US$617,000 Budiriro (CABS) housing row collapses in court as builder’s claim is dismissed

A High Court dispute over more than US$617,000 linked to the Budiriro housing project in Harare has collapsed after the court ruled that the company sued for the money was not legally responsible for the debt.

In a judgment handed down at the Harare High Court, Justice Vivian Ndlovu dismissed a claim by Mutual Construction (Private) Limited against Old Mutual Construction Zimbabwe (Private) Limited for US$617,815.29 arising from the well-known Budiriro housing development scheme.

The money claimed included retention fees, interest, security costs and other payments allegedly linked to the construction of 613 houses in Budiriro, a large housing project in Harare.

“The Plaintiff seeks payment of US$617,815.29 being retention, accrued interest, security cost and client snag list claims emanating from Budiriro Housing Project,” the court recorded.

According to the judgment, the dispute traces back to a 2013 building contract under which Mutual Construction said it was hired to build the houses. The company stated that the works were completed in November 2019, but claimed it was still owed substantial sums.

The project was carried out with the Central Africa Building Society (CABS) as the contracting party, and consulting engineers CNM-YBJ Consulting Engineers were appointed to supervise the works.

Mutual Construction argued that despite repeated demands for payment, the outstanding claims were not settled.

The company said a meeting was held on June 25, 2021, to resolve the matter amicably, but further discussions never materialised. In November 2023, a payment of US$36,289.66 was made as part of the retention amount, leaving the disputed US$617,815.29 unpaid.

The builder told the court it was entitled to the balance together with interest, arguing that the defendant had effectively acknowledged the debt through part payment.

But the defendant rejected liability, insisting that it was never a party to the construction contract.

Its lawyers argued that the agreement had been concluded with CABS and not Old Mutual Construction Zimbabwe, adding that the company’s role was limited to project management.

“The contract relied upon was executed between the Plaintiff and CABS, not with the Defendant,” Ndlovu said.

The court found that the plaintiff had failed to produce any document proving that the defendant had assumed responsibility for the debt.

“What is before the court is merely proof of payment and minutes, neither of which establishes the Defendant as the contracting party,” the judge ruled.

“In the absence of documentary proof, the Plaintiff’s assertion remains unsubstantiated.”

The judge said the plaintiff acknowledged that the defendant acted only as project manager, a role that does not create contractual liability.

“The defendant has managed to show that it was acting merely as Project Manager for CABS… Agency does not render the Defendant liable under the contract; liability rests with the principal, CABS,” the court said.

The court also ruled that it lacked jurisdiction to hear the dispute because the contract required disagreements to be settled through arbitration.

Clause 25 of the agreement states that any dispute “shall be referred to arbitration,” the court noted.

“The jurisdiction of this court is ousted by the arbitration clause, and the dispute must be referred to arbitration,” Ndlovu ruled.

In addition, the judge found that some of the claims themselves were not legally sustainable because they sought interest beyond what the law allows.

The court pointed to the in duplum rule, a legal principle preventing interest from exceeding the original debt.

“The in duplum rule prohibits interest from exceeding the capital debt and equally bars claims that seek to disguise ‘interest upon interest’ as damages,” the judgment said.

Ndlovu concluded that the plaintiff had failed to establish a valid claim against the defendant.

“The Plaintiff’s Declaration fails to disclose a valid cause of action against the Defendant,” the judge ruled.

“The plaintiff’s claim against the defendant is dismissed in its entirety.”

The court also ordered that costs follow the cause, meaning the plaintiff must pay the defendant’s legal costs.

The post US$617,000 Budiriro (CABS) housing row collapses in court as builder’s claim is dismissed appeared first on NewZimbabwe.com.