Developer’s action against EMM dismissed with costs
Developer Rean Booysen has lost the action he brought against the Ekurhuleni Metro.
ALBERTON – A High Court ruling* found in favour of the metro in the matter of Hometalk Development and others vs Ekurhuleni Municipal Metro, Gauteng LD 10135/2010, and dismissed Booysen’s action with costs.
The RECORD perused the judgement and our summary follows below.
The plaintiffs in the case, Hometalk Developments (Pty) Ltd, Afro Pulse 123 (Pty) Ltd and King Trade Investments 100010 (Pty) Ltd, all companies under Booysen’s control, were seeking compensation of R131-million from the EMM for delictual damages for pure economic loss.
The action stems back to the controversial land swap deal between the EMM and Booysen.
Booysen claimed that Patrick Flusk (city manager at that stage) wrongfully and unlawfully delayed the issuing of a Section 82 Certificate for 15 months, from December 15, 2007 to March 20, 2009.
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A Section 82 Certificate is issued only once the metro is satisfied that water, sewerage system and roads inside the development have been completed to municipal standards.
The issuing of the certificates constitutes the final step in the township development processes and only once this has taken place can a developer transfer stands to the end purchaser.
Without the issuing of these certificates, the developer would not be able to continue with the development, nor could stands be transferred into the names of people purchasing land in the estate.
Booysen held EMM liable for the actions of Flusk.
It was also alleged that Flusk signed an offer to purchase a stand in the development, but that he wanted it at discount price and, ultimately, demanded a stand for free and, to this end, withheld the certificates.
Judge CH Nicholls makes mention of the valuations obtained for the two pieces of land and that, despite the objections of Machiel de Wet (the then manager of EMM’s corporate and legal affairs) the land swap was approved on the basis of Thinus Nel’s valuation of the two pieces of land.
Nel valued the EMM land at R7 742 000 and the Meyer land at R9 401 000. The Meyer land was privately owned by the Meyer Family Trusts and Booysen had the rights to develop it.
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Flusk’s defence was that he acted in order to protect the EMM, since he believed the original land swap deal was illegal and that the EMM land swapped for that owned by the developer was worth far more than the developer’s land, and that, as a result, the developer would earn R200-m in profit, while the metro suffered a loss.
Flusk testified that in an attempt to resolve the matter, he extended an offer to the developers to pay market-related prices for the land which they unlawfully obtained in contravention of section 14(2) of MFMA. His offer was rejected.
Flusk was appointed in mid-2007 and shortly thereafter Pasco Risk Management (Pty) Ltd were appointed to investigate suspected fraud in the EMM’s motor vehicle workshops.
Pasco informed Flusk of an anonymous tip-off about the unlawful alienation in Meyersdal and he decided to extend Pasco’s mandate to include a full investigation into the land alienation.
In three different Pasco reports, various EMM councillors are named as parties owning land in the development.
Judge Nicholls found that, in order to visit liability on the state, Flusk’s conduct must not only be irregular, negligent and incompetent, but the plaintiffs must show that, on a balance of probabilities, the delay in issuing the certificates was dishonest and motivated by greed and financial gain.
Conclusion:
In her conclusion, Judge Nicholls stated that the “Genesis of the land exchange was the EMM coming to the rescue of the Gauteng Government”. She further stated that nothing could gainsay Flusk’s version, in that he truly believed that the development was irregular and tainted.”
Although Judge Nicholls also found that in certain cases Flusk’s conduct was blameworthy, the pertinent question was whether or not it was wrongful.
She also found that it could not be in the public interest and the interest of justice that the EMM be held liable for the conduct of an administrative function, since Flusk believed he was preventing a fraud of massive proportions from taking place.
The Judge ordered the action dismissed with costs, including the costs attendant on the employment of two counsel.
EMM spokesperson Themba Gadebe stated that the metro is currently studying the judgement and will provide a response in due course.
Rean Booysen’s office forwarded the following comment: “We intend to appeal against the judgement. We are busy reviewing the judgement and seeking advice about our options.”
