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However, after the plaintiffs brought charges
against the defendants (Solomon and Eslavatore) for
having failed to pay the dues based on the signed
agreement, the High Court on October 21, 2006,
passed a verdict to reinstate the properties to the
plaintiffs by which means the Court voided the
agreement signed earlier.
Unconvinced by the verdict of the High Court,
Solomon and his company submitted an appeal before
the Supreme Court. However, after nine months of
legal battle in its verdict, the Supreme Court on
August 2, 2007, stated that: “since the said
document signed between the plaintiffs and the
appellants was not made in accordance with the law,
the transaction made on the immovable property is
invalid.”
“The agreement on immovable properties is under
obligation to be authenticated before the court or
authorised body, as this has been stipulated in the
law,” stated the Supreme Court. The Court,
subsequently, upheld the earlier decision made by
the lower court.
Beside the particular legal reason stipulated in the
law and applied to make its decision, the Supreme
Court used the basis on which an earlier verdict was
heard four months ago in more or less similar cases
through the Cassation Bench of the Supreme Court.
The Cassation Bench led by Justice Memberetsehay
Tadesse, also vice president of the Supreme Court,
passed the decision on previous disputes between the
plaintiff, Gorfe Gebrehiwot, and the defendants,
Aberash Dubarge and Getachew Nega, in various courts
that was brought forward to the Cassation Bench of
Appeal over the sale of immovable properties saying
that it cannot be valid according to the commercial
code.
The Bench at the Supreme Court that assessed the
appeal of Solomon stated that the decision passed by
the Cassation Bench should be obligatory for the
lower courts at all levels to follow. The latest
decision, according to the Court, is based on a
landmark decision served on an identical case.
Based on the Commercial Code, there are four basic
obligations without whose application agreement of
transaction on immovable properties would remain
invalid.
“The agreement to sell such properties should be put
in writing, be in front of eyewitnesses,
authenticated by courts or an authorised body and it
must be registered in authorised offices,” said a
lawyer.
According to this attorney, it was the lack of these
four basic factors stipulated in the Commercial Code
that led Solomon and his company to lose the court
battle.
The late Kebede Zeleke, his widowed spouse, Shewa
and his son, Dawit, who jointly established the
Central Venue Plc in 1991, took about four million
Birr in loans for the construction of the Hotel from
the Development Bank of Ethiopia (DBE). After Kebede
passed away and the Hotel resumed its operation,
Shewa and Dawit took 1.7 million Br in loans from
the Commercial Bank of Ethiopia (CBE) to inject
working capital.
However, DBE foreclosed on the building that housed
Central Venue Hotel with its property in 2005 as the
borrowers defaulted by paying the debt. By that
time, the debt of the owners of the Hotel peaked at
eight million Birr with interest.
While DBE was in the process to auction the Hotel it
foreclosed, Solomon and the owners of Central Venue
signed an agreement to transfer the property on
sale.
It was on May 12, 2005, that the agreement was
signed between the sellers Shewa and Dawit, and
buyer Solomon. Based on the agreement, Solomon
agreed to pay off all the money owed to DBE.
Clearing the 500,000 Br dues from tax, and also to
pay 165,000 Br unpaid salary, which includes the
compensation for the Hotel’s workers who were laid
off during the closure of the Hotel.
The two million Birr in the form of capital gain tax
was also to be covered by the buyer. On top of all
that, their agreement indicated that the buyer
agreed to pay an additional one million Birr to
Shewa and her son, Dawit.
Another agreement, which closely resembled the
content of the agreement signed between the seller
and Solomon was signed between those parties and
Elsavatore Plc. However, it was Solomon who signed
the agreement as buyer of the property as he is
manager of Elsavatore.
Soon after the agreement was signed between the two
parties, Solomon issued a 200,000 Br check to the
sellers from the account that was opened in Awash
International Bank with Elsalvatore.
Hence, the power of attorney over the edifice, which
facilitated the transaction of the Hotel’s
properties, was given to Solomon, allowing him the
right of to ensure that debts are paid off.
The two agreements signed by Solomon and Elsalvatore
show that when the title deed was transferred to the
name of the buyers, then the remaining 800,000 Br
was to be paid for Shewa and Dawit later on.
Although Solomon and Elsalvatore possessed the power
of attorney based on the agreement made, the whole
agreement of the property transaction did not go
through the authentication and registration
processes.
However, as soon as all the dues were paid by
Solomon within the agreed time, in June 2005, DBE
handed over the property to Solomon. It was then
that the dispute sparked between the sellers and
would-be buyers of the Central Venue Plc.
Shewa
told Fortune that, since DBE overtook the
property to foreclose it from her possession, no
matter who paid the dues, it should have been
appropriate for DBE to handover the property to the
very person it took it from or to it should do so in
the presence of herself.
“I suspect that Solomon and DBE were conspiring
against me,” Shewa claimed.
However, DBE confirmed that, since the power of
attorney for the property was in the possession of
Solomon, it was appropriate to hand over the
property to him.
Disappointed, Shewa then lifted the power of
attorney that she and her sons to Solomon
immediately.
Amid all this controversy, Neterech Kebede, who
claimed to be the daughter of Kebede born from
another woman, brought a court injection to prevent
the property from being sold or transferred to
anyone after she brought a document issued by the
Federal First Instance Court that confirmed her
rights. Neterech succeeded in brining the court
injection before the High Court to devoid the whole
agreement and suspended the property from being sold
without her consent. She further complained that an
agreement such as the one signed earlier by her half
brother and his mother to sell the property, was
without her knowledge; therefore, it should not be
valid.
Despite what has transpired in the courts, Solomon
managed to obtain a trade license from the Kirkos
District on behalf of Elsalvatore. Solomon renamed
the Central Venue Hotel after his fifth son, King
and the renamed King’s Hotel started operation in
September 2006.
After one year of closure, the Hotel resumed
operation with a lot of renovation work and
furniture imported from Italy.
“I have spent more than
two million Birr to refurbish the Hotel,” Solomon
told Fortune at that time.
It was noted that in October 2006, when the Hotel
under the new ownership and management started
operation, Shewa and Dawit filed charges before the
Federal High Court against Solomon and Elsalvatore.
Solomon, however, argued in the High Court that,
after 13 million Br was spent to pay their debt and
renovate the Hotel, it would not be appropriate to
be accused for breaching the agreement.
However, the High Court’s decision stated that the
plaintiffs, Shewa and Dawit, should pay back the
200,000 Br with the interest rate and ownership of
property to be reinstated to the original
proprietors.
The Court also said that the sale of property that
occurred without the consent of another stakeholder,
who is the daughter of the late Kebede, was not
appropriate in itself. The Court further stated that
Solomon could not bring the evidence for the amount
of money he claimed that he expended. However, other
than proceeding with the charges in a new file,
Solomon would have no alternative.
Although, Solomon appealed against the decision made
by the High Court, he was not successful.
“Without necessarily including the reason which the
High Court based its decision on, the Appeal Bench
upheld the decision based on the fact that the
agreement to sell or buy the property was not
authenticated and registered,” said the Court.
The Commercial Code
that refers to the sale of immovable properties that
was not seen in practice for quite some time earlier
in Cassation Bench and now in the Appeal Bench,
which said its reason to pass the decision was a
good lesson for all citizens, Tilaye Tegegn, a
lawyer, told
Fortune.
Although, the Cassation Bench’s decision was the
basis for the Appeal Bench to pass its verdict on
Solomon’s case that both cases focused on the sale
of transferred immovable properties, in accordance
to the law, Tilaye stressed that everyone should be
conscious of the Commercial Code when it comes to
the transferring and selling of immovable properties
without authentication and registration.
However, Abera Hibiso, general manager of King’s
Hotel, told Fortune that they would not stop
their battle.
“We will take the case to the Court of Cassation.
Even if we are denied ownership rights, we will
charge the plaintiffs for the 16 million Br we
spent,” Abera said.
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