REPORTABLE
Case number: 451/98
IN THE SUPREME COURT OF APPEAL OF
SOUTH AFRICA
TECMED (PTY) LTD
APPELLANT
and
EASTERN CAPE PROVINCIAL TENDER BOARD
1st RESPONDENT
EASTERN CAPE PROVINCIAL GOVERNMENT
2nd RESPONDENT
EASTERN CAPE PROVINCIAL DEPARTMENT
OF FINANCE
3rd RESPONDENT
S.A. PHILIPS (PTY) LTD
4th RESPONDENT
CORAM:
SMALBERGER, VIVIER, OLIVIER, SCOTT JJA
and MPATI AJA
DATE OF HEARING:
14 SEPTEMBER 2000
DELIVERY DATE:
29 SEPTEMBER 2000
Review of Tender Board’s decision to award tender - costs.
______________________________________________________________
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JUDGMENT

______________________________________________________________
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. . . SMALBERGER JA
SMALBERGER JA:
[1] In September 1996 the first respondent (“the Board”) invited tenders for the
supply of a Bi-Plane Catheterisation Laboratory to the Provincial Hospital, Port
Elizabeth.  The tender was in due course awarded to the appellant (“Tecmed”).  On
28 August 1997 the fourth respondent (“Philips”) applied to the High Court, Bisho,
for an order, inter alia, reviewing and setting aside the Board’s decision to award the
tender to Tecmed and referring the tender process back to the Board for
reconsideration of the tenders received, excluding the tender submitted by Tecmed.
The matter eventually came before Pickard JP and Smith AJ.  The court granted
Philips an order, with costs, essentially in the terms sought by it.  It refused Tecmed
leave to appeal, but the required leave was subsequently granted by this Court on

application to the Chief Justice.
[2] The Board was established in terms of sec 2 of the Provincial Tender Board Act
2 of 1994 (Eastern Cape) (“the Act”).  Being a creation of statute, the Board derives
its lawfully authorised power from the terms of the Act and the Tender Board
Regulations (Eastern Cape) (“the regulations”) promulgated thereunder.  It has no
powers beyond those conferred upon it expressly or by necessary implication by such
legislation.  Any action it takes must conform to the substantial and procedural
requirements of the empowering legislation.  If it fails to act in accordance with them
the purported exercise of its powers will be invalid and subject to review, no matter
that it may have acted honestly or in good faith or from the best of motives.  (See
generally Baxter: Administrative Law at 384 - 387.)
[3] When tenders were invited both the Act (which commenced on 14 September
1994) and the regulations (which were published on 26 June 1995) were in operation.

The regulations were made pursuant to sec 9(1) of the Act which authorised the
“responsible Member” (the member of the Executive Council of the Province
responsible for financial matters) to make regulations regarding, inter alia,
“(d)
in general, any other matter which the responsible Member may
consider it necessary or expedient to prescribe in order to achieve
or promote the objects of this Act.”
[4] The Board is bound by the provisions of the Act.  It is also bound by the
regulations save to the extent that the Act authorises a departure from them.  I shall
assume, without deciding, that the wide wording of sec 4(1)(b) of the Act would
permit of such a departure in certain circumstances.  Section 4(1)(b) vests the Board
with “the sole power to procure supplies and services for the Province” and provides
further that, with a view to concluding an agreement in relation to what is required,
“in any manner it may deem fit, invite offers and determine the manner in
which and the conditions subject to which such offers shall be made”.

[5] The tender process appears to have been flawed from the outset.  Contrary to
the peremptory provisions of reg 7(3)(a) which requires that “every notice inviting
tenders shall state that all tenders shall be subject to the provisions of the Act and the
regulations”, the notice calling for tenders did not so provide.  Instead the tender
conditions stipulated, without qualification, that the tender was subject to “the State
Tender Board regulations, made in terms of section 13(1) of the State Tender Board
Act, 1960 (Act 86 of 1960), and the general conditions and procedures (ST 36) . . .
dated 17 May 1991 and subsequent amendments thereto . . .”.  The regulations
referred to no longer applied, and the directives contained in ST 36 were only to apply,
in terms of sec 11 of the Act “mutatis mutandis to the Province and be deemed to
have been issued under section 4(1)(i) of this Act, until amended or replaced in terms
of this Act”.  They had in fact been replaced, in all respects material to the present
appeal, by reg 7 which laid down that tenders “shall be invited in accordance with the

provisions of these regulations for all supplies, services and sales” and went on to
prescribe the requirements that had to be complied with.  Furthermore, the tender
invitation stipulated, again without qualification, that “late . . . . tenders shall not be
considered”, this despite the fact that reg 7(6)(d) read with reg 3(4)(c) permitted the
Board, in its discretion, to entertain a late tender.
[6] In inviting tenders in the manner in which it did the Board (or its responsible
officials) appear, initially at any rate, inadvertently to have overlooked the provisions
of the Act and regulations in terms of which it was required to function.  It has never
claimed that it acted as it did in the exercise of its discretion in terms of sec 4(1)(b)
(assuming, again, that any discretion it had would have permitted it to do so).  In any
event the probabilities are, in my view, wholly against it having so acted.  It is
inconceivable that a responsible Board would have consciously chosen to depart from
the prescribed regulations governing tenders in this regard.  There were therefore

significant departures from authorised tendering requirements from the inception of the
tendering process.  The court a quo seemingly failed to appreciate this.  That caused
it to err in concluding that the Board had exercised a discretion not to accept late
tenders and was thereby precluded from considering such a tender, let alone accept
it.
[7] The closing time and date for the submission of tenders was 11:00 on 10
October 1996.  A number of tenders were received before then, including that of
Philips.  It appears from the record that Tecmed’s tender document was collected in
Johannesburg by a courier service on 9 October 1996 for express delivery to East
London where arrangements had been made for it to be delivered to the Board.
Commencing on the evening of 9 October all flights which would normally have
conveyed air freight between Johannesburg and East London were cancelled as a result
of unforeseen industrial action on the part of employees of South African Airways.

Consequently the tender document could not be conveyed as consigned.  It was
eventually delivered to the Board on 10 October 1996, but only after 11:00.  It was
therefore late.  The Board’s officials were, however, informed in advance of Tecmed’s
predicament and the fact that its tender would be late.  Tecmed did not secure any
unfair advantage over its competitors on account of its tender being late. [8] I t  i s
unnecessary to traverse the events that took place at the time of, and immediately after,
the expiry of the deadline.  Suffice it to say that the Board’s secretariat submitted the
tenders received, including that of Tecmed, to the Board for its consideration.  Its
officials appear simply to have regarded Tecmed’s tender as a facsimile tender, which
it was not.  It is common cause that the Board was never informed that Tecmed’s
tender had been late.  After extensive deliberations the Board decided to award the
tender to Tecmed.  Its decision was finally reached on 16 May 1997, and the order for
the supply of the Bi-Plane Catheterisation Laboratory was placed with Tecmed on 2

June 1997.  This gave rise to the proceedings initiated in the court below in August
1997.
[9] Although reg 7(6)(d) provides that any tender received after closing hour shall
be returned to the tenderer, it is subject to certain provisos, one of which is that
“the secretariat may refer to the Board for its decision any late tender
which has been delayed through no fault of the tenderer.”
Regulation 7(6)(d) read with reg 3(4)(c) permits the Board to allow a late tender in the
exercise of its discretion.  But before it can exercise such a discretion it must be
alerted to the fact that the tender was late, and be informed of the circumstances
concerning its lateness, in order to satisfy itself that the delay was not caused  through
any fault of the tenderer.  The Board was not apprised of these facts.  This is apparent
from the affidavit of the chairman of the Board, Mr Finca, who stated that “it [the
Board] was never informed thereof [the relevant facts] by its secretariat before

adjudicating upon the matter and had it been so informed it would have laid the matter
before the members of the Tender Board for discussion and appropriate action.”
Being ignorant of these facts the Board was precluded from applying its mind to
whether or not it should exercise a discretion in Tecmed’s favour.  This was a
necessary prerequisite for the consideration and acceptance of Tecmed’s tender,
which would otherwise have been excluded.  Because the Board (albeit through no
fault of its own) failed to apply its mind to the relevant issue of whether Tecmed’s late
tender should be allowed and considered, its decision  to award the tender to Tecmed
fell to be reviewed (Johannesburg Stock Exchange and Another v Witwatersrand
Nigel Ltd and Another 1988(3) SA 132 (A) at 152 A-B).  Counsel for Tecmed, Mr
Lane, accepted that to be the case.
[10] Mr Lane argued, however, that Tecmed’s situation was saved by reg 3(4)(c)
which reads:

“[T]he Board may, if it is in the interests of the Provincial Government,
accept any offer notwithstanding the fact that the offer was not made in
response to any particular tender invitation, or does not comply with the
tender conditions set out in any specific tender invitation in respect of
which the offer has been made.”
It does not, however, provide an answer.  Like reg 7(6)(d), reg 3(4)(c) also requires
the exercise of a discretion by the Board.  Knowledge that Tecmed did not comply
with the tender requirements, because its tender was late, was also a prerequisite for
the exercise of such discretion.  In relation to its powers under reg 3(4)(c) the Board
did not exercise any discretion in favour of Tecmed.  Without the exercise of such
discretion it could not have allowed and accepted Tecmed’s tender.
[11] In all the circumstances, and given the need for administrative fairness, judicial
interference was justified and the award of the tender to Tecmed had to be set aside.
It is not necessary to consider Mr Lane’s argument, relying on a passage in
Napolitano v Commissioner of Child Welfare, Johannesburg and Others 1965(1) SA

742 (A) at 745 H, that prejudice to Philips was an essential requirement for reviewing
and setting aside the Board’s decision to award the tender to Tecmed.  Assuming that
to be so, there was clearly prejudice or potential prejudice to Philips arising from the
Board’s lack of knowledge and the failure to exercise its discretion which, notionally
at any rate, it may have exercised against Tecmed, leaving Philips as the possible
successful tenderer.  Nor is there substance in Mr Lane’s reliance on the decision in
National and Overseas Distributors Corporation (Pty) Ltd v Potato Board 1958(2)
SA 473 (A) which dealt with a situation significantly different from the present.
[12] The court a quo made the following order:
“(a)
The decision of the [Board] to award tender no. PT B3-96/97-404
for the provision of a Bi-Plane catheterisation laboratory to the
Port Elizabeth Provincial Hospital to [Tecmed] on [16 May 1997]
is hereby reviewed and set aside;
(b)
The matter is referred back to the [Board] to consider afresh
tenders submitted in respect of the tender;

(c)
The [Board] is interdicted and restrained from considering the
tender purportedly submitted on behalf of [Tecmed];
(d)
The [Board] is to pay the costs (including costs of two counsel)
of the application on an unopposed basis;
(e)
[Tecmed] is to pay the costs of the application occasioned by its
opposition.  These costs to include the costs of two counsel.”
[13] For the reasons given in this judgment it was correct in making order (a).  It
was, however, not justified in making orders (b) and (c).  They were premised on the
false argument that the Board was either not entitled to have regard to a late tender, or
had lawfully precluded itself from doing so.  The court should simply have granted
order (a) and have left it to the Board to decide how to deal further with the matter.
(That is the effect which this judgment will have.)  But once it decided that the tenders
submitted should be considered afresh by the Board there was no justification for
excluding Tecmed’s tender from the process.  It remained open to the Board to

consider whether Tecmed’s tender was late through no fault on its part and, if it found
that to be the case, to exercise its discretion whether to entertain it.  The court was not
entitled to deny the Board the authority and power to do so conferred upon it by the
regulations.
[14] It follows that the appeal must succeed to the extent that orders (b) and (c) are
to be set aside.  There remains to be considered the costs of appeal.  It is also open
to us, in the light of our findings, to reconsider the costs order made by the court a
quo.  We have a wide discretion as to costs, to be exercised judicially on a proper
consideration of all relevant circumstances.
[15] Orders (a), (b) and (c) were made in the precise terms asked for by Philips in
the notice of motion.  Philips did not only seek to have the tender award set aside, it
was bent on having Tecmed eliminated from any future tender process, hence the relief
it sought.  There were therefore essentially two issues before the court a quo - the

review of the Board’s decision to award the tender to Tecmed (“the first issue”) and
the exclusion of Tecmed from the further process (“the second issue”).  As I have
held, Philips was entitled to succeed on the first issue but not on the second.
[16] Philips’s attitude in bringing its application was basically that as Tecmed’s
tender was late it should have been, and had to be, excluded from the tender process.
In doing so it sought to rely (wrongly) on directives that had been replaced by the
regulations.  To that extent the application was ill-conceived.  In resisting the
application Tecmed (correctly) relied upon the regulations which would have permitted
the Board to exercise its discretion in its favour.  At that stage Tecmed had no means
of knowing whether the Board had exercised a discretion in its favour or not, but in
my view it was entitled to assume from the fact that it had been awarded the tender that
the Board had done so.
[17] The Board, through Mr Finca, only filed an affidavit at a very late stage of the

proceedings when all the answering and replying affidavits had been filed.  It only then
came to light that the Board had never been called upon to make a decision, as it
should have done, concerning Tecmed’s late tender.  It is arguable that at that stage
Tecmed should have had the good sense to concede prayer (a).  Be that as it may, it
was still fully entitled to resist an order in terms of prayers (b) and (c).  The fact that
the Board had not previously applied its mind to the lateness of Tecmed’s tender
would not legally have precluded it from doing so if the tenders received had to be
considered afresh.  It must be borne in mind that Tecmed had not been guilty of any
improper conduct in relation to the tender.  While it may have left the submission of
its tender to the last moment, ultimately the fact that the tender was late was due to
circumstances beyond its control.  Legally (and morally) there was no valid basis for
excluding its further participation in the tender process.
[18] In the result, while Philips in the court a quo rightly succeeded on what I have

designated the first issue, it should have failed on the second issue, an issue it had
raised and vigorously pursued.  Had Philips so failed, Tecmed would have achieved
a significant degree of success in the court below as a result of its successful
opposition to orders (b) and (c).  They had the effect, in terms of the court’s order,
of eliminating Tecmed (wrongly) from any participation in the further conduct of the
tender.  To protect and maintain its interest in the tender Tecmed was obliged to
appeal.  It could have limited its appeal to orders (b) and (c) and the costs order; by
the same taken Philips could have abandoned orders (b) and (c) to which it was not
entitled.  Neither party can really be blamed for pressing on in the hope of achieving
overall success.  In the end result Tecmed on appeal will have failed on the first issue
but succeeded on the second.  Again this amounts to significant success on its part.
[19] The Board’s secretariat is mainly to blame for the situation which arose in the
present matter because of its failure to inform the Board of the lateness of Tecmed’s

tender and the circumstances pertaining thereto.  The Board, wisely, elected not to
oppose the matter.  Because of the secretariat’s conduct, which is attributable to the
Board, the court a quo made order (b).  Although Philips did not include a prayer for
costs against Tecmed in its notice of motion, once the issues crystalised it must have
been obvious to Tecmed that a costs’ order would be sought against it if the
circumstances justified it.  In ordering Tecmed to pay the costs occasioned by its
opposition the court a quo held that “notwithstanding the fact that it became aware of
the true facts after having been served with the founding papers, [it] nevertheless
decided to oppose the matter.”  This is not quite correct.  The “true facts” cardinal to
a proper decision in this matter only emerged when Mr Finca’s affidavit was filed.
[20] I am of the view, having regard to all the relevant circumstances, and the extent
of the success achieved by each party in this Court and the court below, that fairness
dictates that the costs burden (other than in relation to order (d)) should as far as

possible be shared equally between Philips and Tecmed.  The best way to achieve this
would be to order, in relation to the costs not covered by order (d), that each party
pay its own costs.
[21] The following order is made:
(1)
The appeal against order (a) of the court a quo is dismissed;
(2)
The appeal against orders (b) and (c) of the court a quo succeeds and
they are set aside;
(3)
Order (d) made by the court a quo remains unaltered;
(4)
The appeal against order (e) of the court a quo succeeds.  The order is
set aside and there is substituted in its stead the following:
“Subject to order (d) above each party is to pay its own
costs.”
(5)
Each party is ordered to pay its own costs of appeal.
___________________

J W SMALBERGER
JUDGE OF APPEAL
SCOTT JA  )Concur
MPATI AJA )
OLIVIER  JA
OLIVIER JA
[1] I have read the judgment of my colleague Smalberger.   On some issues we
agree, on some not.   The differences do lead, unfortunately, to divergent
outcomes.
[2] The invitation issued by the Board required tenders to be submitted “... on
or before the closing date 10 October 1996 not later than 11:00”.   Tecmed did
not comply with this requirement.  The Board nevertheless considered its tender.
Mr Ndlebe, the Board’s representative, erroneously and notwithstanding immediate
objections by Philips, never informed the Board that Tecmed’s tender was late.

The Board had a discretion to consider late tenders.  Regulation 7(6)(d) reads as
follows:
“(d) Any tender received after the closing hour shall be returned to the
tenderer: Provided that --
(i)
...
(ii)
the secretariat may refer to the Board for its decision any late tender
which has been delayed through no fault of the tenderer.”
[3] Due to the misconception on the part of Ndlebe, the Board never
exercised the said discretion.    Philips was not at fault at any stage.  The fact is
that Tecmed failed to ensure that its tender would reach the Board timeously.
Philips was entitled to have the award of the tender to Tecmed set aside.
Philips’s main prayer was rightly granted by the  Court a quo.    Nevertheless,
Tecmed pursued an appeal to this Court, and by far the largest part of the time
spent on the hearing of this case was used by Techmed’s counsel in an endeavour
to convince us that the main prayer should have been refused.   He failed to do
so.

[4] Having set the Board’s award of the tender to Tecmed aside, the Court a
quo, at the behest of Philips, made the following orders:
“(b)
The matter is referred back to the First Respondent [the Board] to
consider afresh tenders submitted in respect of the tender;
(c)
The First Respondent [the Board] is interdicted and restrained from
considering the tender purportedly submitted on behalf of the Fourth
Respondent [Tecmed];
(d)
...
(e)
Tecmed to pay the costs of the application occasioned by its
opposition.   These costs to include the costs of two counsel.”
Philips was entitled to the relief sought in paras (b) and (e).   In this Court
counsel for Tecmed submitted that the correct order of the Court a quo should
have been to refer the matter back to the Board to exercise its discretion whether
to allow and consider Tecmed’s late tender.
[6] I do not find any mention in the judgment of the Court a quo that Tecmed
there also adopted its present attitude to the ancillary prayers.
[7] In its application to the Court a quo for leave to appeal to this Court,

Tecmed mainly dealt with the main prayer.   Its approach to the ancillary prayers
is interesting.   I quote from the relevant notice:
“13
The learned Judges, in concluding that the Tender Board would be
precluded from considering late tenders if the matter was referred back
to it for reconsideration, erred in not giving effect to the provisions of
Regulation 3(4)(c) and 7(7).”
The learned Judges failed to take cognisance of the fact that all the
tenders had lapsed and that, accordingly, there was nothing that the
Tender Board could reconsider.”
These two paragraphs were repeated as paragraphs 14 and 15 of the Notice of
Appeal filed by Tecmed after this Court granted it leave to appeal.
[8] If the tenders had lapsed, as Tecmed said , there was in fact nothing that the
Tender Board could consider again.  But then it is impossible to understand why
it now takes up the attitude that the matter should have been referred back to the
Board in order to exercise its discretion to allow and consider its late tender.
According to its own present view, Tecmed’s opposition to para (b) of the

ancillary orders was misplaced.   In any event, it never offered to abandon its
opposition to the main prayer if Philips abandoned the ancillary orders. It persisted,
to the very last, in opposing the main prayer.
[9] Philips, in my view, certainly achieved substantial success in its application
and in its opposition to the appeal.  Although it was not entitled to the relief sought
in para (c) of the order that was of less importance and has by now become
academic as completely new tenders will have to be invited.
[10] I would dismiss the appeal with costs.
P J J  OLIVIER  JA
I CONCUR
VIVIER  JA