Municipality has to lick its wounds
The developer took the municipality to court after the latter failed to honour their agreement
Legal costs for the Lekwa Municipality run to millions of rands after several years of litigation in the High Court, the Supreme Court of Appeal and Constitutional Court and the town’s progress stymied.
Hayes Matkovich Developments (HMD) claimed damages involving the development of a new secure, residential estate incorporating the existing golf course and surrounding areas.
In the respective appeals, Judge Eberhard Bertelsmann’s decision in the High Court was affirmed and the Constitutional Court finally took Lekwa to task and turned down the appeal with costs.
The developer took the municipality to court after the latter failed to honour their agreement to transfer the land for the purposes of the residential development subsequent to HMD being awarded a public tender for the acquisition.
“We were in it for commercial reasons, but are also passionate about what we do and had given commitments in terms of what the project would create in terms of GDP and job creation for the town,” Mr Rob Hudson, CEO of HMD, said.
“In addition, the municipality would receive substantially more than market value for land currently being used for casual grazing.
“The development was also to incorporate an upgrade to the golf course and club house, which would remain in the ownership of the non-profit golf club and a community asset.”
According to Mr Hudson, the company conducted extensive studies such as social economic, geotechnical, hydrological and environmental, and at the cost of millions of rands submitted all the necessary applications for approval of the residential development by the relevant authorities.
“The project was awarded its full Record of Decision (ROD) from the Mpumalanga Department of Economic Development, Environment and Tourism and due protocol was followed with the Department of Water Affairs and Eskom,” he said.
The development was successfully launched in 2011 with more than 60 reservations on the launch weekend.
The agreement between Lekwa and the developer entailed that the parties conclude a bulk services agreement, the terms of which agreement were finalised and also included the developer installing additional electrical capacity that could feed into the town’s supply during peak electrical demand periods.
“With the necessary fundamentals in place to initiate the estate development and following its successful launch, the only matter remaining was for Lekwa to perform in terms of its contractual obligations,” he also said.
“For close on a year the municipality frustrated the process, refused to perform against many requests and ultimate demands until the agreement was repudiated.”
At the time there was no formal reasons given by Lekwa for their refusal to honour the agreement.
“A year later once Lekwa had handed the matter to their legal advisors, such advisors sought to find technicalities that could possibly have rendered the tender process invalid.”
“The crux of Lekwa’s defence was that Lekwa themselves had not followed their internal due protocol in deciding to alienate the land and that their incompetence was in fact their defence,” Mr Hudson said.
He denied the above assertion and explained that at the time the two parties had gone to great lengths to ensure compliance, including obtaining a legal opinion from National Treasury.
With the evidence presented the courts agreed that the tender and acquisition of the municipal land was above board and compliant and that the project would have been viable and benefited the community.
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