Bhisho runs out of options after 17-year legal battle

The Eastern Cape public works department has lost a last-ditch legal effort to avoid paying a firm of architects about R115m in damages.

The 17-year-long legal battle is likely to see Ikamva Architects get at least R115m in damages plus interest for work they were never allowed to do on the upgrade on East London’s Frere Hospital.

The original damages amount of R41m, which the high court in Makhanda ordered the department to pay in 2015 has, in the interim, swelled to about R115m with interest.

The legal and administrative bungling by the department and its legal advisers has earned it some harsh comment from judges over the years.

At one point, the department inexplicably waived a century-old legal rule in terms of which the interest on a judgment debt can never amount to more than double the capital amount.

The so-called in duplum rule would mean that the department could never be liable for more than double the R41m capital amount it was ordered to pay Ikamva — even though its unsuccessful court challenges drew out the legal fight to over a decade.

But, by waiving this rule, the department will continue to pay the full 15.5% per annum interest until the debt is paid in full.

To date, lawyers estimate this stands at about R115m — almost treble the original damages.

This will continue to grow by about R17,000 a day until it is paid in full.

The debacle started with an absurd administrative bungle in 2003 when public works initially appointed Ikamva to do the consulting work on the massive Frere Hospital upgrade project.

Soon after the contract was signed and Ikamva was lining up to start work, the provincial health department, via its implementing agent, the Coega Development Corporation, advertised for and appointed another firm to do the same work.

Ikamva successfully sued for R41m for unlawful repudiation of the contract. This is the profit it says it would have made on the project.

The case has wended its way through the high court, to the Supreme Court of Appeal all the way up to the Constitutional Court with health and public works receiving a drubbing every step of the way.

The Constitutional Court — which was to be the final destination of the disastrous decade-long legal battle — in 2019 ruled in favour of Ikamva Architects, slamming shut the door to any further appeals against the 2015 judgment.

Having exhausted the appeal process, the public works department defiantly resorted back to court in late 2019.

This time it wanted the court to review and set aside its own 2003 decision to award the multimillion-rand contract to Ikamva Architects in the first place.

It says the fiscus would be denuded of desperately needed funds for public healthcare if it had to cough up.

Judge Thami Beshe this week ruled the department was effectively trying to revisit an issue which had already been decided on by the court.

She dismissed its application. In doing so she criticised the delays caused by the department in the matter saying it would cause huge prejudice to the public purse.

This was a “bitter pill to swallow given the needs of the majority of the people of the Eastern Cape and the lack of resources”.

While the department sought to dig itself out of a very deep legal and financial hole of its own making, the 2015 judgment remained intact — meaning the department remains obliged to pay out Ikamva R115m or have its assets seized to satisfy the debt.

Ikamva had agreed not to execute against the debt until the outcome of the department’s review application.

It can now proceed with its plans to do so and may seize the state’s assets if it does not pay up.

Public works spokesperson Vuyokazi Mbanjwa yesterday said the department was studying the judgment and would discuss with the health department a way forward.

The legal costs to date after years of court battles is likely to also stand at millions of rands. In every single case to date, the state has not only lost but been ordered to foot the legal bill.

In this matter, advocates Max du Plessis SC, Sarah Pudifin-Jones and Toni Palmer, instructed by the state attorney and Mabece Tilana  appeared for the public works department.

Advocates Izak Smuts SC and Gavin Dugmore, instructed by Stirk Yazbek attorneys, appeared for Ikamva.

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