Cape Town withholds R11.5m adjudication award as contractor warns of collapse

Cape-based construction company Baseline Civil Contractors, which is in financial distress and business rescue, has warned that a prolonged dispute over an outstanding final payment of about R10 million from the City of Cape Town could threaten its survival.

The dispute relates to the Macassar housing project contract, which ran for about five years and ended in June 2024. A disagreement over the final account was referred to an independent adjudicator under the contract's dispute-resolution provisions. The adjudicator's first decision, published on 6 May 2025, awarded Baseline R5,148,094.32; a corrected decision on 22 May 2025 awarded the company R11,549,644.10, payable within 14 days.

The city paid the lower amount of R5,148,094.32 on 13 June 2025, arguing the adjudicator had no power to correct the first decision. Baseline approached the High Court to enforce the corrected award, and the court ruled in its favour in August 2026, dismissing the city's counter-application, ordering compliance within 10 days and awarding costs to Baseline.

The city was granted leave to appeal to the Supreme Court of Appeal on 20 October 2026, and the operation of the order is suspended pending that appeal, according to city spokesperson Luthando Tyhalibongo. Tyhalibongo said the city had paid the amounts that were due and that the dispute concerns a second adjudicator ruling which the city says is unenforceable because the adjudicator acted outside his powers. No date has been set for the appeal.

Baseline director DC Geldenhuys said the city's pursuit of every available legal avenue amounts to a Stalingrad approach, and that adjudication is part of the process both parties agreed to in the contract. He said the company remains without funding while proceedings continue, and still has to pay employees, suppliers and subcontractors as well as the legal costs of pursuing payment.