National Real Estates (Pty) Ltd and Another v Mangaung Metropolitan Municipality and Others (5086/2019) [2021] ZAFSHC 44 (25 January 2021)

IN THE HIGH COURT OF SOUTH AFRICA

(FREE STATE DIVISION, BLOEMFONTEIN)

CASE NO: 5086/2019

In the matter between

NATIONAL REAL ESTATES (PTY) LTD

First Applicant

WEBBER COOPER LOCKMAN INC Second Applicant

and

MANGAUNG METROPOLITAN MUNICIPALITY First Respondent

RAMOTHELLO & TSOTETSI ATTORNEYS

Second Respondent

MT MTIMANZE PROJECTS & CONSULTING (PTY) LTD Third Respondent

CORAM:

NAIDOO J, O’BRIEN AJ

HEARD ON: 25 JANUARY 2021

JUDGMENT BY: NAIDOO J, O’BRIEN AJ

DELIVERED ON: The Judgment was handed down electronically by circulation to the parties’ legal representatives by email and released to SAFLII on 24 February 2021. The date and time for hand-down is deemed to be 24 February 2021 at 9h30.

JUDGMENT

O’BRIEN AJ

[1] The first respondent (“the Municipality”) issued a tender to collect overdue monies owed to the Municipality. The tender was for three years; and included the levy of taxes; and charges for electricity and water services.

[2] On 14 September 2018, the Municipality advised bidders to submit their offers on 18 October 2018. All bids submitted were publicly opened on 18 October 2018.

[3] It is common cause that the applicants, together with the second and third respondents (“the respondents”), duly submitted their bids. On 15 March 2019, the Municipality published the outcome of the tender’s outcome and awarded it to the respondents.

[4] Aggrieved by the outcome, the applicants wrote to the Municipality requesting reasons from the latter as to why the respondents were the successful appointed contractors. In its reasons, the Municipality stated that the applicants failed to comply with the bid’s minimum requirements.

[5] After the Municipality discarded the applicants’ bid as unresponsive, they approached this court on an urgent basis to review and set aside the Municipality’s decision in awarding the tender to the respondents. Furthermore, they seek an order in terms of Section 8 of the Promotion of Administrative Justice Act, 3 of 2000 (PAJA) for want of compliance with this section. In their amended notice of motion, the applicants seek an order that they be are appointed together with the respondents as successful contractors.

[6] During argument, the applicants no longer sought an order in terms of s8 of PAJA. It bears mention that the third respondent took no part in these proceedings.

[7] Before the hearing of this matter, things took a dramatic turn. It came to the Municipality’s attorneys notice that the firm WCL (an acronym for Webber Cooper Lockman Inc) is not in existence. At this stage, it is convenient to mention that in the bid application, the applicants recorded “WCL-NRE JV” as a bidder. In it, they refer to it as a joint venture.

[8] In a letter dated 7 January 2021, Webber states in essence that the firm WCL no longer exists because of an agreement that terminated its existence on 1 March 2019.

[9] The termination agreement, annexed to the papers, stipulates that during March 2017, WCL verbally concluded an agreement and registered as a personal liability company on 28 March 2017. In clause 3 of the agreement, the parties confirm that their amalgamation had been terminated with effect from 1 March 2019.

[10] When the deponent to the founding affidavit, Stefani Lockman (“Lockman”), signed and attested to an affidavit on 1 November 2019, the second applicant no longer existed.

[11] Notwithstanding this knowledge, Lockman, in her founding affidavit, refers to the second applicant in the following terms:

“WCL is a well-established and respected attorney’s firm in Bloemfontein. Its existence is the result of the coming together of 3 previous Bloemfontein Law Firms, two of its oldest and most established (Webbers & Cooper Bezuidenhout) and one of its youngest and most dynamic, Lockman Inc. It prides itself on being able to consolidate and integrate high-quality human capital and to create innovative legal solutions and value for its clients.”

[12] The upshot of the above is that Lockman made a false declaration in the founding affidavit. Mr. Grobler, acting for the applicants, submitted that the application’s outcome is not dependent on this misrepresentation. He asserted that in response to a Rule 7 notice the applicants confirm the second applicant’s legal personae, its directorship, and the recent change of name from Webber Cooper Lockman Inc to Stephany Lockman Attorneys. Accordingly, so the submission goes, it does not take away the applicants’ locus standi because the company remains the same.

[13] The difficulty with this submission is that in the bid document, WCL - NRE is described as the bidders. If that entity is replaced with Stephani Lockman Attorneys, it means a new bidder steps in the shoes of WCL - NRE. Thus, the misrepresentation goes to the heart of the matter because it affects the applicants’ standing to bring this application. By describing itself as WCL - NRE the applicants created the impression that such an entity still exists, and operated as such. Referring to itself now as Stephani Lockman Attorneys constitutes the misrepresentation. This is a fundamental change that impacts the applicants’ locus standi.

[14] On this basis alone, the application falls to be dismissed. However, should I be wrong there is yet another basis why the application cannot succeed.

[15] In terms of s217(1) of the Republic of South Africa’s Constitution 1996 when the procurement of goods or services is sought, it must comply with fairness, equity, transparency, competitiveness, and cost-effectiveness. The Preferential Procurement Policy Framework Act 5 of 2000 creates the legislative framework regarding what must be contained in tender documents.

[16] When inviting bidders, a procuring entity typically sets out the requirements for a specific tender in its documents. By requiring

tender contractors to fulfil the tender requirements and conditions, it creates uniformity and negates a bidder’s attempt to steal a march, so to speak, on other bidders. Thus understood, when applying for a tender the playing fields are level. (Generally, see: Disqualification for non-compliance with public tender conditions.

P Bolton, Per 2014 Volume 17 no 6)

[17] The question arises whether this court may condone the applicants’ failure to comply with a peremptory requirement in a tender document. In Millennium Waste Management (Pty) Ltd v Chairperson, Tender Board: Limpopo Province and Others 2008 (2) SA 481 (SCA) at para 17 it was held that our law permits condonation of non-compliance with peremptory requirements in cases where condonation is not incompatible with public interest and if such condonation is granted by the body for whose benefit the provision was enacted.

[18] But in DR J S Moroka Municipality & Others v Betram (Pty) Ltd & Another [2014] 1 All SA 545 (SCA) the court held a different view. The court, after referring to the Millennium Waste Management case, stated as follows at para 18:

“…Accordingly, in my respectful view, insofar as the judgment in Millennium Waste Management may be construed as accepting that a failure to comply with the peremptory requirement of a tender may be condoned by a Municipal functionary who is of the view that it would be in the public interest for such a tender to be accepted, it should be regarded as incorrect.”

[19] I do not read the two cases as mutually exclusive. For in the Millennium case the court dealt with a discretion in terms of Regulation 5(c) of the Regulations to the Northern Transvaal Board Act, 2 of 1994. This regulation allows the functionary a discretion if a bid does not comply with a tender invitation.

[20] Insofar as the Moroka decision requires strict compliance, I am in respectful agreement. Here it was never argued that this court should condone the applicants’

failure to submit a debt collection certificate in the name of the joint venture. Nor was it suggested that it would have been in the public interest to condone the applicants’ failure.

[21] In my judgment, the applicants failed to comply with the minimum requirements of the bid.

Minimum requirements:

[22] The requirements, among others, are the following:

“2.1 …

2.2 …

2.3 …

2.4 …

2.5 …

2.6 Proof of registration with Association of Debt Recovery Agents (ADRA) or Council of Debt of Collectors.

2.7 …

2.8 …”

Failure to meet minimum requirements will result in disqualification.

(emphasis added)

[23] The specific requirement for proof of registration with the Association of Debt Recovery Agents (ADRA) of Counsel of Debt Collectors is clear and unambiguous in its terms.

[24] The parties were at one that the applicants as a joint venture failed to submit a debt collector’s certificate in the joint venture’s name. Nevertheless, the applicants submit that they produced debt collection certificates issued to its officers and directors. By failing to provide proof of registration, the applicants did not meet the minimum threshold; therefore, their disqualification was procedurally fair. The requirement of a debt collection certificate is peremptory and absent it, the bid was correctly discarded as unresponsive.

[25] The Municipal functionary had no discretion but to reject the applicants’ bid. Ironically, the applicants submitted a BEE consolidated certificate in the name of the joint venture. By so doing the applicants must have been aware of the minimum requirement of a debt collection certificate in the name of the joint venture.

[26] Why did the applicants not submit a debt collection certificate in the name of the joint venture? In reply, the applicants make out a case that it was not possible to obtain a debt collection certificate in the joint venture’s name. Mr. Halgryn, for the respondents, submitted from the bar that this new version should be struck out. Similarly, references to this new version in the applicants’ heads of argument are objected to.

[27] It is impermissible for a party to make out a case in reply. Recently in Global Environmental Trust and Others v Tendele Coal Mining (Pty) Ltd and Others (1105/2019) [2021] ZASCA 13 (9 February 2021) the court referred with approval to Minister of Land Affairs and Agriculture v D&F Wevel Trust 2008 (2) SA 184 (SCA) para 43:

“[T]he reason is manifest – the other party may well be prejudiced because evidence may have been available to it to refute the new case on the facts.”

[28] In my view, there is no need to deal with the strike out application because section 10 of the Debt Collectors Act 114 of 1998, lists those persons who may not be issued with such a clearance certificate, and joint ventures are not included. There is, therefore, nothing in the Debt Collectors Act that prohibits the joint venture from applying for a certificate. On this ground the application must also be dismissed.

[29] Mr. Halgryn submitted that the cost order should follow the result. It appears that Lockman is known to Mr. Halgryn hence his reluctance to request a punitive cost order.

[30] We would be remiss in our duties if nothing further is said regarding the conduct of Lockman in this matter. Not only did she make a misrepresentation referred to in this judgment, but her subsequent conduct in litigating this matter falls short of that required from a legal practitioner. As an officer of the court, the highest ethical standards are expected. She had the opportunity to rectify her mistake, but failed to do so. A Supplementary Founding Affidavit, an Answering Affidavit as well as a Replying Affidavit were filed, which presented the opportunity I refer to, for Lockman to disclose to the court that the JV which submitted the bid no longer exists Instead, she persisted with the misrepresentation, to the extent that the respondents had to initiate proceedings in terms of Rule 7. Moreover, even after that, no amendment was either sought or made at the hearing of this matter. In my view, the conduct of Ms. Lockman should be referred to the Legal Practice Council, Bloemfontein, for further investigation and taking the necessary steps, if any.

[31] I make the following order:

31.1 The application is dismissed with costs.

31.2 The Registrar of this Court is directed to bring a copy of this judgment to the attention of the Legal Practice Council, Bloemfontein

S C O’BRIEN AJ

I concur

NAIDOO, J

Appearances:

On behalf of the applicants: S Grobler SC

Instructed by: Rossouw Attorneys, Bloemfontein

On behalf of respondents: Adv L Halgryn SC

Instructed by: Phatshoane Henney Attorneys, Bloemfontein