There are various cases where a municipality attempts to evade its obligations owed to a service provider in circumstances where the municipality itself has not followed proper internal procurement processes. In these circumstances, a service provider is often prejudiced and will resort to judicial intervention. In a recent high court case, the court intervened and ordered the municipality to pay the monies owed to the service provider under the acknowledgment of debt and repayment agreement concluded between the parties.

The service provider was appointed to restore electricity following a complete power failure. The municipality had part-paid the service provider and refused to pay the outstanding amount. The service provider submitted that they were lawfully appointed to perform emergency electrical repairs. The municipality submitted that the procurement process was irregular and unlawful. The municipality further submitted that the acknowledgment of debt and certificate of compliance could not override the principle of legality if the underlying appointment was unlawful.

A municipality has the authority to deviate from ordinary competitive procurement processes in emergency circumstances. Deviations must be properly recorded and reported to the municipal council as well as the relevant authorities. In this case, there was no evidence that this was not done.

The court found that:

  • The emergency procurement was authorised by the acting municipal manager.
  • The work was completed and certified as compliant by the municipality.
  • The municipality signed an acknowledgement of debt.
  • The service provider was partially paid and the municipality refused to pay the remainder of the amount.
  • The municipality sought to impugn its own contract and acknowledgment of debt by alleging illegality. There was no concrete evidence which was presented to suggest that the emergency was fabricated or that the deviation was unauthorised.

In the circumstances, the municipality was ordered to pay the service provider the remainder of the monies owed to them. This case serves as a reminder to municipalities that they are required to honour their payment obligations to service providers who have duly performed especially in circumstances where the debt was acknowledged.

The court said that “the court cannot allow its processes to be used as a tactical tool to evade lawful obligations or to harass a counter-party who has lawfully performed its duties.” Where a municipality attempts to use court processes to avoid its obligations, it may be faced with a punitive cost order. If a municipality asserts that an unlawful procurement has occurred, it is incumbent upon the municipality to provide evidence supporting this allegation. If the service provider has performed in good faith, even that evidence may not avail the municipality.

Kwende Construction CC v Ditsobotla Local Municipality (604/2024) [2025] ZANWHC 119.