FRANNY RABKIN

Staff Writer

ILIMA Group, a black economic empowerment (BEE) partner to construction giant Group Five, yesterday argued in the high court in Johannesburg that the courts could treat BEE transactions differently from those not underpinned by public policy.

ILima’s counsel, Vuyani Ngalwana, drawing from constitutional case law, said the government had a constitutional mandate to transform the economy, and BEE was one of the ways it had chosen to do so.

He said if strict enforcement of a clause in a contract could result in unfairness or unreasonableness to the BEE partner, a court should not enforce it — even where neither party was an organ of state.

Group Five was seeking to unravel its relationship with iLima after their BEE deal went sour.

The deal, signed in 2005, was for 10,8% of Group Five’s shares and was worth R336m. The construction company realised that a suspensive condition in the 2005 contract — to register a special resolution with the registrar of companies — had not been fulfilled. This rendered the contract void from the beginning.

ILima responded that Group Five had, through its conduct, waived the condition as it had continued to deal with iLima for another four years.

But Group Five’s counsel, Ivan Miltz, said iLima had not shown the court any conduct that indicated a waiver. In any event, the contract required a waiver to be in writing.

ILima also accused Group Five of treating it unfairly because it had waived suspensive conditions in favour of its other BEE partner, Mvelaphanda Group. Ngalwana said because the deal was a BEE deal, the court could invoke the constitution’s equality clause and require Group Five to treat iLima the same way as it treated Mvelaphanda.

But Miltz said Group Five’s arrangement with Mvelaphanda was not connected to iLima, and Ngalwana’s constitutional argument was irrelevant in this case. He said iLima was not objecting to suspensive conditions because they were unconstitutional, but rather to the fact that the condition was being enforced.

ILima has also taken up its alleged unfair treatment with the Department of Trade and Industry. In response to its complaint, minister Rob Davies wrote to Group Five last week asking why the department should not investigate it. Group Five has 30 days to respond to Davies.

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Source: Business Day