Central African Building Society v Finormacg Consultancy (Private) Limited and Retired Justice L.G. Smith

The appellant (Central African Building Society) and the first respondent (Finormacg Consultancy) entered into a consultancy contract commencing 1 January 2013 and expected to terminate on 31 July 2013 to transform the appellant from a building society into a commercial bank. On 28 February 2013, the appellant terminated the contract by written notice, tendering payment in lieu of notice. The first respondent referred the matter to arbitration before the second respondent (an arbitrator). The first respondent claimed the termination was unlawful and sought reinstatement or damages of US$1,744,451.50. The appellant argued it lawfully terminated under clause 7.1 of the contract and counterclaimed US$1,648,169.91 in damages for alleged breach. The arbitrator found the termination lawful under clause 7.1, dismissed the first respondent's claims, awarded it only US$23,517 for March 2013 payment, and dismissed the appellant's counterclaim. The first respondent applied to the High Court to set aside the arbitral award alleging bias based on a conversation between the arbitrator and the appellant's managing director (Kevin Terry) during proceedings, and on intemperate language in the arbitrator's opposing affidavit filed in the High Court proceedings.

• Whether the High Court misdirected itself in finding a reasonable apprehension of bias warranting setting aside of the arbitral award
• Whether an application can succeed on grounds not pleaded in the founding affidavit but raised in the answering affidavit
• Whether post-award conduct of an arbitrator can retrospectively invalidate an award on grounds of bias
• Whether a court can contradict its own earlier findings within the same judgment
• Whether the High Court has jurisdiction to remit a dispute to a different arbitrator after setting aside an award

The appeal was allowed with costs. The judgment of the High Court was set aside and substituted with an order dismissing the application with costs.

An application stands or falls on its founding affidavit. A court cannot grant relief on grounds raised for the first time in an answering affidavit that were not pleaded in the founding affidavit, as this violates the principle that the founding affidavit informs the respondent of the case to meet. Post-award conduct of an arbitrator (such as averments in an opposing affidavit filed after the award) cannot retrospectively establish bias during the making of the award. A court cannot contradict its own earlier findings within the same judgment by first rejecting evidence of bias and then relying on the same rejected evidence to find bias. Where a court has properly found in favor of a party on all issues raised in the founding affidavit, it must dismiss the application and cannot then rely on matters raised in subsequent affidavits to reach a contrary conclusion.

The court noted that the appellant sought costs on a legal practitioner-client scale but failed to motivate such an order in heads of argument or oral submissions, making ordinary costs appropriate. The court also observed that it was unnecessary to consider the fourth ground of appeal regarding the High Court's jurisdiction to remit disputes to a different arbitrator, given its findings on the other grounds. The judgment implicitly suggests that had the bias allegations been properly pleaded and established, there may have been merit to challenging the award, but the procedural defects were fatal to the first respondent's case.

This case is significant in Zimbabwean arbitration law and civil procedure as it reinforces fundamental procedural principles: (1) An application must stand or fall on its founding affidavit - a respondent must know the case to meet and courts cannot grant relief on grounds not pleaded in the founding papers. (2) Post-award conduct cannot retrospectively vitiate an award on grounds of bias during the arbitration proceedings. (3) Courts cannot contradict their own findings within the same judgment. The case demonstrates the limited grounds for setting aside arbitral awards and the high threshold for establishing bias. It affirms that courts will jealously guard procedural fairness and consistency in judicial reasoning, particularly in the context of applications to set aside arbitral awards under the Arbitration Act and UNCITRAL Model Law.