eThekwini Municipality faces backlash over R23 million legal fees for R30 million payout
EThekwini Municipality is expected to pay R23 million extra after losing a legal battle to defend R30 million claim
Image: Willem Phungula
The eThekwini Municipality has defended its spending of R23 million in defending a R30 million payout.
Last week, the city lost a bruising legal battle in the Constitutional Court in trying to overturn the lower courts' orders, which had dismissed its bid with costs.
The latest ruling drew the ire of political parties and Cooperative Governance and Traditional Affairs MEC Reverend Thulasizwe Buthelezi, who also categorised the city's costs as wasteful expenditure, which he said must be recovered from the officials responsible for them.
The ruling also drew attention to the city's former deputy manager, Sibusiso Makhanya, who, through his attorneys, penned a letter to Mayor Cyril Xaba asking him to take action against City Manager Musa Mbhele, whom he said was liable for this wasteful expenditure.
Makhanya gave the mayor five days to take action or face potential legal consequences. He argued that the city charged him for causing it to incur costs similarly; therefore, to be consistent, the city must also charge Mbhele.
The company, Daily Double Trading, has already calculated its total costs to R53 million and demanded that the city pay within five days.
In the city's response to Makhanya, it defended the legal costs, saying the monies expended in defending the ratepayers' money did not constitute wasteful expenditure.
'There has never been an instance where the legal costs, for work done by the legal representatives, constituted wasteful expenditure, irrespective of the court outcome,' read the letter.
The city further stated that the Executive Committee (Exco) fully supported the decision to approach the Constitutional Court and the Exco's resolution was reported to the council meeting of March 31, which also supported it; therefore, there was no need to refer the matter to the Financial Misconduct Disciplinary Board which Makhanya called for.
Makhanya dismissed the city's assertion that the cost does not constitute wasteful expenditure, saying in terms of the Municipal Finance Management Act, fruitless expenditure is defined as an expenditure that was made in vain and would have been avoided had reasonable care been exercised.
He said if the mayor does act, he would go to court as he indicated in the letter.
The municipality has been in a legal battle since 2018 with the electrical company, Daily Double Trading, known as Pholobas. The company claimed it was legally blacklisted by the city and had done work for the city to the value of over R40 million.
After the municipality objected, the business was granted a preservation order. The sheriff attached the city's assets, but the parties reached an out-of-court settlement in which the city, through its attorney, allegedly promised to pay the company R30 million, which the company accepted, but the city later disputed.
The matter went to court again in 2021, however, the city did not oppose it, and the court ordered the city to pay R30 million with 10% interest from 2018.
The municipality filed a leave to appeal, which was dismissed, and went straight to the Supreme Court of Appeal, which also dismissed the matter.
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