ZHOU J: This is an application in terms of Article
34(2)(b)(ii) of the Arbitration Act [Cap7:15] for the setting aside of
an arbitral award rendered by the second respondent in favour of the first
respondent. The application is opposed by the first respondent. The
background facts to the dispute which the second respondent was called upon to
arbitrate are eminently summarised in the award. They are as follows:
The applicant and the first respondent purchased two
adjoining pieces of land, known as Stands 895 and 894, respectively. They
are both 892 square metres in extent. The two properties are held under
separate deeds of transfer. On the two pieces of land stands a building
known as Lonrho House. Prior to 6 September 1999 the two properties were
owned by one company, Lonrho Properties Zimbabwe (Private) Limited. That
is the company from which the applicant and respondent purchased the two
adjacent properties. The greater portion of the building rests on Stand
894. It is common cause that what was advertised for sale was the
building on the two pieces of land. The applicant paid for his property a
figure which represented 30% of the purchase price while the first respondent paid
70% of the purchase price. Lonrho House was let to a third party as one
unit despite the fact that it sits on the two contiguous stands. The
expenses for the building were shared equally between the applicant and first
respondent. The first respondent which received the rentals apportioned
the net rentals on a ratio of 70% to itself and 30% to the applicant. The
second respondent found, as a fact, that there was no agreement between the
parties that the rentals would be shared in those proportions.
The issue which was referred to the arbitrator, the second
respondent, was whether the net rental realised from the building should be
shared equally by the parties or in the proportions of 70% to the first
respondent and 30% to the applicant. The second respondent came to the
conclusion that the relationship between the applicant and first respondent in
acquiring the two contiguous stands “as a single entity, is one of co-ownership
in proportion to the purchase price each paid. And, likewise, that in
leasing the stands to the World Bank as a single unit the relationship of the
parties became one of co-lessors, each being due only its pro-rata share of
income derived from the payment of rental.” Based on that conclusion, he
determined that 'the share of the income derived from the leasing of the two
stands as one indivisible unit, be in proportion to the specific contribution
made by each party to the purchase price of the single entity.”
Accordingly, the claim by the applicant to be awarded 50% of the net rental was
dismissed. In the award it is held that the same conclusion would be
reached even if the relationship between the applicant and the first respondent
was to be regarded as a partnership and the principles relating to partnerships
were applied. That is the award which the applicant invites this Court to
set aside on the ground that it is contrary to the public policy of Zimbabwe.
The applicant moved the court to strike out the opposing
papers filed on behalf of the first respondent on the grounds, firstly, that
the opposing affidavit is invalid and, secondly, that the deponent to the
opposing affidavit has no authority to represent the first respondent.
The issue of the invalidity of the opposing affidavit on the basis that it was
not properly sworn to was not persisted with in the heads of argument and in
oral argument. The applicant persisted with the contention that the
deponent was not authorised to represent the respondent. That argument
seems to be raised with amazing regularity these days. The applicant's
contention is not that the respondent has not sanctioned the opposition to the
application but, rather, that the deponent is not authorised to represent the
respondent in these proceedings. But the respondent is represented not by
the deponent but by its legal practitioners. The rules are clear as to
the qualification for a person to depose to an affidavit. Order 32 r
227(4) provides that an affidavit filed in written applications “shall be made
by the applicant or respondent, as the case may be, or by a person who can
swear to the facts or averments set out therein”. In other words, a
person who has knowledge of the facts and can swear to those facts is the one
qualified to depose to an affidavit in application proceedings. The applicant
is not contesting the assertion that the deponent to the affidavit has
knowledge of the facts stated in the affidavit. The cases cited by the
applicant in its heads of argument relate to authority to institute proceedings
on behalf of a company or to take certain decisions on its behalf, and not to
the competence of a witness to depose to an affidavit on behalf of a
company. Compare Madzivire & Others vZvarivadza &
Others 2005 (2) ZLR 148(H); see also Madzivire & Others vZvarivadza
& Ors 2006 (1) ZLR 514(S). For that reason, the
objection cannot be sustained.
The first respondent, on the other hand, objected in
limine to the application on the basis that it was filed out of
time. The first respondent contended that the arbitral award was ready
for collection by the parties on 25 February 2011 when a letter was addressed
to the applicant's legal practitioners by the Secretary to the Commercial
Arbitration Centre advising them that the award was ready for collection upon
payment of the fee stated in the letter. The applicant did not attend to
collect the award as advised. The award was subsequently delivered to the
applicant's legal practitioners on 14 March 2011 under cover of a letter dated
on the same date.
Article 34(3) of the Arbitration Act [Cap 7:15] provides as
follows:
“An application for setting
aside may not be made after three months have elapsed from the date on which
the party making the application had received the award or, if a request had
been made under article 33, from the date on which that request had been
disposed of by the arbitral tribunal.”
The above provision shows that the period of three months
is reckoned from the date that a party wishing to apply for the setting aside
of an arbitral award received the award. Mr Morris for the first
respondent submitted that the date on which the award was made available to the
parties must be taken as the date on which the parties received the
award. In this instance that date would be the 25th of
February 2011 when the applicant was notified that the award had been completed
and was available for collection.
According to the Longman Dictionary of Contemporary
English, 'receive' means “to get (something given or sent to one)”.The Oxford
Advanced Learners' Dictionary explains the meaning of the word 'receive'
as follows: “to get or accept sth that is sent or given to you”. The word
'received' to me means that the award must have been sent or delivered to the
recipient. In this case there was an invitation to collect the
award. Until the award was delivered to or collected by the applicant one
cannot say that the applicant had received it. The letter of the 25th
February 2011 does not amount to traditio longa manu as submitted by
Mr Morris. That letter does not amount to a pointing out (with
the long hand) of the item to be delivered. Further, the nature of the
thing-the award- is such that the court would be most reluctant to extend that
form of delivery to it as it could be easily handled and physically given to
the applicant, as what eventually happened on 14 March 2011. See Groenewald
vVan der Merwe1917 AD 233 at 239; MankowitzvLoewenthal1982
(3) SA 758(A) at 765. The award was, therefore, received by the applicant
on 14 March 2011 and not on 25 February 2011. The application was,
therefore, filed timeously. Compare Mtetwa & Anor v Mupamhadzi2007
(1) ZLR 253(S).On that account, the objection in limine fails.
Turning to the merits of the dispute, I need to consider,
firstly, the true nature of the relationship between the parties and its implications
on the sharing of the net rent, bearing in mind the fact that the parties paid
different amounts as the purchase prices for their properties. Whatever
conclusion I reach on that aspect, I will then need to consider whether the
arbitral award rendered is impeachable on the ground of being in conflict with
the public policy of Zimbabwe. The instant case indubitably presents an
unusual scenario that defies the straitjacket of the ordinary principles
relating to ownership of immovable property. It is a situation sui
generis. The parties own their two properties individually, each in
terms of a separate deed of transfer. The building is, however, a part of
the two immovable properties having acceded to them by inaedificatio
in accordance with the Roman maxims, which have been received in the
Roman-Dutch law, superficies solo cedit and omne quod
inaedificatur solo cedit: everything which is built on or attached to the
soil forms part of the soil. C. G. van der Merwe& de Waal, The Law of
Things & Servitudes, p. 126. The building, being immovable
property, cannot be said to be 'owned' jointly by the parties in the ordinary
sense of the word, as there is no title deed relating to it in which the
applicant and the first respondent are stated as the owners. What can be
said is that it is indivisible property which has acceded to two separately
owned contiguous pieces of land. It is now an integral part of the two
pieces of land.
There is no evidence that 70% of the usable rentable area
of the building is on the land belonging to the respondent and 30% of it on the
applicant's stand. For that reason, the parties' undivided shares in the
building cannot be determined by reference to those proportions. I am
not, therefore, persuaded that the conclusion by the second respondent that the
relationship between the parties is one of co-ownership in proportion to the
purchase price each paid and that as co-lessors the parties are entitled to a
pro rata share of the net rent based on the proportions of their purchase
prices in relation to the full purchase price for the two properties and the
building is legally sound. My understanding is that the entire space
covered by the two stands, including the area on which there is no building, is
being leased in terms of the same lease agreement. Put in other words,
the two stands are being leased as one unit.
Mr Morris for the respondent urged the court to
find, as did the arbitrator, that the relationship was one of
partnership. I have no difficulty with the conclusion that the
relationship is one of a partnership insofar as the building is
concerned. The second respondent found that capital contributions of the
parties to the partnership were 30% from the applicant and 70% from the
respondent. I do not agree. The parties' contributions were their
immovable properties, not the money which they paid as the purchase price for
the properties. The purchase price was paid not into the partnership
business but to a third party, the seller of the immovable properties.
Although the parties paid different purchase prices for the properties, they
own those properties separately. Each of those properties contributes to
the housing of the building. But it is not just the building which is
leased by the tenant hence an inquiry into the proportions of the building on
the two contiguous stands is unnecessary. The parties have contributed
equal pieces of land into the partnership. It is immaterial that a larger
portion of the building is located on the stand belonging to the respondent.
The building is indivisible. It has not been shown that if the portion of
the building which rests on the applicant's stand is demolished the building
can remain intact and still be leased at 70% of the rent or that it can be
leased at all.
Article 34(2)(b)(ii) of the Arbitration Act [Cap 7:15]
provides that an arbitral award may be set aside by this Court if it finds that
“the award is in conflict with the public policy of Zimbabwe”.
The test applied in determining whether an arbitral award
is in conflict with the public policy of Zimbabwe is settled. In the case
of ZESA vMaposa 1999 (2) ZLR 452(S) at 466E-G, the test is
set out as follows:
“(T)he court does not exercise
an appeal power and either uphold or set aside or decline to recognise and enforce
an award by having regard to what it considers should have been the correct
decision. Where, however, the reasoning or conclusion in an award goes
beyond mere faultiness or incorrectness and constitutes a palpable inequity
that is so far reaching outrageous in its defiance of logic or acceptable moral
standards that a sensible and fair minded person would consider that the
conception of justice in Zimbabwe would be intolerably hurt by the award, then
it would be contrary to public policy to uphold it.”
See also Delta Operations
(Pvt) Ltd vOrigen Corp (Pvt) Ltd 2007 (2) ZLR 81(S) at
85C-E; Muchaka vZhanje & Anor2009 (2) ZLR 9(H) at
11D-12B.
Having found that the parties' contribution to their
partnership is equal, in that they have each contributed a stand, it seems to
me that unequal sharing of the net rentals constitutes a palpable inequity that
affronts the conception of justice in an intolerable manner. It has not
been shown that the value of the contribution of the respondent's property to
the lease is 70% while that of the applicant's is 30%. Equally, it has
not been shown that the applicant holds an undivided 30% share in the
building. The notarial lease agreement with the International Bank for
Reconstruction and Development recorded the applicant and respondent as joint
lessors without reference to any shares. It is common cause that the
expenses were shared equally between the parties. The mathematical
calculation posited by the first respondent in its heads of argument does not
accurately reflect the effect of the parties sharing expenses equally. In
any event, the fact that the expenses were shared equally is not disputed by
the first respondent in its opposing affidavit. The trite principle of
the law is that what is not denied in affidavits must be taken to be
admitted. See Fawcett Security Operations (Pvt) Ltd vDirector
of Customs & Excise & Ors1993 (2) ZLR 121(S) at 127F. At the
arbitration proceedings the first respondent's witness, Mr Cranswick confirmed
that the deductions for expenses from the gross rentals were paid by the
parties in the proportion of 50/50. It would be a palpable inequity to
require applicant to contribute 50% towards the expenses while receiving 30% of
the net profit on the basis that it paid a lower purchase price for its stand
than that paid by the first respondent. Such an approach amounts to
blowing hot and cold; to approbate and reprobate. It places the award in
conflict with the public policy of Zimbabwe.
In the draft order the applicant asks this Court to set
aside the award and to remit the matter to the second respondent for the
computation of the amount due to it under the notarial lease. The latter
relief falls outside the mandate given to this Court in terms of article 34 of
the Arbitration Act. The court is only empowered to set aside the award.
In the result, it is ordered as follows:
1. The arbitral award
rendered by the second respondent dated 25th February 2011 be and is
hereby set aside.
2. The costs of this
application shall be paid by the first respondent.
Mutumbwa Mugabe & Partners, applicant's
legal practitioners
Atherstone&
Cook, first respondent's legal practitioners
