Council sued for R50m
THREE-YEAR LEASE EXTENSION SIGNED BY NEW MANAGER The municipality had not occupied the building since 2016 therefore did not pay.
The Newcastle Local Municipality is embroiled in a legal battle with its landlord, Scarlet Ibis Investments, for not paying monthly rental of almost R600 000 on the old “Nedbank Centre” building despite not occupying it since 2016.
Should the council lose the battle, ratepayers will have to cough up millions in legal fees, loss of income to the landlord and penalties on non-payment of rent.
Sources within the municipality have revealed the figure could be as much as R50 million since the municipality has allegedly not paid since 2016.
The fifth addendum, which renews the lease agreement for a further three years, and which landed the municipality in the situation of having to pay the loan back on the new civic building as well as on the premises lease at 50 Harding Street, Newcastle (Nedbank Centre) has the municipal manager’s signature on it.
Errol Mswane, at the time of signing the addendum, had just recently been appointed as the new municipal manager.
A leaked copy of the addendum states that the lease was renewed by Mswane in March 2016 for a further three years and expires on July 31 next year.
The landlord was represented by Shabir Hoosen Goga, who it seems, according to the addendum, was a director of Scarlet Ibis Investments at the time.
The addendum’s terms and conditions further reveal the lessee (the municipality) will not only be responsible for the payment of its water, electricity, sewerage and security.
There will be an additional R88 000 monthly for operational costs and a further R48 000 for parking. On top of that, the “lessee shall be liable for an administration fee on all overdue amounts payable under this lease at a rate of R10 000 (excluding VAT) per month”.
It is uncertain at this stage whether the landlord has already attached the security deposit paid by the municipality to Scarlet Ibis of about R500 000.
This was supposed to have been increased to R811 000 in 2016.
The landlord is represented by Shabir Goga, who was approached for comment, but said that since the matter was still sub-judice, he was unable to discuss the details of the legal suit.
He said, however, that Scarlet Ibis Investments case against the municipality was strong.
“We have a very good case and we stand by it. Everything was done above board.
“We expect to go to court in May next year. We will let justice take its course,” he said.
The landlord would not confirm the amount they were suing the municipality for.
They also would not reveal what they planned to do if they won the case and the municipality was unable to pay the damages and costs.
Mswane was given the right of reply, but he deferred the matter to mayor Makhosini Nkosi.
Numerous phone calls were made and an e-mail was sent requesting Nkosi to respond to questions, but no reply was forthcoming. – Caxton News Service
We have a very good case and we stand by it