IN THE HIGH COURT OF ESWATINI
JUDGMENT
In the matter Between: Case No. 307/16
SUNZA INVESTMENTS (PTY) LTD Plaintiff
And
NGWENYA TOWN BOARD Defendant
Neutral citation : Sunza Investments (Pty) Limited v Ngwenya Town Board (307/16) [2018] SZHC 229 (5th March, 2019)
CORAM : M. Dlamini J
Heard : 20th February 2019
Delivered : 5th March, 2019
Procurement procedure: tender to supply consumables: the procurement procedure under issue was not one where once a party is awarded a tender, the awarder is obligated to order. All that the nature of the award stipulated is that in the event there is shortage of consumables, we shall order from any person listed who has won a tender. So a company may be part of a pool of those who won tenders but owing to cheaper awardees, the other awardee may not receive an order. An order may be received only if provided the most cheap awardee has run out of stock or cannot deliver within a reasonable time. A good case for a suit would therefore be instituting action by an awardee who had been ignored despite that it had offered cheaper prices than its competitor from the same pool.
Summary: Plaintiff demands the sum of E200 500 as damages arising out of defendant’s failure to issue orders despite a tender award in its favour. Defendant asserts that it did issue an award but plaintiff failed to deliver.
The Parties
[1] The plaintiff is a company duly incorporated and registered in terms of the company laws of the kingdom. Its principal place of business is at Matsapha Industrial Site, Manzini region. The defendant is by statute a local government and situate at Ngwenya Village, Hhohho region.
The Parties’ Contentions
The Plaintiff’s claim:
[2] The plaintiff pleaded that on 18th February 2015, a publication was run in the Times of Swaziland newspaper for tender to supply cleaning material and consumables. This was tender No. 3 of 2015/2016. Plaintiff responded to the tender invitation and complied with the tender processes. By tender award dated 7th April 2015, defendant awarded plaintiff the said tender.
[3] Plaintiff waited for three months without any order forthcoming from defendant. Plaintiff then approached the defendant to enquire on the reason it was not receiving any orders. Defendant undertook to place an order soon. Despite an undertaking to issue an order, defendant has breach the terms of the tender by failing to issue an order. Plaintiff claims damages to the tune of E200 500.
The Defendant’s plea
[4] In its plea, the defendant states that the action proceedings by plaintiff are pre-maturely following that the tender was yet to lapse in March 2016. It further points out that plaintiff was issued with an order in November 2015 but plaintiff declined the same. Defendants reiterates that plaintiff ought to have waited until the tender lapsed before instituting any proceedings. It was therefore not in breach.
Plaintiff’s replica
[5] In response, the plaintiff point out that when it sought legal assistance, defendant had already advertised for the same tender. It flatly denied any order issued by defendant to it. It points out further that it had not engaged any attorney in November 2015 and that it approached defendant in August 2015 and not November 2015.
Oral evidence
[6] PW1 identified himself as Sunshine Mduduzi Dlamini. He is the director of plaintiff. On oath, he testified that following that business was scarce, it decided to respond to an advertisement published in the Times of Swaziland by the defendant. The advertisement invited companies to submit tenders for the supply of cleaning materials for 2015/2016 financial year. He duly purchased the tender documents by paying a fee of E350.00 and subsequently tendered.
[7] Defendant called to inform plaintiff that it intended to inspect its premises as a requirement for the tender. They did come and inspected its business premises. They asked to see the cleaning material. They were shown the chemicals which were in the shelves. They asked on how the plaintiff would manage to deliver them as it was based in Matsapha whereas they had to be delivered at Ngwenya. Plaintiff assured them that it had transport. It shall duly deliver them at Ngwenya.
[8] Later, the secretary for the defendant called and advised this witness to collect a tender award in favour of plaintiff. He obliged. His further evidence was that defendant waited for an order to supply following the tender award in its favour. There was no order. In August, 2015, Sunshine decided to approach defendant to enquire on when an order would be forthcoming. Defendant apologised, saying that it could not send an order to it because plaintiff was too expensive whereas there was a cheaper supplier.
[9] Sunshine enquired why was plaintiff awarded a tender in light of their reasoning. They responded that they would order from him. Once the other supplier charges them a higher amount than plaintiff. They said he should check his emails as they would place an order as soon as possible. Sunshine testified that he did check his emails but there was no order. He also waited for a call from the defendant to no avail.
[10] He did however receive a call from defendant who stated that they wanted to do another inspection. He told them that an inspection had been conducted prior to the tender award. Defendant should first place an order. If he failed to comply, they could then take the matter from there. However, this fell on deaf ears as defendant did not place any order. In February, 2016, he noticed an advertisement in the Times of Swaziland by defendant inviting suppliers to supply cleaning materials for the year 2016/2017. It is then that he decided to approach the court.
[11] A letter of demand was served on the defendant and summons followed. He asked the court to grant plaintiff the sum of E200 000 as compensation for the damages suffered. He justified the same by testifying that he had to purchase an additional van for E45 000. Had he been issued with an order, plaintiff anticipated the sum reflected in his quotation of E99 000. He also employed a driver and paid him the sum of E1800.
[12] Sunshine was cross-examined at length by Counsel for defendant. He maintained his evidence that he did not file the legal proceedings pre-maturely and that there was no order issued to plaintiff by defendant in November 2015. The plaintiff closed its case.
[13] Defendant called to the witness stand Petros Dumisa Nxumalo, its Treasurer. He told the court that he has been the treasurer for defendant since 2014. He is in charge of the finance department. Amongst others, he ensures that procedures pertaining to procurement are followed. He is responsible for tender contracts as well. He knows Sunshine whom he referred to a Mr. Dladla. Plaintiff had tendered for the supply of cleaning materials and consumables for 2015/2016 following an invitation for 2015/16 in the local daily newspaper. Plaintiff, together with another company, Eefes Investment were successful. Plaintiff’s shop was at Eteni, Matsapha.
[14] Plaintiff advised the board during an inspection at Eteni that its manufacturing plant was at Ngwenya. This was an added credit to plaintiff. Petros then testified on the three types of tenders viz expression of interest, request for a proposal and invitation for sources of supply. He described the procedure and intent for each. He pointed out that the case at hand concerned invitation for sources of supply, whose purpose is to create a pool of suppliers where the party inviting for tenders may whenever a need arise order from a list of sources of supply.
[15] In the invitation for sources of supply, a list of prices per unit is required from the supplier. They then as a board determine which company is the cheapest. When they award a tender under this category, it is not an undertaking that all the quoted items shall be ordered. The plaintiff was present during the opening of tenders. They were advised by him that two companies shall be awarded tenders for that category.
[16] Having awarded plaintiff with the tender, they expected plaintiff to come for orders. Plaintiff did not. He began to search for plaintiff’s contacts. He perused the directory, plaintiff was not listed in it. As he was anticipating driving down to Eteni to plaintiff’s place of business, Sunshine arrived. He thanked him for coming as he was also looking for him to give him an order. He then wrote him an order following that his Chief Executive Officer was not available to sign it and Sunshine indicated that he was rushing somewhere. He agreed to send it to Sunshine with his driver.
[17] The order for supply of cleaning material to the total value of E5000 was later signed by the authorised officer of defendant. Dumisani then called Sunshine and enquired on his where-about. Sunshine said that he was in Mbabane City. Dumisani then directed his driver to deliver the purchase order to Sunshine. His driver obliged and returned with the message that the order was delivered to Sunshine.
[18] Dumisani testified that before Sunshine left defendant’s offices, he pointed out that he would deliver the order himself. He would deliver the said order at plaintiff’s plant in Ngwenya. He would seize the opportunity to inspect plaintiff’s plant. This angered Sunshine who pointed out that since defendant’s board had done an inspection at Eteni before awarding him with a tender, there was no need to do an inspection. He inferred from Sunshine’s response that the further information supplied to them that plaintiff had a manufacturing plant at Ngwenya was false.
[19] Having dispatch the purchase order to plaintiff, he waited until the end of the tender period for plaintiff to deliver. Plaintiff never delivered. He opted to institute the present proceedings. He prayed that the matter be dismissed as plaintiff was in breach of their tender contract by failing to deliver as per the purchase order. He too was cross-examined. I shall refer to his cross examination later in this judgement.
Issue
[20] It is common cause that the plaintiff was awarded a tender to supply consumables by the defendant. The question that begs for an answer is, did defendant order from plaintiff following the tender?
Determination
[21] During cross-examination of Sunshine, it was emphatically put to him repeatedly that he was given an order of E5000 but failed to deliver. Plaintiff strenuously refuted this. He maintained his ground that he did not receive an order. Dumisani on behalf of defendant on the other hand was adamant that an order was dispatched through his driver to the plaintiff who pointed out that he was in a hurry to await the signature of the authorised person from defendant.
[22] My duty is to assess the veracity of the version by both parties. Dumisani testified in his evidence in chief:
“I sent my driver to give Mr. Dladla (Sunshine) the order. It was for about E5000. They met in town here in Mbabane:”
[23] He further testified:
“This was around or between November and January.”
[24] On this evidence which was flatly denied by plaintiff, the court ordered Dumisani to produce evidence of the order. The matter was postponed. On the return date, Dumisani handed to court defendant’s order book for the year 2015. The court examined the entire book. It was satisfied on the sequence of the pages that the order duplicate number 1536 was sequential. The order to plaintiff as evident by the duplicate and triplicate pages was for the total of E2942.15 and the date was 6th November, 2015. This piece of evidence landed credence to the defendant’s version that it did place an order by delivering it to plaintiff, but plaintiff opted to challenge defendant.
[25] I note that the amount of the goods defers from what Dumisani testified on his evidence. Both in chief and under cross-examination his evidence was that the goods ordered were for the sum of about E5000. The exhibit produced in support of his version reflected a sum of E2942.15. That as it may, the variance in price does not detract from the point in issue which was that the defendant did issue an order to plaintiff. The presence of the triplicate copy in the order book in terms of accounting procedure is evidence that there was no delivery of the goods ordered.
[26] Defendant lamented plaintiff’s action of failing to deliver as per the order. Dumisani testified that instead of plaintiff delivering the goods, he decided to solicit for services of an attorney. He referred the court to the letter of demand in this regard. A perusal of the letter of demand showed that it was authored by plaintiff’s attorneys on 8th December, 2015. This correlates to defendant’s version that applicant opted to approach its lawyers instead of delivering in terms of the order.
[27] This letter of demand is contrary to the evidence adduced by plaintiff in chief. Sunshine asserted:
“It became clear to me in February 2016 that I would not be awarded any order. I noted an advertisement for another tender which was exactly the same as the one I was awarded.”
[28] His lawyer led him:
“Defendant said you approached the court prematurely as tender period had not lapsed”
[29] He responded:
“This is not true.”
[30] The above evidence by plaintiff lacks veracity as it is contrary to the date in the letter of demand. Further, a second correspondence which form part of the pleadings, was authored by plaintiff’s erstwhile attorney on 16th February 2016 calling upon the registrar of this court to allocate a hearing date for plaintiff’s action proceedings on this matter.
[31] It is common cause that the tender won by plaintiff ran from 1st April 2015 to March 2016. Why did plaintiff decided to instruct attorneys on a pending tender award without allowing it time to lapse? The answer is as provided by defendant that despite an order, plaintiff was not willing to deliver but kin to sue defendant with a view to making more money. What exacerbates plaintiff’s position is that he refuted obvious evidence by denying that he came to court prematurely. For this reason alone, plaintiff’s cause of action stands to be dismissed.
[32] There is another leg that must be interrogated in these proceedings. It was alluded in evidence by Dumsani on behalf of defendant. He testified on the three categories of procurement. He highlighted that the procurement procedure under issue was not one where once a party is awarded a tender, the awarder is obligated to order. All that the nature of the award stipulated is that in the event there is shortage of consumables, we shall order from any person listed who has won a tender. So a company may be part of a pool of those who won tenders but owing to cheaper awardees, the other awardee may not receive an order. An order may be received only if provided the most cheap awardee has run out of stock or cannot deliver within a reasonable time. A good case for a suit would therefore be instituting action by an awardee who had been ignored despite that it had offered cheaper prices than its competitor from the same pool.
[33] I must agree with this procedure especially when considering the nature of the goods and the functionary calling for tenders. Municipalities, like government departments or parastatals utilise tax payers’ money to run administrative functions. It is in the interest of the public therefore to award tenders to those who could supply the required commodities at the lowest prices. At the same time it would be risky to award the tender to only one party by virtue of low pricing. The rationale in maintaining a pool is to ensure suppliers at all times. For instance, in the event the cheapest awardee runs out of stock, the next on the list would be considered for an order.
[34] It must be noted also that defendant only places an order upon the full consumption of the consumables and must do so to the cheapest awardee. To expect them to order without the need and from an expensive source in the face of a cheaper one is contrary to public policy. Defendant would be failing in its duty to safeguard public funds. I would understand if plaintiff’s case was that he was the cheapest among those pooled, but defendant proceeded to order from the other who had higher prices. This is not defendant’s case.
[35] In the final analysis I enter the following orders:
35.1 Plaintiff’s cause of action is hereby dismissed;
35.2 Plaintiff is ordered to pay costs of suit.
______________________
M. DLAMINI J
For the Plaintiff : M. Ntshangase of Ntshangase Attorneys
For the Defendant : S. Dlamini of Howe Masuku Nsibande Attorneys
