Pretoria - The Supreme Court of Appeal in Bloemfontein confirmed the City of Tshwane was within its rights to cancel an agreement with architecture firm Holm Jordaan & Partners for the design and rebuilding of the gutted Munitoria headquarters.
The firm believed the council repudiated its contract with it and had claimed more than R44 million - fees it said it would have earned had the project gone ahead.
Judge Johan Louw last year turned down the claim.
He said in terms of the agreement between the council and the architecture firm, the latter was only entitled to be paid for work done and not for any damages.
In March 1997 the west block of Munitoria was gutted by fire and the south block severely damaged.
The building could no longer be occupied and staff moved to temporary accommodation.
The council in 1998 decided to hold a competition for an architectural design for a new building on the same site.
The competition was referred to as Project Phoenix.
The winner was to be commissioned as the architect for the rebuilding of the municipal headquarters, including designing the building.
Holm, Jordaan & Partners won the competition.
The total costs for the new building was estimated at R160 million.
Nothing much happened over the next few years and in 2003 the council told the firm it had to work in a joint venture with a BEE company as the project had increased in scope.
The council had incorporated 11 other municipalities and needed bigger space.
The firm agreed to the new terms and started work on the project, for which it sent council an interim bill for about R3m. This was paid.
However, in 2004 the council ruled the project unaffordable after the firm estimated the new project would cost more than R1.2 billion.
At that stage no BEE entity had been identified as the firm still waited for a formal agreement to be concluded.
The council then commissioned various feasibility studies for the project and called on interested parties to comment on the studies.
It suggested an entirely different project and informed the architect firm that it had decided to go the route of a Public Private Partnership and was no longer going ahead with Project Phoenix.
The firm regarded this as a repudiation of the contract and decided to take legal action.
Judge Louw earlier found the right to be commissioned as architect was conditional on funding being found and with the council deciding on whether to go ahead with the project. Five judges of the appeal court agreed.
They said an entirely different project was contemplated when the city passed the resolutions.
It emerged that the project was bigger and cost more than anticipated, having risen from R160m to more than R1.2bn.
They said no agreement had been reached on the scope of work, fees and other aspects of the project. It was found that no contract between the city and the architect firm ever materialised and there was thus no breach of contract.