Court wait freezes Komani hammer
Enoch Mgijima scrambles to stay another auction humiliation over debt
It is a case of once bitten, twice shy for Enoch Mgijima municipality as it tries to block yet another scheduled auction of municipal assets to settle an old debt.
Whether the Komani-based municipality will succeed in blocking Siyahlutha Developers CC from auctioning some of the municipal assets to settle a R5.9m bill it is claiming for building RDP houses in 2005 will be known on Thursday, when the Grahamstown High Court makes a judgment.
This was announced by municipal manager Chris Magwangqana at a council meeting on Tuesday.
On June 1 assets of the municipality went under the hammer for a R21m debt to Milowo Trading Enterprise. Though the loss of 44 vehicles has crippled service delivery, the auction raised less than a third of the money and a second auction was staved off in last-ditch talks between the two parties.
Magwangqana told councillors the local authority had taken all the necessary steps to avoid another humiliation.
Siyahlutha was appointed by the then Lukhanji municipality in 2005 to construct 1,000 lowcost houses in Who-Can-Tell and McBride villages.
“The number of houses to be built was reduced to 859. The original price for a completed structure was to be R14,250 plus an additional R50 in 2009. Siyahlutha approached the municipality advising them that the agreed amount for houses was low and that the municipality had to apply for an increase,” he said, adding if the application was successful the cost of each unit would rise to R16,084.
“Siyahlutha was under the impression that should the application succeed and the variance be paid to the municipality by the department of human settlements, the difference should automatically be paid to them, an assertion that the municipality denies,” Magwangqana said.
He said the amount demanded by Siyahlutha – the difference between the original price and the new price – was just over R1.7m. “When the municipality refused to pay the amount Siyahlutha went to court to sue for it. The matter was on and off the court roll since 2009 with the main reason for the postponements being that Siyahlutha lawyers would demand proof of payment,” he said, adding proof of payment was given last year.
In May the municipality and Siyahlutha agreed to resolve the matter through arbitration.
The arbiter ruled in favour of the company.
“The municipality applied for a review of the outcome of the arbitration and consequently set it aside [put the payment on hold]. During this period Siyahlutha applied to the court to have the arbitration award made an order of the court and an instruction was again given to [municipal] lawyers to oppose the application,” Magwangqana said.
They launched a rule nisi application for stay of execution and the matter is set down on the court roll for Thursday.
The auction is on hold pending Thursday’s outcome.
The Siyahlutha matter, now worth nearly R6m, has been on and off the court roll since 2009