Milnerton Lagoon Mouth Development (Pty) Ltd v The Municipality of George and Others

• Jurisdiction: South Africa
• Judge: Schippers AJ
• Judgment Date: 23 April 2004
• Docket Number: 3435/02
• Court: Cape Provincial Division
• Hearing Date: 23 April 2004
• Citation: 2004 JDR 0258 (C)

Schippers AJ:

[1]

The applicant seeks an order reviewing and setting aside a decision by the executive committee of the first respondent ("the municipality") not to accept any existing tenders for the purchase and development of certain property in

2004 JDR 0258 p2

Schippers AJ

order that a decision by the executive committee on 4 December 2001 that it would award the tender to the applicant was valid and unconditional; alternatively, if it is found that the tender was conditional, that all suspensive conditions have been fulfilled. Finally, the applicant seeks an order directing the municipality to implement the award of the tender to it.

[2]

The facts are these. In 2001 the municipality invited tenders for the purchase of, and development proposals for, certain property adjacent to the Garden Route Dam, George, known as Portion of the Remainder of Erf 464, George ("the property"). The property measures some 110 hectares. The closing date for the submission of tenders was 14 September 2001 but was extended to 1 October 2001.

[3]

The municipality received seven tenders including that of the applicant. In its tender, the applicant, which described itself as a consortium of property developers, offered to purchase the property for R20,25 million plus VAT together with an additional amount of R4.05 million plus VAT (if applicable) as a contribution to job creation. Payment of the purchase price was to be made on a pro-rata basis simultaneous with transfer of the property as subdivided to end purchasers. The tender sum was based on a total of 81 hectares being transferred into private ownership. The applicant's development proposals comprised 680 single residential erven; group

2004 JDR 0258 p3

Schippers AJ

housing and sectional title developments; a retirement village; two commercial zones; tourist accommodation and related businesses; and seven small-holdings.

[4]

On 4 December 2001, the municipality's executive committee resolved that the tender would be allocated to the applicant and that it would be informed of this decision after the municipality's legal advisers had determined that the tender conditions had been complied with. The main dispute between the parties is whether or not this resolution was conditional. The applicant says that it was not. The municipality says that it was. What is clear, however, is that the decision to award the tender was not communicated to the applicant. The municipality says that this was in accordance with the practice followed in making decisions of this kind.

[5]

On 12 December 2001 the executive committee resolved that no tender be accepted and that new tender conditions be drafted and approved by the executive committee before being advertised.

Was the tender finally awarded to the applicant on 4 December 2001?

[6]

The central enquiry in this case is whether the municipality made a final and unconditional award of the tender to the applicant on 4 December 2001. The applicant's contentions in this regard can be very briefly stated. It

2004 JDR 0258 p4

Schippers AJ

submits that by 4 December 2001 the executive committee had received the input of all relevant parties and obtained all the necessary information to make a final award of the tender. It relies for this submission on the following facts. All tenders submitted were circulated to various officials and sections of the municipality such as the City Engineer, the Town Planning Section and the City Treasurer. The applicant's purchase price was substantially higher than that of other tenderers. By 24 October 2001 the executive committee had been informed of the difficulties in relation to the applicant's tender, namely that it did not comply with the tender conditions which required residential/tourism based land uses (the applicant's tender provided for an office park); and that the tender did not provide for payment for the land on transfer but instead offered a payment scheme based on sales to end users. According to the applicant these difficulties were addressed in its presentation to the executive committee on 9 November 2001. It was stated that the office park could be replaced with something else and that the applicant's tender document provided for the right to submit an alternative cash offer should the municipality require it. Finally, the applicant contends that prior to its decision on 4 December 2001, the executive committee caucused and discussed the award of the tender.

[7]

In my view the question whether a final and unconditional award of the tender was made to the applicant on 4 December 2001 cannot be

2004 JDR 0258 p5

Schippers AJ

determined by resort to the comments of various officials of the municipality or the required information provided to the executive committee to enable it to award the tender. Safer by far to examine the minutes of the relevant meetings of the executive committee and determine from them what exactly was decided. But before doing so, the rule in Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd, [1] recently affirmed in Simelane and Others NNO v Seven-Eleven Corporation SA (Pty) Ltd and Another [2] , bears repetition. In a case such as this, evidential disputes must be resolved on the facts averred by the applicant which are admitted by the respondent together with the facts averred by the respondent. The rule is of course subject to the exception that the respondent's allegations or denials may be rejected merely on the papers if they are far-fetched or clearly untenable. [3]

[8]

The resolution adopted in relation to item 6.24 of the minutes of the meeting of the executive committee on 4 December 2001, reads as follows:

"RESOLVED

(a)

that the tender in respect of the above be allocated to Milnerton Lagoon Mouth Development (Pty) Ltd;

2004 JDR 0258 p6

Schippers AJ

(b)

that the successful tenderer be informed about the resolution in (a) above only once all the legal matters in this regard has (sic) been dealt with by the Municipal Manager."

This extract from the minutes accords with the transcript of the discussion of item 6.24 before the resolution was adopted:

"RDL. VAN VUUREN: Baie dankie Burgemeester. Na deeglike bespreking van die koukus het ons besluit dat ons die ontwikkeling gaan toeken aan Milnerton Lagoon Mouth Development (Pty) Ltd en dat hulle vir ons in voorlegging vorentoe moet weergee en dan sal daar in publieke vergadering gereël word op die regte geleentheid en tyd.

BURGEMEESTER: Ek wil net uitwys dat, in tender is nou, ons ken nou die tender toe maar hy is nie amptelik toegeken voordat hy nie bevestig is onder die hand van die stadsklerk nie. Daar mag dalk sekere regsprobleme wees en ek wil 'n versoek doen op enige iemand wat so in probleem het, veral van die amptenare se kant af, om dit met die stadsklerk op te neem voordat hy die brief teken om die tender toe te ken. Ons moet dit net so notuleer asseblief.

RDL. VAN VUUREN: Die proses sal nou maar sy eie pad moet loop tot [ons} uiteindelik by die ontwikkeling kan kom.

STADSTESOURIER: Voorsitter van ons kant af is daar net in probleem met die betaling, wat nie na ons mening 'n korrekte een is

2004 JDR 0258 p7

Schippers AJ

nie, so ons sal dit net met hulle moet uitsorteer voordat u dit ook kan toeken.

BURGEMEESTER: Ja goed, maar u moet maar al daardie sake hanteer met die Munisipale Bestuurder."

[9]

On the level of the facts, two observations are required to be made regarding the extract from the minutes of the meeting of the executive committee on 4 December 2001 and the above transcript. The first is that the resolution is nothing more than the expression of the executive committee's intention to award the tender to the applicant. The second is that that intention was expressly rendered subject to the resolution of certain legal issues by the municipal manager. On their plain wording, the minutes and the transcript evince an intention on the part of the municipality to award the tender to the applicant once any legal problems in relation to the tender were addressed. The second respondent's attorney who was present at the meeting of the executive committee on 4 December 2001, confirms this. He says that he understood the Mayor's statement to mean that the tender was subject to a suspensive condition and that a legal opinion had to be obtained so as to determine whether the applicant's tender was in order. That is also the evidence of the municipal manager on behalf of the municipality. Applying the rule in Plascon-Evans the respondents' version must be accepted.

2004 JDR 0258 p8

Schippers AJ

[10]

The resolution by the executive committee on 4 December 2001 was consistent with the approach followed by the...