Ekurhuleni metro has lost a legal battle against Telkom’s IT unit, Business Connexion, after abruptly cancelling an R85m tender awarded to the company.
The municipality’s appeal at the SCA to overturn the Johannesburg high court’s judgment that it pay R85m to the company plus interest accumulated over two years, was struck from the roll last week.
The municipality awarded a software licence tender to Business Connexion in 2020 but later cancelled the contract citing budget constraints.
“Inability to pay for a contract freely and voluntarily entered into is no defence in these circumstances,” SCA judge Caroline Nicholls said.
Besides enforcing legally binding contracts, the ruling also exposed the extent of the financial and governance mess besieging the municipality.
The court found the municipality’s main argument that Business Connexion did not provide evidence the software licences were delivered to it as no ground for appeal.
The municipality, instead, provided the court with evidence which led to the finding against it.
“It is the letter of cancellation that sets out in the clearest terms the reason for the municipality’s refusal to pay. Nowhere is the non-delivery of the licences mentioned,” Nicholls said.
“The sole reason provided is that the municipality did not have the money to pay the purchase price because their revenue had been drastically reduced due to Covid-19. It was conceded by the municipality in argument that the reason it did not want the licences was because it was unable to pay for them.”
Business Connexion, which initiated the legal battle in 2022, attached the metro’s bank account and 16 vehicles through the court’s sheriff in November 2023 to recoup funds.
The high court halted attachment of the bank account and vehicles pending the SCA appeal.
Should the metro not pay Business Connexion the money, it risks having its account attached again.
“Our legal team is studying the outcome and we can only comment once this process is concluded,” Ekurhuleni metro's spokesperson Zweli Dlamini told Business Day.
The court found there were no “exceptional circumstances” which warrant an appeal.
“The judgment of the high court led to no grave injustice and did not bring the administration of justice into disrepute,” Nicholls said.
“There are no exceptional circumstances that warrant our reconsideration of the decision of this court to decline leave to appeal. This matter accordingly does not engage the jurisdiction of this court.”
Business Connexion CEO Jonas Bogoshi said “the courts have once again affirmed its position and upheld the principles of contractual and legal accountability”.
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