Nisec (Pty) Ltd v Western Cape Provincial Tender Board and Others

• Jurisdiction: South Africa
• Judge: Davis AJ
• Judgment Date: 15 November 1996
• Citation: 1998 (3) SA 228 (C)
• Docket Number: 15081/96
• Hearing Date: 15 November 1996
• Counsel: AJ Smit for the applicant No appearance for the first and second respondents JJ Gauntlett for the third and fourth respondents
• Court: Cape Provincial Division

Davis AJ:

On 15 November 1996 applicant applied to this Court for an order in terms of which

(1)

first respondent is to be ordered to provide time until 1 March 1997 for the applicant to prepare an answer for first respondent in respect of a memorandum of fourth respondent dated 1 October J 1996;

Davis AJ

(2)

first respondent is restrained, pending the provision of an answer in terms of para 1, from cancelling A tender contract No KT30986MD on the grounds as set out in the memorandum.

This Court dismissed the application with costs. The reasons for the decision follow.

In June 1994 first respondent accepted a tender from applicant in terms of which the latter would provide the B supply of computerised fingerprint reading hardware and software, micro computers and automatic cash dispensers and the rendering of a service for the Cape Provincial Administration to pay out social pensions and other welfare grants. C

On 11 October 1996 the State Attorney wrote on behalf of the Minister of Health and Social Welfare to the attorneys for applicant informing them that the issue of the tender would be reconsidered by the Western Cape Provincial Tender Board (Provincial Tender Board). To this letter was attached a copy of a memorandum of the D Department of Social Services of the Provincial Administration of the Western Cape dated 1 October 1996 in which the grounds for the proposed cancellation of the contract were set out in detail.

From a letter written by applicant's attorneys to the Provincial Tender Board on 16 October 1996 it appears that an agreement had been reached to provide applicant with an opportunity to answer the allegations E comprehensively.

On 22 October 1996 the Provincial Tender Board resolved that 'before a final decision is made, the audi alterem partem rule be applied in this case and (applicant) be given an opportunity to advise persons why the proposed cancellation of contract KT30986MD should not be enforced by the Board . . .'. The deadline was set at 30 F October 1996.

On 24 October 1996 applicant's attorneys addressed a letter to the Provincial Tender Board wherein they requested an extension of time to make submissions to the Board as to the reasons why the contract should not be cancelled. G

Further correspondence was exchanged between the various parties. Of particular significance was a letter of 13 November 1996 in which the Provincial Tender Board informed applicant that it was required to submit its response to the Department's memorandum of 1 October by 18 November 1996; hence the urgency of the application to this Court on 15 November 1996. H

The chronology alone does not provide an understanding of the alleged justification for this application. For this it is necessary to examine the basis of fourth respondent's proposed action. The grounds on which the Provincial Administration of the Western Cape: Department of Social Services justified the cancellation of the contract were set out in the memorandum of 1 October 1996 as follows: I

1.

That documents placed before the Board demonstrably showed that applicant had fraudulently represented to the Cape Provincial Administration and the State Tender Board that it had the technological capability to perform the tasks for which a tender had been called. J

Davis AJ

2.

Serious misrepresentations were made in the calculation of the costs of the Cape Provincial A Administration itself carrying out the payment function as specified in the tender.

3.

Applicant's tender prices were artificially reduced in order to show that it was cheaper to award the tender to it than for the Cape Provincial Administration itself to execute the payment function of social B and welfare grants, for applicant's tender price was artificially reduced and those of other tenders inflated to show that the tender of applicant was cheaper, thereby inducing the State to award the tender to applicant.

4.

Officials who were formerly employed by the Cape Provincial Administration and who were later C employed by applicant made material misrepresentations concerning the status of applicant and its ability to carry out the terms of the contract.

IN the Light of These Allegations Applicant's Attorneys Wrote to the Head of the Provincial Tender Board on 25 October 1996 Requesting Copies of a Number of Documents, Including All Files Pertaining to Tender NO Kt30986, D Minutes of All the Meetings Held by the Board which Were Relevant to This Tender and Copies of All Documents, Including Those Tenders Submitted to the Board by 'The Unsuccessful Tenderers'.

Mr Smit, who appeared on behalf of applicant, argued that in the light of the allegations against applicant there E could be no meaningful exercise of the latter's rights to be heard if it was denied access to all the relevant documentation to which reference had been made in the memorandum of 1 October 1996. In particular, para 9.1.1 reads:

'It is demonstrably clear from the documents placed before the Board that NISEC fraudulently represented to the CPA and the State Tender Board that it had the technological capabilities as specified in the invitation to tender when, at all F material times, it was aware that this was not the case.'

In addition Mr Smit referred to paras 9.1.2 and 9.1.3 of the same memorandum. Paragraph 9.1.2 reads:

'Serious misrepresentations were made in the calculation of the costs of the CPA itself carrying out the payment function G as specified in part D of the tender.'

In para 9.1.3 it was alleged that applicant's tender price was artificially reduced in order to show that it was cheaper to award the tender to it than for the CPA itself to execute the payment function of social and welfare grants, thereby inducing the State to award the tender to NISEC.

Mr Smit argued that applicant was not in a position to respond to these allegations unless it was able to examine H all the relevant documents and calculations. It was for this...