Esorfranki Pipelines (Pty) Ltd and Another v Mopani District Municipality and Others

The Mopani District Municipality, acting as implementation agent for the Department of Water Affairs, invited tenders in 2010 for the construction of a bulk water pipeline from the Nandoni Dam to Giyani following a declared water disaster. The tender was awarded to a joint venture comprising Tlong Re Yeng Trading CC and Base Major Construction (Pty) Ltd. Two unsuccessful bidders, Esorfranki Pipelines (Pty) Ltd and Cycad Pipelines (Pty) Ltd, challenged the award. After an initial setting aside and re-adjudication, the municipality again awarded the tender to the same joint venture. The unsuccessful bidders brought review proceedings under PAJA, alleging non-compliance with tender specifications, fraud, fronting, and bias. The High Court set aside the award but allowed the contract to continue subject to remedial measures. Esorfranki and Cycad appealed to the Supreme Court of Appeal on the appropriateness of the remedy and costs.

The appeal was upheld in part. Any contract concluded between the municipality and the joint venture pursuant to the unlawful tender award was declared void ab initio and set aside. The municipality was ordered to approach the Department of Water Affairs to determine remedial work and to invite and adjudicate a fresh tender. The municipality and the third to fifth respondents were ordered to pay the appellants’ review costs and Rule 49(11) application costs on an attorney-and-client scale. Esorfranki’s appeal against a separate costs order in favour of the municipality’s attorney was dismissed.

The case is a leading authority on remedies in unlawful public procurement under PAJA. It confirms that contracts flowing from invalid tender awards may be declared void ab initio and underscores the constitutional principle of legality in procurement. The judgment also clarifies standing of unsuccessful tenderers and signals that courts will impose stringent remedies and punitive costs where municipalities and tenderers engage in fraud, fronting, or biased decision-making.