High Court orders City of Cape Town to pay over R8 million to contractor

THE City will have to pay more than R8 million to a construction company for work done on a new electrical depot in Hout Bay after a protracted legal dispute over project delays, contract termination, and unpaid claims.

The dispute dates back to 2020 when Pro Khaya Construction was suspended from the site and later terminated the contract, citing repudiation by the City. 

The matter was referred to adjudication, where Pro Khaya was awarded payment for outstanding work and additional costs. The City challenged the adjudicator’s decision in court, but the Western Cape High Court recently found no grounds to interfere and upheld the adjudicator’s ruling.

Acting Judge Zuko Mapoma ruled: “In this application, Pro Khaya has succeeded. The respondent is ordered to comply with the Adjudication Determination dated 10 March 2023 published by the Adjudicator Adv JG Vasserman SC.

The City was dealt another blow when the judge dismissed its counter application to set aside the adjudicator’s determination.

Pro Khaya was appointed in 2018 to build the new depot, which included a double-storey administration building, guardhouse, parking structures, and boundary wall - a project valued at over R34 million. 

The City handed over the site in January 2019, but the project was plagued by delays, disputes over timelines, and tension between the contractor and the principal agent, EBESA Architects, according to the court papers.

The issue of the termination of the contract mutated into a dispute that was referred to an adjudicator.

Although an initial 2021 adjudication found Pro Khaya’s termination of the contract invalid, the company later initiated two further adjudications in March and November 2022  over unresolved issues. These included the City and its agent’s failure to issue a final account, certify outstanding payments, return construction guarantees, and recognise claims for time extensions due to delays and civil unrest. 

A new adjudicator was appointed in January 2023 and, after the City failed to participate, he issued a default ruling in March 2023 in favour of Pro Khaya.

“Pro Khaya contends that the City is bound to comply with the adjudicator’s determination, because the latter is an outcome of a dispute resolution mechanism that was employed to resolve a dispute that arose between the parties under the JBCC agreement and its rules, which is the alternative dispute resolution mechanism agreed upon by the parties. 

“In resisting the application, the City launches a two-pronged approach in attacking the adjudicator's determination. In its first leg, the City contends that the adjudication determination is invalid and unenforceable for lack of jurisdiction on the part of the adjudicator,” court papers stated. 

The City further argued that the determination award was “manifestly unjust and cannot be sustained”. 

“The adjudicator acted unreasonably, inexpertly and ultra vires; the adjudicator’s determination was made on a default basis; the determination was incompetent in terms of the JBCC contract procedure,” the City had said.  

However, Judge Mapoma found: “On the facts, it seems to me that the adjudicator considered the contractors submission and delivered a written determination and expressed reasons for his decision. Accordingly, the Court does not find any reason to set aside the determination. Consequently, the counter-application seeking to review and set aside the determination must fail.” 

The City said the judgment was being reviewed to "determine the appropriate next steps".

Lawyers for Pro Kaya did not respond to requests for comment by deadline.

Cape Times