|
|
Home
| Databases
| WorldLII
| Search
| Feedback
High Court of Fiji |
IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION
JUDICIAL REVIEW NO. 0012 OF 2005
THE STATE
V.
MAJOR TENDERS BOARD
RESPONDENT
EX-PARTE: PACIFIC CONNEX LIMITED
1ST APPLICANT
NATIVE LAND TRUST BOARD
2ND APPLICANT
SSA GLOBAL TECHNOLOGIES (N.Z.) LIMITED
1ST INTERESTED PARTY
MINISTER & CHIEF EXECUTIVE OFFICER OF
FINANCE & NATIONAL PLANNING
2ND INTERESTED PARTY
Mr. V. Qoro for the Applicants
Mr. J.J. Udit for the Respondent
Mr. D. Sharma for the 1st Interested Party
Mr. J.J. Udit for the 2nd Interested Party
Dates of Hearing: 29th & 30th June, 2005
Date of Judgment: 25th July, 2005.
JUDGMENT
In 2001 the government adopted a financial reform policy to implement gradually “accrual accounting and performance reporting”. To do this the government required a new integrated Financial Management Information System (FMIS). A notice was signed on 6th April, 2004 and advertised in newspapers locally and overseas inviting suppliers to submit proposals for tender for the proposed integrated FMIS. By the close on 6th of May five bids had been received. Two of the five bidders are parties to this case, namely Pacific Connex Limited, the first applicant and SSA Global Technologies (N.Z.) Limited, the first interested party.
SSA Global was successful in the tendering process. Pacific Connex was not. The latter makes application for Judicial Review of the process. The Native Land Trust Board (NLTB) joins the action as the second applicant. The Minister and Chief Executive of Finance and National Planning are cited as the second interested party. The Major Tenders Board, established under Regulation 12 of the Financial Management (Supplies and Services) Regulations 2005, is cited as the respondent.
The applicants seek the following relief:
“1. A Declaration that Regulation 12 of the Financial Management (Supplies and Services) Regulations 2005 establishing the Major Tenders Board is ultra vires the Financial Management Act 2004.
(b) Order of Mandamus requiring the Major Tenders Board to issue a Request for Proposal for supply of a Financial Management Information System that is compliant with the Social Justice Act by reserving not less than 50% of the contract for companies or entities with majority VKB Fijian and or Rotuman interest and setting out a minimum access requirement for VKB Fijian and or Rotuman interest as defined under the Social Justice Act or alternatively, Order for damages as to 50% worth of the Financial Management Information System contract.
I have before me the following affidavits:
Sivaniolo Waqa Naulogo - 16th March 2005, 30th June 2005
Netava Bakanicevu - 7th April 2005
Aisake Saukawa - 23rd June 2005 and
Alanieta Vakatale - 27th June 2005
for the applicants, and
Aisake Taito - 14th June 2005 and
Vula Vakacegu - 14th June 2005
for the respondents and interested parties
The parties made both oral and written submissions.
The respondent and interested parties pursued two substantial preliminary points. I will deal with those first.
Who is the Correct Respondent ?
Counsel for the Board, the Minister and Chief Executive Officer of Finance and National Planning and counsel for SSA Global argued that the correct respondent is the “Controller” being the person “in-charge of the Government Supplies Department”. They said that it is the Controller who is in overall charge of the process and makes the final decision. The involvement of the Major Tenders Board is a step, and an important one, but not a final one. In those circumstances the application must fail as the correct respondent, the Controller, is not before the Court.
The applicant rejected this argument. They said it was clear from the wording of the Regulations and the reality of the circumstances that the decision lay with the Board. The Major Tenders Board made and publicized its decision on 1st February, 2005.
On the 1st January, 2005 the Financial Management Act 2004 came into force. It repealed the Finance Act 1981. The former also repealed all Regulations and Rules under the previous Finance Act including the Finance (Supplies and Services) Regulations 1982, as revised in 1985, under which the Major Tenders Board had previously been established, [Regulation 12].
The new Regulations, the Financial Management (Supplies and Services) Regulation 2005, were “deemed” to have come into force on 1st January, 2005 although they are dated 27th January, 2005. These Regulations, apart from some changes in nomenclature (e.g. Head of Department becoming Chief Executive Officer) are identical for the purposes of this judgment to the old Regulations. They appear to have been transcribed. There does appear to be an omission in the transcribing in Regulation 11 (4) where the old sub regulation (a) has been left out and old subregulation (b) has been labelled new (a). The old Regulations ceased to have force on 31st December, 2004.
I will deal later with the question raised by the applicants as to the validity of the Tender Board’s decision in February 2005, given the tenders had been called for and most of the process followed under the old Act and Regulations.
The 2005 Regulations were made by the Minister for Finance and National Planning under Section 81 of the new Act. That Section reads as follows:
“The Minister may make Regulations to give effect to the provisions of this Act and in particular to provide for any matter required or permitted to be prescribed by Regulations for the purposes of this Act.”
The Major Tenders Board is again established by Regulation 12. By sub-regulation 8 it is given the task of dealing with tenders for the supply of goods or services where the price exceeds $30,000.
Regulation 3 states:
“(1) No tender for the supply of goods or services, or for the purchase of public stores, shall be called for, considered or accepted otherwise than in accordance with these Regulations.
(2) No indent or order for the supply of goods or services shall be issued or approved otherwise than in accordance with these Regulations”.
In these Regulations “Controller” means the “person in-charge of the Government Supplies Department”, [Regulation 2(1)]. Regulation 4 sets out the duties of the Controller as follows:
“1. The Controller shall –
(a) subject to the provision of these Regulations, be generally responsible for the supply of all goods and services and for the custody and disposal of all public stores;
(b) ensure that the provisions of Regulations (sic) 3 are complied with;
(c) ensure that the instructions required to be issued by Chief Executive Officers under Regulation 9 are issued by them; and
(d) periodically carry out the inspection and audit of all stock balances and inventories and report therein to the Chief Executive Officer of the Department concerned.
The Controller, within Part II, is given further duties and powers, for example under Regulation 7 the inspection of public stores, under Regulation 8 the appointment of a Board of Survey.
Part V – “Purchase of Goods and Services” deals with the purchase of goods and services. In particular Regulation 19 states:
“Subject to the provisions of this part of these Regulations, no person other then the Controller, or any other person authorized by the Controller in that behalf, shall execute any contract for the supply of goods and services.”
Regulation 20 states:
“Subject to the provisions of this part of these Regulations, all goods and services shall be purchased from the most advantageous source and, whenever practicable, at competitive prices.”
Under Regulation 23 Chief Executive Officers may issue indents or orders for goods or services in particular circumstances, if “authorised to do so by the Controller”.
The applicants in this case maintain the position that the Major Tenders Board is the correct respondent, its decision is final and in particular they rely on Regulation 12.
Sub-Regulations 8, 9 and 10 thereof read as follows:
(8) “Subject to paragraphs (9) & (10), the Major Tenders Board –
(a) shall consider and may authorize the acceptance of any tender called for by the Controller for the supply of goods or services or for the purchase of public stores where the price of those goods, services or stores specified in the tender, or in any other tender relating to the same goods, services or stores exceed thirty thousand dollars; and
(b) shall consider and may approve the issue of any indent or order intended to be issued by the Controller for goods or services where the estimated price of those goods or services exceeds thirty thousand dollars;
and in considering any such tender, indent or order, shall conform with any appropriate instructions issued by the Board under sub-regulation (5) or regulation 11.
(9) The Major Tenders Board shall not consider any tender, indent or order which a Divisional Tenders Board has been appointed to consider.
(10) Where the Major Tenders Board is satisfied, after considering any tender, indent or order –
(a) that the tender is unreasonable or collusive; or
(b) that the indent or order is unjustifiable;
it shall reject the tender or refuse to approve the issue of the indent or order, as the case may be.”
The applicants say Regulation 3 clearly states that no tender can be considered or accepted otherwise than in accordance with the Regulations. Under Regulation 12 tenders over $30,000, as is the case here, must go to the Major Tenders Board and the Board alone may authorise the acceptance of the tender. Under Regulation 12(10) it can reject or refuse to consider any tender or refuse to approve the issue of an indent or order. Regulation 19 is purely administrative in the putting into effect of the acceptance of a tender. This is done by the Controller or any person authorised by him or her by executing the contract for the supply of goods or services.
In support the applicants cite the judgment of Jitoko J. in Judicial Review Case No. HBJ0006 of 2004, State v. The Major Tenders Board, Respondent, ex-parte – Fiji Broadcasting Corporation Limited, Applicant and Communications Fiji Limited, 1st Interested Party and the Chief Executive of the Department of Information, Media Relations and Communications, 2nd Interested Party. This very point was argued in that case. That was a case under the old Regulations; those Regulations are identical for all practical purposes to the current Regulations.
At page 19, when dealing with this point, the Hon. Mr. Justice Jitoko states, having reviewed the arguments: “All of these point very clearly in my view, to the fact that the decision of the respondent (The Major Tenders Board) has some air of finality in it. The fact that as is the case in this tender, that the agreement is yet be signed by the successful tender and the second interested party, does not make the decision of the respondent any less binding. The reality given the ethics in good government of accountability and transparency, lends equal support to the argument that the respondents authority to accept any tender amounts to a decision that is final and is therefore open to Judicial Review.“
The respondent and interested parties seek to argue that, with respect, that decision is not correct and this Court is not necessarily bound by it if I come to a different view.
On a true reading of the Regulations how do they operate?
The purpose is clearly to establish a system for the supply of goods and services and the purchase of public stores by the government which gives accountability, transparency and purchase and from the most advantageous source and, whenever practicable, at competitive prices.
It has not been disputed that the process is susceptible to judicial review.
No tender for the supply of goods and services or for the purchase of public stores can be carried out otherwise then in accordance with the Regulations, [Regulation 3(1)].
In my judgment, it is clear that the Controller is the person in overall charge. He is given various powers and duties and in particular the duty of ensuring that these regulations are adhered to [Regulation 4(1)(b)]. He is subject to the provisions of the Regulations generally and is responsible for the supply of all goods and services and for the custody and disposal of all public stores [Regulation 4(1)(a)]. The Controller may call for tenders for the supply of goods or services or for the purchase of public stores. He is the person that may cause a notice announcing the result of a tender to be published in a newspaper [Regulation 18].
No person other then the Controller, or any other person authorised by him in that behalf, can execute any contract for the supply of goods and services [Regulation 19]. Chief Executive Officers may do certain acts by way of obtaining goods and services but need the authorisation of the Controller to do so [Regulation 23]. If done without his authority to meet an emergency, the Chief Executive Officer must report to him as soon as reasonably practicable, [Regulation 24].
The procedure is as follows. Notices are sent out. This is done in the name of the Controller and under the heading of the “Department of Government Supplies”. This is what occurred in this case. Tenders are submitted to the Chairman of the Major Tenders Board, (for sums in excess of $30,000). The Board then considers the tenders. The Board then authorises the acceptance of any tender. The Controller, or any other person duly authorised by him or her in that behalf, then executes the contract for the supply of the goods and services.
The act of the Board is one of authorisation of the Controller. It is not an acceptance of the tender. In my judgment no tendering company could sue the Board, the Controller or the Government in contract purely upon the Board’s authorisation of acceptance of a tender. Finality, for judicial review purposes occurs when the Controller signs the contract.
It might be that, after the Board has authorised the acceptance of a tender but before signing the contract, the Controller comes to the conclusion that the lowest price authorised tender is too expensive. It might be there is a decision not to continue with the acquisition of the goods or services. It cannot be said that the Controller is bound to go ahead and make a contract with the tenderer concerned.
The Board is entitled within the Regulations and within commercial commonsense to authorise the acceptance of two or more tenders. It might be that two or more tenders meet all the requirements and their prices are more or less the same. It would then be up to the Controller to examine the tenders concerned and make a decision as to which one to accept. He or she would have to exercise great care in going about making this choice.
The Regulations also envisage the supply of goods or services not by tender process but by indent or order of the Controller or someone authorised on his behalf. Regulation 3(2) stipulates that that must be done in accordance with the Regulations. Regulation 12(8)(b) requires that such an indent or order, if the estimated price exceeds $30,000, shall be considered and may be “approved” by the Major Tenders Board.
In my judgment this framework supports the interpretation that the Controller is the one who makes and is responsible for the final decision. Whether he decides to proceed by way of tender or by way of indent or order he must obtain the authorisation or approval of the Major Tenders Board. However the matter will come back to him for final decision and execution of any contract. If the Controller proceeds by way of tender, “authorisation” is required before any tender can be accepted. If he proceeds by way of indent or order “approval” is required.
Although he may sit on the Board the Controller does not and cannot exercise control over the Board. That would defeat the purpose in creating the Board. This in itself does not mean the Board’s decision is final.
However, does this mean though that if the alleged failing occurs in the way the Board acts then the Board is the correct respondent; if the failing is that of the Controller he or she is the correct respondent; if both Board and Controller, then both should be respondents ?
In this particular case the applicant’s arguments appear to lie in all three territories, and sometimes across the borders.
Does the Controller’s Regulation 4(1) b responsibility go up to the door of the Major Tenders Board and then resume when an answer comes out, or is it continuous?
In my judgment the answer lies in Regulation 3, “No tender ... shall be called for, considered or accepted otherwise than in accordance with these Regulation and Regulation 4(1)(b)” . The Controller shall “... ensure that the provisions of regulations 3 are complied with”.
It is the Controller who is responsible for the whole process and as such he is the correct respondent.
In these circumstances, I must disagree with the decision in Judicial Review 0006 of 2004, State v. The Major Tenders Board ex-parte Fiji Broadcasting Corporation Limited etc.
This therefore means that the Major Tenders Board is the wrong respondent in this case. Accordingly the application for Judicial Review must fail.
Native Land Trust Board - Sufficient interest?
Before commencement of argument the court, as it did not appear in submissions, raised the question as to whether or not the Native Land Trust Board (NLTB) had sufficient interest to be an applicant. Consideration of this point was invited.
The respondents and interested parties argue that the NLTB does not have sufficient interest. They stated that the NLTB is a one hundred percent shareholder in a company which is a fifty-one percent shareholder in Pacific Connex, the first applicant. There are no extra arguments which the NLTB can raise or advance which are in any way different from those of Pacific Connex. The application of each stands or falls together.
The second applicant, the NLTB, argues that it has sufficient interest. Counsel avers the NLTB has a direct commercial interest in the out come of the application. While conceding that the arguments of the NLTB will be the same as those of Pacific Connex, counsel states it was an integral part of the tender by Pacific Connex and specifically lent Social Justice Act compliance to that company’s tender.
According to the affidavits of the applicants (Netava Bakaniceva, Sivaniolo Waqa Naulago (two) and Alanieta Vakatale), Pacific Connex is a joint venture company registered under the laws of Fiji. Vanua Development Corporation Limited (VDC) is a Fiji registered company and has a fifty-one percent shareholding in Pacific Connex. Vanua Development Corporation Limited (VDC) is wholly owned by the second applicant the NLTB. The NLTB states that the VDC was formed from a desire to generate funds for its owners’ benefit independently from deductions from Land Owning Unit funds, the ultimate purpose being to benefit those persons registered in the Vola Ni Kawa Bula (Register of Native Owners).
It could not be said that in considering whether to grant leave to apply for judicial review the NLTB should be excluded as not having sufficient interest. When considering the substantive application the arguments of both applicants were the same, and delivered by the same counsel. The central feature urged on this point is the commercial interest of the NLTB.
Any Social Justice Act matters are essential parts of the application of Pacific Connex and are not in themselves sufficient to mean the NLTB can be an applicant.
I set out later in this judgment the concerns over the relationships between Pacific Connex, VDC and NLTB, particularly as far as shareholding and dividends are concerned. However, even taking those into account, I find that the NLTB does have sufficient interest to be an applicant, although, as a shareholder in a shareholder of the first applicant, its interest must, for judicial review purposes, be at the limit. The NLTB seeks to look after persons registered in the Vola Ni Kawa Bula. They have a commercial interest in the outcome of this application.
Accordingly I find that NLTB does have sufficient interest to be an applicant.
Grounds On Which Relief Is Sought
The two applicants addressed the court through one counsel and the grounds advanced were identical. I will deal with each in turn.
The applicants argue that Regulation 12 does not give effect to any provision of the Financial Management Act 2004. The Regulations purport to be made under Section 81 of that Act. Section 81 states:
“The Minister may make regulations to give effect to the provisions of this Act and in particular to provide for any matter required or permitted to be prescribed by regulations for the purposes of this Act”.
Under Section 30:
“The Minister may, from time to time, issue and amend Finance Instructions”.
Section 32(2) states:
“The Finance Instructions may also provide for any or all of the following:
(a) ...........
(b) without limiting paragraph (a), the establishment, functions and procedures of tender broads, whether for budget sector agencies generally or for particular budget sector agencies:
(c) – (f) .......”
By section 2(1) “budget sector agency” means “in relation to a financial year, ... a state entity that administers an appropriation for that year under an Appropriation Act or this Act”, and “state entity” means a “department, parliamentary body, statutory authority or government company, and includes an associated entity that is taken to be a separate department under section 80”.
The applicants say that the Minister should have established any tender board under section 30.
It is to be noted that there are Finance Instructions 2005 made in exercise of the powers conferred by Section 30. Instructions 23 and 24 deal with tender boards. Those Instructions were made on the 30th December 2004 and came into force on 1st January 2005.
There are a number of substantial inconsistencies concerning tender boards between the Regulations and the Finance Instructions. Regulation 29 does however state ”this regulation prevails to the extent of any inconsistency with the Finance Instructions 2005”.
The applicants therefore argue that as the Minister had no power under Section 81 to make regulations creating a major tender board therefore the activities and decisions of the body purporting to act as a major tender board must be void and illegal. Therefore, any acceptance of a tender must be a nullity.
I cannot accept this argument. Section 81 gives a general power to the Minister to make regulations to give effect to the provisions of the Financial Management Act. Without limiting the generality of that power it gives power “in particular to provide for any matter required or permitted to be prescribed by regulations for the purpose of this Act”.
The fact that under sections 30 to 32 the Minister may issue Finance Instructions cannot mean that he is thereby generally or specifically precluded from making regulations on any particular matter.
By Section 6 of the Act “the Minister is responsible for managing the financial affairs of the Government as a whole in accordance with requirements of the Constitution and this Act and with due regard to the principles of responsible financial management”. Those principles of responsible financial management are set out in Section 5. They include at sub paragraph (c) “to ensure value for money in the use of money and resources”.
The establishment of tender boards particularly one to deal with larger contracts is in accordance with giving effect to the provisions of the Act. Indeed, the Act envisages the establishment of tender boards, albeit by finance instructions. If the Minister chooses to do that by Regulation, that is a matter for him. He is not precluded from going by Regulation because he is also empowered to go by way of finance instruction. If there is any conflict, as there might well be, the Regulations clearly state that they prevail.
It might be the Minister intended to lay down a regime for the Controller (by Regulation) and a separate one for budget sector agencies by Finance Instruction. No ruling on that is required in this judgment.
Accordingly I must reject this argument of the applicants.
2. Old Act Tender Request - New Act Consideration
The applicants point out that the tenders were requested in April 2004. The governing Act and Regulations were then the Finance Act 1981 and the Finance “Supplies and Services (General) Regulations of 1982, as revised in 1985. That Act and those Regulations were repealed on 31st December 2004. The Major Tenders Board met to make its final decision on 1st February 2005. It was therefore constituted and acting under the new Act and Regulations. The applicants say that any existing tenders ceased to exist on 31st December 2004. Therefore, before the new Board could make any decision, fresh tenders would have to be invited, in other words the process restarted. The respondents and interested parties reject this argument. Although they concede there were no transitional provisions in the Regulations, the reality, they say, is that the procedures and practicalities are identical before and after 31 December 2004.
Some argument has been addressed as to the retrospectivity of delegated legislation. The new Regulations were made on 27th January and Gazetted on 28th of January. The new Major Tender Board sat on the 1st of February.
When the tenders were initially called for in April 2004 it was in accordance with the then existing Regulations. The demise of those Regulations did not mean those tenders were unlawfully called or in themselves automatically became null. When the new Regulations came into force there were therefore a number of valid tenders awaiting consideration. Although it is accepted there are no transitional provisions, the new Regulations did not specifically require the process in respect of pending tenders to be restarted.
The new Regulations do not specifically require or state that tenders must be sought under the new Regulations before they can be considered under the new Regulations. The wording of the new Regulations is not to set out a procedure to be followed from start to finish or a series of hoops all of which must be jumped through in sequence before the Board can deliberate upon a set of tenders. Regulation 3 only prescribes specific acts which cannot be done, otherwise than in accordance with the Regulations.
Further, Regulation 12(7) states “subject to the provisions of these Regulations and to any directions given by the Board, the Major Tenders Board shall regulate its own procedure”.
It does not appear from the affidavits before me as to whether or not the members of the Board addressed their minds to this point. However, they must have known about the change in Regulations. It was obvious the tenders had been called for under the old Regulations. Those Regulations are identical to the new ones. The Board could not do away with the requirements for a proper tendering procedure. A tendering procedure had taken place which was lawful in accordance with prevailing Regulations at the time each step was taken. The Board could, in accordance with the previous and prevailing provisions govern its own procedure, consider the tenders and make its decision.
It is of importance to note that counsel for the applicants considered that on this point were he to be correct and the tenders process run again then the outcome would be no different from the one that has occurred.
In all these circumstances, I refuse the application for Judicial Review on this ground.
3. Social Justice Act Consideration
The applicant states that the FMIS contract is a Government contract. As such under Section 44 of the Constitution and program 7 of the Social Justice Act it must set a minimum requirement for VKB (Vola Ni Kawa Bulu) Fijian and Rotuman majority owned companies to have access to a minimum of fifty percent of the contract. They say such a requirement was not set out in the Request for Proposal, nor was it considered in the selecting of the first interested party. Further, the first interested party, in any event, did not comply. The first applicant says that it does comply with the Social Justice Act.
Chapter 5 of the Constitution is headed “Social Justice”, with a sub-heading of “Social justice and affirmative action”.
Section 44 states:
“(1) The Parliament must make provision for programs designed to achieve for all groups or categories of persons who are disadvantaged effective equality of access to:
(a) education and training;
(b) land and housing; and
(c) participation in commerce and in all levels and branches of service of the State
(2) An Act that establishes a program under sub-section (1) must specify:
(a) the goals of the program and persons or groups it is intended to benefit;
(b) the means by which those persons or groups are to be assisted to achieve the goals;
(c) the performance indicators for judging the efficacy of the program in achieving the goals; and
(d) if the program is for the benefit of a group, the criteria for the selection of the members of the group who will be entitled to participate in the program”.
(3) – (5) .......
(6) The administering department or other agency must monitor the efficacy of a program established under this section by reference to the specified performance indicators. The Minister must make an annual report to Parliament on the results revealed by the monitoring.
(7) – (10) .........”
The Social Justice Act 2001 was enacted to implement the provisions of Chapter 5.
Section 4(1) states:
“Each of the programs specified in the Schedule is established for the purpose of Section 44 of the Constitution”.
The Schedule then sets out some 29 programs covering a variety of “Targeted Persons or Groups to Benefit”.
Section 3(2) of the Act states:
“For the purpose of Section 44(6) of the Constitution, “the Minister” in respect of a program means the relevant Minister responsible for the administering department or other agency specified in the schedule in respect of the program”.
Section 6 states:
“(1) In accordance with Section 44(6) of the constitution-
(2) The relevant Minister must table the annual report in Parliament no later then 30th of September following the year to which the report relates.”
Section 7(1) states:
“The Minister may make regulations to give effect to the provisions of this act”.
In the Schedule there are eight columns for each program. They are headed as follows:
1. The number of the program,
2. Administering Ministry or Agency,
3. Affirmative Action Programs,
4. Targeted Persons or Groups to Benefit,
5. Selection Criteria for Target Groups,
6. Goals of Affirmative Action Programs,
7. Means of Assistance,
8. Performance Indicators.
In Program 7 the columns themselves read: -
“1.
Must show interest and desire to participate in business and commerce.
Must meet minimum/standard requirements of assistance offered.
Must own or have a majority interest in a duly registered company or other similar entity.
To facilitate the equitable distribution of wealth derived from Government activities to the Fijians and Rotumans.
To assist Fijian and Rotuman business secure equitable proportion of income from government contracts, etc.
Reservation of minimum 50% Government shares, licences, and contracts to Fijians and Rotumans.
More Fijians and Rotumans have share in Government owned enterprises.
More Fijians and Rotumans in import/export activity.
More Fijians and Rotumans develop and gain business acumen and skills.
Increased employment opportunities for the communities.”
The respondent and interested parties reject the applicants contentions on a number of grounds. They say that the Minister responsible for program 7 is the Minister of Commerce, Business Development and Investment. He has not been joined as a party to these proceedings.
Further, they argue that program 7 is directed at “small/micro enterprise business or project”. It was never intended for tenders and contracts of the size involved in this case. In any event, SSA Global passed the Regulations test, Pacific Connex did not.
They question whether or not Pacific Connex meets the selection criteria to be a target group. The targeted persons or groups to benefit are Fijians as registered in the Vola Ni Kawa Bula and Rotumans as defined under the Rotuman Act. They say Pacific Connex is a registered company fifty-one percent of whose shares are owned by Vanua Development Corporation (VDC). VDC is a company registered in Fiji but does not qualify, in itself, as a “targeted person or group to benefit”. In turn VDC is one hundred percent owned by NLTB and NLTB in itself does not qualify as a “targeted person or group to benefit”. It is only when the beneficiaries of the activities of the NLTB are considered that the “targeted persons or groups to benefit” provisions are met.
Further they argue that in column 7, “means of assistance”, where it states “reservation of minimum fifty-percent Government shares, licences, and contracts to Fijians and Rotumans” does not mean fifty-percent of every contract but fifty-percent in total of the number of contracts awarded over a time period, that period being a year.
The applicants rejected these arguments and stated that they run counter to both the wording and intention of program 7.
The applicants, further, argue that the Regulations do not comply with the Act when they refer to “an open system of contract”, do not reserve a minimum of fifty-cent Government contracts to Fijians and Rotumans and the loading procedure is not geared towards a minimum reserve of fifty-percent.
The respondents and interested parties replied that if the Regulations are valid they have been complied with and, even if they are not valid, program 7 either does not apply or has been complied with.
Further, the respondents and the interested parties say quite simply that Pacific Connex did not fully meet the tender requirements and as such could not even have been considered under program 7. They continue even when subjected to the Regulations loading test Pacific Connex were beaten by SSA Global.
How do the Social Justice provisions of the Constitution and the Social Justice Act work? How is program 7 to be interpreted? How is it to be applied? Are the Regulations valid? If so, how are they to be applied?
Section 44 is a broad statement of what is to be achieved. The provision is aimed at groups or categories of persons who are disadvantaged. The desire is to give them “effective equality of access” to education and training, land and housing and participation in commerce and in all levels and branches of service of the State.
Parliament is required to establish programs to achieve this purpose. Certain requirements must be set out in those programs [sub-section 2] and the administering department or agency must monitor the efficacy of each program and the Minister make an annual report to Parliament based on the monitoring [subsection 6].
To this end the Social Justice Act was passed. It is a short Act but with a long schedule setting out the 29 programs of affirmative action. Affirmative action means the “state’s policies to assist the groups or categories of persons who are disadvantaged, so as to enable them to achieve equality of access with groups or categories which are not disadvantaged” [section 3(1)]. The words criteria, goals, means, performance indicators and target group in the schedule refer to the use of those terms in Section 44(2) of the Constitution.
The programs are divided into eight columns as set out above. Parliament, in column 4 of each program, has identified the disadvantaged group or category of persons.
For example, in program 8 a low income family is described as one where both parents or guardians must have an income not exceeding $12,000 per year. For the most part, the targeted persons or groups to benefit are reasonably identifiable by the criteria set out in the column entitled “Targeted Persons or Groups Benefit”.
In column 3 Parliament has set out the area of activity to which equality of access is to be promoted for that disadvantaged group or category of persons. The remaining columns set out the mechanics by which equality of access is to be achieved and monitored and measured. Most of these latter provisions are very broad in their description and frequently do not admit of precise identification from the wording used.
Problems of certainty enter when detailed consideration is given to the provisions set out in the four columns concerning Selection Criteria, Goals of Programs, Means of Assistance and Performance Indicators.
Section 7 of the Act gives to the relevant Minister the power to make regulations to give effect to the Act. To this end the Social Justice Regulations 2002 were made for the purposes of program 7. Utilizing his power under Section 7(1) of the Social Justice Act the “Prime Minister and Minister for Fijian Affairs, Culture and Heritage, Minister for National Reconciliation and Unity and Minister for Information and Media Relations” has made the Social Justice Regulations 2002. The point was not taken as to whether it should have been the Minister for Commerce, Business Development and Investment. Nevertheless, it was the Prime Minister who made the Regulations.
The applicants have argued that Regulation 7 is ultra vires, as it is outside the limits of the Social Justice Act and particularly program 7.
Regulation 7 states:
“1. A department or Ministry responsible for issuing contracts for the supply of goods and services may award contracts based on an open system of contract for the supply of services by the department or Ministry.
There is then set out a loading procedure with a formula, supporting examples and a schedule.
The Regulations are clearly intended to give practical effect to the provisions of program 7. To that end Regulation 4 sets out detailed conditions, Regulation 5 sets out the means of proof by which persons or a body can show they qualify under the program, Regulation 6 establishes a monitoring committee and defines its functions in Regulation 7 and Regulation 8 refers to open systems of contract and a formula for loading.
In my judgment program 7 is aimed at “small/micro enterprise business or project”. Column 5, selection criteria, states “must have ability, skills or knowledge to run or be involved in a small/micro enterprise business or project”. The goal of the program is to “promote and facilitate increased participation of Fijians and Rotumans in commerce”. This is to be done by the means of the assistance of “provision of training and business research and development and pilot projects through “National Small/Micro Enterprise Development Centre”. The fourth performance indicator says “More Fijians and Rotumans develop and gain business acumen and skills”.
The whole tenor of program 7 is directed to the assistance and training of the targeted persons and groups and the facilitating of their increased participation in business and commerce and the equitable distribution of wealth from government contracts by training and reservation of Government contracts. It is clearly aimed at those wishing to start up in business or having small businesses that are already running where the owners wish to develop them and gain training and assistance. I can not find any part of program 7 that suggests it is designed to operate to assist large business companies. Indeed, by the very fact that a business is large means it does not qualify for or indeed need the kind of assistance which is envisaged in the program and in the Constitution.
Whilst there is no specific definition of where the cut off point comes for program 7 assistance, the parties in this case and those that tendered are well outside that category. Program 1, for small business equity schemes, is a provision with a similar aim to Program 7. It talks of annual turn over not exceeding $100,000. The eventual price in this case is in the region of NZ$6.9 million. The dividing line between the Major and Minor Tenders Board is $30,000. The Finance Instructions place a line at $50,000, [Instructions 23(1) and 24(1)].
I further find that the applicant’s contention that fifty percent of each contract should go to the targeted group or persons is unsustainable. There is nothing in the wording of program 7 to suggest this. The only reference is in “Means of Assistance” where it is stated “reservation of minimum fifty percent government shares, licences, and contracts to Fijians and Rotumans”. In my judgment that refers to fifty percent of the total number of contracts, not fifty percent of their overall value or the value of each. The wording of Regulation 3 is consistent with this when it states “must reserve and award at least fifty percent of Government contracts or licences ... to Fijians and Rotumans”. In any event, in practical terms it would be extremely difficult to monitor over a period and put into effect a regime where fifty percent of every contract, whether large or small, should go to the target group or persons.
This is also consistent with the interpretation that program 7 is aimed at small and micro businesses where it is unlikely in a period that fifty –percent by value would go to such enterprises. It may well be the commercial fact that in any given period there will be a small number of high value contracts and a large number of medium and small value contracts.
By section 44(b) of the Constitution the Minister must make an annual report to Parliament. By the Act this must be done by 30th September of the following year, [Section 6(2)]. The monitoring period is clearly the calendar year. The Minister responsible for any program can keep a check throughout the year to ensure at least fifty percent of contracts are going to the targeted persons or groups and that the value of these contracts means an “equitable proportion” of the income from government contracts goes to the targeted groups and persons.
When considering the question whether the program is directed at fifty-percent of the value of all government contracts the wording of paragraphs 2 and 3 of column 6 must also be taken into consideration. They state “to facilitate the equitable distribution of wealth derived from government activities to the Fijians and Rotumans“ and ”to assist Fijian and Rotumans business secure equitable proportion of income from Government contracts etc”.
Had the intention of the framers of program 7 been as the applicants suggest then that would have been the place to put their fifty-percent criterion. The very fact the word “equitable” is used lends further support to the conclusion that it is fifty percent of government contracts by number thereby giving a fair or “equitable proportion”, though by no means necessarily fifty percent by value, to the targeted persons or groups.
Therefore, in my judgment there was no requirement on the Controller to make reference to the Social Justice Act when framing and sending out the Request for Proposal at the beginning of this tendering process. In any event, the requirements of the Social Justice Act are statutory and as such should be known. It would, of course, be good practice for reference to be made to the program 7 provisions when tender notices and requests for proposals are framed, if program 7 applies.
It therefore does not fall to me to decide whether or not part or all of the Social Justice Regulations have been properly framed. It is to be noted that in any event the first interested party’s tender and that of the first applicant were assessed against the loading requirements in the Regulations. Even despite that the first applicant fell behind the first interested party. Indeed, according to the Schedule to those Regulations the first applicant was in fact awarded a loading far greater then that to which it was entitled. It should be noted that the Regulations are not entirely clear in how loading is meant to work, and from the affidavits quite how it did work in this case.
I have specifically considered the Social Justice Regulations in relation to the findings I have made above. Whilst there are matters in those regulations which are not entirely clear, I can not find anything that runs counter to the findings I have made.
The evidence is that the first applicant’s proposals, after evaluation (Stage 3) before price considerations and adjustments lagged behind others (see affidavit of Aisake Taito, paragraph 12). It cannot be suggested that Parliament intended by the Social Justice Act and in particular program 7 that a target group or persons should be awarded a contract by dint of being a target group or persons when they could not meet the requirements of the tender or indent or order or fell behind others after non-price evaluation. This interpretation is consistent with the Regulations when in the Schedule “Supply of other goods and services” column 4 “conditions” states the Fijian or Rotuman company or individuals,
“(a) provides evidence indicating capability to undertake contract;
(b) meet tender requirements;
(c) open system of tender must apply”.
After Stage 3 evaluation and the application of Social Justice Act loading SSA Global came first. Even with its incorrectly high loading Pacific Connex came third.
Only the tender of SSA Global was referred to the Board for authorisation. No point was taken as to whether Regulation 12(8)(a) Financial Management (Supplies and Services) Regulations 2005 where it says the Board “shall consider ... any tender called for by the Controller ... “ means every tender must go to the Board or any tender the Controller is considering accepting.
It is pertinent to note in the broad context of this case that an independent review committee was established to ensure transparency and compliance with procedure. It came to the conclusion that the “entire evaluation process is commendable, has maintained transparency and has followed best practice. Furthermore, it was found that the evaluation criteria were applied consistently”, (see annex AT(4) to the affidavit of Aisake Taito).
Accordingly the applicant’s arguments under this head must fail.
4. Miscellaneous
Counsel for the applicants abandoned this ground during argument.
The applicants argued that the Major Tenders Board had surrendered its discretion in considering and authorising the acceptance of the tender as it submitted to the wishes and other instructions of the government. In particular the applicants cited annex SWN(11) and SWN(12) to the affidavit of Sivaniolo Naulago. They said that an announcement was made on the government website, on 17th November 2004 that “cabinet had endorsed the selection of SSA Global Technologies Limited as its preferred supplier ... has emerged as the preferred supplier of Government’s Financial Management Information System.... Cabinet noted that Software Factory will be the local service provider to SSA Global ... there would now be a scooping (sic) study ... cost negotiations and approval by the major tender board would then follow suit”.
SWN(12) is a memorandum of Aisake Taito dated the 19th of November 2004 to various people. That memorandum states at paragraph 1 the government has selected the SSA Financial Management Software as its financial system to support the Financial Management Reform programme across government.... The Government has engaged the supplier of the software, SSA Global Technologies Inc conjunction with the Financil Management Reform team to conduct a scoping study for the financial system implementation, which is expected to take 4 weeks ... At the conclusion of the interview process representatives will be asked to sign the document as acceptance of your respective Ministries and Departments requirement for the FMIS project”.
The respondents and interested parties reply that this was part of the normal and accepted process given the size and complexity of the contract. There were a large number of stages and those included much technical input. The documents cited do no more than establish a point in that procedure without a binding commitment to the first interested party. The reference to representatives acceptance is to Ministry and Department requirements.
I accept the respondents and interested parties arguments on this issue. There is nothing in the papers before me to show the Major Tenders Board surrendered its discretion in this matter. Indeed, it raised a number of queries, immediately before the authorization on 1st of February. See annex VVI to the affidavit of Vula Vakacegu. (Note: the applicants took no point on the blocked-out portion of this document VVI).
Further, the applicants approach is to cast the Major Tenders Board in the role of running and overseeing a tenders procedure from start to finish. The Regulations do not prescribe that. What the Board is required to do is consider tenders called for by the Controller and authorise or refuse their acceptance. In doing so the Board must conform to any instructions issued by the Supplies and Tenders Board. It may reject a tender if it is unreasonable or collusive.
The applicants argued that the rules of natural justice require that a person be given a fair hearing before a decision affecting him is taken. The decision maker must be unbiased in the sense there is no real danger that the decision maker will unfairly favour or disfavour a particular person. They cite the House of Lords case of Lawal v. Northern Spirit Limited [2003] UKHL 35 where the test of bias is laid down as “whether the fair minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased”.
The applicants to support further the complaint refer to the constitution of the Major Tenders Board being all government officials, whether or not various Ministries had signed acceptance of the first interested party’s solution in terms of the 19th November 2004 memorandum (see annex SWN(12)) and the cabinet endorsement of the first interested party as preferred supplier and acceptance by the ministries.
The consideration of tenders is not a quasi judicial hearing in the sense that an appeals board might determine an issue over the dismissal of an employee. I cannot find anything in the documents that supports the contention that the persons on the Major Tenders Board are other than those one would expect to see on such a Board. They are prescribed by Regulation. Public money is being spent, the contract is a commercial one.
I have considered above the website statements of the cabinet. Aisake Taito’s minutes to the various ministries did not bind or commit the Major Tenders Board. Indeed, they appear to be seeking the views of Ministries concerned on the preferred supplier and if they have a positive commitment to that position. The Board raised queries in its letter of 31st January 2005 (see above).
I cannot find any substance in this argument.
The applicants have set out a list of seven points in which they say that their legitimate expectation for a fair procedure has not been met. All of these have been considered under different heads above save for “F. Ministry of Finance officials Zakir Hussein and Aisake Taito made submission to respondent” and “G. respondent made decision based on above unfair procedures”.
I have reconsidered the points again which have been dealt with above together and together with points F and G. Again, I cannot find any substance in this argument.
Pacific Connex and the Social Justice Act
The applicants averred that the whole process did not comply with the Social Justice Act and in any event the first interested party did not meet the requirements of that Act.
It is not clear in Program 7 column 5 “Selection Criteria for Target Groups” what “majority interest” means at criterion 4 when it says “must own or have a majority interest in a duly registered company or other similar entity”. Does majority interest mean by way of shareholding, dividend right, voting right or what? There are other uncertainties, for example the meaning of the third paragraph of that column where it reads “must meet minimum/ standard requirement of assistance offered”.
For the reasons sets out earlier I find the Act does not apply in this case. The applicants placed great reliance on the Social Justice Act arguments yet themselves were not able to show that they complied with it. Their original affidavits fell short of showing how it was the first applicant is more then fifty-percent Fijian/Rotuman owned. A further affidavit was supplied on the first day of hearing. The respondents and interested parties did not object to this. Those further affidavits did not produce clarity.
It would appear according to the face of the applicants’ affidavits (Neteva Bakaniceva and Sivaniolo Naulogo) some fifty-one percent of the shares in Pacific Connex were transferred to the Vanua Development Corporation for the sum of $1 (annexure 6 affidavit of Sivaniolo Naulogo, 16.3.05). The date does not appear on the document. They were A-shares. The remaining shares were called B-shares and were held by Pacific Management Investment Services, a company registered overseas. It is not clear how Pacific Connex is controlled and by whom. It is not clear in what way any declared dividends are to be divided on a medium and long term basis. The various agreements and resolutions which have been disclosed in affidavits by the applicants are dated shortly before and at the time of the Request for Proposals. Until 14th January 2004, Pacific Connex was known as Sasha Limited when its name was changed by Special Resolution, see (Annexure B, affidavit of Bakaniceva). The respondents and interested parties say suspicions are raised.
There is no need for me to make a finding on this point, save for this. If an applicant to judicial review relies upon a set of factual circumstances as being necessary for success, or supportive of argument then there must be solid supporting evidence to that effect. This is not so in this case.
Damages
Order 53 of the High Court Rules governs the procedure for “Applications for Judicial Review”. Where the relief sought “is a declaration, an injunction or damages and the Court considers it should not be granted on an application for judicial review but might have been granted if it had been sought in an action begun by writ” then by Rule 9(5) the Court may order the proceedings to continue, as if begun by writ.
Given my findings in this case I can not see a basis on which these proceedings could be continued in the way envisaged in Rule 9(5).
The Hearing
Before the hearing of the argument in this case the applicants made application to cross-examine some of the respondents/interested parties deponents. This was opposed by the respondents and interested parties. During the latter part of argument the applicants abandoned this application. At the conclusion of argument the applicants, the respondents and the interested parties confirmed that they had advanced all the arguments they wished to and that the hearing might be treated as both the hearing for leave and the hearing for judicial review itself. [This is in accordance with Order 53 Rule 3(9)].
This is a judicial review case and as such I do not make any assessment of the relative merits of each tender submitted.
Conclusion
Given the findings I have made I would refuse leave to apply on the question of “Who is the Correct Respondent” and refuse the various reliefs sought in the application on full argument. Accordingly this matter is dismissed.
(R.J. Coventry)
Judge
PacLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.paclii.org/fj/cases/FJHC/2005/197.html