City of Cape Town 'deliberately or negligently' withheld information, says desalination company
21 June 2019
The City of Cape Town "deliberately or negligently" withheld information about sewage contamination of seawater in the tender information for building a desalination plant at the V&A Waterfront, Quality Filtration Systems (QFS) argues in court papers.
QFS, the company awarded the tender in January last year to build the desalination plant when Cape Town faced the prospect of its taps running dry, said in papers lodged in the Western Cape High Court that had it been informed about the level of sewage contamination of the seawater, it would not have tendered for the project nor invested R37m.
The company, which has spent months in mediation with the City without resolution, is now suing the City for R57.4m for misrepresentation, non-payment, and failure to buy the desalinated water.
QFS said in papers the City had been aware at all times that the seawater in the uptake area was contaminated by sewage. It had also been aware that the tender specifications given to companies wanting to build the desalination plant were inadequate to purify seawater contaminated by sewage.
The City has a marine outfall pipe at Green Point, where raw sewage is disposed of through a pipe that is several kilometres long.
QFS claimed in papers that the City had withheld information about seawater test results, the levels of contamination and objections from independent scientists to the tender specifications.
It said once it had built the desalination plant according to the City's specifications, the City then presented it with new purification standards it had to meet.
"It unilaterally imposed new and more stringent specifications for desalination to compensate for high levels of sewage in the water uptake," the papers said.
This was a grossly negligent misrepresentation, or a breach, of the contract, the papers said.
"Had the plaintiff [QFS] been informed that it would be required to tender and construct a desalination plant to desalinate water with levels of contamination which were deliberately, alternatively, negligently, withheld from it, [QFS] would not have tendered nor invested R37m in the project," the company said in papers.
It said that as a direct result of the City's misrepresentation, it suffered damages of R58.4m.
Of this, R7.2m was spent on upgrading the desalination plant to be able to deal with the sewage pollution in the feed water.
The rest was made up of the capital investment to build the plant, non-payment for the water produced and loss of profit it should have earned in terms of the fixed-term agreement between QFS and the City.
The company said, in terms of the contract, the City was required to pay it a fixed monthly cost, whether or not it bought desalinated water from it.
The court papers quote the terms of the tender, which state that the supplier of the desalinated water would get a monthly fixed payment - an "availability cost" - that it "shall receive regardless of whether the purchaser [the City] required production or not, as long as the water produced is as per specification".
QFS said although its plant produced water purified to the required national standards, the City delayed buying the water from it as required in the contract.
The company said it had fulfilled all its obligations in terms of its agreement with the City.
QFS head Herman Smit said in a statement that his company had been involved in protracted negotiations with the City over contractual disputes relating to the desalination plant, and the City had eventually been forced into mediation in October through a high court order. No settlement has been reached.
"This is ratepayers' funds being spent on a case that should not be anywhere near a high court," Smit said.
News24 asked the City if it intended opposing the court action, and to comment on it, but it replied that it would respond later as its legal team was still in consultation.
The company gave the City 10 days to respond from June 13.
