A Harare lawyer is suing Chinhoyi municipality over cancellation of a debt collection contract, claiming this was in breach of good faith. Mr Paul Munyaradzi Mangwana, a senior partner at Mangwana and Partners Legal Practitioners, has taken the municipality to an arbitrator seeking to recover $2,2 million. The claim covers payment for services rendered and damages over the cancellation of its contract for debt collection.
Chinhoyi municipality, in a full council meeting held on September 8 last year, terminated Mangwana’s business contract for allegedly failing to comply with terms of the agreement.
The contract was later given to another law firm. In his lawsuit, Mr Mangwana claims the parties entered into a debt collection agreement on July 29, 2015. He argues that in terms of the contract, the law firm was supposed to collect $9 169 453,77 from the municipality’s debtors.
The contract was for the duration of one year.
“The cancellation was notwithstanding the fact that the applicant had already commenced work and issued plus or minus 8 000 letters of demand and about 1 500 summons,” says the law firm in its papers. “The applicant has a substantial claim for damages against the respondent, currently estimated at $2,2 million.
“If this contract is given to another law firm, the applicant would have lost its only lien (legal claim).” Mr Mangwana further accuses the municipality of Chinhoyi of terminating the contract for improper and extraneous purposes that resulted in a breach of his duties of good faith and honesty in the performance of the agreement.
The municipality of Chinhoyi, which is being represented by Advocate Sylvester Hashiti, instructed by Dube, Manikai and Hwacha, argues that the relationship between the law firm and the municipality was one based on trust and good faith.
“Such trust and good faith no longer exists due to the issue of collection of money, which was supposed to be paid directly into the respondent’s account, but was not. The money has been paid into the applicant’s account and not forwarded to the respondent,” the council argues.
The municipality also argues that it cancelled the contract to prevent the law firm from continuing to collect money and retain it, which would create more issues concerning accountability and transparency.
“The respondent requires the money from such debts in order to adequately run and provide services to its residents.” Mr Mangwana’s bid to bring the matter as an urgent chamber application at the High Court failed after it was thrown out for lack of urgency.
Former High Court judge Justice Moses Chinhengo will preside over the dispute at the Arbitration Centre, on a date yet to be set. herald