Govan Mbeki Municipality v New Integrated Credit Solutions (Pty) Ltd (1168/2017) [2019] ZAMPMHC 24 (3 December 2019)

Govan Mbeki Municipality v New Integrated Credit Solutions (Pty) Ltd (1168/2017) [2019] ZAMPMHC 24 (3 December 2019)

The court found that the contract between the plaintiff and defendant was procured under Regulation 32, which requires that the original contract be secured by a competitive bidding process. The evidence established that the portion of the contract relating to debts younger than 60 days was not subject to any competitive bidding and was simply awarded to the defendant, contrary to section 217 of the Constitution and Regulation 32. The court held that all conditions of Regulation 32 must be met conjunctively, and failure to comply with the competitive bidding requirement rendered the relevant portion of the contract unconstitutional and invalid. The court further found that the unlawful...

Citation
[2019] ZAMPMHC 24
Parties
Plaintiff: Govan Mbeki Municipality; Defendant: New Integrated Credit Solutions (Pty) Ltd
Court
Middelburg High Court, Mpumalanga
Jurisdiction
South Africa
Judgment Date
3 December 2019
Case Number
1168/2017
Procedural Posture
Review Application / Final Judgment After Trial
Outcome
The court declared the portion of the contract relating to 2.5% commission for debts younger than 60 days unconstitutional, invalid, unlawful, and void ab initio. The defendant is not entitled to recover any compensation for such debts. Costs were awarded to the plaintiff.
Judges
Brauckmann
Legal Topics
Municipal Procurement, Regulation 32, Section 217 Constitution, Declaratory Relief, Severance of Contract, Unlawful Contract
Administrative Law Civil Procedure Commercial and Corporate Municipal Procurement Regulation 32 Section 217 Constitution Declaratory Relief Severance of Contract +1 more

Case Brief

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Parties

Govan Mbeki Municipality

Plaintiff

New Integrated Credit Solutions (Pty) Ltd

Defendant

Procedural Posture

Review Application / Final Judgment After Trial

Legal Issues

  1. 1 Whether the contract between the plaintiff and defendant for debt management services was validly procured under Regulation 32 of the Municipal Supply Chain Management Regulations.
  2. 2 Whether the inclusion of a 2.5% commission for debts younger than 60 days in the contract was unconstitutional, invalid, and unlawful.
  3. 3 Whether the contract, or the impugned portion, should be declared void ab initio and severed from the remainder of the agreement.

Ratio Decidendi

The court found that the contract between the plaintiff and defendant was procured under Regulation 32, which requires that the original contract be secured by a competitive bidding process. The evidence established that the portion of the contract relating to debts younger than 60 days was not subject to any competitive bidding and was simply awarded to the defendant, contrary to section 217 of the Constitution and Regulation 32. The court held that all conditions of Regulation 32 must be met conjunctively, and failure to comply with the competitive bidding requirement rendered the relevant portion of the contract unconstitutional and invalid. The court further found that the unlawful...

Court Disposition

The court declared the portion of the contract relating to 2.5% commission for debts younger than 60 days unconstitutional, invalid, unlawful, and void ab initio. The defendant is not entitled to recover any compensation for such debts. Costs were awarded to the plaintiff.

Orders

  • The reference to 'as well as 2.5% to debt collected to customers under 60 days' contained in clause 6.2.5 of the contract for provision of debt management services is declared unconstitutional, invalid, unlawful, and void ab initio.
  • The defendant will not be entitled to recover any compensation or commission in respect of debts recovered by the plaintiff from customers under 60 days for the duration of the agreement.