Africa Utility Solution, an electrical company that supplied electricity smart meters to eThekwini Municipality, has won round one of its legal battle against the City for R300 million in damages.

The company has been embroiled in legal proceedings with the city since last year, following a news article that suggested that the company had supplied dysfunctional smart meters.

After the said article last year, the company served the city with a letter demanding that it issues a statement within 30 days to correct what the company described as misleading and false information.

The company argued that since the city had received its product and was satisfied with its quality, therefore, it had a legal duty to dismiss the content of the article, which suggested that the product was of poor quality.

However, the city refused.

The company continued with legal process, but the city applied for the matter to be struck off the roll in the Durban High Court.

The matter was heard last week and the city’s application was dismissed with costs. This meant the matter will continue and is expected to be heard in court early next year. 

eThekwini municipality spokesperson Gugu Sisilana said the city will not comment since the matter is still in court.

“Given that the matter is presently before the courts, we will refrain from making any statements until the legal process has concluded,” said Sisilana

The city had denied responsibility for the published information, saying it did not publish the article and those internal sources quoted were not speaking on behalf of the city.

In its defence in court last week, the city argued that there was no law provision that a person has a legal duty to prevent damage to another. This must include a duty to correct statements published by third parties.

However, the company’s argument was that the city’s failure to respond to the questions that were asked by the media company before publication caused the newspaper to publish false information.

Therefore, the municipality must be held liable for the damages the article caused to the company. It further stated that the city’s failure to give correct accounts that the company complied with the work specification of the tender was concerning.

The company argued that as a direct consequence of the city’s failure to dismiss the report, the company has already suffered losses with the withdrawal of contracts awarded to it with the total loss being R48,384,000.00, a projected loss of R78,000,000.00 in respect of future work that is to be allocated in terms of the National Treasury Regulations, as well as the non-award/suspension and/or termination of various contracts that should be awarded to it, which amount to R203,092,500.00.

The company is the same one that scored a court victory against the city last year over the non-payment of R63 million which came with interest.

willem.phungula@inl.co.za

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