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Thursday May 03, 2012

Durban hotel owners in court battle

Durban hotel management group Signature Life Hospitality is caught up in legal battles involving the owners of four hotels it previously managed, who are claiming R4 million in debts and damages.

The Docklands Hotel at the Point Waterfront.

The owners of three hotels accuse the group of breaching its management agreement. In the latest incident, Signature Life staff were forced off the Docklands Hotel property at the Durban Point Waterfront last month.

Owners of Hotel 64 on Gordon (64 Gordon Road, Berea), Hotel on the Park (296 Steven Dlamini/Essenwood Road) and the Boulevard 44 Hotel (formerly Caledon Hotel) in Ballito have all taken legal action against Signature Life.

Boulevard 44 Hotel's shareholders include Mandla Gcaba and Khulubuse Zuma, nephews of President Jacob Zuma.

The action by Hotel 64 is set to be heard in the Durban High Court tomorrow.

Signature Life Hospitality director Alan Vels told The Mercury that all cases related to commercial disputes over money allegedly owed. He said in certain cases the group was counter-suing for damages.

Manogh Maharaj, of Maharaj Attorneys, who represents Hotel 64 and the Docklands Hotel, said: "Signature Life breached its management agreements and had not paid off debts/commission owed to the hotel owners."

He confirmed that Docklands Hotel had cancelled its management agreement with Signature Life last month.

"Hotel 64 had to resort to instituting legal proceedings... because it contravened its management agreement, which resulted in my client being unable to pay taxes and rates on the property," he said.

Amalta Seevnaraiyan, also of Maharaj Attorneys, who is dealing with the case, said Hotel 64's owners were claiming R580 543 in debt owed by Signature Life.

She said Hotel 64 and Docklands Hotel had a mutual shareholder in Charles Taberer. However, Hotel 64 was the client taking court action against Signature Life.

Voreshka Gosai of Farrell Inc Attorneys, who represents Majestic Silver Trading Pty Ltd (owners of Hotel on the Park), said that after protracted litigation Signature Life was evicted from the property last year. It was owned by Dave Jones.

"We are now computing damages of over R3m against Signature Life on behalf of our client," she said.

Gosai said Farrell Inc also represented Boulevard 44 Hotel. "This is a separate case, which we are finalising. Boulevard 44 Hotel's management agreement was mutually ended last year, but the owners are owed money from Signature Life. We are also claiming for the unlawful removal of furniture from the hotel by Signature Life. Together with the debt we will be claiming about R400 000," she said.

Responding to questions from The Mercury, Signature Life's lawyer, Gavin Price, of Gavin Price Attorneys, said in each case, the group had instituted or was in the process of instituting claims against the hotels for non-payment of contractual fees and damages for breach or repudiation of written management contracts.

"Signature Life has already suffered defamation at the hands of these hotels and their representatives and will be instituting action against them for damages," he said.

Price said in the Docklands Hotel matter, cancellation of the management contract with Signature Life was being disputed through pending legal action.

"The so-called cancellation is integrally tied into a failure by the Docklands Hotel to pay the amount which is due in respect of the purchase of Wodka Restaurant and the conference facility (at the hotel)."

Regarding Hotel 64's case, Price said: "(It) is a contrived dispute based on manipulated accounts where a dispute is sought to be created where none exists... All amounts which are owing to Hotel 64 have been paid."

In the Hotel on the Park's case, Farrell Inc's suggestion that it was owned by Majestic Silver was incorrect. "Majestic Silver was the landlord whilst the company set up to operate the hotel was Equistock Properties... The problem which arose was that Dave Jones, the common director of the Dave Jones Family Trust which was a shareholder in both companies, undercapitalised the management company... such that it was unable to pay for goods and services rendered by Signature Life," he said.

Price claimed the situation resulted in Jones attempting to cancel not only the lease agreements, but also the management agreement with Signature Life. He denied that Signature Life was evicted from the property and said the exit was based on Jones's voluntary liquidation of the operating company.

Price said Signature Life's claims and damages against Hotel on the Park included R209 412 for improvements carried out by the group; R160 574 in unpaid marketing and management fees; and damages of more than R1.9m for termination of the contract.

In the Boulevard 44 case, the hotel's owners had "misguidedly elected to pursue proceedings against Signature Life for the value of the furniture".

"Signature Life have defended that claim and countersued for R258 880 for unpaid management and marketing fees."

The Mercury

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