Court name
High Court
Case name
S v Kalingindo
Media neutral citation
[2007] NAHC 38





IN THE HIGH COURT OF SOUTH AFRICA






FORM A



FILING SHEET FOR EASTERN CAPE
JUDGMENT







ECJ
no :
147







PARTIES:



INTERTRADE TWO (PTY)
LTD APPELLANT



And



THE MEC FOR ROADS & PUBLIC
WORKS,



EASTERN
CAPE 1
ST
RESPONDENT




THE PREMIER OF
THE EASTERN CAPE 2
ND
RESPONDENT




REFERENCE
NUMBERS -




  • Registrar:
    1790/04





  • Magistrate:





  • High
    Court:

    CISKEI
    DIVISION




HEARD:
29/3/07



DATE
DELIVERED:
31/5/07







JUDGE(S):
PLASKET,
J




LEGAL
REPRESENTATIVES -



Appearances








  • for
    the State/Applicant(s)/Appellant(s):



  • for
    the accused/respondent(s):




Instructing
attorneys:




  • Applicant(s)/Appellant(s):



  • Respondent(s):




CASE
INFORMATION -




  • Nature
    of proceedings
    :









  • Topic:









  • Keywords:
















































IN THE HIGH COURT OF SOUTH AFRICA



(CISKEI DIVISION)







CASE NO: 1790/04



DATE HEARD:29/3/07



DATE DELIVERED:31/5/07



REPORTABLE







In the matter between:







INTERTRADE TWO (PTY)
LTD APPELLANT







and







THE MEC FOR ROADS & PUBLIC
WORKS,



EASTERN
CAPE 1
ST
RESPONDENT








THE PREMIER OF
THE EASTERN CAPE 2
ND
RESPONDENT







The appellant had tendered for
certain contracts. It was common cause that no final decision had
been taken. Two issues arose for decision on appeal. First, it was
contended that because no estimates were done prior to the opening of
tenders, as they should have been in terms of regulation 11(1) of the
regulations made in terms of the Preferential Procurement Policy
Framework Act 5 of 2000, the entire tender process was a nullity and
the appellant was therefore not entitled to any relief on this basis.
It was held that compliance with regulation 11(1) was not mandatory
and consequently that the tender process was not vitiated on this
account. This issue having been decided in favour of the appellant,
the second issue was whether the appropriate remedy for the failure
to take a final decision on the tenders was an order awarding the
tenders, or some of them, to the appellant, or an order directing the
first respondent to take a decision. It was held that the tender
process, particularly the evaluation of the tenders, had been flawed
and that this precluded the court from substituting its decision for
that of the first respondent, even if exceptional circumstances were
held to be present. It was ordered that the evaluations be done again
by a consultant from a firm other than the one that evaluated the
tenders initially and that a final decision had to be taken within a
stated period of time. Accordingly, the appeal succeeded with costs.



______________________________________________________________







JUDGMENT







PLASKET, J:







[A] INTRODUCTION







[1] The South
African Constitution is based on a set of founding values that
include the rule of law and constitutional supremacy
1
as well as accountability, responsiveness and openness.
2
These democratic values are given specific content by,
inter
alia
,
a fundamental right of access to ‘any information held by the
State’
3
and a fundamental right to just administrative action comprising of
rights to lawful, reasonable and procedurally fair administrative
action, as well as to reasons for adverse administrative action.
4







[2] The importance
of these fundamental rights in the present appeal is illustrated
graphically by the judgment of Maya AJA in
MEC
for Roads and Public Works, Eastern Cape and another v Intertrade Two
(Pty) Ltd
5,
an appeal by the present respondents against an order directing them
to furnish information to the present appellant concerning the tender
process that is in issue in this matter. Having held that the
technical defences raised by the present respondents had no merit,
Maya AJA proceeded to state:
6



There is another issue that
requires comment. The appellants’ resistance to Intertrade’s
request for documentation on technical grounds was, in my opinion,
most reprehensible. Important issues are at stake here. Intertrade
seeks to establish the truth about an extraordinarily extended tender
process to exercise and protect its rights. The appellants knew what
documents it required from the outset. They did not raise any
impediment which would prevent them from producing the documents.
Neither did they deny that they had the documents in their
possession. Their response is rendered more deplorable by the report
contained in the department’s own correspondence which shows
that, whilst they were embarking on delaying tactics at the
taxpayer’s expense, sick and vulnerable citizens were suffering
and children were dying in poorly maintained hospitals as a direct
result of their failure to comply with their constitutional
obligations.’







[3] This appeal
does not concern, directly at any rate, the right of access to
information although the appellant has complained that all the
information that it sought has not been provided.
7
The main focus of this case is the right to just administrative
action in the tendering process. (It is by now trite that tendering
decisions by organs of State constitute administrative action as
contemplated by s 33 of the Constitution and as defined in s 1 of the
Promotion of Administrative Justice Act 3 of 2000 – the PAJA.
8)
It was in the context of tendering that Olivier JA, in
Transnet
Ltd v Goodman Brothers (Pty) Ltd
9
emphasised
the importance of administrative justice when he held that ‘[t]he
right to equal treatment pervades the whole field of administrative
law, where the opportunity for nepotism and unfair discrimination
lurks in every dark corner’.







[4] A further set
of constitutional imperatives comes into play in this case: s 195(1)
of the Constitution provides that the public administration ‘must
be governed by the democratic values and principles enshrined in the
Constitution’ including,
inter
alia
,
the promotion of the ‘efficient, economic and effective use of
resources’, the impartial, fair, equitable and unbiased
provision of services, accountability in public administration and
the fostering of transparency. Finally, it is important to bear in
mind that, in terms of s 237 of the Constitution, ‘[a]ll
constitutional obligations must be performed diligently and without
delay’.







[B] THE FACTS







[5] The facts are,
by and large, not in dispute. What follows is a summary of the more
important facts.
10
They make disturbing reading and tend to show that many of those
involved in what can only be described as a fiasco were grossly
incompetent and displayed a shocking, unacceptable degree of
indifference to the plight of those whose health and well-being was,
and continues to be, put at risk at 36 provincial hospitals and
clinics in four districts of the Eastern Cape. All in all, the
conduct of the administration in this matter displays an alarming
degree of ineptitude, a lack of appreciation of what is required, a
lack of judgment, rationality and common sense, and a disturbing
contempt for the Constitution and for the people of the province that
the Constitution seeks to protect from abuses of public power. In
fairness to the first respondent, it must be said that much of the
blame can be laid at the door of the Provincial Tender Board, which
no longer exists.







[6] The appellant – to whom I
shall refer from now on as Intertrade -- is the corporate successor
to an entity known as YBB CC, which traded as King Enterprises and
Car Electricians. It had, in 1997, successfully tendered for two
contracts in terms of which it was to undertake preventative
maintenance and repairs of plant and equipment at a number of the
Provincial Government’s hospitals. The contracts were to run
until the end of March 1999 but YBB was requested by the Provincial
Government to extend the contract, at the prevailing rates, for
another year. It agreed to do so.







[7] During this period fresh tenders
were invited for the contracts. YBB was the only tenderer but the
tenders were not awarded as a decision was apparently taken to
combine the two contracts and invite new tenders for the single
contract. The Provincial Government requested Intertrade, which had
by now stepped into the shoes of YBB, to extend the contracts, again
at the prevailing rates, for yet another year (ending at the end of
March 2001). Intertrade agreed to do so. Tenders were again invited
for one combined contract for the hospitals. Intertrade’s
tender was the lowest but a decision was taken not to award the
tender. Instead, a decision was taken to split the contract into an
electrical component and a mechanical component and to invite tenders
once more.







[8] Intertrade agreed, on request, to
continue with its preventative maintenance and repair work at its
original rates until the end of January 2002. Once again, tenders
were invited for the electrical and mechanical contracts. It was
recommended that the contracts be awarded to Intertrade but the
Provincial Tender Board decided that the tenders should not be
awarded because the splitting of the contracts along the lines of
electrical work and mechanical work was not cost-effective. It was
decided instead to combine the contracts again and invite tenders yet
again. Intertrade was asked to extend its 1997 contract for a further
period until the end of March 2003. It agreed to do so, on the basis
of escalated rates.







[9] This time, when the combined
contracts were put out to tender, Intertrade was the only tenderer
but this still did not avail it as the Provincial Tender Board
decided not to award the tender, despite the favourable
recommendation of the Head of the Department of Roads and Public
Works. Instead, the Provincial Tender Board directed the Department
to ‘draw up a rephrased specification in order to accommodate
other service providers to tender for the components which are
contained in the tender, and re-advertise’.







[10] It was now decided to split the
contracts differently and call for new tenders. They were to be split
between a mechanical and electrical component, on the one hand, and a
kitchen and laundry component, on the other. When Intertrade was
asked once more to extend its contracts until 1 April 2003, it
refused to do so.







[11] In September 2003, the Provincial
Government, through its consulting engineers, Lukhozi Consulting
Engineers (Pty) Ltd, issued four requests for tenders in respect of
the hospitals. This time the tenders were split into the following:
tender PTB5-02/03-1893ME, which was for mechanical and electrical
work for the hospitals in the Alfred Nzo and OR Tambo districts;
tender PTB5-02/03-1894ME, which was for mechanical and electrical
work for the hospitals in the Chris Hani and Ukhahlamba districts;
tender PTB5-02/03-1893LK, which was for laundry and kitchen repairs
and maintenance for the hospitals in the Alfred Nzo and OR Tambo
districts; and tender PTB5-02/03-1894LK, which was for laundry and
kitchen repairs and maintenance for the hospitals in the Chris Hani
and Ukhahlamba districts.







[12] Intertrade tendered for all four
of the contracts. It was the only tenderer for the two mechanical and
electrical contracts and one of two tenderers for the laundry and
kitchen contracts. Despite various recommendations having been made,
it is common cause that no final decision has been taken in respect
of the four tenders. In two of the tenders – the mechanical and
electrical tenders -- Intertade was the only tenderer, although its
prices in both were significantly higher than the prices that were
arrived at by the engineer who evaluated the tenders. In the
remaining two tenders – the kitchen and laundry tenders –
Intertrade’s prices were higher than those tendered by two
apparently related close corporations that had tendered for one
tender each. Intertade’s prices were also higher than the
evaluated prices.







[13] Intertrade
brought the failure to decide on review. Its application was
dismissed in the court below and it is against that judgment that it
now appeals. The judge in the court below held that the ‘process
was fatally flawed’ because of a failure to compile estimates
prior to opening the tenders
11
but does not appear to have decided the application on this basis.
Instead, although he accepted that no decision had been taken,
12
he dismissed the application on the basis that the respondents’
explanation as to why no decision was taken was acceptable.
13
This explains the costs order that he made, namely that the
‘respondent is ordered to pay the applicant’s costs of
the application up until the date of the filing of the respondents’
answering affidavits’.
14







[14] In my view,
the judgment must be interfered with. The court below accepted that
no decision had been taken. While that state of affairs exists, the
administrative process is incomplete and hangs in limbo. It is a
reviewable irregularity for an administrative decision-maker to fail
to take a decision when he or she has been empowered to do so.
15
A duty rests on the first respondent to decide on the tenders, and he
must do so.







[15] The issues that arise in this
appeal are first, whether a failure on the part of the first
respondent’s department to compile estimates prior to the
opening of the tenders is fatally defective to the tender process
and, secondly, if it is not, whether the appropriate relief for the
failure to decide on the tenders is a remittal to the first
respondent or an order that, where Intertrade is the only tenderer,
the tenders must be awarded to it and the remaining two be remitted
to the first respondent for a final decision to be taken.







[16] When the
process under challenge commenced, the power to enter into contracts
on behalf of the Provincial Government was vested exclusively in the
Provincial Tender Board.
16
That is no longer the case: the Provincial Tender Board Repeal Act
(Eastern Cape) 6 of 2004 (EC) repealed the Provincial Tender Board
Act (Eastern Cape) 2 of 1994 (EC), thus abolishing the Provincial
Tender Board, and vests the power to contract for the procurement of
goods and services in the various government departments and other
provincial public entities. The first respondent is therefore now the
organ of State vested with the power to decide on the tenders in
issue in this appeal.







[17] Before
proceeding to deal with the legal issues, it is necessary to say
something more about the lamentable state of affairs in the hospitals
that are the subject matter of what seems to be a never-ending tender
process. It is not disputed that preventative maintenance at these
hospitals stopped being done at the end of March 2003 and is still
not being done: the maintenance of mechanical, electrical, laundry
and kitchen equipment has only been done –often by Intertrade –
on an
ad
hoc

basis when plant and machinery breaks down. This crisis management
type of approach has, on the respondent’s own documents, led to
deaths. A Problem Report Form of the Department of Roads and Public
Works dated 9 July 2003 in respect of an electrical circuit breaker
in the maternity ward of Saint Patrick’s Hospital states:
‘Circuit breaker is tripping at nursery which led to deaths of
three kids. This is a matter of urgency.’ Despite this, the
Provincial Government has failed to address the problem meaningfully
and with the urgency that the deaths of children should engender in a
caring administration. It was this lack of concern for the people of
the province who had to endure treatment at hospitals with failing
plant and equipment that drew the ire of Maya AJA in the access to
information appeal.







[C] THE ISSUES







(a) Prior Estimates







[18] As stated above, the first issue
to be decided is whether the failure on the part of the first
respondent’s department, through its consulting engineers, to
compile estimates of the tenders prior to the opening of the tenders
is fatal to the tender process. If it is, it robs Intertrade of any
right to compel the first respondent to take decisions on the four
tenders because no valid tender process exists.







[19] The facts in relation to this
point are as follows. According to Mr Malcolm Boucher, a director of
Intertrade, and who deposed to its founding affidavit, he provided
estimates because the departmental official in charge of opening the
tenders ascertained that the consulting engineers had not done so. It
is not contended by Mr Kemp, who appeared for Intertrade, that this
amounts to the making of proper estimates.







[20] Mr Steven Kleyn, a director of
Lukhozi Consulting Engineers (Pty) Ltd, and who evaluated the tenders
for the Provincial Government, admitted that he was telephoned about
the estimates but stated that he did not provide them as it was ‘the
client’s function to give estimates to tenderers, if they so
wish’. Although he stated that prior estimates were drafted, he
never attached any to his affidavit, none form part of the rule 53
record and none were provided to Intertrade by the respondents as a
result of its successful access to information appeal. Only one
estimate was provided by Kleyn and that appears to have been compiled
after the event.







[21] On the basis of the above, it can
be accepted that no prior estimates were made in respect of the four
tenders. This is certainly accepted by Intertrade and the point has
been taken by Mr Buchanan, who appeared with Mr Notshe for the
respondents, that this is fatal to Intertrade’s case.







[22] Regulation 11(1) of the
regulations made in terms of the Preferential Procurement Policy
Framework Act 5 of 2000 provides that, prior to inviting tenders, an
organ of State ‘must’ plan properly for and, ‘as
far as possible, accurately estimate the costs of, the provision of
services or goods for which an invitation for tenders is to be made’.







[23] Whether regulation 11(1)
postulates a ‘mandatory and material procedure or condition’
(in the language of s 6(2)(b) of the PAJA), the non-compliance with
which is fatal to the validity of the administrative action concerned
is a matter of statutory interpretation. In part, at least, it
involves an enquiry into whether the use of the word ‘must’
was intended to place a mandatory duty on organs of State to comply
with the regulation – on pain of their further steps being
invalid -- or whether compliance is merely directory.







[24] In Weenen
Transitional Local Council v Van Dyk
17
the provision under scrutiny used the word ‘shall’ to
impose certain duties on a local authority before it assessed rates
on immovable property. The court was required to determine whether a
failure to have complied rendered the determination of the rates
invalid. Combrink J held:
18



The language
employed in s 166 is manifestly mandatory where the local authority
is instructed that it “shall” assess the rates for a
given financial year in accordance with the provisions of s 105(1)
and that, after the public inspection period had elapsed, it “shall”
publish the two prescribed notices in the prescribed manner. Equally
categorical is the declaration in the succeeding s 167(1) that the
rates “shall” become due and payable one month after the
publication of the first of the said notices and “shall”
be paid on or before the final date set forth in such notice. To be
sure, the use of the verb “shall” by the lawmaker in
prescribing the steps to be taken by a local authority in terms of s
166 is an indication, even a strong one (
Messenger
of the Magistrate's Court, Durban v Pillay

1952 (3) SA 678 (A) at 683), that the injunction is peremptory, but
by the same token our case law literally bristles with decisions in
which that verb had, in the light of other exegetic considerations,
been assigned a directory import. Accordingly it remains a matter of
construction whether
in
casu

the lawmaker intended the verb “shall” to be read as “a
categorical imperative” (per Van den Heever JA in
Messenger
of the Magistrate's Court, Durban v Pillay

(supra)) or “a mere directory verb” (per Van Winsen AJA
in
Maharaj
v Rampersad

(supra)). To that end I adopt the approach suggested by Van Winsen
AJA in the
Maharaj
case at 644D-E, namely to consider the object and importance of the
provision under consideration. That exercise must obviously be
undertaken with due regard to the enactment as a whole.’







[25] The starting
point in the search for the meaning that the legislator intended when
promulgating the regulations ought to be a common sense one which
Baxter captures with his usual clarity. He states:
19



Administrative action based on
formal or procedural defects is not always invalid. Technicality in
the law is not an end in itself. Legal validity is concerned not
merely with technical but also with substantial correctness.
Substance should not always be sacrificed to form; in special
circumstances greater good might be achieved by overlooking technical
defects.’







[26] The
methodology for the search for the true meaning of words such as
‘shall’ and ‘must’, on the one hand, and
words such as ‘may’, on the other, was guided by Wessels
JA in
Sutter
v Scheepers
20
who
adopted a four-point rule-of-thumb approach in the following terms:
21



(1) If a provision is couched
in a negative form it is to be regarded as a peremptory rather than
as a directory mandate. …



(2) If a provision is couched in
positive language and there is no sanction added in case the
requisites are not carried out, then the presumption is in favour of
an intention to make the provision only directory. …



(3) If, when we consider the scope and
objects of a provision, we find that its terms would, if strictly
carried out, lead to injustice and even fraud, and if there is no
explicit statement that the act is to be void if the conditions are
not complied with, or if no sanction is added, then the presumption
is rather in favour of the provision being directory.



(4) The history of the legislation
will also afford a clue in some cases.’




[27] The process of
determining whether non-compliance with a procedure or condition
brings in its train nullity is not a mechanical process. That it is a
nuanced and often difficult interpretive exercise is made clear by
Combrink J in the
Weenen
Transitional Local Council

case. He noted a recognition on the part of judges ‘that the
validity of actions in purported compliance of a statutory injunction
cannot be determined by a mere label such as “peremptory”
or “directory” without proper regard being had to the
intention of the legislator derived from the enactment as a whole’.
22







[28] It will be
noted that regulation 11(1) is couched in the positive – an
‘organ of State must’ – rather than in the negative
-- ‘no organ of State may proceed with a tender unless …’.
This, on the strength of
Sutter
v Scheepers

may be taken as an indication that the injunction is not mandatory.
Secondly, apart from being couched in the positive, no sanction has
been prescribed for non-compliance. This too, according to Wessels JA
in
Sutter
v Scheepers

is indicative of the provision being directory rather than mandatory.
Thirdly, it appears to me that an interpretation of the regulation
that makes compliance with it mandatory, with non-compliance
axiomatically resulting in invalidity of the process, would render
the public procurement process unworkable, would often result in
unfairness, would encourage unscrupulous conduct and would without
justification elevate form over substance. These factors support an
interpretation of the regulation that it is directory rather than
mandatory.







[29] An interpretation that regulation
11(1) is mandatory would render public procurement unworkable because
it would focus attention, and blow out of all proportion, an internal
management tool that is intended to be a fairly rough and ready guide
to the reasonable cost of the provision of the goods or services
involved. The process by which estimates were arrived at would become
the focus of challenges to tendering decisions because, in the event
of the estimates not having been done at all, or having been done
badly or inadequately or inaccurately, the entire process may then
fail, not because the result was unfair, irrational or otherwise
reviewable but because a step that was required to be taken at an
early stage, and that may be entirely irrelevant at the end of the
process, had not been properly completed. Apart from making the
tender process unworkable, such an interpretation of regulation 11(1)
would elevate formalistic i-dotting and t-crossing to a
disproportional importance in relation to issues of substance.







[30] Such an interpretation would
often result in unfairness because it could have the effect of an
objectively fair, rational and otherwise unimpeachable tender being
set aside at the instance of an unsuccessful tenderer because a
bureaucrat failed to do his or her job properly at an early stage in
the process even though this failure may not have had an impact on
the eventual decision. Worse still, it could result in organs of
State opportunistically using defects in their internal management to
resile from contracts that are in reality unimpeachable simply
because they no longer want to abide by their terms. The defects in
the process may, after all, only be known to the organ of State which
may use it as the ultimate trump card when the need arises. It can, I
believe, be assumed that an interpretation that could encourage or
even allow such unscrupulous conduct was probably not intended by the
legislator, and ought to be avoided.







[31] The
regulations of which regulation 11(1) is a part are intended to
provide the
procedure
for the implementation of the Preferential Procurement Policy
Framework Act. The Act and the regulations are part of a public
procurement system that has been ‘elevated to the status of
constitutional principle’
23
and is required by s 217(1) of the Constitution to be ‘fair,
equitable, transparent, competitive and cost-effective’.
Regulation 11(1) is a small part of the machinery that is designed to
achieve results that meet the constitutional standard. In the end
result, however, the entire public procurement process that is the
subject of challenge must pass the test of s 217(1) of the
Constitution.







[32] Regulation 11 as a whole is
intended to place an obligation on those who manage tender processes
to plan them properly so the public purse is used cost-effectively
and so that the result will be fair, rational and otherwise
constitutional. Despite the importance of estimates as a management
tool for the rational evaluation of tenders, it is possible for a
tender process that has not been done in compliance with regulation
11(1) nonetheless to be fair and rational. In this sense, it cannot
be said that, from a practical point of view, compliance with
regulation 11(1) is an absolute imperative for a tender process that
meets the constitutional standard and, in my view this could not have
been intended by the maker of the regulations.







[33] For the above reasons, I conclude
that non-compliance with regulation 11(1) does not have the effect
that the entire tender process has been vitiated: Intertrade is
still, in other words, entitled to a decision. It is to that issue
that I now turn.







(b) The Failure to Decide







[34] It is common cause that no final
decision has been taken in respect of the tenders, despite the
effluxion of a more than reasonable time for a decision to be taken.
This means that there can be no dispute that Intertrade is entitled
to relief: s 6(2)(g), together with s 6(3)(a) of the PAJA, provide
that the failure to take a decision within a reasonable time is a
ground of review and hence an infringement of the fundamental right
to just administrative action. Once that is accepted, the only
remaining issue is what is the appropriate remedy that should be
awarded.







[35] It was argued by Mr Kemp that the
court should simply substitute its decision for that of the
decision-maker and award the mechanical and electrical tenders to
Intertrade, while the laundry and kitchen tenders should be referred
back to the first respondent for a final decision to be taken. Given
the track record of the Provincial Government in this tender process,
that robust option has its attractions. Mr Buchanan, on the other
hand, argued that the court is not able, as a matter of law, to
substitute its decision because the remedial section of the PAJA that
applies to failures to decide, namely s 8(2), does not contemplate
substitution as a remedy: it is only in the case of a decision having
been taken and then being set aside that, in terms of s
8(1)(c)(ii)(aa), a court may ‘in exceptional circumstances’
take the decision rather than remit it to the administrative
decision-maker. In the second place, Mr Buchanan has argued that even
if the court was entitled to take the decision as a matter of law, it
does not have the necessary information available to it to do so, the
circumstances are not exceptional and it would not be able to take a
fair and rational decision.







[36] Mr Kemp has submitted, in my view
correctly, that the tender process in this case was shot through with
irregularities. The first such irregularity is the absence of prior
estimates. While I have stated that the absence of prior estimates
does not in itself vitiate the process, it does have an impact on the
remedy in this case: there is no rough bench mark, determined prior
to the opening of tenders, by which a decision-maker can be guided as
to what may or may not be a reasonable tender. That problem may be
overcome by proper evaluations of the tenders. In this case, however,
the tenders were not properly evaluated.







[37] A number of inconsistencies and
mistakes in the evaluation of the tenders have been highlighted by Mr
Boucher in his replying affidavit. For instance, in the ME1893
tender, Mr Kleyn determined a provisional amount of R300 000.00 for
building repairs and maintenance. Despite this being a set and
immutable figure for all tenderers, when Mr Kleyn evaluated the
tenders he used a figure of R200 000.00.







[38] Secondly, in his supplementary
affidavit, Mr Boucher pointed out that in the LK1893 tender (in which
Mr Kleyn recommended that Zululand Steam CC be awarded the tender)
that ‘whilst the applicant did so, Zululand Steam failed to
allow for time-related costs over the 36 month period of the contract
resulting in a discrepancy of some R3m on this item between the
respective bidders’. Mr Kleyn’s accepted this to be
correct but said that this ‘does not mean however that the cost
related thereto were not included in other rates’ and that
‘although Zululand Steam, in many instances, allowed far less
in respect of time-related costs an allowance has indeed been made in
most cases’. To this Mr Boucher has replied as follows:



The contention that the costs
of time-related items were included in rates other than the ones
which have a time component is simply startling. It is unsurprising
that respondents do not give any actual example hereof. It simply
demonstrates that these tenders were not properly compiled or
evaluated. If a tenderer deflates a rate for his time-related items
and artificially inflates certain of his other rates, there is an
obvious danger to the client if the quantity of the latter items is
greater than expected. Engineers are ordinarily watchful of this and
do not allow the practice.’







[39] Thirdly, Mr Boucher has pointed
out that, in the tender of Eastern Cape Steam CC (LK1894), the
tenderer omitted prices for 438 items, which comprised 26.45 percent
of the total number of items and about seven percent of the total
contract price. The fact that these prices were omitted is not in
dispute and the point that Mr Boucher makes is that the tender rules
have been ignored in that a significant number of items were not
priced by the tenderer and this was ignored by Mr Kleyn. He deals too
with Mr Kleyn’s statement that the applicant did not price
certain items in their tenders by stating:



This riposte indicates just how
little trouble the other Steam tenderers and Kleyn put into preparing
their tenders, estimates and the evaluation of tenders. The reason is
a simple one – the equipment in question does not have or
utilise such spares or items for which no price has been provided. If
a certain piece of equipment does not have a radiator, you do not
price for a radiator or radiator hose for that item – if an
item is not air-cooled, you do not price for a fan or a fan belt. By
way of an example, I refer the court to page 263 of the applicant’s
ME1893 tender … . There are no prices for the removal of the
radiator, re-coring it, the removal of the water pump and the like
because a Lister Diesel Engine TS3 does not have a radiator (some of
the others have). I would have thought that Kleyn would know why no
figures were put in by the applicant. What is quite perplexing is
what Steam priced for.’







[40] Finally, Mr Boucher has
highlighted a number of blatantly inappropriate costs in Mr Kleyn’s
estimate of the ME1893 tender, which was made after the tenders were
opened and which corresponded exactly to his tender evaluation, and
thus formed the basis of his conclusion that the applicant’s
tender was high. These include, in the first place, an
unrealistically low figure for monthly contractual commitments, which
include ‘telephone and cell phone charges, water, electricity,
computers, photocopies, cameras (to photograph service items) and
rental of premises to house at least four service vehicles, offices
etc’. Mr Kleyn provided for a monthly amount of R1 666.00 for
these costs, an amount which is self-evidently inadequate. In the
second place, the depreciation of vehicles and equipment that he
provided for was so low that Mr Boucher summed up the effect by
saying that ‘Kleyn considered that the four vehicles worth
about R1 000 000.00 will be worth R940 000.00 after three years and
after each travelling 100 000 kms over some of the worst roads in
South Africa’. Thirdly, the amount he allowed for supervisory
administration and stores staff meant that the gross salaries of
supervisory staff, administrative staff and stores staff would, on
average, be about R2 500.00 per month. Fourthly, Mr Boucher made the
point that, while the applicant had set its travel rate per kilometre
at R5.00, a figure that had been considered by Mr Kleyn to be fair
and reasonable when he evaluated the applicant’s 2002 tender,
he set the rate in his evaluation at R3.50.







[41] These inaccuracies, mistakes and
inconsistencies are evident from the papers. It is not correct to
categorise them as disputes of fact that either cannot be resolved on
the papers or ought to be resolved in favour of the respondents, on
the normal principles: Mr Boucher’s averments concerning Mr
Kleyn’s methodology are conclusions that he has drawn from the
answering affidavits, the evaluations and other documentation. This
court is able to draw conclusions as to the propriety, consistency
and rationality of Mr Kleyn’s evaluations. It is evident from
what has been set out above that the evaluations of the tenders were
flawed.







[42] In the light
of the view I take of the appropriate remedy to be awarded, it is not
strictly speaking necessary to deal with Mr Buchanan’s argument
that the court has no power to take the decision that the
administrative decision-maker ought to have taken, in circumstances
where, as in this case, no decision has been taken. Suffice it to say
that I am not convinced that the argument is sound that the remedies
listed in s 8(2) constitute a closed list. That argument appears to
overlook the open-ended scheme of the remedies contemplated for
breaches of the right to just administrative action: a court may, in
terms of both s 8(1) and s 8(2) ‘grant any order that is just
and equitable’ and the orders contemplated may
include
those that are listed. I see no reason why a failure to decide an
application for a licence or permit, for instance, may not, in an
appropriate case, be remedied by an order granting the licence or
permit where its grant is a foregone conclusion and no purpose would
be served in referring the matter back to the administrative
decision-maker: a failure to decide may sometimes amount to a
constructive refusal.
24







[43] It is not
necessary to decide the issue because it is simply not possible for
this court to take the decision to award the mechanical and
electrical tenders to Intertrade, much as I sympathise with it for
the shameful treatment it has had to endure at the hands of some
functionaries in the Provincial Government over a protracted period
of time. The availability of proper and adequate information and the
institutional competence of the court to take the decision for the
administrative decision-maker are necessary prerequisites that must
be present, apart from ‘exceptional circumstances’,
before a court can legitimately assume an administrative
decision-making function. This, it seems to me, is a minimum
requirement of rational decision-making, a fundamental requirement of
the rule of law.
25
In this case, because of the absence of proper estimates, because of
the flaws in the evaluations of the tenders and because of the
unknown consequences on the tenders of the inexcusable passage of
time, both prerequisites are absent. If this court was to award the
tenders to Intertrade, it would act arbitrarily and in conflict with
the rule of law because it would not have a rational basis for
concluding that the award of the tenders would be ‘fair,
equitable, transparent, competitive and cost-effective’, as
required by s 217(1) of the Constitution.







[44] I am acutely
aware that the appellant will, no doubt, feel that it has been robbed
of the prize to which it considers itself entitled. After all, it is
not to blame for the way in which the tender process has been
handled. I understand that, but wider interests and principles are
involved. Courts, like any other institutions that exercise public
power in terms of the Constitution, are duty-bound to act in terms of
the rule of law and its principle of legality.
26







[45] Courts are,
furthermore, duty-bound to respect the separation of powers, an
important pillar of the Constitution.
27
Indeed, administrative law is, itself, an incident of the separation
of powers, a point made in the following terms by Chaskalson P in the
Pharmaceutical
Manufacturers

case:
28



Whilst there is no bright line
between public and private law, administrative law, which forms the
core of public law, occupies a special place in our jurisprudence. It
is an incident of the separation of powers under which courts
regulate and control the exercise of public power by the other
branches of government. It is built on constitutional principles
which define the authority of each branch of government, their
inter-relationship and the boundaries between them.’







[46] These
constitutional principles mean that courts, when considering the
validity of administrative action, must be wary of intruding, even
with the best of motives, without justification into the terrain that
is reserved for the administrative branch of government.
29
These restraints on the powers of the courts are universal in
democratic societies such as ours and necessarily mean that there are
limits on the powers of the courts to repair damage that has been
caused by a breakdown in the administrative process. This case is an
ironic example of that: if the Provincial Government had done a
better job of administering the tender process there might have been
more information available to this court, it might well have been
concluded that exceptional circumstances were present and it might
then have been possible to have taken a decision to award the tenders
to the appellant.







[47] That, however, is in the realms
of speculation. All that this court can do is to order that the
process be completed. It appears to me, however, that a convincing
case has been made out by the appellant that the evaluations of the
tenders were flawed. If the end result of the process is to be ‘fair,
equitable, transparent, competitive and cost-effective’, the
evaluations must be done again by a person other than Mr Kleyn or a
member of his firm. The respondents will be ordered to appoint such a
consultant, and to do so within a specified period. Once that has
happened and the consultant has, also within a specified period,
evaluated the tenders, the first respondent will be in a position to
take a decision, in accordance with the statutory provisions that
empower him, that will complete the tender process.







[D] THE RESULT







[48] For the reasons set out above,
the following order is made.



1. The appeal is allowed with costs.



2. The order of the court below is set
aside and altered to read as follows:



2.1 The first respondent is directed
to appoint, within two weeks of the date of this order, an
independent consultant who is not an employee of, or has an interest
in, Lukhozi Consulting Engineers (Pty) Ltd who shall evaluate the
tenders for the following contracts: tender PTB5-02/03-1893ME for
mechanical and electrical work for provincial hospitals and clinics
in the Alfred Nzo and OR Tambo districts; tender PTB5-02/03-1894ME
for mechanical and electrical work for provincial hospitals and
clinics in the Chris Hani and Ukhahlamba districts; tender
PTB5-02/03-1893LK for laundry and kitchen repairs and maintenance for
provincial hospitals and clinics in the Alfred Nzo and OR Tambo
districts; and tender PTB5-02/03-1894LK for laundry and kitchen
repairs and maintenance for the hospitals in the Chris Hani and
Ukhahlamba districts.



2.2 The consultant thus appointed
shall evaluate the tenders and make a recommendation to the first
respondent within two months of the date of his or her appointment by
the first respondent in terms of paragraph 2.1 above.



2.3 The first respondent is directed
to decide on the above mentioned tenders within one month of
receiving the recommendation mentioned in paragraph 2.2 above.



2.4 The respondents are directed to
pay the applicant’s costs.











_____________________



C. PLASKET



JUDGE OF THE HIGH COURT











I agree.











________________________



E. REVELAS



JUDGE OF THE HIGH COURT











I agree.











_______________________



L. KEMP



ACTING JUDGE OF THE HIGH COURT






1
Section 1(c).




2
Section 1(d).




3
Section 32(1)(a).
This right is given effect to by the Promotion of Access to
Information Act 2 of 2000. (Note that s 32(1)(b) extends the right
to information held by private persons or bodies if the information
is ‘required for the exercise or protection of any rights’.)




4
Section 33(1) and
(2). These rights are given effect to by the Promotion of
Administrative Justice Act 3 of 2000.




5
2005 (5) SA 1
(SCA).




6
Para 20.




7
The most obvious
instance of the withholding of information concerns a document that
emanated from the Director-General of the Provincial Government
which is bizarrely (and inappropriately) marked ‘Top Secrete’
(sic). While most of the document was provided, one page – no
doubt the most important to the appellant – has not been
furnished and no explanation or apology has been tendered. The
appellant’s protestations have simply been met with a wall of
silence, a response that ill-behoves an organ of State that is under
constitutional duties to ‘respect, protect, promote and fulfil
the rights in the Bill of Rights’. (Constitution, s 7(2).)




8
See Transnet
Ltd v Goodman Brothers (Pty) Ltd

2001 (1) SA 853 (SCA), para 39 of the judgment of Olivier JA and
paras 7-9 of the judgment of Schutz JA;
Logbro
Properties CC v Bedderson NO and others

2003 (2) SA 460 (SCA), para 14;
Metro
Projects CC and another v Klerksdorp Local Municipality and others

2004 (1) SA 16 (SCA), para 12;
Steenkamp
NO v Provincial Tender Board, Eastern Cape

2006 (3) SA 151 (SCA), paras 11-12.




9
2001 (1) SA 853
(SCA), para 42.




10
The facts are set
out clearly and succinctly in Maya AJA’s judgment in the
access to information appeal. See paras 3-6. Subsequent to the
appeal, however, further papers were filed in this aspect of the
case, the review of the failure to decide on the tenders.




11
Judgment, paras 30
and 36.




12
Judgment, para 33.




13
Judgment, paras
34-36.




14
Judgment, para 2
of the order.




15
Julius v Lord
Bishop of Oxford

(1880) 5 AC 214 (HC), 225;
Cape
Furniture Workers’ Union v McGregor NO

1930 TPD 682, 686;
Mahambehlala
v MEC for Welfare, Eastern Cape and another

2002 (1) SA 342 (SE), 352H-353D;
Mbanga
v MEC for Welfare, Eastern Cape and another

2002 (1) SA 359 (SE), 368E-H;

Ntame v MEC for Social Development, Eastern Cape and two similar
cases

2005 (6) SA 248 (SE), para 36.




16
Eastern Cape
Provincial Government v Contractprops 25 (Pty) Ltd

2001 (4) SA 142 (SCA), paras 7-9.




17
2000 (3) SA 435
(N).




18
At 445D-G.




19
Baxter
Administrative
Law

Cape Town, Juta and Co: 1984, 446.




20
1932 AD 165.




21
At 173-174. See
too Hoexter
The
New Constitutional and Administrative Law

(Vol 2: Administrative Law) Cape Town, Juta and Co: 2002, 139-141.




22
Supra (note
17) at 444C-D.




23
Penfold and
Reyburn ‘Public Procurement’ in Woolman, Roux, Klaaren,
Stein and Chaskalson
Constitutional
Law of South Africa

(2 ed) (Vol 1) Cape Town, Juta and Co: 2006, 25-1.




24
See, for instance,
Pharmaceutical
Society of South Africa and others v Tshabalala-Msimang and another
NNO; New Clicks South Africa (Pty) Ltd v Minister of Health and
another

2005 (3) SA 238 (SCA), para 38 in which the delay in deciding an
application for leave to appeal was held to be ‘so
unreasonable in fact that it could only be interpreted as a refusal
of leave’.





25
Pharmaceutical
Manufacturers Association of SA and another: In re ex parte
President of the Republic of South Africa and others

2000 (2) SA 674 (CC); 2000 (3) BCLR 241 (CC), paras 85-86.




26
See in this
regard,
S
v Mabena and another

2007 (1) SACR 482 (SCA), para 2 in which Nugent JA held: ‘The
Constitution proclaims the existence of a State that is founded on
the rule of law. Under such a regime legitimate State authority
exists only within the confines of the law, as it is embodied in the
Constitution that created it, and the purported exercise of such
authority other than in accordance with law is a nullity. That is
the cardinal tenet of the rule of law. It admits of no exception in
relation to the judicial authority of the State. Far from conferring
authority to disregard the law the Constitution is the imperative
for justice to be done in accordance with law. As in the case of
other State authority, the exercise of judicial authority otherwise
than according to law is simply invalid.’




27
South African
Association of Personal Injury Lawyers v Heath and others

2001 (1) SA 883 (CC); 2001 (1) BCLR 77 (CC), paras 21-26.




28
Supra (note 25),
para 45.




29
See generally Bato
Star Fishing (Pty) Ltd v Minister of Environmental Affairs and
others

2004 (4) SA 490 (CC); 2004 (7) BCLR 687 (CC), paras 46-48. In
Bato
Star

the doctrine of deference was discussed in the context of review for
reasonableness. O’Regan J located the doctrine of deference,
which she preferred to regard as institutional respect, squarely
within the doctrine of the separation of powers. For instance, at
para 48, she held: ‘In treating the decisions of
administrative agencies with the appropriate respect, a Court is
recognising the proper role of the Executive within the
Constitution. In doing so a Court should be careful not to attribute
to itself superior wisdom in relation to matters entrusted to other
branches of government.’ See too
Foodcorp
(Pty) Ltd v Deputy Director-General, Department of Environmental
Affairs and Tourism: Branch Marine and Coastal Management and others

2006 (2) SA 199 (C), 211G.