The eThekwini Municipality will have to fork out about R30 million plus interest to pay a service provider after losing an appeal in a legal matter that dates back almost six years.
The City is involved in a long-running contractual dispute with the company Daily Double Trading 479 cc/Pholobas Projects that led to some of the municipality’s assets being seized in 2022. The case was heard by three judges, and the judgment was handed down in the Pietermaritzburg High Court on October 7.
This followed after the municipality had successfully petitioned the Supreme Court of Appeal (SCA) for leave to appeal.
The saga between the City and the company has been continuing for close to six years.
In 2022, the City was left embarrassed after the sheriff of the court seized assets belonging to the electricity department in connection with this case.
The latest appeal judgment states that the company had contracts with the City, two of which were found to be irregular by the municipality, which cancelled them.
In 2021, the company also alleged it had been blacklisted by the municipality, but the City denied this.
The company took the City to the Durban High Court, demanding that the cancellation of the contracts and the blacklisting be declared unlawful and for the court to rule that the municipality was indebted to the company in the sum of R44.1 m – the amount owing for the cancelled contracts.
However, before the court could hear the matter, an out-of-court settlement was reached by the parties.
The appeal judgment noted a lawyer representing the municipality, identified as Mr Moloi, had reached out to the company’s legal representatives and said he had been directed by the City to offer a settlement of R30m. The settlement was accepted by the company.
But when the municipality failed to pay, the company again approached the Durban High Court and sought to have the settlement made an order of the court.
The matter was set for oral evidence, but the City did not lead any evidence, nor did it call on Moloi to testify.
The Durban High Court found in the 2022 judgment that the City was bound by the agreement and ordered it to pay the company the sum of R30m plus interest at the rate of 10.5% from February 2, 2018, to the date of final payment.
When the City failed to pay in terms of the order, its assets from the electricity department were attached. The assets were returned when it filed the petition with the SCA.
In its appeal, the City argued that the initial application was incompetent in law as it sought to challenge an administrative decision which should be challenged in a review application.
It was further argued that Moloi had no authority to enter into the settlement agreement.
The appeal judges ultimately found that some of the issues being raised by the City were new and had not come before the high court previously.
They found that the City had the same information when the first matter was heard and nothing had stopped it from presenting those arguments at that time.
They said the City had not led evidence that Moloi was not permitted to settle the litigation and the court had heard the evidence of a Mr Ngcobo for the company, which was not challenged on the settlement agreement.
Dismissing the appeal, they noted that from the evidence led and produced at the hearing, Moloi had the ostensible authority to conclude the settlement agreement, which was sufficient for finding that a valid settlement agreement had been concluded.
City councillors on Thursday said that the matter had been mishandled from the outset. They asserted that those responsible should be held personally to account, adding that ratepayers cannot be made to pay for wrongdoing by City officials.
DA councillor Thabani Mthethwa stated that City officials who were implicated in how this matter unfolded should be held accountable.
“This is exactly what the problem is with the municipality. Why should the ratepayers foot the bill because someone dropped the ball and didn’t do what they were supposed to do? Action must be taken against those responsible, and they must be made to pay from their pockets.”
eThekwini Municipality’s spokesperson, Gugu Sisilana, confirmed that as the appeal was dismissed, the City was liable to pay the company but said it was premature to state the amount payable because it had not been calculated by the municipality.
She added that the City was exploring its legal options.
“The City manager has decided that we should take legal advice on the possibility of pursuing an appeal."
Asked about the previous incident where its assets were attached, she said: “The removal of assets was not done by the municipality; therefore, we have no control over the actions of a third party.
“However, we shall follow the correct legal processes to protect the interests of the municipality, as we did previously when the assets were returned.”
The Mercury