National Social Security Authority (NSSA) has lost its Supreme Court appeal against Housing Corporation Zimbabwe (Private) Limited in a matter it was seeking that an arbitral award be set aside.
NSSA was also suing the arbitrator Peter Carnagie Llyod cited as the second respondent in the court application.
The background was that parties entered into a housing offtake agreement.
The agreement was for Housing Corporation Zimbabwe to construct 8000 units on behalf of the appellant at an agreed price per housing unit and in batches of 250 houses over an agreed time frame.
NSSA made a payment upfront of US$16 million to the first respondent.
This payment was in terms of the agreement.
Housing Corporation Zimbabwe then constructed a total of 53 housing units which were completed.
Several others are in various stages of completion.
By the first half of 2018, a dispute had arisen between the parties and this resulted in numerous meetings being held and correspondence being exchanged between the parties.
The general complaint by Housing Corporation Zimbabwe concerned the appellant’s lack of action regarding several issues that affected the performance of the contract.
Following these complaints, Housing Corporation Zimbabwe wrote a letter addressed to NSSA on 29 May 2018 terminating the agreement.
This resulted in the parties blaming each other for breach of contract.
To resolve the dispute the parties thereafter approached the Commercial Arbitration Centre for an arbitrator.
Lloyd was duly appointed as the arbitrator.
During arbitration proceedings, Housing Corporation Zimbabwe averred that the behaviour of NSSA constituted a repudiation of the agreement, a material breach of the agreement and a failure to remedy its breach although it had received notice from the first respondent to do so.
Housing Corporation Zimbabwe maintained that it was entitled to terminate the agreement as it did and as a consequence of the termination, could claim damages for US$2 316 000 and US$56 842 364 together with interest thereon and costs from the appellant.
NSSA denied repudiating or breaching any terms of the agreement.
It also denied that there was any basis on the part of the first respondent to terminate the agreement.
It averred that the first respondent was in breach of its contractual obligations and claimed its right to cancel the agreement, an award that Housing Corporation Zimbabwe repay US$16 million in terms of an Advance Payment Guarantee which was in place between the parties, damages at the rate of US$5 000 per day from 4 February 2018 to the date of payment of the US$16 million and costs.
The arbitrator dismissed the appellant’s claim and found in favour of Housing Corporation Zimbabwe.
He made an award to Housing Corporation Zimbabwe in the sum of US$30 million together with interest thereon at the prescribed rate of 5 percent per annum.
Aggrieved, the appellant applied to the setting aside of the arbitral award under case number HC2938/19.
The appellant averred that the award by the arbitrator was so outrageous in its defiance of logic that it amounted to a serious violation of public policy.
“It further averred that the award gave the first respondent a profit of US$30 million in circumstances where it had failed to build or deliver any house to the appellant in terms of the contract.
“The appellant maintained that the award could not stand as it violated public policy.
“Apart from the ground on public policy, the appellant sought that the award be set aside on a procedural basis as it alleged that the arbitrator did not advise the parties what the issues for determination were nor the evidence that he was going to consider in dealing with the issues,” the court heard.
But the High Court dismissed the matters.
Justice Paul Musithu dismissed the application for the setting aside of the arbitral award and granted the application for registration of the award.
Unhappy with this decision again, NSSA noted an appeal before the Supreme Court.
The appeal was heard on 13 September 2021 by Justices Susan Mavangira, Tendai Uchena and Felistus Chatukuta.
NSSA then sought recusal of Uchena arguing that he was biased since he once ruled in favour of Housing Corporation Zimbabwe.
But the Supreme Court trashed NSSA’s application ruling that it had failed to satisfy the requirements for the recusal of the judge.
“It is clear from the case law cited above that the onus of proving bias on a judicial officer is on the applicant.
“It is also apparent that the applicant must show that there is a real likelihood of bias on the part of the judicial officer.
“The fact that a judge determined a preliminary issue in the appeal is not on its own a basis for an application for recusal.
“As a result, the application for recusal must fail,” ruled the Supreme Court. – NewZim
