Clock runs out as Clifton jewel auctioned
Mansion sells for less than amount owed on bond repayments
It was the house everybody wanted but couldn’t afford. Even the owner.
The mountain-side jewel of SA’s residential property market is now the house nobody can afford without a good lawyer — to battle with the lawyers already fighting over it.
The Clifton mansion, once valued at about R200m, was sold at judicial auction last week after a series of court battles. Prospective buyers stood in the street outside the house and bid in R1m increments before the hammer fell at R84m — a princely sum but much less than the total amount owed on the property’s bond repayments.
The house was developed and marketed by Stuart Chait in the name of the Maverick Trust, of which he is the donor and guarantor. The 1,481m² property in Nettleton Road includes six bedrooms, seven bathrooms, seven garages, a glass elevator, a home cinema, gym, sauna and a steam room.
Chait was unable to prevent the auction, having been removed as a trustee of the Maverick Trust late last year after a legal fight with main bondholder Creditsmith. The property was attached and the Cape Town high court granted a warrant of execution to sell it despite a last-minute court bid to prevent the auction.
Deeds office documents show four bonds registered against the property between 2014 and 2016 totalling R88m, although the total debt snowballed to more than R100m — including almost R3m in unpaid City of Cape Town accounts.
But it’s not over yet. The Maverick Trust’s two main creditors, Creditsmith and finance group Merchant Factors, have yet to finalise their share of the auction proceeds.
And a European property investor is crying foul after making a R95m cash offer shortly before the auction. The Sunday Times has seen a copy of his purchase agreement with Maverick Trust, signed three minutes before the start of the auction.
Merchant Factors director Gavin Connor confirmed the firm had submitted the successful R84m bid — via subsidiary Merchant Commercial Finance 1 (Pty) Ltd — but that the final auction split (with Creditsmith) had not yet been finalised. “The decision taken to buy the property was a defensive position taken by Merchant, with a view to recovering the exposure owing by the Maverick Trust which has been outstanding for a substantial period of time,” Connor said.
Creditsmith’s attorney, Martin Bey, confirmed the company had decided to recoup its losses. “My client is a loan creditor who has waited some six years to be paid, which loan long since became overdue,” Bey said.
“My client has provided great latitude to the debtor to pay the loan, having initially extended the repayment period by a year [until March 2020], then agreeing a further indulgence of some six months [from March 2020 to September 2020] to facilitate an opportunity for the property to be sold on the open market or alternative finance to be raised.
“The property was due to go on a sheriff’s auction in October 2020, and despite defeating an eleventh-hour court challenge to stay the auction, my client again agreed to a further extension of four months to again allow the debtor an opportunity to privately sell the property or raise alternative finance.”
Chait had hoped to develop the site into a boutique hotel. A previous Nettleton Road property he developed was auctioned under similar circumstances five years ago, and sold at significant discount to the daughter of Christo Wiese, one of SA’s wealthiest people.
The foreign bidder, who spoke to the Sunday Times this week on condition of anonymity but who is backed by Cape Town company Dogon Group Properties, said he had not registered for the auction because he had been told his offer had been accepted.
“We were under the impression that we had a deal,” he said. The purchase agreement was signed by the Maverick Trust’s two remaining trustees, Chait’s ex-wife Wendy Sarria, and Dale Irvine.
Sarria could not be reached for comment and Irvine declined to comment. “Unfortunately the trustees are not in agreement of what to disclose and will work on an agreement next week,” Irvine said.
Bey said Creditsmith had been under no obligation to accept the R95m offer. “[It] was insufficient to cover the extent of the indebtedness owed to my client [the first bondholder] and the remaining bondholders,” he said. “Thus, practically, the bondholders could legitimately have refused to cancel their bonds, thereby rendering a private sale at R95m incapable of registration and thereby causing more delays for my client.”
A well-placed property source said the auction was probably a last resort. “It’s not a case where they missed a payment on Tuesday and on Friday they [the creditors] sold him out. This is years in coming,” he said. “It is only when they run out of options and don’t have co-operation from the debtor that the clock starts to tick.”
Chait’s spokesperson, Kaveer Beharee, said: “There have been major developments relating to this entire matter, but we are not in any position to make any public comment at this time.”