<\/p>\n
The Special Tribunal has set aside what it termed \u201cirregular arrangements\u201d the eThekwini Municipality had with three companies.<\/p>\n
Residents have long complained about the quality of housing being built as part of the Phoenix infill municipal housing project, and the subsequent eviction of some tenants.<\/p>\n
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Earlier court cases involved Woodglaze, which trades as Lady Brick Block Property Development and has been building houses in Phoenix for two decades. The company is associated with Durban businessman Jay Singh.<\/p>\n
In a judgment on 5 August, Judge Margaret Victor directed that Woodglaze \u2014 as well as Madupha Business Enterprise and Ready Homes \u2014 may not start building any new houses but may finish those under construction.<\/p>\n
Affordable housing<\/p>\n
The infill project, which began in 2000, was intended to build affordable housing on vacant municipal land in Phoenix.<\/p>\n
In terms of the tender, the service providers were to develop 130 sites within two years and sell them to beneficiaries approved by the municipality\u2019s housing department.<\/p>\n
More than two decades later, it is unclear how many affordable housing units for first-time homebuyers in low- and middle-income groups have been built.<\/p>\n
Questions have also been raised regarding ownership structuring, environmental concerns over the loss of open and recreational spaces, and infrastructure strain.<\/p>\n
Victor declined to order the companies to repay their profits, which was requested by the Special Investigating Unit (SIU), saying a debatement and disgorgement order would be \u201cinappropriate\u201d given the lack of evidence regarding financial details of the project.<\/p>\n
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But she left the door open for further evidence to be filed on this issue.<\/p>\n
Questionable conduct<\/p>\n
\u201cThe municipality\u2019s conduct warrants particular comment,\u201d Victor said.<\/p>\n
\u201cIt created and perpetuated the irregular arrangements, failed to maintain adequate records, failed to revoke or regularise unlawful arrangements when concerns were identified, and then elected not to participate substantively in proceedings concerning its own procurement failures.\u201d<\/p>\n
Victor, in her ruling, said the service providers were required to provide beneficiaries with \u201cgood value for money\u201d.<\/p>\n
They also had to produce evidence of available funding, traceable references and the ability to obtain funding for the entire project.<\/p>\n
Read the ruling here.<\/p>\n
In 2002, the municipality appointed three service providers \u2014 Universal Property Development, Sabamba and Cascade Home Trust.<\/p>\n
They were required to provide detailed plans, specifications, materials and finishes and to demonstrate that they would meet the beneficiary allocation requirements of 25% to subsidy-income beneficiaries (earning less than R3 500 a month) and 75% to middle-income beneficiaries (earning from R3 501 up to R5 000 a month).<\/p>\n
However, it appears none of these companies did the work.<\/p>\n
Madupha and Ready Homes, which were apparently subcontractors to Sabamba, were later \u201cintroduced into the programme\u201d without any prior public tender or adjudication process.<\/p>\n
When Universal failed to perform, Woodglaze, which had participated in the initial tender process, was given the contract in 2005.<\/p>\n
In April 2017, the municipality resolved to revoke this contract because of a breach of supply chain management requirements. But the contract was not revoked. Instead, in 2021, it was renewed without the three-yearly review required by the Local Government Municipal Finance Management Act.<\/p>\n
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Woodglaze, Madupha and Ready Homes argued that they were innocent contractors who believed their contracts were lawful.<\/p>\n
But the central question was whether their appointments and continued participation in the project complied with the constitutional and statutory procurement framework, said Victor.<\/p>\n
\u201cThey did not,\u201d she said.<\/p>\n
\u201cIn respect of Madupha and Ready Homes, there was no public invitation to tender, no competitive bidding process and no evaluation \u2026<\/p>\n
\u201cWoodglaze\u2019s position is different only in chronology, not in principle. Although Woodglaze was connected to the earlier tender process, its later appointment and continued allocation of sites were not managed through a fresh, transparent and competitive process.<\/p>\n
\u201cIt follows that the appointments and continued arrangements under which they participated in the programme are constitutionally invalid and fall to be reviewed and set aside.\u201d<\/p>\n
Turning to the \u201cjust and equitable remedy\u201d, she said there was no finding on the papers that they had acted corruptly or fraudulently.<\/p>\n
\u201cThe papers do not establish the extent of any profits, the value of land paid for, the status of incomplete dwellings or the effect of the requested relief [by the SIU] on purchasers and beneficiaries.\u201d<\/p>\n
Victor said the appropriate remedy was to set aside the \u201cirregular arrangements\u201d going forward and prohibit further development.<\/p>\n
She ordered that if the municipality wants to continue the project, it must run a lawful tender process.<\/p>\n
The municipality did not oppose the SIU\u2019s application, sending an advocate only to observe. Victor directed it to explain by 29 September why it should not pay the costs.<\/p>\n
#eThekwini #housing #contracts #Phoenix #ruled #unlawful<\/p>\n","protected":false},"excerpt":{"rendered":"
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