Cancelled deal cost me profit, says ‘Muvhango’ creator
A legal war has broken out between Muvhango boss Duma Ndlovu and Road Transport Management Corporation (RTMC) after it cancelled his R106-million contract to produce a road safety soapie for the parastatal.
Sunday World can reveal that Ndlovu’s company, Word of Mouth Pictures, which produces the multilingual SABC 2 soapie Muvhango, filed court papers in the Pretoria High Court last week to force RTMC to pay him R20-million of the remaining amount for breaching the contract.
In the court papers seen by Sunday World, Ndlovu said that RTMC, represented by its CEO, Makhosini Msibi, entered into an agreement with his company on March 24 2017 to develop and produce an educational drama, theatrical productions and television documentaries, as well to integrate the themes into existing television drama series (soapies) for three years.
The RTMC was expected to pay his company R33.5-million for the work he would have done in the first year of the contract, R35.5-million in the second year and R37.6-million in the third year.
He said his company rendered the services in the first and second year of the contract and the RTMC paid for those services.
He said although the RTMC paid for him on time for the services he rendered in the first year, they paid him late for those he rendered in the second year.
The second-year payment included R14.2-million, which was supposed to have been paid before April 30 2018; over R7.1-million due before June 30 2018, R7-million due before August 31 2018, and another R7.1-million due before October 31 2018.
He said instead, RTMC paid him over R6.5-million on December 1 2018, over R5.3 million on January 15 2018, R 5.3-million on March 17 2018, over R2.8-million on March 29 2018, over R7.7-million on June 25 2018, and almost R1-million on July 27 2018.
He said it also paid him over R1.3-million on September 21 2018, over R2.1-million on March 16 2019, over R1.2-million on April 18 last year and over 1.9-million on May 10 last year.
Ndlovu said he was financially prejudiced by the late payment of these amounts and as result he is demanding that the RTMC pay him over R3-million in interest for their tardiness.
“Accordingly, the defendant is liable to the plaintiff for interest in the amount of R3 151 367.47,” read the papers.
Ndlovu is also demanding close to R20-million in loss of profit from RTMC for repudiation of the contract after they failed to allow him to render services in the third year of the contract.
“The defendant repudiated the contract in that, in a letter dated 10 November 2017, it advised the plaintiff that it would not honour its payment obligations in terms of the contract, nor would it provide its co-operation that is required by the plaintiff in order that the plaintiff is able to comply with its obligations, until further notice. In a letter dated March 2019, the defendant advised the plaintiff that it regarded the contract as at an end,” read the papers.
Ndlovu said had the RTMC not repudiated the contract, his company would have continued to render the services for the third year and would have become entitled to the stipulated payment.
He said the cost to render the services in the third year would have been over R18.5-million from the over R37.6-million of the contract price and would have made close to R20-million had he proceeded to render the services.
This because in the second year, his costs from the over R35.5-million were above R17.4-million, meaning his profit would have been over R18-million.
“The plaintiff’s loss of profit is therefore the difference between the contract price (R37 696 769.89) and the cost to the plaintiff to render the services (R18 537 071.87), that is R19 159 698.02. Accordingly, the plaintiff suffered damages as a result of the defendant’s repudiation of the contract in the amount of R19 159 698.02,” read the papers.
The paper said despite the demand, RTMC failed to pay the amount.
RTMC spokesperson Simon Zwane said the state entity was not aware of the lawsuit. “If the papers are brought to us, we will refer them to the corporation’s lawyers. And after receiving the papers we will deal with them internally and not comment in the media,” he said.
Muvhango spokesperson Karabo Disethle-Mtshayelo had not replied to our written questions at the time of going to press.
