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[2015] ZACC 22
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Trencon Construction (Pty) Limited v Industrial Development Corporation of South Africa Limited and Another (CCT198/14) [2015] ZACC 22; 2015 (5) SA 245 (CC); 2015 (10) BCLR 1199 (CC) (26 June 2015)
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Heads of arguments
CONSTITUTIONAL
COURT OF SOUTH AFRICA
Case CCT 198/14
In the matter
between:
TRENCON
CONSTRUCTION (PTY)
LIMITED
Applicant
and
INDUSTRIAL DEVELOPMENT
CORPORATION
OF SOUTH AFRICA
LIMITED
First Respondent
BASIL READ (PTY)
LIMITED
Second Respondent
Neutral citation:
Trencon Construction (Pty) Limited v Industrial
Development Corporation of South Africa Limited and Another
[2015]
ZACC 22
Coram:
Mogoeng CJ, Moseneke DCJ, Cameron J, Froneman J,
Jappie AJ, Khampepe J, Madlanga J, Molemela AJ, Nkabinde J and
Theron AJ
Judgment:
Khampepe J (unanimous)
Heard on:
5 March 2015
Decided on:
26 June 2015
Summary:
Section 8(1)(c)(ii)(aa)
of the
Promotion of Administrative Justice Act 3 of 2000
— test for
exceptional circumstances
Court in as good a place as the administrator —
decision of the administrator is a foregone conclusion —
considerations
of fairness weigh in favour of substitution order —
exceptional circumstances warrant substitution order
Standard of appellate court interference —
discretion in the true sense
ORDER
On appeal from the
Supreme Court of Appeal (hearing an appeal from the North Gauteng
High Court, Pretoria):
1.
Leave to appeal is granted.
2.
The appeal is upheld.
3.
The order of the Supreme Court of Appeal is set aside.
4.
The order of the North Gauteng High Court, Pretoria is reinstated
save for the
deletion of paragraphs 1.2 and 1.3.
5.
The respondent is ordered to pay the applicant’s costs,
including the costs
of two counsel, in the Supreme Court of Appeal
and in this Court.
JUDGMENT
KHAMPEPE J (Mogoeng
CJ, Moseneke DCJ, Cameron J, Froneman J, Jappie AJ, Madlanga J,
Molemela AJ, Nkabinde J and Theron AJ
concurring):
Introduction
[1]
In our society, tendering plays a
vital role in the delivery of goods and services. Large sums of
public money are poured
into the process and government wields
massive public power when choosing to award a tender. It is for
this reason that the
Constitution obliges organs of state to ensure
that a procurement process is fair, equitable, transparent,
competitive and cost-effective.
[1]
Where the procurement process is shown not to be so, courts have the
power to intervene.
[2]
The first respondent, the Industrial
Development Corporation of South Africa Limited (IDC), made a
decision declaring the tender
application of the applicant, Trencon
Construction (Pty) Limited (Trencon), non-responsive,
[2]
and awarded the tender to the second respondent, Basil Read (Pty)
Limited (Basil Read).
[3]
The High Court set aside the
decision of the IDC and substituted the award of the tender to
Trencon. The Supreme Court of
Appeal then overturned the
High Court’s decision, remitting the matter to the IDC for
reconsideration. In this
Court, Trencon seeks leave to appeal
against the judgment and order of the Supreme Court of Appeal.
Facts
[4]
On 18 May 2012, the IDC issued a
public invitation to building contractors to submit proposals in
order to prequalify for a principal
building contract to upgrade the
IDC’s head office. The request for proposals (RFP) was an
invitation to contractors
to bid for the tender and it set out the
rules governing the tender process.
[5]
The RFP provided that any
application received after the stipulated closing date would not be
evaluated or assessed. The closing
date and time was
Monday, 4 June 2012 at 12h00. Trencon and other
contractors submitted their proposals on
time. Basil Read,
however, submitted its proposal 14 minutes after the deadline. In
accepting Basil Read’s proposal,
the IDC took the view that its
own guidelines permitted acceptance of late proposals if doing so was
in the IDC’s interest.
[6]
The tender process was carried out
by the IDC’s Bid Evaluation Committee
[3]
,
Support Services, Procurement Department, Procurement Committee and
Executive Management Committee (Exco). The IDC engaged
Snow
Consultants Incorporated (Snow Consultants), an independent firm of
experts, as its principal agent for the evaluation of
the tender. It
also engaged the De Leeuw Group of quantity surveyors (Quantity
Surveyors) to assist the committees.
The tender process was
conducted in two phases.
[7]
The first phase involved the
screening of contractors’ profiles based on their technical
capability, environmental management,
personnel capabilities,
financial standing and litigation history. On 25 June 2012,
during this phase, Snow Consultants shortlisted
seven contractors
including Trencon and Basil Read. On 2 July 2012, the
Support Services, through the Procurement
Department, shortlisted the
same contractors. With regard to Trencon, the Support Services
in its shortlisting submission
to the Procurement Committee stated:
“
The
bidder demonstrated extensive capacity i.e. work experience;
equipment and financial capacity to deliver on this project.
The bidder’s proposed key personnel demonstrated adequate
skills and experience in providing the required services.”
[8]
On 4 July 2012, the Procurement
Committee approved the seven shortlisted contractors to participate
in the second phase. On
12 July 2012, the IDC issued
a tender invitation to those contractors, which provided that the
site handover date would
be 6 September 2012.
[9]
The second phase involved the
evaluation of tender submissions on the basis of price and
broad-based black economic empowerment
(empowerment) points.
[4]
The IDC’s committees had all the documentation required from
the contractors. These included relevant registration,
tax and
verification certificates, performance guarantees, proposed waste
management, environmental and local sourcing plans as
well as a
priced and extended provisional bill of quantities.
[5]
The contractors were required to price each item listed in the
provisional bill of quantities.
[10]
The tender closed on 14 August 2012,
at which time Trencon, Basil Read and two other contractors had
submitted proposals for
the award of the tender.
[6]
The four proposals were then evaluated according to the prescribed
criteria and weighting in the Tender Data.
[7]
[11]
In allocating points for price and
empowerment rating, the IDC chose the 90/10 method. This
required the bids to be measured
against one another to determine
which was the lowest. It is common cause that Trencon submitted
the lowest bid price at
R117 112 972.21, excluding VAT.
Basil Read’s bid price was R120 164 912.30,
excluding VAT.
[12]
According to the 90/10 method, each
contractor could be awarded up to a maximum of 90 points for price
and up to a maximum of 10
points for empowerment. The points
allocated to each contractor were calculated based on a comparison of
the value of the
contractor’s bid with that of the lowest
bid.
[8]
As it submitted the lowest bid, Trencon was awarded 90 points for
price. Empowerment points were allocated depending
on each
contractor’s empowerment verification certificate.
[9]
Of the bidders, Trencon was also awarded the most points for
empowerment.
[13]
In its proposal, Trencon included a
condition that its price would remain fixed for the planned duration
of the contract provided
that the site handover date of 6 September
2012 remained unchanged. The Quantity Surveyors sought
clarification from
the contractors about their pricing during the
evaluation process. During the first round of clarification,
the four contractors
were asked to advise on their conditions should
the site handover be delayed to 1 October 2012. Trencon
indicated that
it would charge an additional monthly 0.6% escalation
amount – approximately R315 000, excluding VAT.
Basil Read
indicated that its bid price would remain fixed,
regardless.
[14]
In the second round, several matters
were raised regarding Trencon’s bid; two of which bear
significance. The first
matter concerned Trencon’s
interpretation of the IDC’s bill of quantities in relation to
sun screens. Trencon
priced its bid on the basis that it was
required to repaint and reinstall the existing sun screens. The
IDC, however, maintained
that the bill of quantities should have been
interpreted to require the supply of new sun screens, and therefore,
the screens had
not been properly priced in Trencon’s bid.
In its clarification answers on this matter, Trencon did not accept
the
IDC’s interpretation that the bill of quantities required
the supply of new sun screens and thus, refused to alter its bid
to
account for the supply.
[15]
The second matter, which was raised
with Trencon as well as the other contractors, concerned the
provisional sums of two items that
had not been included in the IDC’s
approved cost estimate. The Quantity Surveyors, in their
clarification questions,
thus asked the contractors to confirm a
reduction of their bid price for both items. All the
contractors agreed to the reduction.
Trencon, however, made its
agreement subject to conducting a final review with the
Quantity Surveyors.
[16]
On 7 September 2012, Snow
Consultants issued a Tender Evaluation Report. It included all
the information regarding the evaluation
of price and empowerment
points; the Quantity Surveyors’ tender clarifications and
evaluation; the scoring of the tender
offers; and a recommendation by
the Quantity Surveyors.
[17]
To accommodate concerns that arose
during the clarification process, the Quantity Surveyors recommended
that Trencon be awarded
the tender, subject to two conditions, that
Trencon: (1) remove its conditional acceptance of the revised
contract award value;
and (2) either agree to the IDC’s
interpretation of the new sun screens in the bill of quantities and
absorb the cost or
confirm the value to be added to its bid price to
allow for the new screens. The contract value recommended was
the revised
contract award value of R110 948 822.71,
excluding VAT.
[10]
[18]
Snow Consultants, in its letter
dated 7 September 2012, also recommended that the tender be awarded
to Trencon subject to the same
two conditions. Again, the value
recommended for the award was the revised contract value. On
10 September 2012,
the Support Services, through the
Procurement Department, submitted their recommendation to the
Procurement Committee. They,
too, recommended that Trencon be
awarded the tender. In making the recommendation, the
Support Services consolidated
the contractors’ scores,
considered and endorsed the conditions set out in the Tender
Evaluation Report and carried out a
background check on Trencon.
[19]
Importantly, all the recommendations
to the Procurement Committee included the price escalation required
by Trencon should the site
handover date occur on 1 October
2012. In spite of the price escalation, Trencon’s bid
price was still the lowest.
[20]
On 12 September 2012, the
Procurement Committee considered the Tender Evaluation Report, the
recommendations of Snow Consultants
and the Support Services and
carried out its own evaluation of the bids. To account for the
two items not captured in the
cost estimate, the Procurement
Committee carried out the price evaluation based on the revised value
of each bid, in accordance
with the contractors’ agreement in
the second round of clarifications. In Trencon’s bid
price, the Procurement
Committee also included the escalation costs
if the site handover was to occur on 1 November 2012 and a
possible extra
cost for the supply of new sun screens. The
Procurement Committee ultimately recommended Trencon subject to
the same
conditions as the Tender Evaluation Report, and the
recommendations by Snow Consultants and the Support Services.
[21]
The IDC’s approved Delegation
of Authority matrix required that any award above R50 000 000
be approved by Exco.
Accordingly, on 14 September 2012, the
Procurement Committee supplied Exco with a “board pack”.
It contained
detailed reports of the first phase of the tender
process. It also included the Tender Evaluation Report on the
second phase,
as well as the recommendations of Snow Consultants and
the Support Services.
[22]
On 19 September 2012, at a meeting
convened for Exco to consider the award of the tender, Exco awarded
the tender to Basil Read.
It declared Trencon’s bid
non responsive. This was because Exco found that, by
adding the price escalation, Trencon
failed to keep its price fixed
for the 120 days of the tender evaluation period.
High Court
[23]
Trencon challenged this award in the
High Court. The Court found that the award of the tender to
Basil Read was based on a
material error of law and that Basil Read’s
late proposal should not have been considered by the IDC.
[11]
The Court set aside the IDC’s decision to award the tender to
Basil Read.
[12]
[24]
The final issue before the Court was
the appropriate remedy. It considered section 8(1)(c)(ii)(aa)
of the Promotion of Administrative
Justice Act
[13]
(PAJA). The Court accepted that a substitution order must be
granted only in exceptional circumstances.
[14]
[25]
It found that from the moment the
bids were submitted, Trencon’s outweighed Basil Read’s.
Even in its response
to the proposed delay of the site handover date,
Trencon’s price adjustment remained lower than Basil Read’s
price.
Moreover, Snow Consultants and all the IDC
committees recommended Trencon as the successful bidder.
[15]
The IDC was unable to present evidence justifying the refusal of the
tender award to Trencon as the highest points earner.
In
addition, the IDC was unable to show circumstances that would have
necessitated the process starting anew and therefore, the
cancellation of the tender.
[16]
Given the urgency of the matter, the substantial amount of
public funds involved and the unjustifiable prejudice that would
be
occasioned by further delay, the Court held that remittal would not
be prudent.
[17]
[26]
The Court concluded that it was
qualified to grant an order of substitution and that it would be just
and equitable to do so.
It therefore awarded the tender to
Trencon.
[18]
Supreme Court of Appeal
[27]
The IDC sought and was granted leave
to appeal against the High Court’s judgment.
[19]
It conceded that Exco had committed an error of law in declaring that
Trencon’s bid was non-responsive. However,
it persisted
that it had been correct in accepting Basil Read’s late
proposal.
[20]
The IDC further contested the appropriateness of the remedy granted
by the High Court.
[28]
The Supreme Court of Appeal found
that the High Court had overlooked the fact that the IDC was not
obliged to award the tender to
the lowest bidder or at all.
Therefore, despite the fact that Trencon had the highest tender
points, it still could not be
a foregone conclusion that it would
receive the tender. Furthermore, the Supreme Court of Appeal
held that the High Court
failed to balance the substitution remedy
against separation of powers concerns.
[21]
[29]
Considering that over two years had
elapsed since the tender was awarded, the Supreme Court of Appeal
found additional difficulty
in what it considered “unavoidable
supervening circumstances such as price increases that have to be
taken into account”.
[22]
[30]
As a result, it concluded that the
substitution order was inappropriate. The Supreme Court of
Appeal remitted the matter,
without conditions, to the IDC for
reconsideration.
[23]
Leave to Appeal
[31]
This matter implicates a breach of
the right to just administrative action as contained in section 33 of
the Constitution.
[24]
PAJA is the legislation that gives effect to section 33 and the cause
of action in this case requires the interpretation
of exceptional
circumstances that would warrant a substitution order as provided for
in section 8(1)(c)(ii)(aa) of PAJA.
As this Court held in
Bato
Star
, “matters relating to the
interpretation and application of PAJA will of course be
constitutional matters”.
[25]
Furthermore, there are prospects of success.
[32]
This decision will seek to clarify
the test for exceptional circumstances where a substitution order is
sought. It is in the
interests of justice that leave to appeal
be granted.
Issues
[33]
This case raises the following
issues:
(1)
What is the test that courts should apply
in establishing whether there are exceptional circumstances
justifying a substitution
order under section 8(1)(c)(ii)(aa) of
PAJA?
(2)
Are there exceptional circumstances that
justify a substitution order?
(3)
Can an order of substitution be made where
the tender validity period has expired?
(4)
What is the standard for appellate court
interference with a High Court order made under section 8(1) of PAJA?
(5)
Should the Supreme Court of Appeal have
interfered?
(1)
Exceptional circumstances test
[34]
Pursuant to administrative review
under section 6 of PAJA
[26]
and once administrative action is set aside, section 8(1) affords
courts a wide discretion to grant “any order that is just
and
equitable”.
[27]
In exceptional circumstances, section 8(1)(c)(ii)(aa) affords a
court the discretion to make a substitution order.
[28]
[35]
Section 8(1)(c)(ii)(aa) must be read
in the context of section 8(1). Simply put, an exceptional
circumstances enquiry must
take place in the context of what is just
and equitable in the circumstances. In effect, even where there
are exceptional
circumstances, a court must be satisfied that it
would be just and equitable to grant an order of substitution.
[36]
Long before the advent of PAJA,
courts were called upon to determine circumstances in which granting
an order of substitution would
be appropriate. Those courts
almost invariably considered the notion of fairness as enunciated in
Livestock
[29]
and the guidelines laid down in
Johannesburg
City Council
.
[30]
[37]
In
Livestock
,
the Court percipiently held that—
“
the
Court has a discretion, to be exercised judicially upon a
consideration of the facts of each case, and . . . although the
matter
will be sent back if there is no reason for not doing so, in
essence it is a question of fairness to both sides.”
[31]
[38]
In
Johannesburg
City Council
, the Court acknowledged
that the usual course in administrative review proceedings is to
remit the matter to the administrator
for proper consideration.
However, it recognised that courts will depart from the usual course
in two circumstances:
“
(i)
Where the end result is in any event a foregone conclusion and it
would merely be a waste of time to order the tribunal or functionary
to reconsider the matter. This applies more particularly where
much time has already unjustifiably been lost by an applicant
to whom
time is in the circumstances valuable, and the further delay which
would be caused by reference back is significant in
the context.
(ii)
Where the tribunal or functionary has exhibited bias or incompetence
to such a degree that it would be unfair to require the
applicant to
submit to the same jurisdiction again.”
[32]
[39]
On a plain interpretation of
Johannesburg City Council
,
the factors under the exceptional circumstances enquiry – like
foregone conclusion, bias or incompetence – are independent.
That is, if any factor is established on its own, it would be
sufficient to justify an order of substitution. Indeed, this
interpretation is also supported by subsequent case law.
[33]
[40]
The Supreme Court of Appeal in
Gauteng Gambling
Board
seems to have added another consideration, whether the court was in
as good a position as the administrator to make the decision.
[34]
For this, it noted that the administrator is “best equipped by
the variety of its composition, by experience, and its
access to
sources of relevant information and expertise to make the right
decision”.
[35]
The Court also considered the broader notion of fairness in
accordance with
Livestock
.
[36]
This notion seemed to colour the Court’s analysis of whether,
after the Court was satisfied that it was in as good
a position as
the administrator and a foregone conclusion was established, an order
of substitution was the appropriate remedy.
[37]
In applying the notion, the Court’s findings were also informed
by how a party is prejudiced by delay and potential
bias or the
incompetence of an administrator if the matter were remitted.
[38]
[41]
It is instructive that cases
applying section 8(1)(c)(ii)(aa) of PAJA have embraced a similar
approach to those that ordered substitution
under the common law.
However, because the section does not provide guidelines on what
exceptional circumstances entail,
it is of great import that the test
for exceptional circumstances be revisited.
[42]
The administrative review context of
section 8(1) of PAJA and the wording under subsection (1)(c)(ii)(aa)
make it perspicuous that
substitution remains an extraordinary
remedy.
[39]
Remittal is still almost always the prudent and proper course.
[43]
In our constitutional framework, a
court considering what constitutes exceptional circumstances must be
guided by an approach that
is consonant with the Constitution.
This approach should entail affording appropriate deference to the
administrator.
Indeed, the idea that courts ought to recognise
their own limitations still rings true. It is informed not only
by the deference
courts have to afford an administrator but also by
the appreciation that courts are ordinarily not vested with the
skills and expertise
required of an administrator.
[44]
It is unsurprising that this Court
in
Bato Star
accepted
Professor Hoexter’s account of judicial deference as—
“
a
judicial willingness to appreciate the legitimate and
constitutionally-ordained province of administrative agencies; to
admit
the expertise of those agencies in policy-laden or polycentric
issues; to accord their interpretations of fact and law due respect;
and to be sensitive in general to the interests legitimately pursued
by administrative bodies and the practical and financial constraints
under which they operate. This type of deference is perfectly
consistent with a concern for individual rights and a refusal
to
tolerate corruption and maladministration. It ought to be
shaped not by an unwillingness to scrutinise administrative
action,
but by a careful weighing up of the need for – and the
consequences of – judicial intervention. Above
all, it
ought to be shaped by a conscious determination not to usurp the
functions of administrative agencies; not to cross over
from review
to appeal.”
[40]
[45]
Judicial deference, within the
doctrine of separation of powers, must also be understood in the
light of the powers vested in the
courts by the Constitution.
In
Allpay II
,
Froneman J stated that—
“
[t]here
can be no doubt that the separation of powers attributes
responsibility to the courts for ensuring that unconstitutional
conduct is declared invalid and that constitutionally mandated
remedies are afforded for violations of the Constitution.
This
means that the Court must provide effective relief for infringements
of constitutional rights.
. . .
Hence,
the answer to the separation-of-powers argument lies in the express
provisions of section 172(1) of the Constitution.
The
corrective principle embodied there allows correction to the extent
of the constitutional inconsistency”.
[41]
(Footnote omitted.)
[46]
A case implicating an order of
substitution accordingly requires courts to be mindful of the need
for judicial deference and their
obligations under the Constitution.
As already stated, earlier case law seemed to suggest that each
factor in the exceptional
circumstances enquiry may be sufficient on
its own to justify substitution.
[42]
However, it is unclear from more recent case law whether these
considerations are cumulative or discrete.
[43]
[47]
To my mind, given the doctrine of
separation of powers, in conducting this enquiry there are certain
factors that should inevitably
hold greater weight.
[44]
The first is whether a court is in as good a position as the
administrator to make the decision. The second is whether
the
decision of an administrator is a foregone conclusion. These
two factors must be considered cumulatively. Thereafter,
a
court should still consider other relevant factors. These may
include delay, bias or the incompetence of an administrator.
The ultimate consideration is whether a substitution order is just
and equitable. This will involve a consideration of fairness
to
all implicated parties. It is prudent to emphasise that the
exceptional circumstances enquiry requires an examination
of each
matter on a case-by-case basis that accounts for all relevant facts
and circumstances.
[48]
A court will not be in as good a
position as the administrator where the application of the
administrator’s expertise is still
required and a court does
not have all the pertinent information before it. This would
depend on the facts of each case.
Generally, a court ought to
evaluate the stage at which the administrator’s process was
situated when the impugned administrative
action was taken. For
example, the further along in the process, the greater the likelihood
of the administrator having already
exercised its specialised
knowledge. In these circumstances, a court may very well be in
the same position as the administrator
to make a decision. In
other instances, some matters may concern decisions that are judicial
in nature; in those instances
– if the court has all the
relevant information before it – it may very well be in as good
a position as the administrator
to make the decision.
[45]
[49]
Once a court has established that it
is in as good a position as the administrator, it is competent to
enquire into whether the
decision of the administrator is a foregone
conclusion. A foregone conclusion exists where there is only
one proper outcome
of the exercise of an administrator’s
discretion and “it would merely be a waste of time to order the
[administrator]
to reconsider the matter”.
[46]
Indubitably, where the administrator has not adequately applied its
unique expertise and experience to the matter, it may
be difficult
for a court to find that an administrator would have reached a
particular decision and that the decision is a foregone
conclusion.
However, in instances where the decision of an administrator is not
polycentric and is guided by particular rules
or by legislation, it
may still be possible for a court to conclude that the decision is a
foregone conclusion.
[50]
The distinction between the
considerations in as good a position and foregone conclusion seems
opaque as they are interrelated and
inter-dependent. However,
there can never be a foregone conclusion unless a court is in as good
a position as the administrator.
The distinction can be
understood as follows: even where the administrator has applied its
skills and expertise and a court has
all the relevant information
before it, the nature of the decision may dictate that a court defer
to the administrator. This
is typical in instances of
policy-laden and polycentric decisions.
[47]
[51]
A court must consider other relevant
factors, including delay. Delay can cut both ways. In
some instances, it may indicate
the inappropriateness of a
substitution order, especially where there is a drastic change of
circumstances and a party is no longer
in a position to meet the
obligations arising from an order of substitution or where the needs
of the administrator have fundamentally
changed. In other
instances, delay may weigh more towards granting an order of
substitution. This may arise where a
party is prepared to
perform in terms of that order and has already suffered prejudice by
reason of delay. In that instance,
the delay occasioned by
remittal may very well result in further prejudice to that party.
Importantly, it may also negatively
impact the public purse.
[52]
What must be stressed is that delay
occasioned by the litigation process should not easily clout a
court’s decision in reaching
a just and equitable remedy.
Sight must not be lost that litigation is a time-consuming process.
More so, an appeal
should ordinarily be decided on the facts that
existed when the original decision was made.
[48]
Delay must be understood in the context of the facts that would have
been laid in the court of first instance as that is
the court that
would have been tasked with deciding whether a substitution order
constitutes a just and equitable remedy in the
circumstances.
[53]
There are important reasons for this
approach. Where a matter is appealed, delay is inevitable.
Thus assessing delay
with particular reference to the time between
the original decision and when the appeal is heard could encourage
parties to appeal
cases. This, they would do, with the hope
that the time that has lapsed in the litigation process would be a
basis for not
granting a substitution order. Where a litigant
wishes to raise delay on the basis of new evidence, that evidence
must be
adduced and admitted in accordance with legal principles
applicable to the introduction of new evidence on appeal.
[49]
Ultimately, the appropriateness of a substitution order must depend
on the consideration of fairness to the implicated parties.
[54]
If the administrator is found to
have been biased or grossly incompetent, it may be unfair to ask a
party to resubmit itself to
the administrator’s jurisdiction.
In those instances, bias or incompetence would weigh heavily in
favour of a substitution
order. However, having regard to the
notion of fairness, a court may still substitute even where there is
no instance of
bias or incompetence.
[55]
In my view, this approach to the
exceptional circumstances test accords with the flexibility embedded
in the notion of what is just
and equitable. It is, therefore,
consonant with the Constitution while at the same time giving proper
deference and consideration
to an administrator.
(2)
Are there exceptional circumstances in this
case to justify a substitution order?
[56]
The High Court held that the
decision to declare Trencon’s bid non-responsive and award the
tender to Basil Read was unlawful.
This finding was not
appealed. The gravamen of the IDC’s appeal was the High
Court’s remedy. Therefore,
the issue squarely before this
Court is whether the circumstances of this case are exceptional and
warrant a substitution order.
(a)
In as good a position
[57]
This Court, as was the High Court,
is in as good a position as the IDC to award the tender to Trencon.
The material error
of law occurred when the procurement process was
in the stages of finalisation. The two-stage process of bidding
and evaluation
had been completed; the various committees of the IDC,
as well as Snow Consultants and the Quantity Surveyors, had
considered
the bids and undertaken all the technical components of
the process.
[50]
At that point, the bids had been evaluated on price and empowerment
points and the recommendation that Trencon be awarded
the tender had
been made to Exco. All that remained was for Exco to approve
the Procurement Committee’s recommendation.
[58]
The IDC itself stated that Exco had
fully considered Trencon’s bid. This Court has the
benefit of the record, with all
the pertinent information and
recommendations that would have been before Exco at its meeting on 19
September 2012. Furthermore,
the IDC does not explain how its
administrative expertise could come into play at this point or on
what basis it could decide differently.
It is on the basis of
the technical and administrative recommendations and processes that
had already been completed that
this Court finds itself in as good a
position as the IDC to decide whether to award the tender to Trencon.
(b)
Foregone conclusion
[59]
A finding that the IDC’s
decision is a foregone conclusion depends on whether there was only
one proper outcome of the exercise
of its discretion and remittal
would serve no purpose. In other words, if the matter were to
be remitted, the IDC would not
have any discretion left to exercise.
In my opinion, the award of the tender to Trencon is a foregone
conclusion. It
is common cause that Trencon was the highest
points earner and that the IDC’s Support Services;
Procurement Committee;
Quantity Surveyors; and principal agent,
Snow Consultants, all recommended that it be awarded the
tender. It is also
common cause that, but for an error of law
regarding Trencon’s price escalation for the delayed site
handover, Trencon’s
bid would not have been declared
non-responsive.
[60]
The Supreme Court of Appeal, despite
finding that the IDC could not have lawfully awarded the tender to
any other bidder, overturned
the High Court’s order.
[51]
This was on the basis that the IDC still had a discretion not
to award the tender to the highest points earner or not to
proceed
with the tender at all. In this Court, the IDC persists with
this argument. It also argues that Exco did not
have an
opportunity to fully evaluate the bids absent the error of law.
For this reason, the IDC has challenged the finding
of the Supreme
Court of Appeal that the disqualification of Basil Read’s bid
in the High Court was irrelevant. It contends
that without the
disqualification, the IDC would have been found to have exercised its
discretion in comparing the two bids against
one another.
[61]
There are three contentions made by
the IDC that this Court must deal with. The first is that the
IDC had a discretion not
to award the tender to the highest points
earner. The second is that the IDC did not have an opportunity
to evaluate the
bids absent the error of law. And the third is
that the IDC had a discretion not to award the tender at all.
(i)
Discretion not to award the tender to the
highest points earner
[62]
The IDC argued that it had a
discretion not to award the tender to the highest points earner.
[52]
During oral argument, the IDC conceded, however, that this discretion
is constrained by section 2(1)(f) of the Preferential
Procurement
Policy Framework Act
[53]
(Procurement Act) and clause F.3.11.3(d) of the Standard Conditions
of Tender.
[54]
These clauses required the IDC to award the tender to the highest
points earner unless there were “objective criteria”
or
“justifiable reasons” not to do so.
[63]
Throughout the evaluation process, a
number of concerns regarding Trencon’s bid were raised.
[55]
However, in this Court, the IDC did not contend that any of these
concerns would have constituted objective criteria or justifiable
reasons not to award the tender to Trencon.
[64]
On the papers the concerns do not
hold weight. First, the concern about the price escalation was
based on a material error
of law and should not have been considered
by Exco. Second, Trencon accepted that it would absorb any
price discrepancy on
an item that it had allegedly under-quoted.
This was deemed acceptable by the Quantity Surveyors and the
Procurement Committee.
Third, Trencon confirmed its
unconditional acceptance of the revised contract award value.
It was this award value that Trencon
sought, and was granted, in the
High Court. Lastly, the concern about the mispricing of sun
screens because of Trencon’s
interpretation of the bill of
quantities is misplaced. Even accounting for the additional
price of new sun screens, Trencon’s
bid was still lower than
all the other bids. Furthermore, I am satisfied that any
dispute regarding the interpretation of
the sun screens in the bill
of quantities could be dealt with contractually under the Joint
Building Contracts Committee Series
2000 Principal Building Agreement
(JBCC Agreement).
[56]
[65]
Exco, at its approval meeting,
discussed all the concerns that had been broached throughout the
evaluation process.
[57]
Despite this discussion, the only reason given by the IDC for
refusing Trencon the award was the material error of law.
If,
after having considered all the concerns, the IDC found that there
were further reasons – apart from the material
error of
law – justifying that Trencon be refused the tender, why would
the IDC not have cited those reasons in its letter
to Trencon
explaining the refusal of the award? At close scrutiny, the
argument on this score simply cannot stand.
Since section
2(1)(f) of the Procurement Act is peremptory, in the absence of
objective criteria, the IDC would not have been justified
in not
granting the award to Trencon. It was the highest points earner
and following its consideration, Exco did not cite
any other basis,
barring the material of error of law, to have deviated from
section 2(1)(f).
(ii)
IDC did not have an opportunity to evaluate
the bids
[66]
The IDC also argues that, because of
the material error of law, Exco did not have an opportunity to fully
consider Trencon’s
bid. Based on the IDC’s own
affidavits in the High Court,
[58]
this argument is disingenuous. In response to allegations that
the IDC had taken into account irrelevant considerations in
reaching
the decision to award the tender to Basil Read, the IDC proclaimed
that “the decision of Exco was arrived at [by]
taking into
account the totality of the facts before Exco as reflected in its
reasons and deliberations”. The IDC was
also explicit
that “[t]he issues raised by Exco demonstrate that it applied
its mind to issues which were relevant in relation
to its decision
[to award the tender]”. Finally, it asserted in its
affidavit that there is no evidence that Trencon’s
tender was
“not properly evaluated”. Remarkably, the IDC now
argues that Exco had not had an opportunity to apply
its mind to the
bid.
[67]
Whether or not Basil Read’s
bid was valid is of no moment. I am in agreement with the
Supreme Court of Appeal on this
point. The main issue is
whether, on the correct application of the law, the IDC was bound to
award the tender to Trencon.
The validity of any other bid,
including that of Basil Read’s, is irrelevant in that enquiry.
Therefore, the argument
that the IDC did not have an opportunity to
evaluate the bids is misconceived.
(iii)
IDC’s discretion not to award the
tender at all
[68]
Lastly, the IDC argued that it had a
discretion not to award the tender at all.
[59]
In oral argument, however, it conceded that this discretion was
constrained by regulation 8(4) of the Procurement Framework
Regulations, 2011
[60]
(Procurement Regulations). Under this provision—
“
[a]n
organ of state, may,
prior
to the award of a tender, cancel a tender if—
(a)
due to changed circumstances, there is no longer a need for the
services, works or
goods requested; or
(b)
funds are no longer available to cover the total envisaged
expenditure; or
(c)
no acceptable tenders are received.” (Emphasis added.)
This concession is
correctly made. The IDC could only cancel the tender if one of
the grounds stipulated in regulation 8(4)
existed.
[69]
Evidently, none of these grounds
were applicable. With regard to regulations 8(4)(a) and
(b), there is no doubt in my
mind that the IDC intended to continue
with the tender and that it had funds available to do so. The
fact that the IDC ultimately
awarded the tender to Basil Read
provides sufficient credence for this. Further, there is no
basis for the IDC to argue that
no acceptable tenders were received.
[70]
The IDC’s argument cannot
prevail. Almost all tender invitations issued by organs of
state contain a clause giving the
organ of state a discretion to
cancel the tender or not to award it at all. If, when arguing
that remittal is the proper
remedy, an organ of state is able to
raise the fact that it has this discretion without more, a court
would virtually never have
the power to grant a remedy of
substitution. The organ of state would always be able to argue
that it still had a discretion
not to award the tender, thereby
constraining the power of the courts to grant just and equitable
remedies. It is a fundamental
principle of the rule of law that
organs of state, like the IDC, can only exercise power that has been
conferred onto them.
They cannot, on their own volition, confer
power unto themselves that was never there.
[61]
[71]
In addition, according to the
regulation, the IDC could only cancel “prior to the award of a
tender”. The IDC
awarded the tender to Basil Read.
Thus, it cannot, after awarding the tender, claim that it still
possessed the power to
cancel. This belated attempt must fail.
The Supreme Court of Appeal erred in conceiving that the contractual
power
not to award the tender at all could in these circumstances
have been lawfully exercised.
[62]
In any event, there was no suggestion by the IDC that it did not
intend to continue with the tender. All be told, the
award of
the tender to Trencon is a foregone conclusion.
(c)
Delay and supervening circumstances
[72]
The Supreme Court of Appeal found
that the amount of time that had passed was a relevant factor in
revoking the High Court’s
substitution order, particularly
because prices may have increased. On this point, the Supreme
Court of Appeal erred.
[73]
First, the Supreme Court of Appeal
departed from the usual appeal process when it considered the issue
of delay and supervening
circumstances. Rather than determining
the appeal on the facts that were before the court of first instance,
the Supreme
Court of Appeal determined the matter on the basis of the
delay incurred as a result of the appeal itself. And although
the
IDC alleged that the facts and circumstances had changed because
of the delay, it did not seek to introduce new evidence to
substantiate
those claims. The Supreme Court of Appeal did not
take cognisance of the JBCC Agreement, and its application to price
increases.
[74]
Furthermore, the Supreme Court of
Appeal failed to take into account the impact on the public purse of
the further delay occasioned
by remittal. Procurement disputes,
especially those involving organs of state, must be resolved
expediently. Even if
price and supervening circumstances were
factors which the Supreme Court of Appeal was competent to take into
account, considerations
of fairness still point towards the granting
of an order of substitution.
[75]
Second, the Supreme Court of Appeal
did not value the distinction between public and private law.
The decision to award a
tender is a matter of public law. It is
governed by the Constitution, the Public Finance Management Act,
[63]
the Procurement Act and the Procurement Regulations. Although
there may be interplay between public and private law, the
distinction must not be collapsed. Ordinarily, an issue like
contract price adjustment that is subject to negotiation after
the
procurement process has taken place, ought to fall squarely within
the domain of private law. It is subject to ordinary
contractual negotiations between enterprising parties.
Importantly, the parties agreed during oral argument that this
distinction
is applicable.
[76]
I am satisfied that the JBCC
Agreement adequately provides for price adjustments. Even the
IDC, in disputing Trencon’s
price escalation during the tender
period, stated in its notice of application for leave to appeal to
the Supreme Court of Appeal
that “[i]n the post-award, Trencon
could . . . claim for expenses or loss on account of the delay in
handing over the contract
site in terms of clause 29.2.1 read with
clause 32.12 of the JBCC”. It is not clear why, then,
this option is not viable
to account for the delay in these
circumstances.
[77]
Since both parties agree that the
negotiations after the award of the tender would be subject to
private law, I am inclined to accept
that the final contract price
will be a matter of contractual negotiations between them. The
Supreme Court of Appeal erred
in revoking the High Court’s
order of substitution on this ground.
(d)
Other considerations
[78]
The fact that the IDC acted in good
faith when it was moved by a material error of law should be a strong
consideration for the
Court when considering whether to grant a
substitution order. However, viewed through the lenses of
fairness to both parties
and in the context of the findings in
relation to the other relevant factors, it would be unfair for this
Court to remit the matter
to the IDC.
(3)
Expiration of the tender validity period
[79]
The tender validity period has also
been raised in regard to the appropriateness of a substitution
order. The IDC relies on
two cases –
Telkom
and
Joubert
– to contend that substitution is
never appropriate where the tender validity period has expired.
[64]
In both cases relied upon, the respective administrative bodies had
failed to award tenders within the 120-day validity period.
A
substitution order therefore, required the period to be extended
after it had expired.
[80]
This case is distinguishable from
Telkom
and
Joubert
.
The IDC awarded the tender within the validity period. In
those cases, there was no award. Consequently, a substitution
order here would not require the tender validity period to be
extended because this period is held in abeyance pending the
finalisation
of the matter.
[81]
This must be so. Once an award
has been challenged, the litigation process will inevitably run
longer than the 120-day tender
validity period. If the 120 day
period, in itself, were to be treated as a bar to an order of
substitution, there may
be no incentive for an aggrieved party like
Trencon to lodge review proceedings. This is because its
desired remedy –
that of substitution – would not be
available to it. This approach would not accord with the
objectives of PAJA as
the tender validity period would, in most
instances, be deemed to have expired. Courts would almost
always be deprived of
their power to order substitution.
(4)
Standard of appellate courts’
interference
[82]
Regardless of the merits, Trencon
argues that the Supreme Court of Appeal’s order should be set
aside on the basis that it
had no power to interfere with the
High Court’s order. Trencon seems to find a gripping
ground for this argument
in the nature of the discretion conferred by
section 8(1) of PAJA, which Trencon claims to be a discretion in the
“true”
sense.
[65]
[83]
In order to decipher the standard of
interference that an appellate court is justified in applying, a
distinction between two types
of discretion emerged in our case
law.
[66]
That distinction is now deeply-rooted in the law governing the
relationship between appeal courts and courts of first instance.
Therefore, the proper approach on appeal is for an appellate court to
ascertain whether the discretion exercised by the lower court
was a
discretion in the true sense or whether it was a discretion in the
loose sense. The importance of the distinction is
that either
type of discretion will dictate the standard of interference that an
appellate court must apply.
[84]
In
Media
Workers Association
, the Court defined
a discretion in the true sense:
“
The
essence of a discretion in [the true] sense is that, if the
repository of the power follows any one of the available courses,
he
would be acting within his powers, and his exercise of power could
not be set aside merely because a Court would have preferred
him to
have followed a different course among those available to him.”
[67]
[85]
A discretion in the true sense is
found where the lower court has a wide range of equally permissible
options available to it.
This type of discretion has been found
by this Court in many instances, including matters of costs,
[68]
damages
[69]
and in the award of a remedy in terms of section 35 of the
Restitution of Land Rights Act.
[70]
It is “true” in that the lower court has an election of
which option it will apply and any option can never be
said to be
wrong as each is entirely permissible.
[86]
In contrast, where a court has a
discretion in the loose sense, it does not necessarily have a choice
between equally permissible
options. Instead, as described in
Knox
, a
discretion in the loose sense—
“
means
no more than that the court is entitled to have regard to a number of
disparate and incommensurable features in coming to
a decision.”
[71]
[87]
This Court has, on many occasions,
accepted and applied the principles enunciated in
Knox
and
Media
Workers Association
.
[72]
An appellate court must heed the standard of interference applicable
to either of the discretions. In the instance
of a discretion
in the loose sense, an appellate court is equally capable of
determining the matter in the same manner as the court
of first
instance and can therefore substitute its own exercise of the
discretion without first having to find that the court of
first
instance did not act judicially. However, even where a
discretion in the loose sense is conferred on a lower court,
an
appellate court’s power to interfere may be curtailed by
broader policy considerations.
[73]
Therefore, whenever an appellate court interferes with a discretion
in the loose sense, it must be guarded.
[88]
When a lower court exercises a
discretion in the true sense, it would ordinarily be inappropriate
for an appellate court to interfere
unless it is satisfied that this
discretion was not exercised—
“
judicially,
or that it had been influenced by wrong principles or a misdirection
on the facts, or that it had reached a decision
which in the result
could not reasonably have been made by a court properly directing
itself to all the relevant facts and principles.”
[74]
(Footnote omitted.)
An appellate court
ought to be slow to substitute its own decision solely because it
does not agree with the permissible option
chosen by the lower court.
[89]
In
Florence
,
Moseneke DCJ stated:
“
Where
a court is granted wide decision-making powers with a number of
options or variables, an appellate court may not interfere
unless it
is clear that the choice the court has preferred is at odds with the
law. If the impugned decision lies within
a range of
permissible decisions, an appeal court may not interfere only because
it favours a different option within the range.
This principle
of appellate restraint preserves judicial comity. It fosters
certainty in the application of the law and favours
finality in
judicial decision-making.”
[75]
[90]
This applies with equal force to the
wide decision-making powers available to the courts under section
8(1) of PAJA.
[76]
It is perspicuous that there are a wide range of options available to
a court exercising its discretion under section 8(1),
as it lists a
number of just and equitable remedies that a court may grant.
Significantly, it does not seek to confine a
court to the listed
remedies. It provides that a court may award any order that is
just and equitable,
including, but not
limited to
the listed remedies.
It follows that any of these remedies is equally permissible and an
appellate court could legitimately
favour a different remedy than
that preferred by a lower court. But that alone does not permit
it to interfere with the lower
court’s discretion.
[91]
A court may, in exceptional
circumstances, grant an order substituting or varying the
administrative action or direct the payment
of compensation.
[77]
This may appear to be intimating a discretion in the loose
sense. That would only be the case if a court, upon finding
exceptional circumstances, were enjoined to grant either an order of
substitution, variance or correction or to order the payment
of
compensation. However, the section operates differently.
Even where a court finds exceptional circumstances, it
may still
grant any other order that is just and equitable.
[92]
In this case when the High Court
granted a substitution order, it exercised a discretion in the true
sense.
(5)
Should the Supreme Court of Appeal have
interfered?
[93]
The Supreme Court of Appeal
intervened on the basis that the High Court had an incorrect
appreciation of the facts and was
moved by a wrong principle of law.
Specifically, that the High Court had not considered the discretion
of the IDC not to
award the tender at all or not to award it to the
highest points earner and had not correctly applied the separation of
powers
doctrine. The Supreme Court of Appeal determined that
the IDC is the body vested with the power to award the tender and the
High Court should have exercised more judicial deference when
weighing exceptional circumstances for substitution.
[94]
However, the separation of powers is
adequately provided for within the exceptional circumstances test
itself.
[78]
Once a court has properly applied the test for exceptional
circumstances and it makes a just and equitable order on the basis
of
that enquiry, the court has acted in accordance with the doctrine of
separation of powers.
[95]
This is precisely what the High
Court did. It weighed the relevant factors and balanced the
need to grant an effective remedy
against the need to defer to the
administrator and found, upon the existence of exceptional
circumstances, that a substitution
order was the appropriate remedy.
[96]
In overturning the High Court’s
order, the Supreme Court of Appeal took a different view on the
exceptional circumstances
enquiry. It should have had regard to
the fact that Exco had fully considered Trencon’s bid.
Moreover, the Supreme
Court of Appeal interfered on the basis of
supervening circumstances like price, issues that sit comfortably
outside the realm
of public law. It should not have concerned
itself with these issues without further evidence having been
properly tendered
and admitted on appeal.
[97]
Therefore, upon proper consideration
of the facts and the applicable law, the Supreme Court of Appeal
ought not to have interfered
with the High Court’s decision.
Remedy
[98]
The unique circumstances of this
case present a good example, in administrative law, of an instance
where the Court is not usurping
the functions of the administrative
body by making a substitution order. I am satisfied that this
Court is justified in making
a substitution order and that this
constitutes a just and equitable remedy in the circumstances.
[99]
Trencon does not seek an increase of
the contract sum reflected in paragraph 1.1 of the order of the
High Court.
[79]
However, the IDC challenged the enforceability of the obligation,
captured in paragraph 1.2 of the order, to “negotiate
in good
faith” as there is no objective standard against which
compliance can be assessed. I need not deal with this
contention as the parties are in agreement that, after the award of
the tender, contractual negotiations – implicating paragraphs
1.2 and 1.3 of the order – are a matter of private law.
Therefore, in the event of a breakdown in negotiations,
they are
content with resorting to private law for recourse.
Costs
[100]
Given Trencon’s success, costs
must follow the result, including costs of two counsel.
Order
[101]
In the circumstances, the following
order is made:
1.
Leave to appeal is granted.
2.
The appeal is upheld.
3.
The order of the Supreme Court of Appeal is set aside.
4.
The order of the North Gauteng High Court, Pretoria is reinstated
save for the
deletion of paragraphs 1.2 and 1.3.
5.
The respondent is ordered to pay the applicant’s costs,
including the costs
of two counsel, in the Supreme Court of Appeal
and in this Court.
For the
Applicant:
For the Respondent:
D Unterhalter SC, M du
Plessis and S Pudifin-Jones instructed by Joubert Galpin Searle
Inc.
GJ Marcus SC, M
Sikhakhane and C Motsepe instructed by Edward Nathan Sonnenbergs
Inc.
[1]
Section 217 of the Constitution.
[2]
A non-responsive tender is one that was found by
the IDC not to conform to all terms, conditions and specifications
of its tender
documents.
[3]
The Bid Evaluation Committee consisted of the
Procurement Department Manager in consultation with individual
specialists from
different functional areas.
[4]
This is informed by the
Broad-Based Black
Economic Empowerment Act 53 of 2003
. The empowerment points
were calculated in accordance with each bidder’s level of
certification.
[5]
The provisional bill of quantities listed all the
items that would be necessary for the project. It was divided
into five
cost components including preliminaries, rehabilitation
work on roof and façades, aesthetics upgrade, civil
engineering
construction and provisional sums.
[6]
The three other bidders shortlisted to submit
their bids, Aveng (Africa) Limited, ENZA Construction (Pty) Limited
and
Group Five Construction (Pty) Limited, all failed to do so.
[7]
The Tender Data was applicable to the tender and
provided for, amongst other things, the evaluation of tender offers.
[8]
The formula used for scoring was Nf = W1 x
[1-(P-Pm) / Pm].
Nf = the number of tender
evaluation points awarded for the financial offer; W1 = 90; Pm = the
value of the comparative offer
of the most favourable tender; and P
= the value of the comparative offer under consideration.
[9]
For example, an empowerment Level 1 certification
received 10 points, an empowerment Level 2 certification received 9
points,
and so on.
[10]
The revised contract award value was calculated
to account for the two items that had not been included in the IDC’s
approved
cost estimate. See [15].
[11]
Trencon (Pty) Ltd v Industrial Development
Corporation of South Africa Limited and Another
[2013] ZAGPPHC 147 (High Court judgment) at paras 31-2 and 39.
[12]
Id at para 44.
[13]
3 of 2000.
Section 8(1)
provides:
“
The
court or tribunal, in proceedings for judicial review in terms of
section 6(1)
,
may grant any order
that is just and equitable,
including
orders
—
(a)
directing the administrator—
(i)
to give
reasons; or
(ii)
to act in the manner the court or tribunal requires;
(b)
prohibiting the administrator from acting in a particular manner;
(c)
setting aside the administrative action and—
(i)
remitting the matter for reconsideration by the administrator,
with
or without directions; or
(ii)
in exceptional cases—
(aa)
substituting or varying the administrative action or correcting a
defect
resulting from the administrative action; or
(bb)
directing the administrator or any other party to the proceedings to
pay
compensation;
(d)
declaring the rights of the parties in respect of any matter to
which the administrative action relates;
(e)
granting a temporary interdict or other temporary relief; or
(f)
as to costs.” (Emphasis added.)
[14]
High Court judgment above n 11 at para 46.
[15]
Id at paras 49-50.
[16]
Id at para 51.
[17]
Id at paras 52-3.
[18]
Id at para 55. The High Court order in
relevant part reads:
“
1.
The decision of the [IDC] to declare the tender submission of
[Trencon]
non responsive and to award the tender . . . to
[Basil Read] (the ‘decision’) is reviewed, set aside and
substituted
with an award of the tender to [Trencon] in terms of
section 8(1)(c)(ii)(aa)
of [PAJA] on the following terms:
1.1
The contract sum shall be in the amount of R110 633 822.28 (one
hundred
and ten million six hundred and thirty three thousand eight
hundred and twenty two rand and twenty eight cents) plus VAT of R15
488 735.12 (fifteen million four hundred and eighty eight thousand
seven hundred and thirty five rand and twelve cents) . . .;
1.2
The [IDC] shall negotiate in good faith the terms of any final
contract
and service level agreement with [Trencon];
1.3
[Trencon] shall have the right to submit claims in terms of clause
29.2.1
read with clause 32.12; and/or clause 32.5 of the JBCC Series
2000 Principal Building Agreement – Edition 4.1 Code 2101
March 2005 prepared by the Joint Building Contracts Committee Inc.”
[19]
Industrial Development Corporation of South
Africa Limited v Trencon Construction (Pty) Limited and Another
[2014] ZASCA 163
;
[2014] 4 All SA 561
(SCA) (Supreme Court of Appeal
judgment).
[20]
Id at para 11.
[21]
Id at para 18.
[22]
Id at para 19.
[23]
Id at para 20.
[24]
Section 33(1) provides:
“
Everyone has
the right to administrative action that is lawful, reasonable and
procedurally fair.”
[25]
Bato Star Fishing (Pty) Ltd v Minister of
Environmental Affairs and Tourism and Others
[2004] ZACC 15
;
2004 (4) SA 490
(CC);
2004 (7) BCLR 687
(CC) (
Bato
Star
) at para 25. (Footnote
omitted.)
Also see
Joseph and
Others v City of Johannesburg and Others
[2009] ZACC 30
;
2010
(4) SA 55
(CC);
2010 (3) BCLR 212
(CC) at para 16
.
[26]
Section 6(1) provides:
“
Any
person may institute proceedings in a court or a tribunal for the
judicial review of an administrative action.”
[27]
See section 8(1) of PAJA above n 13.
[28]
Id.
[29]
Livestock and Meat Industries Control Board v
Garda
1961 (1) SA 342
(A) (
Livestock
)
.
[30]
Johannesburg City Council v Administrator,
Transvaal, and Another
1969 (2) SA 72
(T) (
Johannesburg City Council
).
[31]
Livestock
above
n 29 at 349G.
[32]
Johannesburg City Council
above
n 30 at 76D-G.
[33]
See generally
Vukani
Gaming Free State (Pty) Ltd v Chairperson of the Free State Gambling
and Racing Board and Others
[2010]
ZAFSHC 33
at paras 53-4 and
Erf One Six
Seven Orchards CC v Greater Johannesburg Metropolitan Council
(Johannesburg Administration) and Another
[1998] ZASCA 91
;
1999 (1) SA 104
(SCA) at para 109F.
[34]
Gauteng Gambling Board
v Silver Star Development Limited
and Others
2005 (4) SA 67
(SCA) (
Gauteng Gambling
Board
) at para 39, where the Court
held that—
“
the
court
a quo
was
not merely in as good a position as the Board to reach a decision
but was faced with the inevitability of a particular outcome
if the
Board were once again to be called upon fairly to decide the
matter.”
[35]
Id at para 29.
[36]
Id at para 28. See also
Livestock
above n 29 at 349G.
[37]
Gauteng Gambling Board
above n 34 at paras 39 and 40.
[38]
Id at para 40.
[39]
See section 8(1) of PAJA above n 13.
[40]
Bato Star
above
n 25 at para 46. See Hoexter “The Future of Judicial
Review in South African Administrative Law”
(2000) 117
SALJ
484
at 501-2.
[41]
Allpay Consolidated Investment Holdings (Pty)
Ltd and Others v Chief Executive Officer, South African Social
Security Agency and
Others
[2014] ZACC
12
;
2014 (4) SA 179
(CC);
2014 (6) BCLR 641
(CC) at paras 42 and 45.
[42]
See [36] to [39].
[43]
See
Radjabu v
Chairperson of the Standing Committee for Refugee Affairs and Others
[2014] ZAWCHC 134
;
[2015] 1 All SA 100
(WCC) at paras 33-9;
Media 24 Holdings
(Pty) Ltd v Chairman of the Appeals Board of the Press Council of
South Africa and Another
[2014]
ZAGPJHC 194 at para 25;
Nucon Roads and
Civils (Pty) Ltd v MEC for Department of Public Works, Roads and
Transport: N.W. Province and Others
[2014] ZANWHC 19
at paras 32, 41 and 44; and
Reizis
NO v MEC for the Department of Sport, Arts, Culture and Recreation
and Others
[2013] ZAFSHC 20
at paras
33 4.
[44]
It should be emphasised that the exceptional
circumstances enquiry only arises in the context of the appropriate
remedy to be
granted as per section 8(1) of PAJA. Thus, it is
only after the unlawfulness of the award has been established
pursuant
to section 6 of PAJA that the remedy, and therefore the
exceptional circumstances enquiry, arises.
[45]
See
Theron en Andere
v Ring van Wellington van die NG Sendingkerk in Suid-Afrika en
Andere
1976 (2) SA 1
(A) and
Hutchinson v Grobler NO
and Others
1990
(2) SA 117
(T) at 157B-E.
[46]
Johannesburg City Council
above n 30 at 76D-H.
[47]
See
Bato Star
above
n 25 at para 48.
[48]
See
Billiton
Aluminium SA Ltd t/a Hillside Aluminium v Khanyile and Others
[2010] ZACC 3
;
2010 (5) BCLR 422
(CC) at para 35 where it was held:
“
In general a
court of appeal when deciding whether the judgment appealed from is
right or wrong, will do so according to the facts
in existence at
the time it was given and not according to new circumstances which
came into existence afterwards.”
(Footnote omitted.)
[49]
See
Rail
Commuters Action Group and Others v Transnet Ltd t/a Metrorail and
Others
[2004]
ZACC 20
;
2005 (2) SA 359
(CC);
2005 (4) BCLR 301
(CC) at paras 42-3.
[50]
See [6] to [22].
[51]
Supreme Court of Appeal judgment above n 19 at
paras 15 and 21.
[52]
The IDC’s argument was based on its tender
invitation which provided that “the IDC reserves the right not
to accept
the lowest tender”.
[53]
5 of 2000. Section 2(1)(f) states that—
“
the
contract must be awarded to the tenderer who scores the highest
points, unless objective criteria . . . justify the award
to another
tenderer.”
[54]
Clause F.3.11.3(d) provides that the IDC is
required to—
“
[r]ecommend
the tenderer with the highest number of tender evaluation points for
the award of the contract unless there are compelling
and
justifiable reasons not to do so.”
[55]
The concerns raised were as follows: (a) the
price escalation for the delayed site handover; (b) the price
discrepancy on an item,
GDK Sambesi Mesh, under-quoted by Trencon;
(c) Trencon’s conditional acceptance of the revised contract
award value (to
account for the reduction of the provisional sums of
the photovoltaic panels and structural steel requirements in the
bill of
quantities); and (d) Trencon’s misinterpretation of
the bill of quantities to price for the supply of new sun screens
rather
than the repainting of the existing ones.
[56]
The JBCC Agreement is a standard contractual
document prepared by the Joint Building Contracts Committee Inc.
The Agreement
formed the basis of the IDC’s tender contract as
modified by the Contract Data.
[57]
The IDC’s answering affidavit in the High
Court states at para 58:
“
Under
the heading ‘
The committee raised
the following concerns
’ appear a
number of items which . . . were questions posed by members of Exco
and which were answered in the course of
the debate. In fact
what occurred is that at the meeting, questions were asked by the
Exco members based on what is contained
in the recommendation and
these questions were answered by
inter
alia
Augustine [the Manager of the
Procurement Department] and Paulo Da Silva [the Building Management
Specialist].”
[58]
Both the answering affidavit and the
supplementary affidavit were deposed to by the IDC’s senior
legal specialist.
The IDC’s Manager of the Procurement
Department, the Sourcing Specialist for the Corporate Procurement
Department, the
Divisional Executive and General Counsel, the
Company Secretary and the Internal Quantity Surveyor deposed to
confirmatory affidavits
for the answering affidavit. The IDC’s
Manager of the Procurement Department and its Divisional Executive
and General
Counsel deposed to confirmatory affidavits for the
supplementary affidavit.
[59]
The IDC’s argument was based on the
following provisions:
Clause
F.1.5 of the Standard Conditions of Tender provides that the IDC—
“
may
accept or reject any variation, deviation, tender offer, or
alternative tender offer, and may cancel the tender process and
reject all tender offers at any time before the formation of the
contract.”
The RFP rules and
conditions, in relevant part, provide:
“
2.6
The IDC does not bind itself to accept any of the applications, nor
to continue with the tender process;
. . .
2.15.2
The IDC reserves the right to (a) accept or reject any application;
and/or (b) cancel the RFP process and reject all applications.”
[60]
Published in
Government
Gazette
34350 of 8 June 2011, issued
in terms of section 5 of the Procurement Act.
[61]
See
Fedsure Life
Assurance Ltd and Others v Greater Johannesburg Transitional
Metropolitan Council and Others
[1998]
ZACC 17
;
1999 (1) SA 374
(CC);
1998 (12) BCLR 1458
(CC) at paras
56-8.
[62]
See for example
Logbro
Properties CC v Bedderson NO and Others
[2002]
ZASCA 135
;
2003 (2) SA 460
(SCA) at paras 23-5 where Cameron JA held
that in the circumstances of that case, procedural fairness demanded
that the procurement
committee, in reconsidering tenders, afford
compliant tenderers an opportunity to make representations on any
factor that might
lead the committee not to award the tender at all.
[63]
1 of 1999.
[64]
Telkom SA Limited v Merid Training (Pty)
Limited; Bihati Solutions (Pty) Limited v Telkom SA Limited
[2011]
ZAGPHC 1
(
Telkom
)
and
Joubert Galpin Searle Inc v Road Accident Fund
2014 (4)
SA 148
(ECP) (
Joubert
).
[65]
The two types of discretion are often referred to
as a discretion in the strict/narrow/true sense and a discretion in
the broad/wide/loose
sense. For consistency, I will refer to
these two types of discretion as a discretion in the true sense and
a discretion
in the loose sense. The distinction between the
two will be expanded upon below.
[66]
The distinction developed with reference to two
cases,
Mahomed v Kazi’s Agencies
(Pty) Limited and Others
1949 (1) SA
1162
(N) at 1168-9 (
Mahomed
)
and
Ex parte Neethling and Others
1951 (4) SA 331
(A) (
Ex parte
Neethling
). In
Mahomed
,
the Natal High Court held that there may be cases where an appellate
court is in as good a position as the court of first instance
and
thus may interfere where the appellate court considers its
conclusion to be more appropriate. In
Ex
parte Neethling
, the Appellate
Division, without referencing
Mahomed
,
took the view that there were classes of decisions in which an
appellate court could not simply interfere because it would have
reached a different outcome. The Court considered cases
regarding decisions on the question of costs, on a postponement
and
on an amendment of pleadings in the lower court. See page 335
where it established that in such cases, an appellate
court could
only interfere where—
“
the
Court a quo has exercised its discretion capriciously or upon a
wrong principle, that it has not brought its unbiased judgment
to
bear on the question or has not acted for substantial reasons.”
[67]
Media Workers Association
of South Africa and Others v Press
Corporation of South Africa Limited
[1992] ZASCA 149
;
1992
(4) SA 791
(A) (
Media
Workers Association
) at 800E.
[68]
Giddey NO v JC Barnard and Partners
[2006] ZACC 13
;
2007 (5) SA 525
(CC);
2007 (2) BCLR 125
(CC)
(
Giddey
)
at para 19.
[69]
Dikoko v Mokhatla
[2006]
ZACC 10
;
2006 (6) SA 235
(CC);
2007 (1) BCLR 1
(CC) at paras
93-4.
[70]
22 of 1994. See
Florence
v Government of the Republic of South Africa
[2014]
ZACC 22
;
2014 (6) SA 456
(CC);
2014 (10) BCLR 1137
(CC) (
Florence
)
at para 111.
[71]
Knox D'Arcy Ltd and Others v Jamieson and
Others
[1996] ZASCA 58
;
1996 (4) SA
348
(SCA) (
Knox
)
at 361I. In that case, the subject of the discretion exercised
was whether or not to grant an interim interdict.
The Court at
362D-E remarked as follows:
“
If
a court hearing an application for an interim interdict had a truly
discretionary power it would mean that, on identical facts,
it could
in principle choose whether or not to grant the interdict, and that
a court of appeal would not be entitled to interfere
merely because
it disagreed with the lower court’s choice. I doubt
whether such a conclusion could be supported on
the grounds of
principle or policy. As I have shown, previous decisions of
this court seem to refute it.”
[72]
Mukaddam v Pioneer Foods (Pty) Ltd and Others
[2013] ZACC 23
;
2013 (5) SA 89
(CC);
2013 (10) BCLR 1135
(CC) at
para 47;
Thint (Pty) Ltd v National
Director of Public Prosecutions and Others, Zuma and Another v
National Director of Public Prosecutions
and Others
[2008] ZACC 13
;
2008 (2) SACR 421
(CC);
2009 (1) SA 1
(CC);
2008
(12) BCLR 1197
(CC) at para 92;
Mphela
and Others v Haakdoornbult Boerdery CC and Others
[2008] ZACC 5
;
2008 (4) SA 488
(CC);
2008 (4) BCLR 675
(CC) at para
26; and
Giddey
above
n 68.
See also
Tjospomie
Boerdery (Pty) Ltd v Drakensberg Botteliers (Pty) Ltd and Another
1989 (4) SA (31) (T);
[1989] 4 All SA 228
(T) where the Full Court
commented on the distinguishing feature of the distinction to be
whether the appellate court “is
in as good a position as the
court of first instance” to exercise the relevant discretion.
This interpretation, however,
has not been rigorously applied in
case law.
[73]
See
Media Workers
Association
above n 67 at 800H.
[74]
National Coalition for
Gay and Lesbian Equality and Others v Minister of Home Affairs and
Others
[1999]
ZACC 17
;
2000 (2) SA 1
(CC);
2000 (1) BCLR 39
(CC) at para 11.
[75]
Florence
above n
70 at para 113.
[76]
See section 8(1) of PAJA above n 13.
[77]
Id.
[78]
See [46] to [50].
[79]
See High Court order above n 18.