Previously Missed Hearing on Awassa Hotel Adjourned for Investigation
Justices at the Federal Supreme Court adjourned the hearing of an appeal in the case between the Privatisation & Public Enterprises Supervising Agency (PPESA) and United Africa Group (UAG) by a little over a month, for further investigation.
The parties have been locked in a courtroom battle since June 2010, after lawyers from the Agency instituted a suit at the Federal High Court, involving a claim of close to 700,000 Br in punitive damages.
The Group, which acquired a state property in Hawassa Town, has failed to honour its contractual obligations. lawyers claim,
UAG, established in 1992 by Haddis Tilahun, an Ethiopian residing in Namibia for 18 years, and his Namibian wife, Marta Namumdjebo, pledged to renovate Awassa Lakeside Hotels (Number One), formerly under the Wabe Shebelle Hotels brand, after it acquired it from the Agency in May 2005 for 6.95 million Br. The company acquired the only property it has in Ethiopia now, agreeing to spend a total of 18 million Br in order to upgrade the hotel to three-star accommodations, within three years.
Developed by Hans Paul in 1968 and nationalised by the military regime in the mid-1970s, Awassa Lakeside Hotels occupies a 51,984sqm plot of land along Lake Awassa, located 273km south of Addis Abeba. The hotel has a restaurant, meeting hall, swimming pool, ground tennis court, and mini golf course. Nonetheless, half of this was demolished for the upgrade, which the Group has agreed to undertake in exchange for taking possession.
An allegation of failure to commit to this agreement, according to the Agency, forced the Group, engaged in real estate, energy, finance, and hospitality services in the Southern Africa region, through its nine chain hotels under the umbrella of UAG, to face the legal tussle.
The UAG, which is registered in Namibia, and has been in operation for the last 16 years, came to Ethiopia after Haddis met Prime Minister Meles Zenawi during his visit to South Africa, according to sources close to him.
UAG’s lawyer, Addisu Yidenekachew, took an appeal all the way to the Supreme Court, following a ruling of the Federal High Court awarding the Agency the punitive damage it claimed.
The original contract, which required the upgrades within three years, has been amended and his client (UAG) has performed according to the amendment, he argued.
On the opening date of the appeal for the hearing at the Supreme Court, on October 17, lawyers of both parties failed to appear before the Court, which resulted in the closure of the case. Addisu later on petitioned the Supreme Court, appealing for the resumption of the hearing process, claiming that the missed date was not done intentionally. It was previously adjourned for Tuesday, March 13, 2012, after a ruling for the resumption of the case was made by justices presided over by Justice Assegid Gashaw
The adversaries, represented by their lawyers, appeared before the bench and fought in the oral plead of the appeal.
Judges at the High Court improperly rejected his claim that the notice written by the Agency being impliedly modified the original terms of the contract, and thus that his client had performed according to the notice, Addisu argued last week.
“The Agency wrote us a letter that implied modifications of our agreement,” he told the justices. “Following oral negotiations made with officials of the Agency, the renovation of the 26 bedrooms out of the agreed 47 is impossible, unless demolished and rebuilt.”
The letter from the Agency notified the Group that an urgent renovation of the remaining 21 bedrooms and submission of a renewed business plan on how it will proceed the full terms of the contract, according to the lawyer representing the Group.
“This led us to believe that the Agency had made considerations in understanding our problem,” he argued.
The subsequent construction was delayed due to disruptions by alleged employees’ activities after they found out that they might lose the 10pc service charges they were being paid from the booking of the bedrooms to be demolished, Addisu argued, in an attempt to persuade the justices.
Nonetheless, UAG’s lawyer had to resort to expressing the “trust” his client had in federal agencies such as the PPESA, in responding to examination by Justice Desta Gebru on whether it was possible to resort to the “implied modification of the contract over an expressed modification, should there exist the willingness to do so.”
“The fact that the Agency is a government Agency led us to maintain our trust,” Addisu told the Supreme Court.
His version of events was categorically dismissed by Ayene Tefera, a lawyer representing the Agency. No contract modification was intended or made by the Agency, according to him.
“The problem allegedly posed by the employees was the Group’s problem, which had no bearing on honouring the terms of the contract,” Ayene argued.
Neither was Ayene without an answer for examination from Justice Desta, who wanted to know why the Agency’s notice was given in relation to part of the bedrooms only.
“The notice did not address the 21 bedrooms expressly, as claimed by the lawyer of the Group,” Ayene responded.
After hearing the arguments of the relatively calm adversaries, the Court adjourned the case until May 2, 2012.
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