Toyota's insurer files R6. 5 billion lawsuit against KZN government for flood damages
Toyota South Africa Motors (TSAM) has clarified that its insurer has initiated the R6.5 billion lawsuit against the KwaZulu-Natal Department of Transport, Transnet, and the eThekwini Municipality, for damages from the April 2022 floods that severely impacted its Prospecton plant.
While The Mercury initially reported that the action was brought by TSAM, it stated today (Thursday) that the insurer had brought the action.
Summons filed in the Durban High Court by the insurer, under the name of TSAM, said damages to the tune of R6.5 billion had been suffered. Transnet, the KZN Department of Transport, and the eThekwini Municipality had been cited as the defendants.
Craig Woolley, a director at law firm Norton Rose Fulbright South Africa Inc, which is acting for the plaintiff, said all three defendants had “entered an appearance to defend”.
Tasneem Lorgat, TSAM general manager, marketing and communications, said they were aware of “the subrogated recovery action instituted by Tokio Marine” against the city, KZN DoT and Transnet.
“Tokio Marine and Nichido Fire Insurance Co. Ltd are the insurers of TSAM, to whom the company submitted its claim in respect of the flood which affected TSAM’s manufacturing operations in the Prospecton area, in April 2022.
“It is important to note that the litigation proceedings against the eThekwini Municipality, the Department of Transport and Transnet SOC Limited are not being facilitated and/or funded by TSAM.
“Accordingly, TSAM will not benefit in any way from the subrogated recovery action against these entities. Upon learning of the impending recovery litigation, TSAM undertook, with the consent of Tokio Marine, to engage with each of the defendants to advise of the impending subrogated recovery action,” said Lorgat.
“As this is a matter currently before the courts and considering the above, TSAM is not in a position to comment on this matter. Queries relating to the proceedings should be directed to Tokio Marine & Nichido Fire Insurance Co. Ltd,” she added.
In the court papers, it is stated that the three organisations had failed in their duty to maintain infrastructure and should have known that neglecting such responsibilities could lead to flooding.
During the April floods, the structural integrity of the Umlaas Canal and the diversion berm were compromised, leading to stormwater flowing into the Prospecton Industrial Area, where the Toyota plant is situated, causing extensive flooding and damage, read the court papers.
It stated that Transnet owned the Umlaas Canal and was responsible for its management and maintenance, as well as the flood risk associated with it. The concrete-lined canal is intended to channel and divert the uMlazi River around the Prospecton Industrial Area. Together with the diversion berm, it forms an integral part of the flood control and prevention mechanism for the Prospecton Industrial Area, it further stated.
It said the Department of Transport was responsible for the management and maintenance of the diversion berm, while the municipality owned, managed, and was responsible for the maintenance and control of the stormwater management system for the Prospecton Industrial Area.
Detailing the court action against each of the defendants, the summons stated that Transnet should have known that in the event of the Umlaas Canal and the diversion berm failing to manage this stormwater, the Prospecton Industrial Area was likely to be flooded, resulting in damage to the company’s premises and property.
It said the defendants failed to ensure that these structures were functioning as required to prevent flooding in the Prospecton Industrial Area.
Additionally, it had neglected to carry out regular maintenance on the Umlaas Canal, resulting in structural weaknesses, and failed to repair previous flood damage.
It said it fell on the Department of Transport to ensure that the diversion berm and canal were functioning properly and it had failed to do so.
It added that the municipality should have known that in the event of the stormwater management system not functioning as required, the area where the plaintiff’s business was situated was likely to be flooded.
“As a result of these failures, Toyota was compelled to engage various contractors to repair the damage caused by the flooding and hired specialist engineers to repair the structural damage to the premises, as well as damage to electrical installations, plumbing, air conditioning, and assembly systems.”
The company suffered “damages to fixtures and fittings, office contents, and electronic equipment, and experienced losses due to vehicles being flooded and damaged.”
Furthermore, they were unable to conduct business activities during the repair period, leading to additional business interruption losses.
The papers state that as a result of the aforementioned issues, damages amounting to R6 540 980 194.00 were suffered which includes R4 488 642 693.00 for the fair and reasonable costs incurred in the repair and reinstatement of the plaintiff’s premises and property and R2 052 337 501.00 for business interruption.
“The defendants are jointly and severally liable to compensate the plaintiff for the aforementioned amounts, along with interest thereon,” stated the court papers.
Ndabe Sibiya, the spokesperson for the KZN Department of Transport, said that MEC Siboniso Duma regarded Toyota as an important stakeholder in the province. “Respectfully, he does not believe that it will be appropriate at this stage to engage on this matter through the media,” said Sibiya.
“We can only indicate that the cut-off low-pressure system continues to leave a trail of destruction across the province. It has triggered floods, mudslides, and a rise in the water table. Bridges, road infrastructure, and houses have been damaged, costing both the KZN Transport and Human Settlements Departments billions of rands. For instance, in 2022 alone, we needed more than R6 billion to repair roads, and we could only reprioritise R2 billion from our budget,” Sibiya said.
eThekwini Municipality spokesperson Gugu Sisilana said the municipality was aware of the court action and had filed a notice to defend.
Transnet did not respond to a request for comment by the time of publication.
* This article has been updated to reflect the comments of Toyota South Africa Motors.