With his legal battle over the sale of the Natal Command site in Durban headed for the Constitutional Court, businessman Sunny Gayadin has now locked horns with the Msunduzi municipality for allegedly selling land cheaply to a property conglomerate.
Gayadin claims that the land was sold to the Liberty Property Group for R7.5 million plus VAT, which he contends in papers filed in the Pietermaritzburg High Court yesterday, was below the fair market value. He said later that his business consortium, Epilite 123, had offered the municipality twice that amount – R15m – for the properties near the Liberty Midlands Mall to develop its own mall at a cost of half a billion rand.
It has long been thought that the site would be used for the expansion of the Liberty mall.
Gayadin has asked the court for an order reviewing and setting aside the municipality’s decision to sell the land; the setting aside of the agreement of purchase and sale; and that if the properties had already been transferred, an order directing the registrar of deeds to cancel the registration of transfer.
The decision to sell, and the process that followed, had not complied with the principle of legality, he argued, adding that the municipality’s executive committee had adopted a resolution to sell the properties to the Liberty group without first calling for representations from the public.
“Had the municipality followed its processes correctly, it would have had the benefit of Epilite’s offer of R15m, or other offers from other interested persons in considering what the fair market value was,” Gayadin said in his affidavit.
“It is submitted that the properties have been sold for less than its fair market value.”
Gayadin said that after it adopted the resolution to sell the property on April 10, 2008, the municipality proceeded to sign the agreement of purchase and sale on June 23, 2009.
“The resolution in April was therefore not an approval in principle, nor did it take into account any comments… from the local community,” Gayadin said.
The municipality, he said, had signed the agreement without first advertising its intention to sell the property, as was required. Epilite thereafter lodged its objection to the sale.
The corporation’s offer was, however, allegedly rejected in September last year on the basis that the council policy did not allow the sale of the property by private treaty, “unless the potential buyer owns the adjoining property and wishes to expand”.
The municipality had also told Epilite that its council was contractually bound by the signed sale agreement with Liberty.
Gayadin said in his affidavit that the municipality had committed a number of irregularities and illegalities in dealing with the offer made by the Liberty group.
“At the time of deposing to this affidavit, the municipality has still not provided a formal response to Epilite’s objection,” he said. Gayadin later said that his consortium had offered
R15m for the land and had set aside R500m to develop it.
He said he made several attempts to arrange meetings with the municipality before the closing date for objections, but was unsuccessful.
“I intended to submit and discuss a development plan concept comparable to the new lifestyle centre in Johannesburg’s Fourways, Nicolway, with a new concept of a Woolworths super store, similar to Hyper by the Sea, and another based on the Crescent Centre at uMhlanga,” Gayadin said.
He said his consortium’s objective was to develop about 40 000m2 of mall space, and had compiled a business plan to offer rentals at less than half of the costs of the existing mall
He is also in the middle of a legal battle with movie maker Anant Singh over the development of a film studio at the Natal Command site. The two will slug it out in the Concourt in September.
Gayadin claims the deal, in which Singh bought a R71m site for R15m by public treaty, was flawed.