By NOMFANELO MAZIYA | 2024-08-05

The High Court has granted Cardo Property Developers (Pty) Limited the right to issue combined summons against BFJ Developers (Pty) Ltd for E34 million.

At the heart of the case is a claim by Cardo Property Developers, which arguesd that it suffered financial damages due to alleged fraudulent actions perpetrated by BFJ Developers.

According to the court papers, the executives of BFJ Developers (PTY) Ltd being Jim McSeveney and Matthew Sprague approached Sipho Makhanya and Bobby Makhanya of Cardo Property Developers (PTY) Ltd with a proposal to develop the property (Potion 10 of Farm Valentia), thereby initiating the joint venture of the construction of the shopping mall - Cardo Square.

These two companies; Cardo Property Developers (PTY) Limited and BFJ Developers (PTY) LTD, were both incorporated according to the company laws of the country.

 

In 2018, they constituted a joint venture agreement for the development of Potion 10 of Farm Valentia situated in Manzini, measuring 9839 square metres held under Deed of Transfer No. 65 of 1995.

 

In terms of the agreement, in order to draw down or payment to be made from the joint venture’s account, two directors were appointed, one from either side, to authorise funds use throughout the project.

 

These were Matthew Sprague and Bobby Makhanya as per the signed agreement by both parties.

The plaintiffs include Cardo Property Developers (PTY) LTD, Cardo Family Trust (PTY) LTD, Sunrise Block yard and Paving (PTY) LTD and the last being Cardo Construction.

The defendants are BFJ Developers, Mathew Sprague, John Michael Mc Sevenny, Chris Wade and H.LA of 7 (PTY) LTD.

As stated in the joint venture signed agreement, BFJ Developers and Mathew Sprague were assigned as project managers of the project at Ngwane Park.

 

agreements

 

According to the court papers, despite mutual agreements between the two parties to conduct business in good faith, Cardo alleged that BFJ was in breach of the  agreement through a series of fraudulent activities involving suppliers and customers.

 

The papers claimed that the defendants, acting as project managers, transferred from the Plaintiff’s account to their account funds exceeding E8 million without authorisation, deeming the transfer unlawful and unjustified.

 

They further state that an amount exceeding E17 million was the actual value of overpayments, and inflated payments to suppliers and staff.

 

The defendant, while project managers, also allegedly made various loans amounting to E1 million at SwaziBank in favour of the defendant.

 

 “As a result of the said unlawful and unauthorised loans, the defendants were enriched to the amount of E1 million while the plaintiffs were impoverished,” read the papers.

 

The court found merit in Cardo’s allegations, granting the company the green light to pursue legal action against BFJ.

 

Cardo Property Developers alleged that by the breach of good faith, they suffered economic loss while BFJ Developers also argued that even though the harm was foreseeable, the defendants did not take any steps to prevent such from occurring.

 

 “However, the first, second and third defendants breached that duty of good faith by committing various fraudulent activities against the plaintiffs to their prejudice.

 

Such fraudulent activities were committed in and through dealings with the various suppliers and customers of the plaintiff,” read the court papers. The plaintiffs claimed that authorisation was made electronically, however, the bank allegedly never confirmed with the authorised signatories before approving funds transfers or loans.

 

They alleged that payments were made by the defendants using an electronically implanted signature for (Bobby Makhanya) and pursuant to such fraudulent act, an amount of E17 498 024 which was from the plaintiff was transferred account to the defendants’ accounts.

Due

 

On another note, due to the alleged fraudulent behaviour by the defendant in the conduct of its dealings while executing the joint venture’s mandate, Cardo claimed that they have resultantly been denied the right to claim a sum of E2 139 492.64, which was value added tax due.

 

Furthermore, and consequent to all such claims, Cardo alleged that they suffered a loss in the amount of E1 million, including an interest at nine per cent per annum of the owed amount.

 

According to the court papers, the E1 million is, therefore, due, “Owing and payable by the first, second and third defendants, but despite demand - the defendant fail, refuse and neglect to pay the said amount owing.”

 

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