POINT YACHT CLUB AND DURBAN PADDLE SKI CLUB
CONCERNS REGARDING THE TERMS OF THE PROPOSED LEASES
AND WATERSPORT CLUBS RELOCATIONS
AND PADDLE SKI CLUB’S ADDITIONAL CONCERNS
The Point Yacht Club (PYC) and the Durban Paddle Ski Club, (DPSC) as well as the other two beach clubs, have been served with notices by DPDC (the developers in partnership with the Durban Metro) to vacate their beach site premises within two months. That is by 8 August 2017. In return three clubs have been offered two leases for future tenancy on Vetch’s Beach. One lease is for the temporary relocation pending the building of permanent homes for the Clubs and the other is for the location on a longer term under the promenade. Both leases are essentially similar in content and nature of intent.
The PYC and the Paddle Ski Club have expressed their committed willingness to work together on our relocation in the utmost and transparent good faith with the DPDC, as well as the other two affected clubs, DUC and Durban Ski Boat Club. There is an urgent need to agree on suitable circumstances under which all the clubs’ futures at Vetch’s beach are equitably secured.
Unfortunately what has been placed on the table by DPDC raises many concerns and does not look like an acceptable option.
PYC and the Paddle Ski Club both agree that further discussion is necessary before any agreement can be reached. A senior member of the PYC with much experience in this field has studied the temporary and permanent lease agreements being offered to the beach clubs. His observations and comments from a businessman’s perspective (before the lawyers have expressed their views) are as set out in the numbered paragraphs below.
Whilst the two lease agreements are not distributed with this document, the observations stated below should assist the members to have a better understanding of the concerns we have. (The developer’s proposed leases will be made available on the respective Clubs’ Websites.)
- Clause 1.1.
Temporary premises – in extent of approximately 450 m2, whilst the plan is illegible being so small, the size is 38 metres x 12 metres or there about as a bare steel structure shell.
Assuming an internal fit out to include a workable and functional kitchen, ablutions and change rooms, committee/meeting room, bar/ liquor store, staff facilities and so on, there will not be much space left.
If these facilities are to be constructed whether internally or externally to the temporary structure that will require considerable cap cost.
Without going any further into the lease what we have here beggars belief and must be rejected out of hand.
- The opinion is that this facility would not be able to adequately cater for sailing regattas, the DSBC fishing festival(s) and what about the visiting ski boats, Hobies, parking and so on notwithstanding the parking area being offered.
- Clause 1.11
Schedule of finishes appears not to have been included in the dockset. The schedule of finishes to comply with food standards is onerous and expensive for such areas as kitchens and food preparation.
- Clause 1.6
Noted as calendar days, not working days.
- Clause 2.2
Observation: Does this clause apply to the permanent lease or to be read in conjunction with it?
- Clause 2.3
Observation: Once the Landlord (DPDC) has completed the temporary premises the tenant is then obliged to occupy and only then has to compile and submit plans to the entities noted under clause 9.4.
This is onerous, time consuming and expensive. And to be at the mercy of eThekwini municipality and the plans department could on past performance take months.
- Clause 4.1.
If the interpretation is correct in that as no time frames are stipulated then this temporary lease could run for an indefinite period to the point that the permanent premises could or may never be constructed.
This is a serious consideration as the clubs would not survive in the temporary facility and question whether they will even survive in the short term as who would pay Club subscriptions as the temporary structure offers no attraction to the beach and “umbrella brigade”.
- Clause 9.1
This clause is typical in construction contracts but in this context there is no guarantee that the structure would be fit for its intended purpose which is considered to fall a long way short particularly when it comes to, for example, public habitable spaces and food preparation.
The structure is, with respect, nothing more than a cheap farm shed.
- Clause 10.2.
This clause is very onerous on the tenant and gives every opportunity for the Landlord to find any excuse or reason to evict.
- Clause 10.8.
PYC to ensure that its concerns are incorporated into the rules of the Durban Point Waterfront Management Association NPC as per Craig Millar’s letter to the Municipality.
- Clause 15.
We are uncertain as to how to interpret this clause. If the temporary premises are destroyed, for example, by ocean wave action or fire and the Landlord serves notice to vacate, is the tenant then left on the street with no remedy to demand or be offered suitable alternative premises assuming the permanent premises have not been constructed or made available and thus effectively the four sporting bodies would no longer continue to exist.
- Clause 7.1
THE PERMANENT LEASE talks of the deposit that has to be paid (R 123 530. 40) to the Landlord “that shall be refunded to the tenant after expiry of the Lease”. By inference or indeed fact is this the end game and the eventual outcome?
There has been a long expressed opinion that the clubs are in all likelihood regarded as an impediment to the overall development notwithstanding DPDC’s comments at our meeting last week that they form an integral part of the development in being able to offer water sports activities to tourists and the general public. Their proposals would seem to suggest otherwise.
General comments and observations.
- A tenant cannot be expected to take occupation of a property such as the proposed “farm shed” without basic infrastructure such toilets and ablutions etc.
DPDC would have to provide the infrastructure at its cost; we cannot be expected to carry this cost.
The temporary shell structure portrayed on the plans would cost about R1.5M to build at today’s rates.
Whilst the tenant is called upon to carry out the tenant improvements strictly in accordance with plans approved by the LANDLORD’s Design Review Committee, the requirements of the ASSOCIATION and the eThekwini Municipality, is in itself not unusual but in context could prove to be fraught with barriers.
Assuming the temporary structure plans would be submitted to eThekwini for plan approval by DPDC then its usage plus such aspects as ventilation, glazing requirements etc. would have to be stated on the plan.
Without full compliance with SANS 10400 the plan would not be approved. This does not make logical sense unless of course DPDC would bypass all due process. In this event we could be blocked in obtaining plan approval for the improvements.
- Nowhere is mention made of any time frames in the lease agreements or on the letter dated the 8th of June 2017 serving the official two months’ notice to vacate the current premises occupied by the three Clubs and PWC.
Whilst DPDC stated the tender notice is due to be issued shortly for the construction of the promenade, it raises the question as to why the urgency to construct this which offers no return on investment.
Even assuming we did sign the lease agreements and vacate the current premises on an undisclosed time frame, we could be destined to occupy the temporary premises for an indefinite period especially if the DPDC fails in its endeavours at any given point in time and to abandon the development, for example, the investor(s) pulling the plug, not unheard of.
- It appears there is little thought being applied to the planning of the first phase of the proposed development and what we have been presented with displays an amateurish and a desperate attempt to try and shut the clubs down and save face for the DPDC and its investors who are most probably losing patience and applying pressure on DPDC to commence.
Unless the point is being missed the documents we were presented with by DPDC are transparent in their intent and we venture to suggest that any reasonably prudent business person would never pen a signature to the agreements in their current format whether it be for the PYC or in a personal capacity as an investor (not in this development!) or as a property developer.
- And of course one of the most pertinent issues of all- how and by what mechanism did the land upon which the proposed PWC facility is to be constructed change from FREEHOLD to LEASEHOLD?
There is the question of a 2015 agreement that DUC Chairman, Cuane Hall, made a statement and referred to in a press statement that is consistently being hidden from the stakeholders.
To summarize, what we have here is fraught with danger for the stakeholders (the clubs) and the question must be asked, “Can the DPDC be so naive as to believe that we would be gullible enough to accept their proposals?”
In conclusion we remain hopeful that the DPDC will see fit to discuss the challenges with the clubs and ensure that both parties are satisfied with a final solution that will give security of tenure to the Clubs in harmony with the development itself.
FURTHER CONCERNS OF THE DURBAN PADDLE SKI CLUB
- A further concern for the Durban Paddle Ski club is the fact that they have not been given new leases to sign as the other clubs have. This is a clear indication that the developers are not complying with the agreement they signed in 2012 in which it clearly states that the paddle ski club will become part of Point Watersports. Although this issue is currently under arbitration, both DUC and the Durban Ski Boat Club are still refusing to accept the paddle ski club as an equal party within Point Watersports, despite having agreed in writing to accommodating them on a “fair and equitable basis”. The paddle ski club is thus expected to vacate its premises while they have no guarantee of being accepted in the new sites by the two above-mentioned clubs or of their tenure by the Landlord. This of course is totally unacceptable.
- From the Durban Paddle Ski Club’s point of view, and in emphasis of what has been said above, the fact that Freehold rights to extremely valuable property on the Durban beachfront have mysteriously been exchanged for onerous leasehold rights, without the various clubs members being aware of this, is to say the least alarming. It would appear that this might have taken place when the so-called “directors” of a PWC which they registered as a company without the knowledge of their members, may have agreed to an amendment during the course of the 2015. The chairman of DUC, Cuane Hall, has previously alluded to an amendment to the Memorandum of Agreement having taken place in 2015. Despite copies of this “agreement/amendment” having been called for several times by our attorneys and others we have been denied access to this document. This has been deliberately hidden from us. Why? How can we trust the present leaders of the DUC and Durban Ski Boat Club if this is what they are leading their clubs and its members into, without their members even having knowledge of all of this? No Special General Meetings to deal with the momentous decisions and never raised at AGM’s. In fact it was never tabled or voted upon in any manner. This clandestine behaviour is in our view unacceptable.
- Even if these most questionable leases were worthy of consideration and possible negotiation, (any real security of tenure under these leases being highly dubious) what remains a major point of concern for the Durban Paddle Ski club is the fact that they have not been given new leases to sign as the other clubs have. This indicates that the developers, seemingly in collusion with the current leadership of DUC and the Durban Ski Boat Club, are not complying with the agreement the developers signed and bound themselves to in 2012. This Settlement Agreement, which also put an end to the small craft harbour for the benefit of the entire boating fraternity, clearly states that the Paddle Ski Club will become part of Point Watersports.
- Although currently under arbitration (at immense legal cost to the respective DUC and Ski Boat Clubs and no immediate costs to PYC and the Paddle Ski Club), both DUC and the Durban Ski Boat Club continue to play the game as if the Paddle Ski Club is not an equal party within Point Watersports. This, in the face of having agreed in writing to accommodate them on a “fair and equitable basis”. In conflict however with their real intentions and the way in which they are excluding the Paddle Ski Club from any engagement in other meetings they are holding, both chairman of the DUC and Durban Ski Boat Club are on record as having included the Durban Paddle Ski Club into their PWC format. For instance Mr Hilton Kidger is recorded in one of his newsletters as saying the following in paragraph 4 of “Summary of the General Meeting held at the Durban Ski Boat Club on 6/2/2017:”
The PWC was approached by the DPDC to accommodate the PSC within the structure. It was agreed that the PWC “would endeavour to accommodate the PSC within the PWC on a fair and reasonable basis”. This will happen in the same way that the other three clubs will retain their identity and constitution. In some of the media, commentary has suggested that the DUC and DSBC are opposed to this inclusion. This is nonsense! They will be accommodated even though they were not part of the 2008 agreement.
Mr Hall is on record as having made similar statements, all of which are blatantly contradicted by the stance of their Clubs in the arbitration proceedings as well as their actions in negotiating with the developer, statements made by them from time to time and their attempts to negotiate with PYC.
- Mr Kidger is in any event wrong on the issue of the 2008 agreement because the Paddle Ski Club has indeed become a party to this agreement through the Settlement Agreement of 2012. It continues to astound us that neither the leadership of DUC and the Durban Ski Boat Club nor the DPDC under this new company the UEM (the developers) are aware or have bothered to make themselves aware of this.
- Only as recently as 17 July 2016, in an official letter to our attorney, both DUC and the Ski Boat club stated “The Durban Paddle Ski Club is one of the four founding pillars of PWC.” And yet today in all their correspondence they are still referring to PWC being made of three clubs and ignoring the paddle ski Club as if it does not exist.
- Yet in the face of all this the Paddle Ski Club is expected to meekly vacate its premises whilst it has no guarantee of any tenure by either the above mentioned clubs or the Landlord. Not very likely. This is patently wrong, unacceptable and defensible in law. If there is not going to be transparency and open good faith, as expressed above, the current state of affairs can only lead, yet again, to prolonged and very expensive litigation, to the detriment of us all.We so desperately wish to avoid this. But we shall do so only once we are certain of being able to protect the rights of our Club and its members.
- We as the Paddle Ski Club strongly contend that this is all actually so very unnecessary. The more so when one considers the sacrifices and efforts made as well as money spent over so many years in litigation with the developer (then under Mr Brink) by the Durban Paddle Ski Club, and the Save Vetch’s Association in saving Vetch’s Beach from being destroyed by the proposed small craft harbour. Laying a foundation to what could have been so good for us all. Throughout our long struggle we received no support at all from the other Clubs, nothing but scorn and criticism from DUC and the Durban Ski Boat Club and their elected leaders, even though these two clubs have benefited substantially and materially from the Paddle Ski Club’s and SVA’s efforts. For how much longer can these two clubs continue allowing their members to live on in blind ignorance and carrying on enjoying the fruits of the Paddle Ski Club’s efforts, whilst actively still trying to exclude it from taking its rightful place in a harmonious PWC, a PWC made up of good and trustworthy people genuinely striving for the ultimate benefit of all of our watersports lovers?
Durban Paddle Ski Club Committee