Maximum Profit Recovery (Pty) Ltd v Naledi Local Municipality & Others

The Naledi Local Municipality (first respondent) published a tender notice on 23 June 2021 inviting service providers to submit bids for appointment to a panel that would provide diverse financial services, including VAT reviews and auditing services, for a period of three years. Sixteen bids were submitted by the closing date of 7 July 2021, including those from Maximum Profit Recovery (Pty) Ltd (the appellant) and Triple M Advisory Services (Pty) Ltd (second respondent). Nine bidders, including both Maximum Profit and Triple M, accepted their appointments to the panel. On 23 March 2022, the municipality invited only four panellists (including Triple M but not Maximum Profit) to submit quotations for VAT recovery services. The letter to Triple M stipulated the rate on which the quotation should be based. The municipality subsequently awarded the contract to Triple M on 5 April 2022 for a period of three years, terminating on 4 April 2025. On 22 April 2022, Maximum Profit launched an application in the North West Division of the High Court, Mahikeng, to review and set aside the contract on the grounds that the tender procedure was unfair, untransparent and uncompetitive. The high court dismissed the application on 15 September 2023, finding that Maximum Profit had failed to establish that the award was reviewable. Maximum Profit appealed with leave. By the time the appeal was heard, the contract had expired on 4 April 2025.

• Whether the appeal had become moot because the impugned contract had terminated on 4 April 2025
• If the appeal was moot, whether it should nevertheless be heard in the interests of justice under section 16(2)(a)(i) of the Superior Courts Act 10 of 2013
• Whether exceptional circumstances existed under section 16(2)(a)(ii) of the Superior Courts Act to justify hearing the appeal to determine the question of costs only
• Whether the procurement procedure followed by the municipality in awarding the contract to Triple M was fair, transparent and competitive in compliance with section 217 of the Constitution, the Preferential Procurement Policy Framework Act 5 of 2000 (PPPFA), and the municipality's Supply Chain Management Regulations

1. The appeal is dismissed. 2. The parties shall bear their own costs.

A court of appeal will dismiss a moot appeal under section 16(2)(a)(i) of the Superior Courts Act unless it is in the interests of justice to hear it. In determining whether to exercise the discretion to hear a moot appeal, a court must consider factors including: whether the order will have practical effect; the importance of the matter; the complexity of issues; the fullness of arguments; and the need to resolve conflicting judgments (per Normandien Farms). An appeal will not be heard in the interests of justice where: (1) the applicable legal principles are well established through existing legislation and jurisprudence; (2) the matter is fact-specific and does not implicate constitutional issues or the rule of law; (3) the factual record before the court is incomplete (in this case, the absence of the full rule 53 record); and (4) the purpose would merely be to provide guidance on future conduct rather than resolve a live dispute. Under section 16(2)(a)(ii) of the Superior Courts Act, save under exceptional circumstances, the question of mootness is to be determined without reference to considerations of costs. No exceptional circumstances exist merely because both parties bear some responsibility for the continuation of proceedings.

The Court observed that the full rule 53 record pertaining to the impugned decision to appoint Triple M was not before the Court, as the municipality initially misunderstood the decision being challenged and filed only the record relating to the panel appointment decision. The Court noted this was significant because without the full record, the Court did not know why or by what process the four panellists were selected or how Triple M was ultimately selected. The Court noted (obiter) that it is not the function of courts to provide legal advice to litigants. The Court distinguished WWF South Africa v Minister of Agriculture, Forestry and Fisheries on the basis that it raised important constitutional and statutory questions about a highly depleted resource, whereas the present case was fact-specific. The Court observed that the issue of financial consequences under the Municipal Finance Management Act and the grant of just and equitable relief was not properly canvassed in the founding papers, and no facts were alleged that would enable the Court to make a sensible determination on appropriate relief. The Court noted approvingly the respondents' concession that it was irregular for the municipality to invite only four of the panellists to submit quotations, though it did not determine whether this irregularity was material enough to vitiate the award.

This case clarifies the application of section 16(2)(a)(i) and (ii) of the Superior Courts Act 10 of 2013 regarding mootness in appeals. It confirms that courts will not hear moot appeals merely to provide guidance on future conduct where established legal principles already govern the issue, where the factual record is incomplete, and where no important constitutional or rule of law issues are engaged. The judgment reinforces that the existence of conflicting judgments is only one factor in the mootness analysis and must be weighed against other considerations, particularly the adequacy of the record and whether the legal principles are already well settled. The case also demonstrates the application of the principle that courts should not determine moot appeals on the basis of costs considerations unless exceptional circumstances exist. The respondents' concession that inviting only selected panel members to quote was irregular, while not determinative, provides guidance on public procurement procedures involving panels of service providers.