Iziqhamo Zethi JV Noble Money v Walter Sisulu Local Municipality and Others (3730/18) [2019] ZAECGHC 32 (26 March 2019)

IN THE HIGH COURT OF SOUTH AFRICA

(EASTERN CAPE DIVISION – GRAHAMSTOWN)

CASE NO: 3730/18

IZIQHAMO ZETHU JV NOBLE MONEY

Applicant

and

WALTER SISULU LOCAL MUNICIPALITY

1ST Respondent

THE MUNICIPAL MANAGER: WALTER

SISULU LOCAL MUNICIPALITY

2ND Respondent

THE ADMINISTRATOR: WALTER

SISULU LOCAL MUNICIPALITY

3RD Respondent

AMADWALA CONSTRUCTION TRADING 363 CC

(Registration Number: 2005/022765/23)

4TH Respondent

JUDGMENT

MBABANE AJ

Introduction

[1] The applicant is seeking confirmation of an interim interdict pendete lite.

[2] On 14 December 2018, an urgent application was launched by the applicant. The application was served on the first to third respondents on 18 December 2018, and the only respondent that received service of the application on the 14th December 2018 was the fourth respondent. The application was opposed by the first and second respondents and there was no

opposition from the third and fourth respondents. The third respondent was the administrator of the first respondent that was appointed in terms of section 139(1)(c) of the Constitution of the Republic of South Africa.[1] At the time of the hearing of the matter, the first respondent was no longer under administration hence the third respondent did not participate in the proceedings.

[3] The matter was heard on 20 December 2018 and an interim order was granted on 21 December 2018 by my sister Robertson J in terms of which the following order was made: -

“1 A Rule Nisi is issued, calling upon the first, second and fourth respondents to provide reasons, if any, on the 5th day of February 2019 at 9:30 why the following order should not be finally made:

1.1 the first and fourth respondents are interdicted and restrained from performing any rights and obligations (including the works) arising from Tender Bid number 66/2018 pertaining to the tender known as “Upgrading of Dukathole internal streets from gravel to paving” (“the Tender”) pending the outcome of an application to be brought by the applicant for the reviewing and setting aside of the award of the tender to fourth respondent.

1.2 directing the applicant to file its review application in respect of the award of the tender, within thirty (30) days of date of this order, failing which this order will automatically lapse.

1.3 that the first respondent be ordered to pay costs of this application and in the event of it being opposed by any of the other respondents that the first respondent together with such respondents who oppose the application be ordered to pay the costs jointly and severally.

2 the order contained in paragraph 1.1 shall have immediate effect and operation, pending the final adjudication of this application.

3 the sheriff is authorised to serve a photocopy of this order upon first, second and fourth respondents.”

[4] The order granted on 21 December 2018 is seemingly ‘interim-interim order’ hence the return date is to decide whether to confirm the interim order or not.

[5] Subsequent to the granting of the order, the fourth respondent delivered a notice of opposition and an answering affidavit on 14 January 2019. The first and second respondents delivered their supplementary answering affidavits on 01 February 2019. On the date that was scheduled for hearing of the matter, 05 February 2019, the applicant argued that the supplementary answering affidavits were filed out of sequence and that the leave of the court was not sought before such could be admitted as part of the affidavits to be considered. I made an order that the supplementary answering affidavits were not filed out of sequence but were filed in compliance with the order of 21 December 2018, which invited them to show cause why the order should not be finally made. The only way the respondents could have shown cause was to file affidavits, which is what they did on 01 February 2019. There is therefore no basis for the submission that the supplementary answering affidavits were filed out of sequence.

[6] Being confronted with the fact that they did not reply to the supplementary answering affidavits, the applicant sought a postponement of the matter. Since the rule nisi was returnable on 05 February 2019 (date for unopposed roll), a letter dated 24 January 2019 (delivered on 30 January 2019) was received from Netteltons Attorneys (local attorneys for the applicant), requesting that the matter be accommodated on the opposed roll on 07 February 2019. I reminded the applicant’s counsel about the letter to highlight the fact that they have indicated in that letter that they are available to have the matter being heard on 07 February 2019. Moreover, this application was brought on an urgent basis and any undue delay was going to frustrate the very same urgency that the applicant sought. I ordered that the matter be heard at 14h00 on 07 February 2019 and that the applicant file its replying affidavit to the supplementary affidavit by 14h00 on 06 February 2019.

The facts

[7] The facts giving rise to the dispute between the parties can be summarised as follows. The first respondent invited tenders for ‘Upgrading of Dukathole internal streets from gravel to paving’ (Tender Bid number 66/2018). According to the tender notice, the following are some of the conditions that applied:

(i) A current tax clearance certificate (original) or tax compliant status pin must be supplied with the tender or the tender the tender will not be considered and in case of a [Joint Venture] JV a tax clearance certificate (original) or tax compliant status pins for both companies must be supplied.

(ii) The municipal rates and taxes or municipal charges owed by the preferred bidder or any of its directors, to the municipality or municipal entity, or to any other municipality or its entity, must not be in arrears for more than three months.

(iii) The tenders will be evaluated on the 80/20 preference points system as prescribed in the [Preferential Procurement Policy Framework Act] PPPFA.

(iv) Adjudication criteria will be 80 points for price and 20 points for B-BBBEE status.

(v) Potential service providers will have to achieve a minimum of 75 points out of 100 for their technical proposals before their financial proposals and B-BBEE status are evaluated.

[8] The closing time and date for the tender submissions was 12h00 on 06 November 2018. According to the tender evaluation report, there were nine tenders that were received on time in respect of both tenders.

The evaluation of the tender

[9] The evaluation report reveals the following:

(a) That, according to the bid evaluation committee, the fourth respondent did not comply with the tender requirements and deemed non-responsive because: -

(i) Tax status could not be verified due to company (fourth respondent) submitting contradicting tax related documents.

(ii) According to the [Central Supplier Database] CSD report dated 21 September 2018, the tax affairs of the company are non-compliant.

(iii) According to the [South African Revenue Service] SARS report issued on 04 June 2018 expiring on 04 June 2019, the tax affairs of the company are compliant.

(b) That the applicant’s tender complied with the tender requirements and was deemed responsive.

(c) That only the applicant was deemed to be responsive, and thus evaluated for functionality.

(d) That the applicant scored 70.5 points for functionality.

(e) That since the applicant was the only bidder that was remaining, it was recommended that it proceeds for further evaluation notwithstanding its failure to meet the required minimum threshold of 75 points.

The adjudication of the Tender

[10] The tender the adjudication report reveals that the adjudication committee seems to have re-evaluated the submitted bids and made its own findings. The following are its findings regarding the applicant and the fourth respondent: -

(a) That the applicant did not comply with the tender requirements and was deemed non-responsive.

(b) That the fourth respondent complied with the tender requirements and deemed responsive as they submitted a valid tax clearance certificate and the SARS pin number to verify its tax matters and the results were that it is tax compliant with SARS. That a SARS verification was done on 21 November 2018 from the SARS website and the tax affairs were found to be in good order.

(c) That the fourth respondent scored 99 points for functionality and therefore considered for further evaluation.

(d) That the fourth respondent was the only tenderer that was found to be responsive and eligible for further evaluation.

(e) That the adjudication committee concluded to recommend that the tender be awarded to the fourth respondent.

Issues

[11] At the heart of this application is the decision by the adjudication committee of the first respondent to overturn the recommendations of the evaluation committee and the reasons given thereat.

[12] The issue of the urgency was canvassed and dealt with when the matter was heard on 20 December 2018 and it was held that the matter was urgent. It is therefore unnecessary to deal again with this aspect again because there is an existing finding that the matter is urgent.

Legal framework

[13] The right which the applicant seeks to protect can be located in section 3 of the Promotion of Administrative Justice Act,[2] (“PAJA”) which requires that the administrative action which materially affects the rights and legitimate expectation of any person must be procedurally fair.

[14] The fourth respondent raised as a point in limine section 62 of the Systems Act.[3] It is contended by the fourth respondent that the applicant cannot succeed in the application for an interdict because it failed to first pursue the internal remedies before approaching the court for the relief sought. Section 7 of PAJA requires that available internal remedies are exhausted prior to the institution of review proceedings (emphasis added). This argument is misplaced in my view because these are not review proceedings but an application for an interim

interdict pending the finalisation of the review proceedings. In addition, section 62 of the Systems Act does not provide for an interim relief pending the finalisation of the internal appeal process and the impugned decision may easily be implemented whilst the appeal process is still pending and thus rendering an appeal process ineffective. Accordingly, there is no merit to this submission.

[15] In order for an application for an interim interdict to succeed, the applicant must satisfy the court that the following requirements exist:

(a) prima facie right;

(b) reasonable apprehension of irreparable harm;

(c) balance of convenience in favour of the granting of interim relief;

(d) the absence of any other satisfactory remedy.[4]

[16] The applicant must make out a case that he or she is entitled to a final relief in the main case in order to establish a prima facie right entitling him or her to an interim interdict.[5] This presupposes the need to do a preliminary assessment of the merits of the applicant’s main case. This is also linked to the balance of convenience. Holmes J (as he then was) in Olympic Passenger Service[6] held that:

“It thus appears that where the applicant’s right is clear, and the other requisites are present, no difficulty presents itself about granting an interdict. At the other end of scale, where his prospects of ultimate success are nil, obviously the Court will refuse an interdict. Between those two extremes fall the intermediate cases in which, on the papers as a whole, the

applicants’ prospects of ultimate success may range all the way from strong to weak. The expression ‘prima facie

established though open to some doubt’ seems to me a brilliantly apt classification of these cases. In such cases,

upon proof of a well-grounded apprehension of irreparable harm, and there being no adequate ordinary remedy, the Court may grant an interdict – it has discretion, to be exercised judicially upon a consideration of all the facts. Usually this will resolve itself into a nice consideration of the prospects of success and the balance of convenience – the stronger the prospects of success, the less need for such balance to favour the applicant: the weaker the prospects of success, the greater the need for the balance of convenience to favour him. I need hardly add that by balance of convenience is meant the prejudice to the applicant if the interdict is refused, weighed against the prejudice to the respondent if it be granted.”

[17] There are various court decisions regarding the test for a prima facie right in the context of an application for an interim interdict. In Simon,[7] the Supreme Court of Appeal (SCA) held:

“The accepted test for a prima facie right in the context of an interim interdict is to take the facts averred by the applicant, together with such facts set out by the respondent that are not or cannot be disputed and to consider whether, having regard to the inherent probabilities, the applicant should on those facts obtain final relief at the trial. The facts set up in contradiction by the respondent should then be considered, and if serious doubt is thrown upon the case of the applicant he cannot succeed.”

[18] In Spur Steak Ranches Ltd[8], Selikowitz J held as follows:

“…the requirement for a right pima facie established, though open to some doubt, involves two stages. Once the prima facie right has been assessed, that part of the requirement which refers to the doubt involves a further enquiry in terms whereof the court looks at the facts set up by the respondent in contradiction of the applicant’s case in order to see whether serious doubt is thrown on the applicant’s case and if there is a mere contradiction or unconvincing explanation, then the right will be protected. Where, however, there is serious doubt then the applicant cannot succeed.”

[19] The same dictum was again echoed in Msunduzi Municipality[9] as it was held as follows:

“The prima facie right which needs to first to be identified by the applicant is one which is of course, in less stringent terms than one where an applicant claims a final interdict. This means that the applicant bears the onus to place sufficient evidence before the court to show the existence of a right even though by reason of denials by the respondent, some doubt is thrown into the existence of that right. If on the probabilities there is great doubt, then the applicant will not be entitled to an interdict, even temporary. The applicant bears the onus to show that, that right has been infringed by the respondents.”

[20] For a tender to be eligible for consideration, it must be an acceptable tender.[10] An acceptable tender is defined as meaning any tender which, in all respects, complies with the specifications and conditions of tender as set out in the tender document.[11] Scott JA in Sapela[12] explained the concept of an acceptable tender as follows:

explained the concept of an acceptable tender as follows:

“The definition of ‘acceptable tender’ in the Preferential Act must be construed against the background of the system envisaged by section 217(1) of the Constitution, namely one which is ‘fair, equitable, transparent, competitive and effective’. In other words, whether ‘the tender in all respects complies with the specifications and conditions of tender as set out in the contract documents’ must be judged against these values.”

Prima facie right

[21] In applying the above principles and considering whether the applicant has been able to establish the existence of the prima facie

right, it is important to mention the following from the onset. Tender offers must be evaluated by the evaluation committee in accordance with the parameters stated in the bid documents and the advertisement to the public. It then follows that the

evaluation committee should not use a different criterion other than the one specified in the bid documents. Where a different

evaluation criterion is applied, other than the one advertised, the constitutional principle of fairness is violated. A tender

cannot be evaluated fairly if the conditions applied are different to those stated in the bid documentation.

[22] I will not dwell into too much detail on the validity of the decision of first respondent to award the bid to the fourth respondent instead of the applicant as such, in my view, will be usurping the pending functions of the review court.[13] It is however important to mention that the function of the adjudication committee is not merely to rubberstamp the recommendations of the evaluation committee but to make their proper assessment (of the evaluation report and submitted bids) and take appropriate decision.

[23] The applicant seeks to place too much reliance on the evaluation report of the evaluation committee without making any reference to the powers of the adjudication committee regarding the recommendations of the evaluation committee and their binding effect. Bid evaluation committees are established to evaluate the financial and technical aspects of proposals and make recommendations to the adjudication committees. The adjudication committee, in turn, is required to consider the recommendations of the evaluation committee and make the decision if so delegated. The adjudication committee is empowered to decide to award a bid other than the one recommended by the evaluation committee if there are valid grounds to do so.[14] This means that the adjudication committee is empowered to overturn the decision of the evaluation committee disqualifying a bidder if, in the view of the adjudication committee, a bidder was wrongly disqualified.

[24] The fourth respondent’s tender was rejected by the evaluation committee based on the uncertainty regarding its tax issues even though it had a valid tax clearance certificate that expires in June 2019. This decision was overturned by the adjudication committee. The explanation given by the first and second respondents in the answering affidavit is that the tender advert required that bidders provide a CSD[15] registration number on the understanding that it will utilise the CSD number to do its own verification in order to independently verify a number of aspects such as:

(a) whether bidders are owned and/or its directors are government employees as it is the policy that government employees are not allowed to do business with government;

(b) bank confirmation for suppliers, so as to prevent fictitious payments to so-called ghost accounts that were prevalent before the introduction of the CSD; and

(c) the tax status of bidders so as to prevent entities whose tax matters are not in order from doing business with government.

[25] Upon conducting its own verification of the tax affairs of the fourth respondent the adjudication committee concluded that the tax affairs of the fourth respondent were in order.

[26] The decision by the evaluation committee to exclude the fourth respondent based on the CSD report dated 21 September 2018 without conducting their own verification was an error in my view. The CSD is a live verification site and the purpose for providing CSD verification number and a pin is to allow the institution given the pin to do their own verification. The evaluation committee should have done their own verification. The CSD report dated 21 September 2018 in which the evaluation committee relied on to disqualify the fourth respondent in my view was irrelevant because it only disclosed the tax status of the fourth respondent as at 21 September 2018. It was not showing the tax status of the fourth respondent at the time of the closure of the bids, or at the time of evaluation. The evaluation committee sat from 18 to 21 November 2018 and during that period, they did not conduct their own verification of the fourth respondent’s tax status by using the CSD verification number and pin that was provided. Moreover, by the applicant’s own admission, the fourth respondent’s CSD was edited on 10 November 2018 which means that by the time the bids were evaluated, the CSD might have had new information regarding the tax status of the fourth respondent. The mistake that the applicant seems to make is to suggest that the CSD status is verified at the time of opening the bids and should not be updated once the bids are submitted. The purpose of the CSD is to safeguard inter alia against transacting with a service provider whose tax matters are not in order. If it happens that, at the time the tenders are evaluated, the CSD report shows a favourable tax compliance status, there is no reason for the evaluation committee to disqualify the bidder on the basis that sometime ago the CSD status was once non-compliant. That would be favouring form over substance. Therefore, the adjudication committee was correct in

conducting its own verification of the fourth respondent’s CSD status.

[27] Regarding the applicant’s bid, the adjudication committee in my view correctly decided that the applicant’s bid did not qualify to proceed to the next evaluation stage. It is common cause that the applicant scored 70.5 points as this seems to be the score that was given to the applicant by both the evaluation committee and the adjudication committee. The applicant does not seem to challenge this score. This means that the applicant did not comply with the tender conditions as set out in the advert and the tender document which required bidders to score 75 points or more for functionality before they can proceed to the next evaluation phase. If the applicant did not secure the minimum points for functionality as advertised, it follows that they were not entitled to be awarded the tender. The applicant has in my view failed to establish a prima facie right.

Reasonable apprehension of irreparable harm

[28] The issue of irreparable harm is linked to the question whether the rights of the applicant were infringed by the adjudication committee of the first respondent. I have already alluded above to the fact that the applicant has failed to establish a prima facie right and it is therefore unnecessary to consider other requirements for the interim relief.

Order

[29] In the result I make the following order:

(a) The application is dismissed with costs including costs occasioned as a result of postponement of the matter on 05 February 2019.

___________________

S M MBABANE

JUDGE OF THE HIGH COURT (ACTING)

Appearances:

Counsel for the Applicant: Adv Delarhape

Instructed by

Honey Attorneys

c/o Nettelton Attorneys

118A High Street

GRAHAMSTOWN

Counsel for the Respondents: Adv Sishuba

Instructed by

Mabece Tilana Inc.

Attorneys of the 1st & 2nd Respondents

100 High Street

AND

Counsel for the 4th Respondent: Adv Greyling

Instructed by Maruis

Van Zyl Inc.

Attorney for the 4th Respondent

c/o J D Haydock Attorneys

Room 4, Eskom Building

110 High Street

Matter heard on: 7

February 2019

Judgment delivered on: 26 March 2019

[1] Section 139 (1)(c) of the Constitution states that when a municipality cannot or does not fulfil an executive obligation in terms of the Constitution or legislation, the relevant provincial executive may intervene by taking any appropriate steps to ensure

fulfilment of that obligation, including dissolving the Municipal Council and appointing an administrator until a newly elected

Municipal Council has been declared elected, if exceptional circumstances warrant such a step.

[2] Promotion of Administrative Justice Act 3 of 2000. (PAJA).

[3]Section 62 of the Local Government: Municipal Systems Act, (Act 32 of 2000) establishes the regulatory framework on appeals lodged against decisions taken in terms of delegated authority by a municipality.

[4] Setlogelo v Setlogelo 1914 AD 221 at 227.

[5] Ferreira v Levin NO; Vreinhoek v Powell NO 1995 (2) SA 813 (W) at 817 F-H.

[6] Olympic Passenger Service (Pty) Ltd v Ramlagan 1957 (2) SA 382 (D) at 383 C – F (Olympic Passenger Service).

[7] Simon N.O. v Air Operations of Europe AB and Others [1998] ZASCA 79; 1999 (1) SA 217 (SCA); [1998] 4 All SA 573 (A) at 228 G-H (Simon N.O.).

[8] Spur Steak Ranches Ltd v Saddles Steak Ranch 1996 (3) SA 706 (C) at 714 F-H (Spur Steak Ranches); Gool v Minister of Justice and Another 1995 (2) SA 682 (C) at 688 (E).

[9] Msunduzi Municipality v Natal Joint Municipal Pension/Provident Fund 2007 (1) SA 142 (N) at 13 (Msunduzi Municipality).

[10] Section 2(1) PPPFA.

[11] Section 1 PPPFA.

[12] Chairperson: Standing Tender Committee and Others v JFE Sapela Electronics (Pty) Ltd and Others [2005] ZASCA 90; 2008 (2) SA 638 (SCA); (2005) All SA 487 (SCA) at para 14 (Sapela).

[13] National Treasury and others v Opposition to Urban Tolling Alliance and Others 2012 (6) SA 223 (CC) para 31.

[14] Regulation 29(5)(a) of the Municipal Supply Chain Management Regulations, published in GN 868 in GG 27636 of 30 May 2005.

[15] CSD is the National Treasury Central Supplier Database.