Judge “reluctantly” orders MEC to pay R27m after unlawful undertakings by officials

Staff reporter

Bloemfontein – The Free State High Court Judge Daniso, has ordered MEC of Public Works and Infrastructure to pay a combined R27 million plus 12% interest following an unlawful undertaking by officials.

This relates to the application in 2021 by NEXOR 312 (PTY) LTD trading as VNA Consulting.

According to the court judgment VNA Consulting was:

On 9 July 2021 letters of demand were transmitted to the respondent’s Supply Chain Director of Management of the Public Works Department, Mr. Khaya Radebe, and the head of its Project Management Unit Mr. Freddy Tokwe respectively. Radebe and Tokwe responded by providing written undertakings to pay the invoices. Annexures “VN4” dated 13 July 2021 and “VN7” dated 15 July 2021 are the written undertakings stating the following:

re: Outstanding IDMS fee claims

Dear Mr. Raghubir

The Free State Department of Public Works and Infrastructure herewith acknowledges receipt of your letter dated 09 July 2021.

Due to the COVID-19 pandemic, all government-allocated funds of the Department were, and are still, being reprioritized in fighting and curbing the pandemic.

This together with the reduced budget has impacted negatively on the day-to-day business of the Department.

The Department of Public Works and Infrastructure are committed to honoring its commitment to VNA Consulting once the Department’s budget allocation for the 2021/22 financial year has been confirmed and finalized.

Further to the above, please be so kind as to provide more clarity on the description of work under invoice FS1048.
I trust that you find this in order.”

Based on the above undertaking VNA Consulting argued the inability to pay is none of their business.

“The applicant submits that the respondent’s inability to pay its debts due to budgetary constraints is of no concern to it.

The applicant is severely prejudiced by the respondent’s failure to make the payments as the invoices have been outstanding for a considerable time and the interest set by the respondent at 2% per annum for unpaid invoices is quite meager considering the prevailing current interest rates.”

In defense, the department argued that the undertakings were not authorized and Judge Daniso explained.

“As regards, the written undertakings to pay given by Messrs Radebe and Tokwe on behalf of the respondent, it is the respondent’s case that these officials are not the respondent’s accounting officers.
They acted without the authority of the accounting officer and such authorization their decisions are invalid and accordingly not binding on the respondent.”

Before handing Judgment, Judge Daniso referred to another judgment in that an unlawful act can produce legally valid consequences if not set aside.

Does the judge admit the act of both Radebe and Tlokwe were unlawful?

In the circumstances, I am satisfied that the applicant has made a case for the relief it seeks. The applicant’s claims prevail.

Resultantly, the following order is made:

1. Judgment is granted in favor of the applicant in respect of:

1.1. Claim 1, payment in the amount of R17 613 073.40 together with interest at the rate of 12% per annum calculated from 1 November 2020 to the date of payment.

1.2. Claim 2, payment in the amount of R10 333.440.00 together with costs and interest at the rate of 12% per annum calculated from 1 November 2020 to the date of payment.

2. The respondent shall pay the costs.

This is a developing story.

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