Menzies Aviation (Namibia) (Pty) Ltd v Namibia Airports Company Limited NASC – tacit relocation of agreements and abuse of process
In 2014, the Namibia Airports Company (NAC) entered into a written agreement with the appellant, Menzies Aviation (Namibia) (Pty) Ltd (Menzies) to perform ‘ground handling services’ at the Hosea Kutako International Airport (HKIA). The agreement was to be for an initial period of five years commencing on 1 January 2014. It had a renewal period of another three years, which was implemented leading to a termination date of 31 December 2021. Prior to the termination date, new bids were invited in respect of the ground handling services at the HKIA. A further extension of six months up to 30 June 2022 was agreed to between the NAC and Menzies in January 2022, subject to a month’s written notice of termination should the procurement process pending at the time be finalized prior to the said termination date. This procurement process was for ground handling services at the HKIA upon the termination of the agreement with Menzies. The mentioned procurement process involved a public bidding process as required by the Public Procurement Act 15 of 2015, which also prescribed certain requirements relating to this process.
Both Menzies and the second respondent (Paragon) partook in the procurement process as bidders. The bid of Menzies was disqualified on the basis of non-compliance with certain tender conditions and the bid of Paragon was accepted by the NAC. Menzies, aggrieved by its disqualification, took the matter to the Review Panel constituted in terms of section 58 of the Public Procurement Act, 15 of 2015, but the review was dismissed by the Review Panel in February 2022.
Per the letter dated 31 March 2022, the NAC gave notice of termination of the agreement between it and Menzies effective from 30 April 2022. Menzies disputed the lawfulness of this notice and per a letter dated 22 April 2022, the NAC withdrew the said notice of termination and informed Menzies that they stood by the termination date of 30 June 2022 as provided for in the extension of the original agreement.
In the meantime, on 11 April 2022, Menzies launched a review application against NAC and eight other respondents (including the Review Panel) taking issue with the constitutionality of section 4(2) of the Public Procurement Act and alleging that the magnitude of the tender was such that the NAC acted ultra vires the powers granted to it to conduct the procurement process itself when it had to be dealt with by the Central Procurement Board of Namibia. In addition, it sought a review of the procurement process based, essentially on its disqualification as a bidder, and hence its exclusion from the evaluation of the bids.
An undertaking was also sought in the letter of 22 April 2022 by the NAC from Menzies that the latter would vacate the premises of the NAC at the HKIA when the agreement between them expired through the effluxion of time and when Menzies refused to give such an undertaking the NAC launched an urgent application on 27 May 2022 seeking a declarator that the agreement would terminate on 30 June 2022 and that Menzies would be obliged to, on that day, cease to provide services to the NAC and give vacant occupation to it of the premises used by Menzies which they occupied to render the services pursuant to the agreement with the NAC.
Menzies opposed this application essentially on the ground that there was a tacit relocation of its agreement with the NAC pending its review application and also launched a counter-application for relief, which Menzies stated amounted to a collateral challenge to the relief sought in the urgent application. This counter-application included an application for an interim interdict allowing Menzies to continue to render the ground handling services pending the review application and averred that the value of the bid for the ground handling services was such as to fall outside the statutory mandate of the NAC and that the central procurement board was the entity which had to conduct the whole bid process.
The court a quo granted the orders sought by the NAC in its urgent application and struck the counter-application from the roll. This was mainly a result of the court a quo’s finding that the Review Panel had to be joined as a party to the counter-application. In both instances, an adverse costs order was granted against Menzies. Two notices of appeal were filed against the whole of the order of the court a quo.
On appeal, the appellant raised several grounds of appeal some of which related to the stay application and the failure to allow oral evidence and cross-examination – these were not persisted with. What remained to be determined was the main application and the collateral challenge to it relating to the monetary threshold point raised as a ground of appeal. Whether it was necessary to join the Namibia Civil Aviation Authority (NCAA) in the main application. Whether there was a tacit relocation in respect of the ground handling agreement between the NAC and Menzies that entitled the latter to continue its occupation of the premises at HKIA so as to provide its services beyond June 2022. Whether the main application amounted to an abuse of process. And whether the threshold point amounts to a successful collateral challenge to the main application.
The Supreme Court considered the appeal and stated the following in respect of tacit relocation of agreements:
‘[39] On the facts Menzies thus did not accept that the notice of cancellation was valid as suggested in the answering affidavit. They maintained the opposite. Furthermore, the reinstatement of the agreement (if it was in fact reinstated) was not done unilaterally as suggested in the answering affidavit. It was done with the consent or acquiescence of Menzies who clearly accepted it as it was in line with their approach at the time that the cancellation was invalid, and that the agreement remained unaltered which is also evident from their conduct in seeking an extension of the agreement subsequent to the withdrawal of the cancellation.
[40] The upshot of the above is that Menzies did not even come close to discharging the onus on them to prove that the parties’ conduct was such as to accept that the cancellation letter terminated the agreement and that their conduct after the termination of the agreement was such to give rise to an inescapable inference that the agreement was tacitly relocated. The evidence established that from the perspective of the parties, a disputed cancellation was resolved by an agreement between them to proceed with the original agreement. The court a quo thus correctly dismissed the reliance on a tacit relocation of the agreement by Menzies.’
In respect of abuse of process, the following:
‘[43] Nothing more needs to be said on the above point as it is so lacking in merits that I am surprised that it was persisted within this court. The NAC awarded a contract to Paragon and for Paragon to be able to render its services, it had to be given access to the premises at the HKIA. NAC was contractually bound to give them that access. In addition, the NAC is the owner of the HKIA and must render the services there in this regard which it decided to do through the agreement with Paragon. The NAC was thus the natural party to bring the proceedings. To suggest that it would assist an ‘invasion’ of the airport is clearly misplaced. The entity, which unlawfully refused to vacate the premises and, in this sense, invaded the rights of the NAC, and can hence arguably be described as an invader, is Menzies. The latter stayed on without any right whatsoever and refused to vacate on the basis of a fabricated defence based on a tacit relocation of an expired agreement.’
It was therefore held that:
a) In terms of sections 4(1) and 5(2)(a) of the Airports Company Act 25 of 1998, the NAC is in charge of the management and control of the HKIA, and this capacity entitles it to enter into agreements with persons to render services that need to be performed at the HKIA on its behalf. The NCAA has no role in the appointment of a service provider by the NAC or to assist the latter with its functions and has no interest in such appointment save to ensure that, where applicable, such service provider renders such services on behalf of the NAC in conformance with the applicable civil aviation standards and procedures applicable to Namibia. The NCAA has no direct and substantial interest in who the NAC contracts with to render service on its behalf. The NCAA further has no direct and substantial interest in a dispute between the NAC and a potential service provider. The court a quo was correct to dismiss the non-joinder point.
b) Whether the agreement between Menzies and NAC was tacitly relocated must be determined on the circumstances and facts of this matter and such relocation must arise unequivocally as an inference from such circumstances and facts. On the facts, Menzies did not accept that the notice of cancellation was valid. The reinstatement of the agreement was not done unilaterally as Menzies suggests in its answering affidavit – it was done with its consent or acquiescence as Menzies clearly accepted it as it was in line with their approach at the time that the cancellation was invalid, and the agreement remained unaltered which was also evident from their conduct in seeking an extension of the agreement subsequent to the withdrawal of the cancellation. Further, Menzies did not discharge the onus on it to prove that the parties’ conduct was to accept that the cancellation letter terminated the agreement and that their agreement after the termination gave rise to an inescapable inference that the agreement was tacitly relocated. The evidence established is that a disputed cancellation was resolved by an agreement to proceed with the original agreement between the parties. The court a quo thus correctly dismissed the reliance on a tacit relocation agreement.
c) The collateral challenge is not the right remedy in the circumstances. The rule of law demands that Menzies’ unlawful hold over the premises and forcing NAC to make use of its services should be put to an end. As Paragon was awarded the bid, and that award had not yet been set aside, it should be allowed to act in accordance with the bid as it is willing to do. The lawfulness or otherwise of the awarding of the bid falls to be decided in the pending review application in the High Court as this is where these matters are normally determined and there is nothing before court to indicate this will somehow run contrary to the rule of law.
The Court concluded and ordered that:
‘[57] It follows from what is stated above that the appeal cannot succeed and that the application to adduce further evidence in this Court falls to be dismissed. As far as the costs are concerned, there was no submission on behalf of any party that the normal costs order would not be appropriate in this matter, and I agree. Further, there was also no dispute that the costs order should include the costs of one instructing and two instructed counsel where utilized given the voluminous nature of the matter and the complexity of the issues raised. This was indeed a case where the use of two instructed counsels was warranted and reasonable.
[57] In the result, I make the following order:
1. The appeal is dismissed with costs.
2. The application to adduce new evidence is dismissed with costs.
3. The costs referred to above shall include the costs of one instructing and two instructed legal practitioners in respect of the first respondent and the costs of one instructing and one instructed legal practitioner in respect of the second respondent.’
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