A development consortium has obtained a Western Cape High Court order to halt tenders for the construction of homes at two N2 Gateway project precincts.
Ibuyile Development Consortium alleges that the rights that are the subject of the tenders were awarded to it in 2005.
The high court interdicted the government from awarding the tenders until February 22, when it will formally hear the application, lodged by Ibuyile and Sea Kay Property Development - the company appointed to construct homes in two of the project's precincts.
The government has until tomorrow to file its opposing papers.
The N2 Gateway Project was initiated in 2004 by the City of Cape Town, the Western Cape government and the national government to alleviate the housing shortage.
In an affidavit before the court, Sea Kay director Pieter van der Schyf said the city awarded a tender to Ibuyile in May 2005 for construction work at Delft Symphony precincts 1 to 6.
He said Ibuyile had put "considerable effort" into the project and had, to date, completed and handed over more than 3 200 homes.
However, he said that the Western Cape Department of Human Settlements gave notice in December of two tenders to build homes and amend services in precincts 3 and 5 of the project.
If the government was allowed to award the tender, the rights previously awarded to Ibuyile would be rendered of no value and the construction of homes stood to be jeopardised, he said.
Ibuyile intends to institute court proceedings relating to the tender issue, but approached the high court to interdict the award of the tender pending the outcome of those proceedings.
Explaining the background to precincts 3 and 5, Van der Schyf said the precincts were treated differently in 2006 when First Rand Bank (FRB) became involved.
Van der Schyf explained that the national Department of Housing entered into a memorandum of understanding with FRB in terms of which FRB undertook to participate in and support governmental plans for sustainable integrated housing development and settlements.
Precincts 3 and 5 were identified to fill the gap market - for beneficiaries too poor to afford houses of their own and not poor enough to qualify for subsidised housing. FRB was to finance the construction and become a bond holder.
A joint venture agreement was entered into between BVI, Ibuyile, Sea Kay and M5 Housing.
All rights and obligations of the joint venture were transferred to BVI in October 2008.
Ibuyile transferred its rights in respect of precincts 3 and 5 to the joint venture for R31.65 million.
Sea Kay was the entity appointed to construct the houses and FRB was to provide funding.
Construction of the first batch of houses started in March 2008.
However, FRB was unable to pass development bonds over provincial land and eventually brought an application to liquidate BVI.
After a provisional liquidation order was granted, the appointed liquidators instituted an action in Gauteng in which they claimed repayment of the R31m in consideration for alienation of the rights.
The liquidators' case, according to Van der Schyf, was that BVI did not receive the rights.
He said that, if the liquidators were correct, the rights remained vested in Ibuyile.
"The right of the provincial authorities to award a tender for the construction of homes in precincts 3 and 5 was alienated by the award of the tender to Ibuyile in 2005. The provincial authorities accordingly cannot award the tender," Van der Schyf said.
Van der Schyf added that, even if the liquidators were not correct, Sea Kay enjoyed an interest in the rights through its participation in the joint venture, and an interdict would still be necessary in order to protect its interests.
He said that beneficiaries would be affected if a new appointment was made.
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