Addis Fortune (Addis Ababa)

6 April 2014

Ethiopia: Access Home Builders Tussle in Court

Judge adjourned the case until April 10, in order to give time to review the desired amendments

A judge at the Federal High Court's Sixth Civil Bench will decide on April 10, 2014, whether Access Real Estate (ARE) should amend its statement of defence to the charge filed against it by Gabby Investment Plc.

Gabby, a grade one contractor, is suing ARE, demanding 72.9 million Br in damages for unpaid work and business costs, along with interest, on September 13, 2013.

Gabby claims ARE had agreed to a 174.4 million Br contract to build five blocks of seven-storey apartment buildings on a plots owned by Me'eraf Plc, in Bole District, adjacent to Nyala Motors, which it had to deliver by February 22, 2010.

It was given another contract in May to erect three additional blocks of similar apartments on a plot owned by Laura Trade & Industry Plc, next to the plots Me'eraf owns, at a price of 108.2 million Br, and to deliver the apartments by May 2010.

However, the cost for the apartment was later amended to 224.1 million Br and 136.1 million Br, for Me'eraf and Laura, respectively, in April 2011. Access agreed to make a monthly payment of 20 million Br to Gabby to cover the total cost of construction at the two sites - 360.2 million Br.

Gabby is asking for compensation of 33.18 million Br for the balance owed, along with a 10.5pc interest for 25 months, according to the charge.

The Company further wants 39.4 million Br for losses it says it incurred in overhead costs, lost business opportunity and waste of input materials, as well as 220,000 Br for payments advanced to workers.

Gabby and ARE first disputed on August 20, 2012, when Gabby requested the termination of the contract unless payments were made by Access. ARE accepted the claims, but asked Gabby to maintain the project, promising to pay 10.5pc interest as soon as it mobilised funds from homebuyers, according to the charge.

Gabby, managed by Biniam Mebrhatu, resumed construction, for which it claims Access owes it another 5.2 million Br. Gabby received five cheques for 1.5 million Br, which failed to clear, it claims in the charge. This led it to finally cancel its deal with Access on March 17, 2013, although ARE has banned Gabby from moving its machinery out of the sites, the charge also claims.

In its response filed on October 22, 2013, ARE claimed that the Court had no jurisdiction to see the case. Its lawyers appealed for the Court to drop the charge, as the plaintiff has not attached enough material evidence to back up its charges.

During the court session, held on February 7, 2014, the judge dismissed ARE's claim on court jurisdiction.

Although the court session on Monday was supposed to hear oral proceedings, ARE's defence lawyers submitted a written request to amend their statement of defence.

The lawyer said that correcting inaccurate figures submitted in the first statement would help the Court to pass a ruling that is just.

However, the Judge, Shemsu Sirgaga said that the written request for amendment did not specify the details of the corrections and ordered the defendant to submit accordingly on Monday, April 7, 2014.

ARE's statement of defence claimed that the amount of money that Gabby requested for unpaid work had not been evaluated by an independent expert.

It argues that engineers it does not know conducted the estimation, while demanding the amount of money Gabby claims as damages should be presented with evidence.

In its response, ARE said that the revised costs of the construction at both sites exceeds 25pc of their original price. Defence lawyers claim the agreement of the cost revision was signed by Ermias T. Amelga, a majority shareholder and CEO of ARE, who they say in their written statement, left the country after subjecting the Company to losses and damages.

Ads by Google

Copyright © 2014 Addis Fortune. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.