Makana ordered to pay for terminated contract

The broke Makana municipality has clocked up millions of rands in interest and damages after it unlawfully terminated a contract for a sewerage reticulation project.

Give Ziyawa Construction was awarded a R3.6-million contract in 2007 for sewerage reticulation in Extension 6 in Grahamstown.

But, according to court papers, the municipality in 2009 unlawfully terminated the contract.

Give Ziyawa Construction’s attorney, Michael Botha of Joubert Galpin & Searle attorneys says in an affidavit that the matter was referred to arbitration.

Botha alleged that the municipality used delaying tactics to dodge arbitration for over two years.

Finally, after Makana municipality failed to attend an arbitration hearing in June, East London-based arbitrator Mike Rivarola ruled that the contractor was entitled to claim damages and other costs. He awarded Give Ziyawa Construction R10.5-million in delay costs, damages, and other costs.

The municipality was also ordered to pay the costs of arbitration which amounted to R294000.

It will also have to pay interest on the amount.

Botha said the municipality had displayed a total and utter disregard of its legal, public, moral and financial obligations throughout the process.

The construction company this week successfully applied to the Grahamstown High Court to make the arbitration finding an order of court.

Botha said that unless it was made an order of court, the contractor would not be able to enforce the award.

He said Makana municipality made it clear it would avoid coughing up the money owed for as long as it could.

Judge Jeremy Pickering granted the application to make the arbitration an order of court, ordering the municipality to pay the R10.5-million owed to the contractor in terms of the award.