Tender disputes

In DPP Valuers (Pty) Ltd v Madibeng Local Municipality (233/2015) [2015] ZASCA 146, the Supreme Court of Appeal addressed the question of whether the dispute resolution mechanism in the Municipal Supply Chain Management Regulations constituted an internal remedy under the Promotion of Administrative Justice Act 3 of 2000 (PAJA).

The Municipality had advertised a tender for the compilation of a general and supplementary valuation roll. The contract was awarded to Dijalo Property Valuers. An unsuccessful bidder, DPP Valuers, lodged an objection in terms of regulation 49 and requested the Municipality to appoint an independent and impartial person under regulation 50 to assist in resolving the dispute.

No response was received to the request and DPP Valuers launched a review application in the High Court. To this, the Municipality and Dijalo Property Valuers argued that DPP Valuers had failed to exhaust all internal remedies before approaching the High Court, as required by section 7(2) of PAJA. The parties stated that regulation 50 was an internal remedy. The High Court agreed and dismissed the application.

On appeal, the SCA disagreed. It held that regulation 50 was not an internal remedy but a non-binding dispute resolution mechanism. Furthermore, the SCA held that section 62 of the Local Government: Municipal Systems Act 32 of 2000 (MSA) would have been an internal remedy, as required by section 7(2) of PAJA. However, this was only applicable where rights had not yet accrued; this was not the case, here, because the Municipality and Dijalo Property Valuers had already concluded a Service Level Agreement.

Consequently, the SCA decided that DPP Valuers was correct in having approached the High Court. The appeal was upheld with costs.

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