Lohan Civils (Pty) Ltd and Others v Dr Ruth Segomotsi Mompati District Municipality and Another (Um 08/2018KP) [2019] ZANWHC 12 (8 March 2019)

IN THE NORTH WEST HIGH COURT

MAHIKENG

CASE NO. UM08/2018KP

In the matter between:

LOHAN CIVILS (PTY) LTD

1ST Applicant

RAUBEX INFRA (PTY) LTD

2nd Applicant

BATHO – BOTLHE GENERAL CONSTRUCTION CC 3rd Applicant

and

DR RUTH SEGOMOTSI MOMPATI DISTRICT 1ST Respondent

MUNICIPALITY

BICACON (PTY) LTD

2nd Respondent

DATE OF HEARING

: 14 February 2019

DATE OF JUDGMENT : 8 MARCH 2019

FOR THE APPLICANT :

Adv. J L Olivier

FOR THE RESPONDENT : Adv. M Motlogelwa

JUDGMENT

KGOELE J

[1] At the core of this application is a decision taken by the Municipal Manager of Dr Ruth Segomotsi Mompati District Municipality, (”the Municipality”) to award a tender to the second respondent (“Bicacon”) under bid BDM2007-028D-BLOEMHOF WTW TO OLIEVENFONTEIN ELEVATED TANK AND PUMP STATION.

[2] The applicants, being a Joint Venture consisting of Lohan Civils (Pty) Ltd, Raubex Infra (Pty) Ltd and Batho-Botlhe General Construction CC are attacking the award of the said tender and in their effort to prevent the further implementation of the works awarded to Bicacon, secured an interim Order, which was obtained by agreement, effectively placing the execution of the project on hold pending the finalisation of the

present application.

[3] The review application was launched in terms of the Promotion of Administrative Justice Act 3 of 2000 (PAJA) and is opposed by the Municipality. Bicacon, despite its interest in the relief sought by the applicants, has decided not to participate

in the litigation.

[4] The major facts in this matter are common cause. On or about 13 September 2017 the Municipality advertised a tender which involved the connection of the new pump station adjacent to Bloem-Hof Water Treatment Works, raising a pipeline from the new pump station to the new Olievenfontein elevated storage tank. The compulsory briefing/clarification meeting was held on 22 September 2017.

[5] The closing date for the tender was 3 November 2017 and the tender validity expiry date was set at 3 March 2018.

[6] After numerous extension of the tender validity period, the Municipality eventually awarded the tender to Bicacon through a letter dated 28 May 2018. Bicacon accepted the award of the tender and thus a contractual relationship was formalised between the Municipality and Bicacon.

[7] At the time the bids were opened, the applicants’ tender was revealed to have been the cheapest bid. The applicants therefore harboured a reasonable expectation that they would be successful in securing the contract. The applicants were surprised to learn on the 29 May 2018 that the contract was awarded to Bicacon. They further contend that even though it is customary for letters to be sent to unsuccessful tenderers informing them of their failure, no such notification was received by them. Their letter in terms of Section 5 of the Promotion of Access to Information Act, 2000 (Act No. 2 of 2000) (PAIA) requesting reasons similarly was not answered.

[8] Applicants were therefore under the circumstances forced to launch an application to compel the Municipality to provide reasons. When the reasons ultimately came, the records revealed that the Bid Evaluation Committee (BEC) recommended that the applicants be appointed as the preferred bidders. However, the records further indicated that the Bid Adjudication Committee (BAC) recommended that the applicants be disqualified for two reasons:-

(a) they did not stamp the bank rating letter and did not show the bidded amount on it;

(b) they had tampered with the bid document.

[9] The recommendation of the BAC which was subsequently approved by the Municipal Manager was then made that Bicacon be appointed.

[10] The live issues between the parties are:-

(a) that the award to Bicacon was made out of the extended validity period;

(b) that the decision of the BAC to regard their bid as non-responsive for failure to submit an original bank stamped rating letter is irrational and unlawful;

(c) that the decision of the BAC to find that their bid was non-responsive as it was tempered with is unlawful.

Expired Tender Validity Period

[11] This constitutes the applicant’s main ground for the review of the award of the tender. The contention of the applicants is that the Municipality awarded the tender to Bicacon outside the tender validity period on the 28 May 2018 when it purported to have done so. According to the applicants the tender validity period expired on the 14 May 2018, as there was no further extension of the period negotiated with and agreed to by the parties.

[12] Applicants relied heavily on the case of Joubert Galpin Searle Inc. and Others v Road Accident Fund and Others, 2014 (4) SA 148 (ECP) to support the contention that it is now accepted as law that a tender may not be “accepted” outside of the stated tender validity period.

[13] The applicants also relied on the following quotation found in Bosch Muniteck (Pty) Ltd v Govan Mbeki Municipality [2015] 4 All SA 674 (GP) to argue that acceptance of the bid is a process whereby the form of offer is accepted and returned before the expiry of the tender validity period:-

“[20] Paragraph 6 of the letter is important in that it recognised that the tender offer made by the Applicant on 3 May 2013 had lapsed because it had not been accepted in the form mandated by the C1.1 Form and had not been signed, accepted and delivered to the Applicant within the validity period as required by the Standard Terms and Tender Data of the tender.” (My Emphasis)

[14] The applicants further contend that where tender documents prescribe how and when a valid and binding contract is entered into, and these requirements are not met, no valid contract comes into existence. No vinculum juris is created. As a basis for this contention they quoted paragraph 20 from the case of Lepogo Constructionn (Pty) Ltd v Govan Mbeki Municipality [2015] 1 All SA 153 SCA wherein it was said:-

“[20] It is undisputed that the form of offer and acceptance had not been completed by the parties. It is the completion of that form, according to clause 3.13, that constitutes the formation of a contract between the Municipality and the successful tenderer. And, in terms of clause 3.16, the agreement only comes into effect on the date when the tenderer receives a fully completed version of the contract document.”

[15] The answer to this ground of review from the Municipality was couched as follows:-

“The extension of the validity period of the appointment of Bicacon was agreed to and Bicacon duly provided such consent”

I may hasten to say that unfortunately this answer was not supported by Bicacon nor substantiated by the first respondent or supported by any documents in the records.

[16] The Municipality submitted further that, given the aforesaid situation and on the strength of the authority quoted below, it was entitled to ask an extension of the validity period from Bicacon as the latter was the only eligible bidder at the relevant time. To seek such an extension from bidders who had already been disqualified would have made no sense at all. The extension was accepted and the appointment and the form of acceptance was duly done on 28 May 2018.

[17] The authority the Municipality heavily relied upon is the case of Aurecon South Africa (Pty) Ltd v City of Cape Town 2016 (2) SA 199 (SCA) wherein the Court, in rejecting an attempt by the City of Cape Town to set aside its own irregularity based on, inter alia, the fact that the validity period was only extended with Aurecon who was already by then, the eligible bidder, had the following to say in paragraph 23:-

“It is unnecessary to require a “formal‟ request from the tenderer in the present circumstances. Clause 140 merely requires an agreement by the affected tenderer in writing, and a decision by the chairperson before the expiration date, both of which were achieved in this case. In any event, if the procedure followed was irregular and the City should have issued a formal request to Aurecon, such irregularity is trifling and is purely a matter of form. And the complaint relating to the other tenderers has no merit whatsoever for the simple reason that they had already been found ineligible at that stage and were out of the picture. Significantly, the only appeal brought by one of the unsuccessful tenderers was dismissed by the City’s delegated appeal authority and those findings have not been impugned.”

[18] The Municipality finally argued that the same principle must be applied in the present matter in the sense that after the last extension of the validity period but before it lapsed, the first respondent had already determined that Bicacon was the eligible bidder. Therefore, their argument continues, the Municipality had no business to seek an extension of the validity period with bidders who were already out of the picture.

[19] The question as to whether the extension was agreed to or not warrants a factual investigation with reference to the Municipality’s answer to establish whether their defence raises a bona fide dispute of fact. The law on this is trite, See: Wightman t/a J W Construction v Headfour (Pty) Ltd and Another [2008] ZASCA 6; 2008 (3) SA 371 SCA where it was said:-

[12] Recognising that the truth almost always lies beyond mere linguistic determination the courts have said that an applicant who seeks final relief on motion must in the event of conflict, accept the version set up by his opponent unless the latter’s allegations are, in the opinion of the court, not such as to raise a real, genuine or bona fide dispute of fact or are so far-fetched or clearly untenable that the court is justified in rejecting them merely on the papers: Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd [1984] ZASCA 51; 1984 (3) SA 623 (A) at 634E-635C. See also the analysis by Davis J in Ripoll-Dausa v Middleton NO [2005] ZAWCHC 6; 2005 (3) SA 141 (C) at 151A-153C with which I respectfully agree. (I do not overlook that a reference to evidence in circumstances discussed in the authorities may be appropriate.)

[13] A real, genuine and bona fide dispute of fact can exist only where the court is satisfied that the party who purports to raise the dispute has in his affidavit seriously and unambiguously addressed the fact said to be disputed. There will of course be instances where a bare denial meets the requirement because there is no other way open to the disputing party and nothing more can therefore be expected of him. But even that may not be sufficient if the fact averred lies purely within the knowledge of the averring party and no basis is laid for disputing the veracity or accuracy of the averment. When the facts averred are such that the disputing party must necessarily possess knowledge of them and be able to provide an answer (or countervailing evidence) if they be not true or accurate but, instead of doing so, rests his case on a bare or ambiguous denial the court will generally have difficulty in finding that the 6 test is satisfied. I say ‘generally’ because factual averments seldom stand apart from a broader matrix of circumstances all of which needs to be borne in mind when arriving at a decision. A litigant may not necessarily recognise or understand the nuances of a bare or general denial as against a real attempt to grapple with all relevant factual allegations made by the other party. But when he signs the answering affidavit, he commits himself to its contents, inadequate as they may be, and will only in exceptional circumstances be permitted to disavow them. There is thus a serious duty imposed upon a legal adviser who settles an answering affidavit to ascertain and engage with facts which his client disputes and to reflect such disputes fully and accurately in the answering affidavit. If that does not happen it should come as no surprise that the court takes a robust view of the matter. [my Emphasis]

[20] The high watermark of the underscoring evidence from the answer provided by the Municipality is firstly that the Municipality does not explain how this extension was achieved. The Municipality is sparse, laconic and to an extent supine in its evidence on how this was achieved. We are not told whether it was done orally or in a written form, except to speculate on this issue. Counsel representing the Municipality could not even answer this question due to lack of averments in this respect from the papers before Court. There is furthermore no evidence or averments in the papers as to the following questions which remained unanswered:- who represented the parties? where and when it was made? Up to when was the tender validity period extended? How was this conveyed to the BAC and finally to the Accounting Officer, the Municipal Manager. The defence can thus be rejected solely on the papers before Court as it does not raise a real genuine dispute of facts. All of these

are facts which are averred by the Municipality and lies purely within its knowledge and was, in my view, able to provide an answer

but instead, rests its case on a bare denial.

[21] From the records submitted by the Municipality, it is apparent that the Municipality had at all the times been communicating with all the parties in this tender regarding the extension of the validity period in writing in exception to the last contentious extension which is the subject of this application. It is furthermore apparent that the Municipality are economic with the truth. The records reveals that the decision of BAC to recommend Bicacon was made on the 16 May 2018, the date when the contract was to expire. It goes without saying that on the 14 May 2018, Bicacon was not the only bidder left

as they contend, because the Joint Venture for example, was not yet eliminated.

[22] But the short and simple answer to this is that by 14 May 2018 the internal process within the Municipality was still not yet concluded, this much so is evident from what they say in paragraph 38.3 of their answering affidavit dated 26/06/2018. It is couched as follows:-

“I further deny that the bid was awarded outside the extended validity period as alleged. The extension of time which was requested by the

second respondent expired on 14 May 2018 and at that time, the internal processes within the municipality were concluded, save for the drafting of the letter of appointment to the second respondent. The second respondent accepted the offer from the first respondent and it follows that there can be no complaint by a party that was not affected by the extension of time after the disqualification of all other bidders except the second respondent.”

[My Emphasis]

[23] It is apparent that it was only on the 28 March 2018, fourteen days after the tender validity period had expired that Bicacon was informed of its success. This is borne by their letter dated 28 May 2018 found on paginated page 45. It is also quite clear that the form of offer and acceptance had not been signed by the Municipality and returned to Bicacon before 14 May 2018, when the tender expired as enunciated in the case of Bosch Munitech.

[24] Sound Procurement Legislative Framework requires that all tenderers should be treated equally. The final decision had not been made by 14 May 2018, and it certainly is factually incorrect to suggest that all other bidders (there were a whole host of them) had no rights to proper evaluation at that stage. Thus, if a tender validity period had to be extended for one, it had to be extended for all. It was not and it hardly warrants any kind of argument that the Municipality could not at that stage have decided to engage only Bicacon because it had submitted the only “responsive” bid. What would have happened if the Municipal Manager decided not to follow the BAC recommendation?

[25] The reliance on the Aurecon matter does not assist the Municipality at all because the facts of this matter are clearly distinguishable from those in Aurecon. In Aurecon, the complaint was that Aurecon made its offer to extend by responding to an internal email and therefore the request to extend was not official as required by

clause 140 of the Supply Chain Management Policy (SCMP). The Court held that it was unnecessary to require a “formal” request from the tenderer in the present circumstances. In our matter, there is no proof of any form of writing. The other fact which distinguishes Aurecon from our matter is that in casu, it is also clear, as I indicated earlier that the other tenderers, in particular the applicant, were not yet out of the picture.

[26] Apart from the fact that the version of the first respondent has not been properly established as a fact, there are furthermore two rudimentary problems with its contention. They are:-

26.1 Firstly, it means that in the evaluation process (the administrative one) preference was given to one tenderer above the other;

26.2 Secondly and on trite jurisprudence, and even by agreement, the offer was no longer open for acceptance. This of course has a new meaning in the Public Law Procurement Process all together.

[27] This is in my view a reviewable irregularity, which on its own obligates the Court to set aside the awarding of the tender.

[28] The proper legal approach to cases of this nature was enunciated in the leading case of Allplay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer, South African Social Agency and Other 2014 (1) SA 604 (CC) in paragraph 25 wherein it was stated:-

“[25] Once a ground of review under PAJA has been established there is no room for shying away from it. Section 172 (1)(a) of the Constitution requires the decision to be declared unlawful. The consequences of the declaration of unlawfulness must then be dealt with in a just and equitable order under Section 172 (1)(b).”

[29] I am of the view that it is unnecessary to consider the second ground relied upon by the applicant that relates to the non-responsiveness of its bid as the irregularity already dealt with above is the gravamen of the applicant’s case and is sufficient enough to vitiate the tender award. In the Allpay matter quoted above, it was said that:-

“if this Court is satisfied on anyone of the review grounds raised by the Department, it must set aside the award of the tender – there is not room for shying away from it” [my Emphasis]

Appropriate remedy

[30] The applicant’s Counsel urged this Court that it is open to this Court as the primary remedy, and in terms of Section 8 of the PAJA to award the contract itself to the applicant. He reasoned that the corollary is thus that the Joint Venture’s bid was responsive, and there serves before the Court no evidence to suggest that it was dysfunctional and this meant that the outcome of the tender is a foregone conclusion. In the alternative, the applicant submitted that the Court should order the process to start afresh as it appears that the applicant is not the only one that was prejudiced by the irregularity.

[31] The Municipality on the contrary requested this Court to remit the matter to the BEC with the rider that it be differently constituted. Counsel representing the Municipality submitted that ordering the process to start afresh will affect service delivery in the Municipality as this was a tender involving an upgrade of water waste treatment plant, which is one of the key service delivery issue.

[32] In terms of our common law, the Courts were generally reluctant to substitute the decision of the original decision-maker but did so in what were determined to be “exceptional circumstances”. This common law position is now reflected in section 8(1)(c)(ii)(aa) of PAJA. Section 8(1)(c)(ii)(aa) provides that 'in exceptional cases' the Court may substitute or vary the administrative action or correct a defect resulting from the administrative action.

[33] I do not agree with the proposition by the applicants that I award the tender to the applicant. Firstly, there are no exceptional circumstances shown by the applicant to this Court to substitute or vary the administrative action taken by the Municipality. Secondly, the irregularity that I considered in setting aside the tender renders the fairness of the process that was embarked upon by the Municipality irredeemably raptured. The same fate applies to the proposition of the Municipality that the matter be referred back to a differently constituted BEC. The tender validity period expired long time ago on the 14 May 2018, and in my view, the two options are not just and equitable in the circumstances of this matter. The execution of the project was put on hold awaiting the decision of this Court by an order.

[34] As correctly prayed for by the applicants in the alternative, it is not only the applicants who were prejudiced by the irregularity, all the tenderers, more so those that were declared responsive like the applicant, were. A just and appropriate remedy is in my view to order the process to begin de novo.

[35] The following Order is thus made:-

35.1 The first respondent’s decision to award the Bid BDM2007-028D-Bloemhof WTW to Olievenfontein elevated Tank and Pump Station to the second respondent (Bicacon) is hereby reviewed and set aside;

35.2 Any Service Level Agreement concluded between the first and the second respondent (The Municipality and Bicacon) and related to the assailed decision if any is hereby struck down in accordance with Section 8 of the Promotion of Administrative Justice Act 3 of 2000;

35.3 The process to award the tender mentioned in paragraph 34.1 above is referred back to the first respondent (Municipality) to start de novo;

35.4 The first respondent (the Municipality) is ordered to pay the costs.

A.M. KGOELE

JUDGE OF THE HIGH COURT

ATTORNEYS

For the Applicant : Smit Stanton Inc

29 Warren Street

2745

For the Respondent : Motshabi & Modiboa

No. 12 Havenga Street

Golfview, Mahikeng