M5 Developments (Cape) (Pty) Ltd v Groenewald NO

• Jurisdiction: South Africa
• Judge: Le Grange J
• Judgment Date: 12 February 2009
• Docket Number: 6277/08
• Court: Cape Provincial Division
• Hearing Date: 30 October 2008
• Citation: 2009 JDR 0094 (C)

Le Grange J:

[1] In this matter the Applicant (M5) seeks an order reviewing and setting aside a decision by First Respondent (Groenewald), the acting municipal manager, that a tender (SC055/2007) of Second Respondent (the Municipality), which was allocated by the Tender Adjudication Committee of Second Respondent to the Applicant, be re-allocated to Third Respondent (Asla).

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[2] M5 furthermore seeks a declaratory order that a valid and binding contract came into existence between the Municipality and itself, pursuant to the allocation of the tender to M5, alternatively that Applicant is entitled to enter into such contract, thereby giving effect to the allocation of the tender.

[3] The factual matrix is mainly common cause between the parties in this matter.

[4] The Municipality, in the first quarter of 2007, published an invitation to tender for services that had to be rendered as the implementing agent for housing projects in the Overstrand Municipal Area.

[5] M5 duly submitted its tender documents and from the 16 tender documents that were received by the Municipality, only 5 tenders were regarded as bona fide, from inter alia M5, Asla and Blue Whale (Fourth Respondent).

[6] The Municipality thereafter appointed an independent consultant firm, namely ICE Group (Pty) Ltd ("ICE"), who recommended that the tender be allocated to M5.

[7] The Municipality's Tender Evaluation Committee, pursuant to the recommendation of ICE, made a formal recommendation that the tender be allocated to M5.

[8] At a subsequent meeting of the Municipality's Tender Adjudication Committee held in April 2007, a resolution was adopted whereby the tender was allocated to M5 in

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accordance with the aforementioned recommendation.

[9] M5 was informed of the allocation of the tender to it by means of a letter dated 28 April 2007. The letter records the following relevant information:-

"It is our pleasure to inform you that your tender for the provision of the abovementioned service has successfully complied with the conditions and specifications of the tender as set by the Municipality and that your enterprise has been appointed as the successful tenderer for the provision of abovementioned service.

Upon completion and signature of the formal Contract and upon the issuing of this letter of acceptance by the Municipality a binding contract will be established between your enterprise and the Municipality for the above mentioned service.

You are advised that all the terms and conditions of tender as well as the tender specifications and requirements continue to apply to the contract for the duration thereof, and that any variation or failure to comply with the tender specifications and requirements, will amount to a breach of contract, unless approved in writing by the Municipality.

Please be informed that the unsuccessful tenderers have a right of appeal in terms of Section 62 of the Local Government Municipal Systems Act, 2000 (Act 32 of 2000) against the decision taken by the Tender Committee, which right of appeal must be exercised within 21 days from date of this letter.

After expiry of the appeal period, you will be required to sign the service contract before the implementation date."

[10] Letters were also forwarded to the unsuccessful tenderers, in which it was stated that they are afforded 21 days in which to lodge appeals in terms of Section 62 of the Local Government: Municipal Systems Act, No 32 of 2000 ("the Systems Act") against

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the allocation of the tender.

[11] Blue Whale lodged an appeal timeously. Asla failed to lodge an appeal within the prescribed time period, but filed a notice of an appeal after the expiry date. From May 2007 to January 2008, no steps were taken by any official of the Municipality to finalize the appeal. Groenewald, who has been employed by the Municipality in various positions, was the acting municipal manager between the periods 1 November 2007 to 31 March 2008. The previous municipal manager had resigned and a new municipal manager was appointed with effect from 1 April 2008.

[12] In February 2008, Groenewald dismissed the appeal of Blue Whale and in a letter dated 12 February 2008 recorded the reason for the decision as follows: "I have considered your representations and have to inform you that your appeal had to be rejected as no fault could be found regarding the adjudication process."

[13] Groenewald however, whilst considering the appeal lodged by Blue Whale, discovered that there were certain differences between the evaluation done by ICE and the information submitted to the Municipality's Tender Adjudication Committee by the Tender Evaluation Committee. According to Groenewald, in the category (empowerment of workforce/development of human resources), certain points were awarded incorrectly to M5 and Asla. In a letter dated 29 January 2008, M5 was informed about this. The letter also records the rescoring of the points of the category in question and Asla as the bid winner by 0.1 point.

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[14] M5 was invited to make written representations to Groenewald regarding all the matters raised in the letter, within a period of one week. M5 was also requested to submit, along with the written representations, further information and documentation, including a confirmatory letter by M5's chartered accountants relating to the points claimed in the category in question in terms of which the tender was evaluated.

[15] In a further letter dated 7 February 2008, Groenewald indicated that if he did not receive anything from M5 by 11 February 2008, he would assume that M5 intends not to avail itself of the opportunity to participate in the appeal process to assist the appeal authority reaching a correct decision.

[16] M5's attorneys responded on 11 February 2008 with a request that M5 be afforded an extension of time as it was advised by its auditors that it would take approximately 14 days from that date, to provide and furnish First Respondent with the relevant information and documentation. M5's attorneys also made reference in the letter that 1 point was awarded under a particular heading "Local Content" to M5, when in fact it qualifies for the full 3 points and the rights of M5 were reserved in that regard.

[17] Groenewald, notwithstanding this requests, informed M5 on 12 February 2008...