MEC for the Department of Public Works, Eastern Cape and Another v Ikamva Architects (2610/2019) [2021] ZAECGHC 12 (16 February 2021)

IN THE HIGH COURT OF SOUTH AFRICA

(EASTERN CAPE DIVISION, GRAHAMSTOWN)

Case No: 2610/2019

In the matter between:

MEC FOR THE DEPARTMENT OF PUBLIC

WORKS, EASTERN CAPE

First Applicant

MEC FOR THE DEPARTMENT OF HEALTH,

EASTERN CAPE

Second Applicant

And

IKAMVA ARCHITECTS Respondent

JUDGMENT

BESHE J:

[1] The applicants are desirous of having a decision that was taken by the first applicant to appoint and

conclude a contract with the respondent reviewed and set aside. To this end, they instituted the present application also referred to as a “self-review” application. These proceedings are concerned with Part B of the said application. They were preceded by a Part A application which resulted in an order that was taken by agreement between the parties, setting a time table for the filing of papers by the parties, including the filing of the Rule 53 record by the applicants.[1] It was also part of the order that pending the determination of Part B of the application, no further execution will take place under the writ of execution dated 11 March 2016.[2] More about the judgment of which the writ of execution was issued, later.

[2] At the institution of the proceedings in September 2019, in Part B of the Notice of Motion it was stated that the order that the applicants would seek will be one in the following terms:

1. The contract concluded between the first applicant and the respondent (and annexed to the Founding Affidavit as “SM8” and “SM9”) is declared void ab initio and set aside.

2. The respondent is ordered to pay the costs of the application, only in the event of its opposition.

3. Further and or alternative relief.

[3] During the course of the same month (September), an amended notice of motion was filed. The relief sought in terms of this notice of motion was for an order in the following terms:

“1. The decision of the Department of Public Works of 29 August 2002 to appoint Ikamva Architects (CC) (“the respondent”) (as reflected in Annexure “SM 14”to the founding affidavit) is reviewed and set aside;

2. The decision of the then Head of Department of the Department of Public Works of 3 September 2002 to contract with the respondent (as reflected in annexure “SM8”to the founding affidavit) is reviewed and set aside;

3. The contract concluded between the Department of Public Works and Ikamva Architects CC on September 2003 (as reflected in annexures “SM8” and “SM9” to the founding affidavit) is declared void ab initio;

4. The respondent is entitled to no further payments under the contract referred to in paragraph 3 above and in terms of the default order of Malusi AJ on 01 December 2015 (as reflected in annexure “SM2”);

5. Hearsay evidence contained in the founding and supplementary affidavits of Sabelo Mgujulwa of 2 and 25 September 2019 respectively is hereby admitted into evidence in terms of section 3(c) of the Law of Evidence Amendment Act, to the extent that it is necessary;

6. The respondent is ordered to pay the costs of the application, only in the event of its opposition;

7. Further and/or alternative relief.”

The amendment of the notice of motion is said to be in terms of Rule 53 (4)[3] of the Rules. This is despite the fact that the record was filed by the applicants.

[4] The parties are described as follows:

The first applicant is the Member of Executive Council for Public Works of the Province of the Eastern Cape, cited in his official capacity as representative of the provincial Department of Public Works.

The second applicant is the Member of the Executive Council for Health of the Province of the Eastern Cape, cited in her official capacity as representative of the provincial Department of Health.

The respondent is Ikamva Architects CC, a close corporation incorporated in accordance with the laws of South Africa, with its registered address at 1st Floor, Kings Entertainment Centre, Aquarium Road, East London.

[5] Mr Sabelo Mgujulwa, an admitted attorney who practices as such at the office of the State Attorney deposed to the founding affidavits. He states that his authority to depose to the founding affidavit derives from the fact that he has been handling this matter on behalf of the applicant. He further states that the facts he sets out fall within his personal knowledge unless the context indicates otherwise and are to the best of his ability true and correct. It is not clear when he started handling this matter on behalf of the applicants. By this “matter” I understand that to refer to the litigation between the parties. Significantly at paragraph 91 of the Founding Affidavit Mr Mgujulwa states the following as explanation as to why the Founding Affidavit is not deposed to by officials of the applicants:

“91. It is noteworthy that a number of personnel in the infrastructure unit had been dismissed by the Department and were no longer

accessible to the Department to provide instructions and details on the infrastructure unit. All of this hampered the Departments’

ability to obtain information and make the necessary decisions to progress the matter.”

Further at paragraph 117 of the initial founding affidavit, the following explanation emerges:

“117. My knowledge of the procurement process is also informed by my discussion with Mr Simka, who was a member of the Procurement

Committee at the relevant time. Unfortunately, however, most of the remaining members of the Procurement Committee are no longer in the employ of the Departments. The chief architect who was in charge of the projects, Mr Hepburn, is now an employee of Ikamva (and naturally cannot be expected to assist in the Departments’ litigation against his current employers).”

[6] The following emerge from Mr Mgujulwa’s affidavit: (Founding Affidavit and Supplementary Founding Affidavit)

According to Mr Mgujulwa the genesis of this application is a contract for renovations to and the upgrading of Free Hospital which is in East London, Eastern Cape.

In September 2002, the Department of Public Works (being the first applicant) addressed letters of appointment to a number of contractors one of them being the respondent, for purposes of the project in respect of the Free Hospital. The respondent was contracted to perform work as a principal agent and consulting architect. The salient parts of the letter that was addressed to the respondent in this regard which is entitled: “Free Hospital (East London): Maintenance (Various); Masterplan Upgrade” read thus:

“We are pleased to inform you that the Department of Public Works (DPW) has decided to appoint your firm as consulting Architects / principal agent for the above project.”

The respondent was required to accept the appointment by signing an acceptance of the appointment document. The letter is dated 3 September 2002.[4] According to what appears on annexure SM9[5] the appointment was accepted on the 15 September 2003.

According to Mr Mgujulwa, no procurement process was followed before the conclusion of the contract between the Department of Public Works and the respondent.

He goes on to state that it is not clear who or how or why the respondent was appointed. And that therefore the contract was irregular and should be set aside. Mr Mgujulwa promises to set the procurement framework as it prevailed at the time in great detail. He points out that “the law did not

countenance such an appointment without an open and transparent procurement process” and refers to Section 217 of the Constitution. In his founding affidavit he does not state what framework prevailed at the time in Public Works Department, Eastern Cape. Instead he refers to decided cases and legal opinion that was sought by the applicant in which an opinion that the contract in question was invalid is expressed. It is only in the supplementary founding affidavit that reference is also made to the Preferential Procurement Policy Framework Act[6] (PPPFA). In particular Section 2 thereof; the Public Finance Management Act[7] (PFMA) Section 38 (1) (a) (ii); The Tender Board Act (Eastern Cape)[8] and later the Provincial Tender Board Repeal Act[9].

He points out that the tender board is vested with the sole power to procure supplies and services for the Province. He further points out that it is permissible for the Tender Board to delegate powers in this regard to sub-committees. That the said Act is complemented by a User Manual – Directive to the Departments.

[7] Reliance for the averment that no procurement process was followed in the appointment of the respondent is also placed on the minutes of a meeting that was held by the procurement committee on the 29 August 2002. It being averred that the minute simply records that the respondent was recommended for appointment but does not state by whom. There is no evidence of a proper consideration of price and or preference scores as required by the PPPFA. Further that it is clear from the minute that the applicants had no formal roster system in place for procurement, or that the department operated on an informal

roster system. The deponent acknowledges the existence of a consultant’s Roster Policy Document and states that same being

dated November 2002, it postdates the decision to appoint the respondent. So, it would not have been used in the appointment of the respondent. Further that the policy would not have applied to respondent’s appointment due to the value of the contract in question.

[8] According to the consultant’s roster policy dated 1 November 2002, as it appears from the record of the decision[10] it applies to:

Building projects where the project fee value does not exceed R3. million inclusive of value added tax.

Roads projects where the project fee value does not exceed R5.0 million inclusive of value added tax.

For projects whose fee exceed these values consultants will be appointed through the Eastern Cape Tender Board.

He further states that no record could be found after a diligent search of the Department’s records that respondent applied for enrolment in the Roster of Consultants. No such roster was provided by the applicants though.

Mr Mgujulwa also suggests that the purported appointment was only in respect of upgrading of accommodation at Free Hospital, which together with two other projects would have been for a combined value of R3 000 000.00. In this regard he refers to minutes of a procurement meeting that was held on the 22 August 2002.[11] He points out that there is no reference to the Master Plan in the said minutes. He however acknowledges that annexure SM8 which is a letter addressed to respondent informs the latter of its appointment as Consulting Architects / Principal Agent the projects referred to in the said letter. The heading or subject of the letter is recorded to be for the following:

Frere Hospital (East London) Maintenance (Various): Masterplan Upgrade.

[9] According to Mr Mgujulwa, if the value of the contract was as respondent suggests, R 77 000 000 and therefore in excess of R 3 000 000 or R 5 000 000 (Provided for in the Consultant’s Roster Policy Document), it stands to reason that the appointment should have been done through the Eastern Cape Tender Board.

[10] To bolster his assertion that the respondent could not have been appointed in respect of the Master Plan Development Project, Mr Mgujulwa states that there is evidence to show that this project was not budgeted for at the time of the impugned decision. He takes the court through certain documents that relate to the budgets. Mr Sean Bernard Frachet who is the Chief Director; Integrated Budget Planning for Eastern Cape Department of Health confirms that he prepared the budgetary documentation in question. The second confirmatory affidavit is deposed to by Mr Chuma Mbande, Executive Manager, Business Development for Coega Development Corporation. His affidavit confirms what was stated about Coega’s

subsequent involvement in the Frere Hospital Project.

[11] This is also cited as yet another ground for the reviewal of the impugned decision. Namely that there was no budgetary allocation for this project. Subsequent to the appointment of the respondent, according to Mr Mgujulwa, in respect of the upgrade of accommodation at Frere Hospital, a different process of procurement was embarked upon, in respect of which Coega Development Corporation was appointed as the implementing agent for the “Upgrade Phase”.

[12] It is common cause that as a result of this latter appointment, respondent claimed that this constituted a repudiation of the agreement between the parties (applicant and respondent in casu). Respondent communicated its acceptance of the said repudiation to the applicant during 2008 and claimed damages.

[13] I have already alluded to the fact that the deponent to the founding affidavit / supplementary founding affidavit is an attorney who is attached to the State Attorney’s office. He deposed thereto by virtue of the fact that he has been handling this matter on behalf of the applicant. In my view, it stands to reason that he does not have first-hand knowledge of what obtained in the offices of the applicants. To this end, he explains that in instances in which he testifies about matters not within his personal knowledge he obtained confirmatory affidavits from persons with first-hand knowledge of such matters. He makes the assertion that such evidence is not hearsay evidence and is therefore admissible. Mr Mgujulwa acknowledges that the procurement process that led to the impugned decision was taken 17 years ago before he was employed in his present position.[12] According to him, his knowledge about the “flawed process” emanates in part from the documents which form part of the decision as well as from discussions he held with Mr Simka who was a member of the Procurement Committee at the time. Mr Simka did not depose to an affidavit to shed light as to how respondent’s appointment came about. Mr Mgujulwa does not tell us what information he got from Mr Simka which Mr Simka will then be required to confirm. It is not clear why Mr Simka did not depose to an affidavit in this regard. It is further alleged that most of the remaining members of the Procurement Committee are no longer in the employ of the departments concerned.

[14] At paragraph 119 of the supplementary affidavit, Mr Mgujulwa makes the point that there has been a number of dismissals from the department concerned and that this has resulted in the absence of institutional knowledge of the departments.

[15] The respondent takes issue with the admissibility of Mr Mgujulwa’s evidence. This on the basis that his evidence is of a hearsay nature and that he seeks to draw wholesale inferences in the absence of proper instructions. Further that it is the lack of knowledge about the working of the departments which are the applicants on the part of Mr Mgujulwa that the confusion about which contract is involved is attributed. The managing member of the respondent Mr Johan Edward De Beer in his answering affidavit states that there are two Frere Hospital related contracts that were awarded to the respondent. The one referred to in SM14 which was awarded in 2002. The one that was the subject matter of a trial in respect of which a judgment was granted in favour of the respondent was awarded in 2003. This is the contract the applicants seek to undo. In this regard he

refers the court to the appointment letter as it appears at page 102 – 104 of the indexed papers which according to him incorrectly

reflects the dates as 3 September 2002 instead of 2003. When this was pointed in the answering affidavit to the original founding

affidavit, the reply thereto was that this was “noted”. The appointment letter referred to above stipulates that the

appointment should be accepted in writing by signing the attached Acceptance of Appointment Document and returning it to the Project

Managers within 21 days of the letter of appointment. The acceptance letter on behalf of the respondent is dated 15 September 2003. Having been placed in possession of the record of the decision, Mr De Beer states that same is dismally incomplete and does not contain documentary evidence relating to the process that led to the impugned

decision. And that the record does not support the grounds of review.

[16] To further illustrate that there were two distinct appointments, Mr De Beer annexes documentation that relates to the upgrade contract which was seemingly accepted on the 10 September 2002 as JBD22.[13] These documents relate to the acceptance of appointment as architects and principal agent in respect of the upgrade program.

PROJECT: UPGRADING OF FRERE HOSPITAL, EAST LONDON

RE:

Acceptance of Appointment

Dear Sir

We wish to kindly thank the Department of Public Works and the Department of Health for the appointment as architect and principal agent on the Frere Hospital Project, East London, which we gladly accept.

Enclosed please receive our acceptance of appointment for the abovementioned project, as well as a copy of proof of our Professional Indemnity Insurance. Our authorised representative on this project will be G. E. Scheepers of our East London office.

Trusting the above to meet your approval

Yours faithfully

_______________

JOHAN DE BEER

IKAMVA ARCHITECTS cc

ACCEPTANCE OF APPOINTMENT[14]

Frere Hospital (East London): Maintenance

I (name) JOHAN DE BEER the authorised representatives of (name of firm) IKAMVA ARCHITECTS hereby accept the appointment as Architects/Principal Agent for the above project in accordance with the terms and conditions detailed in the Latter of Appointment.

Our representative on the project team responsible for the implementation of the project is (name) GERHARD S. SCHEEPERS (Pr Arch)

We hereby confirm that we have adequate professional indemnity insurance cover as required in terms of this agreement for this project (copies of letters from PI broker/company attached)

Signed__(Signature)_______

Date___10/09/2002__________

Witness__________________

Date___10/09/2002__________

Kindly return to: Bowie Monk & du Plessis

Fax no. 040 – 639 2358 or

Email: bmpqsbls@intekom.co.za

He points out that the upgrade contract above was not the subject of the damages claim which is the contract applicants seek to have reviewed and set aside, namely the decision to award the said contract.

[17] Regarding the process followed to award contracts Mr De Beer has this to say:

There was no tender system in operation before and for a number of years after the award of the contract in respect of the built environment professional consultants such as architects, quality surveyors and engineers. That in terms of national legislation, architects were precluded from competitive price tendering with the fees for architects being prescribed and gazetted from time to time. That there existed at the time a Standard Agreement for consultants by the first applicant and attaches an example of the Standard Agreement. Further that the first applicant department (DPW) awarded contracts on a roster system. He goes on to list examples of instances where appointments were made in the same fashion. Some of those appointments were made during 2004 and 2007 well after the impugned decision. No tenders were sought by or offered in respect thereof. There having been no tender system in operation. According to Mr De Beer, even appointments by the National Department of Public Works were made in the same fashion without any invitation for tenders. He provides an example of such an appointment made during August of 2013. This is a contract where the respondent was invited to perform professional services at the Cradock Prison Complex where the construction of new classrooms was to take place.[15] He also made enquiries with the South African Institute of Architects (SAIA) as to whether any tendering systems was in place. The response thereto is contained in an attachment marked “JDB30”[16] to his affidavit; it is to the effect that SAIA does not have a record or evidence of any appointment of architects having been made through a bidding or tendering procurement process during 2002 – 2005 by the Department of Public Works. He further states that an application (annexure B) to be included in the roster for consultants as envisaged by the relevant policy document was completed on behalf of the respondent. Mr Mgujulwa stated that no such application could be found after a diligent search. Mr De Beer points out that Mr Mgujulwa does not state when and by whom the search was conducted.

[18] Mr De Beer refutes the suggestion that respondent was only appointed in respect of the accommodation project. To that end, he refers the court to first applicant’s plea in the damages action where in paragraph 4 thereof the following admission is made:[17]

“4.1 The First Defendant admits that:

4.1.1 by letter dated 3 September 2002 (Annexure “POC1”) the Head of the Department made an offer to the Plaintiff for its appointment as consulting architect/principal agent for the completion and approval of a master plan for the Frere Hospital project; and

4.1.2 on 15 September 2003 the Plaintiff accepted the above offer in writing (Annexure “POC3”).

4.2 The First Defendant pleads that the above agreement between the Department and the Plaintiff was invalid because the Department had no power to enter into that agreement.

4.3 In terms of Section 4 (1) of the then Provincial Tender Board Act, 1994 (Act No. 2 of 1994) (Eastern Cape) the Eastern Cape Tender Board had the sole power to procure services for the Eastern Cape province.”

[19] Mr De Beer takes issue with Mr Mgujulwa’s assertion that before an appointment could be made a budget for the entire project had to be allocated. That in his experience budget for projects of this nature were provided year to year. Pointing out that consultants are in fact directly involved in the preparation of budgets for such projects. Mr De Beer’s evidence as regards the procedure for the appointment of consultants that obtained at first applicant’s department is supported by affidavits deposed to by Messrs Keating, Pretorius, Damstra Hepburn and Ms Lemmer.

[20] Mr Hepburn, a registered architect, was in the employ of the Department of Public Works, Eastern Cape from March 2002 as a Deputy Chief Architect. He was involved in and directed the procurement process of professional consultants, architects included. According to him, at the time there was no official roster system in place. To facilitate the procurement process, he obtained a list of all registered architects for the Eastern Cape district from the SAIA. As and when projects came up, he would be invited to the procurement meeting. His role was to make recommendations about professional consultants. He endeavoured to ensure that no body received undue preference and also favoured previously disadvantaged individuals. No tendering took place. The appointment following the meeting of the 9

August 2002 related to the upgrading of accommodation at Frere Hospital. The one relating to upgrade project (subject of the damages

claim) was a different project which was accepted on 15 September 2003. He is aware of a payment of R 11 000 000.00 that was made by Department of Public Works to Price Waterhouse Coopers during 2000 to prepare a report in respect of the formation of a roster system for the procurement of professional consultants. That the implementation of the tender system for the appointment of professionals by Public Works only started years later. To explain this even more, Mr Hepburn deposed to a supplementary affidavit to the effect that he only made a recommendation in respect of the upgrading of accommodation at Frere Hospital. By the time he left the employ of Public Works in October 2002, no procurement committee had been held in respect of the Frere Hospital Upgrade Project.

[21] Ms Lemmer, a former employee of first applicant, who is a Quantity Surveyor, stated that during 2002 and 2003 no tender system applied to the appointment of professional consultants by Public Works. There was rather an internal roster system in place. To this end, they were instructed by the Head of the Department of Public Works to ensure that professional consultancy firms were properly registered and had an office in a particular region, whereupon they would be placed on the roster. During or about 2004 or 2005, a Provincial Roster System was set up and operated from Bhisho. This was in compliance with a Supply Chain Management Circular issued by the National Treasurer which delegated authority for the procurement system in using the Provincial roster. In 2010 she opened a Quantity Surveyor practice. She would be appointed based on the procurement system she has outlined without tendering. To this end, she attaches an appointment letter dated 28 November 2011.

[22] Mr Pretorius’s affidavit reveals the following:

He is a retired Quantity Surveyor. He was attached to the National Department of Public Works until his retirement in 2013. Prior to 2007, there was no tender system that was applied by the department for the appointment of professional consultants, including architects.

The earliest version of a tender document for the appointment of professional consultants was introduced in July 2007. He attaches a specimen of the said document.

[23] Mr Pretorius’s evidence is also confirmed by Mr Damstra. He too was employed by the National Department of Public Works. This was up until 2016. He is a registered architect. From 2018 he is also an advocate of the High Court having been admitted as such. When he joined the department in 1980, there was a roster system in place. During or about 1997, this was replaced by a pilot roster system in terms of which all the consultants had to be registered. He co-authored this roster system. He later co-authored a revised version of this system. The system was updated once again during 2002 – to make provision for affirmative action. During this whole period, when the roster system in its various forms operated, there was no tendering. This was the case until 2007. During 2005, the department set up a team to prepare tender documentation for utilization in due course for the appointment of professional consultants. This was despite the promulgation of the PFMA (date of commencement - 1 April 2000). Proposed tender documentation of professional consultants was prepared in 2007. Before that, no tendering applied. He attaches the tender documentation (specimen thereof).

[24] Yet another retired architect Mr Keating who practiced as such in East London for many years and being self-employed in the period between 2002 and 2003. During the time, he practiced in East London, the Department of Public Works as well as its predecessor Roads and Public Works did not apply any tendering system in respect of the appointment of professional consultants – including architects. There was a roster system in place. During 2002, he was appointed with Mr Sindile Ngonyama as architects without any tendering. Mr Keating’s evidence is confirmed by Mr Ngonyama.

[25] I a nutshell, respondent resists the application on the basis that it was appointed lawfully and in accordance with the procurement procedure that was applicable at the time and governed all architectural appointment in the Eastern Cape. It would also seem that this was the procedure that was also adopted or applied by the National Department of Public Works.

[26] On the day that was initially appointed for the hearing of the application – the 25 October 2019, an application was made by the respondent for the admission of a supplementary supporting affidavit by Mr Greef who had deposed to a confirmatory affidavit earlier. This was on the basis that subsequent to the filing of the supporting affidavit he remembers something that was not part of the supporting affidavit. He only recalled it after the filing of his supporting affidavit.

[27] After hearing argument by both parties, I exercised my discretion in favour of allowing the filing of a further affidavit in the form of a supplementary supporting affidavit by Mr Greef. This was on the basis that what was sought to be addressed by the said affidavit was material to the issue(s) at hand. Also on the basis that matters should be adjudicated upon all facts relevant to the issues in dispute.[18]

[28] In his supporting affidavit Mr Greef attested to having been an employee of first applicant (DPW) from 2003 to 2006 as Head of Building Services: Amathole Region. He stated that there was no tender system in place in respect of the appointment of professional consultants by Public Works. He testified about the existence at the time of a procurement committee and the use of a roster system. The need to depose to a supplementary supporting affidavit arose as a result of him having recalled further information relating to the procurement process during his time with the Department of Public Works. This further information according to him was the existence of a pre-audit document (whose appellation he could not recall). The document would be signed off by certain officials some of whom he enumerates one of whom is a person from the finance department on behalf of the Eastern Cape Provincial Treasury. He states that the signatory to the document verified that the works order in terms of which the appointment letter is issued is as per the Eastern Cape Treasury Regulations and conformed to all laws and regulations that apply to the procurement process.

[29] The matter having been postponed to allow the applicants an opportunity to respond thereto, Mr Mgujulwa deposed to a replying affidavit in respect of Mr Greef’s supplementary supporting affidavit. Mr Mgujulwa seeks to make out a case for little weight to be attached to Mr Greef’s supplementary affidavit. Inter alia for the following reasons:

There is no explanation why he initially did not recall these details.

His allegations in this regard are not confirmed by anyone from Ikamva.

This evidence is irrelevant because he does not state that Ikamva was pre-audited in respect of the impugned contract.

[30] According to Mr Mgujulwa, the pre-audit form was used to generate payment on service providers’ accounts.

[31] The contents of Mr Greef’s initial supporting affidavit is also assailed on the basis that he does not state when the roster system came into effect.

[32] The following is worth noting regarding Mr Greef:

He was employed by Department of Public Works during the period 2003 – 2006. He deposed to the supporting affidavit as well as the supplementary affidavit thereto during 2019, more than 10 years after he left the employ of the Department of Public Works. In my view, it ca be expected that some details may have escaped his memory.

[33] It will be recalled that the application for the setting aside of the decision to appoint the respondent, in particular the contract concluded between the first applicant and the respondent, be declared void ab initio and set aside. This was based on the following grounds:

No lawful procurement process was followed prior to the decision.

There was not budgetary allocation for the project prior to the decision.

[34] These grounds were confirmed as being the following in the supplementary founding affidavit:

1. No proper procurement was followed before the appointment as required by national and provincial law, and

2. there was no budgetary allocation for the work and services at the time the contract was concluded as required by the Public Financial Management Act 1 of 1999.

In reply, the point is made that even if it can be said that there was some form of procurement system followed that clearly only pertains to the accommodation / maintenance project as the minute provided shows. There is no record of how the Ikamva appointment in respect of the Masterplan project was done. And that therefore there was no other lawful process in respect of the Masterplan project. Mr Mgujulwa is adamant that even in respect of the maintenance project, the appointment was irregular as there was no Tender Board approval.

Ikamva is criticized for not providing documentary evidence to prove / show that there was a proper procurement process which gave rise to the impugned decision.

[35] It would seem that the basis for asserting that there was no lawful procurement procedure that was followed before a decision was taken to appoint Ikamva is that there is no record of such, no procurement committee minute. Nor is there a Tender Board Minute relating to this appointment.

[36] What the applicants do not do is to let us in into how the appointment was made. The respondent can hardly be expected to know or have the records not having been part of the procurement committee. It is not clear why Mr Simka who seems to be only official who was involved at the time does not shed light as to how the appointment was made. It is also not clear what it is that he is confirming in relation to Mr Mgujulwa’s affidavits. Especially in view of the fact that he is “part of the procurement committee that recommended the respondent for appointment”. He is better placed to tell us exactly what preceded and therefore led to the appointment. There is a suggestion that there are two decisions that came into play – the accommodation project and the Masterplan project. He does not tell us which of the two projects he is referring to in his confirmatory affidavits in any of his confirmatory affidavits.

[37] In Kalil v Mangaung Municipality[19] the function of public servants and government officials at all levels was said to be to serve the public. Further that:

“Thus where, as here, the legality of their actions is at stake, it is crucial for public servants to neither be coy nor to play fast and loose with the truth. On the contrary, it is their duty to take the court into their confidence and fully explain the facts so that an informed decision can be taken in the interests of the public and good governance. As this court stressed in Gauteng Gambling Board and another v MEC for Economic Development, Gauteng, our present constitutional order imposes a duty upon state officials not to frustrate the enforcement by courts of constitutional rights”.

Later at paragraph 32 of the judgment the following is stated:

“Confirmatory affidavits at times may have their place but, by and large, constitute a slothful means of placing evidence before a court which is entitled to expect that the actual witnesses to an event depose to the facts. Be that as it may, when no facts are alleged, either in a respondent’s answering affidavit or in a supporting confirmatory affidavit, to substantiate a denial of the version alleged by an applicant, the denial can be disregarded.”

In my view, these remarks apply to the situation that this court finds itself in. Mr Simka, though a Principal Superintendent since 1997 and part of the procurement committee, does not take the court into his confidence

and fully explain the process that led to the appointment of Ikamva or why he is not able to.

[38] As far as Mr Frachet’s confirmatory affidavit(s) is/are concerned, yes he confirms that there was no budget allocation for the Masterplan project when Ikamva contract was concluded. He explains that this is because the costs estimates were not available at that point and that were subject to 1.1 of his report. Paragraph 1.1 of “SFA2” reads as follows:

“1.1 The finance team urgently mobilised the facilities management team at Frere Hospital today and they were able to retrieve very useful information from hospital archives which had not been previously requested from them, one being the bound Ikamva Architects Frere Hospital Master Plan Report no 1 – showing the population of the scope of their envisaged work. (Refer Annexure “1”

hereto as an extract).”

This in my view lends credence to Mr De Beer’s assertion that the preparation of budgets would of necessity require the involvement of consultants. If, as the applicants suggest, Ikamva was appointed, albeit irregularly according to them, only in respect of the accommodation / maintenance project, no explanation is forthcoming as to why:

(i) If that “appointment” was made in 2002, it was only accepted in 2003 yet the requirement is for acceptance to be signalled within 21 days of the letter of appointment;

(ii) Why the letter of appointment appellation refers to the masterplan project?

(iii) Mr Frachet’s report refers to Ikamva Architects Frere Hospital Master Plan Report (SFA2 above).

[39] A number of respondents’ witnesses point out that both the National Department of Public Works and the Eastern Cape Provincial Department utilized a roster in its different forms to appoint consultants.

[40] In reply, the assertion that no tender system was applied in the National Department but some form of roster system was, is dismissed by saying this is irrelevant because we are here concerned with a decision that was taken in the Eastern Cape. Yet, at paragraphs 27 and 28 of the supplementary founding affidavit, reference is made to what the procurement scheme at national level was. In particular, at paragraph 28 the following is stated:

“At national level, the PPPFA 5/2000 was applicable to the departments when the decision was made.”

In my view it ill behoves Mr Mgujulwa to say this is irrelevant yet he sought to suggest that both at National and Provincial level the department was required to follow a lawful procurement process – being a tendering system. Something respondent’s witnesses, through their supporting affidavits, refute.

[41] It is confirmed on behalf of the respondent that no tendering process was followed in the appointment of professional consultants and a reason is proffered as to why this was the case. But that instead a procurement process that was followed at both levels was that of a roster system.

The record provided by the applicant contains a Consultants Roster Policy Document dated the 1 November 2002 for the Eastern Cape Province – Department of Public Works. The said policy clearly acknowledges that:

The National Department of Public Works and the Gauteng Department of Transport, Roads and Public Works policy documents for the Appointment of Consultants from a Roster have been used as base documents. These have been revised to suit the Eastern Cape Department of Roads and Public needs.

In the preface thereof, the following is recorded:

“This policy is also an indication of not only over adherence to the preferential procurement policy, but also the implementation

thereof.”

This then begs the question: If the appointment of consultants was not done on a roster system at the time, why was there a need to have a roster policy for the appointment of consultants?

[42] Granted, the policy provides for a referral to the Tender Board in respect of projects of the value of which is in excess of given amounts. This in my view is in keeping with respondent’s evidence that around 2003 the department moved towards having a formal roster for consultants whereas previously there was an informal roster or rosters. We unfortunately also do not know when this policy came into effect. Mr Simka only confirms that there was no “pre-audit system” in place. He does not tell us whether there was a roster system in place or not, or how services of consultants were procured. The respondent is at a disadvantage in that he cannot attest to the procedure that was followed, whether there was referral to the Tender Board and subsequent approval. According to the respondent, the minutes relied upon by the applicants relate to a different decision, the one pertaining to the maintenance project. It cannot be expected of the respondent to produce documents or information that is supposed to be in the applicants’ possession – such as the Tender Board Approval, delegation of powers, minutes of departments’ meetings etc. Both in the founding and supplementary affidavits, Mr Mgujulwa makes references to litigation that preceded this application and his opinion thereon. Relating to the value of the work in respect of the impugned decision and with reference to the judgment of Malusi AJ (as he then was) he states that the judge agreed that the contract was worth this exorbitant amount and that respondent had “proved its damages”. He also highlights the following:

That the department, focusing on the contractual unlawfulness of the contract, applied for the rescission of the Malusi AJ’s judgment. Which application was dismissed. An appeal against this decision was dismissed by the Full Bench. Leave to appeal was sought from the Supreme Court of Appeal. The application was dismissed. So was the application for leave to appeal to the Constitutional Court. He then submits that this application is based on a different cause of action to the rescission application as no court in the litigation history of this matter has ever considered the public law challenge raised herein. In the process of making these submissions, he refers to decided cases.

[43] Under the rubric “Delay” in the founding affidavit, Mr Mgujulwa highlights the fact that the contract in question was concluded during the year 2002, nearly 17 years ago (at the time of making the affidavit). He conceded that legality reviews should generally be brought within a reasonable period. But that unlike PAJA reviews, they do not have any fixed periods within which they should be brought. He further states that the department could not have known what the developments of the Constitutional Court would be 15 years after the decision was taken. He also suggests that the decision to “self-review” came as a result of a new administration in the province taking office and endeavouring to correct the wrongs of the past.

[44] The nature of the evidence and submissions made by Mr Mgujulwa prompted an application for the striking off of certain parts of his affidavits. This was mainly on the following grounds:

The validity and enforceability of the contract in question as upheld by Malusi AJ is irrelevant and res judicata and therefore evidence in relation thereto is inadmissible. So is Mr Mgujulwa’s opinion evidence that is not based on proven facts. Evidence concerning the procurement process amounts to hearsay evidence.

Parts of his affidavit are impugned on the basis of constituting argument. In this regard, it will be noted as stated earlier in this judgement the case of the applicants, it would appear, is that it is not known how the impugned decision was reached. Unfortunately, as I pointed out even Mr Simka does not shed any light in this regard. In one of his confirmatory affidavits he states that he confirms the contents of Mr Mgujulwa’s affidavit “insofar as it relates to the processes of Public Works and the procurement committee before the contract in question was awarded to the respondent”. Yet he does not share with us that first-hand information he professes to have and should in reality have, information relating to how the respondent came to be appointed – the process that led to the appointment of the respondent. Incidentally, nothing is said about the existence or otherwise of a roster policy and how it worked.

[45] This in my view would justify the complaint that parts of Mr Mgujulwa’s evidence are of a hearsay nature, some are argumentative and some amount to opinions he has formulated which are irrelevant and

therefore inadmissible. The irrelevance complaint relates also to the fact that applicants seem to only address themselves to the 2002 appointment. Nothing much if anything is said about the 2003 appointment. The respondent has, in my view, managed to demonstrate

that the appointment in question was made during the year 2003 and is the subject of the damages claim.

[46] It is asserted on behalf of the applicants that the evidence in the founding affidavit is not hearsay. It being submitted that it either derived from personal knowledge or gleaned from document at deponent’s disposal. Further confirmed by a person with first-hand knowledge of the facts. The problem with this assertion is that:

1. Mgujulwa cannot claim to have personal knowledge about the procurement process of the applicants because he was never part of the department or involved in the procurement process.

2. Nothing is ventured about how the respondent was appointed. As such nothing is confirmed by Mr Simka. No facts are confirmed by Mr Simka.

On the other hand, the respondent places evidence of how professional consultants were appointed both in the national and provincial spheres before court. This is not addressed by either Mr Mgujulwa or Mr Simka.

[47] Applications to strike out matters from an affidavit are governed by Rule 6 (15) of the Uniform Rules of this court which provides that:

“The court may on application order to be struck out from any matter which is scandalous, vexatious or irrelevant, with an appropriate costs order.

Further that a court may not grant the application unless it is satisfied that the applicant will be prejudiced if the application is not granted.

It is trite that for the application to be granted the court must be satisfied that the matter is indeed scandalous, vexatious or irrelevant and that if not struck out the parties seeking the striking thereof will be prejudiced if it is not so struck out.”

[48] The manner in which the respondent allege it will be prejudiced if this evidence is not struck out of applicants’ affidavit, is that if regard is had to the history of this matter, the delay, the findings of the respective court at different stages of the litigation, contumacy on the part of the applicants, all point to lack of bona fides on the part of the applicant. And is aimed at prejudicing the respondent.

[49] I am inclined to agree with the respondent that the parts of the founding affidavits complained indeed amount to hearsay evidence, some contain legal conclusions – therefore argumentative.

[50] Applicants urged the court in the event of finding the evidence to be of a hearsay nature, to admit same in terms of Section 3 (c) of the Law of Evidence Amendment Act.[20] This subsection provides for the admission of hearsay evidence if it is in the opinion that it should be admitted in the interest of justice. Even if I am inclined to admit the evidence, on the basis that it would be in the interest of justice to do so, the problem with it is that it is of very little probative value, no reason has been given as to why it is not given by the person on whose credibility the probative value of the evidence depends – Mr Simka who is still an official of the first applicant (Section 3 (c) (v)).

[51] An assertion has been made repeatedly by the applicants that it is common cause that no lawful procurement process was followed in respect of the appointment in question. And that there was no Tender Board approval or involvement. There was a need for a budget to have been allocated prior to the conclusion of the contract in question.

[52] The respondent proffers a version explaining each of the abovementioned aspects.

[53] The correct approach is to decide these issues on the version of the respondent based on the Plascon-Evans rule.[21]

[54] Even more importantly though, the respondent objects to parts of the founding affidavits on the basis that the issues raised therein are res judicata and cannot be re-opened or re-argued. This would in essence be tantamount to contradicting a competent judgment. In this regard, the respondent draws the court’s attention to the decision in Buizenhout v Patensie Sitrus Beherent Bpk[22]. In this matter the court held that an order of a court of law stood until it was set aside by a court of competent jurisdiction. Until that has been done, the court order had to be obeyed even if it might be wrong. That the order made by a division of a High Court could only be set aside on appeal, or in terms of Rule 42 of the Uniform Rules of Court or common law grounds. It was also stated that it does not follow that because an order was given for different reasons or on different

criteria, it does not contradict the High Court order. The reliance of the res judicata principle by the respondent as I pointed out, is not only in respect of the striking application but as a defence to the merits of the application.

[55] The applicants’ response in this regard is the following:

The subject matter and the cause of action is not the same. So are the parties, there being no relief sought against the respondent which party is only cited as such because of its interest in the matter.

As far as the contention that subject matter and the cause of action is different, the following submission is made: The self-review (current proceedings) is concerned with the legality principle and therefore public law. The action concerned a claim for damages for breach of a contract and resorted under private law. And that therefore the requirements for res judicata have not been met.

[56] In my view, this distinction is illusionary –

Firstly, it is not accurate to suggest that no relief is sought from the respondent;

The orders sought in the Notice of Motion will no doubt affect the respondent.

The following prayers refer:

The declaration and setting aside of the contract concluded between the applicant and the respondent is sought;

An order to the effect that the respondent is entitled to no further payments under the said contract and in terms of Malus AJ’s order on the 1 December 2015. There can be no doubt therefor that the respondent has a direct and substantial interest in this application and that should the court find in favour of the applicants, the respondent will be prejudiced. The respondent’s rights that flow from the Malusi AJ’s judgment will be taken away.

[57] Applicants acknowledge that an application to rescind Malusi AJ’s judgment failed. This was followed by a dismissal by the full bench of this division on an appeal against the said judgment. Leave to appeal to the Supreme Court of Appeal was sought and refused and so was the application for leave to appeal to the Constitutional Court.

Secondly, the deponent to founding / replying affidavits makes plain what the motive behind the application is in my view.

The founding affidavit acknowledges that the matter has its genesis in an action instituted by the respondent against the applicants. In respect of which a default judgment was obtained for an “alleged” breach of contract.

[58] At paragraph 44 of the replying affidavit[23] the following is stated:

“44. The Departments’ case is in any event unique in many respects – the Departments are resisting payment by way of self-review, in circumstances where the sums are exorbitant and no work was done. This is different in most instances, where the work had been done and paid for and the contract is only of historical relevance. There is no other case that the Departments know of which is similar to the peculiar set of facts before this Court.”

[59] Can it be said in these circumstances that the parties are not the same and the lis between the parties has not been put to rest? That the matter is not res judicata. The issue in both matters – the one categorised as being based in private law and this application, is the validity or otherwise of the contract that was concluded between the parties namely the applicants and respondent. The following remark by Madlanga J in Eke v Parsons[24] are apposite in this regard where he had this to say:

“[31] The effect of a settlement order is to change the status of the rights and obligations between the parties. Save for litigation that may be consequent upon the nature of the particular order, the order brings finality to the lis between the parties; the lis becomes res judicata (literally, “a matter judged”). It changes the terms of a settlement agreement to an enforceable court order. The type of enforcement may be execution or contempt proceedings. Or it may take any other form permitted by the nature of the order. That form may possibly be some litigation the nature of which will be one step removed from seeking committal for contempt; an example being a mandamus.

[32] Litigation antecedent to enforcement is not necessarily objectionable. That is so because ordinarily a settlement agreement and the resultant settlement order will have disposed of the underlying dispute.”

In my view, the underlying dispute between the parties has been disposed of.

The underlying dispute in this matter, in my view is the validity of the contract entered into between the parties. And the Malusi AJ’s order brought finality to the lis between the parties – the lis became res judicata. In the matter of Transalloys (Pty) Ltd v Mineral-Loy (Pty) Ltd[25] the object res judicata defence was said to be based on two grounds, these being:

“The object of the defence of res judicata is based on two grounds: the one public policy, that is to say, it is in the interest of justice that there should be an end to litigation, and the other, the hardship to a litigant, that he should not be vexed twice for the same cause. To allow the appellant’s new defences in relation to the respondent’s claims for payment of the two unpaid invoices and the claim for damages arising from repudiation would defeat the whole object of the defence of res judicata.”

In my view therefore, the defence of res judicata falls to be upheld.

[60] In case I am wrong in this regard and the merits of the matter need consideration on the basis of public law - that is the legality challenge or grounds for self-review. The following are my views:

It is indeed so that Section 217 (1) of the Constitution enjoins organs of state when contracting for goods or services to do so in accordance with a system which is fair, equitable, transparent, competitive and cost effective.

It is also so that our courts have over the years pronounced themselves on the need for state organs or public administrators, where they have acted unlawfully in making a decision – to take steps to remedy the unlawfulness through an application for self-review.[26] This is what the applicants state they seek to do.

Under what circumstances in the case of a self-review should the impugned decision be declared unlawful? When the unlawfulness is of the decision is clear and undisputed.[27] This should be the case even if there has been unreasonable delay in bringing the application for self-review.[28] The rationale for this is the principle that “a court should be slow to allow procedural obstacles to prevent it from looking into a challenge of unlawfulness of an exercise of public power.[29] It was also however acknowledged in the Tasima matter that: A delay can have the effect of prejudicing the respondent, weakling the ability of the court to consider the merits of a review and undermine the public interest in bringing certainty and finality to administrative action. In casu, the public interest will also be prejudiced in that the amount awarded to the respondent as damages on the 1 December 2015 has

increased over the years. Even more so that the applicants according to Mr Mgujulwa. The respondent “will get interest on the money if successful (and the Departments have agreed to the payment of interest to ensure that the respondent is not prejudiced by the in duplum cap)”.[30]

[61] All the ills that are highlighted in Tasima that are likely to follow as a result of substantial delay are manifest in the matter under consideration. I have alluded to the prejudice to the public purse. A bitter pill to swallow given the needs of the majority of the people in the Eastern Cape and the lack of resources. The respondent has no doubt been prejudiced having had a judgment granted in its favour in 2015 as damages for the unlawful repudiation of a contract in respect of which a decision was taken in 2002 according to the applicants and 2003 according to the respondent. The lack of institutional memory Mr Mgujulwa is complaining of as a result of most of the departments’ officials who were involved at the time having left the department. This no doubt also hampers the court’s ability to consider the merits of this application.

[62] The parties are ad idem that no tendering process was preceded the decision to appoint the respondent. According to the applicants, that, coupled with the fact that no budget has been allocated for the project (Master Plan) translates to there having been no proper procurement. Respondent on the other hand asserts that it was appointed based on a proper procurement system that was applicable at the time. To this end, respondent places evidence before court to show that there was a roster policy in its different forms in place that applied at the time.

[63] In a matter that I was referred to by the respondent, in fact there are a few matters where Manong & Associates and first applicant department are involved. A judgment on the appeal against the Equality Courts decision was delivered on the 29 May 2009.[31] And a second judgment was delivered on the 23 September 2009.[32] Both are Supreme Court of Appeal decisions. These matters were concerned inter alia with a complaint by Manong & Associates against the decision by Department of Public Works to do away the roster that was in operation then and replacement thereof with a register. The appellant in the September judgment is described as a national company specialising in civil, structural and development

engineering. A clear picture of Mr Manong’s complaint is depicted in paragraph [21] of the judgment that reads:

“Disgruntled at DPW’s decision to discard the roster system in favour of a new register, Mr Manong wrote a letter on 7 April 2008, in which he called upon the minister not to implement the new policy … … …”

[64] In another matter involving Manong & Associates v Department of Roads and Transport, Eastern Cape Province[33] at paragraph [24] of the judgment, the court refers to a roster system that was launched by the respondent in the matter, for appointing consultants to construction projects. According to the respondent in casu, this was preceded by an informal roster system.

[65] It would therefore appear, as the respondent suggests, the procurement of consultants took place by means of a roster system and not tendering at the relevant time. That appears to have been the procurement system that was applicable at the time with no tendering required in this regard – both nationally and provincially. With the tendering process having been introduced much later.

[66] Can it therefore be said in the circumstances and bearing in mind that the issue should be decided on the respondent’s version that the unlawfulness of the decision is clear and undisputed and therefore falls to be set aside? I think not. I am unable to conclude that the decision to appoint the respondent in respect of the Master Plan project was unlawful. Accordingly, the application falls to be dismissed.

[67] I am not aware of any reason why the costs should not follow the result.

Order

[68] The application is dismissed with costs, such costs to include the costs of two counsel as well as the costs relating to the appearance on the 23 September 2019. Costs in relation to the appearance on the 24 October 2019 are to be borne by the respondent.

_____________­­__

N G BESHE

JUDGE OF THE HIGH COURT

APPEARANCES

For the Applicants : Adv: M Du Plessis SC & Adv: Ngcukayitobi & Adv: Jones

Instructed by : STATE ATTORNEY, EAST LONDON

C/o ZILWA ATTORNEYS

100 High Street

GRAHAMSTOWN

Ref: A F Basson/lab/M345

Tel.: 046 – 622 2047

For the Respondent : Adv: I J Smuts SC

Instructed by : STIRK YAZBEK ATTORNEYS

C/o WHITESIDES ATTORNEYS

53 African Street

Ref: Mr G Barrow

Tel.: 046 – 622 7117

Date Heard : 10 December 2019

Date Reserved : 10 December 2019

Date Delivered : 16 February 2021

[1] As provided for in Rule 53 (1) (b) of Rules.

[2] Per Rugananan AJ (as was) on the 17 September 2019.

[3] (4) The applicant may within ten days after the registrar has made the record available to him or her, by delivery of a notice and accompanying affidavit, amend, add to or vary the terms of his or her notice of motion and supplement the supporting affidavit.

[4] Annexure SM8 pages 102 – 104 of indexed papers.

[5] Page 105 of indexed papers.

[6] Act 5 of 2000.

[7] Act 1 of 1999.

[8] Act 2 of 1994.

[9] Act 6 of 2004.

[10] Page 17 of the record of the decision.

[11] Annexure SM14 page 125 – 129 of the indexed papers.

[12] Paragraph 114 of the Supplementary Founding Affidavit page 30 of the indexed papers.

[13] Page 818 of the indexed papers.

[14] Page 819 of the indexed papers.

[15] JDB28 to Mr De Beer’s answering affidavit page 842 of papers.

[16] Page 880 of papers.

[17] Page 320 – 21 of the indexed papers.

[18] DICKSON V South African General Electric Co. (Pty) Ltd 1973 (2) SA 620 (A) at 628 F.

[19] (210/2014) [2014] ZASCA 90 (4 June 2014) [30].

[20] Act 45 of 1988.

[21] Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd [1984] ZASCA 51; 1984 (3) SA 623 A.

[22] 2001 (2) SA 224 ECD at 231.

[23] Page 1197 of the indexed papers.

[24] 2015 (11) BCLR 1391 CC at [31] – [32] page 1933 – 4.

[25] (781/2016) [2017] ZACSA 95 (15 June 2017).

[26] Department of Transport v Tasima 2017 (2) SA 622 CC at 647 D – E. MEC for Health, EC & Ano v Kirkland Investment (Pty) Ltd t/a Eye and Laser Institute 2014 (3) SA 481 CC at 505 [82]. State Information Technology Agency SOC Limited v Gijima Holdings 2018 (2) SA 23 CC at 36 [38]. The review in Gijima was under PAJA though. Buffalo City Metropolitan Municipality v Also Construction 2019 (4) SA 331 at 334.

[26] Department of Transport v Tasima 2017 (2) SA 622 CC at 647 D – E.

MEC for Health, EC & Ano v Kirkland Investment (Pty) Ltd t/a Eye and Laser Institute 2014 (3) SA 481 CC at 505 [82].

State Information Technology Agency SOC Limited v Gijima Holdings 2018 (2) SA 23 CC at 36 [38]. The review in Gijima was under PAJA though.

Buffalo City Metropolitan Municipality v Also Construction 2019 (4) SA 331 at 334.

[27] Gijima supra at [40] page 37. See also Asle supra at 351 [66].

[28] Asle page 351.

[29] Tasima at [160]. The court was not unanimous in this regard namely, on the issue of overlooking an inordinate delay.

[30] Paragraph 120 of the founding affidavit, page 40 of the indexed papers.

[31] Manong & Associates v Department of Roads & Transport, Eastern Cape Province and National Treasury 331/08 [2009] ZACSA 59 (29/5/2009).

[32] Manong v Minster of Public Works and Another (518/2008) [2009] ZACSA 110 (23/09/2009).

[33] 2008 (6) SA 434 EqC.