The City of Johannesburg has secured a court order to reclaim land it sold nearly two decades ago for a housing development that never materialised. But it will have to take the property back with a R5 million bond attached.
The Johannesburg High Court found that Sibenti Business Enterprise had breached a 2018 court order requiring it to complete the development.
In a ruling delivered on Thursday, 8 October, Judge Fiona Dippenaar ordered the company to transfer the property in Albertville back to the City immediately, warning that the sheriff could sign the necessary documents if it failed to comply.
The City’s attempt to have the bond cancelled failed. “If the City takes re-transfer of the property, it must be subject to Rota’s bond,” the judge said.
The dispute dates back to 2000, when the City council decided to sell the land for a mixed-income housing development. Sibenti won the tender in 2005.
In 2008, the City agreed to sell the property to Sibenti for R1.76 million to enable the developer to raise finance. Sibenti paid only the 10% deposit, leaving R1,584,000 unpaid. No housing was built.
The dispute eventually went to court, culminating in a settlement in 2018 that was made an order of court. Sibenti was given 36 months to complete the development, while its original member, Sibusiso Mashabane, was required to retain a majority stake in the company.
The deadline passed in August 2021 without the development being completed.
Dippenaar found that Sibenti had breached three requirements of the court order. It failed to complete the development by the deadline, did not complete the agreed valuation process and no longer had Mashabane as a member by March 2020.
Company records cited in the dispute showed that Ashley Youngman held a 98% interest in Sibenti from March 2020.
Youngman, who was then an attorney, was subsequently struck off the roll of legal practitioners in May 2024.
In a separate case, the High Court found that his professional conduct fell short of the standards required of a legal practitioner.
The City demanded the property back in January 2022. Two weeks later, Youngman emailed the City to warn that a bond had been registered over it.
The bond had been registered on 26 January 2022 in favour of Rota Investments, a credit provider. Its registration came months after Sibenti’s deadline to complete the housing development had expired.
The bond was linked to financing advanced to Armour Group Africa, a company associated with Dylan Keating, who held a 1% interest in Sibenti.
Rota advanced approximately R2.7 million in bridging finance to Armour. Sibenti stood surety for the debt, with the Albertville property offered as security.
The financing arrangement had already featured in earlier litigation.
In a separate judgment delivered in April 2023, the Western Cape High Court recorded how Youngman introduced Rota to Sibenti and represented that the Albertville property was unencumbered.
Rota subsequently registered a bond over the property in January 2022. The judgment also recorded that the City had launched proceedings to recover the property and that Rota opposed the application.
By September 2022, the debt owed to Rota by Armour, with Sibenti standing surety, had grown to almost R3.5 million, according to the latest judgment.
Dippenaar found that Armour was effectively insolvent.
The City did not accuse Rota of wrongdoing, and the judge accepted that it had acted as an arm’s-length lender.
The central problem for the City was that Sibenti was the registered owner when the bond was granted. The judge found that the 2018 court order did not prohibit Sibenti from registering a bond over the property.
Although the City was entitled to demand the property back because of Sibenti’s failure to meet its obligations, that did not automatically entitle it to cancel the security held by Rota.
The City must therefore recover the property subject to the bond.
The court also criticised Youngman’s conduct during the proceedings. He sought a postponement, saying he was required to appear in unrelated criminal proceedings. The judge refused the application.
“Mr Youngman was not frank with the court in explaining the true facts,” Dippenaar said.
She found that Sibenti “fell woefully short” of demonstrating why the matter should be postponed. She also remarked that Sibenti’s ownership appeared to be a moving target.
The court ordered Sibenti to pay the City’s legal costs on the punitive attorney-and-own-client scale. Sibenti and Youngman were ordered to pay jointly the costs associated with the unsuccessful postponement application.
Despite the City’s success in obtaining an order to recover the land, it must pay Rota’s legal costs.
The ruling leaves the City with a property it is entitled to recover, but not free of the financial encumbrance registered over it.
