The company that initially won the R194 million contract to refurbish Lilian Ngoyi Street (formerly Bree Street) in the Johannesburg central business district has until August this year to avoid its final liquidation.
Step Up Engineering was provisionally liquidated by the North Gauteng High Court last week. Judge Mabaeng Lenyai placed the company under provisional liquidation due to debt it owes Khumalo Engineering, with which it had a entered into a joint venture agreement in 2017.
The purpose of the joint venture was the execution of a project in the 2016/17 financial year 20km road and stormwater and 2.5km stormwater channels in Soshanguve in the City of Tshwane.

The joint venture had a dispute regarding the management and control of the administration and execution of the project and in January 2021 the parties entered into a settlement agreement. In terms of the agreement, Step Up Engineering would pay Khumalo Engineering an amount of R5.8 million.
The first payment of R1.2 million was due on or before February 28, 2021 and the balance of R4.6 million would be payable in six equal monthly instalments commencing from March 31, 2021 and the last payment being on the August 31, 2021 or alternatively a lump sum would be payable on or before July 31, 2021.

This was provided that Step Up Engineering would keep Khumalo Engineering informed of the status of the project on a monthly basis for as long as the balance remains unpaid.
The companies agreed that the joint venture agreement would be considered to be cancelled on the date of the signing of the settlement agreement.
But according to Khumalo Engineering, Step Up Engineering made a series of sporadic payments to it between the period of March 30, 2021 until December 24, 2022 totalling an amount of R3.75 million and as a result is still owing an amount of R2.05 million.

Khumalo Engineering accused Step Up Engineering of breaching the terms of the settlement agreement in having failed to make the payments as agreed to in the settlement agreement.

Step Up Engineering said the settlement agreement makes provision amongst other things that the settlement agreement be made an order of court and that in the event of breach, Khumalo Engineering would approach the City of Tshwane and make a claim against any funds due and payable to Step Up Engineering in terms of this tender project.

In addition, Step Up Engineering contended that Khumalo Engineering did not make the settlement an order of court and neither did it approach the City of Tshwane first as stipulated in the settlement agreement.

The company also stated that it is not insolvent and is capable of paying its creditors.

However, Judge Lenyai said Step Up Engineering did not furnish the court with its audited financial statements to corroborate its claim that it is solvent.
"I am reluctant to accept the say-so of the respondent (Step Up Engineering) as to its financial position without the audited financial statements being shared with the court," the judge said.

Judge Lenyai said Step Up Engineering admitted that despite having made a further payment after the liquidation process was initiated by Khumalo Engineering, it still owes the company R1.7 million.
Judge Lenyai placed Step Up Engineering under provisional liquidation and ordered the company and any other party who wishes to avoid such an order being made final are called upon to advance reasons, if any, why the court should not grant a final order of its liquidation on August 26, 2025 or as soon thereafter as the matter may be heard.

Step Up Engineering was removed from the Lilian Ngoyi Street project by the Johannesburg Roads Agency in August last year following a massive gas explosion that damaged the street after failing to meet several contractual obligations.

Gwanangura Inc. Attorneys, Step Up Engineering’s legal representatives did not respond to enquiries by deadline.

loyiso.sidimba@inl.co.za

contracts

Former Lilian Ngoyi Street contractor given until August to avoid final liquidation