Staff Reporter
The Redforce Debt Management company has lost its court battle against the Keetmanshoop Municipal Council, after claiming that the municipality breached a contract and failed to pay for debt recovery services rendered to them.
The case emanates from a tender awarded to Redforce in March 2017 by the Local Tender Board of the Municipality.
The Redforce company, which offers debt collection services to a number of local authorities and municipalities, has recently come under fire, especially in the capital, with residents calling for the City of Windhoek to cancel its contract with Redforce, as residents’ water supply and electricity are often cut off due to arrears.
In a ruling, Justice Nate Ndauendapo ruled that Redforce’s case be dismissed and ordered that Redforce pay the costs of the defendant. “The Court found that the tender award to the plaintiff was valid; however, there was no subsequent written agreement between the plaintiff and the defendant as required by s 31A of the Act. The claim amount of the enrichment claim is the same as the commission claim, and as Ms. de Jagger put it: the commission claim can by no stretch of the imagination represent the ‘value and extent’ of the services or the amount of enrichment or the amount of impoverishment,” Justice Ndauendapo said.
Redforce Debt Management CC claimed that it rendered the services, but the Keetmanshoop Municipal Council refused to pay. The plaintiff Redforce instituted an action against the defendant, claiming that it rendered debt collection services on behalf of the defendant and that the defendant is refusing to pay its commission in the amount of N$1,623,332.44. The plaintiff also claimed that, as a result of the defendant’s breach of the tender award, it suffered damages in the form of loss of profit, for the duration of the tender from January 2019 up to the end of June 2019 in the amount N$1,817,007.65, being the potential 9% commission the plaintiff would have received had it not been for the defendant’s breach of the tender award.
In the alternative, the plaintiff claims N$1,623,332.44 from the defendant for unjustified enrichment.
Justice Ndauendapo, however, held that section 31A of the Local Authorities Act, 23 of 1992 is applicable and a resolution of the defendant and a signed written agreement were required. He added that the defendant pleaded that, in the event that the Court finds that a valid agreement exists between the parties, the plaintiff breached the tender agreement in that the tender was not to exceed the amount of N$2,920,381.05, which amount the defendant has already paid to the plaintiff. The defendant further pleaded that no monthly reports in respect of collections were provided to the Defendant, and that Redforce did not assess or report to the Defendant on the prospects and cost-effectiveness of the recovery of debt. In addition to this, he added that Redforce failed to collect arrear debts. ‘In fact, the Defendant’s debtors’ account increased by 21% during the period Plaintiff alleges to have rendered debt collection services to the Defendant.’ Ndauendapo said.
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