The eThekwini Municipality will have to fork out millions of rand after it lost its bid to overturn a court ruling that found it liable to pay a company the sum of R30 million related to contracts cancelled years ago.
Following the Supreme Court of Appeal’s (SCA) recent dismissal of its special leave to appeal application, the City may have to pay out around R30m, plus interest, to Daily Double Trading 479 CC, trading as Pholobas Projects.
A document seen by The Mercury suggests that the final amount, including interest, could be around R50m.
According to the SCA order, the municipality’s application was dismissed with costs, effectively upholding the Durban High Court’s judgment. The Mercury has previously reported that the matter dates back several years and came about after the City cancelled contracts that the company had with it.
The company took the City to court to seek an order that the cancellation of the contracts be declared unlawful and for the court to rule that the municipality was indebted to the company in the sum of R44.1m – the amount owing for the cancelled contracts.
However, an out-of-court settlement was reached where the City was to pay R30m to the company. When the City failed to pay, the matter went back to court, and the court ruled in 2022 that the City was bound by the reached agreement. When it failed to pay up again, the company attached its assets.
The City sought leave to appeal the high court judgment, which was dismissed by the appeal court in KwaZulu-Natal last year, and then filed a special leave to appeal with the SCA, which has now also been dismissed.
In response to questions, eThekwini Municipality spokesperson Gugu Sisilana said the City acknowledges the SCA court order.
She said the City, however, could not provide a final amount owed, including interest. “We are unable to comment on the accuracy of the interest amount. The City will consult with its legal team and seek legal advice on the matter,” said Sisilana.
ActionSA has welcomed the SCA’s ruling, criticising the municipality for wasting public funds on prolonged litigation instead of prioritising service delivery.
“This ruling confirms what we have long argued: that the municipality has been wasting ratepayers’ money on unnecessary and prolonged litigation instead of focusing on service delivery,” said ActionSA provincial spokesperson Sanelisiwe Zuma.
She added that the municipality’s legal strategy had been flawed from the outset, and the situation could have been avoided had the City taken a responsible approach. “Instead of engaging in a costly legal battle, the municipality should have sought a fair and efficient resolution to the dispute. The continued pursuit of appeals, despite earlier unfavourable rulings, has only exacerbated the financial strain on the City.”
ActionSA also warned that the financial burden of this legal defeat would worsen eThekwini’s existing financial challenges.
“The municipality is battling a financial crisis, with escalating debt and deteriorating infrastructure. This additional financial setback will divert funds from critical services such as water provision, road maintenance, and electricity infrastructure,” Zuma said
.DA eThekwini caucus leader Thabani Mthethwa has called for a full report on the matter to be presented before the Executive Committee (Exco) and council.
“If it is found that it was as a result of reckless decision-making, then due disciplinary process must be instituted,” he said. Mthethwa also highlighted the financial burden the municipality now faces, arguing that the funds could have been used to improve service delivery.