The developer of the R3bn Leonardo mixed-use development in the heart of Sandton has terminated infrastructure and resources group Aveng’s contract to build Africa’s tallest building, in a dispute about delays, says a Business Day report.

Aveng said it had received a notice to terminate the contract for the construction of the Leonardo, a high-rise residential, hotel and retail complex in the centre of Johannesburg’s financial district, from property company Seventy Five on Maude – a partnership between Nedbank and real estate developer Legacy Group.

The report notes the cancellation could deal a financial blow to Aveng as the developer has called on a R87.4m construction guarantee it put in place to provide the client with security should it under perform or not complete the work as agreed in the contract.

Aveng said it would challenge Seventy Five on Maude’s decision to call on the contract performance guarantee as the ‘responsibility and the consequence of such delays are the subject of various disputes, dealt with in terms of (an) agreed dispute resolution mechanism’.

‘Aveng’s position is that the grounds for termination relied on by the employer are incorrect, inaccurate and ill-conceived, and are accordingly denied,’ it said in a statement.

‘Furthermore, Aveng is of the view that the employer is itself in material breach of the contract, which precludes the possibility of a valid termination. Therefore, the action taken by the employer amounts to a clear repudiation of the contract.’

The company, which has accepted what it calls the repudiation of the contract, plans to seek to recover damages from the developer resulting from the termination.

‘The building is practically complete for the purposes of its intended use. Large elements of that building are ready for use,’ Aveng CEO Sean Flanagan said.

Full Business Day report