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Monday Jul 01, 2013

Investors concerned over stalled Blythedale resort plans

Jittery investors who have ploughed millions into the beleaguered R10 billion Blythedale Coastal Resort development on the North Coast have begun turning to the courts to get their money back while others are poised to form a "creditors' committee" to protect their interests.

The project, once lauded as a blueprint for land reform, has stalled because of a land claim dispute that could take another two years to resolve, failing an out-of court settlement.

Developer Mark Taylor says his investors are sticking with him, but two have approached the court and obtained judgments against Blythedale Coastal Resort Pty Ltd for just more than R1 million plus interest and legal costs.

Taylor's attorney, Daryl Francois, said on Friday that he believed the judge had erred in granting the applications and they would appeal.

He said there was no other pending litigation against the company and investors and creditors were being kept informed of every development.

"It is counter-productive (for creditors) to rock the boat now. We are negotiating and we are confident we will succeed," he said.

Attorney John Lister, whose client invested R15m in the property project, said he intended to form a creditors' committee in an attempt to avoid putting the company into liquidation, which might not be financially beneficial to creditors now.

He said there were several scenarios, one of which could see Blythedale receiving compensation from the government.

"Taylor is being very transparent. But we want to ensure that creditors get their slice of any government compensation.

"If the land claim deal fails and Blythedale does not get compensation and creditors do not get paid, we will go after the government for our money," he said.

But some creditors have already gone the court route.

According to a recent judgment by Pietermaritzburg high court acting Judge Igna Stretch, Logindri Govender and Andrew Walsh both entered into agreements with the company in January 2010, Govender lending it R522 500 and Walsh R632 500 in return for options to purchase sites.

Their identical agreements stated that the loans would be settled on the transfer of the properties into their names within 24 months, failing which they would be entitled to repayment of the capital sum plus interest on 30 days' notice.

The relevant period expired in January last year and both investors signed agreements of cancellation but were never repaid.

The company opposed both applications, claiming oral agreements had extended the loans, which would become repayable only when other lenders had been found to replace the investors.

The judge said from what she could glean from this "cursory affidavit", the nature of the defence was that after cancelling the agreements, the investors "made an about-turn" against their own interests and entered into an extremely vague and open-ended oral agreement. The judge said this defence was not only vague but also "improbable" and the defence had been raised "solely for the purpose of a delay".

Taylor bought the land in the early 2000s but development was stalled because of a subsequent land claim lodged by the Zwelabantu Dube community.

This was resolved in 2009 in a "landmark" agreement. But now the community wants its land back and has brought an application to the Durban labour court, supported by Rural Development and Land Reform Minister Gugile Nkwinti, who lambasted his predecessor and the former acting land claims commissioner for allowing the deal to go ahead.

The matter is back in court at the end of September but Jabulani Mabaso, a spokesman for the community, said the dispute could drag on for another two years because it could be settled "only in the Constitutional Court".

The Mercury


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