A R6.54bn claim against Transnet, the KwaZulu-Natal department of transport and eThekwini Municipality for devastating flood damage to the Toyota South Africa Motors (TSAM) vehicle assembly plant in Prospecton, Durban, in 2022, could potentially open the door to more litigation by SA companies hurt by failing infrastructure.
TSAM was forced to halt vehicle production for four months after flood defences around the Prospecton industrial area collapsed in April 2022.
At the time, company president Andrew Kirby called it "the biggest crisis in the history of this company". Japanese parent Toyota Motor Corp deemed it "the most comprehensive damage to one of our global production facilities as a result of a natural disaster".
Three years on, the three accused parties face a hefty bill for their alleged part in the disaster.
The case has been brought in the high court in Durban by TSAM’s Japanese insurer, Tokio Marine & Nichido Fire Insurance.
It alleges that the floods, which closed the Prospecton plant for four months, cost TSAM almost R4.5bn in plant repairs and rehabilitation and more than R2bn in business interruption. The suit, which claims interest on the sum, alleges that by failing to maintain waterways and drainage systems that carried the floodwater, the three defendants shared responsibility for the damage.
Craig Woolley, a partner in law firm Norton Rose Fulbright SA that is acting for Tokio Marine and TSAM, said that several other Prospecton companies affected by the 2022 floods were also taking action against the three parties.
A lawyer unconnected to the case said the outcome would be watched closely by other SA businesses whose operations are hurt by failing state-owned services and infrastructure. "A successful case on behalf of Toyota could encourage others to seek compensation from municipalities and state-owned enterprises whose failure to deliver causes them losses," he said.
Woolley said that though TSAM is the official plaintiff in the case, Tokio Fire is the active participant. "Toyota suffered the loss and the insurers are claiming by virtue of subrogation, which allows the insurer to step into the shoes of the insured for the purposes of a recovery action."
TSAM said in a statement: “Tokio Marine are the insurers of TSAM, to whom the company submitted its claim in respect of the flood.
“The litigation proceedings are not being facilitated and/or funded by TSAM. Accordingly, TSAM will not benefit in any way from the subrogated recovery action against these entities.”
Stormwater management
Transnet, says the court claim, owns the Umlaas canal, which is supposed to divert the Umlazi River around the Prospecton industrial area, and is responsible for the canal’s maintenance. The stormwater management system, the responsibility of the provincial department of transport, includes diversion berms, ridges of compacted soil designed to redirect water around flood-prone areas.
Critically, they are also intended to divert sediment-laden water.
The municipality was responsible for the overall management and maintenance of the Prospecton stormwater management system.
On or about April 12 2022, however, say court documents, the "structural integrity" of the canal and berm were compromised and stormwater flowed into Prospecton "in an uncontrolled fashion". And not just water. Thousands of tonnes of mud and silt blanketed the floors of the Toyota plant, jamming machinery and preventing a quick cleanup after floodwaters receded. Much of the machinery had to be dismantled and rebuilt.
At the time, Kirby estimated potential damage to be in the "tens of billions of rand". This included the scrapping of 4,000 built vehicles awaiting collection from the company’s low-lying stockyard.
Prospecton builds the Hilux bakkie, Fortuner SUV, Quest and Corolla Cross cars, HiAce minibuses and Hino trucks and buses. About half of production is exported, mainly to Europe.
Immediately after the flood, TSAM predicted a 33% drop in planned vehicle production in 2022 and potential sales revenue losses of over R27bn.
In the event, loyal customers prepared to wait months for delivery, extraordinary product support from the rest of the global Toyota network, and quicker-than-expected plant reopening, minimised the financial damage.
If Transnet, the department of transport and municipality are found liable for R6.5bn — plus interest and costs — they may reflect that it could have been a whole lot worse.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.