Bhisho to pay R80m for hospital tender bungle

EASTERN Cape taxpayers have to pay more than R80-million in damages and interest to an East London firm of architects, and further millions in legal fees, after a decade-long court case rife with state blunders.

The R42-million award – which swells to double when interest is included – is one of the biggest default judgments ever given against the provincial government.

The legal fees will be extraordinary after the case bounced from the high court, to a full bench, up to the Supreme Court of Appeal and back to the high court with the health and public works departments receiving a drubbing at every step of the way for what the courts termed its serial default, recklessness and repeated failures to comply with court orders.

The taxpayer must legal bill. now foot the multimillion-

It will also foot the bill for the more than R80million to be paid to Ikamva Architects, which was never given the opportunity to earn a cent of the money.

This will be a huge blow to the provincial fiscus.

The saga began in 2003 when public works appointed Ikamva as its architectural consultants to oversee the R1.3-billion Frere Hospital upgrade. An agreement was signed between the department and Ikamva to this effect.

But shortly after being appointed, the work was again advertised and another firm of architects appointed to do the same work.

Ikamva said in court papers this constituted a repudiation of agreement and sued the department for R41-million in damages that it said it had suffered as a result.

This is the profit Ikamva said it would have enjoyed had the department not unlawfully repudiated the contract after awarding it.

In its defence, the department acknowledged Ikamva’s appointment but claimed the agreement was invalid because the department had had no power to enter into it in the first place.

The health department had in the meantime appointed Coega Development Corporation (CDC) as the implementing agent to oversee the upgrade of health care facilities then known as the East London Hospital Complex, which included Frere Hospital.

It seems the CDC, unaware that public works had already signed a contract with Ikamva, then advertised and appointed another service provider to oversee the project.

More confusion followed once summons were issued when Ikamva sought the discovery of documents from the two departments to supplement its case.

The departments failed to produce the documents.

Ikamva brought an application to compel them to do so when the court ordered the departments to produce the documents within 10 days, or their defence would be struck out and Ikamva could immediately apply for default judgment.

The departments failed to comply and their defence was duly struck out.

The departments then applied to the court for an extension of time to provide the documents, and also applied to have their defence reinstated.

They inexplicably withdrew this application. In that matter, Judge Murray Lowe ordered the departments to pay the costs of the application on a punitive scale.

Leave to appeal was refused and Judge Belinda Hartle has now dismissed the rescission application.

She said the departments had burned their bridges with the court by never producing the documents they were ordered to in the first place.