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[2014] ZAWCHC 67
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Goodhope Plasterers CC T/A Goodhope Construction v Independent Development Trust and Another (5472/2013) [2014] ZAWCHC 67 (29 April 2014)
IN THE HIGH COURT
OF SOUTH AFRICA
(WESTERN CAPE
DIVISION, CAPE TOWN)
Case
Number: 5472/2013
REPORTABLE
DATE:
29 APRIL 2014
In the matter
between:
GOODHOPE
PLASTERERS CC trading as
GOODHOPE
CONSTRUCTION
...............................................................................
Applicant
And
THE INDEPENDENT
DEVELOPMENT TRUST
.....................................
First
Respondent
GVK-SIYA ZAMA
BUILDING CONTRACTORS
(PTY)
LTD
..................................................................................................
SecondRespondent
JUDGMENT
DELIVERED ON 29
APRIL 2014
SALIE-SAMUELS
A.J:
1. This application
concerns a review of a decision to award a tender and a subsequent
decision to withdraw the tender. The matter
came before me in terms
of Rule 53 of the Uniform Rules of Court, a review application in
respect of a tender process for the construction
of the new
Plettenberg Bay Magistrate’s Court building.
2. During July 2012
First Respondent (The Independent Development Trust, hereinafter
referred to as “the IDT”) invited
tenders for the
construction of the new court building, pursuant to which tenderers
submitted bids, inter alia, the Applicant (Goodhope
Plasterers CC
trading as Goodhope Construction, hereinafter also refered to as
“Goodhope”) and the Second Respondent
(GVK-Siya Zama
Building Contractors (PTY) Limited hereinafter refered to as GVK).
3. The Applicant was
represented in court by Mr Olivier SC assisted by Mr. Vivier.
Appearing for the First Respondent was Mr.Leech
SC assisted by Mr.
Mokutu.
4. On 14 November
2012 the IDT notified GVK in writing that the tender had been awarded
to it subject to certain conditions. The
other tenderers were
formally notified in writing of the outcome of the tender on 1
February 2013. On 19th February 2013 the IDT
notified GVK in writing
that the award of the tender to it had been withdrawn and reasons for
such withdrawal and cancellation
of the tender were given.
5. The Applicant now
seeks a review and setting aside of the IDT’s decision to award
the tender to GVK as well as the IDT’s
subsequent decision to
withdraw the tender. It further seeks an order that the tender be
awarded to itself (Goodhope) together
with ancillary relief as
provided for in Section 8 of the Promotion of Administrative Justice
Act, Act 3 of 2000 (“PAJA”).
6. The Application
was issued on 12 April 2013, for relief set out in the Notice of
Motion as follows:
“1.
Interdicting and restraining First Respondent from taking any steps
to call for new tenders in respect of tender with
reference: TENDER
NO: DOJ MC 02, PLETTENBERG BAY MAGISTRATES COURT (HEREINAFTER
REFERRED TO AS “THE TENDER”), pending
the final
determination of this application;
2. That First
Respondent’s decision to award the tender to Second Respondent
be reviewed and set aside;
3. That First
Respondent’s decision to withdraw the tender be reviewed and
set aside;
4. That the tender
be awarded to Applicant.
5. That First
Respondent be ordered to take all steps and do all things necessary
to put into effect the awarded tender.
6. That First
Respondent pay the costs of this application unless Second Respondent
opposes in which event Second Respondent be
ordered to be liable for
Applicant’s costs jointly and severally with First Respondent,
the one to pay, the other to be absolved…...”
7. IDT opposes the
application, while GVK has filed a notice that it would abide by the
decision of this Court.
8. In June 2012 the
IDT, upon the instructions of the Department of Justice, was mandated
to attend to the planning and implementation
for the construction of
the new Plettenberg Bay Magistrate’s Court. This instruction
follows a memorandum of agreement in
terms of which IDT has
undertaken to assist the Department with its “Construction of
New Courts Programme”, a project
which provides for the
construction of new court buildings and the provision of court room
furniture.
9. Pursuant to a bid
adjudication process of all submitted tenders by the tender
evaluation committee, it was recommended to the
tender adjudication
committee that the project be awarded to the second respondent, which
recommendation was approved. On 14 November
2012, a letter was
addressed to GVK informing it of its conditional appointment for the
implementation of the project.
10. Insofar as the
tender herein falls within the ambit of administrative action, the
evaluation of the tenders is subject to three
criteria, that being:
functionality, price and broad-based black economic empowerment
compliance. Points are awarded to the tenderers
according to the
assessment of each tender in respect of these criteria. The tenderer
who scores the highest points, is awarded
the tender. In particular,
the black economic empowerment criterion (hereinafter referred to as
“the B-BBEE-evaluation”)
constitutes 10% of the total
criteria, for which points are awarded on a scale of 1 to 10.
11. It was conceded
by the First Respondent that an error had been made in the tender
evaluation of the Applicant’s B-BBEE
status in that it was
incorrectly awarded 8 points as opposed to 9 points in light of its
level 2 B-BBEE status.
12. The First
Respondent further conceded that a calculation, allocating the
correct points in respect of Applicant’s B-BBEE
status, would
render the Applicant as the highest point scorer.
13. In
correspondence addressed to IDT by Goodhope’s attorneys on 4
and 11 February 2013, Goodhope pointed out this error
and insisted
that it was entitled to have been awarded the highest score in
respect of the tender. It was thus demanded that the
award of the
tender to GVK should be set aside and that the tender should be
awarded to Goodhope.
14. In the absence
of a favourable response by the IDT, Goodhope launched an urgent
application on 20 February 2013 (refered to
as the first application)
seeking (a) the review and setting aside of the IDT’s decision
to award the tender to GVK, and
(b) an order interdicting and
restraining the IDT from taking any steps to implement the tender.
15. On the same day
the IDT informed Goodhope that the award of the tender had been
cancelled, notice having been given to GVK on
19 February 2013 that
it was not in a position to negotiate and conclude a contract with it
and that its appointment under the
tender was withdrawn as a result
of the unavailability of funds, unresolved land issues and the
revised scope of works. The IDT
further informed the Applicant that
no contract would be concluded with the second respondent, that there
would be no site handover
and that a new tender would be advertised
in the new financial year. In the premise, the first application was
not proceed with.
16. It is not in
dispute that the project specifications or scope of the works and a
lack of clarity over the design specifications
of the new
Magistrate’s Court have become apparent. Mr. Olivier in fact
argued that the new scope of works is yet to be
determined and
finalised for the construction of this court building.
17. Mr. Leech argued
that whilst it is conceded that an error had occurred as alleged by
the Applicant during the tender evaluation
process, the correct
position of which dictates the Applicant as the highest scorer, the
actual scoring of the tenders is no longer
relevant. In
amplification of this contention, it is submitted that, in essence,
the revised scope of works to date sees a marked
difference between
the original scope of works and the new works against which new
tenders will be issued and that at present it
exceeds an approximate
30% difference in the scope of the works and 43% in the price or
value thereof.
18. Mr. Olivier
argued that upon awarding the tender, the IDT was functus officio and
thereby had no right to cancel the tender.
In the Founding Affidavit
the Applicant maintains that after IDT realised that it had
incorrectly awarded the tender to GVK it
could not itself change or
rectify this decision as it had by then become functus officio.
Further to that, inasmuch as the Applicant
ought to have been awarded
the tender, the IDT is bound to the successful bidder to address any
change in the scope of works within
the contractual boundaries which
it believes exist between the IDT and such bidder. That upon the
award of the tender to GVK,
the IDT was obliged to consult with GVK.
By way of such consultation process the three issues which is claimed
to be the cause
for the cancellation of the tender, that being,
unavailability of funds, unresolved land issues and the revised scope
of works
could be assessed and addressed so as to ultimately comply
with the suspensive conditions and that resort to cancellation of the
tender was simply not, in this factual context, an option available
to the IDT.
19. For the
Applicant, reference was made to the letter from the Bitou
Municipality dated 27 February 2013 and addressed to Town
Planning
Services which in effect gives permission to proceed in terms of
Section 7 of the National Building Regulations and Standards
Act with
construction and that the Department may take occupancy for
construction purposes accordingly. Mr. Olivier vehemently
argued
that site clearance was clearly imminent at the time when the tender
was withdrawn on 19th February 2013. The argument
follows that
there was no “real” unresolved land issue and that the
IDT raised this speedily as a front to proceed
to cancel the tender
when the error in the evaluation process came to their attention,
thereby avoiding the ultimate award of the
tender to the Applicant.
As for the increase in respect of the size of the building including
therein the further cost factors,
it is argued for the Applicant that
this specific issue could be accommodated under the provisions of the
JBCC contract.
20. In response to
the aforementioned argument, Mr. Leech maintained throughout the
hearing that the award of the tender to the
Second Respondent was
made subject to the conclusion of a contract and the meeting of other
suspensive conditions. Thus the tender,
he argued, was withdrawn and
cancelled before these conditions were met. The award of the tender
was thus never unconditional
and not a final appointment, thereby
leaving the functionary fully vested with its power to cancel and
withdraw the tender for
the reasons it had set forth. Furthermore,
it was argued for the First Respondent that in terms of Item 8(4) of
the Preferential
Procurement Policy Framework Act, 5 of 2000 (the
PPPFA) the power is expressly reserved unto the Trust to cancel a
tender (prior
to the award thereof) as a result of changed
circumstances or when there is no longer a need for the services or
works requested.
The word “award”, Mr. Leech submitted,
must be interpreted to mean a final award of the tender and that the
award
of the tender to GVK, being a conditional award, cannot be
deemed to be final.
21. What appears to
be a foregone conclusion is what the Applicant considers a paragon
position, perfectly suitable for the exceptional
circumstance as
ascribed by our courts whereby it will substitute its own decision
for that of a functionary who has a discretion
under the Act. In
other words, it would merely be a waste of time to order the
functionary herein to reconsider the award of the
tender. That
Goodhope scored more than GVK is argued by the Applicant to be the
end of the matter. On review, the Applicant
views this circumstance
to be ideal for the court to simply award the tender to Goodhope as
the highest scorer in the tender process.
22. I am not
convinced that the facts arising herein support the notion that the
decision sought from this court would be such with
which it could
proceed to effect what is considered a straightforward swop of the
Second Respondent for the Applicant. That is
not to say that our
courts do not recognise the possibility of usurping a decision made
by a functionary and with which the court
is fully familiar and
qualified to do. See Theron en Andere v Ring van Wellington van die
NG Sendingkerk in Suid-Afrika en Andere
1976 (2) SA 1
(A), where it
was held on appeal that a court could substitute its own decision for
that of the functionary because it was dealing
with a type of
decision with which it was fully familiar and referring the matter
back would serve no purpose. (See also University
of the Western
Cape and Others v Member of Executive Committee for Health and Social
Services and Others,
1998 (3) SA 124
at page 133 Would an order of
this court replacing GVK with Goodhope and the further relief sought
amount to the “type of
decision” as contemplated by our
leading authorities. I do not believe this to be the case. Taking
account of the authorities
directly in point, I am not convinced that
the matter before me allows for this Court to usurp the repository’s
powers or
functions. In my view a substantial deviation of the
original scope of works for the construction of the Plettenberg Bay
Magistrate’s
Court compels that such revised works require a
new tender process as contemplated in the PAJA..
23. The underlying
test to be applied by the Court in terms of its departure from the
general practice of remitting the matter back
to the administrator
has been well established in Johannesburg City Council v The
Administrator, Transvaal
1969 (2) SA 72
(T) at page 76 thereof. The
common law principles establishing the circumstances in which a court
will be prepared to substitute
an administrative decision were
clearly defined as:
23.1 The end result
is a forgone conclusion and it would be a waste of time to remit the
decision to the original decision maker;
23.2 Any further
delay would cause unjustifiable prejudice to the Applicant; and
23.3 The original
decision maker has exhibited bias or incompetence to such a degree
that it would be unfair to ask the Applicant
to submit to its
jurisdiction again.
24. In Gauteng
Gambling Board v Silver Star Development Limited
2005 (4) SA 67
(SCA), the court added a further principle that such decision may be
taken where the court is as well qualified to make that decision.
25. Mr. Olivier
primarily anchored his argument in support of this review application
premised on the principle that the end result
is a forgone conclusion
and it would be a waste of time to remit the decision to the original
decision-maker. At common law, correction
or substitution is the
exception rather than the rule.
1
The common law position is given statutory expression in the PAJA
which permits a court to substitute or vary the administrative
action, or to correct a defect resulting from the administrative
action, only in ‘exceptional cases’. In Gauteng Gambling
Board supra Heher JA indicated that remittal is almost always the
prudent and proper course. The reasons for this are not only
constitutional but also institutional in nature, since the
administrator is generally 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. The court
typically
has none of these advantages and is required to recognise
its own limitations. It follows therefore that this court is by no
means
qualified to make the decision to award the tender herein given
the fact that the prevailing circumstances fall squarely within
the
authority in point.
26. In the founding
affidavit it is made out that the First Respondent withdrew and
cancelled the tender capriciously because the
Applicant had become
aware of the mistake in the scoring of the tenders. Although not
specifically stated in the founding affidavit,
Mr Olivier argued
that the IDT acted arbitrary in the withdrawal of the award and
aborted the tender process, preventing the correction
of the award to
Goodhope.
27. Important
principles relating to the test for judicial review of administrative
action under the Constitution were laid down
in the case of The
Pharmaceutical Manufacturer’s Association of South Africa and
Another v The President of the Republic.
In point it is worthy to
record a statement of general principle made by the Court as the
basis upon which review applications
are to be considered.
“It is a
requirement of the rule of law that the exercise of public power by
the executive and other functionaries should
not be arbitrary.
Decisions must be rationally related to the purpose for which the
power was given, otherwise they are in effect
arbitrary and
inconsistent with this requirement.” (paragraph 85 thereof) -
emphasis my own.
28. In casu the
allegation of arbitrary conduct was denied by the First Respondent,
which denial was supported by the sequence of
events unfolding
particularly insofar as the original scope of works had indeed varied
substantially. The First Respondent’s
reasons for the
withdrawal and cancellation of the tender have been satisfactorily
dealt with and its denial of alleged arbitrary
action, in my view,
has been successfully ventilated in the papers.
29. Mr. Olivier’s
submission that it is not open to the Department of Justice to amend
the design of the building to such
an extent that it would in effect
denude the successful tenderer of its vested rights is, with respect,
untenable. The primary
purpose of the project is not so much to vest
a bidder with a contract, but indeed it was to provide the community
of Plettenberg
Bay a court building to function and serve the needs
for which it was created and provided for in the first place. To
restrict
the Department to an original building project, for which
upon revision, it no longer requires to the extent that the tender
had
been formulated, cannot by any stretch of the imagination be in
line of the relevant principles of administrative law.
30. It is of
particular relevance to bear in mind that in relation to the
procurement of services for the construction of the revised
scope of
works, the Department will lose the advantage of a competitive
bidding process, should this Court grant the relief sought
by the
Applicant. I do not agree that any revised scope of works should be
addressed within a contractual elastic polarised between
the
Applicant and the First Respondent. The Department is no doubt
subject to budgetary constraints and it would not be for a
Court to
impose upon it a contract for the building of a structure it may very
well not be able to finance. The tender process
must start afresh
for the construction of a building and furnishing thereof which could
properly and effectively serve the needs
of the Plettenberg Bay
community. Accordingly I do not see any basis upon which this court
could set aside the IDT’s decision
to withdraw the tender. To
this end, I find that the functionary’s indication to open a
fresh tender process for the reviewed
scope of works is not only
reasonable but indeed the only avenue available to secure a tender
process for the building of the magistrate’s
court,
substantially revised from the original tender. It was not per se
argued that such resort would prejudice the Applicant
inasmuch as the
Applicant’s tender price or formulation for quoting had by way
of the original tender process been exposed.
However, that I had
taken it into account need be stated as well as the prejudice of
wasted costs of preparation/presentation
of tender costs, to which my
view is that the anticipated fresh tender appears clearly to be for a
vast variation of the original
tender and that such prejudice pales
into insignificance given the overall position that the tender would
be drastically different,
albeit still for a court building.
Further to this it is within the nature of the building trade and
industry to incur costs
in the preparation of tenders, accepting with
it the risk that such costs may be in vain should the bidder not
secure a final contract
in respect of the tender which could be for
any one of a multitude of reasons. This rationale must be viewed
within the legislative
framework. Section 217 of the Constitution of
the Republic of South Africa 1996 (as amended) which states:
“217.
Procurement.-
(1) Where an organ
of state in the national, provincial or local sphere of government,
or any other institution identified in national
legislation,
contracts for goods or services, it must do so in accordance with a
system which is fair, equitable, transparent,
competitive and
cost-effective.”
31. Furthermore one
of the objects of the Public Finance Management Act, Act 1 of 1999 is
to ensure transparency, accountability
and sound management of the
revenue expenditure, assets and liabilities of the institutions to
which it applies.
32. A fresh tender
process for a court building (substantially different to the original
plan) would compel that the procurement
for the construction of the
building and supply of court room furniture (as amended) must be done
in accordance with a competitive
and cost-effective manner with the
requirements that such process also be fair, equitable and
transparent. This very framework
would hopefully be honoured with
the strictest application in the anticipated fresh tender process and
the First Respondent’s
attention is respectfully drawn thereto.
33. Mr. Olivier also
argued that upon awarding the tender to GVK, IDT had become functus
officio and was thereby not entitled to
make further decision in
respect of the tender and more particularly was not entitled to
withdraw it. The question at this juncture
begs: Was the trust (IDT)
after awarding the tender to GVK entitled to withdraw and cancel the
tender? If a public body has made
a decision which it afterwards
discovers to be
2
based
upon an error of fact or law it appears that it will nevertheless
still be functus officio irrespective whether the error
was within or
beyond its discretionary powers. 2 In Jacobsen v George Licensing
Court
1934 CPD 452
the court held that where a member of the
licensing court had voted under a misapprehension, he was allowed to
change his mind
once he had discovered his error. However, the
decision appears to be based on the court’s view that the
licensing court
had not yet completed its proceedings (at page 455
thereof). In the circumstance, the fact that the tender was awarded
subject
to conditions, amounts similarly to administrative action not
yet completed. Wherefore the IDT could not be held to have been
functus officio upon the award of the tender to GVK.
34. Having addressed
the above issues, it would be nonetheless pertinent to address the
case for the Applicant, that being, that
upon the award of the tender
to the successful bidder, it has vested such bidder with a legitimate
expectation, from which certain
consequences in law flow, limiting
the functionary’s power to cancel the tender without
consultation. Differently put, Applicant
contends that the First
Respondent was not entitled to simply cancel GVK’s award of the
tender as it had in fact done by
written notice on 19 February 2013.
That upon an award of a tender to a bidder, such bidder is vested
with a legitimate expectation
and the functionary is not by any means
free to unilaterally cancel the award, Mr. Leech argued that, the
award of a conditional
tender, at best offers the successful bidder
with a spes. In other words, a hope to contract in the future. I
disagree that a
successful bidder within the scope of administrative
law enjoys no more than a spes (hope). Indeed, the conditionally
successful
bidder enjoys a legitimate expectation. In those
circumstances, it is vested with an expectation to be the contracting
party upon
the fulfilment of the suspensive conditions or, at the
very least, an expectation to be heard before an adverse decision can
be
made.
35. In University of
the Western Cape and Others v Member of Executive Committee for
Health and Social Services and Others, supra
at page 133 Hlophe J (as
he then was) deals with the English doctrine of legitimate
expectation in South African administrative
law. The learned Judge
addresses this doctrine with reference to the authority,
Administrator, Transvaal and Others v Traub
and Others
[1989] ZASCA 90
;
1989 (4) SA
731
(A) whereat the Appellate Division affirmed the importance of the
doctrine in our law. The principle was clarified in our law to
mean
that it covers an expectation which goes beyond enforceable legal
rights, provided it is well grounded. In National Director
of
Public Prosecutions v Phillips
2002 (4) SA 60
(W) the courts
described the requirements of legitimacy as including:
(i) a reasonable
expectation that was
(ii) induced by the
decision-maker based on
(iii) a clear,
unambiguous representation which was
(iv) competent and
lawful for the decision-maker to make.
In the matter of
South African Veterinary Council and another v Szymanski 2003 (4)
BCLR378 (SCA) the court further clarified that
the representation
must be one which was competent and lawful for the decision-maker to
make “without which the reliance
cannot be legitimate”.
36. In the matter
before me, it would be absurd to consider an error in the
adjudication of a tender that such erroneous award nonetheless
affords the recipient a legitimate expectation and furthermore
entitles it to the benefit of the consequences recognised in our
law.
To bolster a legitimate expectation born from an administrative
error, such as herein, would not meet the requirement of
being based
on a representation which was competent and lawful for the
decision-maker to have made.
37. Before this
court, the Applicant views the award to GVK to mean that as the
successful bidder it is entitled to a legitimate
expectation,
entitling it to be consulted upon with the dawning of hurdles in the
subsequent continuation of planning and administration
of the project
with the view to address it within the entitlement of a final
contract. In so doing, the Applicant argues that
it (as the actual
highest scorer) is to usurp GVK’s position and entitlement in
law and ultimately be the contracting party
to the project.
38. The question
arises, was GVK as the recipient of the conditional tender entitled
to the audi alterem partem rule? That an error
had been made and
which had come to light, means that GVK had no entitlement or any
legitimate expectation to start off with.
Strictly speaking, the
tender had not been awarded in the first place and as matters stand
had been withdrawn by the functionary
as it is empowered to do within
specific circumstances in terms of regulation 8(4) of
Preferential
Procurement Policy Framework Act, 5 of 2000
.
I consider the
variation in the building works initially tendered for to be a
changed circumstance as required by the aforesaid
regulation. The
IDT is also entitled to cancel the tender at any time prior to the
formation of the contract in terms of the
Construction Industry
Development Board Act, 38 of 2000
.
39. In light of the
conclusion to which this Court has come, I do not deem it necessary
to deal with other arguments advanced for
the purposes of this
judgment including the points in limine raised by Mr. Leech. In all
circumstances, the application is accordingly
dismissed with costs.
SALIE-SAMUELS, AJ
1
Cora
Hoexter, Administrative Law in South Africa, (Second Edition) Page
552 -553
2
Lawrence
Baxter: Administrative Law page 375