Augur wins appeal over Pomona City land dispute

Fidelis Munyoro Chief Court Reporter

West Property Holdings Limited  Zimbabwe can now continue with its Pomona City development without any legal troubles after the Supreme Court settled the protracted financial row between Augur Investments and Fairclot Investments over payment made for a dual carriageway leading to Robert Gabriel Mugabe International Airport in Harare.

A three-judge panel of the Supreme Court of Justice Chinembiri Bhunu, Justice George Chiweshe and Justice Hlekani Mwayera unanimously endorsed the debt settlement of more than US$4,9 million to Fairclot Investments in local currency on a one to one basis, in an appeal case against a High Court decision by Augur.

This judgment settles two points of law.

First, arbitral awards became effective when made, rather than when they are registered, and this meant Augur was able to discharge its debt to Fairclot in local currency at a 1:1 exchange rate.

Secondly, arbitral awards are not judgment debts subject to investigation by the High Court, with the registration in the High Court simply a way of enforcing the arbitral award.

West Property is a subsidiary of Augur Investments, one of the leading land development companies in the country, which went to High Court challenging the attachment of land belonging to West Property, but lost.

Augur appealed to the Supreme Court to reverse the High Court decision ordering attachment of West Property’s land to counterbalance the debt with Fairclot.

At the height of the dispute was whether registration of an award issued before February 22 2019 could result in that award having to be paid in US dollars instead of Zimbabwe dollars. Writing the judgment for the court, Justice Chiweshe allowed the appeal by Augur with costs of suit, finding merit in the case.

He ruled that the registration of an arbitral award does not create a judgment debt, as this was simply a vehicle through which parties may access the services of the sheriff to execute arbitral awards.

He added that it was a procedure designed solely for purposes of execution. In that regard, the High Court does not inquire into or determine the merits of the matter as it is a mere vehicle for enforcement.

“Thus, the arbitral award, granted in 2015, was subject to the provisions of SI 33 of 2019, notwithstanding its late registration after the effective date.

“The debt is, therefore, payable at the prescribed rate of US$1 to RTGS$1. The first appellant has thus fully discharged its debt,” said Justice Chiweshe, setting aside the order of the High Court in case No HC 5989/19 and case No HC10315/19.

In his judgment, Justice Chiweshe also absolved the Sheriff of the High Court of any wrongdoing for lifting the attachment on the property on the grounds that the debt had been cleared following the payment of $4,8 million in local currency.

“He was right in his assertion that the debt had been fully discharged in RTGS at the prescribed rate of one is to one to the United States dollar,” he said.

“For that reason, the order granted against him cannot stand.

“In any event the sheriff acted in terms of an order granted by Mushore J (Justice Edith Mushore).”

The judgment delivered yesterday put paid to Fairclot’s bid to have the debt settled in United State dollars and cleared West Property to continue with its upmarket housing development at Stand 654 Pomona Township.

This judgment is an important clarification of the law.

The registration of an arbitral award after February 22, 2019 does not mean the award will be paid in US dollars.

It also clarifies an outstanding question of law that had been created by the contrary judgment in the High Court.

Advoc­ate Tawanda Zhuwarara assisted by Adv Taona Nyamakura, argued that the fact that arbitral award was issued in 2015, meant that it was a liability which had been converted by operation of law to have become RTGS in view of Statutory Instrument 33/2019.

On the other hand, Adv Thabani Mpofu assisted by Adv Tinomudaishe Chinyoka, argued that because the award was only registered in June 2019, it was not affected by the S/I 33/2019.

If Fairclot had succeeded, it would have meant that all parties who have arbitral awards that were due before February 22, 2019 would now be paid in United State dollars.

This would have had wider ramifications on the economy. The law is now clear: an arbitral award becomes due and payable when it is granted as opposed to when it is registered.

The Supreme Court has already ruled that liabilities that arose before February 22, 2019, are affected by the 1:1 rate whereas Adv Mpofu sought to argue that an arbit­ral award only becomes effected after it has been registered.

Augur entered into a contract agreement with Fairclot Investments trading as Truck and Construction Private Limited (T&C Construction) for the construction of the airport road and was offered part of stand 654 Pomona Town­ship as collateral.

After constructing a portion of the road, a dispute over payment arose and Fairclot pulled out of the project and parties went for arbitration and Fairclot won the case.

However, following the promulgation of the SI 33 of 2019 which declared that debts owed in US dollars could be settled in local RTGS at a rate of 1:1, Augur transferred $4.8 million and $1 078 040,21 to Fairclot in local currency.

After the full payment the sheriff of the High Court lifted the attachment of the stand, which was then transferred to Doorex, a shelf com­pany owned by Augur.

Fairclot then successfully challenged the upliftment of the attachment on the property by the Sheriff of the High Court on the grounds that the debt had been cleared after the payment of $4,8 million in local cur­rency.

Aggrieved by the lower court’s decision, Augur appealed to the Supreme Court, arguing that the lower court erred in failing to hold that the arbitral award dated March 19 2015, granted in favour of Fairclot, constituted a liability affected by the statutory instrument which then was incorporated into the Finance Act No. 2 of 2019.

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