The Federal High Court ruled to terminate the real estate development contract between Laura Trade & Industry and its sister company, Access Real Estate (ARE) S.C., paving the road for the former to make a claim for damages.
Laura filed a civil suit against ARE two years ago. The two had a contract for ARE to construct 96 apartments on 2,900sqm of land, which was held by Laura. In return Laura would get 11 of the apartments, with ARE being responsible for any possible lease payment that may be required for the use of the land. That agreement was signed on May 12, 2010.
Laura claimed that ARE had failed to construct the buildings or to terminate the contract, preserving the damages incurred by Laura.
ARE claimed that it had already invested 220 million Br on the land, which it argued was property owned by the government. Laura had simply contributed a vacant plot, ARE’s lawyer Tibebe Sirak defended the company, denying that there was a time set for ARE to deliver the 11 apartments. Besides, that part of the agreement was changed and replaced with a nine million Birr payment from ARE to Laura. If the contract is to be terminated Laura would have to pay it 220 million Br, ARE claimed.
ARE and Laura have a joint obligation to homebuyers, hence ARE is not supposed to pay debts to Laura earlier, according to the argument of Tibebe.
However, the court preferred to accept the claim of Laura, as the contract between the two did not provide a timeline within which it was going to be terminated and giving its own interpretation considering the nature of the contract.
Thus the court decided to terminate the contract between ARE and Laura noting that the reasonable time for the construction of the apartments, five years, had already lapsed. It accordingly decided that the land was now considered under Laura’s possession. If as a result of the failure of the contract to be performed, Laura faces any lease related penalties, it can claim damages from ARE. The latter retains the right to file a civil suit if it has any claims related to any payments and construction it says it made to Laura.
Two months ago Laura had a ruling in its favour at the Supreme Court, related to this particular plot of land. Laura had filed a suit at the Federal High Court asking the court to lift the frozen assets owned by ARE by Gabby, until payments it claimed to be owed were paid to it. These assets included the 2,900sqm plot.High court decided against Laura. It appealed to the Supreme Court claiming that the plot belonged to it, not to ARE that led the Supreme Court to order the High Court to revise its examination of the case.
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