South Africa
Court holds municipal workers personally liable for costs

On 5 April Judge Dhaya Pillay of the Kwazulu-Natal High Court in Durban handed down a judgment with potentially far reaching consequences for future government litigation.

Pillay ordered several employees of the eThekwini Municipality personally liable for half the costs of the litigation.

Ordinarily, the government or department would be liable if the case is against individuals acting in an official government capacity.

However, in the eThekwini case, the judge found that the employees had acted so carelessly that they should be liable for the costs of the application.

Background

The judgment follows an order Pillay made in December concerning the award of an R80 million tender to NC South West Brokers (South West) by eThekwini Municipality.

Westwood Insurance Brokers, an unsuccessful bidder, challenged the award of the tender on the grounds that South West did not meet its requirements.

In May 2015, the eThekwini Municipality advertised a tender to procure water loss insurance for damage from underground leaks. As part of the procurement process, bidders were required to provide some proof of underwriting insurance.

Bidders also had to be registered with the Financial Services Board. South West did not meet either of these requirements.

In fact, it appears that South West’s bid does not provide water loss insurance. Instead it actually offers professional indemnity insurance, something completely unrelated to the tender.

The court found that the difference between the two kinds of insurance should have been obvious to the employees who put out the tender.

When the award was challenged in court, eThekwini insisted that South West had met the requirements of the bid.

Officials made statements under oath to this effect but failed to produce any letters of undertaking or other evidence that South West was providing water loss insurance.

Eventually, the court made an order requiring eThekwini to produce a letter of undertaking.

In response, the municipality submitted a letter of undertaking in which South West said that it provided professional indemnity insurance!

Following all this, the court found that the award of the tender to South West was “highly questionable”.

In light of the evidence, the court found that there was a “lack of transparency and accountability of public officials and persons performing public duty” when awarding the tender to South West. The award was set aside.

By: Safura Abdool Karim – GroundUp

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