This article may contain graphic and/or adult content unsuitable for minors and sensitive readers.
John Harvey
The Oudtshoorn Municipality has emerged victorious after the Supreme Court of Appeal upheld an earlier judgment which found that a company awarded a R7-million tender to develop municipal land did not meet stipulated Broad Based Black Economic Empowerment (BBBEE) criteria.
The dispute arose when the Oudtshoorn Municipality awarded a tender to develop Erf 5366 to Newco - a company to be incorporated and with a specified black empowerment constituent profile.
Newco was later replaced by the appellant, CShell 271 (Pty) Ltd, who sought to enforce the tender.
In 2006 the property was being offered for purposes of development and the tenders submitted had to contain the development proposals as well as its BEE component. In addition, it had to contain employment opportunities for locals in the area.
Newco stated that R2.1-million of the R7-million would go towards uplifting members of the Oudtshoorn community.
The tender submitted stated that the intention was to utilise the property for a shopping mall with a commercial and low income residential component with the possibility of a petrol station and a local tourist hotel being considered.
Newco indicated that it was 80% BBBEE compliant. In February 2007, the municipality was then informed that a new company, CShell, would replace Newco but that it would adhere to the agreed conditions.
However in May 2009, the municipality was made aware that the composition of CShell was considerably different to that of Newco.
The municipality decided to re-advertise the tender but on January 31 2011, CShell sought an order preventing the municipality from seeking any other proposal for the alienation of the property.
After two years of court battles the Supreme Court, during which the Cape High Court ruled in favour of the municipality, the Supreme Court of Appeal finally ended the saga with its verdict on Friday.
Acting Judge of Appeal KGB Swain found that CShell's lack of standing made it unnecessary to decide whether this BBBEE related municipal decision should have been made an order by the Western Cape High Court.
"CShell quite clearly did not possess locus standi to seek a review of the municipality's decision to cancel 'the award' of the tender, as CShell acquired no rights in the contract concluded as a result of the award of the tender," Swain said.
Reacting to the verdict, Oudtshoorn mayor Gordon April said: "The council has in the recent past been castigated for unnecessary law suits and this judgement confirms that decisions to go to court are not taken lightly and are made after due application of minds and in the interests of taxpayers and residents."
