R5m breach of contract claim against municipality dismissed - with costs
Johannesburg - A company that claimed over R5 million from the Makhado Municipality in Limpopo for breach of a contract, which both parties admitted was awarded irregularly, won’t get a cent.
The Supreme Court of Appeal (SCA) delivered a scathing judgment against Gobela Consulting in its legal battle against Makhado Municipality dating back to 2011.
In addition to ruling that Gobela was not entitled to any payment, SCA Judge Mahube Molemela slapped the company with legal costs. This would include costs for two counsels.
“There is no reason to depart from the general rule that the costs must follow the result,” Judge Molemela said. “The case was not of such complexity as to warrant the employment of two counsel.”
Gobela had sought to appeal a 2017 judgment of the Limpopo High Court that went against them.
Judge Fikile Mokgohloa ruled then that the contract could not be enforced because it was awarded irregularly.
Gobela was awarded the contract in 2011 after its owner, Abaphumane Mavhandu‚ submitted an unsolicited proposal to the municipality.
Mavhandu proposed to train Makhado’s officials on corruption and fraud prevention. He had apparently read in a newspaper that the municipality faced fraud and corruption.
The municipal manager then awarded Gobela a contract to train 745 officials, which included councillors.
Mavhandu’s preparations for the job included hiring professionals and support staff and also drafting and printing manuals for training.
But he was informed on the day training was due to begin that it would not, owing to unresolved issues between the mayor and the ANC Youth League.
As time went by and Gobela was not called, Mavhandu issued the municipality with an invoice for payment of over R6.3m for training staff members and councillors.
Mavhandu subsequently issued a summons against the municipality, in which he claimed R5.1m as damages for alleged breach of contract.
But the same problem that collapsed his company’s case at the high court also haunted him at the SCA.
He had to prove that Gobela was entitled to payment despite the contract being awarded without a competitive tendering process.
Said Judge Molemela: “Of significance is that on Gobela’s own version, the contract concluded between Gobela and the municipality emanated from an unsolicited proposal made to the municipality outside its normal bidding process and accepted by the erstwhile municipal manager without authorisation.”
She found that the high court was correct to find that the contract was invalid and unlawful, despite the municipality not having brought an application to review and set it aside.
“Moreover, a finding in favour of Gobela would have the equally untenable result that the municipality would essentially be paying for a benefit it did not receive, notwithstanding the undisputed assertion that it had budgetary constraints,” Judge Molemela added.
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