T P Electrical South Coast CC v Chairperson of the Tender Appeal Authority: Ethekwini Minicipality and Others (2063/2006) [2007] ZAKZHC 25 (18 October 2007)

IN THE HIGH COURT OF SOUTH AFRICA

DURBAN AND COAST LOCAL DIVISION CASE NO. 2063/2006

In the matter between:

T P ELECTRICAL SOUTH COAST CC APPLICANT

and

CHAIRPERSON OF THE TENDER APPEAL

AUTHORITY: eTHEKWINI MUNICIPALITY FIRST RESPONDENT

eTHEKWINI MUNICIPALITY SECOND RESPONDENT

CLASS A CABLES THIRD RESPONDENT

ABERDARE CABLES (PTY) LTD FOURTH RESPONDENT

AFRICAN CABLES FIFTH RESPONDENT

________________________________________________________________

JUDGMENT delivered on 18 October 2007

SWAIN, J

The issue that arises for decision is whether the applicant’s claim for a review of a decision made by the first respondent, being the Tender Appeal Authority of the second respondent, to set aside a tender award made to the applicant by the eThekwini Municipality’s Bid Adjudication Committee, is moot. The validity of the decision made by this authority is no longer in issue as Mr. Gajoo, S.C., who appeared for the first and second respondents, conceded that the conduct of the first respondent in setting aside the tender award made to the applicant when such award was never before it on appeal, was wrong and bad in law. The issue of whether the relief sought in this application was moot was produced as the proverbial rabbit out of a hat, by Mr. Gajoo, S.C. in his heads of argument, shortly before the matter first came before me. I therefore directed that both parties be given leave to file additional affidavits and, if necessary, heads of argument dealing with this issue and, as a consequence, adjourned the matter.

The cornerstone of the argument advanced by Mr. Gajoo, S.C. was that the contract was to endure for a twenty four month period, commencing on 01 December 2004 and consequently expired on 30 November 2006. The response of Mr. Voormolen, who appeared for the applicant, was to contend that the period of the contract had not yet commenced.

In the award it is specified that the supply of cables by the applicant will be for a twenty four month period commencing on 01 December 2004 “extendable at the sole discretion of the Bid Adjudication Committee”. The letter informing the applicant of the award was dated 18 November 2004 and contained the following statement in the penultimate paragraph

“In view of the above you are advised that this contract cannot come into effect until after the expiration of twenty one days from the date of notification”.

What was set out “above” were details of how unsuccessful tenderers could go about appealing the award by written notification within twenty one days of notification of the decision. The applicant, being aggrieved at the award of a portion of the tender, being item numbers 35 and 37 to the third respondent, noted an appeal only against the award of these items to the third respondent. In response the second respondent, by way of a letter dated 13 December 2004 to the applicant, confirmed receipt of the appeal and stated in the final sentence

“Finally we confirm that pending the finalisation of all appeals pertaining to this matter”.

The sentence was clearly incomplete. However, it is apparent from the additional affidavits filed that the applicant, as well as the first and second respondents, understood the incomplete sentence to mean that pending the finalisation of the appeal process, the implementation of the contract would be suspended. The ruling of the Appeal Authority is dated the 02 September 2005 in which it surprisingly not only set aside the awards of the items appealed against, namely items 35 and 37, but also the balance of the tender awarded to the applicant, which were never the subject of an appeal before it. It is therefore apparent that the appeal process was finalised by no later than 02 September 2005.

At this stage, however nothing further was done by any of the parties to implement the contract for obvious reasons. The applicant had been told that it no longer possessed the items on the tender it has previously been awarded and the second respondent accepted the decision of the first respondent in that regard. In this context for the second respondent to contend that the time for performance by the applicant had commenced running, when it was quite clear that the second respondent would not accept such performance, is without merit. The understanding between the parties that the implementation of the contract would be suspended, pending the finalisation of the appeal process, must have been predicated upon the basis that there would a contract capable of being performed by the applicant, once the outcome of the appeal was finalised. On the first and second respondent’s view of events, after the ruling of the first respondent, there was no contract in respect of which a suspended date of commencement could be implemented. How now can the first and second respondents be heard to say that the contract nevertheless commenced running? In my view the argument is without merit and is not determinative of the question of mootness.

Of greater significance however, with regard to whether the issue is moot or not, is the following. The first and second respondent’s requirements in respect of the electrical goods, which formed the subject matter of the tender, have been met by other suppliers in the interim. The first and second respondents allege that in the interim, the second respondent’s electrical requirements and specifications have changed, to accommodate advances in technology and to render them more environmentally friendly. As a result the second respondent has finalised specifications for a fresh tender, relating to its current and anticipated future electrical requirements. The tender will be advertised and the fresh contract will commence on 01 January 2008. It is therefore clear that the contract to which the applicant seeks re-instatement has effectively been performed. The second respondent’s need for the goods specified in that contract has been satisfied. It no longer requires such goods, now, or in the future. There is consequently no on going need for the specified goods by the second respondent, in respect of which the applicant can tender performance for the duration of the contract of twenty four months. A failure by the second respondent to accept any tender of performance by the applicant in terms of the original contract, or any re-instated contract, raises the issue of a claim for damages by the applicant against the second respondent. It is this aspect which forms the second leg of Mr. Voormolen’s argument on this issue.

He submits that a decision by this Court regarding the first respondent’s decision, is still of importance to determine whether the applicant has a claim for damages against the second respondent. An order setting aside the decision of the first respondent, and re-instating the applicant to the agreement awarded to it by the second respondent, is not a pre-requisite for such a claim, although undoubtedly helpful to the applicant. What is of importance is the conduct of the first respondent in setting aside the tender awarded to the applicant, which was not before it on appeal. As I have said Mr. Gajoo, S.C. conceded that the first respondent was not entitled to do this. He submits that it was not mala fide in doing so, but had simply committed an error of law. That it was not entitled to act in the manner it did, is as plain as a pikestaff, and could not be in issue in any claim for damages advanced by the applicant against the second respondent.

The consequences that flow from such conduct on the part of the first respondent, in respect of a claim for damages against the second respondent, presumably for breach of contract, do not arise in the present case. In the light of the impracticality of re-instating the applicant to the contract, to which I have already referred, an order doing so in combination with a review of the first respondent’s decision, purely as a stepping stone for the applicant on the path to a possible recovery of damages, is not justified.

Regard being had to the a foregoing, I am satisfied that the issue of whether the decision of the first respondent should be reviewed and set aside, and the applicant as a consequence re-instated to the contract, is abstract and there is no justifiable advantage which would accrue to the applicant as a consequence.

Sebenza Kahle Trade v Emalahleni Local Municipal Council

[2003] 2 All S.A. 340 (T) at 349 J

I therefore agree with the submission of Mr. Gajoo, S.C. that the issue is therefore moot.

What remains is the issue of costs. For the reasons which follow, the first and second respondents will be ordered to pay the applicant’s costs, on the attorney and client scale, as a mark of my displeasure at their conduct:

As conceded by Mr. Gajoo, S.C. the first respondent was not entitled to act as it did. Its conduct was unlawful and this should have been apparent to the first and second respondent’s representatives, legal and otherwise, from the outset. Instead of conceding this issue, the merits were contested right up until the eve of the hearing, when the merits were conceded and the issue of mootness raised for the first time. Although the applicant was, to an extent, dilatory in advancing these proceedings, the attitude of the first and second respondents unjustifiably prevented the applicant from performing its obligations in terms of the contract, of which it was unlawfully deprived. In our new era of fairness and transparency such conduct on the part of a local authority in dealing with a member of the public is unacceptable.

The first and second respondents, in their answering affidavit, sought to advance reasons in support of the decision of the first respondent not originally advanced. The basis for the decision of the first respondent, advanced in its ruling dated 2 September 2005, was that the tender could not be split in any way. However, in the answering affidavit filed on behalf of the first and second respondents, Mr. Gavin Joseph conceded that although it was technically feasible to award different items of the contract to different entities, which the second respondent did, the reason why the first respondent ruled as it did was as follows.

In the special conditions of the tender, the second respondent reserved to itself the right to set aside up to thirty percent of the contract in any of the categories for previously disadvantaged bidders. However, it was not disclosed to the tenderers which items of the tender, or which portions of such items, would be set aside to ensure that a fair, transparent and appropriate award could be made.

When regard is had to the fact that this reason was raised for the first time when the affidavit was signed, being 28 September 2006, a year after the original ruling, I agree with Mr. Voormolen’s submission that this smacks of new reasons being sought ex post facto to justify the original decision taken.

This again illustrates the reluctance on the part of the second respondent to appreciate and act in accordance with the fact that the original ruling by the first respondent was blatantly unlawful.

The order I therefore make is the following:

The application is dismissed.

The first and second respondents are ordered to pay the applicant’s costs jointly and severally, on the attorney and client scale.

_______________

SWAIN, J.

Appearances ../

Appearances:

For the Appellant : Adv. Voormolen, A.V.

Instructed by : Haralambous Attorneys

For the 1st & 2nd Respondents : Adv. Gajoo, V., S.C.

Instructed by : Naidoo Maharaj Inc.

Dates of Hearing : 29 June 2007 27 September 2007

Date of Judgment : 18 October 2007