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High Court sets aside controversial valuation tender

 

The awarding of the tender for the compilation of a new valuation roll for the Makhado Municipality was unfair and unlawful.

This was the conclusion Acting Judge D Dosio came to in handing down judgement in the Gauteng High Court last Friday in the case between DDP Valuers vs Makhado Municipality (first respondent), Siyabuselela Trading Enterprise 275 CC T/A Risuna Property Consultants (second respondent) and Mr Kulani Dumond Nkuna (third respondent).

From the outset, the awarding of the tender for the compilation of a new 2014 to 2018 valuation roll for the Makhado municipal area (Tender 1/2013) was marred by allegations of irregularities and even fraud. This in addition to the controversy and public outcry the completed valuation roll itself eventually sparked among residents, arguing that the valuations done by Risuna Property Consultant of their properties were, in most cases, nothing more than a thumb-sucking exercise. The big question now is: Does the new 2014 tot 2018 valuation roll, which came into effect on 1 July this year, constitute a legal and enforceable document? A general principle in law is that, should any part of an administrative process be ruled unlawful, any processes that follow such an unlawful action would also be deemed unlawful.

The matter between DDP Valuers, who also tendered for the compilation of Makhado’s 2014 to 2018 valuation roll, against the Makhado Municipality, Siyabuselela and Nkuna was heard in the Gauteng High Court on 23 May, but the judge postponed judgement. Tender 1/2013 called on bidders to submit two quotations (option 1 and option 2) in their tenders. Option 1 was for proclaimed townships such as Makhado (Louis Trichardt) and option B for villages in rural areas. DDP quoted R1 350 000 for option 1 and R9 500 000 for option 2. Siyabuselela quoted R7 487 583 for option 1 and R2 087 226 for option 2.

DDP Valuers took the municipality, Siyabuselela and Nkuna to court for what they deemed to be the fraudulent awarding of the valuation roll tender to Risuna Property Consultants in 2013. DDP further argued in their motion to the High Court that the Makhado Municipality took irrelevant considerations into account or failed to consider relevant considerations, in that the designated municipal valuer did not have the work experience as prescribed in the tender conditions. DDP also stated that the Makhado Municipality had awarded the tender to Risuna in contradiction of the municipality’s own bid evaluation committee's recommendations that Siyabuselela's tender was not acceptable and that the tender be awarded to DDP.

In regard of the tender's being obtained by fraudulent means by Siyabuselela, DDP argued that Siyabuselela had forged the signature of Siyabuselela’s supposed designated valuer, Mr Wilfred Zulu, in their tender bid documentation. In proving this, DDP called on the expertise of an expert signature examiner, Lt Col G M Cloete. Cloete is the co-founder and a fully accredited member of the former South African Association of Forensic Document Examiners. Cloete’s report, submitted to court, found that Mr Zulu’s known signature does not correspond with the signature appearing on the tender bid documentation as submitted by Nkuna. It was further argued that Mr Zulu was in Zambia on the day (29 January 2013) the documentation was supposedly signed in Giyani.

As for the Makhado Municipality's taking irrelevant considerations into account or failing to consider relevant considerations in that the designated municipal valuer did not have the work experience as prescribed in the tender conditions, DDP’s motion stated that Mr Zulu, according to Siyabuselela’s tender documents, was attributed with previous work experience with regard to compiling valuation rolls, but DDP’s investigation revealed that the mentioned work experience conducted at several municipalities showed that the valuations had actually been done by other persons and valuers.

DDP also argued that the Makhado Municipality's awarding the tender to Siyabuselela in contradiction of the recommendations of the municipality’s own bid evaluation committee, that DDP be awarded the tender, “was arbitrary or capricious and/or was done male fide, alternatively for an ulterior purpose or motive.”  In this regard, he quoted the committee’s recommendation as recorded on 19 March 2013, stating: “That it be noted that tendered no. 2, Risuna Property Consultants Valuers under Tender No. 1 of 2013, was disqualified due to the reason that their trading name is not (a) registered entity name, and the fact that it submitted only one year’s financial statements and not three as required by specifications. Option 1: That the Evaluation Committee recommends that Tender No. 1 of 2013, Compilation of Makhado Municipality Valuation Roll 2014/2015 to 2017/2018 financial years be awarded to DDP Valuers …”

Based on the above, DDP asked the court to have the tender be awarded to them, alternatively that the tender be referred back to the municipality for consideration afresh.

In his judgement, Judge Dosio, stated that DDP had, in his view, correctly pointed out that there were irregularities in the tender process. The first such irregularity, he pointed out, was the fraudulent signature on the municipal valuer's affidavit. “The First Respondent [Makhado Municipality] has merely stated it has no knowledge of this. The First Respondent should have obtained its own expert to examine the handwriting of Mr Zulu, but it elected not to do so. The inference this court must draw is that the First Respondent has accepted the correctness of Lieutenant Colonel Cloete’s report and that is why they have allowed the allegation to stand uncontested,” Judge Dosio said. He added that Mr Zulu’s election to remain silent convinced the court that it is probably not his signature.

The second irregularity or non-compliance with a material condition that was pointed out by Judge Dosio was that the Second Respondent [Siyabuselela] had nominated a person who clearly did not have the requisite experience as a municipal valuer. “The Applicant’s allegation that false information pertaining to the work experience of Mr Zulu was inserted in the municipal valuer affidavit remains uncontested. Accordingly, a mandatory condition prescribed by an empowering provision was not complied with…” Judge Dosio said.

The judge also pointed out that Siyabuselela had failed to appoint a substitute municipal valuer. The tender documents clearly state that this must be done. In addition, the tender documents also state that a minimum of two assistant municipal valuers must be appointed. “The Second Respondent only appointed the Third Respondent [Nkuna]. The Second Respondent did not nominate an assistant municipal valuer. Accordingly, the Second Respondent did not comply with an obligatory condition of the tender documents,” Judge Dosio said. He added that failure by the municipality to give reasons for this oversight “leads the court to believe that the First Respondent acted ultra vires the enabling legislation.”

These irregularities, stated Judge Dosio, stripped the tender process of an essential element of fairness, namely, the equal evaluation of tenders. “These are consequential flaws. This is not an acceptable tender as defined in the Procurement Act,” Judge Dosio said and set aside the awarding of the tender. He added that although the municipality believed that they had followed all procedures properly, the court could not come to the same conclusion. Judge Dosio ruled that the municipality had committed a procedural irregularity of significant material consequence, which rendered the granting of the tender to Siyabuselela procedurally unfair and reviewable in terms of the Promotion of Administrative Justice Act. “There was no rational connection between the outcome of the decision of the First Respondent and the facts upon which the decision was based,” Judge Dosio said. He added that the granting of Option 1 of the tender to Siyabuselela for an inflated amount suggested to the court that this must have been granted either owing to an ulterior purpose or motive, because irrelevant considerations were taken into account.

Judge Dosio also made mention of the settlement agreement reached between the municipality and Siyabuselela in May, whereby Siyabuselela withdrew from the contract. “The settlement agreement indicates to this court that the First Respondent has understood that it did not act in an appropriate manner,” Judge Dosio said.

But having set aside the awarding of the tender, Judge Dosio stated that he could not merely order that DDP be awarded the tender. “Even if the court is wrong in this respect, the minutes of the Bid Adjudication Committee [who overruled the Bid Evaluations Committee’s recommendation] are not before this court, and neither are the reason … This makes it difficult for this court to award option 1 and 2 of tender 1/2013 to the Applicant,” Judge Dosio said. He explained that the Bid Evaluations Committee only recommended that Option 1 be awarded to DDP and that, by setting aside the tender, the foregone conclusion would be that DDP would also be granted the tender in respect of Option 2. “Inasmuch as this court sympathises with the treatment the Applicant was exposed to, this court cannot act arbitrarily and award Option 1 and 2 of Tender 1/2013 to the Applicant,” Judge Dosio said.

Judge Dosio’s  final order reads:

* The award of tender 1/2013 made by the First Respondent to the Second Respondent is hereby reviewed and set aside.

* The award of such tender is declared to have been unlawful and unfair.

* The First Respondent is directed to reconsider the competing tender of the Applicant in accordance with all applicable laws, regulations and to procurement policy of the First Respondent in accordance with the requirements of Section 217 of the Constitution.

* Due to the urgency of this matter, the First respondent is ordered to evaluate the tenders submitted and to decide not later than one month from the date of this order, which tender ought properly to have been accepted.

* The First Respondent is ordered to pay the cost of this application.

The Makhado Municipality was approached on Monday for comment with regard to the High Court's ruling and how it would impact on residents and the new valuation roll. On Tuesday, municipal spokesperson Mr Louis Bobodi indicated that they are busy with the media enquiry. On Wednesday he stated, however, that the municipality was unable to answer yet, as the relevant officials dealing with the matter were out of office and would only be available on Thursday.

News - Date: 01 August 2014

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Andries van Zyl

Andries joined the Zoutpansberger and Limpopo Mirror in April 1993 as a darkroom assistant. Within a couple of months he moved over to the production side of the newspaper and eventually doubled as a reporter. In 1995 he left the newspaper group and travelled overseas for a couple of months. In 1996, Andries rejoined the Zoutpansberger as a reporter. In August 2002, he was appointed as News Editor of the Zoutpansberger, a position he holds until today.

Email: [email protected]

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