Gordon Mashigo acted for the successful applicant.
The Maquassi Local Municipality (“the Municipality”) sought to review its decision to appoint Kwane Capital (“Kwane Capital”) as a service provider for the acquisition of new plant and construction equipment, declaring the appointment unlawful and invalid.
The Municipality argued that it deviated from the normal tender process by procuring services through a deviation process under Regulation 32 of the Municipal Supply Chain Management Regulations (“Regulation 32”), which allows for procurement of goods and services under contracts secured by other organs of state, and thus exempts municipalities from compliance with strict tender processes envisaged in section 217 of the Constitution of the Republic of South Africa, 1996 (“the Constitution”). The Municipality contended that:
- When deviating from normal tender process [as envisaged in section 217 of the Constitution] in terms of Regulation 32, it ought to be determined whether the constitutional imperatives have been compromised by the exemption; if so, it is unconstitutional, if not, the exemption is permissible. In this case, the constitutional imperatives have been compromised by the exemption and must be reviewed and set aside; alternatively;
- Kwane Capital failed to deliver the agreed-upon machinery and vehicles, and requested the repayment of R3,713,547.92. Kwane Capital must repay the money paid to it on the basis of breach of contract; alternatively;
- Kwane Capital was unduly enriched, having been paid an amount of R3,713,547.92 by the Municipality, and having delivered no goods or services for the payment.
Kwane Capital opposed the application, arguing:
- No payment was received;
- The Municipality failed to meet the standard for self-review;
- There were material disputes of fact; and
- There was an unreasonable delay in launching the proceedings.
The court considered issues of undue delay, self-review, materiality, just and equitable remedy, breach of contract, and disputes of fact. The court found the appointment and contracts invalid and ordered Kwane Capital to repay the Municipality the amount of R3,713,547.92, excluding interest.
The ratio decidendi of the case is the court’s decision to set aside the appointment and contracts between the Municipality and Kwane Capital due to non-compliance with Regulation 32 and the Constitution. The court found that the Municipality’s decision to appoint Kwane Capital through a deviation process under Regulation 32 was unlawful and invalid, as separate agreements were signed instead of procuring goods and services under the existing contract with another organ of state. The court also considered the materiality of the deviation, the just and equitable remedy, and Kwane Capital’s breach of contract. The respondent was ordered to repay the applicant, excluding interest, despite the delay in launching the review proceedings.
The court relied on several cases to support its reasoning and conclusions. Here is a summary of the key cases and their neutral citations:
- Blue Nightingale Trading 397 (Pty) Ltd t/a Siyenza Group v Amathole District Municipality 2017 (1) SA 172 (ECG) – This case addressed the interpretation of Regulation 32 and the requirement to procure goods and services under an existing contract with another organ of state.
- KwaDukuza Municipality v Skillful 1169 CC and Another (11060/2017) [2018] ZAKZDHC 35 (6 July 2018) – This case provided guidance on the interpretation of Regulation 32 and the requirement to demonstrate benefits and discounts.
- Contour Technology (Pty) Ltd v Mamusa Local Municipality and Another (KPUM32/2018) [2020] ZANWHC 3 (7 February 2020) – This case reinforced the interpretation of Regulation 32 and the need to procure goods and services under an existing contract.
- Merafong City Local Municipality v AngloGold Ashanti Limited 2017 (2) SA 211 (CC) – This case addressed the impact of delays in launching review proceedings and the potential prejudice to respondents.
- Gijima v Minister of Home Affairs, (Gijima) – This case discussed the duty of an applicant to launch review proceedings within a reasonable time and the court’s discretion to overlook delays.
- Khumalo and Another v Member of the Executive Council for Education: KwaZulu Natal 2014 (5) SA 579 (CC) (Khumalo) – This case highlighted the factors considered by courts when determining whether to overlook delays in review applications.
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