The legal battle between the eThekwini Municipality and a service provider who is demanding R30 million from the city is heading to the Constitutional Court.

The Mercury is in possession of court papers indicating that the municipality has lodged an appeal with the apex court in its dispute with Daily Double Trading 479 cc/Pholobas Projects.

EThekwini Municipality spokesperson Gugu Sisilana yesterday confirmed that the “City has filed a leave to appeal application with the Constitutional Court”. She declined to comment further.

The city is applying to the Constitutional Court to appeal previous judgments that had found in favour of the company in this dispute. The municipality has been involved in a legal tussle over cancelled contracts with Daily Double Trading 479 that dates back to 2018.

At the centre of the dispute is an agreement struck by the city's lawyer, identified as Mr Moloi, with Daily Double Trading 479. The court papers show that the city had cancelled the contracts between it and the service provider after an investigation revealed irregularities in how the contracts were awarded.

The service provider launched a legal challenge against the cancellation of their contracts. Moloi engaged with the service provider on behalf of the city and represented that the city was offering a R30 million settlement.

The municipality said Moloi did not have the authority to do this, and it is not aware who gave him the authority to enter into the arrangement.

Furthermore, it said that even the city manager, the highest official in the municipality, would not have had the power to enter into such an agreement without a resolution from the council.

In its court papers, the city claims that constitutional matters are being violated.

An affidavit deposed by city manager Musa Mbhele details the city’s legal position in the matter, including what it views as shortcomings in the previous judgments that went against the city.

“This court has jurisdiction for several reasons; firstly, this matter relates to the lawfulness of the settlement agreement purportedly concluded by functionaries of the organ of state exercising public power. This court held that the exercise and control of public power is always a constitutional matter.

“The matter squarely raises a constitutional issue since it turns on the proper interpretation of the Municipal Finance Management Act (MFMA). This court has stated that the proper interpretation of legislation is a constitutional issue, particularly when it concerns the exercise of public power by public functionaries,” the court papers state.

One of the points highlighted was the validity of the agreement and whether it is permissible for a high court to speculatively conclude that a municipal manager (then city manager Sipho Nzuza) not having the authority to approve or make financially related decisions exceeding R5 million did not negate the possibility that some other functionary within the municipality possessed such power.

It was noted that this issue arises in light of eThekwini’s undisputed and common cause evidence that the municipal manager, as the highest-ranking official and chief accounting officer, had refused to sign off on the purported agreement because only the council had the power to do so.

“The case has serious ramifications that could affect the exercise of public power. The municipality is pleading for leave to appeal to be granted because the matter involves a substantial amount of public money.”

The municipality also said the case will have serious implications for municipalities across the country and asked the court to clarify the ambit of an attorney’s competency to enter into settlement agreements on behalf of municipalities and similar organs of state where the relevant functionaries, i.e., municipal managers and councils, whose authority is derived from the MFMA, have not consented to or ratified any such settlement agreement.It argues that if it were to be held that such agreements can stand where lower-level employees could approve payments, millions of rand would be lost as a result of errant employees.

“To this day, I, as a municipal manager, simply do not know who purported to authorise the lawyer (Mr Moloi) to offer Daily Double Trading R30m. Moloi’s version was simply that the decision to make the offer was taken by undisclosed municipal advisers. What is clear is that Mr Moloi never said that the unnamed and unknown legal advisers had any authority to instruct him to conclude the agreement. No decision could be concluded without the full council and the accounting officer of the municipality,” concluded the affidavit by Mbhele.

THE MERCURY