Back in March 2009, councillor Ian Neilson (currently City of Cape Town Deputy Mayor), then chairperson for the powerful Mayoral Committee for Finance, Economic & Social Development, told noseweek to forget it when we asked to see the lease agreement that had handed a prime Gordon’s Bay property to Alexander Acavalos’ Ocean Diners cc (nose114).
Said Neilson: “I am very suspicious of what happened in some of the old municipal fiefdoms. But I cannot go on a wild goose chase on a 20-year-old decision when we can do nothing about it now, and when we have more than enough work on our plate.”
But noseweek didn’t give up – and we’re now in proud possession of a copy of the aforesaid agreement. And, alas, it seems that, contrary to councillor Neilson’s claims, there has long been plenty of scope for the City to intervene in the matter.
For instance, Clause 9 of the agreement says: “The lessee [Acavalos, aka Ocean Diners] shall not assign this lease nor give occupation of the said premises or any portion thereof to any other person, nor shall it let the whole or any portion thereof without the prior consent of the lessor (City of Cape Town) given in writing under the hand of the Town Clerk. The sale or disposal of more than 50% of the shareholding in the lessee will be regarded as an assignment of the lease and may not be made without the prior consent of the lessor as aforesaid.”
Since Ocean Diners has repeatedly sublet the premises (to various operators of a Spur restaurant, for up to R65,000 per month), without getting municipal consent, the City certainly did, and does, have sufficient legal grounds for terminating the agreement.
Additionally, the agreement required Ocean Diners to demolish the original property and erect a new one, by not later than 30 November 1988. Yet, since 25 May 1988, when the lease was signed, no plans for such a development were ever submitted to the City for approval – suggesting that this condition of the lease was not fulfilled. What is not clear is whether Ocean Diners collected the City's 50% contribution towards the erection of the new development, as provided for in Clause 3.6 of the agreement, and if so, how much the Council paid.
Noseweek’s source in the City of Cape Town says there are several other properties which have similar agreements in place: “The main problem with these agreements is that the City of Cape Town is bound to grant the lessees the first option to rent at the end of the lease. At R10 per annum, who wouldn't want to exercise that option?”
The Ocean Diners lease is due for renewal in October 2013, but with councillors like Ian Neilson running things, who show that they aren’t willing to take action against tenants who seem to do as they please, this and other prime City properties may well continue to earn good money for private individuals.
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