IN THE HIGH COURT OF NAMIBIA
REPORTABLE
REPUBLIC OF NAMIBIA
HIGH COURT OF NAMIBIA MAIN
DIVISION, WINDHOEK
JUDGMENT
Case no: A 66/2013
In the matter between:
OKA INVESTMENTS (PTY) LTD
...........................................................APPLICANT
and
THE CHAIR OF THE TENDER BOARD
FOR THE CITY OF WINDHOEK
..................................................1st
RESPONDENT
THE MUNICIPAL COUNCIL OF THE CITY
OF WINDHOEK
...........................................................................2nd
RESPONDENT
Neutral citation: Oka
Investments (Pty) Ltd v The Chair of the Tender Board for the City of
Windhoek (A 66/2013) [2013] NAHCMD 89 (5 April 2013)
Coram: Schimming-Chase, AJ
Heard: 22 March 2013
Delivered: 5 April 2013
Flynote: Interpretation of
Regulations – Conflicting provisions –
Regulation 6
of the Local Authorities Tender Board Regulations dealing with powers
and functions of Tender Boards providing that Tender Board may cancel
any agreement concluded by the Tender Board on behalf of a local
authority, but that the local authority must take the final decision
in respect of the cancellation – Regulation 27 of the
Regulations providing that in specific instances of a person’s
non-compliance with the title of the tender or agreement, or delay in
performance or unsatisfactory performance the Tender Board may cancel
the agreement – Two conflicting provisions in same Regulation –
The established rule of interpretation for resolving such a conflict
is that the latter of the two provisions prevails or governs –
Accordingly the local Tender Board authorised to cancel agreement if
delay or unsatisfactory performance occurs.
Interim interdict pending institution
of review, alternatively action proceedings – Prerequisites,
prima facie right, well grounded apprehension of irreparable
harm, balance of convenience favouring applicant, no other
satisfactory remedy.
Interim interdict – Prima
facie right – Degree of proof required restated.
Practice – Applications and
motions – Applicant required to make out a case for the relief
sought in the founding papers – Applicant cannot remedy paucity
of information in founding affidavit in replying affidavit –
Such the position also where urgent relief sought.
Summary: The applicant launched
an urgent application for an interim interdict preventing respondents
from implementing a notice to cancel an agreement with the applicant
concluded subsequent to a tender award in terms of which the
applicant was to provide fuel, pending the finalisation of
proceedings to be instituted against the respondent. The notice was
issued by the first respondent on behalf of the second respondent.
The applicant was not yet clear at the stage the application was
launched whether the proceedings to be instituted were review
proceedings or action proceedings, especially in view of the Supreme
Court decision of Permanent Secretary of the Ministry of Finance
and Others v Ward
to the effect that whether an action amounted to an administrative
act would depend on the nature of the power exercised, the source of
the power, the subject matter, whether it involved the exercise of a
public duty and how closely related it was to the implementation of
legislation. Both parties relied on the provisions of the Local
Authorities Tender Board Regulations published in Government Notice
73 of 12 April 2011. Regulation 6 provides that the first respondent
may cancel any agreement concluded with the second respondent, but
that the second respondent must take the final decision in respect of
the cancellation. Regulation 27 provides that the first respondent
may, in the event of a person’s non-compliance with the title
of the tender or agreement or delay in performance or unsatisfactory
performance cancel the agreement. No provision is contained in
Regulation 27 requiring the second respondent to make the final
decision in such an event.
Held, it appeared that Regulation 6 is
of general application and Regulation 27 of specific application in
the instances therein referred to, but the provisions are also
conflicting. Insofar as the conflict is irreconcilable, the
principles relating to statutory interpretation set out in R v
Brener
are to be applied, namely that in the event of a conflict, the later
of the two provisions prevails, and the first respondent was
authorised to cancel an agreement concluded on behalf of the second
respondent.
Held further, in establishing whether
the applicant showed a prima facie right to specific
performance it had to show that the breach of contract was prima
facie not material, and that cancellation was not warranted. The
applicant failed to set out such a case in its founding papers and
sought to remedy the paucity of information provided in the replying
affidavit. The respondents proved the first respondent’s right
to cancel on the facts, and the application was accordingly
dismissed.
%20Ltd%20v%20The%20Chair%20of%20the%20Tender%20Board%20for%20the%20City%20of%20Windhoek%20(A%2066-2013)%20%5B2013%5D%20NAHCMD%2089%20(5%20April%202013)_html_11a7f518.gif)
ORDER
The application is
dismissed with costs, such costs to include the costs of one
instructing and one instructed counsel.
JUDGMENT
SCHIMMING-CHASE, AJ
This is an urgent application for an
order interdicting the respondents from implementing the first
respondent’s notice to cancel an agreement concluded between
the applicant and the second respondent, in terms of which the
applicant was to deliver fuel to the second respondent, pending the
“outcome of the dispute”
regarding the notice to cancel the agreement. I shall refer to the
first respondent as the Tender Board, the second respondent as the
Municipality and to both of them as the respondents.
The applicant as part of its
interdictory relief seeks an order forcing the Municipality to
comply with its obligations in terms of the agreement (concluded
between the parties on 2 December 2010), and in particular to
continue ordering fuel from the applicant as it did prior to the
“purported”
cancellation of the agreement. The applicant also informed the court
that it would institute proceedings within 20 days from the date the
order was made, and also applied for an order to that effect.
In essence, this is an application
for specific performance, pending the finalisation of proceedings
the applicant intends instituting against the respondent for the
aforesaid relief. The parties agreed that the matter was urgent, and
the court finds that the applicant has made out a case for urgency.
In short, the background to this
application is as follows. Subsequent to the applicant’s
response to a tender application, the applicant was informed by the
Tender Board that part of its tender for the supply and delivery of
fuels, oil lubricants, brake fluids and freeze compound was awarded
to it. This application only relates to the fuel component of the
tender. The letter of the chairperson of the Tender Board,
confirming the award of the tender, together with the tender
documentation lodged by the applicant during the tender proceedings
represented the terms of the agreement between the applicant and the
Municipality.
The material terms of the agreement
were:
(a) the applicant would supply all
four items at agreed prices stipulated in the tender when ordered by
the Municipality for the next 5 years;
(b) the fuel ordered must be delivered
within 48 hours of receipt of a written order. Failure to comply with
the delivery time could result in fuel being ordered from alternative
suppliers and the applicant would be liable for the difference in
costs if any;
(c) payment for each delivery had to
be made to the applicant within
7 days from delivery. (This is
alleged by the applicant to have been agreed orally), and is not
disputed by the respondents.
The agreement contains no breach or
cancellation clause. The provisions regarding cancellation are
contained and provided for in
Regulation 6(1)(f) read with
Regulation 6(4) of the current Tender Board Regulations published in
Government Notice 73 of 12 April 2011 (“the Regulations”).
The respondents do not dispute these allegations, but pointed out
that all tenders awarded by the Tender Board are subject to the
conditions of tender and the provisions of the Regulations, and that
Regulation 6, containing the Tender Board’s powers to cancel
agreements must be read together with Regulation 27, which
authorises the Tender Board to cancel agreements in certain
instances. I deal with the Regulations in more detail later in this
judgment.
The applicant alleged that subsequent
to the conclusion of the agreement, it supplied the Municipality
with fuel when it was ordered and that “the
only incidence of ‘late supply of fuel” was
raised by the Municipality’s senior buyer in 2012 in writing
and responded to by the applicant. Since then “everything
continued as normal and no
further late deliveries occurred.
There was never any further indication that the Municipality had any
complaints about or was dissatisfied with applicant’s
performance in terms of the agreement”. (emphasis
supplied)
The applicant further alleged that
“out of the blue, and as
a total surprise …” it received a letter from
the Tender Board on 25 February 2013 which letter informed the
applicant that “… the
local Tender Board at its extra-ordinary meeting on 20 February
2013, had resolved to terminate the contract with your organisation
for the supply of fuel as per items 1 and 2 respectively of Tender
M38/2010 with immediate effect. The reason for the termination is
due to poor performance on your part. In that, despite our numerous
requests to you to adhere to your promised delivery period as
stipulated in your tender proposal, your organisation had on a
continuous basis failed to deliver the fuel on time to the City of
Windhoek.”
The applicant stated in the founding
papers that apart from the fact that it was never given a hearing in
respect of this decision, it denied that any “numerous
requests were made in relation to alleged late deliveries or that
there were any unjustified late deliveries”. I point
out at this stage that the allegation that there were no unjustified
late deliveries is in direct contrast to the earlier allegation that
no further late deliveries occurred.
It is common cause that the applicant
did not make any formal representations to the Municipality and in
particular the Tender Board before the agreement was cancelled in
the manner set out above.
In support of the interdictory relief
sought the applicant alleged that the cancellation by the Tender
Board wass invalid because:
(a) it must take all its decisions at
meetings and keep minutes thereof in terms of Regulation 10(2);
(b) Regulation 6(1)(f) authorises the
Tender Board to cancel agreements on behalf of the Municipality, but
Regulation 6(4) requires the Municipality to take the final decision
on such cancellation and in this instance, the Municipality did not
take the final decision;
(c) the applicant was entitled to a
hearing when the decision was taken, the applicant was not informed
of the intended decision, nor invited to make a representation. The
applicant was thus denied its right to be heard and to make
representations to the Tender Board resulting in a breach of Article
18 of the Constitution;
(d) the cancellation was actuated by
ulterior motives which the applicant referred to as “strong
arm tactics” to compromise its claim for outstanding
monies against the Municipality in order to bully the applicant and
deprive it of the opportunity to earn a living, which also breaches
Article 18 of the Constitution;
(e) the respondents are in any event
not entitled to cancel the agreement for late delivery (assuming it
occurs), because the additional conditions of tender stipulate that
fuels must be delivered within 48 hours of written order, and failure
to comply with the delivery requirements within the stated time can
result in fuels being ordered from alternative suppliers and the
difference in cost, if any, shall be for the account of the
applicant. The applicant stated in this regard that the
Municipality’s remedy for the “so
called” breach would be to order fuel from an
alternative supplier after the 48 hours have elapsed ;
(f) in any event, the Tender Board
could not and has no reason to cancel the agreement with immediate
effect.
The applicant submitted that the
interim interdictory relief should be granted because the Tender
Board representing a public authority was acting unlawfully, and the
applicant has a clear right to preserve the status quo ante until
the dispute about the cancellation is resolved. Furthermore the
applicant alleged that the total value of the contract is about
N$180 million over 5 years with each periodic order – which
occurs roughly every week – worth approximately N$400,000.00.
This, the applicant alleged, is the loss it would make. If the
contract were to be cancelled now, the applicant would never recover
the money, and it should be allowed to perform in terms of the
contract on a legitimate and bona fide basis until it is
clear it can be cancelled legitimately.
The applicant further alleged that
this is its only financially viable contract. The applicant is a
recent start-up and will not be able to survive financially to
challenge this unlawful action if this application is to be heard in
the normal course which may only be at the end of this year assuming
then that judgment is given immediately. The applicant stated that
this is exacerbated by the fact that there is already about N$2,5
million (although this amount is disputed) owing to applicant by the
Municipality which creates serious cash flow problems for the
applicant. The applicant submits that there is no inconvenience for
the respondents if the Municipality is forced to maintain its
obligations in the meantime. This is because the terms of the tender
are clear and if the applicant does not deliver within 48 hours,
fuel can be ordered from alternative suppliers and the difference in
cost would be for the applicant’s account. Finally the
applicant reiterated that its right is clear (as opposed to a prima
facie right) because of the glaring flaws in the purported
cancellation based on a reading of Regulation 6 read with Regulation
6(4).
As regards the dispute, the applicant
submitted that in order to challenge this purported cancellation of
the agreement, its options will have to be carefully considered
because as a rule the decision to cancel should be reviewed, but
there is some uncertainty as to whether the cancellation of
agreements by public bodies are generally reviewable actions. The
applicant’s legal practitioners would make a final decision on
the correct procedure to challenge the purported cancellation of the
agreement once the status quo ante is preserved through this
application.
The respondents pointed out that the
Municipality is responsible for providing municipal services to the
City of Windhoek. The services include the supply of water,
maintaining the sewerage system, providing refuse removal services
and the supply of electricity to the residents of Windhoek. The
Municipality also maintains the police force in order combat crime
in the city. Further responsibilities include providing an ambulance
service, a traffic service and the fire brigade as well as a public
transport system.
The respondents further alleged that
the Municipality has to maintain an efficient system of service
delivery in order to cater for the many and diverse needs of the
residents of the City of Windhoek. Many of the services so provided
are critical for the safe and proper functioning of the city, and
would broadly speaking be viewed as essential services. Critical to
the service delivery is the establishment and maintenance of a fleet
of vehicles to carry out these duties. The Municipality’s
fleet includes approximately 2000 vehicles – from sedan
vehicles to various trucks used in its operations – and
approximately 100 buses used for public transport. In order to keep
these vehicles running, it has to obtain fuel, and it is very
important that it has a reliable supply of this product. Should
there be any breakdown in the supply it has serious consequences for
the City of Windhoek and the services which it is required to
perform, and more especially the essential services such as
policing, emergency services and ambulance services. A disruption in
these services also has serious consequences for the residents of
the city. For instance, many residents, and particularly the poor
residents of Windhoek, rely heavily on public transport provided by
the Municipality in the form of the bus service.
The respondents also alleged that the
applicant had difficulties in delivering fuel on time and it became
apparent that the applicant did not have the capacity to provide an
efficient and timeous service to the Municipality. It was pointed
out that it was at times extremely difficult for the Municipality’s
employees to contact the applicant in order to discuss problems with
the supply of fuel. Mostly this could only be done by contacting the
managing director of the applicant on his cellular phone and at
times when the Municipality tried to contact him, the cellular phone
was turned off and this was a general problem.
It was stated that the applicant’s
non-compliance with the terms and conditions of the agreement
relating to the supply of fuel was a persistent and ongoing problem.
A summary showing the numerous instances of late delivery (more than
48 hours) supported by records was annexed to the answering papers,
from which it is apparent that the late delivery of fuel occurred on
a regular basis, contrary to what was stated in the founding
affidavit. It was apparent that late delivery of fuel took place
over a period of 15 months. It was also apparent from the supporting
documentation that late deliveries occurred approximately 55 times
between 8 January 2011 and 20 February 2012. On
15 occasions,
the fuel was delivered 1 day late; on 10 occasions the fuel was
delivered 2 days late; on 8 occasions the fuel was delivered 3 days
late; and on 7 occasions the fuel was delivered 4 days late. Between
27 December 2012 and 8 January 2013 fuel was delivered on one
occasion more than 8 days late.
The respondents alleged that two of
the Municipality’s employees had numerous meetings with the
applicant, in particular its managing director to discuss these
problems, and made numerous telephone calls to discuss
non-performance. They emphasised that timeous performance was
absolutely essential and that it became clear that the applicant was
simply not able to effectively perform in terms of the agreement.
Over the 15 months or so of late deliveries, the applicant always
promised to improve the situation but this never happened. Given the
long period of non-compliance, the respondents submitted that the
Municipality had been more than accommodating in allowing the
situation to continue despite no real improvements.
The respondents pointed out that more
recently the Municipality had entered into correspondence with the
applicant concerning the continuing breaches. Some of the more
recent correspondence was annexed to the answering papers and
included an email dated 16 October 2012 to the applicant where
specific mention was made that fuel should be delivered within 48
hours and that if there were problems, a back-up plan had to be in
place. In a further email dated 17 October 2012, the Municipality’s
employees warned the applicant that due to late delivery by the
applicant the Municipality’s fuel tanks had started to run dry
and requested urgent delivery in compliance with the procurement
orders. In an email dated 14 November 2012, the applicant was
reminded that the fuel supply had reached critical levels and a
request was made as to when delivery could be expected. In an email
dated
22 November 2012 the Municipality noted that the applicant
had failed to deliver fuel on time on several occasions and reminded
the applicant of its contractual obligations. The applicant was
further reminded in this mail that late deliveries led to the
shortage of fuel which grounded vehicles, thereby negatively
affecting the operations of the City of Windhoek. The following was
inter alia stated in this email:
“Failure
to deliver on time, which is a breach of your contractual
obligations, will leave us with no alternative but to approach the
Tender Board to review your tender, which could ultimately lead to
the cancellation of your tender.
Also
take note that should we be forced to purchase fuel from another
supplier because of non-delivery, you could be held liable for the
difference in price.”
A further email from Mr Mouton of the
Municipality dated
30 November 2012 pointed out that an order
was placed on 26 November 2012 but that no delivery had yet taken
place. It was specifically stated in that email that the situation
had now become unacceptable as it seriously hampered the operations
of the City of Windhoek, and the applicant was further informed that
the Municipality indicated that it had no choice but to report the
matter to the Tender Board for further action. A further email dated
1 February 2013 again enquired about late fuel delivery. In email
dated 18 February 2013, the applicant was informed that “our
petrol tanks had now run dry. When can we expect fuel delivery. You
leave us with no alternative but to order fuel from somewhere else,
which will result in you not being able to deliver our tanks in
full.”
All these emails were annexed to the
answering affidavit. In this regard it was stated in the answering
papers that the allegation in the applicant’s founding papers
to the effect that the only incidents of late supply of fuel were
raised in the email of 22 November 2012 was patently false in light
of the emails annexed, and that it was also patently untrue that no
further late deliveries occurred after 22 November 2012. The
respondents alleged that it was also false for the applicant to
state that there was never any further indication that the
Municipality had any complaints about or was dissatisfied with the
applicant’s performance in terms of the agreement.
This, the respondents alleged was an
active attempt to mislead the court in suppressing the true facts
especially with regard to the applicant’s allegations to the
effect that there was only one incident of late supply of fuel, that
there were no late deliveries either prior to or after 22 November
2012 and that the Municipality had no complaint and was not
dissatisfied with the applicant’s performance. The respondents
made it clear that the cancellation letter did not come out of the
blue and as a total surprise, but that it was a culmination of
verbal admonitions over 15 months, written complaints and requests
to comply with the agreement. The respondents submitted that on this
basis alone the application should be dismissed given the conduct of
the applicant, and that the applicant should be mulcted with
punitive costs.
The respondents submitted that the
cancellation by the Tender Board was not an administrative action.
They submitted that the Tender Board did not exercise a public power
when it cancelled the agreement with the applicant. It simply
exercised its common law rights to cancel the agreement on the basis
of the applicant’s repeated breach of its obligations. It was
further submitted that it was irrelevant to the determination
whether such grounds for termination are incorporated into the
regulations governing the operation of the Tender Board. In this
regard the respondents denied that the applicant was entitled to a
hearing before the Tender Board and that the Tender Board’s
decision to terminate the agreement because was a purely commercial
decision, taken in the best interest of proper service delivery and
on the basis of repeated breaches of the agreement by the applicant.
It was further submitted that the cancellation was lawful, and there
was nothing in the nature of the decision which elevated it to a
reviewable administrative action which entitled the applicant to be
given a hearing either at common law in terms of Article 18 of the
Constitution.
As regards the interdictory relief
sought, the respondents submitted that the applicant had not
complied with the requisites for the granting of an interim
interdict. They further alleged that they would be severely
prejudiced should an interim order be granted because it is by no
means clear how long the interdict would be in effect, which would
force the respondents to continue with an agreement which the
applicant has consistently breached.
In reply, the applicant mainly dealt
with the allegations of the respondents concerning the material
non-disclosure of the applicant of the actual situation pertaining
to the dispute between the parties, and in particular, that contrary
to what was stated in its founding papers mentioned above, the issue
of the late delivery of fuel was an ongoing problem. The applicants
denied that they misrepresented any facts and stated that there was
a justifiable explanation for each and every late delivery since 22
November 2012 as well as for dates prior thereto. The explanations
were set out in detail in the replying affidavit.
In light of the above facts I now
proceed to consider whether the applicant has made out a case for
the relief sought.
At the outset counsel for the
applicant, Mr Coleman, submitted that an urgent application to
maintain the status quo is a common phenomenon and that this
court has ruled that an inference of unreasonable delay may be drawn
from a failure to seek urgent relief to maintain the status quo,
and it is not only possible but also the most effective remedy in
the context of administrative decision making.
Mr Coleman further submitted that it has been accepted that the
stronger the right established by the applicant “ … the
less important the other matters become …”.
The so-called rule that a decree of specific performance – or
an interdict – should not be granted where an applicant could
be
compensated by an award of damages is
an impermissible curtailment of the court’s discretion.
In this regard, Mr Coleman submitted
that the core question to be determined is whether or not the Tender
Board had authority to cancel the agreement in terms of the
Regulations, and ex facie the Regulations, the Tender Board
had no right to cancel the agreement. Thus, since the Tender Board
exceeded its powers because it had no authority, the cancellation
was invalid and unlawful, and the applicant had made out a clear
right in respect of the interdictory relief sought. It was also
submitted that the issue regarding whether or not performance
occurred justifying cancellation is not to be determined by the
court in light of the unlawful cancellation of the Tender Board.
Considering that both parties rely on
different Regulations, it is necessary to determine whether or not
the Tender Board had authority to cancel the agreement. I am mindful
of the fact that whilst there may be situations where a court having
to decide on an interim interdict has sufficient time and assistance
to arrive at a final view on the disputed legal point (in which
event it probably ought to express a firm view in order to save
costs), situations of urgency arise when decisions on legal issues
have to be made without the judicial officer concerned having had
the time to arrive at a final considered view. In such a situation
the judicial officer is placed in a position to express only a prima
facie view. The expression of such a view and the grant of
interim relief only would not conflict with the principles of res
judicata and there is no embarrassment in a judge in an urgent
application for an interim interdict being overrideen by a trial
judge because the interlocutory decisions of judicial officers are
not binding at later stages of the proceedings.
I also hold that the converse would apply in instances where a judge
is faced with the position where, without having had time to arrive
at a final view expresses a prima facie view on the disputed
legal point resulting in the refusal of the interim relief sought.
Regulation 6 of the aforesaid
Regulations provides the following:
“Powers
and functions of local tender boards
6.
(1) A local tender board is solely responsible, unless otherwise
provided in the Act or in any other law, for the procurement of goods
and services for a local authority council, and, subject to the Act
or any other law, for the arrangement of the letting or hiring of
anything or the acquisition or granting of any right for or on behalf
of a local authority council, or for the disposed of property of a
local authority council, and for that purpose but subject to
subregulations (2) or (3), may –
(a)
on behalf of a local authority council enter into an agreement with
any person within or outside Namibia for the furnishing of goods or
services to a local authority council or for the letting or hiring of
anything or the acquisition or granting of any right for or on behalf
of a local authority council or for the disposal of property of a
local authority council;
…
take
steps or cause steps to be taken to enforce any agreement entered
into under paragraph (a);
on
behalf of a local authority council withdraw from or cancel any
agreement entered into under paragraph (1) and, if appropriate,
claim and recover damages;
…
(2)
The local authority council concerned may issue general policy,
reporting, monitoring directives or directives in respect of levels
of authority to the local tender board relating to the procurement of
goods and services for the local authority council and for the
cancellation or settlement of agreements entered into in respect of
such goods and services and any matter ancillary thereto.
No
exemption, condonation, settlement or amendment which may be to the
prejudice of a local authority council may be granted, negotiated or
made under paragraph (g) or (h) of subregulation (1) without the
prior approval of the local authority council concerned.
A
local authority council must take the final decision under
paragraphs (e), (f) of subregulation (1) or in respect of any matter
referred to them under regulation (3).
…”.
Regulation 27 provides the following:
“Non-compliance
with title of tender or agreement, or delay in performance of
agreement
27.
(1) Unless otherwise provided, but subject to this regulation –
…
in
an agreement, a local tender board may -
if
the contractor concerned fails or has failed to comply with any of
the terms and conditions of the agreement or performs or has
performed unsatisfactorily under the agreement, in addition to any
other legal remedy it may have, cancel the agreement;
if
the contractor concerned fails to furnish any goods or services
within the period of time stipulated in the agreement –
(aa)
act in accordance with subparagraph (i); or
(bb)
make arrangements for the furnishing of goods or services of similar
quality and up to the same quantity in lieu of the goods or services
not furnished or rendered under the agreement,
(cc)
in the case of the late delivery of goods or services levy a penalty
as determined by the local tender board and contained in the tender
title or contract,
and
recover any expenses, loss or damages incurred or suffered by the
local authority council from that contractor in accordance with
subregulation (2).
(2)
If –
an
agreement is cancelled under subregualtion (1)(b)(i) or (ii), the
contractor concerned is liable to compensate the local authority
council concerned in accordance with regulation 26(2);
...
but
if the contractor satisfies the local tender board or the local
authority concerned, as the case may be, in terms of subregulation
(4) that the delay in the furnishing of goods or services is the
direct result of strikes, lockouts, riots, accidents in connection
with machinery, natural disasters or storms or other circumstances
which could not have been foreseen or prevented by the contractor, is
not so liable to compensate the local authority council.”
As previously stated Mr Coleman on
behalf of the applicant relies on the provisions of Regulation 6(4)
which provides that the local authority must take the final decision
in the event that the Tender Board cancels any agreement in terms of
Regulation 6(1)(f). Mr Corbett on behalf of the respondents relies
on Regulation 27 which he submits is a specific regulation giving
the Tender Board authority to cancel an agreement, without the
Municipality having to take the final decision, in instances of
non-compliance with title of tender or agreement, or a delay in
performance of the agreement.
Unfortunately the court was not
provided with any authorities relating to the principles governing
the interpretation of the relevant regulations. On the face of it,
there is a conflict between the provisions of Regulation 27 and the
provisions of Regulation 6. Regulation 6 also appears at first blush
to be of general application and Regulation 27 of specific
application in instances of non-compliance or delay in performance
of the agreement.
It is a rule of statutory
interpretation that the language of every part of a statute should
be so construed as to be consistent, so far as possible, with every
other part of that statute and with every other unrepealed statute
enacted by the same legislature.
In Principal Immigration Officer v Bhula
Wessels JA summarised the rule as follows:
“The
legislature is presumed to be consistent with itself. … Where
there are two sections in an Act which seem to clash, but which can
be interpreted so as to give full force and effect to each, then such
an interpretation is to be adopted rather than one which will partly
destroy the effect of one of them.”
In R v Brener
it was held that where two inconsistent sections or provisions
appear in a statute, the established rule of interpretation for
resolving such a conflict is that the latter of the two provisions
prevails or governs.
In Entabeni Hospital Ltd v Van der
Linde; First National Bank of SA Ltd v Puckriah
the court had occasion to deal with two conflicting rules of court
namely Rules 31(2)(a) and 31(5)(a). Rule 31(5)(a) provided that in
circumstances there stipulated, the plaintiff seeking a default
judgment was required to always apply to the Registrar, whereas Rule
31(2)(a) authorised the plaintiff to obtain the same default
judgment from the court. The court found that there appeared to be
an irreconcilable conflict between the provisions of these two
sub-rules. The court applying the above-mentioned established rules
of interpretation, held at 424B-E that it followed that it was no
longer competent for a plaintiff who seeks to obtain judgment by
default in the circumstances stipulated in Rule 31(5)(a) to set the
action down for hearing in order to obtain such judgment from the
court.
It appears to me that Regulation 6 is
interpreted to be a general application and Regulation 27 of
specific application, such an interpretation would give force and
effect to each regulation. In the event that the regulations do
conflict in an irreconcilable manner, which prima facie also
appears to be the case, the provisions of Regulation 27 would still
prevail based on the rule set out in R v Brener supra.
Thus in my opinion, the Tender Board has the authority to cancel an
agreement in the circumstances set out in Rule 27, without the
Municipality having to take the final decision.
The next issue to be determined is
whether the cancellation by the Tender Board amounts to an
administrative decision. In Permanent Secretary of the Ministry
of Finance and Others v Ward
the Supreme Court had occasion to determine whether or not a
cancellation by the Ministry of Finance of an agreement in terms of
which a doctor would render professional services to members of
PSEMAS at a prescribed professional tariff for which he would be
remunerated, was a purely administrative or commercial act.
At paragraph 29 of that judgment the
court found that in order to determine whether the cancellation of
the agreement was done purely in terms of the agreement or whether
it was an administrative act was not easy. After a thorough
discussion of the various decisions of the South African courts, the
court held that the principles to be considered in determining
whether an action amounted to an administrative act would depend on
the nature of the power exercised, the source of the power, the
subject matter, whether it involved the exercise of a public duty
and how closely related it was to the implementation of legislation.
Applying the principles laid down in
the Ward decision, it is clear that the Tender Board is
indeed a public authority and has the power to on behalf of the
Municipality to conclude agreements with any person for the
furnishing of goods and services. However, I had the view that after
an agreement is concluded subject to a tender procedure, the actual
implementation of the terms and conditions of the agreement (set out
in the tender document) are commercial and not administrative in
nature. The Municipality pays for services rendered on a contractual
basis. It involves proper performance on both sides. The agreement
concluded in this matter contains no provisions governing breach
(contrary to the facts in Ward). Those provisions are instead
set out in Regulation 6 read with Regulation 27, which I have found
authorises the Tender Board to cancel the agreement in instances of
non-compliance with the title of the tender or in this case, delay
in performance.
In my view the regulations simply set
out the common law rights of the Municipality which are implemented
or exercised through its agent, the Tender Board, which has been
authorised to perform certain functions on its behalf. The
cancellation in this instance thus did not amount to an
administrative act, but rather a commercial one.
Mr Coleman correctly submitted that
in regard to cancellation of contracts, it is trite that the
innocent party may cancel an agreement in instances of material
breach, in the absence of a specific clause governing the breach.
Where no material breach occurred, and in the absence of a breach
and cancellation clause in an agreement, the party wishing to cancel
an agreement must put the party in mora by way of a clear
notice. Only after the other party persists with the non-performance
amounting to repudiation can the agreement be cancelled. If this
does not happen, the cancellation is unlawful.
Mr Corbett on behalf of the
respondents submitted that the applicant was indeed placed in mora
in particular in the email dated 22 November 2012 (mentioned above)
in which the applicant was advised that the failure to deliver on
time was a breach of the contractual obligations, which could
ultimately lead to cancellation of the tender, as well as the email
of 30 November 2012 where it was indicated that the situation had
become unacceptable as it seriously hampered the operation of the
City of Windhoek. I am inclined to agree with
Mr Corbett that
the applicant was properly placed in mora.
What the court must now decide is
whether it should grant an interim interdict for specific
performance of the agreement pending finalisation of proceedings to
be instituted by the applicant, and in this regard to determine
whether the requisites for an interim interdict have been properly
set out. In this regard, it is to be noted that it has been found
that the Tender Board has authority to cancel the agreement, and
that the notice of cancellation was a commercial and not an
administrative act.
In order to succeed in an application
for an interim interdict, the applicant would ordinarily be required
to establish, firstly, a prima facie right to the relief
sought, even if it is open to some doubt; secondly, a well-grounded
apprehension of irreparable harm if the interim interdict is refused
and the ultimate relief is ultimately granted; thirdly, that the
balance of convenience favours the granting of an interim interdict;
and fourthly, that the applicant has no other satisfactory remedy.
To these must be added the fact that the remedy is a discretionary
remedy and that the court has a wide discretion.
In order to establish a prima
facie right the applicant would need to show that it has a right
to specific performance even if that right is open to some doubt.
The degree of proof to establish a prima facie right was
dealt with by Smuts, J in Nakanyala v Inspector General of
Namibia and Others
applying the summary by Justice Harms, in the Law of South
Africa
as follows:
“The
degree of proof required has been formulated as follows: The right
can be prima
facie
established
even if it is open to some doubt. Mere acceptance of the applicant’s
allegations is sufficient but the weighing up of probabilities of
conflicting versions is not required. The proper approach is to
consider the facts set out by the applicant together with any facts
set out by the respondent which the applicant cannot dispute, and to
decide whether, with regard to the inherent probabilities and the
ultimate onus,
the applicant should on those facts obtain final relief at the trial.
The
facts set out in contradiction by the respondent should then be
considered and if they show serious doubt on the applicant’s
case the latter cannot succeed.
…”.
(emphasis
supplied)
It is apposite at this stage to
reiterate the well established principle that an applicant is
required to make out a sufficient case in the founding papers, and
an applicant cannot remedy the paucity of information in the
founding affidavit in the replying affidavit.
I already found, based on the
interpretation of the Regulations that the applicant does not have a
clear right. It remains to be established whether the applicant has
made out a prima facie right for the relief it seeks. At the
very least the applicant must prove, prima facie that
cancellation was not warranted. In this regard, one cannot escape
the fact that the applicant in its founding papers painted itself as
a completely innocent party when it came to the performance of the
terms of the agreement. The applicant made it clear in its founding
papers that the only incidence of late supply of fuel was raised by
the Municipality’s senior buyer in November 2012. Furthermore,
the deponent to the affidavit stated that “since
then everything continued as normal and no further late deliveries
occurred. There was never any further indication that second
respondent had any complaints about or was dissatisfied with the
applicant’s performance in terms of the agreement”.
The applicant then says that “out
of the blue and as a total surprise the applicant received a
letter.”
What is clear from the respondents’
allegations, is that delivery was consistently late and that the
Municipality pointed out to the applicant that it was having serious
problems to execute its mandate as a local authority because of the
constant late deliveries of fuel. I refer to the emails above. The
applicant in its founding papers clearly failed to take the court
into its confidence to at the very least inform that there were
issues regarding the performance of the agreement, and to explain
them. I say this simply because on the applicant’s own papers
it alleges that there were no problems with delivery and that the
letter of cancellation came as a total surprise.
The applicant only dealt with the
issues of late performance, and that the late performance was
justifiable in most instances in its reply. These facts should have
been set out in the founding papers. Apart from this, what is stated
in reply is irreconcilable with the picture presented in the
founding papers. As such based on the test set out by Justice Harms
in the Nakanyala case, together with the principles set out
in the TransNamib case, the applicant has failed to make out
a prima facie case for the relief sought.
In light of the above it is not
necessary for me to consider whether the applicant has made out the
other requisites for interim relief.
The respondents sought a special
costs order based on the applicant’s material non-disclosure.
I believe that in view of the order I make, the applicant has
already suffered the consequences of failing to make out a prima
facie case in its founding papers. In light of the foregoing the
following order is made:
The application is dismissed with
costs, such costs to include the costs of one instructing and one
instructed counsel.
______________________
EM SCHIMMING-CHASE
Acting Judge
APPEARANCES
APPLICANT: GB Coleman (with him E
Angula)
Instructed by AngulaColeman
RESPONDENTS: AW Corbett
Instructed by Muluti & Partners
Oka Investments (Pty) Ltd v Chair of the Tender Board for the City of Windhoek and Another (A 66/2013) [2013] NAHCMD 89 (05 April 2013);