Kunene Rampala Inc v North West Province Department of Education and Sport Development
| Jurisdiction | http://justis.com/jurisdiction/166,South Africa |
| Judge | Mbatha JA, Mothle JA, Hughes JA, Matojane JA and Mali AJA |
| Judgment Date | 15 September 2023 |
| Citation | 2023 JDR 3503 (SCA) |
| Hearing Date | 11 May 2023 |
| Docket Number | 460/2022 |
| Court | Supreme Court of Appeal |
Hughes JA (Mbatha JA, Mothle JA, Matojane JA and Mali AJA concurring):
This appeal concerns a dispute arising from an addendum to a service level agreement duly concluded between the appellant, Kunene Rampala Inc. (KR Inc.), a firm of attorneys and the North West Province, Department of Education and Sport Development (the Department), the respondent. The appeal is with the leave of the high court, the North West Division, Mahikeng (the high court).
The facts that give rise to this appeal are largely common cause. On 28 September 2015 the Department invited tenders to provide services to conduct evaluation, adjudication and supply chain management administrative services for the provision and delivery of Learner Teacher Support Material (LTSM), under closed tender EDU 04/15 NW. KR Inc. submitted a successful bid, and on 9 October 2015 the Department and KR Inc. concluded a Service Level Agreement (SLA) with the contracted price of R1 243 215. 60.
2023 JDR 3503 p3
Hughes JA (Mbatha JA, Mothle JA, Matojane JA and Mali AJA concurring)
According to the SLA, the duration of the contract was for a period of 12 months. The terms of reference for tender EDU 04/15 NW, highlighted the scope of services to be provided as follows:
The handling of the closure of the tender.
The recording of the receipt of the tender documents.
The administering of the tender documents (i.e. sifting).
Performing evaluation of the tender (including site inspections).
The actual adjudication of the qualifying providers.
The recommendations of the successful bids to the Accounting Officer.
Prepare bid evaluation report and Bid adjudication report.
Recording of all proceedings in the Bid Evaluation committee meetings.’
On 12 October 2015, just three days after the SLA was concluded, and before KR Inc. conducted any work, the parties concluded an addendum to the SLA without further procurement processes being followed. The heading of the addendum thus reads:
‘BID NUMBER – EDU 01/05 NW: PROVISION AND DELIVERY OF STATIONERY TO DISTRIBUTORS WITHIN THE DEPARTMENT OF EDUCATION AND SPORT DEVELOPMENT IN THE NORTH WEST PROVINCE FOR 3 YEARS.’
Coupled with the above, the addendum specified its purpose under the definitions as:
‘“Addendum” – this addendum regarding the appointment of KR Inc to render Supply Chain Management Administration for the provision and delivery of stationery to distributors relating to tender number: EDU 01/15(NW).’
At this juncture, it is necessary to mention that the aforesaid bid EDU 01/15 NW, in the preceding paragraph, had gone out for tender under bid EDU 34/13 NW in November 2013. The tender award was reviewed and set aside in its entirety on 18 September 2014 by the high court, before Kgoele J, who declared that the tender award was improper, irregular, unlawful and invalid. The grounds for the declaration of invalidity are not necessary for this judgment. The Department was ordered to commence the tender award process de novo. The invitation in respect of bid EDU 01/15 NW went out for tender just ten days after the court order of Kgoele J. It is the substance of this bid that formed the addendum which was concluded between the parties.
2023 JDR 3503 p4
Hughes JA (Mbatha JA, Mothle JA, Matojane JA and Mali AJA concurring)
Notably the following appears in the preamble of the addendum:
AND FURTHER WHEREAS KR INC. professed to have the requisite skills to execute the services envisaged in the award of tender 01/15 and professes to have the appropriate, reputable and the necessary expertise to undertake and execute supply chain management administration services and oversight relating to delivery of stationery to distributors within the Department of Education and Sport Development in the North West Province;
. . . .
AND FURTHER WHEREAS it is the intention of the parties to align this addendum with the clause 4.2 of the service level agreement and the letter of appointment (engagement).’ Clause 4.2 of the SLA merely states that ‘[t]he Services will conform in all material respects to its service description as set out in the . . .Engagement Letter.’ The latter purely relays that the letter serves as a binding contract, however, ‘no services must be rendered without obtaining an official purchase order.’
Pertinently, the addendum spelt out the task to be undertaken as the provision and delivery of stationery to the distributors, bearing in mind that in terms of the SLA the appellant was tasked to evaluate, adjudicate and identify the service provider, to supply chain management services, and to conduct the provision and distribution function. Further, the lifespan of the work under the addendum was ‘for a period of 3 years or any such extended period’. Whilst, the lifespan of the SLA was only 12 months.
The effect of the addendum was that: KR Inc. under the SLA was to provide services to conduct evaluation, adjudication and supply chain management administrative services for the provision and delivery of LTSM; having provided such service under the addendum, KR Inc. would be rendering the services for which they had evaluated and adjudicated upon, in that, they would be providing and delivering the stationery to distributors. This in turn resulted in the contract of KR Inc. being increased by three years. In addition, the scope of work to be conducted was increased. The net effect was that the fees due were also increased. Consequently, the appellant was able to charge an amount equivalent to 15 % of the budget spent by the respondent on the procurement of services envisaged. According to the appellant, as per their claim against the respondent, the fee due to them was an amount of R46 650 000.00.
2023 JDR 3503 p5
Hughes JA (Mbatha JA, Mothle JA, Matojane JA and Mali AJA concurring)
KR Inc. performed and completed its duties in terms of the SLA signed on 9 October 2015 for bid EDU 04/15 NW and was duly paid therefore. On 23 December 2016, pursuant to the conclusion of the addendum, KR Inc. issued its invoice to the Department. On 15 March 2017, KR Inc. gave notice of its intention to institute legal proceedings in terms of s 3 of the Institution of Legal Proceedings against Certain Organs of State Act. [1]
On 22 March 2017, the Department wrote a letter of cancellation to KR Inc. advising KR Inc. that it had come to the Department’s attention that the addendum was invalid as it ‘encompassed new scope of work as well as...
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