Orapa Mega Phase Trading Store 176 CC and Another v University of North-West and Another (39/2003) [2003] ZANWHC 11 (18 March 2003)

CA NO. 39/2003

IN

THE HIGH COURT OF SOUTH AFRICA

(BOPHUTHATSWANA PROVINCIAL DIVISION)

In the matter between:

ORAPA MEGA PHASE TRADING STORE 176 CC

AND ANOTHER Applicant

and

THE UNIVERSITY OF NORTH WEST & ANOTHER Respondent

APPLICATION

MAFIKENG

PISTOR

AJ

DATE OF HEARING 18 March 2003

DATE

OF JUDGMENT

COUNSEL FOR APPLICANT Adv. R.G Beaton

COUNSEL FOR RESPONDENT Adv. R.D. Hendricks

JUDGMENT

PISTOR AJ

This is a review application in terms of Rule 53 of rules of court. First applicant is a close corporation of which all, or at least a substantial number office members had previously been employed as cleaners by The University of the North-West (First Respondent in this matter, herein after referred to as The University). Second applicant is a member of the first applicant close corporation.

Over a period of time, preceeding generally 2001 the university retrenched a number of its cleaning staff. Some of them formed a close corporation with the intention of providing cleaning services through the close corporation to the university.

On 31 January 2001 the university by means of an advertisement in a newspaper invited tenders for cleaning services on the university’s premises.

First applicant submitted the tender. Four tenderers were short-listed. The tender was awarded to second respondent.

The applicants maintained that first applicant was entitled to be appointed to provide the necessary cleaning services to the university and the applicants filed this application.

According to the notice of motion the relieved claimed was:

“1. Directing first respondent to appoint applicant to attend cleaning servises as agreed in terms of paragraph 11.3 of the memorandum of agreement...

Alternatively to prayer 1 supra 2.1 reviewing and setting aside the decision of first respondent to put its cleaning services out to tender during January 2001; 2.2 reviewing and setting aside the decision of the Tender Committee to award the cleaning contract of First Respondent tender to Second Respondent”.

In his heads of argument and in argument before me Mr Beaton, who appeared on behalf of the applicants, abandoned the relief sought in paragraphs 1 and 2.1 of the notice of motion and relied only on the relief sought in paragraph 2.2. of the notice of motion.

GROUNDS OF REVIEW In the founding affidavit the applicants in essence relied on agreement for their claim that they were entitled to be awarded the tender. Mr Beaton however, abandoned the reliance on contra (in my view correctly so). The relevant averments made in the founding papers with regard to contract are briefly as follows: Over a period of time prior to the retrenching of the employees (the retrenchees) news letters issued by the university management and various negotiations had taken place between the university management and representatives of the then employees with regard to the proposed retrenchments. In such news letters and negotiations the university informed the employees inter alia: that they (the employees) should form a juristic entity which would undertake cleaning services and that the university “would certainly contract with such an entity should it at any stage in future require cleaning services”. that “first option should be given to such companies in awarding contracts.” that the university “would not contract with any other entities to conduct cleaning services as the premises of the (University) unless those entities were owned and operated by cleaning personnel formerly employed by the (University).” The negotiations culminated in a written agreement between the university and the staff association (the latter acting on behalf of the affected employees). A copy of the letter agreement was attached to the founding affidavit and was accordingly put before me.

In his heads of argument and in argument before me Mr Beaton, who appeared on behalf of the applicants, abandoned the relief sought in paragraphs 1 and 2.1 of the notice of motion and relied only on the relief sought in paragraph 2.2. of the notice of motion.

GROUNDS OF REVIEW

In the founding affidavit the applicants in essence relied on agreement for their claim that they were entitled to be awarded the tender. Mr Beaton however, abandoned the reliance on contra (in my view correctly so). The relevant averments made in the founding papers with regard to contract are briefly as follows:

Over a period of time prior to the retrenching of the employees (the retrenchees) news letters issued by the university management and various negotiations had taken place between the university management and representatives of the then employees with regard to the proposed retrenchments.

In such news letters and negotiations the university informed the employees inter alia:

that they (the employees) should form a juristic entity which would undertake cleaning services and that the university “would certainly contract with such an entity should it at any stage in future require cleaning services”.

that “first option should be given to such companies in awarding contracts.”

that the university “would not contract with any other entities to conduct cleaning services as the premises of the (University) unless those entities were owned and operated by cleaning personnel formerly employed by the (University).”

The negotiations culminated in a written agreement between the university and the staff association (the latter acting on behalf of the affected employees). A copy of the letter agreement was attached to the founding affidavit and was accordingly put before me.

Paragraph 11 of the agreement is specifically relied upon by the applicants in the founding affidavit. It reads as follows: RE-HIRING OF VOLUNTARY RETRENCHEES ....................... “That in the event of the services of the retrenched employees are still needed by the university the retrenched employees be re-employed on temporary part-time, at an hourly rate which falls within his /her previous salary scale. His/her new contract should not contain any benefits.” Contrary to the agreement and “the legitimate expectation” first respondent invited tenders in January 2001. In his heads of argument and in argument Mr Beaton abandoned all reliance on contract in my view Mr Beaton’s approach is, for a number of reasons correct. In the first instance of ...... a substantial number of factual disputes with regard to what was conveyed to the applicants the negotiations leading up to the written agreement having been entered into. Secondly does the written agreement not support the applicants in their claim that first applicant (being a close corporation) would have been entitled to be given a tender “as a right” so to speak. In view of Mr Beaton’s concession in this regard, I do not deem it necessary to further attend to the terms of the. Mr Beaton based his approach on a ...... ........ which a paraphrase (in the hope that I do not do an injustice to Counsel’s argument). On the facts that are common cause, the university’s committee, which considered the tenders, clearly was of the view that the employment of retrenchees of the university was an important factor in the consideration of the tenders. With regard to the first applicant and first respondent the committee was of the view that they were “on a similar footing ..... with regard to the

employment of ex-retrenchees.” By that time second respondent had not yet employed any retrenchees, but has indicated to the committee that it “would employ” retrenchees and that the said finding of the committee (that two tenderers were on similar footing) was based on such undertaking.

Paragraph 11 of the agreement is specifically relied upon by the applicants in the founding affidavit. It reads as follows:

RE-HIRING OF VOLUNTARY RETRENCHEES

.......................

“That in the event of the services of the retrenched employees are still needed by the university the retrenched employees be re-employed on temporary part-time, at an hourly rate which falls within his /her previous salary scale. His/her new contract should not contain any benefits.”

Contrary to the agreement and “the legitimate expectation” first respondent invited tenders in January 2001.

In his heads of argument and in argument Mr Beaton abandoned all reliance on contract in my view Mr Beaton’s approach is, for a number of reasons correct. In the first instance of ...... a substantial number of factual disputes with regard to what was conveyed to the applicants the negotiations leading up to the written agreement having been entered into. Secondly does the written agreement not support the applicants in their claim that first applicant (being a close corporation) would have been entitled to be given a tender “as a right” so to speak. In view of Mr Beaton’s concession in this regard, I do not deem it necessary to further attend to the terms of the.

Mr Beaton based his approach on a ...... ........ which a paraphrase (in the hope that I do not do an injustice to Counsel’s argument). On the facts that are common cause, the university’s committee, which considered the tenders, clearly was of the view that the employment of retrenchees of the university was an important factor in the consideration of the tenders. With regard to the first applicant and first respondent the committee was of the view that they were “on a similar footing ..... with regard to the

employment of ex-retrenchees.” By that time second respondent had not yet employed any retrenchees, but has indicated to the committee that it “would employ” retrenchees and that the said finding of the committee (that two tenderers were on similar footing) was based on such undertaking.

However, so the argument went, the committee was, “dubed” into coming to this conclusion which, according to the argument was reached on false or wrong facts, since 18 months after the tender was awarded second respondent had not employed a single retrenchee. Consequently so Mr Beaton submitted, with reference to Federal Convention of Namibia v Speaker, National Assembly of Namibia and Others 1994 (1) SA 177 (NM), The decision was based on a “false or fraudulent premise and should be set aside”.

I now turn to consider the grounds of the review, advanced by Mr Beaton.

CONSIDERATION OF

GROUNDS OF THE REVIEW

It is in my view clear that the committee considered the employment of retrenchees by the tenders to be and important consideration in its adjudication of the tenders. Thus in the committee’s reasons, filed in terms of Rule 53 (1) (b) of rules of court the Deputy Vice Chancellor of the university said:

“The reason why the cleaning services were put out to tender and been advertised is due to the fact that there could have been other legal entities which could have retrenchees in their employment or share holding and these companies also had to be given an opportunity to tender for the cleaning services .....”

However, for the reasons that follow Mr Beaton’s submissions, thorough as they might be, cannot be upheld.

Firstly it is clear from the fore-said reasons that the employment of retrenchees was only one of a number of factors that were taken into account by the committee. In this regard the following appear from the said reasons:

“All the ex-retrenchees as well as other people and companies had right to tender. For the sake of fairness and transparency as well as to be equitable, it is the practice that, in dealing with public funds, tenders should be invited from the public for the delivery of services. It was never intended that only ex-retrenchees will be awarded the tender for the cleaning services.”

It was not a requirement that at the time of the consideration of the tenders, the tenderers should already have employed retrenchee. In order to stress the importance of the employment of the retrenchee, Mr Beaton invited attention to the fact that two of the tenderers were eliminated after the interviews inter-alia because they did not indicated that they would employ retrenchees. It is correct that two of the four short-listed tenderers were indeed eliminated after the interviews. However the main reasons as to why they were eliminated had nothing to do with the fact that they had employed retrenchees. The one was eliminated because of its tender price seems to have so low that he did not really know what he was letting himself in for. The second tenderer was eliminated because its tender price was too high. In addition to the afore stated reasons the Vice Chancellor stated that “these two companies also did not indicates that they would employ ex-retrenchees of the university....” Both first applicant and first respondent indicated that they would employ retrenched members of the university. In the replying affidavit (paragraph 3.3 thereof) it is stated that since the tender has been awarded to second respondent, it (second respondent) has not “employed one ex-employee of first respondent” and “accordingly, any communication by second respondent to the effect that

it would employ retrenchees was fraudulent and, in so far as the tender committee or the officials concerned relied upon such communication in reaching their decision, they were dubed into it by second respondent.” The afore-said averment relating to fraud, and contained in the replying affidavit, were not part of the founding affidavit. Mr Beaton argued that the respondents could have reacted to the averments by the filing of a further affidavit. That the respondents could have taken steps to have a further affidavit filed is of course correct. However, in my view the absence of a further affidavit does not justify an inference that the committee did not apply its mind all that it based its decision on the wrong facts. The averment in the replying affidavit that the second respondent had defrauded the committee is not made on the basis that at the time when the second respondent had indicated to the committee that it would employ retrenchees, that information was wrong or false. The averment that second respondent defrauded the committee is based on the inference that subsequent to the tender having been awarded to the second respondent the latter had not employed any retrenchees.

It was not a requirement that at the time of the consideration of the tenders, the tenderers should already have employed retrenchee. In order to stress the importance of the employment of the retrenchee, Mr Beaton invited attention to the fact that two of the tenderers were eliminated after the interviews inter-alia because they did not indicated that they would employ retrenchees. It is correct that two of the four short-listed tenderers were indeed eliminated after the interviews. However the main reasons as to why they were eliminated had nothing to do with the fact that they had employed retrenchees. The one was eliminated because of its tender price seems to have so low that he did not really know what he was letting himself in for. The second tenderer was eliminated because its tender price was too high. In addition to the afore stated reasons the Vice Chancellor stated that “these two companies also did not indicates that they would employ ex-retrenchees of the university....”

Both first applicant and first respondent indicated that they would employ retrenched members of the university. In the replying affidavit (paragraph 3.3 thereof) it is stated that since the tender has been awarded to second respondent, it (second respondent) has not “employed one ex-employee of first respondent” and “accordingly, any communication by second respondent to the effect that it would employ retrenchees was fraudulent and, in so far as the tender committee or the officials concerned relied upon such communication in reaching their decision, they were dubed into it by second respondent.”

The afore-said averment relating to fraud, and contained in the replying affidavit, were not part of the founding affidavit. Mr Beaton argued that the respondents could have reacted to the averments by the filing of a further affidavit. That the respondents could have taken steps to have a further affidavit filed is of course correct. However, in my view the absence of a further affidavit does not justify an inference that the committee did not apply its mind all that it based its decision on the wrong facts.

The averment in the replying affidavit that the second respondent had defrauded the committee is not made on the basis that at the time when the second respondent had indicated to the committee that it would employ retrenchees, that information was wrong or false. The averment that second respondent defrauded the committee is based on the inference that subsequent to the tender having been awarded to the second respondent the latter had not employed any retrenchees.

Thus viewed, it is not a factual averment that fraud was committed but an inference drawn by the applicant from the stated facts. Many other inferences, not consistent with fraud, can of course be drawn. For example it is possible that second respondent could, ....... attempts to employ retrenchees, not reach agreement with them as to the conditions of service.

Thirdly the employment of retrenchees was on what is before me, not made a condition on which a tender was awarded. It was therefore led to the successful tenderer to implement the undertaking to employ such retrenchees.

Fourthly it is clear that, apart from the requirement with regard to the employment of retrenchees, the committee also considered a number of other aspects relating to the tenders. Say for example did the committee consider the fact that after the first applicant was prepared to reduce its tender price from R51 000-00 to R45 000-00 per month its tender price (per month) was still almost R10 000-00 in excess of the tender price of the second respondent.

Therefore, in my view, it cannot be said that the committee did not apply its mind to the matter. The fact that the first applicant was not awarded the tender, from the applicant’s point of view, is seen as unfair. However, unfairness in itself is not a ground for review. The unfairness has to be of such a degree that an inference can be drawn there from that the committee had eared in a respect that would provide grounds for review. That inference is not easily drawn. See Bel..... School Governing Body and Other vs Premier, Western Cape, and Another 2002 (c) SA 265 (CC) at 29 and 2 B.

COSTS

According to what was conveyed to me from the Bar, the respondents brought an application for the filing of security which was heard by Hendler J in this court on 20th June 2002. The present applicant’s reaction to that interlocutory application was that it should be postponed sine die since the first respondent had failed to file its reasons in terms of Rule 53 (1). According to the information conveyed to me from the Bar the interlocutory application was indeed postponed and first respondent was directed to file its reasons. The interlocutory application has subsequently not been enrolled. In the circumstances I am of the view that the application for security cannot be considered as having been successful and the applicant in that application should therefore pay the costs wasted as a result of the filing thereof. Consequently I make the following order.

ORDER

The application is dismissed with costs, save the costs referred to in paragraph 2 herein below.

The costs of the application to demand security, reserved by Hendler J on 20th June 2002 and of the opposition to such application shall be paid by the applicants in the application for security.

JHF PISTOR

ACTING JUDGE OF THE HIGH COURT

I