Johannesburg - THE Gauteng Human Settlements Department has been ordered to pay businessman David Mabilu's company Vharanani Properties more than R1.85 million to partly settle a dispute over the construction of low-cost housing and rental units.
Vharanani Properties built the houses in Nellmapius Extension 22, Heatherley East in Tshwane after being awarded the contract in June 2005.
The clash between the company and the department started in July 2018 when Vharanani Properties submitted an invoice for more than R5.2m.
The department only paid about R3.9m in November that year.
In 2019, Vharanani Properties demanded payment of the remaining R1.3m, for which the department admitted liability but failed to pay despite the company’s lawyers writing a letter of demand.
Vharanani Properties maintained that it executed the work for which the claim was made and that the payment of R5.2m had been certified by the project manager, Kibiti Ntshumaelo of Lekwa Consulting Engineers.
It also stated that in terms of the contract, there was no lawful reason for the department not to pay.
In June 2020, the company also demanded about R540 000 by July that year from the department after Ntshumaelo issued another payment certificate, but it failed to respond and pay.
The department was also warned that interest would accrue if it failed to pay.
The non-payment forced Vharanani Properties to haul the department to North Gauteng High Court in Pretoria to force it to pay.
In response to the court action, the department said Vharanani Properties’ application was premature and that the company was supposed to first lodge “the dispute” with the adjudicator in terms of the dispute resolution clause contained in the contract.
According to the department, the dispute resolution process provided for in the agreement was not followed.
However, North Gauteng High Court Judge Elmarie van der Schyff found that Vharanani Properties had made a proper case for the company to be paid by the department.
In her judgment handed down on June 1, Judge van der Schyff ordered the department to pay Vharanani Properties the R1.85m (R1.3m and R540 000) and interest on another R3.9m the department delayed in paying.
Last year, Vharanani Properties took the dispute to court interest on the R3.9m, whose payment was delayed and calculated daily at 2% per annum above the prime lending rate and compounded annually was more than R105 000.
Judge van der Schyff referred the dispute over interest on the R1.3m for further oral arguments at the high court.
The department’s spokesperson Tahir Sema told the Sunday Independent this week that they were still studying the judgment to come up with the best solution.
“The department remains committed to paying suppliers on time where there is no dispute,” he said.
In the past, the department has admitted that it has been marred by a series of systematic challenges such as poor financial management and non-payment of service providers.
This ultimately leads to substantial historical accruals affecting the delivery of houses in the province but insists that it is making progress.