Still no holiday home – R5,5 million later

MBOMBELA – The investors of a house being built on Bazaruto Island View Estate (BIVE) in Vilankulos in Mozambique have little to show for the R5,5 million they have spent on their house.

Lowvelder recently reported on the developer’s struggles to get the resort and holiday homes off the ground, and the questions raised about Mr Ettiene Erasmus’ permission to develop, as well as him possibly misleading investors.

Four years after agreeing to invest in BIVE, Ms Sophie and Mr Martin Haupt’s house is incomplete and valued at about R800 000.

The initial contract signed between the Haupts and BIVE was for R3,2 million, but building prices quickly escalated. Even after a third building contract was signed, BIVE was unable to fully deliver on the first contract.

The couple told Lowvelder they were looking for property in Mozambique, when they chanced upon BIVE’s website. Developers, Erasmus and Ms Grace Bagnari, came to see them at their Pretoria home a few days later.

In December 2012 they “purchased” a stand on the development. After a visit to Vilanculos in May 2013, they changed it to the seafront Unit 10.

They signed a building contract with Erasmus’ MPD&I Construction LDA on September 6, 2013 to build the house at a cost of R3,2 million.

At first they mostly met the strict payment dates set out in the first building contract. Yet, building progress was so slow and payments were so far ahead of the construction that by the time they abandoned the project and Erasmus cancelled their contract, the house still had no roof and the interior was not completed.

Lowvelder has seen the proof of payments from the Haupts for each transaction the couple has made into BIVE’s FNB bank account in Fourways, as indicated on the company’s invoices, as well as the Barclays Bank account in the name of Vilanculos Beach Properties in Maputo.

By January 6, 2015, these amounted to R5,5 million.

By the time R2,9 million had been paid on the R3,2 million on December 20, 2013, new excavations were completed and building had started.

At this point the couple changed the house design. It necessitated a second building contract for R1,9 million, signed on January 23, 2014, on which the outstanding amount of R840 374 on the first contract was carried over.

Bagnari stated in an email dated February 1 that, aside from the changed plans, the costs increased to included deeper excavations for the foundations, exchange-rate differences and “standing time due to delays in money transferred to Mozambique, and waiting for suppliers to deliver materials”.

By February R931 114 was paid, and new foundations had been laid for the downstairs rooms and the basement level was almost complete at the start of April. By July 5, a further R1,1 million had been paid, at which time the ground-floor slab and reinforcing had been done.

On July 12, Martin requested that air bricks be added to the basement, and that an additional window be installed in the eastern wall of the bedroom and red bricks be used for the top of the staircase and kitchen splashback.

Erasmus then decided that all houses had to be constructed with a steel-reinforced concrete roof with a lapa instead of a closed jecka roof.

On October 31, a letter of demand from Erasmus’ lawyer, for an additional R977 675 arrived. Trying to find a way forward, they sat down together with Erasmus and his attorney on November 24. Erasmus wanted another R1,2 million to complete the house.

A third contract, for R1,3 million, was signed on December 15. The Haupts paid another R600 000 on January 6, but seemingly nothing happened. It was the last payment they would make.

On March 13, 2015, the architect presented them with three options, two of which did not entail a concrete-slab roof Erasmus insisted upon, but which they were worried would not be carried by the house in the absence of engineering reports.

Martin stormed out of the meeting.

On March 18, Erasmus informed them that the transaction was cancelled as they had defaulted on the payment and “for standing costs”.

When Erasmus threatened to sell the house to “recoup his losses”, the couple approached the Gauteng High Court to prevent this, and to obtain a breakdown of how their money was spent. Still, on June 4 Erasmus asked for money again. He informed them of his intention to sell, stating a contract with a buyer for Unit 10 has been signed and will be concluded on June 10.

“As a final gesture of goodwill… I propose… making the necessary payment of USD37 374 before or on June 5 (for continuing with the transaction).”

He offered them unit 14, the only other structure under construction on BIVE, as surety until a quantity surveyor could determine the money they had paid for their house was correct, and to keep until refunded in full.

He claimed in his opposing affidavit that the cost increases were due to them regularly changing of the building plans and frequent delays in payments.

“(The delayed payments) obliged (him) to build (on Unit 14) to try and carry some of the costs in standing fees to limit any damages suffered due to such delay.”

The Haupts argue that the final structural changes were made on February 10, 2014 to move rooms, with other changes like inserting a window and air bricks merely being cosmetic.

In the meantime the Haupts do not have any building plans for the house as it stands. They have no engineering specifications for the slab, no environmental-impact study and no geological reports to substantiate problems with the foundations.

They are also still waiting for a reconciliation for the money paid to Erasmus and his companies, as well as the full details of the breakdown of the standing costs as alleged by Erasmus.

Erasmus undertook to refund the Haupts after deducting various costs but they are still waiting for the money.

“Why has nobody else started building?” Sophie pointed out.

In October BIVE started advertising unit 10 for sale on BIVE’s Facebook page.

The Haupts’ lawyer, Mr Coenraad Kukkuk, explained that since all negotiations and contracts took place in South Africa, they are arguing that the case can be heard by a South African court. The judge recommended that they file supplementary documents to that effect.

However, Kukkuk said Erasmus doesn’t own any assets aside from a bakkie in the country, it was not feasible for his clients to pursue the matter, as they would be unable to recover any of their money. Moreover, orders by local courts can’t be executed in Mozambique, rendering it a mere piece of paper.

“Maybe with a united front we can achieve something,” he said.

Quantity surveyor, Mr Eddie Mol, explained to Lowvelder that his provisional report into the property was based on local market values, ie what he would have been able to source there had he built the house.

His report is standard and something he says he would testify to in court. He estimates that his error rate is 10 per cent, either way.

He spoke to material suppliers and builders in the course of his investigation last year. In September 2015 he informed the Haupts that the value of the structure that had been erected was R807 000, or 25 per cent of the R3,2 million project. “It was cheap to build. You could complete it for R2,5 million. But the developers made their price,” he said.

Moll said the changes were minimal and should not have increased the building price by R2 million.

“I have been building for a long time. If both parties want to complete a project, it gets done. But if someone has an agenda, you can’t.

“We have been advised by our attorneys that the matter which you refer is sub judice,” Erasmus said in an email last week.

“Most of your points are factually incorrect and in contradiction with the sworn affidavits submitted by the Haupts.

“Furthermore, from your questions it is clear that similarly to your previous false reporting, you are not interested in the facts and clearly have malicious intent to slander, therefore it is pointless for us to have any further communication.

“We would like to warn you against further defamatory and slanderous false reporting.”