Debt collection agency RedForce Debt Management will remain the Walvis Bay Town Council’s debt collector for now after a High Court judge yesterday temporarily suspended the municipal council’s decision to terminate its five-year contract with RedForce.
RedForce and Walvis Bay signed a contract in 2023 when RedForce was selected through a bidding process to become the municipality’s debt collector.
However, in September this year, minister of rural and urban development James Sankwasa called on the municipality to cancel the contract.
“Walvis Bay through RedForce is currently charging residents double the amount which the residents owe the municipality, in that RedForce collects the debt owed by residents with an additional charge levied by RedForce on top of such debts.
“So, the residents are being charged double,” Sankwasa wrote on 10 September.
He said the contract was also legally invalid because it was only signed by the local authority council chief executive rather than co-signed by another authorised staff member.
On 7 October, at a special council meeting, the Walvis Bay Town Council agreed to terminate the contract with immediate effect.
RedForce applied to the High Court to halt that decision, saying it is an unlawful breach of contract to immediately suspend the agreement and that the company was not given a right to a fair hearing by the council.
“RedForce was entitled to fair administrative treatment and an opportunity to answer the proposed grounds before this adverse decision. The council gave no such opportunity,” RedForce owner Selma Hangombe says in an affidavit filed at the Windhoek High Court.
Acting judge Michael Mtambo ordered at the end of a hearing yesterday that the decision to terminate RedForce’s contract is cancelled.
However, he did not make a ruling on the legality of the contract, which Sankwasa cited as the basis of his directive to terminate the contract.
The lawyers for the municipality argue that the contract must be found null and void because the legal process for signing the contract was not followed.
RedForce says the contract must be upheld because it acted in good faith and the municipality has to follow proper processes for ending a contract.
A ruling on these arguments will come at a later date. However, RedForce has a separate court case against the municipality and Sankwasa, in which it is challenging the minister’s directive to terminate its contract.
Acting judge James Devittie is expected to deliver a judgement in that case today.
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