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Hopolang Mokhopi
THE Lesotho Housing and Land Development Corporation (LHLDC) is facing a M15 million lawsuit for allegedly terminating its contract with Rendeals Four Consulting Pty Ltd “prematurely”.
LHLDC is a state-owned enterprise providing rental accommodation, houses for sale, and serviced land for commercial and residential purposes. It had entered into a M140,673,327.75 contract with Rendeals Four Consulting Pty Ltd in 2012.
The agreement was for the refurbishment of the Phomolong Residential apartments in Maseru. However, in 2015, LHLDC terminated the contract before Rendeals could complete the refurbishment works.
Rendeals, through its legal representatives, P.V. Tsenoli Chambers, served LHLDC with a letter on 10 October 2023, demanding the M15,052,046.07 payment, arguing that it had already incurred substantial costs before the contract’s termination. LHLDC ignored the letter, prompting P.V. Tsenoli Chambers to issue another letter on 2 February 2024, notifying LHLDC of its intention to seek arbitration through the courts.
LHLDC responded on 15 February 2024, through its lawyers, Mei & Mei Attorneys, stating that the contract was terminated due to Rendeals’ failure to fulfill its contractual obligations, which constituted a breach.
“Your clients (Rendeals) were requested to attend meetings and rectify their acts of default and/or comply with the suspensive conditions. However, they failed to do so, leading both parties to acknowledge the breach of contract. Consequently, the contract was terminated. Following this termination, the Corporation decided to re-advertise the project’s development,” Mei & Mei Attorneys wrote.
“Your clients were informed that they were free to re-tender for the project, but they failed to do so, possibly because they knew they had previously failed to meet their contractual obligations.
“The termination of the entire contract also included the arbitration agreement. In these circumstances, our client is not amenable to arbitration. Should your clients take any other legal steps, we request they notify our client in time so that appropriate legal measures can be taken to defend its rights.”
In response, P.V. Tsenoli Chambers wrote back to Mei & Mei Attorneys on 23 July 2024, stating that the only remaining option was to proceed to court.
As a result, Rendeals filed an application on 7 February 2025, requesting the court to order both parties to undergo arbitration.
“At the time of contract termination, the applicant had undertaken several works towards fulfilling its contractual obligations, such as designing the apartments as required by the contract. It had incurred expenses, entitling it to compensation under clause 25.1 of Part A and clause 28 of Part B of the contract. The compensation is calculated at 10.7% of the projected profit of M140,673,327.75, amounting to M15,052,046.07.
“A demand for payment of this compensation was made in October 2023 but was not honoured. After receiving no response, the applicant sent another letter in February 2024, invoking clause 13.1 of Part D of the contract and referring the matter to arbitration under the Arbitration Act of 1980. The applicant also requested the respondent to suggest and agree on an arbitrator within seven working days.
“The respondent (LHLDC) replied on 15 February 2024, refusing arbitration on the grounds that both the main agreement and the arbitration agreement had been terminated. However, the applicant maintains that this position is legally flawed, as clause 13.6 of Part D states that the arbitration clause remains in effect even if the main agreement is terminated.
“On these grounds, I humbly submit that the respondent should be subjected to the arbitration process, and this Honourable Court should order it accordingly.”
LHLDC filed its intention to oppose on 20 February 2025.
