Property developer faces $200m compensation bill

Property developer faces $200m compensation bill
Eddie Pfugari and his wife

Eddie Pfugari and his wife

THE High Court has ordered Eddies Pfugari (Pvt) Limited to fully service two sections of its Knowe suburb in Norton within 90 days, failure of which the property development firm should pay nearly $200 million in compensation to residents.
Justice Owen Tagu granted an application by the Knowe Residents and Ratepayers’ Association for an order to force the company to service the residential areas in Phase 2 and Phase 3 of the Knowe housing development in Norton that it has neglected for almost 20 years in breach of contract.
The judge ruled that in the event that the firm failed to do within three months, it should pay $192 901 995,00 to the property owners.
The court found that Eddies Pfugari breached its side of the bargain by failing to construct roads, connect water reticulation, drainage and sanitary systems, erect street lights and construct public facilities or amenities such as schools, clinics and a shopping complex as stipulated in agreements of sale.
The firm, owned by businessman Eddies Pfugari, sold the residential stands between 1998 and 2003 and the buyers were given various payment options ranging between 30 and 60 months and the buyers made all the payments, but the stands remained un-serviced.
Most of the residents built their houses but failed to get title deeds for the properties as the Norton Town Council maintained that it could not issue rates clearance certificates for properties constructed on unserviced land.
This prompted the residents to drag the coampany to court.
Through its lawyers, the company argued that the claim by the residents had prescribed since the payments were made a long time ago and also that the home seekers, who made their payments using the defunct Zimbabwe dollar, could not claim services in United States dollars.
Tagu dismissed the Pfugari’s arguments, saying the claim could not have prescribed because there was no time limit within which the residents could have made the claim. He noted that from the papers filed in court as recently as April 2015, the developer’s lawyers had written to the residents telling them not to complain because there was no time limit for the developments.
“A perusal of the permits granted to the first respondent did not give a time limit within which the first respondent was to carry out the infrastructural development. In my view this too did not give the applicant’s members time limits within which to sue the first respondent,” said the judge.
“It is my further view that whatever was to be done was to be done within a reasonable time. The members having performed their obligations within the stipulated times, it was their legitimate expectation that the first respondent was to also perform its obligations within a reasonable time. The first respondent to date has failed to do so to date. It cannot therefore hide behind the issue of prescription to avoid its obligations.”
Tagu also dismissed the argument that inflation had rendered it impossible for the developer to make the infrastructural developments. He accused Eddies Pfugari of trying to unjustly enrich itself by raising “supervening impossibility” as its defence, saying most of the money was paid to it almost a decade before inflation wiped off the value of the local currency.
“In my view any suggestion to that effect constitutes an attempt by the first respondent to eschew obligations that it voluntarily assumed and to unjustly enrich itself at the expense of the members of the applicant. With due respect, the first respondent has failed to discharge the onus of establishing that performance is now impossible in the error of dollarisation.
“For a contract that was entered into in 1998, there is no explanation whatsoever as to why between 1998 and 2009 when dollarisation occurred, the first respondent failed to service the stands. This is a simple case of a litigant who failed to fulfil its contractual obligations for many years, having squandered the millions of the purchase price and now seek to suggest that inflation prevented it from doing the right thing. This is not the sort of scenario that the defence of impossibility of performance was designed for. Any hardships that arose now is self-created and must not be accommodated by this honourable court.”
The court ordered the company to service the stands to the satisfaction of the Norton Town Council, failure of which it would be required to pay the money in compensation. In the event that Eddies Pfugari fails to do both, the court authorises the Sheriff to attach and sell its assets.

  • Handira

    Inga. Once again people: There is a huge difference between revenue and profit.

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