RCC bid to recover B1 millions faces wait

THE Roads Contractor Company’s attempt to use legal steps to recover at least some of the money it has sunk into the stalled B1 City property development project in Windhoek has been postponed for a further three weeks.

The RCC filed a case with the High Court in mid-July to ask the court to order Ae//Gams Engineering Company, the owner of the plot on which the B1 City development now stands partly built, to pay some N$5,69 million back to the RCC. This is money that the parastatal has lent to Ae//Gams Engineering.The RCC is also asking the High Court to sanction the sale of the plot on which the B1 City shopping complex and taxi rank were being built, in order to raise money to repay Ae//Gams debt to the parastatal.The case was postponed for a third time on Friday.It had also been postponed, each time for a one-week period, on two previous occasions in August.It is now scheduled to return to court on September 21.The B1 City project was estimated to cost some N$54 million when completed, it has been reported previously.According to a source who spoke to The Namibian late last week, though, the project’s final cost was to be in the region of about N$44 million.Documentation on the project seen by The Namibian late last week indicates that the project was initially envisaged to be a joint venture between the RCC and Ae//Gams, with each company to have had a 50 per cent stake in the project once completed.An agreement to that effect was signed between the then Chief Executive Officer of the RCC, Kelly Nghixulifwa, and Ae//Gams director David Imbili in February 2005.Erf 10485 in Katutura – the plot at the intersection of Independence Avenue and the Western Bypass road where the B1 City development was supposed to be built – was finally sold to Ae//Gams by the city of Windhoek in October 2005.The price was some N$3,905 million.The money for that transaction appears to have come not from Ae//Gams, which was afterwards registered as the owner of the erf, but from the RCC, with Bank Windhoek having informed the City of Windhoek in March 2005 that it held N$3,9 million on behalf of the RCC for the purchase of the land.Bank Windhoek initially had a mortgage of N$5,6 million registered over the property in its favour, but after the RCC had paid off this debt to the bank, a mortgage was registered in the parastatal’s favour on December 13.That mortgage stands at the centre of the case the RCC has lodged against Ae//Gams in the High Court.According to documentation shown to The Namibian, the RCC informed Ae//Gams by about April last year that it no longer wanted to be part of a joint venture with the company, but preferred to be the project managers for the development.The RCC, instead of Ae//Gams, then went ahead to appoint a locally registered Chinese building company, New Era Investments, as the building contractor.The firm started with building work in June last year – but stopped the construction in November, because it had not been paid for its work up to then.Nothing has happened since then.By mid-April this year, the RCC’s lawyer, Marén de Klerk, sent a demand for payment of N$19,7 million to Ae//Gams Engineering.A month later, the lawyer sent a notice to Ae//Gams to inform the company that the RCC was foreclosing on the property in terms of the mortgage agreement.About 10 days after that, the RCC sent Ae//Gams Engineering a letter in which it now demanded payment of N$13,9 million from the company.Ae//Gams was informed that the RCC had made improvements valued at approximately N$8,2 million to the property.The loan of about N$5,6 million from the RCC to Ae//Gams made up the rest of the N$13,9 million that was being demanded.Professional fees claimed to be due to the RCC made up N$1,83 million of the amount, while civil works performed by the RCC were charged to have cost N$3,8 million, the building contractor’s account was charged at N$5,9 million and a further N$2,8 million was charged for work done by an architect and firm of consulting engineers, according to the RCC’s letter.A valuator has subsequently valued the property in its current, half-built state as being worth N$20,6 million.The land itself, measuring 2,26 hectares, was valued at N$12,43 million, while the building works on it were valued at N$8,2 million.Imbili has already given notice to the court that he will be opposing the case that the RCC lodged.In an affidavit, he has stated that the RCC’s summons for the provisional sentence against Ae//Gams was “fatally defective”, as it did not allege or set out through what default on Ae//Gams’s part the company is alleged to have failed to comply with the provisions of the mortgage bond.Imbili also stated that in terms of the mortgage agreement Ae//Gams only has to start paying the N$5,69 million back, in 120 monthly instalments, once all the building works on Erf 10485 had been completed.The RCC on Friday filed a notice with the court to inform Ae//Gams that it intends to amend its summons for a provisional sentence in order to claim that Ae//Gams has breached the mortgage agreement by failing to have the property and the improvements on it insured and by failing to promptly pay the municipal rates and taxes on the plot.Ae//Gams can object to this intended amendment of the summons within 10 days.This is money that the parastatal has lent to Ae//Gams Engineering.The RCC is also asking the High Court to sanction the sale of the plot on which the B1 City shopping complex and taxi rank were being built, in order to raise money to repay Ae//Gams debt to the parastatal.The case was postponed for a third time on Friday.It had also been postponed, each time for a one-week period, on two previous occasions in August.It is now scheduled to return to court on September 21.The B1 City project was estimated to cost some N$54 million when completed, it has been reported previously.According to a source who spoke to The Namibian late last week, though, the project’s final cost was to be in the region of about N$44 million.Documentation on the project seen by The Namibian late last week indicates that the project was initially envisaged to be a joint venture between the RCC and Ae//Gams, with each company to have had a 50 per cent stake in the project once completed.An agreement to that effect was signed between the then Chief Executive Officer of the RCC, Kelly Nghixulifwa, and Ae//Gams director David Imbili in February 2005.Erf 10485 in Katutura – the plot at the intersection of Independence Avenue and the Western Bypass road where the B1 City development was supposed to be built – was finally sold to Ae//Gams by the city of Windhoek in October 2005.The price was some N$3,905 million.The money for that transaction appears to have come not from Ae//Gams, which was afterwards registered as the owner of the erf, but from the RCC, with Bank Windhoek having informed the City of Windhoek in March 2005 that it held N$3,9 million on behalf of the RCC for the purchase of the land.Bank Windhoek initially had a mortgage of N$5,6 million registered over the property in its favour, but after the RCC had paid off this debt to the bank, a mortgage was registered in the parastatal’s favour on December 13.That mortgage stands at the centre of the case the RCC has lodged against Ae//Gams in the High Court.According to documentation shown to The Namibian, the RCC informed Ae//Gams by about April last year that it no longer wanted to be part of a joint venture with the company, but preferred to be the project managers for the development.The RCC, instead of Ae//Gams, then went ahead to appoint a locally registered Chinese building company, New Era Investments, as the building contractor.The firm started with building work in June last year – but stopped the construction in November, because it had not been paid for its work up to then.Nothing has happened since then.By mid-April this year, the RCC’s lawyer, Marén de Klerk, sent a demand for payment of N$19,7 million to Ae//Gams Engineering.A month later, the lawyer sent a notice to Ae//Gams to inform the company that the RCC was foreclosing on the property in terms of the mortgage agreement.About 10 days after that, the RCC sent Ae//Gams Engineering a letter in which it now demanded payment of N$13,9 million from the company.Ae//Gams was informed that the RCC had made improvements valued at approximately N$8,2 million to the property.The loan of about N$5,6 million from the RCC to Ae//Gams made up the rest of the N$13,9 million that was being demanded.Professional fees claimed to be due to the RCC made up N$1,83 million of the amount, while civil works performed by the RCC were charged to have cost N$3,8 million, the building contractor’s account was charged at N$5,9 million and a further N$2,8 million was charged for work done by an architect and firm of consulting engineers, according to the RCC’s letter.A valuator has subsequently valued the property in its current, half-built state as being worth N$20,6 million.The land itself, measuring 2,26 hectares, was valued at N$12,43 million, while the building works on it were valued at N$8,2 million.Imbili has already given notice to the court that he will be opposing the case that the RCC lodged.In an affidavit, he has stated that the RCC’s summons for the provisional sentence against Ae//Gams was “fatally defective”, as it did not allege or set out through what default on Ae//Gams’s part the company is alleged to have failed to comply with the provisions of the mortgage bond.Imbili also stated that in terms of the mortgage agreement Ae//Gams only has to start paying the N$5,69 million back, in 120 monthly instalments, once all the building works on Erf 10485 had been completed.The RCC on Friday filed a notice with the court to inform Ae//Gams that it intends to amend its summons for a provisional sentence in order to claim that Ae//Gams has breached the mortgage agreement by failing to have the property and the improvements on it insured and by failing to promptly pay the municipal rates and taxes on the plot.Ae//Gams can object to this intended amendment of the summons within 10 days.