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IN THE HIGH COURT OF SOUTH AFRICA(NORTH GAUTENG HIGH COURT, PRETORIA)
Date: 2011-01-07
Case Number: 27974/2010
In the matter between:
TELKOM SA LIMITED Applicant
and
MERID TRADING (PTY) LTD First Respondent
BIZ AFRICA 1944 (PTY) LTD Second Respondent
PLESSEY/HEZEKI JOINT VENTURE COMPANY Third Respondent
FORTEL INVESTMENTS CC Fourth Respondent
BIHATI SOLUTIONS (PTY) LTD Fifth Respondent
MTHIYANE SEYAMA PROJECTS Sixth Respondent
and
Case Number: 25945/2010
BIHATI SOLUTIONS (PTY) LTD Applicant
and
TELKOM SA LIMITED First Respondent
PLESSEY (PTY) LTD Second Respondent
HEZEKI CONTRACTING (PTY) LTD Third Respondent
BIZ AFRICA 1944 (PTY) LTD Fourth Respondent
FORTEL INVESTMENTS CC Fifth Respondent
MERID TRADING (PTY) LTD t/a VUKA
ENTERPRISES Sixth Respondent
MTHIYANE CONSTRUCTION CC Seventh Respondent
SEYAMA SOLUTION AND PLANT HIRE (PTY) LTD Eighth Respondent
GIO CONSTRUCTION AND PLANT HIRE (PTY) LTD.........Ninth Respondent
WORLDTEL (PTY) LTD Tenth Respondent
MOTATA TELECOMMUNICATIONS (PTY) LTD Eleventh Respondent
JAPP CONSTRUCTION (PTY) LTD Twelfth Respondent
JUDGMENT
SOUTHWOOD J
[1] In the application under case number 27974/2010 (‘the main
application’) the applicant seeks the following relief in terms of its
amended notice of motion dated 17 November 2010:
(1) An order reviewing and setting aside the applicant’s decision
taken on 14 November 2008 to accept the proposals submitted
by the six respondents in terms of RFP0101/2007, and the
award of RFP0101/2007 to the six respondents as
communicated to them in the applicant’s letter of 5 December
2008;
(2) In the event that the court finds that this application falls within
the ambit of section 7(1)(b) of the Promotion of Administrative
Justice Act 3 of 2000 (‘PAJA’), an order condoning the
2
applicant’s failure to launch this application within 180 (one
hundred and eighty) days after 14 of November 2008, in terms
of the provisions of section 9 of PAJA;
(3) An order declaring that the applicant’s acceptance of the
proposals submitted by the six respondents in terms of
RFP010/2007 and the award of tender RFP0101/2007 to the six
respondents is null and void and of no force or effect;
(4) An order that the first and fifth respondents pay the costs of this
application.
Only the first and fifth respondents oppose the application. The fifth
respondent, as applicant, in an application under case number
25945/2010 (‘the related application’) seeks the following relief:
(1) An order declaring that Telkom is bound by its decision taken on
5 December 2008 to award the said tender to the applicant (i.e.
the fifth respondent in the main application);
(2) An order that the first respondent (i.e. the applicant in the main
application) in good faith and with due diligence and expedition,
engage with the applicant (i.e. the fifth respondent in the main
application) in a process of negotiation of any outstanding
issues required for the implementation of its original decision to
3
award the tender to the applicant, including the negotiation of
outstanding issues required for purposes of the formal
agreement to be concluded between the parties, and to pursue
and implement all remaining aspects of the tender process in
that regard;
(3) An order that the first respondent (i.e. the applicant in the main
application) pay the costs of the application.
The applicant in the main application opposes the grant of this relief
and relies on the facts set out in the main application.
[2] By agreement between the parties the two applications were enrolled
and heard together. The parties agree that the main application must
be decided first and that if the substantive relief is granted the fifth
respondent will not be entitled to the relief which it seeks in the related
application. For the sake of convenience the parties will be referred to
as they are referred to in the main application.
[3] The following facts are common cause or cannot be disputed:
(1) The applicant is an organ of State as contemplated in section
239 of the Constitution of the Republic of South Africa 1996, and
PAJA.
4
(2) The applicant is subject to the provisions of section 217 of the
Constitution and accordingly, when it contracts for goods and
services it must do so in accordance with a system which is fair,
equitable, transparent, competitive and cost effective. Pursuant
to these constitutional obligations the applicant has adopted a
procurement policy.
(3) The applicant’s procurement policy states with regard to
Requests for Proposals (‘RFP’s’):
‘This is an alternative procurement method that should be
employed where goods or services are available from
general sources and it differs from each other not only in
price but in other aspects as well (i.e. quality, availability,
features, etc.). A Request for Proposal (RFP) is typically
used when the product or service cannot be defined with
absolute specificity and further dialogue with suppliers
concerning the subject of the RFP is expected. The
information generally contained in a RFP is similar to that
listed under paragraph 8.5 (RFB).’
(4) On 8 November 2007 the applicant published an open Request
for Proposal (‘RFP0101/2007’) with a view to selecting and
appointing service providers for the provisioning of Telkom
Network Services (Construction Services) as and when required
by the applicant.
5
(5) The RFP stipulated that the closing date for the submission of
proposals was 12 December 2007. By the closing date the
applicant had received 61 proposals in response to the RFP.
(6) The RFP stipulated that the proposals submitted shall be open
for acceptance by the applicant for a period of 120 days from the
closing date (12 December 2007). The proposal signed by each
proposer contains the following:
‘I/we agree that the offer herein shall remain binding upon
me/us and open for acceptance by Telkom SA Limited
during the validity period indicated and calculated from
the closing hour and date of the bid’.
(7) The 120 day period expired on or about 12 April 2008. The
period of validity for proposals to be submitted was not extended
at any time prior to 12 April 2008, either unilaterally by any of the
proposers or by agreement between the applicant and the
proposers who had submitted proposals. (The first respondent’s
counsel contends that prior to 12 April 2008 the applicant and
the first respondent agreed that the validity period of the first
respondent’s proposal was extended but there is no factual
basis for the contention.)
(8) The evaluation of the 61 proposals received and the shortlisting
of 15 proposals for further consideration took place in
accordance with the applicant’s procurement policy. On 28
6
February 2008 15 of the proposers who had submitted
proposals were shortlisted and approved by the applicant’s
Procurement Review Council.
(9) By 12 April 2008 the applicant had not accepted any of the
proposals.
(10) On 24 June 2008, after the validity period of the proposals had
expired, the applicant sent an e-mail to each of the 15 proposers
whose proposals had been shortlisted for further consideration
and requested them to extend the validity period of their
proposals. This e-mail reads as follows:
‘Dear Proposer
Please note that the validity period of RFP0101/2007
(Construction Services) has expired and we kindly
request your permission to increase it with another 120
days from date of expiry as the tender evaluations are still
ongoing. It will be appreciated if your confirmation can be
received by no later than Thursday 26 June 2008 12h00.’
(11) Several of the proposers to whom the message was sent,
including the six respondents, agreed to extend the validity
period by a further 120 days, which extended period expired on
or about 12 August 2008. No further extensions were sought or
agreed before or after that date. (The first respondent’s counsel
contends that after 12 August 2008 the parties agreed that the
7
validity period of the first respondent’s proposal was extended
‘for a reasonable time, at least until decision by the applicant’s
procurement bodies’. Once again there is no factual basis for
the contention. The first respondent does not even allege that
the parties entered into such a tacit agreement. The fifth
respondent alleges that ‘at least by their conduct the applicant
and the fifth respondent tacitly agreed to the further extension of
the validity period of the tender’. This allegation is extremely
vague and unconvincing. It is not alleged what conduct is relied
upon, who entered into this agreement and that they had the
necessary animus contrahendi and for how long the validity
period was extended. The existence of the tacit agreement
must be inferred from all the relevant facts and circumstances –
see Standard Bank of South Africa Ltd v Ocean
Commodities Inc 1983 (1) SA 276 (A) at 292B; Joel Melamed
and Horwitz v Cleveland Estates (Pty) Ltd 1984 (3) SA 155
(A) at 165I. If an inference can be made from the conduct of the
parties it is by no means clear that ‘the most plausible probable
conclusion’ (see Joel Melamed at 165I) is that the parties
agreed to extend the validity period of the proposal. If the
parties knew – as they clearly did – that the validity period had
expired and no tender had been awarded, the most plausible
probable conclusion is that the parties were engaging in a
procurement process other than by way of public tender.)
8
(12) On 18 September, and after the agreed extended period of the
proposals had expired, the applicant’s Cross-Functional
Sourcing Team, acting in accordance with the applicant’s
Procurement Policy, submitted a written memorandum to the
applicant’s Procurement Review Council (‘PRC’) in which the
award of the RFP to the six respondents was recommended.
On 18 September 2008 the applicant’s PRC supported the
decision and decided to forward the memorandum to the
applicant’s Executive Committee for approval.
(13) On 15 October 2008 the applicant’s PRC submitted a
recommendation to the applicant’s Executive Committee for
support of the recommendation and onwards submission to the
applicant’s Board of Directors for final approval.
(14) On about 14 November 2008 the Executive Committee of the
applicant submitted the recommendation of the PRC to the
applicant’s Board of Directors for acceptance of the
recommendations to make the award of the tender to the six
respondents. The applicant’s Board of Directors approved the
recommendation and resolved to award the RFP to the six
respondents as service providers.
(15) On 5 December 2008, pursuant to the decision taken by the
applicant’s Board of Directors on 14 November 2008, the
9
applicant sent a letter to each of the respondents advising them
of their appointment as preferred service providers for the
provisioning of Telkom Network Services (Construction
Services). The award letters specified that any final award of
business and the effective commencement date of the
appointment as a preferred service provider was conditional
upon the signature of an agreement within 45 days from 5
December 2008 incorporating the matter specified in the award
letter.
(16) The 45 day period calculated from 5 December 2008 expired on
or about 20 January 2009, but no agreement as contemplated in
the award letter was signed between the applicant and any one
of the respondents.
(17) After the issue of the award letters the applicant negotiated with
the six respondents the terms of the final agreements but no
agreements were concluded with any of the respondents.
(18) By February 2009 the applicant had not informed the
unsuccessful bidders that their proposals had not been
accepted.
(19) During February 2009 one or more of these unsuccessful
bidders lodged a complaint with the office of the Public Protector
10
with regard to the procedure relating to the RFP.
Correspondence ensued between the attorneys acting for the
complainants, the Public Protector, and attorneys acting for the
applicant.
(20) Pursuant to these complaints and the correspondence which
ensued between the applicant and the Public Protector, on 6
August 2009 the applicant sent identical letters to the six
respondents advising them that the applicant had consulted with
an external legal counsel and was considering what steps it
should take in respect of the tender.
(21) The applicant decided to suspend the further negotiation of
agreements with the six respondents pending receipt of legal
advice. The applicant received an opinion from Senior Counsel
to the effect that an unsuccessful bidder who had been
eliminated in the evaluation process could contend that the
tender process had come to an end when the validity period had
expired without any award having been made and that he
should then be permitted to submit an approved bid in a
subsequent public tender process in terms of a new RFP.
(22) On 20 November 2009 the Executive Committee of the applicant
submitted a recommendation to the applicant’s Board of
Directors for approval to set aside the award of RFP0101/2007
11
for the provision of Telkom Network Services (Construction
Services). This memorandum specifically referred to the opinion
obtained from legal counsel.
(23) On 13 April 2010 the applicant addressed a letter to the second,
third, fourth, fifth and sixth respondents in which the applicant
advised them of its intention to bring this application. The
applicant gave similar advice to the first respondent on 13 May
2010.
(24) The fifth respondent launched the related application on 6 May
2010 and the applicant launched the main application on 18 May
2010.
[4] The principal issue raised in this case is the legal consequence of a
failure by a public body to accept, within the stipulated validity period
for the (tender) proposals, any of the proposals received.
[5] The applicant’s primary contention may be summarised as follows: the
proposals submitted constituted offers by the proposers to the
applicant to supply the required services to the applicant on the terms
set out in the proposal. Such offers were open for acceptance for a
period of 120 days after the closing date (i.e. until 12 April 2008). The
legal nature of the proposal was an option granted to the applicant (i.e.
an offer coupled with an undertaking to keep the offer open for a
12
specified period of 120 days), and the applicant was entitled to
exercise the option and accept the proposal within the validity period.
After 12 April 2008 there was no longer a valid option open for
acceptance by the applicant. On 24 June 2008, when the applicant
requested the 15 shortlisted proposers to ‘increase their validity period
with another 120 days’ and the proposers agreed to the request, as a
matter of law this could not constitute an extension of or amendment to
the initial proposals and offers which had lapsed, but constituted new
offers made by each of the proposers who agreed to the request, and
which new proposals were on the same terms and conditions as the
initial proposals, save that they were open for acceptance by the
applicant until 12 August 2008. The applicant contends that as the
validity period of the proposals had long since expired the applicant
could not validly have accepted any of the proposals and that the other
proposers must have appreciated by this time that their proposals,
which were not open for acceptance beyond the stipulated period of
120 days, had long since lapsed.
[6] According to the first respondent’s answering affidavit and first
respondent’s counsel’s heads of argument the first respondent
opposes the application on the following grounds:
(a) The applicant and the respondents concluded oral or, at least,
tacit agreements to extend the second validity period from 8
13
August 2008 at least until the date of the award on 5 December
2008;
(b) When the award was made an enforceable agreement came
into existence between the applicant and each of the
respondents;
(c) After the award was made, the applicant and the first
respondent (and, presumably, the other respondents too) in any
event concluded an enforceable agreement with consensus on
all material terms;
(d) The applicant cannot rely upon its own refusal (following
complaints by the unsuccessful bidders) to sign the written
agreement in frustration of fulfilment of the simple conditions;
(e) There is nothing unfair, unconstitutional, unlawful or reviewable
about the negotiation and conclusion of the agreements with the
successful bidders during the extended offer period (to the
exclusion of the unsuccessful bidders who had not, even, met
the applicant’s minimum requirements);
(f) On the contrary, if the award and consequent agreement is set
aside, the first respondent (and, presumably, the other
respondents too) would suffer immense prejudice and
14
themselves become the victims of unfair and unconstitutional
treatment.
[7] The fifth respondent contends that the court is precluded from granting
the relief sought by the applicant because of the applicant’s delay in
instituting these proceedings. In this regard the fifth respondent relies
on the provisions of section 7 of PAJA. (At the hearing the first
respondent’s counsel adopted the fifth respondent’s argument.) With
regard to the merits, the fifth respondent contends that the parties were
free to extend the validity period of the bidders’ proposals and that
there was nothing unfair about the applicant continuing to negotiate
with the 15 bidders who had submitted acceptable tenders. According
to the fifth respondent the tenderers who fell out of the race had their
moment and the extension of the validity period by agreement with the
15 shortlisted tenderers who had submitted acceptable tenders, after
the expiry of the validity period, cannot conceivably be said to be unfair
to the tenderers who fell out of the race. The fifth respondent also
contends that the court must consider all the relevant circumstances of
the tender and adjudicate the matter on the basis of whether the
applicant’s decision to award the tender to the six respondents was
reasonable (see Bato Star Fishing (Pty) Ltd v Minister of
Environmental Affairs 2004 (4) SA 490 (CC) paras 42 and 45) and
taking into account that not every slip in the administration of a tender
must be visited by judicial sanction (see Moseme Road Construction
v King Engineering Construction 2010 (4) SA 359 (SCA) para 21).
15
Finally the fifth respondent contends that the applicant’s letter of
acceptance of 5 December 2008 does not contain a suspensive
condition.
[8] It will be convenient to deal first with the question of the applicant’s
delay in instituting these proceedings before considering the merits of
the application.
[9] The main application is partially an application for judicial review of an
administrative action in terms of section 6 of PAJA. The applicant’s
counsels’ heads of argument rely on a number of grounds of review
specified in section 6. The first and fifth respondents contend that the
applicant did not bring its application within the 180 day period
stipulated by section 7(1) of PAJA. However the applicant argues that
section 7(1) of PAJA does not apply when the decision maker applies
to set aside its own decision as the date of the decision maker’s
decision is not covered by paragraphs (a) and (b) of section 7(1) which
provide for the date from which the 180 days must run. The applicant
contends that the common law rule as enunciated in Wolgroeiers
Afslaers (Edms) Bpk v Munisipaliteit van Kaapstad 1978 (1) SA 13
(A) applies (i.e. the court must decide (a) whether the proceedings
were instituted after the passing of a reasonable time and (b), if so,
whether the unreasonable delay ought to be overlooked. In deciding
(b) the court exercises a judicial discretion, taking into consideration all
the relevant circumstances.)
16
[10] Section 7(1) of PAJA provides that –
‘Any proceedings for judicial review in terms of section 6(1) must
be instituted without unreasonable delay and not later than 180
days after the date –
(a) subject to subsection (2)(c), on which any proceedings
instituted in terms of internal remedies as contemplated in
subsection (2)(a) have been concluded; or
(b) where no such remedies exist, on which the person
concerned was informed of the administrative action,
became aware of the action and the reasons for it or
might reasonably have been expected to have become
aware of the action and the reasons.’
On the face of it the use of the word ‘any’ indicates clearly that the
section is intended to apply to all proceedings for judicial review but
this interpretation may be affected by the context. As pointed out in
Commissioner for Inland Revenue v Ocean Manufacturing Ltd
1990 (3) SA 610 (A) at 618H-I ‘Any is “a word of wide and unqualified
generality. It may be restricted by the subject-matter or the context, but
prima facie it is unlimited’ (Per Innes CJ in R v Hugo 1926 AD 268 at
271.). ‘In its natural and ordinary sense, any – unless restricted by the
context – is an indefinite term which includes all of the things to which it
relates’ (Per Innes JA in Hayne & Co v Kaffrarian Steam Mill Co Ltd
1914 AD 363 at 371.)’ While PAJA appears to govern all proceedings
for judicial review the failure of the Legislature to provide for a date
17
where the decision maker wishes to review its own decision indicates
that section 7(1) was not intended to apply to such proceedings. As
long ago as 1977 our (then) highest court held that a public body may
not only be entitled but also duty bound to approach a court to set
aside its own irregular administrative act – see Transair (Pty) Ltd v
National Transport Commissioner and Another 1977 (3) SA 784 (A)
at 792H-793G. Even if the Legislature cannot be presumed to know
the state of the law, the omission seems to be deliberate and the court
must give effect to the Act as it stands. Furthermore, it seems to be
clear that a court cannot read into the Act something that was
overlooked by the Legislature – see Jaga v Dönges NO & Another
1950 (4) SA 653 (A) at 664G. Counsel for the respondents had
difficulty in suggesting the words which could fill the casus omissus and
eventually, as I understood them, accepted the applicant’s contention
that where the decision maker seeks to review its own decision the
common law rules must be applied. This means that all the relevant
circumstances must be taken into consideration, particularly the
strength of the case on the merits. Accordingly I turn to a consideration
of the merits.
[11] As appears from the parties’ opposing contentions they have
diametrically opposed points of departure. The applicant’s approach is
that there has not been compliance with section 217 of the Constitution
(i.e. the administrative process is flawed). On the other hand, the
respondents’ approach is that the rules of contract apply, that the
18
parties were free to extend the validity period of their proposals, that
they in fact did so and accordingly that the award of the tender is valid.
For this approach the first and fifth respondents rely on the legal
position set out in Manna v Lotter and Another 2007 (4) SA 315 (C)
paras 12-29.
[12] The Constitution lays down minimum requirements for a valid tender
process and contracts entered into following an award of a tender to a
successful tenderer: the tender process, preceding the conclusion of
contracts for the supply of goods and services, must be ‘fair, equitable,
transparent, competitive and cost-effective’ – section 217 of the
Constitution. The decision to award a tender constitutes administrative
action and therefore the provisions of PAJA apply – see Millennium
Waste Management (Pty) Ltd v Chairperson, Tender Board:
Limpopo Province and Others 2008 (2) SA 481 (SCA) para 4;
Metro Projects CC v Klerksdorp Local Municipality 2004 (1) SA 16
(SCA) para 12; Logpro Properties CC v Bedderson NO and Others
2003 (2) SA 460 (SCA) para 5. Generally, once a contract has been
entered into pursuant to the award of the tender the rules of contract
apply – see Cape Metropolitan Council v Metro Inspection
Services CC 2001 (3) SA 1013 (SCA) para 18; The Law of
Government Procurement in South Africa Phoebe Bolton Lexis
Nexis Butterworths page 30 para 5. In accordance with the principle or
doctrine of legality a contract entered into without complying with the
prescribed tender processes is invalid and the court has no discretion
19
to enforce the contract or refuse to enforce it – see Municipal
Manager: Qaukeni v FV General Trading CC 2010 (1) SA 356
(SCA) paras 14, 15 and 16; Premier, Free State and Others v
Firechem Free State (Pty) Ltd 2000 (4) SA 413 (SCA) para 30;
Eastern Cape Provincial Government v Contractprops 25 (Pty) Ltd
2001 (4) SA 142 (SCA) paras 8 and 9. It follows that, even if no
contract is entered into, all steps taken in accordance with a process
which does not comply with the prescribed tender process are also
invalid – see section 2 and 172(1) of the Constitution:
Pharmaceutical Manufacturers of South Africa: In re ex parte
President of the Republic of South Africa 2000 (2) SA 674 (CC)
para 48.
[13] Once the applicant was advised that its tender process was irregular
because it did not comply with the prescribed tender procedure the
applicant was duty bound to approach a court to set aside its own
irregular administrative act – see Municipal Manager: Qaukeni v FV
General Trading CC supra para 23. The applicant was under a duty
not to submit itself to an unlawful contract and was obliged to ignore
the award of the tenders and resist any attempt to enforce them – see
Premier, Free State and Others v Firechem Free State (Pty) Ltd
supra para 36; Municipal Manager, Qaukeni v FV General Trading
CC supra para 23. The applicant was entitled to bring an application
to review and set aside the award of the tenders and/or apply for a
declarator that the award of the tenders was null and void and of no
20
force and effect – see Municipal Manager: Qaukeni v FV General
Trading CC supra paras 25 and 26.
[14] The question to be decided is whether the procedure followed by the
applicant and the six respondents after 12 April 2008 (when the validity
period of the proposals expired) was in compliance with section 217 of
the Constitution. In my view it was not. As soon as the validity period
of the proposals had expired without the applicant awarding a tender
the tender process was complete – albeit unsuccessfully – and the
applicant was no longer free to negotiate with the respondents as if
they were simply attempting to enter into a contract. The process was
no longer transparent, equitable or competitive. All the tenderers were
entitled to expect the applicant to apply its own procedure and either
award or not award a tender within the validity period of the proposals.
If it failed to award a tender within the validity period of the proposals it
received it had to offer all interested parties a further opportunity to
tender. Negotiations with some tenderers to extend the period of
validity lacked transparency and was not equitable or competitive. In
my view the first and fifth respondent’s reliance only on rules of
contract is misplaced.
[15] A further reason for finding against the first and fifth respondents is that
they have not laid a basis for finding that the validity period of their
proposals was lawfully extended until the tenders were awarded.
21
[16] Furthermore, the applicant’s letters to the six respondents, all dated 5
December 2008, advising them that they were preferred service
providers for the provisioning of Telkom Network Services
(Construction Services) clearly does not contain an unqualified
acceptance of the respondents’ proposals such as would give rise to a
binding agreement. The letters clearly stipulate that –
‘Any final award of business including the effective commencement
date will be contingent upon the signature of an Agreement,
within 45 days from the date of this facsimile, incorporating, inter
alia, the following:
• Telkom’s Standard Terms and Conditions for
Rendering (Turnkey) Services for Telkom
• An appropriate discount structure in line with the
required 15 % saving on current Telkom cost as
detailed in the original Proposal
• Bid conditions as detailed in the original Proposal
• BEE Commitment Plan’
(See e.g. Premier, Free State and Others v Firechem Free
State (Pty) Ltd supra paras 21 and 35)
[17] There is also no room for finding that the requirement of a written
agreement signed by the parties was a condition which had been
fictionally fulfilled. If the award process was flawed, as it has been
found to be, the applicant was under a duty not to submit itself to an
unlawful contract and was obliged to resist the respondents’ attempts
to enforce such a contract – see Premier, Free State and Others v
Firechem Free State (Pty) Ltd supra paras 36 and 37.
22
[18] Insofar as it was suggested that the applicant is estopped from denying
that an agreement had been entered into this would be contrary to
what is required by law, namely that the contract be entered into
pursuant to a tender process which is ‘fair, equitable, transparent,
competitive and cost-effective’, and estoppel cannot operate – see
Eastern Cape Provincial Government and Others v Contractprops
25 (Pty) Ltd 2001 (4) SA 142 (SCA) paras 11 and 12.
[19] As far as the declarator is concerned it must follow from the finding that
the tender process was flawed, that the applicant’s acceptance of the
proposals submitted by the six respondents and the applicant’s award
of the tender to the six respondents were null and void and of no force
or effect. As already mentioned a declarator is an appropriate remedy
– see Municipal Manager: Qaukeni v FV General Trading CC 2010
(1) SA 356 (SCA) para 26. The applicant is therefore entitled to the
declarator which it seeks. This will also have an impact on the issue of
unreasonable delay which must now be considered.
[20] The respondents’ approach is that the delay which must be considered
is from 14 November 2008, when the decision was taken to award the
tenders, until 18 May 2010, when this application was launched (i.e. a
period of 18 months). It seems to me that this is not correct. Until
February 2009 the applicant clearly proceeded in the belief that it was
acting properly in terms of a lawful process. It only became aware that
23
the tender process was flawed when it received counsel’s opinion at
about the beginning of August 2009. Thereafter the applicant complied
with its internal procedures before the application was launched. On
20 November 2009 the applicant’s Executive Committee submitted a
recommendation to the applicant’s Board of Directors for approval to
set aside the award of RFP0101/2007. This recommendation
incorporated a summary of counsel’s opinion: that once the validity
period of the proposals had expired with no extension of the period
being arranged before the expiry of the validity period, there were no
valid bids in existence and an award could not be validly made. The
applicant does not say what the Board of Directors decided on that day
and correspondence ensued about the delay in finalising the tender. At
the end of January 2010 the applicant informed the Public Protector
that the Board of Directors’ approval of the Executive Committee’s
recommendation of 20 November 2009 was still awaited. In a letter
dated 13 May 2010 the applicant informed the first respondent’s
attorneys that it intended to apply for the review and setting aside of
the award of the tender. From another letter dated 13 April 2010 it
appears that by then the applicant’s Board of Directors had resolved to
review its decision to award the tenders and that the applicant was
already preparing the application. The applicant eventually issued the
application on 18 May 2010.
[21] In the light of these facts the applicant contends that there was no
unreasonable delay in instituting these proceedings. In argument the
24
applicant’s counsel readily conceded that there are gaps in the
narrative but contended that the applicant is a very large organisation
and that ‘it takes a long time to turn such a big ship around’. I do not
agree. There is no factual basis for the contention that it would take a
long time for the applicant to reverse a decision previously taken. On
the face of it all that was required was a recommendation by the
applicant’s Executive Committee to the applicant’s Board of Directors
and once the Board of Directors had taken its decision the papers
could have been prepared. In my view once the applicant had received
counsel’s opinion that the tender process was flawed the applicant’s
Board of Directors could have taken the necessary decision and the
application could have been prepared and launched within a period of
about two to three months. A period of 10-12 months is obviously
unreasonable.
[22] The question which remains is whether this unreasonable delay should
be overlooked. In my view it should. The applicant is seeking to avoid
the consequences of an unlawful tender process where no final
agreement has been concluded and no party is acting pursuant
thereto. As already pointed out where the tender procedures had not
been complied with the applicant is duty bound to apply to set aside
any resulting contract and not to submit the enforcement of any such
contract. The applicant is entitled to a declarator to the effect that the
acceptance of the proposals submitted by the six respondents and the
award of the tender to the six respondents were null and void and of no
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force and effect. It would therefore make no sense to refuse the relief
sought in the review part of the application. I am mindful of the fact
that the first and fifth respondents allege that they will suffer financial
prejudice because of the delay in finalising the tender but these
allegations are not convincing: there are no facts to support them. In
my view the principle of legality must prevail.
[23] The applicant is therefore entitled to the substantial relief sought in its
amended notice of motion.
[24] With regard to costs the applicant is not entitled to the costs of the
whole founding affidavit. These papers run to 566 pages and include
many documents which were not relevant to the case which the
applicant sought to advance. In my view the founding affidavit should
not have exceeded 200 pages and the costs of the remaining papers
must be disallowed.
[25] All the parties employed senior counsel although only the applicant
employed two counsel. It was not argued that the applicant is not
entitled to the costs of two counsel and in my view it is. The issues are
of sufficient importance to warrant the employment of two counsel.
[26] With regard to the related application the fifth respondent’s counsel
conceded that the court could not grant the relief set out in prayer 1 of
the notice of motion for the simple reason that the application was
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brought too late. A further reason was that there was no evidence that
the decision sought to be reviewed and set aside was taken. As
already mentioned the parties agree that if the applicant is granted
substantive relief the related application must be dismissed.
[27] The following orders are made –
I In the main application under case number 27974/2010:
(1) The applicant’s decision taken on 14 November 2008 to
accept the proposals submitted by the six respondents in
terms of RFP0101/2007, and the award of
RFP0101/2007 to the six respondents as communicated
to them in the applicant’s letter of 5 December 2008 are
reviewed and set aside;
(2) It is declared that the applicant’s acceptance of the
proposals submitted by the six respondents in terms of
RFP0101/2007 and the award of the tender
RFP0101/2007 to the six respondents is null and void
and of no force and effect;
(3) The first and fifth respondents are ordered to pay the
applicant’s costs of this application, jointly and severally,
the one paying the other to be absolved, such costs to
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include the costs consequent upon the employment of
two counsel but to exclude the costs of preparing 365
pages of the founding affidavit and annexures.
II In the related application under case number 25945/2010:
(1) The application is dismissed with costs, such costs to
include the costs consequent upon the employment of
two counsel.
_______________________B.R. SOUTHWOOD
JUDGE OF THE HIGH COURTCASE NO: 27974/2010
HEARD ON: 18 November 2010
FOR THE APPLICANT: ADV. N.G.D. MARITZ SC ADV. L.A. RETIEF
INSTRUCTED BY: Maluleke Msimang & Associates
FOR THE FIRST RESPONDENT: ADV. J. MARAIS SC
INSTRUCTED BY: Macintosh Cross & Farquharson
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FOR THE FIFTH RESPONDENT: ADV. L. HALGRYN SC
INSTRUCTED BY: Jacobson and Levy Inc.
DATE OF JUDGMENT: 7 January 2011CASE NO: 25945/2010
HEARD ON: 18 November 2010
FOR THE APPLICANT: ADV. L. HALGRYN SC
INSTRUCTED BY: Jacobson and Levy Inc.
FOR THE FIRST RESPONDENT: ADV. N.G.D. MARITZ SC ADV. L.A. RETIEF
INSTRUCTED BY: Maluleke Msimang & Associates
FOR THE SIXTH RESPONDENT: ADV. J. MARAIS SC
INSTRUCTED BY: Macintosh Cross & Farquharson
DATE OF JUDGMENT: 7 January 2011
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