Govt to cough up ‘hefty’ R7.8m for contract breach

The public purse has been depleted by more than R7.8 million after a property investment company obtained judgment against government for leasing offices in Pretoria, but then failing to move in or pay rent.

Judge Selby Baqwa granted a default judgment to the MMI Group against government, represented by the public works minister, for the payment of more than R3.6 million for outstanding rental and more than R4.2 million for the early cancellation of the lease agreement. The government, which did not defend the claim, was also ordered to pay interest on the amounts and to pay MMI’s legal costs.

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MMI instituted the claim after Momentum Property Investments, represented by a public works official, in September 2011 concluded a lease agreement with MMI for offices in Persequor Technopark, in Pretoria, at a monthly rental of more than R140 600, plus almost R22 000 for parking. The lease was to commence in January 2015 and terminate in December 2018.

MMI alleged in court papers that government had breached the terms of the lease agreement by failing to take occupation of the premises and failing to pay the monthly rental and charges up to August 2016. MMI cancelled the lease agreement, but also sued government for another R4.2 million for damages.

A property management expert, Peter Strainton, said in an affidavit that taking into account factors such as location and demand, the commercial property would not be re-let before July 2018.

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