Olivewood Trade & Invest 41 (Pty) Ltd and Another v Amathole District Municipality and Another (264/2013) [2014] ZAECGHC 32 (22 May 2014)

IN THE HIGH COURT OF SOUTH AFRICA

(EASTERN CAPE – GRAHAMSTOWN)

CASE NO.: 264/2013

DATE: 22 May 2014

In the matter between:

OLIVEWOOD TRADE & INVEST 41 (PTY) LTD................................................... First Applicant

TALEDI MOROSI BUILDING CONSTRUCTION CC.........................................Second Applicant

And

AMATHOLE DISTRICT MUNICIPALITY.............................................................First Respondent

LEJAMO CONSTRUCTION CC...........................................................................Second Respondent

JUDGMENT

BESHE, J:

[1] This is an application for an order to interdict the second respondent in this matter from continuing with the contract work in respect of a contract that was concluded between the first and second respondent in respect of Bedford Bucket Eradication Phase 4B project arising from Tender No. 8/2/266/2011/2012 (tender in question) pending the finalisation of review proceedings to be instituted by the applicants.

[2] The first applicant is a company with limited liability and with registration number 2010/020092/07, duly registered in accordance with the Companies Act 61 of 1073, and with registered address at 66 Coleraine Drive, Riverclub, Johannesburg.

The second applicant is Taledi Morosi Building Construction CC, a close corporation with registration number 2003/067666/23, duly registered in accordance with the Laws of the Republic of South Africa, with registered address at 157 Umthambeka Section, Thembisa. First and second applicants entered into an unincorporated joint venture for purposes of tendering on the tender in question.

The first respondent is the Amathole District Municipality, municipality duly incorporated and established in terms of Section 12 of the Local Government : Municipal Structures Act, 117 of 1998, having its principal place of business at 40 Cambridge Street, East London.

Second respondent is Lejamo Construction CC, a close corporation with registration 2000/064613/23 duly registered in accordance with the Laws of the Republic of South Africa, with registered address at 37 Mopani Road, Beacon Bay, East London and physical address at Farm W3, Wansley Road, Thomvlei, East London.

[3] It is common cause that during May 2012 the first respondent issued a notice inviting tenders. The purpose of the tender was to attract and appoint a suitable and qualified contractor to do work aimed at eradicating all bucket toilets at formal erven in Adelaide and replacing same with a waterborne sewerage system. The tender notice in question reads thus:

“T1.1 BID NOTICE

AMATHOLE DISTRICT MUNICIPALITY

TENDER NOTICE

PROJECT NAME: Adelaide and Bedford Bucket Eradication – Phase 4B

TENDER NO.: 8/2/266/2011-2012

Bids are hereby invited for the construction of water reticulation networks, the connection of existing toilets onto water and sewer networks, as well as the rehabilitation of existing toilets, the building of new toilets, and the installation of water meters in New Lingelethu, Adelaide.

The minimum specifications are detailed in the Bid document.

Tenderers should have a CIBD contractor grading designation of 5CE or higher.

Tenderers must be registered with the CIBD in a 5CE or higher class of construction works.

Bid documents will be available from the Engineering Services Department, upon payment of a non-refundable fee of R100 (One Hundred Rand) for each document (either in cash or by means of a bank guaranteed cheque) made payable to the Amathole District Municipality. The deposit is to be paid at the Budget and Treasury Office, 40 Cambridge Street, Ground Floor, East London between the hours of 07h30 and 15h00 prior to the collection of the bid documents from the Engineering Services Department, 7th Floor, Caxton House, East London. The documents will be available on Wednesday, 9 May 2012.

Technical Enquiries should be addressed to Mr J du Toit at WorleyParson RSA and can be contacted at (041) 391 8811.

A compulsory site inspection will be held on Tuesday, 15 May 2012 at 11h00. Prospective bidders are to meet at the Nxuba Municipal Offices in Adelaide at the said time.

Completed bid documents are to be placed in a sealed envelope endorsed “ADELAIDE AND BEDFORD ERADICARION – PHASE 4B: BID NO 8/2/266/2011-2012 – AMATHOLE DISTRICT MUNICIPALITY” must be deposited in the Bid Box, at the offices of the Amathole District Municipality, 40 Cambridge Street, East London, 5200, not later than 11h00 on Wednesday, 30 May 2012 at which time the bids will be opened in public.

PREFERENTIAL PROCUREMENT POLICY FRAMEWORK ACT (PPPFA) POINTS WILL BE AWARDED AS FOLLOWS:

Price - ….......................................................................90 points

B-BBEE Status Level of Contribution- …................10 points

TOTAL..................................................................100 points

Bidders are to note that a Pre-Qualification evaluation will be undertaken. A minimum score of 60 points out of 100 must be scored in order to proceed to the Financial Evaluation.

TENDERERS SHALL TAKE NOTICE OF THE FOLLOWING TENDER CONDITIONS:

The Amathole District Municipality Supply Chain Management Policy will apply;

The Amathole District Municipality does not bind itself to accept the lowest bid or any other bid and reserves the right to accept the whole or part of the bid;

Bids which are late, incomplete, unsigned or submitted by facsimile or electronically, will not be accepted;

Bids submitted are to hold good for a period of eight (8) weeks.

All contractors including sub-contractors must be registered with the Construction Industry Development Board (CIDB).

Successful bidders will be required to register as a supplier/service provider on the ADM’s Supplier/Service Provider Database, if not already registered.

Bidders must include in their proposals whether cession agreements will be required to secure funding, or goods and services for the project. Details of such cessions, such as names and details of proposed cessionaries and percentage of quoted price to be ceded, must be given.

N. C. Magwangqana, Municipal Manager

40 Cambridge Street, P O Box 320, East London, South Africa, 5200

Tel (043) 701 4000 Fax (043) 742 0337

[4] The requirements to be met by tenderers are contained in the tender document entitled “Tender data”. In respect of joint ventures, the tender document provides that:

1. Joint ventures are eligible to submit tenders provided that:

Every member of the joint venture is registered with the CIDB: (F 2.1)

Under: Joint Venture Discloser Form: General; the tender document requires that:

(i) … … ….

(ii) A copy of the joint venture agreement must be attached to this form, in order to demonstrate the Affirmable, Joint Venture Partner’s share in the ownership, control, management responsibilities, risks and profits of the joint venture, the proposed joint venture agreement must include specific details relating to:

(a) the contributions of capital and equipment

(b) work items to be performed by the Affirmable Joint Venture Partner’s own forces

(c) work items to be performed under the supervision of the Affirmable Joint Venture Partner.

(iii) Copies of all written agreements between partners concerning the contract must be attached to this form including those, which relate to ownership options and to restrictions/limits regarding ownership and control.

(iv) ABE partners must complete ABE Declaration Affidavits.

(v) The joint venture must be formalised. All pages of the joint venture agreement must be signed by all the parties concerned. A letter/notice of intention to formalise a joint venture once the contract has been awarded will not be considered.

(vi) Should any of the above not be complied with, the joint venture will be deemed null and void and will be considered non-responsive.

[5] It is common cause that the applicants submitted a tender to the notice as parties to the joint venture. It also appears to be common cause that the joint venture had tendered the lowest price. Applicants’ tender was found to be unresponsive. According to the first respondent’s municipal manager, it should not have been considered for pre-qualification stage and the applicants were not awarded the tender. In a letter addressed to the joint ventures’ attorney, first respondent advised that:

The joint venture had not met the pre-qualification requirement of 60% in that each of the joint venture partners in the Olivewood Group did not complete the compulsory enterprise questionnaire.”

[6] According to first respondent’s manager, the applicants also failed to attach a copy of their joint venture agreement as required and that only one of the joint venture partners signed a joint venture disclosure from. He alleges that it was an error to subject the applicants’ tender to a functionality evaluation as it was non-responsive for the pre- qualification stage.

[7] Applicants contend that if the compulsory enterprise questionnaire was incorrectly completed, this did not justify the joint venture’s disqualification. The first respondent should have exercised its discretion in favour of condoning this shortfall.

[8] However, according to the first respondent, the applicants were also outscored by the winning bidder/tenderer in other aspects as well, those being experience, educational qualifications and experience of key personnel, bank rating, and number of prior similar projects undertaken.

[9] Applicants contend that non-compliance with requirements pertaining to joint ventures should have been condoned by the first respondent since they are minor.

[10] Over and above first respondents’ allegations that applicants’ tender was properly excluded or disqualified, first respondent raises a point in limine alleging that the urgency is of applicants’ own making. That therefore the application should be dismissed on that basis alone. The following is the basis on which the abovementioned submission is made by the first respondent:

After the awarding of the tender to the second respondent, they moved into site on the 8 January 2013. On the following day the 9 January 2013, applicants threatened to launch an urgent application. The urgent application was only launched on the 18 February 2013. By that time, about 40% of the work had been completed by the second respondent. That it will not be in the public interest for the work to be suspended.

[11] The explanation proffered by the applicants for the delay in launching the application is the following:

A “minor” delay in instituting this application occurred because the sole member of second applicant Ntsoaki Motlhako took ill and was unable to provide formal instructions to applicants’ attorneys. The applicants while admitting that by the 8 January 2013, the site handover had taken place and second respondent had begun setting up a site camp, they deny that substantial work as alleged by the first respondent has been completed.

[12] According to Dr Vosloo who saw Ms Motlhako on the 13 January 2013, she was unfit for duty from 13 January 2013 to 15 January 2013. Dr Vosloo stated that she may resume normal/light duty on 15 January 2013. Ms Motlhako deposed to a sworn affidavit indicating therein that she only resumed work on the 18 January 2013. There is no explanation as to what happened from the 18 January 2013 to the 18 February 2013. The upshot of the institution of the application more than a month after work had begun on the site is that a considerable amount of work is likely to have been completed at a great cost to the first respondent and subsequently to the tax payer. Needless to say of course is that by the time the application was heard work on the project is likely to have progressed even further. Another aspect that should not be lost sight of, is the purpose of the tender. The tender was issued for the purpose of eradicating bucket system of toilets for the community of Adelaide and replacing it with waterborne sewerage system. It has taken almost 20 years after the dawn of democracy for this community, for steps to be taken to eradicate the bucket system. Work commences in this regard, there is light at the end of the tunnel for this community. Applicants wait for over a month before they can launch an application to interdict the second respondent from carrying on with the work. This in circumstances where the applicants have, on the face of it, failed to comply with inter alia, peremptory requirements of the tender. Those being: Failure to attach a copy of the joint venture. Each of the partners to the joint venture was required to complete an enterprise questionnaire. There was no compliance with this requirement. (Only the first applicant completed the questionnaire)

[13] Surely the issue of urgency has a bearing on the consideration of prejudice that is likely to be suffered by any of the parties. In my view the first respondent and subsequently the members of the community of Bedford will suffer an inconvenience if the application were to be granted. See in this regard, what was stated by Brand JA in Associated Institutions Pension Fund and Others v Van Zyl and Others 2005 (2) SA 302 (SCA) at paragraph 46 – namely:

“… … … . It is a longstanding rule that courts have the power, as part of their inherent jurisdiction to regulate their own proceedings, to refuse a review application if the aggrieved party had been guilty of unreasonable delay in initiating the proceedings. The effect is that, in a sense, delay would ‘validate’ the invalid administrative action (see eg Oudekraal Estates (Pty) Ltd v City of Cape Town and Others 2004 (6) SA 222 (SCA) ([2004] 3 All SA 1) at para [27]). The raison d’être of the rule is said to be twofold. First, the failure to bring a review within a reasonable time may cause prejudice to the respondent.

Secondly, there is a public interest element in the finality of administrative decisions and the exercise of administrative functions

(see eg Wolgroeiers Afslaers (Edms) Bpk v Munisipaliteit van Kaapstad 1978 (1) SA 13 (A) at 41).”

[14] It is my considered view that in the circumstances, the urgency was of applicants’ making. For this reason the application is dismissed with costs.

______________

N G BESHE

JUDGE OF THE HIGH COURT

APPEARANCES

For the Applicants : Adv: Rorke SC

Instructed by : NETTLETONS ATTORNEYS

118 High Street

GRAHAMSTOWN

Tel.: 046 – 622 7149

Ref.: Mr P Cloete

For the Respondents: Adv: Scott SC

Instructed by : DOLD & STONE ATTORNEYS

100 High Street

Tel.: 046 – 622 2348

Ref.: Ms Y Coetzee

Date Delivered : 22 May 2014