Mamlambo Construction CC v Port St Johns Municipality and Others (1876/2008) [2010] ZAECMHC 21 (24 June 2010)

IN

THE HIGH COURT OF SOUTH AFRICA

(EASTERN CAPE DIVISION – MTHATHA)

CASE NO. 1876/2008

In the matter between :

Mamlambo Construction CC Applicant

And

Port St Johns Municipality First Respondent

African Bulk Earthworks Second Respondent

Nangamso Civils & Project Managers Third Respondent

EN Route Bunsey’s JV Fourth Respondent

JUDGMENT

_______________

PETSE, ADJP:

INTRODUCTION :

[1] What lies at the heart of the dispute between the applicant on the one hand and the respondents on the other is the validity or otherwise of the tender for construction of an erosion protection wall and a pathway at the Second Beach Port St Johns awarded by the first respondent to the second respondent after the first respondent had invited tenders by way of an advertisement that

appeared in the Daily Dispatch newspaper on 18 June 2008.

[2] The applicant was one of the interested parties who had, in response to the advertisement aforementioned, submitted a tender to the first respondent. It came to pass that after the process of evaluating the various tenders submitted to the first respondent at its behest the second respondent was declared the successful tenderer and the tender was awarded to it.

[3] The applicant became aggrieved by the award of the tender to the second respondent and asserts that there is no logical basis for such an award contending that on all available information the tender should have been awarded to it because its award instead

to the second respondent is not explicable on any rational basis other than that the decision to award the tender to the second

respondent was made arbitrarily and capriously.

[4] Consequently the applicant instituted these proceedings on 1 December 2008 in which it seeks the following principal relief :

“1. that the decision of the first respondent to award the contract to the second respondent be set aside and declared invalid;

2. the contract be awarded to the applicant.

3. that the costs of this application be paid by the first respondent and, in the event of the second respondent or any other respondents opposing the relief sought, by such respondents jointly and severally, such costs to include the costs of the application of the 11th of December 2008.

4. ………………………………………………………….”

THE PARTIES :

[5] The applicant is a Close Corporation carrying on business as Civil Engineering Contractors at 6 Robbie de Lange Street, Wilsonia, East London and conducts its business throughout the Province of the Eastern Cape.

[6] The first respondent is a local authority duly constituted under law with its principal place of business at the Municipal Offices in Port St Johns.

[7] The second respondent is African Bulk Earthworks (Pty) Limited, a company incorporated with limited liability in accordance with the laws of the country and conducts its business as a Civil Engineering Contractor from its principal place of business at 60 Burman Road, Deal Party, Port Elizabeth in the Province of the Eastern Cape.

[8] The third respondent is Nangamso Civils & Project Managers, a partnership firm or unincorporated body of persons, carrying on business as Civil Engineering and Project Managers with its principal place of business and head office at Lot 1290 Humperies Road, Margate, KwaZulu-Natal.

[9] The fourth respondent is EN Route Bunsey’s Joint Venture, a joint venture carrying on business as Civil Engineering Contractors with its principal place of business at 5A Sunset Place, Beacon Bay, East London, Eastern Cape.

[10] It is timely at this stage to mention that only the first respondent has chosen to resist the grant of the relief sought by the applicant herein. The remaining respondents have not entered the legal fray and thus elected to remain supine.

[11] By reason of the fact that it is the first respondent only that is actively resisting the applicant’s application I propose in this judgment purely for the sake of brevity to refer to the first respondent simply as “the respondent”. If and when a need arises to refer to any or some or all of the remaining respondents I shall use the designations assigned to that particular respondent as preceded by the numeral necessary to identify such respondent.

FACTUAL BACKGROUND :

[12] It is now convenient to set out the factual matrix against which the central issue raised in these proceedings has to be considered. In so doing I shall begin with the averments contained in the applicant’s founding papers which will be set

out in summary form.

[13] On the 18th of June 2008 an advertisement appeared in the Daily Dispatch newspaper inviting prospective bidders to bid for the rehabilitation

of the Port St. Johns Second Beach by means of constructing an erosion protection wall and a pathway which advertisement also

required prospective tenderers to attend a compulsory site inspection on the 23rd of June 2008 at 11h00, which site inspection was attended by representatives of all interested parties. The advertisement specifically stated that it is only contractors who are registered with a CIDB in Category 5CE or higher that would be considered. Furthermore the advertisement stipulated that the tender would close at 12h00 on 1 July 2008. The applicant submitted a duly completed tender document by handing same in at the Municipal offices of the respondent at Port St Johns which it claims was a fully compliant and

fully responsive tender as required in terms of the bid notice.

[14] The tenders were then opened and the names of the entities making the tender were announced together with the price tendered by such entities. Thereafter, a list of the tender results was complied and handed to all interested parties. The respondent had caused a notice to be published in Government Gazette No. 28127 promulgated on 14 October 2005 which set out what is termed “the standard tender evaluation methods” that were to be adopted by Consulting Engineers, Gcina Sonke Consulting Engineers CC who were entrusted with the task of evaluating the tenders and then “recommend the highest ranked tender, alternatively the tender with the highest number of evaluation points, for the award of the contract unless there are compelling and justifiable reasons not to do so.” (My emphasis). I have put the words “are compelling and justifiable reasons not to do so” in parenthesis for reasons that will readily become apparent later in this judgment. From this point the respondent was then required to consider the Engineer’s tender report and then make a recommendation to the Bid Committee which would then make the final adjudication after which all the tenderers would be advised of the outcome of their tenders and those tenderers who were unsuccessful would also be advised of the period of time available to them to lodge any appeal if so advised.

[15] On the 29th of August 2008 the applicant’s Technical Contracts Manager, a Mr Ian Symons (“Symons”) telephoned Gcina Sonke

Consulting Engineers CC for a progress report. During the course of this telephone call, Gina Sonke Consulting Engineers CC then advised that the project had been awarded to the second respondent. Symons then addressed a letter to the Municipal Manager of the respondent dated the 29th of August 2008, in which he conveyed the applicant’s belief that the applicant had been unfairly prejudiced in the award of the project, and requesting documentation which formed part of the public record to which the respondent replied on the 9th of September 2008 advising that “we have received the tender adjudication report from our consulting firm Gcina Sonke and have therefore taken their recommendation as it was.” Apparently not satisfied with this response Symons then requested, on 10 September 2008, a copy of the Municipal Bid Adjudication report, Municipal Bid Resolution and details of the CIDB reference numbers of all contractors that had tendered on the project.

[16] The requested documentation was not furnished by the respondent with the consequence that the applicant consulted its attorneys Messrs Abdo & Abdo on the 18th of September 2008, who then took up the matter with the respondent. On 30th of September 2008 Messrs Le Roux Incorporated, acting on behalf of the respondent responded to Messrs Abdo and Abdo furnishing but only part of the information and documentation required. This was followed by a further request for more documentation to which was also coupled an invitation to the respondent to confirm that work on the project would not be commenced with until some assessment of the environmental impact that the project might have had been finalised. The respondent was only prepared to give an undertaking that the work would not commence until “after the holiday period”.

[17] When all the requested documentation was finally furnished the applicant discovered on perusing such documentation that :

two of the entities that had submitted tenders were adjudicated as being non-compliant, whilst three were adjudicated as being compliant. A specific note was also made that Sinotab Civil & Construction failed to submit any CIDB certificate and accordingly was not adjudicated any further.

(ii) the second respondent’s tender was also not responsive, in that the tender called for a twelve week duration, whereas the second respondent had instead tendered on a period of fifteen weeks within which to complete the project, which was three weeks outside the stipulated project duration.

the Consulting Engineers had apparently corrected tender amounts, without giving any indication of what mistake(s) was/were found in relation to the tendered amounts.

the applicant was the lowest tenderer, whereas the second respondent was the highest tenderer, by a significant margin by approximately 10.5% higher compared to that of the applicant.

that the second respondent achieved a total points score of 83.69 points, whereas the applicant achieved a total point score of 93.17 points.

that the claim that the tender was awarded to the second respondent on the basis of its alleged capacity to do the work cannot be sustained on any objective ground.

that the applicant had no experience in bulk earthworks apart from the fact that in any event the nature of the work entailed in the project could not be classified as “bulk earthworks”.

that second respondent’s pricing was not competitive and that the respondent would not make any “savings” if the award of the tender to the second respondent were to be allowed to stand.

[18] The applicant thus contends that regard being had to the content of the documentation in the possession of the respondent there can be no doubt that :

(i) there was no adverse report but complimentary remarks about the applicant’s abilities and expertise to perform the project.

(ii) on a comparative analysis of the adjudication report relating to the second respondent it is evident :

. that their tender scored significantly lower points;

. that the tender document was complete “to

satisfaction”, which is somewhat less than an

unqualified accolade; and

. the project would take three weeks longer than the time limit stipulated in the project; and

. the second respondent was significantly more expensive;

. the second respondent’s experience in such contracts does not compare with that of the applicant.

In the premises the applicant contends that there is simply no logical basis for such a recommendation because in whatever way one looks at the available information, the conclusion to award the tender to the tenderer who had the lowest points, and the highest price, can only have been made arbitrarily and capriciously and in circumstances where irrelevant considerations must have been

taken into account, or relevant considerations not considered. In the premises the applicant further contends that the highest points scored by it and the lowest tender price are in the normal course the most crucial considerations that ought to determine who should be awarded the tender. Thus given the fact that the award of the tender to the second respondent is so exceptionally irregular and manifestly indefensible on any conceivable rational basis it is reasonable to conclude that the award was made for some ulterior purpose or motive or even in bad faith because the decision has no rational connection with the information given to the Bid Adjudication Committee and on those grounds the decision to award the tender to the second respondent falls to be reviewed, corrected and set aside, and declared invalid.

[19] The respondent’s answer to the case made out in the applicant’s founding papers as is apparent from the respondent’s answering affidavit deposed to by Mr Zola Michael Hewu (“Hewu”) is summarised below, leaving out for the sake of brevity, formal allegations relating to Hewu’s capacity and authority to depose to such affidavit on behalf of the respondent.

[20] It is perhaps convenient first and foremost to mention that apart from dealing with the merits of the application the respondent disputed in the first place that the matter was sufficiently urgent to warrant that it be dealt with in terms of Rule 6(12) of the Uniform Rules. In the second place the respondent took the point that the applicant failed to exhaust its internal remedies

such as an appeal in terms of sec 62 of the Local Government : Municipal Systems Act 32 of 2000. The respondent has also called in aid sec 7(2)(a) of the Promotion of Administrative Justice Act 3 of 2000 contending that this Court ought then to refrain from reviewing an administrative action of the kind complained of by the applicant

before the applicant has first exhausted any internal remedies provided for in any other law. I shall return to this aspect of the matter in a moment.

[21] Apropos the merits of the application Hewu denies that the second respondent’s tender was not responsive and that the extra three week period allowed for the completion of the works would have any costs implications for the respondent as the period

within which the contract was to be completed in terms of the terms of the tender was, as he put it, “not that essential”.

Hewu proceeds to aver that whilst Mr Jones Frimpong, who drafted the tender adjudication report, was not allowed to amend any quantity or rate in any of the tenders, it was nevertheless expected of him to check for any calculation errors in the tender and to rectify them if and when he deemed it necessary to do so. The rationale for this was said to be that it sometimes may happen that the tenderer made a calculation error when multiplying the quantity with the rate, or omitted to fill in the sum under the amount, or made a mistake with the carried forward amount. In such event it was the task of Mr Frimpong to do his own calculations and where the total tendered amount differs from his calculation, the corrected amount must be indicated in his report. He then concludes on this score by saying that on an objective evaluation of the various tenderers’ abilities to undertake the works it was found that the applicant had vast experience in the construction industry and more particularly in water works whereas the second respondent specialised in bulk earthworks a factor that rendered the second respondent more suitably qualified and able to undertake works of the nature envisaged in the tender. This was said to be of critical importance if regard is had to the fact that the project’s principal objective was to prevent the serious erosion caused by floods and exceptionally high tides to the beach at Second Beach in Port St. Johns.

[22] In order to justify the decision to award the tender to the second respondent despite the fact that its price was substantially more than that of the applicant the respondent essentially relies on two bases and I hasten to quote liberally from Hewu’s affidavit hereunder :

“31. In addition to this Mr Frimpong further considered the difference between his estimate and the respective tenders. His estimation is based on prices of the material to be used and by comparing expenses of contractors who performed similar work in Kwa - Zulu Natal. Where a tendered price is more than 10% lower or higher than his estimate, it is an indication that the tenderer did not apply its mind properly to the tender in question.

Where the tender is too low there is always a risk that the tenderer might suffer a loss on the project, which may have an effect on its cash flow situation. Such contractor may not be able to finish the project in question and that would be to the detriment of the respondent.

The applicant’s estimate was 11.71% below the cost estimate of Mr Frimpong, whilst the second respondent was 2.55% below his estimate.

On page 30 of the applicant’s tender, the applicant suggested proposed amendments to the tender. The applicant suggested that the permit for obtaining the sand be obtained by the respondent and it thus only allowed a maximum of one kilometre free haul for the delivery of the sand for the filling of the materials.

The suggested deviation of the tender may have had an extra cost factor not included in the tender. Once appointed, the applicant may be required to attend meetings with environmental officers in connection with the conditions of the permit. This can lead to monetary claims for time spent in attending such meetings and/or travel costs. The applicant excluded such costs from its

tender and if appointed, might have claimed such costs from the respondent.

There was still the possibility that sand needed to be hauled at a distance of more than one kilometre. The applicant, if appointed, would have been entitled to claim for such extra costs from the respondent.”

Hewu then proceeds to say that the respondent’s Technical Manager Mr Onke Sopela had discussions with Mr Frimpong in relation to the tender adjudication report prior to the meeting of the Bid Adjudication Committee and as the scope of the work set out in the tender fell foursquare within the Technical Manager’s department, the rest of the Committee comprising three senior employees of the respondent had to reply on “his knowledge and expertise” in the field of civil engineering who then

explained to the other members of the Committee before looking at the tenders, that the specific project was a specialized one and that it required someone with expertise in the field of civil engineering and more specifically earthworks. After due consideration of everything before them the Committee members came to the conclusion that there were “reasonable and justifiable” grounds for not accepting the lowest tender and recommended that the tender be awarded to the second respondent notwithstanding its higher rates because such rates “were still within the budgeted amount for the project.” The respondent thus denies that it was actuated by ulterior motives or acted in bad faith by not awarding the tender to the applicant. Nor that such a decision is one that is not rational given the information placed at the disposal of the Bid Adjudication Committee.

[23] The aforegoing is then a summary of the facts as they emerge from the affidavits filed of record in this matter upon which the fate of this application hinges.

[24] As foreshadowed earlier in this judgment the respondent has, in resisting the relief sought by the applicant, also raised two preliminary points, namely (i) lack of urgency, and (ii) the failure by the applicants to exhaust internal remedies and to be more precise the applicant’s failure to exercise its right to appeal against the respondent’s decision.

[25] Before I give consideration to these rivalling contentions I should perhaps digress at this juncture to make the point that counsel on both sides, and even more so with applicant’s counsel, cited a number of judicial authorities in their heads of

argument which clearly exhibit a result of much industry on their part in support of their rivalling contentions. I thus unreservedly

express my gratitude to both counsel for their invaluable assistance. Having waded through such authorities, in a manner of speaking, and reflecting carefully upon the matter I am, however, of the view that the matter can be resolved by recourse to what has turned out to be a narrow issue to which I now turn.

[26] First I propose to deal with the preliminary objections raised by the respondent and determine whether or not they present an insurmountable obstacle to the determination of this matter on its merits.

URGENCY :

[27] The issue of urgency in this case is in my view not something that is of any real relevance at this stage because although the applicant approached this Court by way of urgency on 11 December 2008 the application was postponed by agreement between the

parties and the applicant granted interim relief. Thereafter the Rule Nisi granted on 11 December 2008 was extended from time to time to afford the parties time to deliver such affidavits as they deemed fit until the matter finally became ripe for hearing before me on 29 January 2010. It cannot therefore, in the light of the aforegoing, be contended as Mr Botma counsel for the respondent sought to do that the matter was not urgent after it had been in and out of Court on several occasions with the acquiescence if not the consent of the respondent. Compare also in this regard : Commissioner for South African Revenue Service v Hawker Aviation Partnership and Others [2006] ZASCA 51; 2006 (4) SA 292 (SCA) at 300 E-F. Thus whatever legal leg, so to speak, that the respondent might have had to contest the issue of urgency was forfeited. Apart from all else I am in any event more than satisfied that the applicant has adequately explained on the papers how and why it came about that these proceedings were instituted only on 1 December 2008. In this regard I mention that the applicant had in fact earlier sought an undertaking from the respondent that its contract with the second respondent should not be carried out pending the outcome of its appeal against the respondent’s decision to award the tender to the second respondent which the respondent refused to give. This was further compounded by the fact that the respondent had chosen to furnish the applicant with the documentation that the latter had requested at a time of its own choosing which was after a lapse of several weeks and even then the documentation furnished was not complete.

FAILURE TO EXHAUST INTERNAL REMEDIES

[28] Apropos this aspect of the case Mr Botma submitted that even accepting that the period within which the applicant should have lodged its appeal against the decision of the respondent in terms of sec 62(1) the Local Government : Municipal Systems Act 32 of 2000 (“the Systems Act”) had elapsed by the time that the applicant instituted these proceedings in this Court it was still necessary for the applicant to apply for an exemption from the requirement to first exhaust its internal remedies in terms of sec 7(2) of the Promotion of Administrative Justice Act 3 of 2000 (PAJA). He contended further, as he put it, that “there must always be an application to be exempted and in such application for exemption

the Court can look at the reasons on which such application is predicated.” And if one of such reasons is that the period

within which the aggrieved party could have lodged its internal appeal has expired then such a factor would constitute exceptional

circumstances. I enquired of counsel as to what would be the virtue of seeking to be exempted from exhausting internal appeal remedies if the right to appeal has already lapsed due to effluxion of time. In developing his argument Mr Botma called in aid the judgment of Nichol and Another v Registrar of Pension Funds and Others [2006] 1 AllSA 589 (SCA) at para [15]. There being no application for exception, so the argument went, the applicant was precluded from pursuing its application until it has brought such application.

[29] In view of the fact that Mr Botma seemed to pin his faith on the Nichol judgment, supra, it is necessary to quote the relevant passage therein before I examine the question of whether Mr Botma’s

submission is sustainable. At para [15] of the Nichol judgment Van Heerden JA, writing for the unanimous court, had this to say :

“[15] Under the common law, the mere existence of an internal remedy was not, by itself, sufficient to defer access to judicial

review until the remedy had been exhausted. Judicial review would in general only be deferred where the relevant statutory or contractual provision, properly construed, required that the internal remedies first be exhausted. However, as is pointed out by Iain Currie and Jonathan Klaaren, “by imposing a strict duty to exhaust domestic remedies, [PAJA] has considerably reformed the common law”. It is now compulsory for the aggrieved party in all cases to exhaust the relevant internal remedies unless exempted from doing so by way of a successful application under section 7(2) (c). Moreover, the person seeking exemption must satisfy the court of two matters: first, that there are exceptional circumstances and second, that it is in the interest of justice that the exemption be given.”

[30] In so far as the requirement to exhaust internal remedies is concerned Hoexter in Administrative Law in South Africa at 480 forthrightly expresses the following view :

“Review is prohibited unless any internal remedy provided for in any other law has been exhausted. The court is obliged to turn the applicant away if it is not satisfied that internal remedies have been exhausted, and may grant exemption from the duty only in exceptional circumstances where it is in the interests of justice to do so. It may well be asked whether this statutory duty will pass constitutional muster, or whether it be regarded as unjustifiably infringing the right of access to a court of law.

In this regard, much depends on how the courts interpret the adjective “internal” and the phrase “any other law”. These terms ought to be read restrictively to include only remedies specifically provided for in the legislation with which the case is correct.”

[31] I have to say that on my reading and understanding of the ratio decidendi of the Nichol judgment it offers no support that is tenable for the proposition advanced by Mr Botma. All it says is that if the right to appeal in terms of the appellate regime established in terms of section 62(1) of the Municipal Act exists, the aggrieved party is ordinarily obliged to exhaust his or her internal remedies before approaching the court save when exceptional circumstances exist justifying a direct resort to the courts of the land. The alternative basis urged upon the court by Mr Botma is equally untenable. If there exists no right to appeal because such right has, so to speak, been extinguished by lapse of time, that is to say, it has for whatever reason not been asserted within the period stipulated in terms of the relevant Act the question may well be asked - why should it then still be necessary to seek exemption from “complying” with an obligation that in reality does not exist. It is illogical and incongruous to expect an aggrieved party to seek to be absolved from an obligation that does not in any event exist. Thus all what the Nichol judgment says on a fair reading thereof in my view is that if the internal appeal remedy was available at the time the review proceedings were launched but was for no good reason not invoked it cannot be an answer for the aggrieved party to say –

when the matter is finally heard by the Court long after that right can no longer be asserted because the statutory prescripts decreed in terms of sec 62(1) of the Systems Act were not heeded - that its internal appeal remedy has since been lost due to lapse of time. I am fortified in this view by the dictum of Van Heerden JA in para [17] of the Nichol’s judgment, supra where the learned Judge of Appeal had occasion to say the following :

“[17] The exceptional circumstances upon which reliance is placed in support of an application for exemption in terms of section 7(2) (c) should primarily be facts and circumstances existing before or at the time of the institution of the review proceedings. This does not mean that the court may not, in principle, take into consideration events occurring after the launch of such proceedings. …………………………………………”

(Emphasis added)

[32] In my view the facts of the matter now under consideration are materially distinguishable from the facts that obtained in the Nichol judgment, supra. I say this mindful of the fact that judicial precedents are important for the legal principle(s) that they enunciate. But the factual matrix still plays a significant if not a material part in the resolution of the dispute. Whilst it is so that in both Nichol case and in hoc casu the applicants had not even thought of or been aware of the need to exhaust internal remedies it is, however, important to bear in mind that in hoc casu the applicant had no effective and/or adequate appeal remedy for at least two reasons. First there would have been no virtue in applicant appealing against the award of the tender to the second respondent when it was evident that the respondent had evinced a determination to commence with the works through the second respondent. This situation was further exacerbated by the fact that the respondent had steadfastly refused to give the undertaking sought that it would not carry on with the works until the applicant’s review application had been determined something which in some measure precipitated the urgency of the matter.

[33] In any event, and this I believe to be a telling factor, when the applicant launched these proceedings whatever right of internal appeal that the applicant might have had became forfeited when the twenty one day period within which it had to be exercised had already expired not on account of the applicant’s indolence but solely due to the dilatory conduct of the respondent. Thus for all intents and purposes by the time that the applicant could take any meaningful steps to appeal against the award of the tender to the second respondent (which was after the respondent had ultimately furnished the information required of it at the time of its choosing albeit incomplete) the right to appeal had already been lost due to lapse of time.

[34] Having disposed of the preliminary points I now turn to deal with the merits of the application. Apropos this aspect of the matter I should perhaps by way of prelude say that what I have discerned from the papers is that the award of the tender to the

second respondent by the respondent is assailed on several bases. Broadly stated they are that :

the respondent took into account irrelevant considerations and ignored relevant ones;

the respondent considered a tender that was not responsive in that the respondent elected to allow the second respondent the benefit of an additional three months to complete the works, something that was not extended to the other tenderers;

that the price tendered by the second respondent was substantially more than that of the applicant.

the award of the tender to the second respondent is so unreasonable that no reasonable person acting honestly would have done so.

the failure to award the tender to the applicant who had scored the highest points and had tendered for the lowest price was so irrational that the only reasonable inference to draw is that the award of the tender to the second respondent was arbitrary and

capricious when viewed against the fact that there existed no compelling and justifiable reasons for the tender not to have been

awarded to the applicant.

[35] In Minister of Social Development and Others v Phoenix Cash and Carry – Pmb CC and Others 2007 (9) BCLR 982 (SCA) Heher JA writing for the unanimous court had occasion to say that “[T]he award of public tenders is notoriously subject to

influence and manipulation.” The issue raised in these proceedings is one which cannot be determined in the abstract. In the nature of things it is thus necessary to conduct an analysis and survey of the circumstances under which the tender implicated in these proceedings came to be awarded to the second respondent.

[36] The point of departure in undertaking that exercise is of course the Constitution of the Republic of South Africa Act 108 of 1996 (“The Constitution”). Section 217 (1) of the Constitution requires of an organ of the State, such as the

respondent, when contracting for goods or services “to do so in accordance with a system which is fair, equitable, transparent,

competitive and cost effective” (my emphasis). This constitutional injunction has found expression both in the Systems Act and the Local Governments : Municipal Finance Management Act 56 of 2003 (“the Finance Management Act”).

[37] The provisions of both the Systems Act and the Financial Management Act deal with the procurement of ‘municipal services’ by municipalities and somehow compliment each other. For present purposes I will content myself by summarising the applicable provisions relating to the procurement of municipal services from private entities such as the applicant and the second respondent which are defined in sec 1 of the Systems Act as an ‘external service provider’ as follows:

A municipality is to have and implement a supply chain management policy which is fair, equitable, transparent, competitive and cost-effective’ and which complies with a regulatory framework designed to have that effect which, inter alia, covers ‘competitive bidding processes’, procedures for ‘the evaluation of bids to ensure the best value for money’ and measurers to combat ‘fraud, corruption, favouritism and unfair and irregular practices’ in municipal supply chain management.

A municipality may provide a municipal service by way of an ‘external mechanism’ by concluding a service delivery agreement with an external service provider.

In the event of a municipality deciding to do so it must select the external service provider by a process which complies with its supply chain management policy, including a competitive bidding process which allows all prospective service providers to have equal access to information relevant to the bidding process and which minimises the possibility of fraud and corruption.

The process by which an external service provider is selected

must be ‘fair, equitable, transparent cost-effective and competitive’.

The regulatory framework governing a municipal supply chain management policy requires the policy to provide for the procurement of goods and services above a transaction sum of R200 000.00 (which is the situation that obtains in hoc casu) by way of “a competitive bidding system”.

[38] These statutory injunctions therefore oblige a municipality concluding a service delivery agreement with an external service provider at a contract amount in excess of R200 000.00 to act openly and in accordance with a fair, equitable, competitive and

cost-effective system, and in terms of a supply chain management policy designed to have that effect. It therefore brooks of no

argument to the contrary that the respondent was therefore obliged to act openly, transparently, fairly equitably, competitively and cost-effectively when contracting with an external service provider to render the municipal service that was the subject matter of the tender implicated in these proceedings.

[39] There is a legion of judgments of the various Courts that have proclaimed in an harmonious chorus that contracts concluded without complying with prescribed competitive processes are invalid. Thus in Premier, Free State and Others v Firechem Free State (Pty) Ltd 2000 (4) SA 413 (SCA) the Supreme Court of Appeal set aside a contract concluded surreptitiously in breach of provincial procurement procedures, holding that such a contract was ‘entirely subversive of a credible tender

procedure’ and that it would ‘deprive the public of the benefit of an open competitive process’. Again in Eastern Cape Provincial Government v Contractprops 25 (Pty) Ltd 2001 (4) SA 142 (SCA), which concerned the validity of two leases of immovable property concluded between the respondent and a provincial department without the provincial tender board having arranged the hiring of the premises as was required by statute, it was held that the leases were invalid. In writing for the unanimous court, Marais JA, after his exposition of applicable statutory tender requirements, said the following at paras [8] and [9] :

“As to the mischief which the Act seeks to prevent, that too seems plain enough. It is to eliminate patronage or worse in the awarding of contracts, to provide members of the public with opportunities to tender to fulfil provincial needs, and to ensure the fair, impartial, and independent exercise of the power to award provincial contracts. If contracts were permitted to be concluded without any reference to the tender board without any resultant sanction of invalidity, the very mischief which the Act seeks to combat could be perpetuated.

As to the consequences of visiting such a transaction with invalidity, they will not always be harsh and the potential countervailing harshness of holding the province to a contract which burdens the taxpayer to an extent which could have been avoided if the tender board had not been ignored, cannot be disregarded. In short, the consequences of visiting invalidity upon non-compliance are not so uniformly and one-sidedly harsh that the legislature cannot be supposed to have intended invalidity to be the consequence.

What is certain is that the consequence cannot vary from case to case. Such transactions are either all invalid or all valid. Their validity cannot depend upon whether or not harshness is discernible in the particular case.”

[40] It is therefore axiomatic that any procurement contract for municipal services concluded in breach of the prescripts of those laudable principles set out above which are after all designed to ensure a transparent, cost effective and competitive tendering process in the furtherance of public interest will virtually in every instance be declared invalid and unenforceable.

[41] Keeping uppermost in my mind the principles that I have outlined above I now turn to consider whether in the context of the circumstances obtaining in this case as they emerge from the affidavits it can be said that the award of the tender to the second respondent by the respondent bears close and intense scrutiny. For reasons that I shall set out briefly below it is my judgment

that the answer to this question taking an objective and dispassionate view of the facts must be a “no.”

[42] In coming to this conclusion I should perhaps digress to mention that I do not for one moment believe that I have strayed outside the parameters set by judicial precedent which enjoin the courts to “take care not to usurp the functions of administrative agencies”. On the contrary it is my conviction that in coming to the decision that I have reached in hoc casu I have done no more than “to ensure that the decisions taken by administrative agencies fall within the bounds of reasonableness as required by the Constitution.” Compare in this regard : Bato Star Fishing (Pty) Ltd v Minister of Enviromental Affairs and Others [2004] ZACC 15; 2004 (4) SA 490 (cc) at paras [44] and [45].

[43] In this matter the following facts are common cause or not in serious dispute, namely:

that the applicant scored the highest number of points on adjudication;

that its price is substantially less than that of the second respondent by about R400 000 odd;

that the applicant is as suitably qualified to do the work as the second respondent;

there are no fundamental misgivings about the capacity of the applicant to carry out the works in accordance with the specifications as determined by the tender;

that the second respondent would take three months more than the applicant to complete the works;

[44] It therefore seems to me that taking these factors either individually or cumulatively into account ineluctably lead to the conclusion that the scales were heavily tilted in favour of the applicant. Accordingly it is my judgment that there ought therefore

to have been more compelling and cogent reasons to justify the award of the tender to the second respondent other than that :-

the second respondent had more experience in earthworks;

that the applicant had proposed a deviation from the tender conditions regarding the haulage and delivery of sand to the site. (ref : pp 236 – 238 of the papers)

that the time factor within which the contract had to be completed was not, as Hewu puts it, “that essential”.

that the three months period allowed the second respondent (and denied to the other tenderers) had no costs implication for the respondent.

that the second respondent had more experience than that possessed by the applicant in works of the kind required by the tender despite the fact that the applicant had received affirmation of its abilities to do the work more particularly when viewed against the fact that even on respondent’s own account the applicant had vast experience in the construction industry.

[45] To conclude on this aspect of the matter I should also mention that Mr Botma raised what I initially thought was a strong counter to Mr Cole’s argument which was that it was not only illogical but also did not make sense both on the basis of

rationality of the decision as also the financial impact it would have on the respondent’s coffers to award the applicant the highest number of points during the process of adjudicating the tenders but at the same time conclude that the second respondent who scored less points than the applicant deserve to be awarded the tender. Having given Mr Botma’s submission some anxious

consideration I have on mature reflection come to the conclusion that Mr Botma’s submission cannot be upheld more so that even on respondent’s own account it was accepted that the applicant possessed as much skill and expertise to undertake the work despite the fact that it was, in the same vein, thought that the applicant had no extensive experience in bulk earthworks.

[46] In arriving at this conclusion I have taken cognisance of the fact that in my view the phrase “relevant considerations were not considered” contained in sec 6(2)(e)(iii) of PAJA should not be construed to mean that relevant considerations were not considered at all but ought also to be understood to mean that such relevant considerations were not, when being considered, given sufficient weight for to hold otherwise would in my view amount to an unwarranted limitation of their full import. This would then mean that even paying mere lip service to the prescripts of the provisions of sec 6(2)(e)(iii) of PAJA would pass constitutional muster something that would not be consistent with the values, as I understand them, permeating the Constitution.

[47] It remains now to consider what I understood to be Mr Botma’s catch-all alternative argument which boiled down to this. Mr Botma was at pains to remind me of what he apparently perceived to be the proper approach that a Court is enjoined by sound judicial authority to adopt when it is confronted with the sort of situation now before me in which the applicant essentially seeks

to have a decision taken by a functionary and/or organ of State, as is the position in hoc casu, reviewed and set aside. In articulating his submission on this score he argued that this Court can only review and set aside the respondent’s decision to award the tender to the second respondent only if it were demonstrated on clearly discernible

objective grounds that the respondent in coming to the decision it did took into account, as he put it, “irrelevant factors and/or considerations”. Mr Botma stressed and also sought to remind me that it is, so his argument went, “easy for us now sitting in court and looking at the facts of this case in the calmness of the courtroom and the benefit of wisdom gained in hindsight that the applicant can do the work for substantially less than what the second respondent would charge whereas the respondent chose someone best equipped to do the work”. Mr Botma may well have had and indeed does have a valid point in so far as the correct approach that this Court is enjoined to adopt in adjudicating a matter of the kind with which I am seized in these proceedings. But for the reasons that I have stated hereinbefore Mr Botma’s catch-all argument, attractive though it may be at first blush, cannot in my view be sustained on the peculiar circumstances of this case.

[48] There is one minor aspect to address before concluding which is this. In prayer 2 of its notice of motion the applicant seeks an order awarding the tender to it on the grounds that the applicant is unlikely to receive a “fair hearing” if the matter were to be referred back to the respondent for reconsideration However, faced with the reality that a period of almost eighteen months has elapsed since the award of the tender to the second respondent Mr Cole, counsel for the applicant, soon realised on the day of the hearing of this matter that given this significant lapse of time it would be ill-advised of this Court to accede to this prayer even if it were otherwise disposed to grant it. Thus nothing further need be said on this score.

[49] Having reached my conclusion in relation to the fate of this application it remains now to comment on the heads of argument filed on applicant’s behalf in this matter. Mr Cole who argued the case on behalf of the applicant prepared lengthy heads of argument containing elaborate and extensive quotations from authorities on which he relied in support of the submissions that he pressed before me. I just want to say, albeit in passing, that the applicant’s heads of argument were, in my view, unduly

overburdened than the exigency of the case dictated. I, however, hasten to add that this remark is not intended to be a criticism of Mr Cole but purely to illustrate the point that brevity is always golden whereas prolixity is not. Compare in this regard : South African Post Office v De Lacy and Another 2009 (5) SA 255 (SCA) at para [8]. (Ref : Joint Rules of Practice for the High Courts of the Eastern Cape Province : para 8(d)(i) and (ii).

[50] For all the aforegoing reasons therefore I am satisfied that the applicant is entitled to some substantive relief the precise terms of which will be spelt out in the order below.

[51] Before concluding I feel constrained to record that I regret that it has not been possible to finalise this judgment much earlier as I had intended. This was partly due to factors that I need not delve into in this judgment and the added pressure of other

pressing matters that I was required to attend to. I am always ever conscious of the fact that litigants are entitled to an expeditious

judicial resolution of the disputes that they bring to the courts for adjudication. Compare in this regard : Pharmaceutical Society of South Africa and Others v Tshabalala – Msimang and Another NNO : New Clicks South Africa (Pty) Ltd v Minister of Health and Another 2005 (3) SA 238 (SCA) at 261 C.

Having said that I must nevertheless hasten to add that given the nature of the issues raised in these proceedings I deemed it prudent to eschew undue haste in writing this judgment being acutely mindful of the far-sighted and profound statement by Publius Papinius Statius who once had occasion to say: “allow time and moderate delay in whatever you do because haste manages all things badly.”

[52] In the result the following order shall issue :-

The decision taken by the first respondent to award the tender under project name “Second Beach Erosion Protection” to the second respondent is declared invalid and is hereby set aside.

The tender relating to the Second Beach Erosion Rehabilitation Project is referred back to the first respondent for reconsideration and decision on the matter.

The costs of this application shall be borne by the first respondent.

_______

X. M. PETSE

JUDGE OF THE HIGH COURT

HEARD ON : 29 JANUARY 2010

DELIVERED ON : 24 JUNE 2010

COUNSEL FOR THE APPLICANT : MR S. H. COLE

INSTRUCTED BY : MESSRS ABDO & ABDO

ATTORNEYS

COUNSEL FOR THE RESPONDENT : MR D.C. BOTMA

INSTRUCTED BY : MESSRS

KEIGHTLEY

INCORPORATED

APPEARANCE FOR SECOND,

THIRD AND FOURTH RESPONDENTS : NONE