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/SG

IN THE HIGH COURT OF SOUTH AFRICA

(TRANSVAAL PROVINCIAL DIVISION)

DATE: 19/06/2006

CASE NO: A2211/2004

11655/2004

UNREPORTABLE

In the appeal between:

TEDCOR (PTY) LIMITED 1^ST APPELLANT

(1^ST APPLICANT

in the court a quo)

MBOMBELLA WASTE MANAGEMENT CC 2^ND APPELLANT

(2^ND APPLICANT

in the court a quo)

And

MBOMBELA LOCAL MUNICIPALITY 1^ST RESPONDENT

(1^ST RESPONDENT

in the court a quo)

TELEGENIX 655 TRADING CC 2^ND RESPONDENT

(2^ND RESPONDENT

in the court a quo)

JUDGMENT

MYNHARDT, J

Introduction

1. This is an appeal against the judgment of SERITI J dismissing the appellants’ application to review and set aside the decision of the first respondent to award a tender to the second respondent and ordering the appellants to pay the second respondent’s costs, including the cost of two counsel, on an attorney and client scale and which costs were also to include the second respondent’s costs in respect of an application for condonation.

2. The learned judge also refused an application by the appellants for leave to appeal the judgment. The appellants thereafter applied to the President of the Supreme Court of Appeal for the necessary leave. On 9 November 2004 leave was granted to the appellants to appeal to the Full Court of this Division. It was further ordered that the costs of the application in the court a quo for leave to appeal as well as the cost of the application to the Supreme Court of Appeal, would be costs in the appeal.

3. The appellants approached the court a quo by way of an urgent application. They sought an order reviewing and setting aside the decision of the first respondent to award a tender for the implementation and management of a waste collection and removal project in the townships in the area of the first respondent, to the second respondent. They also sought an order remitting the tender to the first respondent for reconsideration and decision and, lastly, a costs order against any party opposing the application.

4. Initially the appellants sought an order awarding the tender to them. The first respondent opposed only that relief and further abided the decision of the court. The appellants and the first respondent thereafter settled their differences; the appellants abandoned that part of the relief which they sought and the first respondent then withdrew its opposition to the application. The appellants were, and still are, content with an order remitting the matter to the first respondent in the event of them obtaining an order setting aside the decision of the first respondent to award the tender to the second respondent.

5. The second respondent, however, opposed the application and has also opposed the appeal. Its standpoint was that the appeal ought to be dismissed with costs.

The facts

6. The salient and undisputed facts of the matter, insofar as they are relevant for purposes hereof, may be summarised as follows: During the latter part of 2003 the first respondent called for tenders for the rendering of waste collection and removal service in the areas of Kanyamazane, Matsulu and Tekwane North and South. These areas fall within the boundaries of the first respondent and are inhabited. There are thousands of households in those areas. According to the appellants’ tender documents there are approximately 20 400 households but according to the calculations of the Chief Financial Officer of the first respondent there are only 16 350. Nothing turns on this difference.

7. The so-called shadow price of the first respondent for the tender, ie its budget for the tender, was R20 million including 10% escalation per year, for 60 months. The tender was furthermore subject to so called Tender Specifications which, in no uncertain terms, prescribed what should be contained in the tender documents. It was also subject to the first respondent’s Preferential Procurement Policy (“Procurement Policy”) which was contained in a document.

8. Sixteen tenders were received by the first respondent, including those of the appellant and the second respondent. Thirteen of these were rejected or eliminated by the first respondent in terms of clause 2.2.16 of its Procurement Policy. The precise grounds for their elimination are not relevant for purposes hereof. The remaining three tenders were those of the appellants, the second respondent and that of Ka Magobeni Waste Management.

9. The tender prices of these three tenders were as follows:

9.1 The second respondent: R18 396 693.00

9.2 Ka-Magobeni Waste Management R19 586 700.00

9.3 The appellants R20 553 652.80

The Chief Financial Officer of the first respondent made certain adjustments to the tender prices, the particulars of which are not relevant, and calculated the monthly costs to the first respondent if either of the appellants’ or second respondent’s tenders were accepted as R300 492.00 and R219 008.25 respectively. He furthermore calculated the adjusted tender price of the second respondent for five years as R16 050 796.00 and that of the appellants as R20 111 408.00.

10. The Municipal Manager of the first respondent recommended to the Mayoral Committee that the tender of the second respondent be accepted and that recommendation was indeed accepted. The contract, or tender, was therefore awarded to the second respondent on 27 October 2003.

On 28 October 2003 the appellants were notified in writing by the first respondent that the tender had been awarded to the second respondent.

The appellants have performed a similar service in the four areas since 29 August 2003, the date on which their contract had expired, on a month to month basis. They were notified in the same letter that that contract would be terminated on Friday 28 November 2003. The implication of this was that the second respondent would perform the service from Monday 1 December 2003.

11. On 3 December 2003 the appellants’ attorneys wrote to the first respondent and raised certain concerns that the appellants had about the ability of the second respondent to do the work. The attorneys also requested certain information from the first respondent in terms of section 18 of the Promotion of Access to Information Act, 2000, no 2 of 2000.

12. On 27 February 2004 the appellants’ attorneys received a copy of the report by the Director, Community Services, of the first respondent about the tenders that were received by the first respondent, and the recommendation that was made to the first respondent by its Municipal Manager. I have already mentioned that his recommendation that the tender be awarded to the second respondent, was accepted by the first respondent. From this document it became apparent to the appellants and their legal representatives what had transpired after the closing date of the tenders and why the tender had been awarded to the second respondent.

13. On 4 March 2004 the first respondent wrote to the appellants’ attorneys in response to their letter of 27 February 2004 that the first respondent was negotiating with the appellants with a view to possibly entering into a contract with the appellants for rendering services in respect of similar projects in “areas not covered by the awarded tender”. The letter also stated that it “may be misleading to say” that the first respondent and the appellants had commenced negotiations “regarding the award of the tender” to the second respondent, “with a view to reaching settlement”.

14. On 12 March 2004 the appellants’ attorneys wrote to the first respondent and raised a number of concerns and complaints that the second respondent’s tender “did not meet the tender specifications at the time of tendering”. It was further stated in the letter that the second respondent “still does not meet those specifications and is accordingly in breach of its contract with you”.

The first respondent was given time until 23 March 2004 to respond to the letter. This date was later extended to 1 April 2004 after it had been pointed out to the first respondent that “the mayoral committee” had decided on 27 October 2003 “to award the tender to the second tenderer (the appellants) ...” in the event that the second respondent “is unable to perform in accordance with the contract”.

15. On 1 April 2004 the first respondent wrote to the appellants’ attorneys that in its opinion “the tender was allocated correctly” to the second respondent. The letter further stated that “certain aspects pertaining to our contract with Telegenix (second respondent) ...” need further attention and that these matters are being addressed.

16. On 8 April 2004 the appellants instructed junior counsel to advise them and “to draft the papers for purposes of launching this application”. Counsel recommended the employment of senior counsel and appellants’ attorneys managed to secure the services of senior counsel on or about 22 April 2004.

The papers were finalised over the weekend of 1 and 2 May 2004. The application was launched on 6 May 2004.

17. The matter came before the court a quo on 15 June 2004 after both the first and second respondents had filed opposing affidavits. The hearing of the matter was delayed for some time because the second respondent filed and served its opposing affidavit late. The affidavit was filed of record on or about 2 June 2004. The second respondent had to apply for condonation for the late filing of its answering affidavit.

18. On 11 February 2004 the first respondent and the second respondent entered into a written agreement with each other in regard to the services to be rendered by the second respondent pursuant to the tender. In terms of clause 6 of this agreement it was deemed that the contract had commenced on 2 December 2003.

19. It does not appear from the papers precisely when the second respondent entered into written agreements with the four subcontractors that it had to employ in terms of its contract with the first respondent. Those contracts must, however, have been entered into after 28 March 2004 because the second respondent had invited applications from suitably qualified contractors for appointment as subcontractors. In the advertisements that were published by the second respondent it was stated that the applicants would be interviewed on 28 March 2004.

The four contracts that were subsequently concluded with the subcontractors each contained a clause in terms whereof the contract was deemed to have taken effect on 1 April 2004. Each of these contracts also provided for a suspensive condition that the subcontractor meet “all the statutory obligations required in this contract (and) in particular tax and labour relations which are pre conditional to the operationalsation of the contract”.

Whether these suspensive conditions were fulfilled does not appear from the papers. I shall, however, assume that that had happened.

In passing I would like to mention that no evidence was put before the court by the second respondent that it had entered into a subcontract to remove the refuse from the area of Tekwane South and North. However, nothing turns on that.

The judgment of the court a quo

20. The learned judge approached the matter on the basis that a reasonable time for the appellants to have instituted the review proceedings commenced to run on 28 October 2003. In terms of section 7 of the Promotion of Administrative Justice Act, 2000 no 3 of 2000 (“PAJA”) the appellants had, at most 180 days to institute the proceedings. That section provides, insofar as it is relevant, that proceedings for judicial review must be instituted without unreasonable delay and not later than 180 days after the date on which the aggrieved person became aware of the administrative action complained about and the reasons for it “or might reasonably have been expected to have become aware of the action and the reasons”.

In terms of section 9 of PAJA the period of 180 days may be extended by agreement between the parties or, failing such agreement, by a court on application by the person concerned. Such an extension may be granted by the court “where the interests of justice so require”.

The learned judge found, furthermore, that the appellants had launched the proceedings late because 180 days from 28 October 2003 had already elapsed by 6 May 2004.

The next question that the court a quo had to decide was whether or not it should extend the period of 180 days. The learned judge considered the evidence about the prejudice that the second respondent would (allegedly) suffer if such an extension is granted and the application succeeds. He concluded that because the second respondent and members of the community would suffer “immense prejudice” in such an event, the late launching of the proceedings should not be condoned because an extension of the time would not be in the interests of justice.

The last issue that the court a quo had to consider was the question of costs. The second respondent sought a cost order against the appellants on the scale as between attorney and client. The learned judge found, inter alia, that the appellants’ explanation for the delay in bringing the review application was disingenuous. He also branded the appellants’ attitude to require the second respondent to bring a condonation application for the late filing of its answering affidavit, as unreasonable. The punitive costs order mentioned hereinbefore was therefore made.

The learned judge did not, in the course of his judgment refer to, or discuss, the merits of the appellants’ case. He was not impressed by the explanation offered by the appellants for the delay in the bringing of the application and his views about the prejudice that would be suffered by the second respondent and the community if an extension of time were permitted, were decisive in refusing to extend the period of 180 days.

Discussion

21. The appellants contended on appeal that the court a quo wrongly found that the application was launched after the expiry of a reasonable period. Counsel for the second respondent supported that finding of the court a quo.

Counsel for the appellants contended that the period of 180 days mentioned in section 7 of PAJA merely provides for a maximum period within which to bring proceedings for review and that the court still has to determine whether or not proceedings were brought within a reasonable time.

For purposes hereof I shall assume, without deciding the point, that counsels’ submission is correct. See de Ville; Judicial Review of Administrative Action in South Africa: at 439/440.

22. I think that it would be appropriate to divide the period from 28 October 2003 to 6 May 2004 into different shorter periods as components of the overall period, in order to decide whether or not the proceedings were brought within a reasonable time.

The first component would then be the period from 28 October 2003 to 27 February 2004.

23. According to the appellants’ counsel the date of 27 February 2004 plays an important role. It can be regarded as the date on which the appellants became aware of the reasons for the decision of 27 October 2003 to award the tender to the second respondent. The appellants and their legal representatives could, and was able to, glean from the document that they received from the first respondent on that date, what the reasoning was that had led to the decision of 27 October 2003. As a matter of fact, the appellants’ papers were drafted whilst their legal representatives only had that document available. The appellants’ attorneys did request the first respondent on 3 May 2004 to furnish its reasons for the decision but until the hearing of the matter the first respondent did not respond to that request.

24. In terms of section 7 of PAJA a reasonable time within which to bring review proceedings, and also the 180 days, would commence to run from the date on which the aggrieved party became aware of the administrative action and the reasons therefor or he/she might reasonably have been expected to have become aware “of the action and the reasons”.

The question now is whether the appellants could reasonably have been expected to have become aware of the reasons for the decision before 27 February 2004.

25. The appellants’ case is that negotiations were taking place between the appellants and the first respondent in December 2003. Their attorneys, in any event, wrote the first letter to the first respondent for purposes of obtaining information on 3 December 2003.

The court a quo did not accept the appellants’ version that there were negotiations taking place between the parties about the award of the tender in December 2003. The learned judge found that the appellants were not candid with the court about this and that their version was disingenuous. These conclusions were based on the contents of the letter of 4 March 2004 wherein the first respondent stated that negotiations were taking place in respect of areas not covered by the tender. In its letter of 1 April 2004 the first respondent repeated that statement.

26. In my view the court a quo erred fundamentally in coming to the abovementioned conclusions. I say that for the following reasons:

The deponent to the appellants’ founding and replying affidavits stated categorically under oath that such negotiations had taken place. As a matter of fact, he stated that a meeting had been held on 9 December 2003 at the offices of the first respondent and he mentioned the names of the persons who represented the respective parties. At that meeting, said the deponent, “the award of the tender to the Second Respondent was discussed ...

The Mayor informed the meeting that the First Respondent intended to look into the award of the tender. I understand that an enquiry was launched on the instruction of the Mayor. The outcome of this enquiry is unknown to me. The Applicants anticipated a response from the Mayor and which response has not been forthcoming.”

That meeting was held because the four persons who represented the appellants had previously written a letter to the Mayor of the first respondent. A copy of that letter is annexed to the appellants’ papers. In that letter the author complained bitterly about the fact that the tender had been awarded to the second respondent. It is also worthwhile to quote the last two paragraphs of that letter. They read as follows:

“We would sincerely request the Mayor and his decision makers to kindly meet with the entrepreneurs and their employees so that they could review their decision as a matter of urgency before it ends up getting out of hand.

We are sure that Tedcor (Pty) Ltd will also request a review of the tender process.”

On 10 March 2004 the four representatives again wrote a letter to the Mayor of the first respondent in which they, inter alia, thanked the Mayor “for giving us the opportunity to discuss the abovementioned matter on the 9/12/2003 ...”. The Mayor was also told that it is intended to challenge the matter in the High Court “if the need arises”.

The second respondent obviously could not refute the appellants’ allegations. The first respondent did not do so in its answering affidavit.

It was, in my view, wrong for the court a quo to disbelieve, or to doubt, the appellants’ version of the negotiations that took place in December 2003 about the award of the tender. There was nothing to gainsay the appellants’ version. There were, therefore, no grounds for not accepting the appellants’ version.

The matter does not end there. The deponent to the appellants’ replying affidavit said that he had attended a meeting in Nelspruit on 6 February 2004 with Mr Phiri of the first respondent. At that meeting Mr Phiri “proposed the possibility of the Applicants and the Second Respondent entering into a joint venture or alternatively appointing the Second Respondent to the Applicants as a consultant. I indicated to him at that meeting that it was our normal business practice to enter into joint ventures and accordingly that a joint venture with the Second Respondent was a distinct possibility. Mr Phiri also proposed an additional arrangement involving four (4) new areas requiring waste removal services and in respect of all of these issues I requested Mr Phiri to put a proposal to the Applicants in writing. Mr Phiri undertook to let me have the proposal by the following Monday (9 February 2004). No such proposal has been received although this discussion was acknowledged in the letter of the first respondent of 4 March 2004 ... .” These allegations were also not disputed. The court a quo had no reason to reject or disbelieve it.

If one reads the letters of the first respondent of 4 March and 1 April 2004 carefully, it is apparent that they contain no denial that negotiations had taken place earlier about the award of the tender to the second respondent. At best for the second respondent it can be said that according to the letters no such negotiations had taken place between the parties in March.

The court a quo relied heavily on the contents of these letters for disbelieving the appellants’ version. In doing so the learned judge erred. The contents of those letters were not confirmed under oath. It was therefore wrong for the learned judge to rely on them in order to reject the testimony of the deponent to the appellants’ papers.

It is in this context then that the court a quo’s finding must be considered that the appellants would have received the first respondent’s reasons earlier than 27 February 2004, if they had requested reasons immediately after 28 October 2003.

I am prepared to accept for purposes hereof that the reasons would have been available before 27 February 2004 if the first respondent was requested to furnish them immediately after 28 October 2003. The crucial question is, however, whether one can blame the appellants for not doing that. I do not think so. The appellants obviously had a good relationship with the first respondent. That is also stated by the Municipal Manager in his letter of 4 March 2004. The appellants, furthermore, had rendered the same service for the first respondent during the latter part of 2003. They also tendered for the work. They had the necessary resources to render the service in terms of the contract if the tender would be awarded to them. It is therefore not reasonable, in my view, to expect of them to dig in their heels immediately after 28 October 2003 and to draw the battle lines. The fact that they initially attempted to solve the problem amicably should therefore not count against them. See also Ntame v MEC for Social Development, Eastern Cape, and two similar cases, 2005 6 SA 248 (ECD) 257D-258G (para 15 17).

27. I now come to what I believe the second component of the time period should be and that is the period 27 February 2004 to 1 April 2004.

On 12 March 2004 the appellants’ attorneys wrote to the first respondent as mentioned above. The first respondent was given time until 1 April 2004 to respond to the letter. It did respond by saying that there was nothing wrong in the award of the tender to the second respondent.

It can surely not be suggested that the appellants took too long after the documents had been received by their attorneys on 27 February until the letter of 12 March was written. The learned judge in the court a quo also did not make such a finding.

The fact that the first respondent was given time until 1 April to respond to the letter of 12 March was, in my view, reasonable. In the letter of 12 March a large number of complaints were raised about the ability of the second respondent to render the service and a large number of omissions, or defects, in the tender documents submitted by the second respondent, were pointed out to the first respondent. It was therefore reasonable, in my view, to afford the first respondent ample time to consider the matter. The extension of the date for responding to the letter was brought about by the fact that a further letter was sent to the first respondent on 29 March 2004 which also warranted proper attention to be given to it.

There is, therefore, no basis for finding that this period should be taken into account against the appellants.

28. The last component of the time period is the period from 1 April to 6 May 2004.

I have already referred to the steps that were taken by the appellants after 1 April 2004 to employ the services of counsel. In my view the appellants cannot be faulted in any respect for their conduct. The court a quo also did not make any adverse findings against the appellants in respect of this period.

29. I therefore find that the appellants have instituted the proceedings within a reasonable time after 27 February 2004 being the date from which, in terms of section 7 of PAJA, a reasonable time commenced running. In any event, the proceedings were instituted well before 180 days have elapsed since that date.

The court a quo was therefore wrong in finding that the proceedings were instituted after the expiry of a reasonable period. That finding is premised on the finding that the first respondent’s reasons would have been available before 27 February 2004 had the appellants’ attorneys requested them “timeously” ie immediately after 28 October 2003. Consequently, according to the court a quo, a reasonable time, and the 180 days, commenced running, not from 27 February 2004, but from such earlier date as the appellants might reasonably have been expected to have become aware of the reasons. Unfortunately the learned judge did not find on which date, or approximately when, the reasons would have been furnished to the appellants’ attorneys.

Even if one assumes that the reasons would have been furnished to the appellants before 27 February 2004 had they been requested “timeously”, the question still remains whether or not the appellants delayed the process unreasonably. In the light of what I have discussed hereinbefore I do not think that such a finding would be justified.

30. In the light of my finding that the proceedings have been brought within a reasonable time, it is not necessary to consider the court a quo’s reasoning in regard to the question of prejudice to the second respondent and members of the community. This aspect was considered by the learned judge in the context of whether the appellant’s unreasonable delay ought to be condoned by extending the period of 180 days in terms of section 9 of PAJA.

31. The next question to be considered is whether the appellants have made out a case for the relief that they seek, namely, to remit the matter to the first respondent for reconsideration of the decision to award the tender to the second respondent.

This question entails a consideration of the merits of the appellants’ case.

The court a quo did not deal with this aspect because of the finding that the appellants’ unreasonable delay should not be condoned. The approach of the court a quo was unduly narrow. It should have considered the prospects of the appellants succeeding on the merits and the prospect of them succeeding to achieve a meaningful result, before it could finally decide whether the prejudice that the second respondent and the community would suffer, outweighed the other factors and whether or not it should, in its discretion, refuse to condone the delay. See Gqwetha v Transkei Development Corporation Ltd and Others 2006 2 SA 603 (SCA) 609H-I, 611I-612B; 614J 615B, 615E F.

32. In their papers the appellants relied on many defects in the tender documents of the second respondent for their standpoint that the first respondent should have awarded the tender to them rather to the second respondent.

I do not intend to deal with all these alleged deficiencies. I shall only deal with two of them which, in my view, are decisive of the matter.

33. The second respondent had to include in its tender documents a draft of the agreement it intended to conclude with subcontractors. It did not include such a draft in its tender. The second respondent therefore failed to comply with the requirements of the tender. This was admitted by the second respondent in its answering affidavit. The second respondent did, however, conclude agreements with the subcontractors at a later stage.

The second respondent also failed to include in its tender a draft of the agreement it proposed to conclude with the first respondent. This was also admitted in the second respondent’s answering affidavit. The second respondent said that its attitude was that it would conclude an agreement with the first respondent if and when the award was made. In its view it was not necessary to include a draft agreement in its tender.

In regard to the latter aspect it would be appropriate to quote the wording of clause 1.4 of the Tender Specifications. It reads as follows:

“1.4 The tenderer shall provide full details of his/her remuneration for rendering the services described herein together with any draft agreement the tenderer proposes concluding with Mbombela Local Municipality.”

There can be no question about the obligation of the tenderer to have included such a draft agreement in its tender. The reason therefor is obvious. It is to enable the first respondent to decide whether it would be prepared to enter into a contract with the tenderer on the terms proposed by the tenderer. Another reason is the possibility that the successful tender may later insist on terms in the agreement that might have the practical effect that its tender is more expensive to the first respondent than those of other tenders. The draft agreement therefore obviously plays an important role. That is why clause 1.10 of the Tender Specifications provides that the first respondent “shall not be obliged to conclude any agreement as proposed by the tenderer and reserves the right to substitute or redraft any portion or the whole of the proposed draft agreement submitted”.

34. The next question is what the effect of the two omissions was on the tender.

Clause 2.2.16 of the first respondent’s Procurement Policy provides that as a first step after the opening of the tenders “the responsiveness of each tender shall be established” by determining whether it, inter alia, “complies with the conditions of tender”. The clause further provides that if a tender does not meet “all of the aforegoing requirements” it should be regarded “as being non responsive”. Such tenders “shall be eliminated from further consideration” whilst “all responsive tenders shall proceed to the next stage of adjudication”.

Clause 2.4 of the Procurement Policy contains the “Conditions of Tender”. The documentation that should be submitted in support of a tender is dealt with in clause 2.4.1. This sub-clause requires of a tenderer “to complete the tender document in full ...”. The sub clause further provides as follows:

“Failure to complete the tender documents in full, properly signing same and annexing all relevant documents, shall result in the tender being automatically rejected.”

According to the document that was furnished to the appellants’ attorneys by the first respondent on 27 February 2004 the tender of Blues Alley Trading 137, had been eliminated in terms of clause 2.2.16 of the Procurement Policy because the tenderer “failed to provide a detailed plan as per the terms of reference (specification)”.

There is, in my view, no difference in principle between the tender of Blues Alley Trading 137 and that of the second respondent. It follows that the tender of the second respondent should also have been eliminated in terms of clause 2.2.16 of the Procurement Policy.

35. It therefore follows that the appellants have made out a case for the review of the first respondent’s decision of 27 October 2003 and for the matter to be remitted to the first respondent for reconsideration. The court a quo could, therefore, have granted the relief which the appellants had sought and which the learned judge had set out at the commencement of his judgment.

36. There is seemingly a dispute on the papers between the appellants and the first respondent about the question whether appellants have complied fully with the Tender Specifications and the Procurement Policy. It was alleged by the first respondent in its answering affidavit that the appellants did not furnish a valid tax clearance certificate as was required in terms of clause 4.3 of the tender document. This has been denied by the appellants.

This court need not consider this issue. It is no longer an issue between the parties as far as this court is concerned because the appellants do not ask this court to award the tender to them. The issue will have to be resolved between the appellants and the first respondent when the first respondent considers the matter again.

The fact that an applicant for review has succeeded in showing that the decision of the decision-maker is invalid and that it is liable to be set aside does not necessarily and under all circumstances lead to an order setting aside that decision. Sometimes it is necessary to consider the practical effect and consequences of an order setting aside the decision. A court may therefore well refuse to grant such an order despite having found the decision to be invalid. See Chairperson: Standing Tender Committee and Others v JFE Sapela Electronics (Pty) Ltd and Others [2005] 4 All SA 487 (SCA) para 27-28.

In the present case I do not think that there is any reason why an order setting aside the first respondent’s decision of 27 October 2003 should not be made. The tender was for the removal of waste in the four areas. That is an ongoing operation. The appellants have stated that pending the final outcome of the review proceedings the second respondent can be employed to render the service on a month to month basis. Its tender was to render the service for R219 008.25 per month. The appellants also offered to take over the financial obligations of the second respondent and to procure the release of Ms Mushwana of her liability as a surety for some of the financial obligations of the second respondent. There is no reason to think that the appellants do not have the financial recourses to do that. Until the end of November 2003 the appellants rendered the same service in the four areas. They have the resources and the expertise to continue to do so if it becomes necessary.

This is therefore not a case where there would be a disruption of the service on a large scale or where the four communities would suffer irreparable prejudice.

I therefore conclude that the court a quo should have granted an order setting aside the first respondent’s decision of 27 October 2003.

The costs order made by the court a quo

37. From what I have said so far it is apparent that the appeal must succeed. There is also no reason why the costs of the appeal should not follow the result. Those costs would include the costs of the two applications for leave to appeal in the court a quo and in the Supreme Court of Appeal as has been set out in the order of 9 November 2004 of the latter court.

It follows, therefore, that the cost order made by the court a quo in regard to the review application will also have to be set aside.

38. It may be argued that the cost order made by the court a quo in respect of the application for condonation, should not be affected by the outcome of the appeal and that that order should remain undisturbed.

Such an argument would be wrong.

The appellants have also appealed against that order. They have not appealed against the court a quo’s finding that the condonation application should be granted.

Paragraph 13.2 of the appellants’ notice of appeal raises the correctness of that cost order pertinently. This court is therefore obliged to consider it.

In my view the learned judge in the court a quo erred in making the order that he did.

In his judgment in regard to costs the learned judge relied on three grounds for making a punitive cost order. The first ground was that there is no reason why the second respondent should be out of pocket. This does not justify a punitive cost order. It is a fact of life that in every case the winning party is out of pocket. Before a punitive cost order can be made there must be a specific reason why the court would want to mark its disapproval for the conduct of the losing party. To say merely that the winning party should not be out of pocket, is to rely on a reason that is without merit.

The second reason relied on by the learned judge was that the appellants’ explanation for the delay in bringing the review application was disingenuous. That, as appears from what I have said earlier herein, is also wrong.

The third reason relied on by the learned judge was that the appellants’ attorneys unreasonably refused the second respondent any indulgence to serve and file a notice of intention to oppose and an answering affidavit, out of time. This reason too, in my view, is without merit if one has regard to the facts.

The review application was served on the sole member of the second respondent, Ms Mushwana, at Nelspruit on 7 May 2004. The second respondent was afforded time until 14 May 2004 in the notice of motion, to deliver its notice of intention to oppose. It had time, according to the notice of motion, until 16:00 on 28 May 2004 to deliver its opposing affidavit. If no notice of intention to oppose were delivered the application would have been set down for hearing on 18 May 2004.

On 10 May 2004 Ms Mushwana instructed her sister to seek legal advice from attorneys in Tzaneen. On Thursday 13 May 2004 Ms Mushwana consulted an attorney of the same firm in Tzaneen. He advised her that the first respondent intended to oppose the application and that it would not be necessary for the second respondent “to file any documents for the purposes of opposing the application”. She was not satisfied with that advice and decided to consult her present attorney of record, Mr Msimeki, in Soweto, Johannesburg.

On 24 May 2004 Ms Mushwana telephoned Mr Msimeki. That is eleven calendar days after her consultation with attorney Brits in Tzaneen.

Mr Msimeki wanted to read the papers before he could advise Ms Mushwana. That is understandable. The papers were uplifted from attorney Brits in Tzaneen on the same day, 24 May 2004.

In the meantime, and on 19 May 2004, attorney Brits had written a letter to the appellants’ attorneys to advise them that the second respondent does not wish to oppose the application and that it is “willing to abide by the outcome”.

After the papers were uplifted attorney Brits telephoned Ms Mushwana’s sister to tell her that the first respondent did not intend opposing the application.

Ms Mushwana consulted with attorney Msimeki on 25 May 2004. She thereafter consulted with counsel and on 27 May.

On 27 May 2004 attorney Msimeki telephoned Mr Fletcher of the appellants’ attorneys and sought an indulgence to file the second respondent’s answering affidavit “on or before” 4 June 2004. This request was refused. On 28 May a notice of intention to oppose was filed.

Ms Mushwana further said in her affidavit in support of the condonation application that attorney Brtis had written the aforesaid letter without her authority and without her consent or knowledge. She further stated that Mr Msimeki had told Mr Fletcher during their first telephone conversation that the letter written by attorney Brits did not correctly reflect her instructions to oppose the matter.

I do not quite understand why Ms Mushwana says that the letter does not correctly reflect her instructions to attorney Brits. She nowhere in her affidavit states that she had instructed attorney Brits to oppose the matter on behalf of the second respondent. The furthest that she goes is to state that her sister had to seek legal advice from the attorneys in Tzaneen “with the view to opposing the relief claimed”. On 13 May she herself had a consultation with attorney Brits who gave her advice. The letter was only written on 19 May.

This court is not called upon to decide whether Ms Mushwana had offered a reasonable and acceptable explanation for the failure to file a notice of intention to defend and an answering affidavit, timeously. The court a quo accepted the explanation.

What is, however, of importance in deciding upon the reasonableness or otherwise of attorney Fletcher’s refusal of the request for an indulgence, is to bear in mind that he was in possession of the letter of attorney Brits. Mr Fletcher was only approached by Mr Msimeki on 27 May 2004 which was one day before the answering affidavit had to be delivered. The indulgence sought was to be allowed to deliver it by 4 June 2004 which was four days before the matter was to be heard in court according to the notice of motion.

In my view attorney Fletcher was entitled to refuse the request of Mr Msimeki and to insist on an application for condonation to be brought. He was entitled to insist on an explanation given under oath as to why the second respondent now wants to oppose the review application after he had been told by attorney Brits that it would not be opposed. He was also entitled to insist on an explanation as to why eight calendar days had elapsed between the date on which attorney Brits had written the letter and the date on which attorney Msimeki had requested the indulgence. He was also entitled to a proper explanation why twenty calendar days were allowed to elapse since the papers were served on the second respondent and also why no notice of intention to oppose was filed on 14 May 2004. To merely have told attorney Fletcher that attorney Brits had acted contrary to his instructions, if that had in fact been the case, was not sufficient.

It follows, therefore, that the court a quo should not have ordered the appellants to pay the second respondent’s costs of the condonation application, let alone on a punitive scale. It was after all the second respondent who was seeking an indulgence. The basic rule in such an event is that the party who seeks an indulgence must stand in for the costs occasioned thereby unless there is a good reason not to order him/her to pay those costs. In the present matter there was, in my view, no such reason. At best for the second respondent the court a quo should have made no order as to costs. The appeal against that part of the court a quo’s order must therefore also succeed.

Order

1. The appeal is upheld with costs, including the costs of two counsel;

2. The order of the court a quo is set aside and replaced with the following:

“(a) The decision of the first respondent to award to the second respondent a tender with reference number 17 of 2003 for the implementation and management of a complete waste collection and removal project in the areas of Kanyamazane, Matsulu and Tekwane North and South, is reviewed and hereby set aside;

(b) The matter is remitted to the first respondent for reconsideration;

(c) The second respondent is ordered to pay the applicants’ costs of suit in respect of the review application, including the costs of two counsel;

(d) No order as to costs is made in respect of the second respondent’s application for condonation.”

S J MYNHARDT

JUDGE OF THE HIGH COURT

I agree

F G PRELLER

JUDGE OF THE HIGH COURT

I agree

M N S SITHOLE

ACTING JUDGE OF THE HIGH COURT

A2211/2004

HEARD ON: 22 May 2006

FOR THE APPELLANTS: ADV J Wasserman SC & H J Smith

INSTRUCTED BY: MESSRS Cliffe Dekker Inc, Johannesburg

FOR THE RESPONDENTS: ADV W Mokhare

INSTRUCTED BY: MESSRS M Msimeki, Johannesburg

DATE OF JUDGMENT: 19 June 2006

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