The Middelburg High Court in Mpumalanga has overturned a R4.7-million default judgment awarded against the embattled Emalahleni Housing Company (EHC), shedding light on a protracted legal battle that has captivated local government and corporate circles.
The judgment, handed down by acting judge Bhengu on January 9, marks a significant reprieve for the EHC, now under administration by the Social Housing Regulatory
Authority (SHRA).
EHC, established in 2000, was created to provide affordable rental housing in Emalahleni. Managing over 1, 200 units in developments such as Uthingo Park, the non-profit organisation was established to serve hundreds of tenants.
However, it has faced operational struggles, including tenant boycotts, management disputes and allegations of financial mismanagement. By 2023, these challenges had escalated, prompting SHRA to step in as administrator.
At the heart of the dispute is Uthingo Park, a residential complex caught in the crossfire of shifting management and contractual obligations.
In 2021, EHC engaged CSC Security Services to safeguard several properties, including Uthingo Park, under a one-year contract with provisions for automatic renewal. But by early 2022, cracks began to appear.
EHC informed CSC that Uthingo Park was being handed back to the Emalahleni Local Municipality.
However, CSC pushed back, arguing EHC’s unilateral decision violated their contract. When EHC failed to oppose CSC’s court application, a default judgment was granted in January 2023, ordering EHC to pay the full amount.
Enter SHRA, which was appointed to salvage the collapsing EHC months after the judgment. Faced with the R4.7-million bill, SHRA sought to have the judgment rescinded, pointing to what it described as a cascade of administrative failures.
“The head office of EHC has been vandalised, computers stolen, and records hijacked, making it impossible to retrieve critical documents,” SHRA’s legal team explained in court, painting a picture of a practically dissolved company in chaos.
Judge Bhengu accepted SHRA’s explanation. “I am of the view that the applicant’s failure to intervene before judgment was granted cannot be construed as acquiescence to the judgment,” the judge ruled.
The court’s decision turned on more than procedural delays. SHRA argued that CSC’s claim for payment between March and August 2022, after EHC had relinquished responsibility for Uthingo Park, was inflated and unsupported. It contended that the true liability was closer to R813, 000.
Judge Bhengu agreed that this raised a “triable issue,” warranting further examination in court. The dispute boiled down to a fundamental question: Did CSC act reasonably in rejecting EHC’s proposal to transfer security obligations to the municipality?
“No party shall have the right to assign or cede this agreement… without the prior written consent of the other party, which consent shall not be unreasonably withheld,” Bhengu quoted from the contract.
SHRA now has less than 10 days to formally oppose CSC’s claim, setting the scene for what promises to be a high-stakes courtroom showdown.
While Judge Bhengu rescinded the judgment, the court did not absolve SHRA entirely. It ordered the administrator to cover CSC’s legal costs for both the default judgment and the rescission application, a reminder that delays in justice come at a price.
