Online Reporter
Fidelis Munyoro
Chief Court Reporter
THE High Court has dismissed Venturer Investments (Private) Limited’s bid to overturn an arbitral award ordering it to honour a property sale to Joseph and Caroline Shonhiwa and Simbarashe and Barbara Madzima, bringing the two couples closer to taking transfer of the disputed Umwinsidale property.
Justice Faith Mushure, sitting in the Commercial Division, ruled that the arbitral award was not contrary to public policy and should be recognised and enforced.
The judge dismissed Venturer’s application to set aside the award with costs and granted the buyers’ application for recognition and enforcement of the award made by the later retired Justice Moses Chinhengo in March 2024.
At the heart of the dispute is No. 2 Wallshill Close, Umwinsidale, Glen Lorne, Harare, which the parties agreed to sell for GBP200,000.
The two couples paid the purchase price in full, but the transaction later unravelled when ZIMRA assessed the property for capital gains tax purposes at a value that the parties disputed.
The assessment became the flashpoint in a dispute that ultimately saw Venturer attempt to cancel the agreement.
The company argued that the transaction breached exchange-control laws, that the person who represented it in the sale lacked mental capacity because of ill health, and that the purchase price was unreasonably low.
The buyers rejected the cancellation and took the dispute to arbitration, seeking an order compelling Venturer to proceed with the sale and transfer the property.
Justice Chinhengo ruled in their favour. He set aside Venturer’s cancellation of the agreement and gave the company 30 days to approach ZIMRA for a possible reassessment of the property’s value and capital gains tax.
If that effort failed, Venturer was required to pay the US$49 000 capital gains tax assessed by ZIMRA and proceed with the transfer.
Venturer then approached the High Court, arguing that the award had been reached unfairly and was so unjust that enforcing it would offend public policy.
Justice Mushure rejected the argument.
A substantial part of the judgment dealt with Venturer’s failure to properly attend the arbitration hearing on 12 January 2024.
The company’s lawyer of choice, Advocate Tapson Dzvetero, was in Bulawayo, while the company’s representatives were reportedly in Dubai and the United Kingdom.
A stand-in lawyer appeared only to seek a postponement.
But the judge found that the hearing date had been communicated repeatedly and that Adv Dzvetero had been copied into the relevant emails.
The arbitrator had, therefore, been entitled to refuse the postponement and proceed under Article 25(c) of the Model Law, which allows an arbitral tribunal to continue where a party fails to appear without sufficient cause.
Justice Mushure was particularly emphatic on the consequences of Venturer’s failure to attend.
“The first respondent authored its own demise,” the judge said.
The court found that the arbitrator had considered the circumstances surrounding the postponement request and had not acted irrationally or unfairly.
“The opportunity was presented; it chose not to take it up, to its detriment,” Justice Mushure said.
Venturer also argued that the arbitrator had unlawfully ventured into ZIMRA’s territory by allowing the company to seek a reassessment of its capital gains tax.
The judge found otherwise.
The award did not compel ZIMRA to reassess the tax or dictate what the revenue authority should accept. It merely gave Venturer an opportunity to approach ZIMRA.
“ZIMRA retained the discretion to either grant or deny the indulgence sought,” Justice Mushure held.
The judge also rejected the argument that the sale should not be enforced because ZIMRA had effectively found the agreed price to be far below the property’s market value.
The court stressed that ZIMRA’s statutory power to determine fair market value for purposes of calculating capital gains tax did not give it the power to determine the contractual sale price between private parties.
“ZIMRA does not set purchase prices for properties,” the judge said.
Justice Mushure further relied on the principle of sanctity of contract, noting that Venturer had set the purchase price, accepted the full payment and proceeded with the transfer process before attempting to cancel the agreement.
The judge found no “palpable inequity” sufficiently serious to trigger the narrow public-policy exception under the country’s arbitration law.
“None of the grounds advanced by the first respondent demonstrate that the arbitral award is contrary to public policy,” Justice Mushure ruled.
The judgment nevertheless drew a significant distinction between registration and conversion of an arbitral award.
The buyers had asked the court to recognise the award as a judgment of the High Court and had included additional directions compelling transfer of the property.
Justice Mushure held that an arbitral award does not become a High Court judgment merely because it is registered. Its status remains that of an arbitral award, with registration serving to facilitate enforcement.
The court found that the buyers’ proposed additional directions went beyond the limited role of a registering court.
However, rather than allowing that defect to sink the entire application, Justice Mushure held that the offending portion could be severed.
The final order therefore dismissed Venturer’s challenge and granted the Shonhiwas and Madzimas recognition and enforcement of Justice Chinhengo’s award.
Venturer was also ordered to pay the buyers’ costs.
The ruling leaves the original arbitration award standing: the cancellation of the May 14, 2022 sale agreement remains set aside, and Venturer remains bound by the award requiring it to take the necessary steps towards transferring the Umwinsidale property to the buyers.
