Housing project deadlock heads to arbitration
Goitsemodimo Kaelo | Tuesday August 22, 2023 06:00
The recent CoA ruling dismissed Quality Builders’ appeal against a High Court decision, which acknowledged a dispute between Quality Builders, BI, and the Botswana Public Employees Union (BOPEU) over a development agreement for transforming a specific plot into a residential estate.
The High Court had referred the matter for arbitration. Quality Builders then challenged the High Court’s ruling that identified a dispute and sent it to arbitration. However, CoA Justices Goemoekgabo Loeto Tebogo-Maruping and Johan Coenraad Froneman, aligned with Justice Isaac Lesetedi’s ruling, supported the High Court’s position. Justice Lesetedi’s judgment explained that there was no substantial reason to contest the High Court’s reference to arbitration under Clause 18 of the parties’ agreement.
The dispute revolves around determining who breached the agreement and how to proceed. “That’s clearly a significant dispute to which neither party can close its eyes. It matters not that one party holds the view that the other is not acting in good faith. These are questions to be decided in the arbitration,” noted Justice Lesetedi in his judgment.
He highlighted the dispute’s significance, which has halted a major project for years without resolution between the parties. “The contention by the Appellant the parties left to themselves should resolve their differences and implement the agreement flies in the face of the reality which has existed on the ground,” he added. The court found Quality Builders’ assertion that parties should resolve their differences independently a stark contradiction to the evident situation on the ground.
Lesetedi emphasised that both parties agreed to arbitration to address disputes arising from their agreement. The legal clash between Quality Builders and Babereki Investments emerged due to their failure to fulfil a contractual agreement. Babereki Investments, linked to BOPEU, and Quality Builders entered a development agreement involving plot 76660 Gaborone.
The plan was to create a residential estate for sale to BOPEU members. Key terms, according to the court papers, Quality Builders would amongst others donate the project plot, and provide expertise, design, and development services, while Babereki Investments would contribute funds for infrastructure, more particularly pay P10 million excluding Tax, in equal instalments of P2 million for five months.
The parties also reached a consensus that common areas and infrastructure shall be transferred to Babereki Investments upon complete payment for all sold/unsold developed units and undeveloped units. Reportedly, while Babereki Investments has settled P8 million of the P10 million, Quality Builders remains in violation. Their failure to contribute the property to the project for development has led to this breach. It was discovered that the property was encumbered by a tax lien to Botswana Unified Revenue Service and registered under a third party’s name.
Clause 18 of their development agreement stipulated that any arising disputes must undergo arbitration for resolution. However, Quality Builders argued that a dispute had emerged between the parties, challenging its suitability for arbitration.