Zimra loses case to terminate 85 vehicles deal

THE Zimbabwe Revenue Authority has lost its bid to cancel a tender for the supply of 85 vehicles worth more than US$3,9 million after the High Court Commercial Division threw out the appeal.

The revenue authority failed to prove on a balance of probabilities that Mike Harris, a company that sells Toyota vehicles and parts, and which delivered 15 Toyota Hilux vehicles, had deliberately failed to supply the remaining 70, despite full payment.

The Commercial Division upheld the decision of the arbitrator the two had used, and agreed that Zimra was in effect seeking a rewrite of the contract.

Mike Harris had delays in getting foreign currency allocations, and fluctuations in the exchange rate meant that top-up payments would be required for vehicles still to be delivered.

Zimra, although it had paid in local currency, wanted to cancel the contract with the refund being calculated at the present local currency equivalent of the foreign currency the original payment would have bought.

As it stands Zimra has received the first batch of 15 vehicles following payment of an equivalent of US$876 000.

However, after making another payment of Z$209, 658, 911 on February 24, last year, Mike Harris did not deliver the next batch of the 70 remaining vehicles, mainly Toyota Corollas, with full payment having been made to the car dealer.

Several meetings held by the parties to resolve the delay in delivering the 70 vehicles yielded nothing, with Mike Harris insisting that it could not deliver the vehicles due to challenges in procuring foreign currency.

Zimra declared a dispute by sending a notice of termination to the car dealer accusing the car dealer of breach of contract and sought reimbursement in the sum of US$3,063,000.

The stalemate prompted Zimra to activate a clause in their contract which required a resolution of the dispute before an arbitrator.

However, after a hearing, the arbitrator, Mr Kevin Terry, ruled in favour of Mike Harris after finding that the contract between the parties was not cancelled on September 28, 2022 and that Zimra was not entitled to payment by the car dealer in the sum claimed payable in ZWL at the RBZ auction rate together with interest.

The arbitrator rejected Zimra’s prayer for damages in the sum of US$ 3 063 000 payable in local currency at the RBZ auction rate at the date of payment. Unhappy with the arbitration decision that was rendered in June this year, Zimra took the matter up to the High Court Commercial Division on appeal seeking to set aside the decision. After hearing counsel for both parties, Justice Sylvia Chirawu-Mugomba upheld the arbitrator’s decision finding no merit in the Zimra appeal.