Judge hammers City
A high court judge has severely criticised the Windhoek municipality for dealing with the sale of public property assets in a “cavalier fashion”.
The Windhoek municipality has been found gravely wanting in terms of the manner in which it has dealt with the selling of a public asset to Zest Investments Seventy Three CC.
The company had lost its long-running battle late in June to acquire a prime property measuring 5 277 square metres from the City, when High Court judge Boas Usiku determined it had not complied with the purchase agreement entered into with the municipality.
In November 2015 the municipal council took a decision to cancel the agreement, after Zest Investments failed to provide a bank guarantee for the full purchase price of N$8.6 million and decided instead to allocate the property to Quiver Tree 26 CC for N$9.5 million, which includes value-added tax (VAT).
Zest Investments challenged this decision, arguing the municipality had breached the material terms of the sales agreement and that it in fact tendered payment for the purchase price through a letter of undertaking.
It made this assertion on the basis of a letter of undertaking its lawyers had submitted to the municipality.
During the court proceedings Elli Shipiki, head of the municipality’s property management department, testified he had signed the sales agreement with Zest Investments on behalf of the City’s CEO.
He also confirmed he had instructed Zest Investments’ lawyers to attend to the registration of the transfer of the property on the strength of the letter of undertaking.
Shipiki said he had accepted the letter because the municipality had adopted a practice where it accepts letters of undertaking as a proper instrument of payment of the purchase price.
Judge Usiku, however, said a letter of undertaking does not guarantee payment of the purchase price against the transfer of the property.
The judge further said only a person who has funds available or who has the availability of such funds guaranteed, can guarantee payment.
He added the letter guaranteed nothing in terms of the sales agreement and that the municipality therefore had the right to cancel it.
Judge Usiku said the case had raised a number of “disturbing facts” regarding the sale of public property.
He said the sales agreement had apparently been orally altered by the municipality and Zest Investments was allowed to execute the sales agreement without furnishing the requisite proof of a loan approval.
Moreover, Usiku said the letter of undertaking was apparently regarded, initially, as a “good guarantee”.
He said it was “very alarming and disturbing” that the municipality had adopted such a practice particularly because it dealt with the disposal of public assets in which all taxpayers and ratepayers have an interest.
“Dealing with immovable property in such a cavalier fashion amounts to playing ducks and drakes with public assets. It is an abdication of the responsibility that the public reposes in the [municipality],” Usiku said.
He instructed the registrar of the High Court to refer a copy of his judgement to the City of Windhoek “in the hope that remedial action is taken”.
CATHERINE SASMAN
The company had lost its long-running battle late in June to acquire a prime property measuring 5 277 square metres from the City, when High Court judge Boas Usiku determined it had not complied with the purchase agreement entered into with the municipality.
In November 2015 the municipal council took a decision to cancel the agreement, after Zest Investments failed to provide a bank guarantee for the full purchase price of N$8.6 million and decided instead to allocate the property to Quiver Tree 26 CC for N$9.5 million, which includes value-added tax (VAT).
Zest Investments challenged this decision, arguing the municipality had breached the material terms of the sales agreement and that it in fact tendered payment for the purchase price through a letter of undertaking.
It made this assertion on the basis of a letter of undertaking its lawyers had submitted to the municipality.
During the court proceedings Elli Shipiki, head of the municipality’s property management department, testified he had signed the sales agreement with Zest Investments on behalf of the City’s CEO.
He also confirmed he had instructed Zest Investments’ lawyers to attend to the registration of the transfer of the property on the strength of the letter of undertaking.
Shipiki said he had accepted the letter because the municipality had adopted a practice where it accepts letters of undertaking as a proper instrument of payment of the purchase price.
Judge Usiku, however, said a letter of undertaking does not guarantee payment of the purchase price against the transfer of the property.
The judge further said only a person who has funds available or who has the availability of such funds guaranteed, can guarantee payment.
He added the letter guaranteed nothing in terms of the sales agreement and that the municipality therefore had the right to cancel it.
Judge Usiku said the case had raised a number of “disturbing facts” regarding the sale of public property.
He said the sales agreement had apparently been orally altered by the municipality and Zest Investments was allowed to execute the sales agreement without furnishing the requisite proof of a loan approval.
Moreover, Usiku said the letter of undertaking was apparently regarded, initially, as a “good guarantee”.
He said it was “very alarming and disturbing” that the municipality had adopted such a practice particularly because it dealt with the disposal of public assets in which all taxpayers and ratepayers have an interest.
“Dealing with immovable property in such a cavalier fashion amounts to playing ducks and drakes with public assets. It is an abdication of the responsibility that the public reposes in the [municipality],” Usiku said.
He instructed the registrar of the High Court to refer a copy of his judgement to the City of Windhoek “in the hope that remedial action is taken”.
CATHERINE SASMAN
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