outside the scope of the
original tender award, was never subjected to a competitive procurement process, and
was consequently inconsistent with the requirements of section 217 of the
Constitution.
[16) Counsel argued that, following the recommendation of the Bid Adjudication
Committee ("BAC"), the Municipal Manager, Mr Habile, was specifically requested to
negotiate the respondent's pricing from between R700 ancl R800 per unit to an amount
of R600 per unit. In his approval of the BAG recommendation on 5 October 2021, Mr
Habile expressly recorded that the respondent's appointment was subject to the
successful negotiation of the price to R600. According to the appellant, this condition
was necessitated by budgetary constraints, as the municipality could not afford the
pricing refiected in the respondent's original bill of quantities.
[17) The appellant contended that the Service Level Agreement concluded on 18
November 2021 did not give effect to the negotiated pricing contemplated by the BAC
recommendation and the Municipal Manager's approval. Instead, it was concluded on
the basis of the respondent's original bill of quantities, contrary to the condition upon
which the award had been approved.
[18) A furtl1er complaint relates to the second letter of appointment signed by the
Municipal Manager on 9 December 2021. The appellant submitted that this letter
introducecl material terms which were inconsistent wit11 ancl substantially departed
from the original award. It allegedly altered the procurement model from an outright
purchase arrangement to a rental-based model, expanded the scope of the contract,
and introduced a revised pricing structure. The result, according to the appellant, was
a dramatic escalation of the contract value from approximately R1 .58 million to R7 024
a dramatic escalation of the contract value from approximately R1 .58 million to R7 024
752.00, contrary to both the BAC recommendation and the negotiated pricing
condition.
[19] The appellant argued that the conduct of the Municipal Manager and the
respondent in implementing the revised arrangement was unlawful and amounted to
a material deviation from the approved procurement process. The appellant further
complained that the respondent did not provide the three traceable project
experiences as required. It was argued that such conduct tainted the procurement
process, entitling the municipality to review and set aside its own decision.
[20] In support of tl1is contention, reliance was placed on the decision of the
Constitutional Court in Al/Pay Conso/iclatecl Investment Ho/clings (Ply) Lief v Chief
Executive Of/teer of SASSA [2014] ZACC 12, where it was held that compliance with
constitutional and statutory procurement requirements is indispensable and that
material irregularities render administrative action susceptible to judicial review.
[21] The appellant further submitted that the negotiated pricing constituted an
indispensable condition of the award. Absent agreement on the negotiated price, no
valid contract could lawfully arise. Consequently, the respondent's appointment on the
basis of its original bill of quantities, which exceeded the approved budget, was
unlawful, not cost-effective, and inconsistent with section 217 of the Constitution.
[20) It is further submitted that by participating in and advancing a post-award
escalation of pricing contrary to the bid value and the BAC conditions, Nashua aligned
itself with conduct that transgressed the principles of fairness, transparency,
competitiveness, and cost-effectiveness ensl1rined in section 217 of the Constitution
[22] It was further contended that the respondent rendered invoices and claimed
payment in accordance with the revised and unlawful arrangement rather than the
procurement terms approved by the municipality. The appellant accordingly
maintained lhat both the impugned award and the subsequent contractual
maintained lhat both the impugned award and the subsequent contractual
arrangements offended the principle of legality and fall to be reviewed and set aside.
Responclent's Submissions
[23J On behalf of the respondent, Adv Swart submitted that the municipality itself
irnplemented and gave effect to the impugned arrangements. Counsel pointed out that
the appellant continued to accept and utilise the services rendered and made payment
until January 2022, being approximately one month after the second letter of
appointment hacl been issuecl. According to the respondent, the municipality induced
the respondent to act on the apparent validity of the appointment.
[24] Counsel further submitted t11at, even if the contract were ultimately declared
invalid, the respondent would nevertheless be entitled to remuneration for services
actually rendered between October 2021 and February 2023. In this regard, the
respondent persisted with its counterclaim in the amount of R2 465 252.21 for services
allegedly rendered during that period.
[25] Regarding the validity of t11e tender process, the respondent contended that
neither the tender documents nor the applicable procurement framework prohibited
reliance on franchise experience. It was therefore submitted that the evaluation
committee was entitled to take sucl1 experience into account when assessing t11e
respondent's bid.
[26] The respondent further argued ttiat expenditure exceeding a projected or
allocated budget does not, without more, invalidate a tender award. Reliance was
placed on section 70 of the Municipal Finance Management Act, which permits
overspending in certain circumstances. II was submitted that the appellant had failed
to establish that the alleged budget limitation formed part of an approved municipal
budget within the meaning of the applicable legislative framework.
[27] The respondent accordingly maintained that the tender award and subsequent
contractual arrangements were lawful and valid and that the appellant had failed to
establish any basis for the review and selling aside the tender award.
ISSUES FOR DETERMINATION
[28] The central issues for determination are:
·J. Having found the relief incompetent, whether the Court erred in dismissing
the application on the merits.
2. Whether the appointment letter of 9 December 2021 constituted a material
amendment of the tender award;
3. Whether the decision to award the tender and related decisions should be
reviewed as provided for based on t11e principle of legality.
4. Whether the respondent is entitled to payment under its counterclaim
and;
5. Whether the court a quo erred in granting a punitive costs order against the
appellant.
ANALYSIS
Tile appeal
[29] The appellant seeks an order setting aside the judgment of the court a quo and
substituting it will1 an order reviewing and setting aside the decisions relating to the
awarding of the tender and the extension of the tender scope and the amended pricing
structure introduced after the award of the tender.
[30] Appeals are governed by section 17 of the Superior Courts Act1, the general
rule is that appeals lie against judgments or orders, not against the reasons or
factual findings of the court itself.
[31] To the extent tliat the parties devoted substantial argument to the functionality
scoring, reference letters and alleged misrepresentations during the bid evaluation
process, those issues are not decisive of the present appeal. And to the extent that
the appellant sought an order that the tender award be declared null and void based
on the bill of quantities not in line with the budget of the appellant, the appellant does
not persist with the alleged fraud or material misrepresentation to invalidate the
original tender award and tlie first appointment letter.
[32] Similarly, the court's findings on the unreasonable delay from September
2021, the finding that the functionality evaluation was irregular and ultra vires and the
finding that prayers 1-4 were "incompetent" and "vague", are findings by the court a
quo that are not subject to appeal and need not be considered further.
[33] The appellant did not assist the court because the grounds of appeal
were not easily crystallised or succinctly set out. I have highlighted the conflated issues
'See section 17 of tl1e Superior Courts Act, 10 of 2013,
in paragraphs 32 and 33. Consequently, I will proceed with the grounds of appeal as
we could establish from the submissions by both parties.
Dismissal of tile application on the merits
[34] It is apparent from the judgment that the court a quo fully engaged with and
determined the substantive merits of the review application. In doing so, !lie court
considered and analysed, inter alia, the issues relating to the alleged budgetary
constraints, the reference letter, the second appointment letter, and the procurement
process that culminated in the award of the tender.
[35] Having embarked upon and pronounced on the merits of the dispute, the court
nevertheless dismissed the application on the basis that the relief sought was
incompetent. In these circumstances, the question arises whether the court was
entitled to dismiss the application outright, rather than striking the matter from the roll
or affording tl1e appellant an opportunity to seek appropriate relief. The distinction is
significant, as a dismissal ordinarily constitutes a final determination of the dispute,
whereas a striking-off order generally leaves the litigant at liberty to pursue the matter
afresh upon rectifying the procedural or jurisdictional defect.
[36] Having considered and determined the substantive issues raised in the review
application, the court a quo effectively adjudicated the merits of the dispute. In those
circumstances, ii was incompatible to dismiss t11e application solely on the basis that
the relief sought was incompetent. If the defect lay only in the formulation of the relief,
the appropriate course would have been either to strike the matter from the roll or to
consider whether competent relief could be fashioned on the facts before the court.
[37] MEC for Health, Eastern Cape and Another v l<irlancl Investments {Ply) Ltc/2
emphasises that courts should decide disputes on their substance and fashion
effective relief consistent with legality and justice. In Al/Pay Consolidated Investment
effective relief consistent with legality and justice. In Al/Pay Consolidated Investment
Holdings (Ply) Ltd and Others v Chief Executive Officer of the South African Social
Security Agency and Olhers3, It was stated that courts must focus on the lawfulness
of the impugned administrative process rather than on technicalities.
2 See MEC/or Health, Eastern Cupe and Another v Kir/ond Investments (Pty) Ltd [2014) ZACC 6.
3 See Al/Pay Consolidated Investment Ila/dings {Ply) Ltd and Others v Chief Executive officer of the South African
Social Security Agency and Others
[38] The dismissal of the application, after full consideration of the merits, had the
effect of finally disposing of the dispute without determining wl1ether the impugned
administrative action was lawful, reasonable and procedurally fair. Such an approach
is inconsistent with the constitutional preference for the resolution of disputes on tt1eir
substantive merits rather than on technical procedural grounds.
[39] In Al/Pay Consolic/atecl Investment, the court found that the tender award was
unlawful but did not immediately decide the appropriate remedy. Instead, the Court
requested further argument on what would be "just and equitable," recognising that
cancelling the contract outright could interrupt social grant payments to millions of
beneficiaries. Similarly, the court a quo should have granted the municipality an
opportunity to amend the prayers in the Notice of Motion.
[40] Although the appellant failed to distinguish between the original tender award
and the subsequent appointment letter of 9 December 2021, it was clear that the
review application was in relation to both decisions. The court ought not to have
clismissed the application on the basis that such a distinction is not apparent frorn the
appellant's papers.
Review application
[41] The appellant sought the order to set aside and the review of the alleged
unlawful expenditure consequent to the second appointment letter of December 2021.
It cannot be gainsaid that the applicant instituted a review application under PAJA and
this matter involves the exercise of public power.
[42] The J<ir/and lnvestments4 case is a major South African Constitutional Court
decision. It was stated that, "even if a government c/ecision is wrong, the state cannot simply
ignore it or cancel it internally. The government must apply formally for a cow1 lo set asic/e the
c/efective c/ecision, so that the court can properly consicler its effects on those su/Jject to ii."
[43] The question is whether the conversion of the procurement rnoclel from an
[43] The question is whether the conversion of the procurement rnoclel from an
outright purchase to a rental model was lawful and whether the amended pricing
structure compliecl with section 217 of the Constitution;
4 See Footnote 2 for full citation.
[44] The Municipality's procurement powers are expressly regulated by the
Municipal Finance Management Act5(MFMA), including section 112(1 )·(2), which
requires a supply chain management system that gives effect to the constitutional
procurement values and prohibits deviations that undermine fairness, transparency
and competitiveness.
Tile appointment letter of 9 Decem/Jer 2021
(45] The true dispute concerns the legality of the subsequent amendment embodied
in the appointment letter dated 9 December 2021. The dispute goes to the heart of the
review application which was brought by the applicant and whicl1 the court a quo did
not deal with.
(46] In A/tech Radio Ho/clings (Ply) Lie/ and others v Tshwane City t11e court stated
that "When government errs by issuing a defective decision, the subject affec/ec/ by it is
en/ii/eel to proper notice, and to /Je afforclec/ a proper hearing, on whether the clecision shoulc/
/Je set asic/e. Government shou/c/ not be allowed to take shortcuts. Generally, this means
that government must apply formally to set asic/e tile decision. Once tile subject has relied on
a decision, government cannot, /Jarring specific statutory aut/Jorily, simply ignore what it has
done. The c/ecision, despite being c/efective, may /Jave consequences I/Jal make it
undesirable or even impossible to set ii aside. That demanc/s a proper process, in which ail
factors for and against are properly weighed."
14 7] This court is therefore not concerned with the validity of the original award itself.
The position is however materially different in relation to the appointment letter issued
on 9 December 2021. The letter introduced a substantially different commercial
arrangement from that contemplated by the tender documentation.
(48] In Pepcor Retirement Fune/ ancl Another v Financial Se/Vices Boarc/7 the
Supreme Court of Appeal held that administrative decision has to be taken on an
accurate factual basis as a result of wl1ich a material mistake of fact renders an
accurate factual basis as a result of wl1ich a material mistake of fact renders an
administrative decision subject to review. The court held at paragraph 32 that:
"Judicial intervention has Ileen limiled to cases where the c/ecision was arrived at arbitrarily,
capriciously or ma/a fide or as a result of unwarrantec/ ac//Jerence to a fixed principle or in
ore/er to further an ulterior or improper purpose; or where the functionaIy misconceived the
5 See Municipal Finance Managcll)ent Act No.56 of 2003, supported by t11e Annual Division of Revenue AcL
& See Aftech Radio Holdings (Pry) Ltd and others v Tshwone City 2021 (3) SA 25 {SCA) porn 65,
7 See Pepcor Retirement fund and Another v Financial Services Board 2003 (6) SA 38 (SCA).
nature of 1/Je discretion conferred upon /Jim and took lir/o account itrolcvanl consiclera/ions
or ignored relevant ones; or where /ho decision of the funcliona1y was so grossly
unreasonable as lo warrant the inference //Jal /Je had failed lo apply his mind to the
matter ... )
1
•
The conversion of the procurement model
[49) The evidence demonstrates that the original purchase model was replaced with
a rental model and that the financial implications of the contract increased substantially
beyond the approved tender budget. No evidence exists that this material variation
was subjected to a fresh competitive procurement process or approved t11rough the
procedures required for public procurement. Consequently, the conversion lrorn an
outright purchase lo a rental model was unlawful,
[ 50) A material amendment of a public contract after its award may not be used to
circumvent the constitutional requirements governing public procurement. Section
217(1) of the Constitution requires procurement systems to be fair, equitable,
transparent, competitive and cost-effective,
[51) The material amendment to the tender makes a decision subject to review
because the decision has been made in ignorance of the true facts material to that
decision or for not considering relevant material.
[52] The conversion of the procurement model and the introduction of substantially
revised pricing fell outside the parameters of the original tender and offended these
constitutional principles, To that extent, the conduct embodied in the appointment
letter of 9 December 2021 was unlawful and falls to be reviewed ancl set aside. Section
33(1) of the Constitution of the Republic of South Africa, 108 of 1996, gives anyone a
right to administrative action that is procedurally fair, Section 6(2)(c) of PAJA allows
review of an administrative action on the ground that the action was procedurally
unfair.
[52) The appellant cannot rely on the negotiations which were not finalised. It must
unfair.
[52) The appellant cannot rely on the negotiations which were not finalised. It must
apply formally for a court to set aside the defective decision, so that the court can
properly consider its effects on those subject to iL The conditions imposed by t11e Bid
Evaluation Committee and the Municipal Manager's instruction to negotiate the price
to RG00 per vehicle amounted to a suspensive condition, The conduct is incompatible
with t11e principles and values enshrined in section 195(1) of the Constitution.
The Counterclaim
[53] Even if the contract were ultimately declared invalic!, the appellant accepts that
the respondent is entitled to reasonable compensation for services actually rendered.
MFMA8 provides that," Any entillement to payment must in any event l;e approachec/
through the scope of the MFMA, including sections 15(a)-(b) and 32, which regulate
and restrict payment of unauthorised, irregular or fruil/ess and wasteful expenditure."
[54) The difficulty witl1 the order of the court is that it awarded the respondent the
full amount claimed under a contractual arrangement that was itself tainted by
unlawfulness.
[55) Once the amended contractual arrangement is found to be unlawful, 1110
appropriate remedy is not the enforcement of the amended pricing structure rather,
the respondent's entitlement must be determined on a just and equitable basis, having
regard to the value of the services rendered and the pricing framework contemplated
in the original tender documentation.
[56) The court a quo accordingly erred in granting the full amount claimed by l11e
respondent in the counterclaim.
Costs
[57) The court a quo ought not to have granted a punitive costs order against the
appellant. Although aspects of the appellant's conduct may be criticised, the legality
review raised genuine constitutional and the procurement-law issues deserve judicial
determination.
[581 The punitive costs order is dispropo1iionate and confiates the Municipality's
litigation conduct with its administrative conduct. W11ile the Municipality's
administrative handling was poor, the review application raised genuine questions of
fraud and "ultra vires" conduct t11at warranted judicial determination. The costs order
effectively penalizes the Municipality for exercising its constitutional right to seek
legality review.
8 See Municipal Finance Management /\ct (MFMA) [Act 56 of 2003. Section 15 restrict spending. A municipality
can only incur expenditure if lt is in accordance wlth an approved budget, and section 32 Oictr1tes how
municipalities must handle prohibited spending, It mandates that if an expenditure falls outside the bounds of
the law, the municipality must Investigate, recover the money from the person liable, or write it off.
159) In the circumstances, a punitive costs order was not justified.
WHEREFORE, THE FOLLOWING ORDER IS PROPOSED:
1. The appeal succeeds.
2. The order or the court a quo is set aside and is replaced with the following:
1. The decision embodied in the appointment letter dated 9 December
2021, together with the amended pricing structure and related contractual
arrangements arising therefrom, is reviewed and set aside.
2. The respondent is declared entitled to reasonable compensation for
services rendered to lhe appellant, such compensatton to be determined
on a just and equitable basis having regard lo the original tender framework.
3. The appellant shall, within 30 days, rurnish the respondent with a written
computation of the reasonable compensation due. In the event that the
parties fail to agree on the amount within 30 days thereafter. The parties
are directed to endeavour to reach an agreement on lhe quantum of such
compensation within 60 days of this order.
4. Failing agreement within the stipulated period, either par1y may
approach this Court, on supplemented papers if necessary, for the
determination of the quantum of compensation.
3. Each party shall pay its own costs of the review proceedings.
J LESO AJ
ACTING JUDGE OF HIGH COURT,
MPUMALANGA DIVISION, MIDDELBURG
I agree
MATIMEAJ
ACTING JUDGE OF HIGH COURT,
MPUMALANGA DIVISION, MIDDELB URG
I agree. It is so ordered.
K F PHAHLAMOHLAKA
JUDGE OF THE HIGH COURT,
MPUMALANGA DIVISION, MIDDELBURG
(The judgmenf was f 1a11ded clown electronically and by clrculalion to tile parties ana
or their represent elives by e-matl and by uploading lo Case/ine. The date of hand dow11
is lhf> date when the Judgment was signed.)
APP_gARANCES
For the Appellant
Counsel: Adv. M R Maphutha
Contacts:
Attorney:
Contacts
Attorney
For the Respondent
Counsel:
Contacts
Attorney:
Contacts:
Adv. N Sibanyoni
Cell: 083 360 1025
Email: maphutha@rsabar.co.za
Lusenga Attorneys Incorporated
DD SWART
072 634 7604
Cronje De Waal - Skllosa na Inc
013 7551280
Email:ansie@cro njedewaa l.co.za
Date of Hearing: 27 February 2026
Date of Judgment: 30 June 2026