Makana loses court case

The Grahamstown High Court on Tuesday ordered Makana municipality to pay a debt settlement of over R600 000 to a service provider that it had failed to pay.

The service provider, Lumotech (Pty) Ltd was awarded a tender by the municipality to supply efficient lighting to the municipality.

Court documents reveal that Lumotech supplied 590 units totalling an amount of R681 343.80. In March this year Makana admitted to being liable to Lumotech.

The two parties drew up a written agreement that the municipality would settle the debt in monthly instalments of R100 000.

“The first instalment was due to be paid on 31 March this year and thereafter on the last day of each and every consecutive month until the agreed debt, interests and costs as provided for in the agreement had been paid in full,” read the documents.

On 30 August Lumotech’s BLC Attorneys wrote a letter to then acting municipal manager Riana Meiring and informed her that they were to take the matter further.

“In terms of the settlement agreement, our client has given us instructions to proceed to institute legal action against the municipality for recovery of the above mentioned sum,” read the attorney’s letter.

Lumotech and the municipality agreed that interest would increase on the agreed debt at a rate of 9 percent per annum. It would be calculated daily and compounded monthly from 18 August 2014 to date of final payment.

Makana further agreed and undertook to pay Lumotech’s legal costs incurred in pursuing payment of the agreed debt.

All payments were to be made by the municipality to Lumotech in terms of the agreement. The payments were to be deposited into a bank account details of which were set out in the agreement.

In the event that Makana failed to make payment timeously in terms of the agreement, Lumotech was entitled to institute legal action against Makana.

That would be for recovery of the full outstanding balance of the agreed debt due by the municipality to Lumotech without further notice to the department.

Makana Municipality has breached the agreement in that they have failed to make payment as provided for in the agreement.

Lumotech has now exercised their rights to recover the full outstanding agreed debt.

Questions that were sent to municipal spokesperson Yoliswa Ramokolo were not answered by the time of going to print.