Judge rules 99-year lease of a municipal property unlawful

A MUNICIPALITY in the Harry Gwala District of Kwazulu-natal secured an eviction order by proving in court that a company and a government department unlawfully occupied a property it owns in Ixopo.

The Ubuhlebezwe municipality’s eviction application was heard by acting KZN Judge President Thoba Portia Poyo-dlwati, at the Pietermaritzburg High Court.

Judge Poyo-dlwati ordered on April 28 that Pisys Technologies CC, the fourth respondent, and any other person or entity occupying the property on Margaret Street be evicted.

The other respondents were the Minister of Public Works, the director-general of Public Works and the Department of Statistics.

All three indicated they intended to abide by the court outcome, and the fifth respondent, Saho Investments CC, did not oppose the application.

Only Pisys Technologies opposed the action.

Pisys claimed it secured the 99-yearlease for the property with a rental charge of R1 per annum from the municipality in October 2007, after the original lease holders, Showdown Investments (Pty) Ltd, ceded its ownership rights to it.

The company claimed that Nouleen Peterson, the former mayor of the municipality, had authenticated the lease agreement adjustment that made Pisys the rights holders on October 30, 2007.

Pisys claimed it invested R14.3 million to erect the building on Margaret Street, it cost them about R20 000 per month to maintain, and received permission from Peterson to hire out the building, which was never revoked.

Therefore, all subsequent sub-leases were lawful.

By possessing and occupying the building, Pisys said it also made its arrangement with Saho and the Public Works Department’s legal unit, and that Saho leased some of its space to the DG of the Public Works Department.

Pisys claimed it was due compensation for the improvements made to the building, which also entitled them to possess and occupy it.

But the municipality, represented by advocate Dees Ramdhani SC, argued that Pisys’ lease agreement was not in accordance with various pieces of legislation, and it made amicable attempts to have the respondents vacate the property but failed.

Ubuhlebezwe originally entered into a 99-year lease agreement with Showdown in 2007 for the exclusive purpose of erecting a call centre at the property and it was not permitted to sub-let or cede its rights, without the municipality’s written consent.

But in September 2009, the municipality discovered that Pisys entered into a sub-lease agreement with Saho, without their consent and the rental payable was R70 000 plus VAT.

Ubuhlebezwe then discovered that Saho sub-let a portion of the property to the Public Works Department and charged a monthly rental of more than R111 000.

The municipality also found that Showdown was de-registered as a trading concern in 2016, which added to the unlawfulness of the sublease agreements entered into by the respondents.

Denying it entered a lease agreement with Pisys, the municipality presented an affidavit from Peterson where she denied signing the said agreement, which Poyo-dlwati accepted.

The judge said she was also mindful that the municipal manager, the municipality’s accounting officer, did not sign the amended lease agreement, which was contrary to a council decision taken in 2004 that all signing powers rested with the municipal manager.

She said when changes were made to such agreements, council had first to ratify the amendment before the municipal manager signed it, but there was no record of the amendment in the council’s subsequent meeting.

Judge Poyo-dlwati was satisfied there was no compelling evidence indicating the municipality permitted Showdown to cede its ownership rights, which caused all sub-leases to be invalid, including Pisys’ occupation and possession of the property.

“The property was developed to be used solely for the erection of a call centre, and for no other purpose with the municipality’s written consent.”

She ruled that Pisys had no lawful right to keep possession of the property (lien) and did not have continuous possession as it emerged that Saho had possession from September 2009 until August 2014.