Maximum Profit Recovery (Pty) Ltd v Segomotsi Mompathi District Municipality and Another (UM138/2021) [2021] ZANWHC 76 (12 November 2021)

Key Facts

Issues

• The first respondent argued that the court improperly dismissed their point of law concerning the applicant's failure to serve a mediation notice under Rule 41A(2)(a). The court held that the applicant's non-compliance was condoned mero motu and that the issue was overtaken by the application's transition from urgent to opposed proceedings.
• The first respondent contended that the court violated audi alteram partem by not postponing the hearing to permit filing an answering affidavit. The court rejected this, stating the respondent's decision not to oppose the application on mediation grounds was final and that procedural flexibility applied to the case's history.
• The second respondent claimed the court erred by not addressing whether the applicant exhausted internal remedies under PAJA before seeking review. The court dismissed this, emphasizing the applicant's right to challenge the tender process and the absence of a requirement to file an answering affidavit.
• The first respondent challenged the substitution relief, arguing the court lacked sufficient facts about the tender process. The court found the applicant outscored other bidders and that the relief provided cost savings, rejecting claims of procedural impropriety.
• The second respondent argued the court had no basis to grant substitution relief without the municipality's adjudication details, noting other bidders offered lower prices. The court upheld the order, finding the applicant's appointment was justified on cost and merit grounds.

Holdings

• The court dismissed the first respondent's application for leave to appeal, finding no reasonable prospects of success as the legal issues raised were without merit. The judge determined that the first respondent's grounds (including procedural errors and failure to file an answering affidavit) lacked substance and did not warrant appellate intervention.
• The court dismissed the second respondent's application for leave to appeal, concluding that its challenge to the substitution order also lacked reasonable prospects of success. The judge emphasized that the second respondent failed to demonstrate that another court would overturn the decision to award the tender to the applicant.

Remedies

• The application for leave to appeal to the Supreme Court of Appeal or alternatively the Full Court of this Division is dismissed.
• The first and second respondents are ordered to pay the applicant's costs of the application for leave to appeal, which costs shall include the costs of Senior and Junior Counsel as employed.

Legal Principles

• The court highlighted the peremptory nature of PAJA's Section 7(2)(a), which mandates that administrative actions cannot be reviewed unless internal remedies are exhausted. This reflects the constitutional principle of separation of powers, ensuring courts do not overstep into administrative functions unless legally justified. The judgment reinforced that judicial intervention in procurement decisions must respect the administrative authority's role and procedural compliance.
• The court applied judicial review principles to assess the validity of the tender disqualification and award decisions. It evaluated whether the municipality adhered to procedural requirements under the Promotion of Administrative Justice Act (PAJA) and the Constitution, particularly section 217 requiring fair and equitable procurement. The judgment emphasized the necessity of exhausting internal remedies before seeking judicial review and the limitations on substitution relief absent clear evidence of irrationality or unfairness.

Precedent Name

Cited Statute

• Local Government: Municipal Systems Act 32 of 2000 (MSA)
• Constitution of the Republic of South Africa, 1996
• Uniform Rules of Court
• Promotion of Administrative Justice Act 3 of 2000 (PAJA)

Judge Name

Passage Text

• All indications from the record are that two horses were left in the race for Tender 13A, the applicant and the second respondent. The applicant was clearly excluded on the basis of not having an auditor as one of the requirements of the tender, where on the papers it clearly had an auditor. The applicant outscored the second respondent on most if not all scores.
• The first respondent in its second ground of appeal contends that this Court should have allowed it, once dismissing its point of law, to file an answering affidavit. It is trite that when a point of law or point in limine is raised, one pleads over, in anticipation of the possible dismissal of the point of law or point in limine.
• In my view, the first respondent has not demonstrated any prospects of success, that another court would come to a different conclusion.