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[2013] ZAWCHC 117
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Asla Construction (Pty) Ltd and Others v Minister of Human Settlement, Western Cape Government and Others (3159/2013) [2013] ZAWCHC 117 (20 June 2013)
REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE HIGH COURT, CAPE TOWN)
Case no: 3159/2013
In
the matter between:
ASLA CONSTRUCTION (PTY) LTD
.........................................
First
Applicant
JV 3A
....................................................................................
Second
Applicant
JV 3B
........................................................................................
Third
Applicant
and
MINISTER OF HUMAN SETTLEMENTS
WESTERN CAPE GOVERNMENT
.......................................
First
Respondent
HEAD OF THE DEPARTMENT OF
HUMAN
SETTLEMENTS WESTERN CAPE
GOVERNMENT
................................................................
Second
Respondent
GROUPFIVE / MOTLEKAR CAPE JV
................................
Third
Respondent
Heard: 22 May 2013
judgment
delivered: 20 JUNE 2013
savage AJ:
Introduction
This is an application for the review and setting aside of three
tenders awarded on 14 December 2012 by the second respondent
(“the
Department”) to the third respondent (“G5M”) for
the construction of housing units at Delft Precincts
3A, 3B and 5;
the review and setting aside of the decision taken on 10 December
2012 to disqualify the applicants’ bids
in respect of the
tenders as non-responsive; and the setting aside of the contracts
concluded on 14 February 2013 between the
Department and Group 5.
The applicants, Asla Construction (Pty) Ltd and two joint venture
companies, seek that the tender bids
be remitted to the Department
for reconsideration.
The applicants did not persist with their initial application for
interdictory relief to restrain G5M from executing any further
works
on the project pending the outcome of the current application,
following agreement reached regarding a timetable for the
filing of
the papers in this application.
The facts
On 27 July 2012 the Department invited three tenders for the
construction of housing units at Delft Precincts 3A, 3B and 5:
3.1. in Precinct 5 for the development and
construction of 890 Breaking New Ground (MNG) residential units
comprising 146 single
storey units (40 m
2
)
and 744 double storey units (42 m
2
)
incorporating non-standardised construction and 40 FLISP single
storey residential units (minimum 40 m
2
)
incorporating non-standardised construction;
3.2. in Precinct 3A for the development and
construction of 620 BNG residential units comprising 24 single storey
units (40 m
2
)
and 596 double storey units (42 m
2
)
incorporating non-standardised construction; and
3.3. in Precinct 3B for the development and
construction of 587 BNG residential units comprising 38 single storey
units (40 m
2
)
and 559 double storey units (42 m
2
)
incorporating non-standardised construction.
The purpose of the tender was to assess more environmentally
friendly and alternative building technologies in the state-funded
housing environment to test the durability, cost effectiveness,
environmental impact, appeal and acceptance of such technologies.
Non-standardised construction was defined in paragraph C3.1.1 of the
tender specifications as –
‘
any form of home construction which
utilises sub-structure, superstructure, roof assembly and/or building
systems which are not
fully covered by SANS 10400 building standards
and specification or codes of practice and/or which are not described
or referred
to in the deemed-to-satisfy rules of the National
Building Regulations
’.
Thematerial tender requirements were
inter alia
:
5.1. that the housing be built using
non-standardised construction methods. Paragraph 3.4.3.1 of the
published tender specifications
expressly required “
non-standardised
building systems/constructions and material
”;
and
5.2. that in respect of the non-standardised
building systems there must exist Agr
é
ment
South Africa approval or National Home Builders Registration Council
(“NHBRC”) approved rational design.Para 3.4.3.1
provided
that “
(a)lternative building
systems being considered must be approved by the Agr
e
ment
South Africa, NHBRC, City of Cape Towns, PDHS and SABS. In this
regard, any unconventional system shall have an Agrement
Certification
”.
At the same time, paragraph C3.2.2.1.1 of the tender specifications
required:
‘
All construction methods, materials and
workmanship [are] to comply with the relevant SABS/SANS Codes of
Practice and NBR –
these specifications must be seen as the
Department’s requirements to the above
.’
The National Building Regulations and Building Standards Act 103 of
1977 (“the Building Act”) provide “
for the
promotion of uniformity in the law relating to the erection of
building in the areas of jurisdiction of local authorities;
for the
prescribing of building standards
”. The National Building
Regulations (“NBR”)specify building standards with Codes
of Practice promulgated in
terms of the NBR to facilitate proper
implementation of these requirements.Regulation AZ4(1)(b)(i) of the
NBR refers to compliance
with SANS 10400 which stipulates
specifications relating to every aspect of a building, based on
conventional methods and products.
This regulation also provides for
circumstances under which aspects of a building system comply with
“deemed to satisfy”
provisions.
Agr
é
ment South Africa approval
is granted in the form of an Agr
é
ment
certificate confirming “
fitness-for-purpose of a
non-standardised product, material or component or the acceptability
of the related non-standardised
design and the conditions pertaining
thereto (or both) issued by Agr
é
ment
South Africa
” (in accordance with Regulation AZ2 of the
NBR). Rational design approval is obtained from the NHBRC.
Applicants’ bids
The applicants’bids were submitted in respect of the Asla
reinforced concrete frame system with three options for wall
infill
panel materials: hollow 125mm cement blocks, which isa patented,
non-standardised system with NHBRC rational design approval;
magnesium boards; or a 2mm PVC skin with a sand cement core. The
foundations are non-standard with a design that is not in accordance
with s6 of the SAICE Code of Good Practice.
The bids included a NHBRC rational design approval,which recorded
that the Asla building system conformed to the criterion for
structural integrity and that a rational design had been submitted,
scrutinised and accepted for enrolment by the NHBRC. This
approval
had been obtained on 16 February 2004, in response to thesubmission
on 17 September 2002 by Asla and its consulting
engineer of a NHBRC
questionnaire in relation to the system’s rational design.
This NHBRC approval was re-submitted by
the applicants on 8 October
2012 at the request of the Department’s consultant, Mr
Flanagan.
The applicants contend that their Asla frame system constitutes
non-standardised construction in that –
11.1. as a whole it is non-standard in that the result is non-load
bearing walls while conforming to the rational design criteria
for
structural integrity;
11.2. itsintegrated concrete frame as a wholeis not fully covered by
existing SANS10400 building standards, specifications or codes
of
practice, is not contained in the deemed-to-satisfy rules of the
National Building Regulations (“NBR”) and it is
an
alternative building technology; and
11.3. its foundations are non-standard as they comprise of an
integrated beam and/or slab system functioning as a unit with the
concrete superstructure and block work infill.
The applicants accept that the individual substructure and
superstructure elements of the Asla system are partially covered by
SANS10400 building standards and specifications and the
deemed-to-satisfy rules of the NBR, but argue that a
non-standardised
system does not consist exclusively of non-standard
components but requires that material elements be non-standard
components.
Furthermore, a standard method or building system would
be impossible to patent in that a standard method would not require
a
rational design as it would fall within the SANS10400
“deemed-to-comply” requirements. The applicants dispute
that
the tender specifications require Agr
é
ment
certification when a NHBRC approved rational design has been
provided.
The Department argues that the NHBRC approval submitted in respect
of the Asla system did not indicate whether the system was
classified as a non-standardised building system for a single
project or all future projects and that in the absence of the letter
dated 30 January 2004 referred to in the NHBRC approval, it appears
that the approval granted related to the structural integrity
of the
125 mm block used and insulation. The bids made no reference to
double-storey units, the rational design did not meet
the minimum m
2
sizes for both single and double-storey units and the first
applicant’s patent relates to single-storey structures only.
Furthermore, the fact that 40 000 units using thr same system have
been constructed to date and inspected and approved by the
NHBRC and
local authorities does not make it a non-standardised system but one
well known in the construction industry. In addition,
the patent
obtained relates to the use of conventional building materials and
methods and does not meet the requirements of non-standardised
construction.
G5M does not dispute that the applicants have NHBRC approval
certifying conformity to the NHBRC criteria for a rational design
for structural integrity. This approval does not however address
whether the system is non-standardised, alternative or
unconventional,
nor could the NHBRC competently do so given that its
purpose is to certify the structural integrity of a building system.
It
would be equally incompetent for Agr
é
ment
South Africa, as a private body, to address whether a building
system is alternative.Furthermore, the fact that 40 000 houses
have
been built using the Asla system justifies asking why the system
would be used when new and innovative design technologies
are
sought.
G5M’s bids
G5M submitted bids in respect of its Vela steel building system
which it submits is compliant in that:
15.1. a light-weight steel frame is used in
accordance with SANS 517, being the South African standard for light
steel framed building
which obviates the need for Agr
é
ment
certification. The system uses composite wall panels comprising of 10
mm autoclaved boards and a polyurethane core or 9mm Nutek
cellulose
fibreboard with the same core;
15.2. the system is non-standard and was not
created under the purview of SANS10400 or the deemed to satisfy rules
of the NBR;
15.3. the requirement that Agr
é
ment
certification or rational design approvalfrom the NHBRC be obtained
is only triggered when the proposed building system is
patently
idiosyncratic or does not comply with any relevant SABS/SANS
standard;
15.4. the double-storey buildings comply with the
SANS517, save for the use of magnesium oxide boards for interior wall
panels which
are resistant to decomposition in rain and can be stored
on-site, and are unquestionably non-standard with suitable structural
integrity; and
15.5. the single-storey system deviates from
SANS517 and requires Agr
é
ment
certification, which was provided. The first deviation relates to the
removal of a central vertical support or “stud”
in the
infill panels which in single-storey buildings has a cost-saving
benefit. The second deviation relates to the alteration
of the infill
boards to fit the adjusted framing.
The applicants take issue with the following aspects of the G5M
systemin support of their contention that G5M’s bid should
properly have been found non-compliant by the Department:
16.1. the foundation and floor slab are
standardised, as is the roof which is constructed of standard
lightweight steel trusses
clad with metal sheeting, concrete roof
tiles or Agr
é
ment
approved cladding;
16.2. no Agr
é
ment
certificateor NHBRC approved rational design exists for the
double-storey units when the bulk of the units to be constructed
in
Precincts 3A and 3B are double-storey units and no provision is made
for dispensing with the requirement of Agr
é
ment
or NHBRC approval, whether part of the system complies with a SANS
standard or not. Yet, the only Agr
é
ment
certificate provided by G5M relates to the erection of single-storey
buildings; and
16.3. the magnesium oxide Vela panels are not
listed as permissible walling materials in SANS517, nor has G5M put
up proof that
they meet the requirements of the NBR and Building
Standards Act in all respects when the tender requires that all
construction
methods, materials and workmanship must comply with the
relevant SABS/SANS Codes of Practice and the NBR.
G5M arguesin support of its system that there is no reason to
speculate that the double-storey dwellings will not be enrolled
by
the NHBRC and that an external independent structural engineer, who
is a competent person as defined, has certified the Vela
system for
use in double-storey buildings. However, given that the structural
integrity of the building has not been placed in
issue by the
applicants, requiring an idiosyncratic NHBRC approved design would
thus not serve any demonstrable purpose.
SANS 517 is a “relevant SABS/SANS Code of Practice”
published by the SABS in terms of its powers under the
Standards Act
8 of 2008
“
to establish a standard for light steel
framing
”.It covers all the major components of light steel
framed building, including foundations, structural design aspects,
material
specifications as well as general requirements for thermal
and acoustic insulation and allows for the use of different infill
materials but does not contain a provision relating to variations to
the structural elements as a result of which Agr
é
ment
certification was required for the single-storey system.
The Department argues that the use of the SABS approved SANS517
national standard has resulted in the simplification of the
submission of rational design. If a building conforms to the
deemed-to-satisfy rules provided in this standard, the NHBRC does
not require a rational design and this obviates the need for
Agr
é
ment certification. However,
the applicants point out that
s14(2)(c)
of the
Housing Consumers
Protection Measures Act 95 of 1998
stipulates that the construction
of a home, the acquisition of which will be financed solely by a
state subsidy, shall not commence
unless the NHBRC has issued a
certificate of proof of enrolment.
Reasons
for disqualification of applicants’ bids
The Department’s Bid Evaluation Committee (“BEC”)
disqualified the applicants’ bidson 10 December 2012.
The
reason for disqualification appears from the minutes:
‘
No Agreement (sic) Certificate provided
for combined Vela panel system and Concrete Framed System. This
information was requested
on 17 October 2012, prior to Limited Bid.
Rational design submitted has no reference
.’
On31 January 2013 the reasons for disqualification was recorded as
being due to the applicants not having submitted an Agr
é
ment
certificate and the rational design having no reference. The
applicants’ contend that this is a material mistake in
that
either an Agr
é
ment certificate
or a NHBRC approved rational design was required and a rational
design approved by the NHBRC was provided.
On 6 February 2013, in a meeting with the Department, the applicants
were informed that the Department disregarded any tenders
that
proposed the use of hollow cement blocks because they were
considered conventional materials. The applicants contend that
this
is a material mistake in that the test imposed by the tender
specifications is not whether the system incorporates standardised
elements, but whether the system as a whole is fully covered by the
SANS10400 building standards and specifications or is referred
to in
the deemed-to-satisfy rules of the NBR.
In its answering affidavit dated 26 April 2013 the Department raised
two additional grounds of alleged non-compliance with the
bid. The
first was that the NHBRC approval for the Asla building system
refers to 36m
2
and 30m
2
houses, although the
NHBRC approved the rational design of the system and not houses per
se. The applicant’s deny that
the reference to 30m
2
and 36m
2
houses is a limitation on the rational design
approval by the NHBRC.
The second additional ground of alleged non-compliance is that the
applicants’ system relates to single and not double-storey
units, whereas the tender specifications required a minimum of 40m
2
for single-storey units and 42m
2
for double-storey units.
The applicants deny that this is relevant in that it was not
necessary to register a patent for a double
or multi-storey system
in that the system used was the same and they deny that there was
insufficient information to satisfy
the bid requirements.
The applicants argue that the Department's decision that G5M’s
Vela system was compliant is vitiated by material mistake
of law
and/or a material mistake affect and the Department failed properly
to apply its mind to the matter given that the Vela
system does not
have an Agr
é
ment certificate or
a NHBRC-approved rational design for double-storey buildings, which
comprise the overwhelming majority of
houses to be constructed. The
decision accordingly falls to be reviewed and set aside in terms of
sections 6(2)(d)
and (i) of PAJA given the existence of a material
mistake of law and/or of fact and the Department’s failure
properly to
apply its mind to the matter.
Remedy
The applicants argued that the starting point for the enquiry is
that if successful, they are entitled to effective relief and
may
only be denied any and all relief if exceptional circumstances exist
to warrant this.
Bengwenyama Minerals (Pty) Ltd v Genorah
Resources (Pty) Ltd and others
2011 (4) SA 113
(CC) at para 84;
Mvumvu and others v Minister of Transport and another
2011
(2) SA 473
(CC) at para 46. The applicants seek an order reviewing
and setting aside the Department's decisions
ex nunc
and not
ex tunc,
and a referral of the tenders back to the Department
for reconsideration. Theyconcede that G5M should be permitted to
complete
the construction of as yet unfinished Vela houses.
Consequently, the relief sought by the applicants will not have
disastrous
consequences in that relatively little work has been done
to date, with approximately 11% of all construction work on all
three
precincts having been completed as at 31 May 2013 and that it
has not been established on the facts that significant disruption
would occur.
The Department denies that an order setting aside the award of the
tender would be just and equitable in that the housing project
forms
part of the larger N2 Gateway development that will create in excess
of 20 000 houses. The aim of the project is to eradicate
informal
settlements by 2014 and the Department has contractual obligations
towards G5M. For each day that the works on all three
sites is
stopped, the Department is faced with a potential claim for some
R265 000 excluding costs and claims which may arise
if the contract
is terminated such as loss of profit and de-establishment costs.
The three housing projects are being financed through the Department
of human settlements provincial housing subsidy scheme and
the
housing units are expected to be completed by 31 March 2014.
Beneficiaries will suffer in the event of a delay in that families
have been placed in temporary relocation areas in Philippi and
Delftto allow for formal development.
As at 18 April 2013, 18% of civil works have been completed, 1.2% of
the scheduled value of the works have been certified and
over R8.5
million paid out, with more than R9 million owed and further monies
due thereafter.
The Department argues that in the event that the Court was to
conclude that the decision-maker had committed reviewable
irregularities,
an order that is just and equitable should be
granted, balancing the interests of the parties considering the
potential “
catastrophic consequences for an innocent
tenderer, and adverse consequences for the public at large
”
(
Millennium Waste Management (Pty) Ltd v Chairperson, Tender
Board Limpopo Province and others
2008 (2) SA 481
(SCA) at para
23).
G5M argues that the department made a technical value judgment
within its competence, using specialist expertise, in a matter
imbued with policy considerations and that the Court should exercise
the appropriate degree of deference to such decision which
not
reviewable if no demonstrable factual or legal error, or irrational
or unreasonable action, exists. The grant of just and
equitable
relief is discretionary and requires a balance to be struck between
legality and certainty. Setting aside the tender
awarded would be
impractical in that it will cause delays which will translate
directly into delays in the provision of housing
to the poorest of
people, in circumstances in which the state bears an obligation to
provide access to housing.
In addition, G5M would face enormous claims from subcontractors with
whom it has made long lead time arrangements and who are
innocent
third parties. Two thirds of the foundations will have been cast by
time judgment is delivered and all are specific
to Vela systemin
that another contractor would be unable to use such foundations,
resulting in irrecoverable losses should the
tender be set aside.
The total estimated costs of the project to date are R70 million
with the anticipated amount to be spent
in May 2013 alone being R20
million. Accordingly, the degree of irregularity must be considered
against the unravelling of a
highly complex, costly and important
project. Legality must in such circumstances yield to certainty.
Discussion
The applicants seek the review and setting aside of the decisions
taken by the Department on the basis of material mistakes of
law
and/or fact and on grounds of the failure by the Department to
properly to apply its mind to the matter under
s6(2)(d)
and (i) of
PAJA. The procedural fairness of the Department’s decisions is
not attacked.
The exercise of public
power is constrained by the principle of legality (
Minister
of Health and Another v New Clicks South Africa (Pty) Ltd and Others
2006 (2)SA 311 (CC)
at
para 144). T
he Promotion of Administrative Justice Act 3 of
2000 (“PAJA”) gives effect to this
principle
of legality
inter alia
in
codifying
grounds for thejudicial review of administrative
actionin s6. These grounds include the power to review if the action
was materially
influenced by an error of law (s6(2)(d)); the action
was taken because irrelevant considerations were taken into account
or relevant
considerations were not considered (s6(2)(e)(iii)); and
the action is otherwise unconstitutional or unlawful (s6(2)(i)).
In performing its task a review Court must not lose sight of the
distinction between appeal and review. ‘
Review is not
directed at correcting a decision on the merits. It is aimed at the
maintenance of legality
…’
Pretoria Portland
Cement Co Ltd v Competition Commission
2003 (2) SA 385
(SCA) at
402. In Liberty Life Association of Africa v Kachelhoffer
2001 (3)
SA 1094
(C) at 1110-1111 the Court stated:
‘
Review and appeal are dissimilar proceedings. The former
concerns the regularity and validity of the proceedings, whereas the
latter
concerns the correctness or otherwise of the decision that is
being assailed on appeal (see Davies v Chairman, Committee of the
Johannesburg Stock Exchange
1991 (4) SA 43
(W) at 46H, 48E). Because
of this fundamental difference between review and appeal, they are
inconsistent remedies in the sense
that, if both are available, an
appeal can be considered only once the review proceedings have been
finalised as a decision in
respect of the appeal would preclude the
granting of relief by way of review…Similarly a successful
review obviates the
need to consider the merits of an appeal
…’
Material mistakes of fact or law
In
Pepcor Retirement Fund and another v Financial Services Board
and another
2003 (6) SA 38
(SCA) at para 47 Cloete JA held:
‘
In my view, a material mistake of fact should be a basis
upon which a Court can review an administrative decision. If
legislation
has empowered a functionary to make a decision, in the
public interest, the decision should be made on the material facts
which
should have been available for the decision properly to be
made. And if a decision has been made in ignorance of facts material
to the decision and which therefore should have been before the
functionary, the decision should (subject to what is said in para
[10] above) be reviewable at the suit of, inter alios, the
functionary who made it – even although the functionary may
have
been guilty of negligence and even where a person who is not
guilty of fraudulent conduct has benefited by the decision. The
doctrine
of legality which was the basis of the decisions in Fedsure,
Sarfu and Pharmaceutical Manufacturers requires that the power
conferred
on a functionary to make decisions in the public interest,
should be exercised properly, i.e. on the basis of the true facts; it
should not be confined to cases where the common law would categorise
the decision as ultra vires.
’
It was argued for
G5M
that a review based on mistake of fact more correctly flows from
s6(2)(e)(iii) of PAJA which provides for review where
“
irrelevant
considerations were taken into account or relevant considerations
were not considered”.
However, in
Chairman,
State Tender Board v Digital Voice Processing (Pty) Ltd; Chairman,
State Tender Board v Sneller Digital (Pty) Ltd and
others
[2012]
2 All SA 111
(SCA) Plasket AJA stated at para 34 that:
‘
It is now well established in South
Africa (and in some other common law jurisdictions) that a material
error of fact is a ground
of review. This is so even though it is not
one of the grounds specifically listed in section
6(2) of the PAJA. It has been held
that it falls within the
ground specified in section
6(2)(e)(iii) – the taking into account of irrelevant
considerations
and the ignoring of relevant considerations –
but it may just as easily be accommodated in section
6(2)(i), the catch-all
provision that allows for the development
of new grounds of review. This section provides that administrative
action may be reviewed
and set aside on the basis of it being
“otherwise unconstitutional or unlawful
’
.
At para 40, the learned judge continued:
‘
In order to be rational, the decision
must be “based on accurate findings of fact and a correct
application of the law”.
That being so, no rational basis
existed for the STB’s conclusions: the administrative action
that it took was not rationally
connected to the information before
it, as required by section
6(2)(f)(ii)(cc) of the PAJA.’
While errors of law can lead to gross
irregularities in proceedings, a mistake on a point of law in
relation to the merits does
not always amount to a gross
irregularity.
Telcordia Technologies
Ltd v Telkom SA Ltd
2007 (3) SA 266
(SCA) at para 69.
Reasons
for disqualification of applicants’ bids
Section 5 of PAJA provides for reasons to be
furnished by the administrator and the adequacy of reasons will
depend on a variety
of factors, such as the factual context of the
administrative action, the nature and complexity of the action, the
nature of
the proceedings leading up to the action, and the nature
of the functionary taking the action. The reasons must from the
outset
be intelligible and informative to the reasonable reader of
them who has knowledge of the context of the administrative action.
If the reasons refer to an extraneous source, that extraneous source
must be identifiable to the reasonable reader.
Commissioner
,
SA Police Service v Maimela
2003
3 All SA 298 (T)301303;
2003 5 SA 480 (T) 484 485–486.
It was argued by the Department that it is appropriate for a
government authority to raise reasons after the fact, provided these
elaborate on the reasons given contemporaneously. However, in
National Lotteries Board and others v South African Education and
Environment Project
2012 (4) SA 504
(SCA) at paras 9, 11 and 28
it was stated that a decision maker who unlawfully restricts or
aggregates his discretion cannot
remedy the situation are
substituting different reasons after the fact.
The reasons for the disqualification of the applicants’ bids
recorded in the minutes of the BEC were that no Agrement certificate
had been obtained and the rational design submitted had “no
reference”.The lack of the Agr
é
ment
certificate was repeated on 31 January 2013 as the reason for
disqualification. On 6 February 2013 in a meeting with the
Department the applicants were informed that the Department had
disregarded any tenders that proposed the use of hollow cement
blocks because they were considered conventional materials.In its
answering papers the Department raised additional grounds of
non-compliance, namely the square meterage of the houses tendered
and the fact that the applicants’ system relates to single
and
not double-storey units.
It is not disputed that the tender sought to assess more
environmentally friendly and alternative building technologies in
the state-funded housing environment to test the durability, cost
effectiveness, environmental impact, appeal and acceptance of
such
technologies. In doing so, it sought bids for the construction of
housing using non-standardised building systems, construction
methods and materials (paragraph 3.4.3.1). In this regard, the
tender requirements were that “
(a)lternative building
systems being considered must be approved by the Agr
e
ment
South Africa, NHBRC, City of Cape Towns, PDHS and SABS. In this
regard, any unconventional system shall have an Agrement
Certification
” (paragraph 3.4.3.1)
Paragraph C3.1.1 of the tender specifications sought ‘
home
construction which utilises sub-structure, superstructure, roof
assembly and/or building systems which are not fully covered
by SANS
10400 building standards and specification or codes of practice
and/or which are not described or referred to in the
deemed-to-satisfy rules of the National Building Regulations’.
At the same time, paragraph C3.2.2.1.1 required that all
construction methods, materials and workmanship comply with the
relevant
SABS/SANS Codes of Practice and NBR.
The interpretation of the document is a matter of law whether it is
a statute, a contract or a tender specification.
KPMG Chartered
Accountants (SA) v Securefin Ltd and another
2009 (4) SA 399
(SCA) at para 39.The tender specification clearly sought bids in
respect of alternative, unconventional, non-standard systems
not
covered by conventional building standards or codes and not falling
within the “deemed-to-satisfy” provisions
of the NBR.
The applicants’ system on their version was “not fully
covered”, or put differently was partially
covered by these
standards or codes, or the NBR, but was nevertheless alternative
with non-standard foundations. It is the applicants’
case that
its bids were compliant in that a non-standardised system does not
consist exclusively of non-standard components but
requires that
material elements be non-standard components.
The tender document was not a model of clarity in providing that
alternative systemshad to be approved by the “Agr
e
ment
South Africa, NHBRC, City of Cape Town, PDHS and SABS”while
“any unconventional system” required Agr
é
ment
certification. There was no suggestion made by the Department that
Agr
e
ment South Africa, NHBRC, City of
Cape Town, PDHS and SABS approval had to be obtained and I tend to
agree with the applicants
in the circumstances that their submission
of a NHBRC approved rational design in respect of an alternative
system was compliant.
I am not persuaded that the fact that NHBRC
approval does not address whether the system is non-standardised,
alternative or
unconventional goes to compliance with the tender
specifications which do not require that such approval determine a
system to
constitute an alternative one.
G5M’s system was argued not to have been created under the
purview of SANS10400 or the deemed to satisfy rules of the NBR,
according rather with SANS 517 for double-storey buildings, save in
one respect. However, no Agr
é
ment
certificate or NHBRC approved rational design exists for the
double-storey system, which accounts for the bulk of the units
to be
constructed in Precincts 3A and 3B. I accept that no provision is
made in the tender specifications for dispensing with
the
requirement of Agr
é
ment or NHBRC
approval, whether part of the system complies with a SANS standard
or not, and that while the tender requires that
all construction
methods, materials and workmanship must comply with the relevant
SABS/SANS Codes of Practice and the NBR, there
is no confirmation
that G5M’s double-storey system does. The fact that the system
may at a later date be enrolled by the
NHBRC and that an external
independent structural engineer, who is a competent person as
defined, has certified the system for
use in double-storey buildings
does not lead to a conclusion that the tender specifications have
been complied in the manner
required.
The suggestion by G5M that the structural integrity of the building
has not been placed in issue by the applicants and that requiring
an
idiosyncratic NHBRC approved design would thus not serve any
demonstrable purpose, does not address the real issue, being
the
failure to comply with the requirements of the tender, andI do not
agree that the requirement for Agr
é
ment
certification or rational design approvalfrom the NHBRC is only
triggered when the proposed building system is patently
idiosyncratic or does not comply with any relevant SABS/SANS
standard. Agr
é
ment certification
or NHBRC approval is required to establish structural integrity in
systems such as those contained in the bids
submitted.
Furthermore, the fact that G5M obtained Agr
é
ment
certification for its single-storey system which deviates from
SANS517, does not resolve the difficulties that emerge in
terms of
compliance with the tender requirements for the double-storey
system.
The Department argued that the use of the SANS 517 national standard
resulted in the simplification of the submission of rational
design.
If a building conforms to the deemed-to-satisfy rules provided in
this standard, the NHBRC does not require a rational
design and
obviates the need for Agr
é
ment
certification. The difficulty with this argument is that the tender
requirements do not state this to be the case. Furthermore,
SANS 517
does not cover variations to the structural elements which appears
to be the reason why Agr
é
ment
certification was required in such circumstances.
While the applicant argued that G5M’s system is not
non-standard in that the foundation and floor slab and roof are
standardised,
on its own version the applicants’ system also
contains standardised aspects.I accept that a non-standardised
system does
not consist exclusively of non-standard components but
requires that material elements be non-standard components and
thatthe
test imposed by the tender specifications is not whether the
system incorporates standardised elements, but whether the system
as
a whole is fully covered by the SANS10400 building standards and
specifications or is referred to in the deemed-to-satisfy
rules of
the NBR.
An assessment as to what constitutes an unconventional, alternative
or non-standard building system requires a thorough understanding
and analysis of the various systems available using expert knowledge
as to their similarities and differences, the standardised
and
non-standardised features of the systems and their usefulness and
impact in the context of the overarching tender requirements.
I
accept that the test must be one of materiality. However, given the
technical nature of the subject-matter, the exercise of
the
discretion as to what system best meets the requirements of the
tender is one that is properly vested in the administrative
decision-maker.
In this regard the case of
Minister of Environmental Affairs &
Tourism v Phambili Fisheries (Pty) Ltd; Minister of Environmental
Affairs & Tourism
v Bato Star Fishing (Pty) Ltd
2003
(6) SA 407
(SCA) is on point, in which it was stated at para 52 that
–
‘(j)
udicial deference is particularly appropriate where the
subject-matter of an administrative action is very technical or of a
kind
in which a Court has no particular proficiency’
.
In
Bato Star Fishing (Pty) Ltd v Minister of Environmental
Affairs & Tourism & others
[2004] ZACC 15
;
2004 (7) BCLR 687
(CC) at
paragraph 44 O’Regan J emphasised that:
‘...
a court should be careful not to attribute to itself
superior wisdom in relation to matters entrusted to other branches of
government.
A court should thus give due weight to findings of fact
and policy decisions made by those with special expertise and
experience
in the field. The extent to which a court should give
weight to these considerations will depend on the character of the
decision
itself, as well as on the identity of the decision-maker. A
decision that requires an equilibrium to be struck between a range of
competing interests or considerations and which is to be taken by a
person or institution with specific expertise in that area
must be
shown respect by the court. Often a power will identify a goal to be
achieved, but will not dictate which route should
be followed to
achieve that goal. In such circumstances a court should pay due
respect to the route selected by the decision-maker.
”
The applicants seek the review and setting aside of the decision
taken on 10 December 2012 to disqualify their bids in respect
of the
tenders as non-responsive. The reasons given for the
disqualification of the applicants’ bids were initially that
an Agr
é
ment certificate had not
been provided and that the rational design has no reference but were
later expanded to include that the
system was conventional, the
square meterage contained in the bid documents differed to what was
required and difficulties identified
with the system in covering
both double and single-storey buildings.
Given that the Agr
é
ment
certificate was not required where NHBRC approval had been
submitted, as the applicants had done, this reason reflected an
error of law insofar as the tender requirements did not to require
an Agr
é
ment certificate to be
furnished by the applicants. It is however material in that the
Agr
é
ment certificate confirms a
system’s “
fitness-for-purpose of a non-standardised
product, material or component or the acceptability of the related
non-standardised
design and the conditions pertaining thereto (or
both) issued by Agr
é
ment
South Africa
” (in accordance with Regulation AZ2 of the
NBR). Furthermore, the fact that the NHBRC rational design was
determined not
to have reference, indicates that it was considered.
The reason provided that the applicants’ bids were
non-compliant due
to the lack of submission of the Agr
é
ment
certificate must therefore, in my mind, have the necessary
consequence that the bids were determined non-compliant in that
fitness-for-purpose of a non-standardised system has not been
provided.
Thus while the Agr
é
ment
certificate was not required, a conclusion that the rational design
had no reference is material in that it was a non-standardised
construction system that formed the subject matter of the bids being
considered by the BEC. I accept that it is permissible for
an
administrative functionary to provide further reasons for a decision
after the fact, even in answering papers placed before
the review
Court, provided these elaborate on the reasons provided
contemporaneously. In this regard it must be noted that the
functionary is often an expert in his or field but not necessarily a
lawyer involved in crafting a careful defence to any later
legal
action that may ensue. While this does not however insulate a
functionary from the requirement that different and unrelated
reasons cannot be substituted after the fact in order to cure a
defect, I am satisfied in this case that the BEC did consider
the
bids’ compliance with tender requirements and that its reasons
provided bear this conclusion out.
The degree of irregularity is therefore limited to the statement
that the Agr
é
ment certificate
was required in circumstances in which it was not and when it was
apparent that the NHBRC rational design had
been considered. The
degree of irregularity is required to be weighed in balance. In
Moseme Road Construction CC and others v King Civil Engineering
Contractors (Pty) Ltd and another
2010 (2) SA 359
(SCA) at para
21 the Court held that ‘(n)
ot every slip in the
administration of tenders is necessarily to be visited with judicial
sanction
.’ Accordingly,while I accept that the decisions
taken by the Department to disqualify the applicants due to no
Agr
é
ment certificate having been
provided was not in compliance with the tender requirements, the
conclusion that the rational design
approval did not have reference
indicated that it had been considered by the BEC.I am not persuaded
that a material mistake of
law accordingly arose in relation to the
apparent reason that there was a lack of the Agr
é
ment
certificate when considered in the context of the substantive
content of the bids considered, or that it is illustrative
unlawfulness in a material respect.
With regards to the conclusion as to whether the bids were
unconventional, non-standard or alternative, given the technical
nature of the subject matter of the bids and the assessment and
consideration of these individual bids against the bid requirements,
I am of the view judicial deference should be given to the
administrative functionary to determine such substantive compliance
with the bid requirements.
I am accordingly not persuaded that the decision to reject the
applicants’ bids constituted a material error of law or
was
unlawful within the meaning of s6(2)(d) or (i).
The applicants seek, in addition, the review and setting aside of
three tenders awarded on 14 December 2012 by the second respondent
(“the Department”) to the third respondent (“G5M”)
for the construction of housing units at Delft Precincts
3A, 3B and
5 and the setting aside of the contracts concluded on 14 February
2013 between the Department and G5M. I accept that
G5M’s
non-compliance with the requirement that an Agr
é
ment
certificate or NHBRC approval be provided for its double-storey
system was overlooked by the BEC which was not in compliance
with
the bid requirements. I am not persuaded however that this failure
constituted a material mistake of law justifying the
review and
setting aside of the award of the tenders, nor I am persuaded that
it follows that it was sufficiently material to
justify a finding of
unlawfulness. Given the complexity of the subject matter concerned,
a determination regarding the substantive
content of the bids and
their respective compliance with the overarching tender
requirements, is not in my view a matter for
this Court but is one
in respect of which judicial deference should properly be exercised.
The fact that the applicants have
previously been awarded contracts
to build 40 000 houses using the same Vela system, simply confirms
the complexities involved
in a determination as to whether its bid
contained sufficient non-standard, unconventional and alternative
components such as
to justify the award of the tender to it above
another. This is not a task that this Court in a position to
undertake in the
absence of expert knowledge or detailed expert
evidence tendered during the course of a trial relating to the
material issues
in dispute between the parties.
It follows that the applicants’ application accordingly must
fail.
For the sake of completeness I consider it appropriate to record
that even if I am wrong that the decisions taken do not fall
to be
reviewed and set aside, s8 permits an order that is “just and
equitable” and a decision on remedy must be made
within the
context of a housing project underway in circumstances in which
thereis dire social need for the new housing under
construction, a
constitutional right of access to adequate housing and an obligation
upon the state in terms of s26(2) of the
Constitution to ‘
take
reasonable legislative and other measures, within its available
resources, to achieve the progressive realisation of this
right
’
.
In
Oudekraal Estates (Pty) Ltd v City of Cape Town and others
2004
(6) SA 222
(SCA) at para 46 it was stated with regards to remedy
that –
‘
much will depend upon a balancing of all
the relevant circumstances including the need for finality, but also
the consequences for
the public at large, and, indeed for future
generations, of allowing the invalid decision to stand
.’
In
Millenium Waste Management (Pty) Ltd v Chairperson of the
Tender Board: Limpopo Province and others
2008 (2) SA 481
(SCA)
Japhta JA at para 23:
‘
The difficulty that is presented by
invalid administrative acts, as pointed out by this court in
Oudekraal Estates (at para 36
)
is that they often have been acted upon
by the time they are brought under review. That difficulty is
particularly acute when a
decision is taken to accept a tender. A
decision to accept a tender is almost always acted upon immediately
by the conclusion of
a contract with the tenderer, and that is often
immediately followed by further contracts concluded by the tenderer
in executing
the contract. To set aside the decision to accept the
tender, with the effect that the contract is rendered void from the
outset,
can have catastrophic consequences for an innocent tenderer,
and adverse consequences for the public at large in whose interests
the administrative body or official purported to act. Those interests
must be carefully weighed against those of the disappointed
tenderer
if an order is to be made that is just and equitable.
’
I am satisfied that on the facts before this Court, as was stated in
Chairperson: Standing Tender Committee and others v JFE Sapela
Electronics (Pty) Ltd and others
2008 (2) SA 638
(SCA) an order
to set aside, if implemented, would be disruptive but would give
rise to a host of problems not only in relation
to a new tender
process but also in relation to the work performed.
The impact upon the public purse, while sometimes a matter for
speculation, is relevant (
Millennium Waste Management (supra)
at paras 29-30). Furthermore, where third parties have based their
affairs, or altered their positions on the lawfulness of the
decision and would be prejudiced if it would be set aside (
Eskom
Holdings Ltd v New Reclamation Group (Pty) Ltd
2009 (4) SA 628
(SCA) at para 9), or where there would be a disastrous domino effect
on subsequent decisions (
Searle v Van Rooyen NO and others;
Provincial Government, North West Province v Van Rooyen NO and
others
2008 (4) SA 43
(SCA) at para 13) it would not be just and
equitable to set aside a tender. A network of contractors and
subcontractors have
commenced work, significant costs have been
incurred in the initial phase of construction, sunk costs would not
be able to be
reclaimed given that they are recouped in a proportion
to the works completed over the life of a contract and work
undertaken
on one tenderer’s system does not easily translate
to work on another, in the event that another tenderer were to be
successful.
Consequently, even if I had reached the conclusion that that the
award of the tenders fell to be set aside, a decision to set
aside
the tenders and refer the bids back to the BEC for reconsideration
would in my mind not be just and equitable.
Costs
There exists no reason as to why costs should not follow the result,
including the first and second respondents’ costs
of two
counsel.I was asked to make an order as to wasted costs arising from
the applicants’ delay in filing their affidavits
in accordance
with the timetable agreed. I am not persuaded that given the
complexity of the matter and the voluminous papers
filed, that such
an order is appropriate.
Order
In the result, the following order is made:
The application is dismissed.
The applicants are to pay the respondents’ costs, inclusive of
the costs of two counsel briefed by the first and second
respondent.
KM SAVAGE
ACTING JUDGE OF THE HIGH COURT
Appearances
:
For applicants: A M Breitenbach SC and M Schreuder
Instructed by Werksmans Inc.
For first and second respondents: W R E Duminy SC and R Jaga
Instructed by the State Attorney
For third respondent: D Borgstr
ö
m
Instructed by Baker & McKenzie