SC 11-15 - PERUKE INVESTMENTS (PVT) LIMITED v WILLOUGHBY'S INVESTMENTS (PVT) LIMITED and ANOTHER

PERUKE     INVESTMENTS     (PRIVATE)     LIMITED

v

    WILLOUGHBY’S     INVESTMENTS     (PRIVATE)     LIMITED

    THE     HONOURABLE     MR     JUSTICE     (RETIRED)     A.R.     GUBBAY     SC

SUPREME COURT OF ZIMBABWE

GOWORA JA, HLATSHWAYO JA & PATEL JA

HARARE, OCTOBER 10, 2014 & MARCH 19, 2015

E.W.W. Morris, for the appellant

L. Uriri, for the first respondent

PATEL JA: This is an appeal against the decision of the High Court setting aside an arbitral award rendered by the second respondent on 25 February 2011.  The grounds of appeal relate to the period allowed for contesting an arbitral award and the substantive correctness of the decision of the court a quo.

FACTUAL BACKGROUND

The appellant and the first respondent purchased two adjoining stands (nos. 894 and 895) respectively, with a building (Lonrho House) straddling both stands. The two properties are held under separate deeds of transfer.  The greater portion of the building rests on stand no. 894.   It is common cause that the appellant paid 70 per cent of the total purchase price while the first respondent paid 30 per cent of that price.

Lonrho House was let to a third party as a single unit.  The expenses for the building were shared equally by the parties.  The appellant received the rentals and apportioned the net rentals in the ratio of 70 per cent and 30 per cent.  There was no agreement between the parties that the net rentals would be shared in that proportion.

The first respondent’s claim that the rentals be shared equally was referred for arbitration to the second respondent (the arbitrator).  The latter held that the income derived from the two stands as one indivisible unit should be in proportion to the specific contributions made by the parties towards the total purchase price.  The first respondent’s claim for 50 per cent share of the rentals was dismissed.  Aggrieved by the arbitral award, the first respondent challenged the award as being contrary to public policy.

The High Court held that the first respondent’s challenge was not filed out of time but was filed within the prescribed three months of receiving the award, even though the first respondent had been advised three weeks earlier that the award was ready for collection.

On the merits, the court found that both stands and the building thereon were leased out as a single unit.  There was no evidence that 70 per cent of the usable rentable area of the building was on the stand belonging to the appellant and 30 per cent on the first respondent’s stand.  The parties had contributed equal pieces of land to their partnership and it was immaterial that a larger portion of the building was located on the appellant’s stand.  The parties’ contribution to the partnership was equal as both had contributed a stand and both paid for the expenses equally.  The arbitrator’s award of only 30 per cent of the net rental income to the first respondent was palpably inequitable and therefore contrary to public policy.  In the result, the court held that the arbitrator had erred in rejecting the first respondent’s claim and ordered that his award be set aside with costs to be borne by the appellant.

2015

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