Palm Stationery Manufacturers (Pty) Ltd and Mveli Data Matrix Solutions (Pty) Ltd (Joint Venture) v Acting Head of Department: Mpumalanga Department of Education and Others (2336/2019) [2023] ZAMPMBHC 45 (21 August 2023)

SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document in compliance with the law and SAFLII Policy

THE HIGH COURT OF SOUTH AFRICA

MPUMALANGA DIVISION, MBOMBELA MAIN SEAT

CASE NO: 2336 / 2019

(1) REPORTABLE: NO

(2) OF INTEREST TO OTHER JUDGES: NO

(3) REVISED.

DATE:21 August 2023

SIGNATURE

In the matter between:

PALM STATIONERY MANUFACTURERS (PTY) APPLICANT

LTD and MVELI DATA MATRIX SOLUTIONS

(PTY) LTD (JOINT VENTURE)

And

ACTING HEAD OF DEPARTMENT:

1ST RESPONDENT

MPUMALANGA DEPARTMENT OF EDUCATION

MEMBER OF THE EXECUTIVE COUNCIL

2ND RESPONDENT

MPUMALANGA DEPARTMENT OF EDUCATION

FREEDOM STATIONERY (PTY) LTD 3RD RESPONDENT

JUDGMENT

RATSHIBVUMO J:

Delivered: This judgment was handed down electronically by circulation to the parties' representatives by email. The date and time for hand-down is deemed to be 10H00 on 21 August 2023.

[1] Background.

On 15 May 2019, the First Respondent awarded tender bid no. E[...] for the manufacture, packing and delivery of scholastic stationery to public schools in Mpumalanga to the Third Respondent. The tender was valued at approximately R675 million, excluding VAT and it was for a period of three years. The Applicant’s bid for this tender was disqualified at the initial stage of the tender evaluation process.

[2] On 02 July 2019, the Applicant launched an urgent application (the main application) seeking to: -

a. review and set aside the Second Respondent’s decision to award the tender to the Third Respondent on the grounds that the award was unlawful and irrational;

b. declare any contract concluded between the Second and Third Respondents invalid ab initio and as having no force and effect;

c. direct the First Respondent to consider all bids within fourteen days of the order, alternatively that a just and equitable remedy be granted;

d. costs only in the event of opposition.

[3] There have been developments in the main application following the filing of the complete review record by the First Respondent, so much that the initial relief sought by the Applicant has been abandoned, save for the costs (this application). The reasons for the abandonment are detailed in the supplementary founding affidavit filed by the Applicant in terms of Rule 53(4) of the Uniform Rules of the High Court. The supplementary founding affidavit was filed on 07 February 2023, whereas the complete record was filed with the Registrar of this court on 01 September 2022, some five months earlier. The supplementary founding affidavit was initially not filed with the application for condonation for its late filing in view of the above mentioned rule that provides for the filing of same, within ten days.

[4] It is the Third Respondent that averred in its supplementary answering affidavit that in view of the absence of condonation application, the supplementary founding affidavit was inadmissible. This prompted the Applicant to formally bring a condonation application regarding the supplementary founding affidavit. The Third Respondent is however not opposed to the condonation application by the Applicant. The Third Respondent also averred that the sole purpose for the Applicant launching the now abandoned main application was for it to access its bid. For that reason, it must be ordered to pay the costs on punitive scale.

[5] In return, the Applicant now seeks that the Third Respondent be ordered to pay the costs of the abandoned application on attorney and client scale. The reasons furnished for this submission are that in asserting the condonation point and in seeking punitive costs order against the Applicant, the Third Respondent acted frivolously, unreasonably and vexatiously in spurring further litigation which ought to have been avoided.

[6] Costs.

The purpose of an award of costs is to indemnify a successful party who has incurred expenses in instituting or defending an action.[1] As a general rule, costs follow the event. This rule should be departed from only where good grounds for doing so exist.[2] For example, a party may be deprived of some of the costs to which he or she would otherwise have been entitled if such party’s conduct has

unnecessarily occasioned, encouraged or prolonged a trial.[3] Costs are incurred even in circumstances where the court did not adjudicate on the merits of the case, such as where the claim is withdrawn or abandoned. Abandonment of claims is sanctioned by Rule 41(1) which provides,

(1)(a) A person instituting any proceedings may at any time before the matter has been set down and thereafter by consent of the parties or leave of the court withdraw such proceedings, in any of which events he shall deliver a notice of withdrawal and may embody in such notice a consent to pay costs; and the taxing master shall tax such costs on the request of the other party.

(b) A consent to pay costs referred to in paragraph (a), shall have the effect of an order of court for such costs.

(c) If no such consent to pay costs is embodied in the notice of withdrawal, the other party may apply to court on notice for an order for costs.

[7] As Lewis J puts it in Waste Products Utilisation (Pty) Ltd v Wilkes and Another (Biccari Interested Party)[4], “[w]here a party withdraws a claim the other is entitled to costs unless there are good grounds for depriving him.” In Absa Bank v Robb[5], Boruchowitz J (Molahlehi AJ concurring) stated, “[I]t is trite that a party who withdraws an action or application or who abandons a defence is in the same position as an unsuccessful litigant, and therefore the other party is ordinarily entitled to costs. A departure from the principle, that costs must be awarded to the party which has been put to the expense of defending withdrawn proceedings, is only warranted in exceptional circumstances.” The question this court must answer is whether in casu, there are such exceptional circumstances.

[8] The Applicant must have been conscious of the need to show the exceptional circumstances when it went all out to display the Third Respondent as a vexatious litigant. It will be noted that although the litigation commenced in 2019, the complete review record was only made available in September 2022. This was after the First Respondent had initially made available the record which did not include the Third Respondent’s bid. The Applicant then approached this court for an order compelling the First Respondent to disclose the Third Respondent’s bid as part of the review record, which application was unsuccessfully opposed by the Third Respondent. An application for leave to appeal the order compelling the disclosure of the Third Respondent’s bid was

refused by this court.

[9] The Supreme Court of Appeal however, granted leave to appeal on petition by the Third Respondent, to the full court of this Division, as it reasoned that there were reasonable prospects of success. The full court of this Division handed down a judgment that was a partial success for the Third Respondent as it ordered its bid to be disclosed under certain confidential provisions, that allowed it to produce a redacted bid. Whether the opposition to the production of the bid was unreasonable or not, it was meted with the necessary costs order by the full court and as the parties submitted, that is res judicata and should have no bearing on this application.

[10] It is important to note that following the filing of a complete review record, and after viewing the Third Respondent’s bid, the Applicant reconsidered its position and concluded that there were no prospects of success in proceeding with the reviewing application. After all, the contract between the First Respondent and the Third Respondent had in any event expired due to influx of time. It is for these reasons that it abandoned the main application.

[11] Of further importance is a letter written by the Applicant to the Third Respondent dated 19 December 2022 in which a settlement was proposed under the following terms:[6]

a. that the costs orders in the applicant’s favour in the interlocutory matters be agreed or taxed;

b. that [the Third Respondent] would pay 75% of the aforementioned costs orders as agreed or taxed; and

c. upon payment, the review application would be withdrawn by consent, with no order as to costs and no other orders would be due by any other party, particularly the Department, given the Constitutional nature of the review.

In rejecting this proposal, the Third Respondent gave the Applicant “until 17 January 2023 to tender the costs in the main application, failing which, it had instructions to proceed to set down the main application for hearing on the opposed motion roll and to seek punitive order of costs against it, on an attorney and client scale, for wasting the court’s time.”

[12] It is this rejection that is portrayed as being unreasonable by the Applicant, and the basis of which punitive costs are now sought against the Third Respondent. The costs in respect of the interlocutory application had been determined already by the court and in my view, there was no need of interfering with them as the Applicant attempted to do in the settlement proposal. I therefore see nothing untoward in the Third Respondent rejecting this proposal. A demand for the Applicant to tender costs in respect of the main application is in line with the provisions of Rule 41(1) since the Applicant was abandoning the application without making a tender in respect of costs.

[13] I am unable to agree with the argument to the effect that the offer made by the Applicant in this regard was a reasonable one as submitted or that there is no value in rejecting it. No basis was advanced for this argument. I am not in a position to compare the untaxed costs and determine if the Third Respondent would benefit more in getting the Applicant to pay the costs or in it paying 75% of the interlocutory costs and its own costs in the main application.

[14] Equally, I am unable to find it as vexatious or unreasonable for the Third Respondent to submit that the supplementary founding affidavit filed out of time was inadmissible unless it was condoned by the court. Rule 27(1) provides that “in the absence of agreement between the parties, the court may upon application on notice and on good cause shown, make an order extending or abridging any time prescribed by these rules or by an order of court or fixed by an order extending or abridging any time for doing any act or taking any step in connection with any proceedings of any nature whatsoever upon such terms as to it seems meet.” [My emphasis].

[15] The Applicant knew or ought to have known that it was way out of time in filing the supplementary founding affidavit. It was also aware that it did not seek and acquire an agreement from the Third Respondent to have this condoned. It proceeded to file the same without filing a condonation application irrespective of the above. I am of the view that the Applicant can only blame itself for costs in this regard as it is liable for not seeking and acquiring an agreement in this regard, failing which, it could have just filed the condonation application altogether; and it did not do so.

[16] I am as such unable to find that a good cause exists for the costs order to be made contrary to general rule. In closing argument, the Third Respondent submitted that the costs warranted for abandoning the application would be on normal party and party scale as opposed to what was submitted in the supplementary answering affidavit. I agree with this capitulation.

[17] For the aforesaid reasons, I make the following order.

[17.1] The condonation for late filing of the supplementary founding affidavit is allowed.

[17.2] The Applicant is ordered to pay costs for the abandoned (main) application.

TV RATSHIBVUMO

JUDGE OF THE HIGH COURT

FOR THE APPLICANT: ADV. S MAHABEER SC INSTRUCTED BY: THOMLINSON MNGUNI JAMES C/O: STEGMANNS INC MBOMBELA FOR THE RESPONDENT: ADV. AR SHOLTO DOUGLAS SC INSTRUCTED BY: MS OMAR & ASSOCIATES C/O: KRUGER AND PARTNERS MBOMBELA DATE HEARD: 10 AUGUST 2023 JUDGMENT DELIVERED: 21 AUGUST 2023

[1] Jonker v Schultz 2002 (2) SA 360 (O) at 363H-I; Maloney's Eye Properties BK v Bloemfontein Board Nominees Bpk 1995 (3) SA 249 (O) at 257. See also Cobb v Levy 1978 (4) SA 459 (T) at 464-5

[2] Skotnes v SA Library 1997 2 SA 770 (SCA) 778D–E.

[3] See MB v NB 2010 3 SA 220 (GSJ).

[4] 2003 (2) SA 590 (W) at 597A – B

[5] 2013 (3) SA 619 (GSJ), at para 8.

[6] See paragraph 32 on p. 597 of the paginated bundle and Annexure F to the supplementary founding affidavit.