The Mpumalanga department of human settlements has argued that more than R300m claimed by a construction company for building RDP houses is “overrated, inflated and exaggerated”.
This is contained in court papers filed in the Mpumalanga high court, where it is seeking to rescind a default judgment and subsequent warrant of execution obtained by XJR Construction after the company alleged it had been underpaid for nearly a decade.
In April, XJR Construction secured a default judgment of about R320m after the department failed to oppose the application or file responding papers.
The company, which has built thousands of RDP houses in Mpumalanga since 2014, claims it was paid about R103,000 per house instead of the applicable government subsidy quantum of R164,000. It alleges the underpayment resulted in substantial financial losses over the past decade, while the provincial department continued receiving the full housing subsidy from the national department.
Three weeks ago, the court issued a warrant of execution amounting to R470m, including interest, against the Mpumalanga human settlements department, with MEC Speedy Mashilo and human settlements minister Thembi Simelane as respondents.
In a rescission application, Mpumalanga head of department Mfana Chunda said XJR was not owed any money and had been paid in accordance with the contract concluded between the department and the company on May 21 2017.
“The amounts claimed by XJR in its particulars of claim are overrated, inflated and exaggerated. There’s no way in which the department would be indebted to XJR in the amounts claimed, more so after it had already paid it more than R154m of the entire contract price,” Chunda said in his founding affidavit.
Chunda argued that XJR had no entitlement to the amounts claimed and that the court would not have granted the default judgment or warrant of execution had it been aware of the department’s version.
“It obtained default judgment where it ought not to have done,” he said.
The relief sought is extraordinary in nature and the grant of a stay does not follow as a matter of course merely because an application for rescission has been instituted.
— XJR director Paul Mthabela
He further contended that none of the public housing contracts awarded to XJR was worth about R320m and that the figures claimed by the company bore no relation to the contractual amounts.
“The respondent was not underpaid; it was paid for the work it had done and on the correct subsidy quantum that was applied in the respective financial years since this was a multi-year project,” Chunda stated.
In replying papers, XJR director Paul Mthabela opposed the department’s application, arguing that Mashilo and the department had failed to establish the exceptional circumstances required for the court to suspend the execution of a valid judgment.
“The relief sought is extraordinary in nature and the grant of a stay does not follow as a matter of course merely because an application for rescission has been instituted,” Mthabela said.
He argued that the department had failed to justify depriving XJR of the benefit of a judgment it had lawfully obtained.
“XJR has for several years been deprived of payment for work performed under public housing projects undertaken for the benefit of the people of Mpumalanga,” Mthabela said.
Mthabela also argued that the department had been afforded every opportunity to participate in the litigation but failed to do so.
He said the company had suffered financial prejudice as a direct consequence of the department’s failure to honour its contractual and legal obligations.
The matter was due to be heard on Thursday but was postponed to July 16.
Isaac Mahlangu
www.timeslive.co.za
