Question 1
The Msunduzi Municipality calls for tenders for the erection of street lights in the Scottsville area. Bright Lights (Pty) Ltd (‘Bright Lights’); Never Dull (Pty) Ltd (‘Never Dull) and Everbright (Pty) Ltd (‘Everbright’) all submit tenders. Bright Lights submits a tender quoting their price for the work required at R 90 000 and undertake to complete the work within six weeks. Never Dull submits a tender quoting their price for the work required at R 80 000 and undertake to complete the work within twelve weeks. Everbright undertake to complete the work within eight weeks and according to documents before the Municipality, Everbright’s quote for the work is R 130 000. Having considered the prices and the completion times for the respective tenders, the cash strapped Municipality awards the bid to Never Dull as they submitted the most cost-effective tender. When Never Dull is informed of the decision, they immediately start ordering all of the necessary materials and equipment that they need to complete the work. In light of the above facts, explain the legal position in each of the following separate instances:
1.1 Bright Lights wants to challenge the decision to award the tender to Never Dull on the basis that the Municipality, in making its decision, placed too much of emphasis on the amount of the bid submitted by the prospective applicants and did not give sufficient consideration to the duration of time needed to complete the work. Advise Bright Lights on whether they can have the decision set aside on this basis in terms of s 6 (2) (e)(iii) of PAJA (i.e. the ground of review pertaining to relevant and irrelevant considerations)
[5 marks]
1.2 Bright Lights argue that their tender offered the best of both worlds in that it was both cost effective and time saving. On the contrary, they argue that while Never Dull bid was cost-effective, it would take twice as long to carry out the tender. Advise Bright Lights on whether they can challenge the decision to award the tender to Never Dull on the basis that the Municipality made a decision that was not reasonable in terms of s 6 (2) h of PAJA). In answering this question, you must not discuss rationality and proportionality.
[7 marks]
1.3 Assume that it is subsequently discovered that the tender submitted by Everbright was R 70 000 and not R 130 000. Due to oversight of an official of the Municipality the wrong documents were placed before the Municipality which contained the incorrect figure.
1.3.1 Can Everbright challenge the decision of the Municipality to award the tender to Never Dull under these circumstances? Explain. [3 marks]
1.3.2 Assume that a court subsequently sets aside the tender awarded to Never Dull as a result of the error made by the Municipality in awarding the tender to them. Can Never Dull claim delictual damages from the Municipality for the out-of-pocket expenses that it incurred? Explain fully
[10 marks]
1.1 Bright Lights can potentially challenge the decision to award the tender to Never Dull on the basis that the Municipality did not give sufficient consideration to the duration of time needed to complete the work. In terms of s 6(2)(e)(iii) of the Promotion of Administrative Justice Act (PAJA), a decision can be reviewed and set aside if the decision-maker took into account irrelevant considerations or failed to take relevant considerations into account. In this case, if Bright Lights can show that the time frame for completion was a relevant consideration that was not adequately taken into account by the Municipality, they may have a valid ground for review.
1.2 In terms of s 6(2)(h) of PAJA, a decision can also be reviewed and set aside if it was unreasonable. Bright Lights can potentially challenge the decision on the basis that while Never Dull's bid was cost-effective, it would take twice as long to complete the work compared to their own bid. If Bright Lights can demonstrate that their tender offered the best combination of cost-effectiveness and timely completion, and that the Municipality's decision was not reasonable in light of this, they may have a valid ground for review.
1.3.1 Everbright can potentially challenge the decision of the Municipality to award the tender to Never Dull under these circumstances. If it can be shown that the incorrect figure in Everbright's tender played a significant role in the decision-making process, and that the error was due to the oversight of an official of the Municipality, Everbright may have grounds to challenge the decision.
1.3.2 If a court sets aside the tender awarded to Never Dull due to the error made by the Municipality, Never Dull may be able to claim delictual damages for the out-of-pocket expenses they incurred as a result of being wrongly awarded the tender. This could include expenses related to ordering materials and equipment, as well as any other costs directly attributable to preparing for and commencing work on the project based on the awarded tender. However, the exact circumstances and specifics of the case would need to be considered to determine the likelihood of success in claiming such damages.