Contractor threatens to sue City

The contractor whose deal with the City of Tshwane to build the Townlands housing complex in Marabastad was terminated will not take the matter lying down. The municipality terminated a R366 million contract with Magic Construction for development last year, citing the service provider’s failure to meet a deadline for completing 100 housing units by June. However, Magic Construction director Hamlet Chaane claimed the termination was due to his refusal to buckle under political pressure to work with other construction entities.

He claimed officials from Housing Company Tshwane, a municipal entity, told him of a political directive that he partner with another major construction company or risk having his contract terminated. “We were not comfortable to work with them and stated that we were not going to We said we are willing to work with subcontractors for as long as they were BEE compliant so that we can contribute to the whole empowerment agenda”, Chaane said. He claimed there were concerted efforts made from the outset of the project by the DA-led administration to frustrate the contractor.

“We started this project without all legal documents required to take over the site”, he said. He said there were no approved drawings of the housing project and the site was not enrolled with the National Home Builders Registration Council as required by law. According to Chaane, the contractor came under political pressure to start with work on the site although it did not have a construction permit from the Department of Labour. “With those documents outstanding, we were not supposed to commence with construction activities”, he said.

According to Chaane, all the above-mentioned documents were submitted to the company in May last year. “We asked them for an extension of time for construction and they didn’t want that”, Chaane said. He believed the City terminated its contract with the company after losing patience with it for refusing to work with certain construction entities. “They issued a termination letter and we declared a dispute because they didn’t follow the proper process to terminate.

You have to put people on terms and then you give people a notice to terminate, and that process was not followed”, Chaane said. He said the City also declined to go through an independent arbitration process to adjudicate on the termination. “We have sought legal advice and we believe we have a strong case. We are going to go for the City for damages and loss of projected income. “We are not going to walk away from this project. We are going to fight them”, Chaane said.

Human Settlements MMC Mandla Nkomo said he was aware the company intended taking a legal action against the City. According to him, the City would wait for the legal fight to be exhausted in court before a new contractor could be appointed. He said the contract was terminated because the developer was not performing according to contractual obligations. “They were supposed to deliver 100 housing units in June last year and they couldn’t”, he said.

The project was abandoned last month with few incomplete housing units. Nkomo said there was no truth in the allegations that the contractor was axed due to political pressure to work with another company. The housing project was sod-turned by former mayor Kgosientso Ramokgopa two years ago, but the construction site was handed over to the contractor in January last year by the new administration. The development was planned to comprise 1200 social housing units for low-income earners.

Its beneficiaries were categorised into two groups: those who took home between R2 500 and R3 500 a month and those who earned between R3500 and R7 500. It was envisaged that on its completion, the social rental stock complex would have an outdoor gym, braai places, vegetable gardens, a community hall, netball court and soccer field. The project was bankrolled by the national Department of Human Settlements through its Social Housing Regulatory Authority, and the Gauteng Department of Human Settlements through the Gauteng Partnership Fund. A capital expenditure grant was supposed to come from the City.