Two security companies sue the KZN Health Department for R24 million for breach of contract

DURBAN - Two security companies are suing the Department of Health (DoH) in KwaZulu-Natal for more than R24 million for breach of contract.

The sheriff of the Pietermaritzburg High Court issued summons to the KZN Health Department last Thursday.

LK Security and Sharks Protection are taking the department to court over a breach of a contract signed in November 2014. In the contract, the department had agreed that both the security companies would provide guarding services to hospitals in the province on a month-to-month payment basis.

In November 2017, before the contract expired, the department agreed on an extension of the contract, also on a month-to-month basis, with the understanding that the department was facing challenges replacing the current service provider. The department was also in the process of finalising the bidding process for the provision of security services.

Three years later, according to the summons, the department had failed to conclude its processes owing to appeal papers being lodged against the bidding process, seeking to replace the contract with LK Security and Sharks Protection. Thus the department contractually committed to yet another month-to-month extension.

The tender process to replace the two security companies was tainted, and challenged at a Bid Appeals Tribunal in 2019, where it was found that the process was unlawful and invalid, and should be started all over again.

In the combined summons, the Health Department is said to have created an expectation that LK Security and Sharks Protection would continue to provide their services until such time that the bidding process was properly instituted and carried out.

The contract breach occurred at the end of May 2021, when the department allegedly illegally awarded a tender and removed the companies from the sites where they were providing security services.

Sharks Protection had made attempts to obtain an interdictory order against the decision in order to bring to the attention of the department the arbitrary nature of its decision to terminate the existing contract without following due process.

The Health Department’s supply chain management director, Khondlo Mtshali, filed answering affidavits, opposing the matter being dealt with on an urgent basis, citing that Sharks Protection would still be able to cover its losses if an order was not granted in its favour.

As a result, the two companies argued that they were subjected to prejudice and financial loss, which they continue to bear the brunt of, resulting in a claim of R12 685 345 for past loss of income for six months and prospective loss of revenue for six months.

The department was given 20 days to file answering affidavits.

The department did not respond to a request for comment sent on Monday.

Daily News