NRZ defeated in battle for Victoria Falls complex

THE High Court has ordered the National Railways of Zimbabwe (NRZ) to surrender rentals collected from tenants at a complex in Victoria Falls following a protracted court battle with  Landela Safari Adventure (PVT) Limited.

Landela had filed a spoliatory and interdict relief before the High Court following the dispute with NRZ.

The safari operator named NRZ, The Victoria Falls Trading Post (Private) Limited, Dedication Collections (Private) Limited, and Victoria Falls Adventures (Private) Limited as respondents. In his verdict, High Court judge Justice Siyabona Musithu stated that he found nothing in the lease agreement that clearly barred the court from granting Landela's requested relief. "The court deems the preliminary point to be without merit and dismisses it accordingly. The applicant (Landela) was the majority stakeholder in the second respondent (Victoria Falls Trading Post) and had maintained complete control over the company for the previous 20 years. "The first respondent (NRZ) was a minority shareholder," he explained.

Justice Musithu also held that Landela had an interest in the NRZ's activities and could not stand by while things deteriorated due to disagreements with a fellow stakeholder. He stated that the renters' refusal to pay NRZ-mandated rentals violated the contract, and that Landela might sue them. "The fact that NRZ confirmed receiving rentals from some of the tenants, yet it accepts the existence of a lease agreement between the tenants and the second respondent is quite revealing," the lawyer stated.

The judge also urged the parties to uphold the integrity of the arbitral process they proposed in the agreement. Landela and the NRZ formed a cooperative business that includes The Victoria Falls Trading Post, Dedication Collections, and Victoria Falls Adventure. According to court documents, NRZ holds immovable properties in Victoria Falls, which the railway operator leased to Landela under a deal signed on November 27, 1998. The safari operator promised to build three residences and two lodges at its expense in exchange for the lease of the properties.

The operator also agreed to build a commercial centre on the same property with the NRZ as a development partner, which required the purchase of shares in The Victoria Falls Trading Post. The deal gave rise to the Victoria Falls Trading Post, in which the parties were the sole stockholders. The properties were leased to the corporation under the terms of an agreement signed on October 8, 1999. The lease was valid for eight years from the date of signing, with the option to renew for up to two more periods of eight years and four months each.

Landela's commercial structures were to be rented out to third parties, with the parties sharing rental income at agreed-upon ratios. However, a dispute emerged between the parties over the lease and shareholders agreement, which was sent to arbitration by NRZ in accordance with the fundamental provisions. Landela accused the NRZ of abusing its authority by barring the Victoria Falls Trading Post from the administrative block in the commercial centre.

The NRZ allegedly threatened to lock out some tenants while signing lease agreements with others. Landela argued that the NRZ's locking out of the Victoria Falls Trading Post violated the rule of law and undermined the lease, joint venture, and shareholder agreement. Landela also argued that the NRZ's conduct invalidated the ongoing arbitration proceedings, despite having a strong chance of success.