HCZ bid to challenge Supreme Court ruling dismissed

Fidelis Munyoro-Chief Court Reporter

THE Housing Corporation Zimbabwe (HCZ) has seen its efforts to gain direct access to the Constitutional Court thwarted, bringing a conclusive end to a protracted contract dispute with NSSA over housing on Caledonia to the east of Harare that could have seen HCZ receive US$22 million in damages.

The Constitutional Court dismissed the corporation’s bid to challenge a Supreme Court decision that reversed a High Court ruling awarding Housing Corporation damages for lost profits. This seven-year contractual dispute, which began in arbitration and wound its way through the judicial system, has now been definitively resolved.

The saga stems from a 2017 agreement between HCZ and the National Social Security Authority (NSSA) for the construction of 8 000 housing units in Caledonia, Harare, valued at US$304 million.

HCZ, co-founded by Adam Molai and Stephen Duggan, was awarded the contract just one week after its formation. However, the partnership soured, leading to HCZ’s claim that NSSA had breached the agreement. The dispute was referred to arbitration, where senior lawyer Peter Carnegie Lloyd ruled in HCZ’s favour, awarding US$22 million in damages for loss of profit. This award, however, became the crux of the legal battle.

The arbitrator’s decision was contested by NSSA on the grounds that the award granted consequential damages explicitly barred under clause 22.1 of the Housing Offtake Agreement. NSSA argued that the arbitrator had overstepped his mandate and violated public policy by awarding damages outside the contractual framework. Despite these objections, the High Court registered the arbitral award, dismissing NSSA’s arguments and ordering payment to HCZ. NSSA then escalated the matter to the Supreme Court, where the tide turned in its favour.

The Supreme Court, in a judgment authored by Justice Antonia Guvava and supported by Justices Tendayi Uchena and Samuel Kudya, set aside the High Court ruling. The court found that the arbitrator had indeed erred by awarding consequential damages that the parties had expressly excluded in their contract.

Justice Guvava emphasised that an arbitral award must be overturned if it is so fundamentally flawed that it contravenes public policy or contractual principles. She noted that the High Court had failed to critically examine the arbitrator’s findings and had mischaracterised NSSA’s legal argument as an appeal for sympathy rather than a legitimate contractual claim.

The Supreme Court’s decision underscored the sanctity of contractual terms and the importance of adhering to agreed provisions. Justice Guvava dismantled the High Court’s reasoning, pointing out that the damages awarded by the arbitrator were neither general nor implicit but rather special or consequential damages clearly barred under the agreement.

By allowing such damages, the arbitrator had effectively rewritten the contract, a move that Justice Guvava deemed untenable. The judgment also addressed procedural issues, highlighting NSSA’s initial misstep in sending a relatively junior representative to the arbitration hearing, which resulted in damaging concessions. Despite this, the court held that the arbitral award could not stand given its manifest inconsistency with public policy and the contract’s explicit terms.

Following this Supreme Court ruling, HCZ sought recourse in the Constitutional Court, alleging that its constitutional right to a fair hearing had been violated. HCZ’s application, supported by a founding affidavit from Adam Molai, claimed that the Supreme Court had erred by deviating from its own previous judgments, including the landmark case of ZESA v Maphosa. HCZ also argued that the Supreme Court had improperly acted as a court of first instance by ruling on public policy issues not addressed by the High Court. Represented by Advocates Lovemore Madhuku, Lewis Uriri, and Daniel Tivadar, HCZ contended that these actions amounted to a breach of its constitutional rights.

NSSA, represented by Advocate Thabani Mpofu, instructed by Mr Regis Chawatama of Mawere, Sibanda Commercial Lawyers, countered that HCZ’s application was baseless and amounted to an “appeal in disguise.” Advocate Mpofu argued that the Supreme Court had acted within its mandate and adhered to established legal principles.

He demonstrated that NSSA had raised public policy concerns in the High Court, which the Supreme Court had properly considered.

Furthermore, he argued that the Supreme Court was not bound to follow its previous decisions although it had, in fact, done so in this case. The Constitutional Court, after hearing arguments from both sides, agreed with NSSA’s position. The court dismissed HCZ’s application, stating that it lacked merit. Full reasons for the court’s decision are expected to be delivered at a later date.

This ruling marks a significant victory for NSSA, saving it millions of dollars in damages while reaffirming the principles of contractual sanctity and public policy. The decision also closes a contentious chapter in Zimbabwe’s legal and commercial history, bringing finality to a high-stakes dispute that has spanned nearly a decade.