NSSA slapped for breach of contract

BY XOLISANI NCUBE

The National Social Security Authority (NSSA) has been ordered to pay Housing Corporation of Zimbabwe (HCZ) $30 million with interests for breach of contract after the pension fund cancelled a housing deal.

The State-controlled pension manager had accused HCZ representatives Adam Molai, Stephen Duggan and Alec Nyatanga of swindling the public pension fund of $16 million in a botched housing investment deal which NSSA had terminated

But an independent arbitrator Peter Lloyd ruled that NSSA had no case against HCZ and the manner in which it handled the matter was wrong hence, they must compensate the property developer $30 million plus interest and legal fees.

“For all the reasons I make the following award, the respondent (NSSA) shall pay the claimant (HCZ) damages in the sum of $30 million together with interests thereon at the prescribed rate of 5% per annum from the date of partial award,” ruled Lloyd on February 24, 2019.

The housing developer had rushed to the arbitrator after NSSA had terminated the deal alleging that HCZ had failed to deliver within the agreed timeframe.

HCZ has been embroiled in a legal battle with NSSA over breach of contract involving the construction of 8 000 housing units.

NSSA accused HCZ of failing to deliver any completed housing units as required in terms of the agreement.

While the matter was before arbitration, NSSA tried to take $16 million performance bond from Zimnat Lion Insurance alleging that the developer had failed to deliver on time.

But the High Court halted the move with High Court Judge Justice Esther Muremba ruling that the application by HCZ which sought to stop Zimnat from releasing the money to NSSA had merit.

In addition, Justice Muremba prohibited NSSA from writing any further letters of demand for payment to Zimnat until the matter was finalised by the arbitrator.

The dispute arose after HCZ entered into a housing off-take agreement with NSSA on July 14, 2017 which meant that HCZ was to acquire land and construct
8 000 housing units, which would be sold to NSSA, as complete housing units.

The parties agreed on the terms and conditions governing their rights and obligations relating to the acquisition of the land, construction and off-take of the housing units.

One of the conditions was that the developer was to furnish NSSA with an unconditional and irrevocable performance bond of $16 million issued by an insurance company or bank in the form acceptable to NSSA and valid for the duration of the project.

NSSA was supposed to pay an off-take deposit of $16 million to HCZ.

The money was to be channelled towards the purchase of price of the housing units. NSSA paid this deposit to HCZ. The housing project commenced in 2017.

However, claiming breach of contract, NSSA in July this year, wrote a letter of demand to Zimnat demanding payment of the $16 million accusing the housing development firm of failing to deliver its end of the deal in terms of the contract.

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