Defying warnings from its own legal team has backfired for the Nelson Mandela Bay municipality, which has been ordered by a judge to pay more than R13m — plus R3.3m in interest and legal costs — after losing a protracted lawsuit that now places its assets and bank accounts at risk of attachment.
The payout is owed to Afrirent, which the city brought in to fuel its fleet after it became entangled in another court spat over its petrol tender.
But after two years of running on Afrirent’s petrol cards, the municipality slammed the brakes on the deal and refused to settle the full bill, insisting it owed the company only R1.5m.
After heading to the Gqeberha high court for relief, the matter was stayed pending the outcome of an arbitration.
The city lost the adjudication, which dragged on for more than a year.
But, undeterred, the municipality ignored advice from an advocate and headed to the high court on appeal.
On Thursday last week, judge Nyameko Gqamana enforced the order in Afrirent’s favour, ordering the municipality to cough up a total R16.3m.
On Friday, Afrirent chief executive Senzo Tsabedze said he regretted ever getting into business with the metro, which had sought out its services when it was in the lurch.
“We are now in the process of attaching the municipality’s bank accounts and their assets to recover our money.
“There was never a reason for this to even go to court; it’s been a nightmare for two years, and now the sad part is that it has cost the taxpayers millions of rand.
“I never wanted to do business with the Nelson Mandela Bay municipality.
“I went there to try help because they said the municipality was on the verge of collapse because they did not have petrol,” he said.
He said the sheriff’s office had been contacted so that the municipality could be served this week.
In 2021, Afrirent, a holding company based in Johannesburg, was roped into an initial six-month contract which was later extended to December 2022.
“We were only given a notice that they had appointed a service provider and no longer needed our services.
“We then sent all our invoices and statements, which amounted to about R13m,” Tsabedze said.
After not being paid, Afrirent approached the high court for an order in 2023 to challenge the municipality’s claims that the company was owed only R1.5m.
It was then referred to arbitration.
During the arbitration, before retired judge Lorimer Eric Leach, the municipality argued that it had, in fact, been overpaying Afrirent due to the levies it was being charged on top of the fuel price amount.
Municipal lawyers argued that since the levies were an overpayment, they should be deducted from the R13m demanded by Afrirent.
Leach, however, disagreed.
In his ruling in October 2024, he said it was clear that the contract was understood by both parties — and that the municipality needed to pay Afrirent the petrol charges incurred when using the cards.
This also included fees for providing the municipality with fuel usage reports.
Criticising how the municipality had handled the case, Leach said at the time: “Had a little bit of common sense been used from the outset, this case would surely never have seen the light of day.”
Further legal advice was sought from advocate Miranda Pango in November, who, in a leaked memo seen by The Herald, said she did not believe good grounds existed for a review of the case.
“I advise that Afrirent be paid out as fully set out in the arbitration award,” she said.
On Thursday, Gqamana ruled in Afrirent’s favour.
Municipal spokesperson Sithembiso Soyaya said the metro confirmed receipt of the court order and was studying its contents to determine the appropriate course of action.
Roads and transport political head Yolisa Pali, meanwhile, said she was ignored when she advised the municipality not to take the case back to the high court.
“I had a meeting in my office with the directors and told them I don’t see how we can possibly win this.
“My stance was always clear, that we tendered a service from someone and needed to pay them, and this was based on the outcome of the arbitration and further legal advice I sought.
“That was ignored and they went to the city manager, who then signed off on the appeal.
“I do not know why, but those who were driving this must be held accountable now because municipal assets can now be attached,” she said.
The metro had turned to Afrirent after it was legally advised that its then “evergreen contract” with Masana Petroleum Solutions, which the city awarded several times relying on deviations, was irregular.
Fleet Sync Caltex Joint Venture filed an application for an interdict at the time to stop the city from filling up its fleet at some BP petrol stations through the Masana contract before the contract was cancelled.
Fleet Sync Caltex wanted the court to declare the Masana contract unlawful.
In 2021, when Afrirent was brought in, the company issued the municipality with 1,700 petrol cards for its fleet, and 15 bulk cards for miscellaneous use.
An internal audit found that the cards were being illegally swiped for thousands of rand as the municipality used a pen and paper system to record transactions, rather than an electronic one.
Tsabedze said it was at the insistence of the municipality that cards be used without a fuel management system.
“We were supposed to supply them with a fuel management system when we were appointed, but they did not implement that and requested that, as a stopgap, because they are in court, we must assist them with fuel cards.
“We offered to put a tracking [device] on the vehicles so we can give reports on any abuse of vehicles and advise on the fuel use, but they were not interested.
“But if you separate the fuel from the tracking, you won’t win, because they inform each other on the use of the vehicle and can manage the maintenance of the car to see if it’s being abused,” he said.
The audit found that one of the cards had been used six times over the course of just a few days, totalling R19,501.
Tsabedze said his company was basically financing the municipality.
“They were using our money because as they swapped those cards. I was the one paying the bank, so it was like I was financing the municipality.
“They knew they had no case but were trying to frustrate us.
“We had a lot of different people calling us, telling us they want to talk to us so that this can be resolved. Our position was always clear that this was with the lawyers.
“We do not want to have private meetings with politicians, and I believe because we did not want to entertain those meetings, we were being frustrated,” he said.
The municipality has been using the Fleet Sync Caltex Joint Venture to fill its cars since booting out Afrirent in 2024.
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