Exilaclox (Pty) Ltd v MEC, Provincial Department of Roads and Public Works, Northern Cape Province and Another (1615/2019) [2020] ZANCHC 57 (15 April 2020)

IN THE HIGH COURT OF SOUTH AFRICA

(NORTHERN CAPE DIVISION, KIMBERLEY)

Case no: 1615/2019 Date heard: 20/02/2020 Date available: 15/04/2020 In the matter between: EXILACLOX(PTV)LTD Applicant and MEC, PROVINCIAL DEPARTMENT OF ROADS & PUBLIC

WORKS, NORTHERN CAPE PROVINCE

1st Respondent

MEC, PROVINCIAL DEPARTMENT OF TREASURY,

NORTHERN CAPE PROVINCE

2nd Respondent

JUDGMENT

DAUDS AJ

[1]

This matter involved an application that was brought by the Applicant on 25 July 2019 wherein the Applicant sought several forms of relief, including:

1.1 that the application be heard on an urgent basis;

1.2 that the 1st Respondent be ordered to immediately proceed with the implementation of the terms of a tender in respect of which the review Court

declared the Applicant to be the preferred bidder - in other words, that the review Court's order declaring the Applicant as the

preferred bidder be read as though that Court had awarded the tender to the Applicant even in the absence of such express words;

1.3 that the 1st Respondent be interdicted from re-advertising the tender after cancelling it;

1.4 a declarator that the 1st Respondent had failed to comply with paragraph 4 of the review Court's order dated 21 July 2017 in that the 1st Respondent had failed to negotiate with the Applicant the requirements and finishes of the building sought by the 1st Respondent and to do so in strict compliance with the terms of reference and the building specifications.

1.5 a punitive costs order against the 1st Respondent.

[2] The matter was heard on 18 October 2019 and judgment delivered during November 2019. The Court dismissed the Applicant's application with costs. The Applicant then delivered an application for leave to appeal on 17 December 2019.

[3] The Applicant set out three grounds of appeal in its application. They included the following (and I quote):

"FIRST GROUND OF APPEAL

1. The Court erred in finding (in para. [23]) that the order granted by this Honourable Court in the review application ('the Review Court') on 21

July 2017 could not have been intended as an award of the tender to the Applicant.

2. The Court ought to have held that:

2.1 the order of the Review Court constituted an award of the tender to the Applicant;

2.2 the relief sought in the notice of motion (to the exclusion of prayer 1) be granted

SECOND GROUND OF APPEAL

3. The Court erred in finding (in para. [23]) that there was a distinction to be drawn between a declaration as a preferred bidder and the award of the tender by the making of a substitution order, to the extent that it had the effect, in the present matter, that the declaration of the applicant as the preferred bidder did not constitute an award of the tender to the applicant

4.

The Court should have held that, on application of the proper contextual interpretation of the judgment and order (by considering from the outset the context and the language together, with neither predominating over the other)(Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) at [191) the declaration of the application as the preferred bidder constituted an unconditional award of the tender to the applicant

5.

fn particular, but without derogating from the contextual interpretation of the judgment and the order, the court should have considered the following findings and orders in interpreting the import and effect of the declaration of the applicant as the preferred bidder and considered the declaration of the applicant as the preferred bidder as an award of the tender by substitution order:

5.1

5.2

THIRD GROUND OF APPEAL

6.

The Court erred in finding (in para. [28]) that the tender documents made it clear that the aspects referred to in paras. [24], [25} and [26} of the judgment still had to be negotiated before the tender could be awarded and by finding (in para. [33] of the judgment) that:

'In these circumstances, it would be difficult to draw the reasonable conclusion that the first respondent had any intention to contract with the applicant. In other words, it lacked animus contrahendi'

7.

The Court should have held that:

7.1 First, the Review Court made it clear in the judgment that it granted an order substituting the order of [sic] the decision of the organ of state with its own decision as contemplated in section

8(1)(c)(ii)(aa) of the Promotion of Administrative Justice Act, 3 of 2000;

7.2 In granting the aforesaid order the Review Court gave effect to the terms of the tender by making allowance for the negotiation between the parties of minor 'incidentalia' to the contract that came into being in the award of the tender by substitution order and, for this reason, formulated the order as it did;

7.3 Second, negotiations outside of the strict terms of reference (including the contents of the applicant's tender) and building specifications were at variance and in breach of the substitution order that limited the negotiations to the requirements and finishes to the building offered by the applicant in its tender and in strict accordance with the terms of reference and the building specifications;

7.4

7.5

...

7.6

7.7 ...

7.8 The issue of parking and office space were not issues that were still open for negotiation, outside of the strict terms of reference

(including the contents of the applicant's tender) and the building specifications;

7.9

7.10 Third, the negotiating and contracting of an agreement at variance with the strict terms of reference, building specifications and the content of the applicant's responsive tender would offend the tenets of procurement law and it would be inimical to the constitutional imperatives of section 217 of the Constitution of the Republic of South Africa, 108 of 1996

7.11 .. .

7.12 . . ."

Issues in the Application for Leave to Appeal

[4] When the matter was heard on 20 February 2020, Mr Els (for the Applicant) indicated at the outset that the application for leave to appeal was proceeding only in respect of the issue surrounding the parking space and the issue surrounding the size of the office space.

[5] In other words, the leave to appeal was no longer proceeding in respect of the issue of whether the fact that the review Court's order that the Applicant was declared the preferred bidder had the effect of awarding the tender to the Applicant or constituted an unconditional award of the tender to the Applicant. Having regard to the formulation of the Applicant's application for leave to appeal, it was apparent that it

was no longer proceeding with its pt and 2nd grounds of appeal - only the third which

involved the issue of parking and the size of office space.

Consideration of Applicant's Third Ground of Appeal

[6] Paragraph 4 of the review Court's order is clear it ordered the 1st

Respondent to:

"negotiate with Exilaclox the requirements and finishes which the building must comply with and [to] do so in strict compliance with the terms of reference and the building specifications"

The terms of reference in this regard could only mean the tender terms of reference, all of which formed part of the tender documents.

[7] The review Court did not venture an opinion on which terms of the tender or which building specifications were relevant or irrelevant, or which were crucial or important, or which terms of the tender or building specifications were merely incidental or minor. Nor did the review Court venture an opinion on whether the scope of the terms of reference of the tender or the scope of the building specifications ought to be limited in any way whatsoever. In its order, the review Court also did not specify whether any of the items were negotiable or whether any were non-negotiable.

[8] The tender documents were clear - under the heading "SPECIFICATION FOR ADDITIONAL REQUIREMENTS AND FINISHES TO WHICH THE BUILDING MUST COMPLY" it is apparent that a number of items had to be negotiated between the 1st Respondent and a (preferred) bidder before the actual award of the tender. The tender documents also required the preferred bidder to submit a detailed implementation plan with regard to those additional items spelled out in the documents. The relevant parts of the tender documents which illustrate the point are the following:

"SPECIFICATION FOR ADDITIONAL REQUIREMENTS AND FINISHES TO WHICH THE BUILDING MUST COMPLY:

NB: The additional required items are subjected to negotiation prior the awards [sic], preferred bidder will be required to submit detailed implementation plan with regard to additional items"

"COMPLIANCE REQUIREMENTS

NB: The compliance required items are subjected to negotiation prior the awards [sic], preferred bidder will be required to submit detailed implementation plan with regard to compliance items"

[9] The list of compliance items included the carpets or tiles for flooring, the security doors to be fitted on all external doors as well as the store room, the burglar bars to be fitted on all windows, the demarcation of the waiting room, the air-conditioning in all offices and the storeroom, the blinds on all windows, the double power skirting in all offices, the accessibility of the office building to people with disabilities, the emergency escapes which includes fire-fighting equipment and signage and compliance with building regulations.

[10] Under the following heading of the tender documents "TERMS OF REFERENCE AND BUILDING SPECIFICATION REQUIREMENTS FOR LEASE OF OFFICE ACCOMMODATION ON BEHALF OF THE DEPARTMENT OF PROVINCIAL TREASURY AT FRANCES BAARD DISTRICT, KIMBERLEY", particularly on page 381, an extensive list of the number of items forming part of the terms of reference and building specification appeared. They included the waiting area of the office building, the conference room, the registry, the strong room, the boardroom, the reception area, the security/control room, the cleaners' rest room, the disabled toilet facility, the warehouse, the training facility, the sick bay, archive registry, registry, the kitchen, the covered parking, the secured parking, the visitors' parking [my emphasis] and the full toilet facilities. In its order, the review Court did not specify whether or which of these items were negotiable or non-negotiable. Nor did the review Court limit negotiation of any of these items.

[11] It was common cause that after two meetings (on 17 April 2019 and 23 May 2019) and several pieces of correspondence going back and forth between the 1st Respondent and Applicant, the parking issue remained a bone of contention between them. This issue was extensively dealt with by the 1st Respondent's attorneys in their correspondence to the Applicant's attorneys. The parties simply could not find any agreement on the parking issue. And it appeared that until this issue was resolved, there was no prospect of the parties ever concluding a contract.

[12] In paragraph 7.2 of its Application for Leave to Appeal, under its third ground of appeal, the Applicant contends that this Court should have held that in making its order, "the review Court gave effect to the terms of the tender by making allowance for the negotiation between the parties of the minor 'incidentalia' to the contract that came into being in the award of the tender by substitution order and, for this reason, formulated the order as it did". While it is correct that the review Court ordered the pt Respondent to negotiate with the Applicant in regard to the requirements and finishes of the office building required by the 1st Respondent and to do so in strict compliance with the terms of reference of the tender and the building specifications, no contract ever came into being by way of, or as a result of, the review Court's order - nor did the Court's order constitute an award of the tender to the Applicant.

The Stellenbosch Law Review article

[13] Mr Els provided the Court with a copy of the 2006 article authored by Dr Phoebe Bolton (as she then was) and at the time associated to the University of the Western Cape. The article was published in, if I understand it correctly, 17 Stellenbosch L. Rev. 266 (1). The article was provided to purportedly demonstrate or in support of the argument that the ist Respondent sought to improperly conduct negotiations outside the strict terms of reference of the tender which, according to the Applicant, were at variance with and in breach of the review Court's order which purportedly limited the number of items the parties could negotiate.

[14] The article bears the title "SCOPE FOR NEGOTIATING AND/OR VARYING THE TERMS OF GOVERNMENT CONTRACTS AWARDED BY WAY OF A TENDER PROCESS". While the Applicant sought to argue that the review Court's order constituted an award of the tender to itself or had the effect of awarding the tender to the Applicant, it is a fact that the review Court never made an order in such terms, namely, of awarding the tender to the Applicant. Nor did the 1st Respondent itself award the tender to the Applicant. Accordingly, no contract ever existed between the 1st Respondent and the Applicant. That the Applicant misguidedly interpreted the review Court's order as an unconditional award of the tender to itself (even in the absence of such language in the Court's order) does not mean that the tender was ever actually awarded to the Applicant, nor that a contract ever came into being between the pt Respondent and the Applicant as a result of the order. In other words, no government contract was ever awarded to the Applicant by way of a tender process.

[15] It is apparent that Dr Bolton's article deals with the negotiation and/or variation of the terms of government contracts awarded (my emphasis) after a bidder had been successful in the tender process. For instance, Dr Bolton writes as follows on p. 267 of her article:

"Limits are placed on the scope for negotiating the terms of a contract after the award [my emphasis] of a tender. Limits are placed on varying the terms of the contract after its conclusion. In this article, attention will be given to the application of the principles in section 217(1) of the Constitution to contracts awarded [my emphasis] by way of a tender process at all three levels of government, namely, national, provincial and local"

[16] On p. 268 she writes that: "First, a brief overview will be given of the meaning of the different principles in section 217(1) of the Constitution. The focus will then shift to the negotiation and/or variation of the terms of contracts awarded [my emphasis] by way of a tender process".

[17] The author repeats the focus of her article on p. 270 where she writes that: "In light of the broad discussion above of the different principles in section 217(1) of the Constitution, it is clear that an organ or State and the selected contractor are not, and cannot be, at liberty to negotiate the terms of the contract to be concluded after the award of a tender [my emphasis]"

[18] On p. 272 the author writes further as follows:

"Most relevant for present purposes is that an organ of State must give 'adequate notice of the nature and purpose of the proposed

administrative action'. In the procurement context, this requirement can be said to give rise to four entitlements for tenderers:

• sufficient access to tender competition;

• timeous notification of the closing date for submission of tenders;

■ information on evaluation and selection criteria; and

■ the right to expect and require the organ of State calling for tenders to abide by the criteria laid down in its tender call

It is particularly the last two entitlements that have a direct impact on negotiation and/or variation of the terms of contracts awarded [my emphasis] by way of a tender process"

[19] First of all, the Applicant, during its counsel's (Mr Nel's) address to the Court when the application for leave for appeal was heard on 20 February 2020, expressly abandoned the ground of appeal which contained the contention that this Court should have held that the review Court's order constituted an unconditional award of the tender to the Applicant and that the relief sought in this regard in the Notion of Motion of its main

application should have been granted. Both this, which was the Applicant's first ground of appeal, and its second ground of appeal which constituted an elaboration of the first, were abandoned. In other words, there can no longer, even from the Applicant's perspective, be any talk of the review Court awarding the tender to the Applicant by way of its order, nor can there be any talk of a contract having come into existence between the parties as a result of the review Court's order. This issue simply does not arise any longer.

[20] In any event, as illustrated in paragraph 12 above, the review Court's order, as far as this Court is concerned, did not constitute an award of the tender to the Applicant, nor could any contract have come into being between the parties as a result of the review Court's order.

[21] Mr Els' reliance on the Stellenbosch Law Review article was thus entirely misplaced.

Order

[22] Having considered the application for leave to appeal as well as the submissions in support thereof, this Court is of the opinion that the appeal has no reasonable prospect of success. The application for leave to appeal is accordingly denied with costs.

For the Applicant: Adv. APJ Els

Attorneys for the Applicant: Waldick Jansen van Rensburg Attorneys, Centurion c/o Duncan & Rothman Inc, Kimberley

For the 1st Respondent:

Adv. WA Van Aswegen

Attorneys for the 1st Respondent: Peyper Attorneys, Bloemfontein c/o Haarhoffs Inc, Kimberley