SIGH OF RELIEF

High court dismisses urgent application to liquidate Basil Read

AN URGENT application for the liquidation of listed construction group Basil Read lodged by sub-contractor Baarata Construction & Projects CC in the North Gauteng High Court yesterday failed.

Judge Nomonde Mngqibisa-Thusi ruled a case for urgency had not been made and dismissed the application with costs.

Mngqibisa-Thusi did not deal with the merits of Baarata’s claim that it was owed R4.2 million by Basil Read for work that had been completed at the Medupi power station project.

Baarata’s application follows Basil Read in August 2012 sub-contracting the firm to supply and install ceilings and partitions in various buildings at Medupi.

The value of the work to be done by Baarata was valued at R10.1m and was initially to be completed by the end of May 2013 but various delays, including strikes, resulted in the contract being delayed.

Ricardo Jardim, the commercial manager of building at Basil Read, said in an affidavit it was a material term of the sub-contractor agreement with Baarata that payment would only be due and payable within seven days of receipt of payment from Eskom to Basil Read.

Revenue service

Jardim said the payment Baarata now claimed from Basil Read had not yet been paid to Basil Read by Eskom.

Bernette Bergenthuin, the counsel for Baarata, said the firm was notified on August 11 this year that Absa had been appointed by the SA Revenue Service (Sars) as an agent to collect all money in Baarata’s bank account and pay it over to Sars.

Bergenthuin said Baarata was experiencing dire cashflow problems because of the non-payment for work already performed on behalf of Basil Read.

She said in excess of R800 000 was due to Sars and the amount owing from Basil Read was due.

Bergenthuin said Baarata would “have to close up shop” and its workers would be laid off if Basil Read did not pay the amount due.

She said the amount owed had been acknowledged and never been disputed by Basil Read.

However, Ishmael Semenya, the counsel for Basil Read, said the matter should be struck off the roll because of lack of ground for urgency.

Semenya said Sars had obtained judgment against Baarata on February 27, 2014, which was a year-and-sevenmonths ago.

Tax liability

Jannie Lewies, the attorney for Baarata, said after the application had been dismissed that Baarata’s VAT liability to Sars resulted from invoices it was required to submit to Basil Read, but it had not yet been paid these invoiced amounts.

Lewies said Baarata had decided against resolving the dispute through arbitration because it would have taken about 18 months to conclude, would have prevented Baarata from approaching the court for relief and it would have had to pay upfront for the arbitration.

He confirmed Basil Read had offered to settle with Baarata for R368 000 but this offer was rejected because it amounted to less than 10 percent of Baarata’s claim.

Basil Read in June 2013 terminated an R83m contract it had sub-contracted to engineering solutions provider Thusananga Gast for alleged non-performance and called in Gast’s R8.2m performance bond.

Gast chief executive Kevin Gast confirmed yesterday that his company had closely monitored the Baarata court proceedings and was in contact with other contractors who had experienced similar treatment from Basil Read.

Gast was still owed more than R55m by Basil Read.

Gast said his firm had spent R12m in the past two years preparing for arbitration on its dispute with Basil Read, which he hoped would be finalised within the next six months.

Basil Read shares on the JSE yesterday rose by 1.25 percent to close at R4.05.