- Allenby Housing CC has secured an order requiring Gauteng’s human settlements MEC and department to pay R68.3 million for accommodation units supplied and installed across the province.
- The government claimed its lawyers lacked authority to finalise the settlement, even though they had agreed on the amount owed and when it should be paid.
- Judge Henriques found the agreement was binding and said the government had not provided any facts to support its claim that its representatives lacked authority.
A Gauteng government department and the provincial MEC must pay a housing contractor R68.3 million for supplying and installing prefabricated modular accommodation units at sites across the province.
Judge JI Henriques ordered payment after deciding the parties had reached a binding settlement during mediation and dismissing the government’s argument that its lawyers lacked authority to conclude the deal. The contractor agreed to reduce its claim, but the government did not pay the agreed amount by the deadline.
A decade-long dispute over unpaid work
Allenby Housing CC took legal action in 2014 against the Gauteng Department of Human Settlements and the MEC, asking for payment for work it had done under five partly written and partly oral agreements.
Dr Gonaseelan Govender, the company’s managing member, said Allenby Housing had supplied and installed prefabricated modular accommodation units at various sites across Gauteng. Despite repeated requests for payment, the department still owed the company money.
In June 2023, the department told Allenby Housing it was starting mediation with the Office of the Premier to reduce its backlog of legal disputes. The company agreed to take part, and Advocate VG Sibeko was appointed as mediator through the State Attorney’s office in KwaZulu-Natal.
During talks to narrow the issues in dispute, the parties reached an agreement, which they recorded in a document dated 1 December 2023. Although the document was titled “Stated Case”, it set out specific settlement terms, including the amount to be paid and the deadline for payment.
Allenby Housing agreed to reduce its claim by about R15.4 million, bringing the agreed capital amount to R59.4 million. Both sides also agreed to cap interest at 15 percent, which came to R8.9 million. The total settlement was R68,303,234.15, with payment due by 28 February 2024.
Government failed to make interim payment
When both sides returned to the mediator in December 2023, the government’s lawyers asked for a delay to arrange payment. There were more postponements while they waited for further instructions.
At the hearing on 31 January 2024, the government’s lawyers could not confirm whether enough funds were available. They also questioned whether the accommodation units had actually been delivered, even though the company relied on evidence to support its claim.
Allenby Housing said it would only agree to another delay if the government made an interim payment of about R12.5 million, which the company said had been verified by the government’s auditor. The government’s lawyers were only authorised to agree to an interim payment of R9,314,710.86.
The mediator issued a ruling allowing for the interim payment while the government got further instructions about the outstanding balance. According to Allenby Housing, neither the interim amount nor the balance was ever paid.
The company then went to the High Court, asking the court to declare the written agreement a settlement and make it an official order of the court.
In August 2025, the application was postponed indefinitely to give Allenby Housing time to add more detail about how the document was signed and why it should count as a settlement agreement.
Government disputed the settlement
The government argued that the document was only a “Stated Case” drawn up during mediation to outline points of agreement and explore possible compromises. It said that no final settlement was reached and that any concessions made during talks were not binding.
The government also claimed its lawyers, including the State Attorney and counsel, did not have written authority to settle the claim. According to the government, any settlement needed approval from the head of department after the necessary legal and financial checks.
Allenby Housing argued that the document set out the amount owed, the interest and the payment deadline. The company said the government could not avoid its obligations just because the document was titled as a stated case.
Although the government had filed affidavits opposing the application, no lawyer attended the hearing. Judge Henriques was satisfied the government had been notified and knowingly chose not to send a representative. The judge still considered the objections raised in its affidavits.
Judge finds binding settlement
Judge Henriques found the document was not a standard stated case under court rules because it did not set out the legal questions the parties wanted the judge to decide. Instead, it simply recorded the terms of a settlement reached during mediation.
The judge looked at the agreed payment amount, the interest rate, the payment deadline and the reduction of the original claim. These terms showed the parties had resolved their dispute, not just listed facts for a future hearing.
The judgment noted that the point of mediation is to help parties resolve disputes through negotiation and compromise. Under the relevant rules, a written settlement agreement can be made an order of court once the parties have agreed. The judge also rejected the government’s claim that its lawyers lacked authority.
The government had allowed its representatives to take part in mediation and negotiate the dispute. They had agreed on the capital amount, interest and payment deadline, and the government had even given instructions for an interim payment.
Judge Henriques said the government’s affidavits did not explain whose approval was needed, what restrictions were on the lawyers’ authority, or if the approval process had actually been followed. The government made general claims without facts to back them up.
The judge explained that State Attorneys have a wider mandate when representing the government in court than private lawyers do. The government could not let its representatives negotiate and agree to the settlement, then later deny their authority when payment was due.
The judge also found that the government’s conduct led Allenby Housing to believe the representatives were authorised to agree. The government was therefore bound by the settlement.
Mediator’s ruling not made an order
Allenby Housing also asked, as a backup plan, for the mediator’s ruling to be made an order of court. Judge Henriques refused this because the ruling had not been signed by the parties or their lawyers.
The judge explained that a mediator’s job is to help with negotiations but not to impose a settlement or make a binding decision. The settlement agreement itself, not the mediator’s ruling, was the right document to make an order of court.
Government ordered to pay R68.3 million
Judge Henriques ordered the Gauteng MEC for Human Settlements and the Gauteng Department of Human Settlements to pay Allenby Housing CC R68,303,234.15, jointly and severally. This means the contractor can enforce the payment against either respondent but cannot recover more than the total amount owed.
The respondents were also ordered to pay the costs of the application.
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