The eThekwini Municipality faces a significant financial setback after its appeal against a contract dispute ruling was dismissed by the Supreme Court of Appeal (SCA). As a result, the City is now liable to pay R30 million to Daily Double Trading 479 CC, trading as Pholobas Projects. With interest, the final amount could reach approximately R50 million, according to documents seen by The Mercury.
The ruling follows years of legal battles stemming from the City’s decision to cancel contracts with the company. Daily Double Trading took legal action, arguing that the cancellations were unlawful and initially sought R44.1 million in damages. However, an out-of-court settlement reduced the amount to R30 million. When the City failed to pay, the matter returned to court, and in 2022, the Durban High Court ruled that the municipality was bound by the settlement agreement.
Despite this ruling, the City continued to challenge the case, filing for leave to appeal in the KwaZulu-Natal High Court, which was dismissed. The municipality then took the matter to the SCA, which has now also rejected the appeal with costs, upholding the previous judgment.
Municipality Acknowledges Ruling But Uncertain on Final Amount
eThekwini Municipality spokesperson Gugu Sisilana confirmed that the City acknowledges the SCA’s ruling but could not confirm the final amount due, 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,” Sisilana said.
Political Fallout and Criticism
The ruling has drawn sharp criticism from opposition parties, who argue that the City wasted taxpayer money on prolonged and unnecessary litigation. ActionSA provincial spokesperson Sanelisiwe Zuma condemned the municipality’s legal strategy, saying it had been flawed from the outset.
“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 Zuma.
She further stated that instead of engaging in costly legal battles, the City should have sought a fair and efficient resolution. “The continued pursuit of appeals, despite earlier unfavourable rulings, has only exacerbated the financial strain on the City,” she added.
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.
Calls for Accountability
The Democratic Alliance (DA) has also weighed in on the controversy, calling for accountability. DA eThekwini caucus leader Thabani Mthethwa has requested a full report on the matter to be presented before the Executive Committee (Exco) and the City Council.
“If it is found that it was as a result of reckless decision-making, then due disciplinary process must be instituted,” Mthethwa stated.
He also emphasized the financial burden this legal loss has imposed on the municipality, arguing that the funds could have been better spent on improving service delivery instead of legal fees.
With the City already facing financial constraints, this latest legal defeat further complicates its fiscal outlook. As eThekwini struggles with growing debt and service delivery challenges, the fallout from this court battle is expected to add even more pressure to the already strained municipal budget.
