Durban officials appeal costs order over botched tender

Durban - Sixteen eThekwini Municipality officials, including the municipal manager, a lawyer and an engineer, who were ordered to personally pay the costs of litigation over a botched tender award, have been granted leave to appeal the ruling.

However, KwaZulu-Natal High Court in Durban Judge Dhaya Pillay has adopted an unusual stance in the matter, repeating her concerns about the tender award and her criticisms at those involved.

She said in the main, she was only giving the officials permission to appeal "because of the novelty" of the case which involved the right of an organ of state and its employees who did wrong, to appeal against unfavourable costs orders when they refused explain their actions.

She said every single ground raised by the officials had to be prefaced by the questions she had raised and which, in spite of being given several opportunities, the officials concerned had refused or declined to answer, refusing to account for their unlawfulness.

The matter before her concerned the award of three year R81m water loss insurance contract for the city's ratepayers.

READ: Durban officials to pay after landmark judgment in botched tender scandal

Socio-economic catastrophe

Unsuccessful tenderer Westwood Insurance Brokers, cried foul when the tender was awarded to another company - South West Brokers - which, the city later conceded, had tendered professional indemnity insurance when its bid should have been underwritten by an insurance company.

In her original judgment, handed down earlier this year, Pillay said this would have led to a socio-economic catastrophe leaving ratepayers uninsured for often costly water leaks.

After the city's concession, the judge set aside the tender award and ordered that Westwood be giving the contract.

She then directed that all the officials involved in the tender award file affidavits detailing their role in the blunder, giving them an opportunity to explain themselves and say why they should not pay out of their own pockets half of the costs of the litigation, with South West paying the other half.

"Their inefficiencies are unexplained and their unjustified preference for South West is unexplained.

"Whatever the reasons, be it bias, incompetence, negligence or fraud, the lack of transparency and accountability of public officials under the glare of the Constitution was decisive," she said in her original judgment.

Those who had "knowingly acted unlawfully, unconstitutionally and unethically" were the unnamed city manager who approved the award, and the named managers of contracts, water and sanitation, the deputy head of supply chain operations and some members of the Bid Evaluation Committee and the Bid Adjudication Committee.

However, after "trawling through their affidavits" she said no-one had answered the "puzzling question" as to how the entire procurement team had got it wrong.

READ: Court holds municipal workers liable for costs of 'wasteful litigation'

Worrying issue

She then made the costs order, and ordered the present acting city manager to report back to her by the end of July on what steps have been taken to recover the money - and thereafter on the last day of the month until the costs are paid in full.

The city officials launched the application for leave to appeal.

In her latest judgment on the appeal issue handed down this week, Pillay said a worrying issue was whose interests the city was representing in applying for leave to appeal against a judgment entirely in its favour and those of the people its officials were elected to or appointed to represent.

"eThekwini has positioned itself against the judgment. It became clear there was no voice for the people of eThekwini," she said.

"Its stance prompted me to ask the chairman of the Bar Council to assign counsel to notionally represent the people of the city."

In response to one of the arguments raised by the city - that Pillay had not established bad faith or dishonesty on the part of any employees before ordering them to pay costs - the judge said all interested parties had been given two opportunities to explain themselves and none had used those opportunities.

'Little error'

"A refusal to account is unconstitutional," she said.

With regard to a further argument that "the order could terrorise and paralyse employees into not doing their jobs out of fear that every little error would be met with extreme sanction", Pillay said: "No-one took the court into its confidence to disclose what the 'little error' was in this case. It is this refusal to disclose that attracts the punitive costs order.

"That punishment must fit the offence is an essential tenet of our common law now well-entrenched into our constitutional and labour law jurisprudence.

"If an error is indeed little, the sanction will be slight. However, when the consequences for the people of the city are so dire, the error is not little and the sanction of one-fifteenth of 50% of the costs is hardly extreme.

"Honest employees attentive to their responsibilities need suffer no paralysis. If a genuine error occurs, employees can escape liability and punishment, but only if they account fully for how it occurred.

"Without accountability, transparency and remorse, no reprieve is permissible," she said.

The appeal will be heard by three judges in KwaZulu-Natal.

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