COFFEE BAY HOTEL LEASE ‘WAS INVALID’

Hotel manager’s lease was invalid, judge rules

Agreement with local community has no standing, as ECDC owns the facility, high court finds.

The Coffee Bay Hotel and Conference Centre’s Alexander Wiggett has failed in his high court bid to force the Eastern Cape Development Corporation to allow him to continue to run the facility in line with a lease he says he has with the local Tshezi Community Trust.

The problem Wiggett faced is that the lease agreement with the trust was invalid as the ECDC – and not the trust – is the registered owner of the hotel.

According to court papers, in May 2015, Wiggett’s company, the Coffee Bay Hotel and Conference Centre, signed an agreement with the Tshezi Community Trust to lease the hotel for 25 years. Wiggett said the ECDC facilitated the deal.

The company needed about R12m to get the decrepit hotel up to scratch, but the Industrial Development Corporation was prepared to advance only R6.6m. The company sought a further R5.4m from the ECDC.

But, to Wiggett’s surprise, the ECDC said it could not provide funding as it was “against ECDC policy to refurbish a property that belongs to ECDC”.

It informed him that it was undergoing a forensic investcould igation around ownership of the property.

In September 2015, the ECDC furnished Wiggett with documents showing that properties belonging to the former Transkei Development Corporation, including the hotel, had been transferred to the ECDC in 2000. Then minister of rural development and land reform Gugile Nkwinti had also informed Wiggett that the ECDC CEO was the only agent that enter into lease agreements with other parties.

It was at this point that the trust in any event cancelled the lease as the company was unable to meet the rental.

In December 2015, Wiggett signed a new 25-year lease with the trust in his own name, not that of his company.

In August 2016 Wiggett – who had by then left the hotel – learned that the ECDC was actively marketing the hotel to prospective lessees and had posted security guards there to protect the premises.

When Wiggett demanded access, he was informed his second lease was invalid. He later resorted to court for an interim interdict against the ECDC.

But Judge Gerald Bloem dismissed the application with costs. He found that Wiggett might have laboured under the impression that the hotel belonged to the trust at the time of signing the first lease, but by the time he concluded the second one he was fully aware that the ECDC was the rightful owner.

By the time of the second lease he was aware the trust was not the owner