Kayofa Investment Holdings (Pty) Ltd v Government of the Republic of Namibia and Another (HC-MD-CIV-ACT-CON-2020/04172) [2023] NAHCMD 365 (29 June 2023)

Key Facts

Transaction Type

Issues

• Whether the defendants' officials had the authority, under the Public Procurement Act and Bidding Documents, to extend the deadline for the plaintiff to sign the contract (to 17 January 2019 or 6 December 2018) and provide the performance guarantee (to 23 January 2019 or 13 November 2019).
• Whether the defendants' counterclaim, arguing that the contract was null and void for not being executed within the stipulated period and without fulfilling suspensive conditions, should succeed.
• Whether the written notice from the Ministry on 10 October 2018 constituted a binding contract with the plaintiff, including the contract price of N$6 743 178.53 and a suspensive condition regarding no successful review applications from 11 to 18 October 2018.
• Whether the defendants and the Ministry duly extended the time limits for signing the contract and furnishing the performance guarantee as alleged by the plaintiff.
• Determining the quantum of the plaintiff's damages claim, which includes various calculations and discrepancies between the plaintiff's evidence and expert testimony.
• Whether, under the Public Procurement Act and Bidding Documents, the plaintiff's failure to sign the contract or provide the performance guarantee by 22 October 2018 or 8 November 2018 caused the tender to lapse, thereby rendering the contract void.

Holdings

• The court concluded that the defendants' counterclaim seeking to declare the contract null and void lacked merit. The failure to meet initial deadlines did not invalidate the contract because the Government extended the timelines, and the contract was executed by both parties.
• Costs for the absolution application were awarded to the plaintiff, as the court ruled in favor of refusing the defendants' application. The plaintiff is entitled to costs of one instructing and one instructed legal practitioner.
• The court found the Government and accounting officer had the authority to extend the deadlines for signing the contract and submitting the performance guarantee. These extensions were exercised in this case, rendering the defendants' argument of a lapsed bid validity period inapplicable.
• The court determined that the plaintiff's evidence sufficiently established a prima facie case for the relief sought, leading to the refusal of the defendants' application for absolution from the instance. The judge emphasized that the plaintiff's case, though not conclusive, provided a basis for the court to proceed with the trial.
• The court held that the requirement for the plaintiff to provide a performance guarantee was a contractual obligation, not a suspensive condition. This meant the Government retained discretion to extend deadlines or cancel the contract rather than the contract being void for non-fulfillment.

Remedies

• The application for absolution from the instance is refused, meaning the court determined the plaintiff's evidence established a prima facie case for their claim.
• The matter is postponed to 6 July 2023 at 08h30 for allocation of dates to continue the trial, as the absolution application was refused and the case remains active.
• The defendants are ordered to pay the plaintiff's costs of opposing the application for absolution, including costs for one instructing and one instructed legal practitioner, with the obligation to pay each other if necessary.

Contract Value

Legal Principles

• The court held that costs follow the result, with no reasons provided to depart from this established principle. The plaintiff was awarded costs for the absolution application.
• The court reiterated that a plaintiff must establish a prima facie case for all elements of its claim at the absolution stage. The plaintiff's evidence was accepted as true unless inherently improbable, fulfilling this requirement.

Precedent Name

• Dannecker v Leopard Tours Car & Camping Hire CC
• Arandis Power (Pty) Ltd v President of the Republic of Namibia and Others
• Telkom SA Ltd v Merid Training (Pty) Ltd and Others
• Joubert Galpin Searle Inc and Others v Road Accident Fund and Others
• Babyface Civils CC JV Hennimma Investments CC and Others v //Kharas Regional Council and Others

Key Disputed Contract Clauses

• Regulation 38(4) states that failure to sign a contract or provide required security within 30 days (or an extended period) allows the public entity to select another bidder. The court addressed whether this provision applied to invalidate the plaintiff's contract or if it was subject to discretion.
• Clause 39.2 of the Bidding Documents prescribes a 30-day period for the plaintiff to sign the contract after notification. The court examined whether this deadline was strictly adhered to or if extensions were permissible under the PPA's discretionary framework.
• Section 55(4) of the Public Procurement Act (PPA) outlines the requirements for notifying successful bidders and establishing a standstill period for review applications. The court analyzed whether the plaintiff's notification as the successful bidder on 10 October 2018 and the subsequent 7-day standstill period (11–18 October 2018) were properly adhered to, and if this formed the basis of a binding contract.
• Section 55(6) of the PPA specifies that the plaintiff must sign the contract within 30 days of notification (or by 22 October 2018 in this case) and submit a performance guarantee. The court evaluated whether this provision was interpreted as a suspensive condition or a contractual obligation, concluding the latter.
• The dispute centered on whether the requirement to submit a performance guarantee by 22 October 2018 (later extended) was a suspensive condition (rendering the contract void if unmet) or a contractual obligation (granting the Government discretion to cancel). The court ruled it was a contractual obligation.
• Section 55(7) of the PPA grants the Government discretion to extend deadlines for signing contracts or selecting another bidder if the successful bidder fails to comply. The court found this authority was exercised in the plaintiff's case, supporting the validity of the extended timelines.

Cited Statute

• Public Procurement Act 15 of 2015
• Public Procurement Regulations under Act 15 of 2015

Judge Name

Passage Text

• [69] I find on a prima facie basis, that the accounting officer or the Government was empowered after notifying the plaintiff as the successful bidder, to extend the date to sign the contract and for the plaintiff to provide a performance guarantee in the exercise of his or its discretion. This, the Government and or the accounting appears to have done.
• [64] In light of the above authorities and discussions, I find that the requirement of a performance agreement did not constitute a suspensive condition but a contractual obligation. This position finds further support from the letter of 2 November 2018 addressed to the plaintiff by Mr Nghidinua, giving the plaintiff an extension and a final notice to furnish the guarantee within five days or not later than 7 November 2018, failing which will constitute sufficient grounds to cancel the award.
• [70] In respect of the defendants' complaint about the difference in figures and calculations between the evidence of Mr Kayofa and Mr Chinwaramusee, I prima facie find that despite a few discrepancies between the evidence of the two, the quantum was testified to.

Damages / Relief Type

• Compensatory Damages of N$2 649 756.63 claimed by the plaintiff for alleged repudiation of the building contract.
• Declaratory Relief sought by the defendants to declare the 17 January 2019 contract null and void.