The contract was not illegal as it was concluded with a pretium in local currency...what was unlawful was the payment in foreign currency.

There are two rules which are of general application: The first is that an illegal agreement which has not yet been performed, either in whole or in part, will never be enforced. This rule is absolute and admits no exception. It is expressed in the maxim ex turpi causa non oritur actio.

The second is expressed in another maxim in pari delicto potior est conditio possidentis, which may be translated as meaning "where the parties are equally in the wrong, he who is in possession will prevail." The effect of this rule is that where something has been delivered pursuant to an illegal agreement the loss lies where it falls. The objective of the rule is to discourage illegality by denying judicial assistance to persons who part with money, goods or incorporeal rights, in furtherance of an illegal transaction.

In the present matter, the illegal agreement has been performed. The plaintiffs' delivered the property to the second defendant authorising...to pass cession to him on...The ex turpi causa maxim does not apply...Rather, the in pari delicto rule applies...The property was delivered in pursuant to an illegal payment agreement. The parties are equally in the wrong. The loss lies where it fell.

The plaintiffs' did not suffer loss as they received a sum equivalent to...that they sold their rights for. The second defendant received transfer of the property. The property is in his name and he is saddled with rates and municipal charges...The plaintiffs' have failed to establish the need to relax the in pari delicto rule. Cancelling the cession would not be equitable.

That the conclusion of a lease agreement for the use of premises contrary to municipal zoning regulations is illegal was set out in. where it was stated that:-

The definition of and the jurispudential justification for relaxing the in pari delicto maxim is set out as follows:

"It is not open to the parties to negotiate terms which are clearly illegal and then to turn around and invite the court to recognize or enforce their illegal activity. I would, therefore, hold that if the lease agreement had not been acted upon, this court would have refused to enforce it. But since it has been acted upon, the court will intervene if justice and equity deem it proper."

She agreed to be bound by such decisions as the college authorities may make on her behalf. In any event, she contracted herself to abide by the rules and regulations of the college. This is reflected in the manner in which she, up until this dispute, had been conducting herself. She is party to an illegality she now complains of.

Assuming that I have erred in refusing to hold the letter as a liquid document, I still would have declined provisional sentence in this matter on another basis.

From the correspondence that the parties attached to the pleadings in this matter, it is common cause that the transaction giving rise to the dispute between the parties was a sale of certain equipment. The sale was concluded in September 2008. The equipment was sold for US$14,650=. This was prior to the date when the exchange control authorities allowed the use of foreign currencies for ordinary trade within the jurisdiction, and, thus, the agreement fell foul of the relevant foreign exchange regulations of the time that prohibited individuals from exchanging goods or services for foreign currency without prior approval of the exchange control authorities. In this regard, the transaction between the parties was tainted with illegality. See Matsitka v Jumvea Zimbabwe (Private) Limited and Another 2003 (1) ZLR 71 (H).

It is the settled position at law that where the court is faced with an agreement that is tainted by illegality, the court may allow the loss to lie where it falls, or may relax the rule against illegality to do justice between the parties. Whether to allow the loss to lie where it falls or to relax the rule against illegal agreements to do justice between the parties is an issue to be determined at the trial of the matter and cannot be debated at provisional sentence stage.

At the hearing of the application, the issue that took centre stage was the illegality of the contract, and whether the applicants could seek refund of the purchase price of the property, a judgment that will sound in foreign currency.

The law that applies to illegal contracts appears to me to be quite clear.

Two rules are of general application. Where the contract has not been performed, the courts will not compel performance by either party to the contract. This rule is absolute and admits of no exceptions. Where the parties are equally in the wrong, the loss will lie where it falls, unless, in its discretion, the court is of the view that one party will thereby be enriched at the expense of the other. In such cases, the courts will relax the in pari delicto potior est condutio possidentis rule to do justice between the parties.

The application of the two rules, in my view, calls for a two step approach to any contract that is tainted with illegality. Firstly, the judicial officer has to ascertain whether the contract has not been performed, in part or in whole, and the order sought in the suit will serve to compel performance under the contract. If that appears to the court to be the case, the first rule applies without exception, and the plaintiff seeking to compel performance under such a contract is non-suited.

If the court ascertains that the contract has been performed, in part or in whole, then the court embarks on the second rung of the inquiry to ascertain whether allowing the loss to lie where it falls will result in one of the parties being unjustly enriched at the expense of the other.

Ordinarily, where the contract has been performed, in part or in whole, the default position is that the loss should lie where it falls. This is so to discourage illegality by denying judicial assistance, and recognition, to parties who deliberately breach the law for gain. In establishing whether one of the parties will be unjustly enriched at the expense of the other, the courts in this jurisdiction have taken the simple approach of assessing whether one party will gain, or benefit, where he, or she, has not given value for the transaction.

In Dube v Khumalo 1986 (2) ZLR 103 (SC) GUBBAY CJ was of the view that because the defendant received rights, title, and interests in the land without incurring any corresponding disadvantage, and without giving any value for such rights, the plaintiff who had paid for the property was unjustly impoverished at the expense of the defendant. The same approach appears to have been taken by KORSAH JA in Young v Van Rensburg 1991 (2) ZLR 149 (SC) where he reasoned that in circumstances where the appellant had given no value for the property, and had done nothing to improve the property, whereas the respondent had paid for the property and has made considerable improvements thereon, a refusal of the relief sought would result in the unjust enrichment of the appellant.  

It appears to me that this approach, though simple in nature, is in line with the steps that BARTLETT J laid out in Walker v Industrial Equity Limited 1996 (1) ZLR 269 (HC) where he was dealing with a claim founded on unjust enrichment. He adopted the summary that was set out by WOULTER DE VOS in Verrykingsaanspreeklikheid in die Suid Afrikaanse Reg (1958) as stated by SCHOLTENS in the 1996 Annual Survey of South African Law, 150..., and gave the requisites of an action on unjust enrichment as:

“(a) The defendant must be enriched;

(b) The enrichment must be at the expense of another (i.e the plaintiff must be impoverished and there must be a casual correction between enrichment and impoverishment);

(c) The enrichment must be unjustified;

(d) The case should not come under the scope of one of the classical enrichment actions;

(e) There should be no positive rule of law which refuses an action to the impoverished person.”

In my view, the inquiry that a judicial officer must therefore take when exercising his, or her, discretion to relax the in pari delicto rule are the first three requisites set out above by BARTLETT J. It appears to me that the judicial officer must establish whether the defendant will be enriched, the enrichment will be unjustified, the plaintiff impoverished, and that both the enrichment of the defendant and the impoverishment of the plaintiff are linked to the illegal transaction.

Applying the above facts of this matter, it is common cause that the illegal contract of sale between the parties has been performed in part. The applicants have made payment towards the purchase of the piece of land. The papers, however, do not disclose whether or not occupation of the land has been given to them. This appears not to be an issue between the parties.

In the circumstances, the first rule is thus of no application to the facts of this dispute.

At the time the parties entered into the Agreement of Sale, the law prohibited transactions in foreign currency without prior authority of the Central Bank. Both parties avoided getting such authority, and, in doing so, I hold that they are equally in the wrong.

The second rule thus applies to their circumstances, and the loss should lie where it falls.

It appears that to allow the loss to lie where it falls will leave the parties in the partially performed contract where the applicants have parted with money for a piece of land to which they may eventually have title. One may argue and say there is no loss on the part of the applicants as they have received a piece of land for value.

It has not been argued before me that this state of affairs will unjustly enrich the respondent at the expense of the applicants. Rather, the applicants have approached the court to disengage from the contract on the basis of an alleged misrepresentation. They are seeking a remedy that is ordinarily available to parties to a legal agreement.

I would have followed the reasoning in Dube v Khumalo 1986 (2) ZLR 103 (SC) to relax the application of the in pari delicto rule were I persuaded that there is a loss to the applicants in this matter, or that the transaction has unjustly enriched the respondent at the expense of the applicants.

I am neither so satisfied, nor has the unjust enrichment been brought to my attention. Each party to the transaction parted with an asset of value. No one is to gain where there have both given value.

Two rules are of general application to illegal agreements.

They are the ex turpi causa non oritur actio and the in pari delicto potir est conditio possidentis rules.

Where the contract has not been performed, the courts will not compel performance by either party to the contract. This rule is absolute and admits of no exceptions. Where the parties are equally in the wrong, the loss will lie where it falls, unless, in its discretion, the court is of the view that one party will thereby be enriched at the expense of the other. In such cases, the courts will relax the in pari delicto rule to do justice between the parties. (See Dube v Khumalo 1986 (2) ZLR 103 (SC); Young v Van Rensburg 1991 (2) ZLR 149 (S); Matsika v Jumvea Zimbabwe (Private) Limited and Another 2003 (1) ZLR (H); and Edson Mudzivo and Another v Norest Nyamakope HH120/09).

It is common cause that the contract in casu was performed in part. The default position, therefore, is that the loss should lie where it falls, unless this will result in the defendant being unjustly enriched at the expense of the plaintiffs.

The plaintiffs have parted with two properties and in turn have received, from the defendant, the sum of US$85,000=. In the circumstances, if I were to allow the loss to lie where it falls, the defendant will walk away with two properties, whose value was agreed, as between the parties, to be not less than US$265,000=, for much less. This appears to me to be obvious unjust enrichment. The circumstances of this matter, in my view, justify the relaxation of the in pari delicto rule to avoid the injustice that will result by allowing the loss to lie where it falls.

In the result, I make the following order:

1. The Sale Agreement between the plaintiffs and the defendant in respect of Stands 32 and 37A Kandeya Township, Mt. Darwin, is hereby set aside.

2. The defendant is to cede and transfer his rights, title and interests in the two properties to the plaintiffs against refund of the sum of US$85,000=, failing which the Deputy Sheriff shall take all steps necessary and sign all documents on behalf of the defendant.

It is now settled law that “an illegal agreement which has not yet been performed, either in whole or in part, will never be enforced” by the courts. Per GUBBAY JA..., in Dube v Khumalo 1986 (2) ZLR 103..., in terms of the maxim ex turpi non aritur actio – a rule which is absolute and admits of no exception.

In casu, the Agreement of Sale is almost complete – it has been performed in part, as it is common cause that the applicant has paid the purchase price in full, as acknowledged by the respondents...,. The applicant was given vacant possession of the house by the respondents on 24 September 2004, and has been in possession ever since.

The Agreement of Sale is almost complete. It has been performed in part.

What is illegal in the Agreement of Sale is the portion of clause 2 wherein the parties state that “..., the full purchase consideration for the said property is the sum of $70,000,000= payable by the purchaser direct to the seller...,” when, in fact, the correct amount should have been reflected as $130,000,000=.

The rest of the Agreement of Sale document reflects the true and correct intention of the parties.

The South African Court had occasion to deal with an analogous case in Brits v Van Heerden 2001 (3) SA 257. The parties in that case reflected the purchase price as being R160,000= only, and made declarations to that effect, when , in fact, the purchase price was R160,000= plus a cession of an insurance policy of R33,000=. (The equivalent of section 44 of the Stamp Duties Act [Chapter 23:09] in South Africa is section 14 of their Act). KNOLL J had this to say..., -

“It is the agreement to omit the particular portion of the agreement referring to the balance of the purchase consideration which is, in fact, the illegal agreement.”

The issue that raised my concern in the above matter is the legality of the original contract of services.

It is not in dispute that the parties agreed to transact using “foreign currency”, then, as a medium of exchange. The plaintiff accepts that this was illegal. He, however, pleads with me to relax the rule against illegal contracts and allow him to collect the balance due under the contract.

This, in his view, will prevent an injustice and will ensure simple justice between man and man.

In my view, the admission by the plaintiff that the original contract between the parties was illegal was well-made.

It appears to me that the law applicable to illegal contracts is quite clear, and business people are well-advised to take heed of this law before they institute litigation over contracts whose illegality may be questionable.

Two rules are of general application.

Where the contract has not been performed, the courts will not compel performance by either party to the contract. This rule is absolute and admits of no exceptions.

Where the parties are equally in the wrong, the loss will lie where it falls, unless, in its discretion, the court is of the view that one party will thereby be enriched at the expense of the other. In such cases, the courts will relax the in pari delicto potior est condutio possidentis rule to do simple justice between the parties.

In casu, it is common cause that the contract was performed in part. 

The defendants have thus made some payments towards the services that the freight company rendered them. They are not seeking to reap where they have not sowed, as was the case in Dube v Khumalo 1986 (2) ZLR 103 (SC), where the Supreme Court relaxed the application of the in pari delicto rule.

Finally, counsel for the plaintiff contends that even if the original transaction between the parties is found to be contrary to statute the court has a discretion to enforce the Agreement despite its illegality in order to avoid the unjust enrichment of one party at the expense of the other.

As I have recently held in Funding Initiatives International (Pvt) Ltd v Mabaudi HH20-07..., -

“The established principle of our law is that anything done contrary to a direct statutory prohibition is generally void and of no legal effect. The mere prohibition operates to nullify the act, particularly where it is visited with a criminal sanction. See Schierhout v Minister of Justice 1926 AD 99 at 109; Metro Western Cape (Pty) Ltd v Ross 1986 (3) SA 181 (AD) at 188-189...,. Having regard to the direct and unambiguous prohibition spelt out in section 8 of the Act I am in no doubt that its provisions cannot be waived and that any contractual stipulation to the contrary must be treated as being null and void ab initio. Moreover, as is made crystal clear in section 9, any interest charged or agreed in excess of the prescribed maximum is unenforceable and irrecoverable whether through civil proceedings or otherwise. Consequently, where usurious interest is charged in contravention of the Act the borrower is entitled, in terms of section 11, to recover the excess amount paid within a period of two years after the date of payment.”

It follows, therefore, whether the transaction in casu was a genuine investment or a disguised loan, that the transaction and the Acknowledgement of Debt premised upon it are susceptible to scrutiny for compliance with the in duplum rule as well as conformity with the governing statutes. Moreover, if the transaction is found to be tainted with illegality it will be necessary to consider the relevant facts surrounding its conclusion as well as the respective degrees of turpitude attributable to the parties in order to determine the extent of its illegality and its enforceability under the par delictum rule. See Jaybay v Cassim 1939 AD 537...,.; Young v Van Rensburg 1991 (2) ZLR 149 (SC)...,.; Hattingh & Ors v Van Kleek 1997 (2) ZLR 240 (S)...,.

The Legal Position

The issue before me is not a novel one as this court has had occasion to deal with similar situations in the past. See the following cases for guidance: Wycliff Matsika v Jumvea Zimbabwe Limited and Sydney Mpofu HH09-03; and Lloyd Gambiza v Pikirai Taziva HH109-08.

In the Wycliff Matsika v Jumvea Zimbabwe Limited and Sydney Mpofu HH09-03 case the issue which the court had to determine was crisply put by the learned judge in the following -

“I became concerned that one issue had not been dealt with to my satisfaction – the issue being whether the parties were entitled, under our law, to transact business in foreign money, i,e, in United States dollars. In other words, the question which vexed me was whether two Zimbabweans, both resident in the country, were entitled to buy and sell in United States dollars.” See S.I.109 of 1996.

After a thorough analysis of the case before him the learned judge concluded that the transaction was, in fact, in violation of section 4(1)(a)(ii) of the Exchange Control Regulations. See Wycliff Matsika v Jumvea Zimbabwe Limited and Sydney Mpofu HH09-03...,.

Following on the decision in Wycliff Matsika v Jumvea Zimbabwe Limited and Sydney Mpofu HH09-03, the learned judge who dealt with the Lloyd Gambiza v Pikirai Taziva HH109-08 case concluded that the transaction therein was a violation of the same Exchange Control Regulations.

There is a slight distinction, though, from the above referred cases from the instant case. Whereas in Wycliff Matsika v Jumvea Zimbabwe Limited and Sydney Mpofu HH09-03 and Lloyd Gambiza v Pikirai Taziva HH109-08 there was evidence that foreign currency had actually changed hands, in the instant case the parties had only made an undertaking to exchange the foreign currency once the transaction had been concluded. However, this distinction must not cloud issues in this matter. The Agreement between the parties cannot be looked at in a vacuum. There is need to consider the history of the two parties, as captured in Exhibits 2 and 3 – which were tendered by the plaintiff himself in a bid to strength his case.

In my view, these two confirmed transactions clearly demonstrate a stout effort, by both parties, to flout Exchange Control Regulations with their eyes wide open. The record of proceedings in this case will show that even when the two parties engaged in this transaction they both knew that they were flouting the Exchange Control Regulations in question. To that extent, it cannot escape one's mind that this particular transaction was tainted with illegality.

During submissions, counsel for the plaintiff referred me to the case of Barker v African Homestead Touring and Safaris (Pvt) Ltd & Anor 2003 (2) ZLR 6 (S) as authority for the support of the plaintiff's claim.

With respect, that case was referred to out of context in that in that case the Supreme Court was called upon to deal with violations of section 11 of the Exchange Control Regulations – which section was designed to control payments by Zimbabwean residents outside Zimbabwe or to incur an obligation to make a payment outside Zimbabwe subject to certain conditions being fulfilled. In the instant case, the issues involved two Zimbabweans, one being the plaintiff, and the other being a representative of his duly registered Zimbabwean company. The transaction involved providing services to each other, and paying each other, in this country, in foreign currency. To that extent, therefore, the distinction between these two cases is quite clear. Different considerations apply to these two sets of transactions. See..., Barker v African Homestead Touring and Safaris (Pvt) Ltd & Anor 2003 (2) ZLR 6 (S) and Macafe (Pty) Ltd v Executrix, Estate Forrester 1991 (1) ZLR 315 (S)...,.

Having determined that the Agreement entered into by the parties was an illegal one, I turn now to consider whether the plaintiff's case is sustainable or not given the fact that the plaintiff's suit was, in essence, meant to enforce this contract.

In dealing with this issue, I find the views of GUBBAY JA in the case of Dube v Khumalo 1986 (2) ZLR 103 SC..., to be quite instructive. The then learned Judge of Appeal put the position succinctly in the following -

“There are two rules which are of general application: first is that an illegal agreement which has not yet been performed, either in whole or in part, will never be enforced. This rule is absolute and admits no exception. See Mathews v Robinowitz 1948 (2) SA 876 (W) at 878; York Estates Ltd v Warcheam 1950 (1) SA 125 SR at 128. It is expressed in the maxim ex turpi causa non oritur actio.

The second is expressed in another maxim in pari delicto potior est conditio possidentis, which may be translated as meaning: 'where the parties are equally in the wrong, he who is in possession will prevail.' The effect of this rule is that where something has been delivered pursuant to an illegal agreement the loss lies where it falls. The objective of the rule is to discourage illegality by denying judicial assistance to persons who part with money, goods, or incorporeal rights in furtherance of an illegal transaction. But, in suitable cases, the courts will relax the par delictum rule and order restitution to be made. They will do so in order to prevent injustice on the basis that public policy 'should properly take into account the doing of simple justice between man and man.' As was pointed out by STRATFORD CJ in Jaybay v Cassim 1939 AD 537 at 544-54...,.” See Dube v Khumalo 1986 (2) ZLR 103 SC...,.

In the case before him, the learned judge, with the concurrence of the other Judges of Appeal, went on to relax the par delictum rule and granted relief to the plaintiff.

I consider that the overriding factor in the majority of the cases where the par delictum rule is relaxed is that the party seeking relief will not be seeking to enforce an illegal agreement.

I also make a further observation that almost invariably where parties enter into illegal agreements there is an element of unjust enrichment, particularly where courts have declined to relax the par delictum rule. In other words, one of the parties to the illegal transaction comes out of it with burnt fingers whilst the other stands to benefit. Such is the hazardous nature of entering into an illegal transaction.

In the case before me, it is clear that the plaintiff, in both the main and the alternative claim, has sought to enforce the illegal contract...,.

From the evidence given, and accepted by the court, the conduct of the parties in this case is quite reprehensible. They have a very clear history of transgressing the Exchange Control Regulations as in force then – as confirmed by Exhibits 2 and 3. The conduct of the parties disables the plaintiff from the benefit of a “once off” transaction. They had systematically connived to act in the way they did fully aware of the existence of the prohibitive Exchange Control Regulations

Counsel for the plaintiff submitted that in the event that the court finds that the Agreement violated the  Exchange Control Regulations, S.I.109 of 1996, the court has a discretion to relax the effect of the maxim in pari delicto est conditio possedenis and not deny judicial assistance to a party who parts with money in furtherance of such a transaction.

I have been asked to exercise my discretion to relax the effect of the maxim in pari delicto est conditio possedentis (in pari delicto). The maxim is translated as meaning “where parties are equally in the wrong, he who is in possession will prevail”. See Dube v Khumalo 1986 (2) ZLR 103 SC..,. The rationale for this discretion is to prevent injustice where one party is enriched at the expense of the other. See Jajbhay v Cassim 1939 AD 537...,.

In my view, this is an appropriate case where the loss should lie where it fell. The plaintiff did not part with anything in furtherance of the transaction. The defendant was not enriched; neither was the plaintiff impoverished in pursuance of the transaction. Granting the order being sought by the plaintiff would amount to enforcing an illegal contract. In the result, I will make the following order -

1. The plaintiff's claim is dismissed.

During the week ending 29 December 2006, the Herald newspaper carried an advertisement inserted by Murenga Estate Agents (“Murenga”) wherein Stand No.1759 of 323 Midlands, Waterfalls, was being advertised for sale at a purchase price of twenty five million dollars. The respondent was interested in the property and visited Murenga Estate Agents's offices where he spoke to a Mrs Madziva, a sales agent thereat. He was  referred  to Stand 323 Thorn Road, and, having viewed the property, returned to Murenga Estate Agents and expressed his desire to purchase the property at the asking price of $25,000,000=. He was given Murenga Estate Agents's bank account number wherein he could transfer the purchase price. Later that week, having effected the transfer as directed, he met with the appellant at Murenga Estate Agents's offices where they were to sign the Agreement of Sale.

According to the respondent, the appellant pleaded with Mrs Kasenza, who drafted the Agreement of Sale, to reflect the purchase price as $8,000,000= instead of the actual price of $25,000,000= that he had paid. Mrs Kasenza was reluctant to understate the purchase price but following consultations with her superior, Mr Murenga, and more pleading from the appellant, who claimed to be heavily indebted with medical bills and the like, the respondent, after an initial objection to this proposal since he had already paid $25,000,000=, and it was generally known that properties in the area were fetching prices in excess of $8,000,000=, finally agreed to the appellant's suggestion that the agreement be back-dated to September 8, 2006 and the purchase price be understated.

The appellant, however, states that it was the respondent who requested the understatement of the price in order to evade stamp duties on transfer.

Following these events, and on 29 December 2006, the appellant, as Seller, and the respondent, as Purchaser, concluded an agreement for the sale of:

“Certain piece of land situate in the District of Salisbury being subdivision of 323 Midlands Township 2 of Upper Waterfalls Estate called Stand No.1759 measuring 2,167 square metres. A residential Stand with staff quarters partly walled measuring 2,167 square meters.”

In terms of the agreement, the purchase price was $8,000,000= (eight million dollars) which was to be deposited with Murenga Estate Agents and held by them pending transfer. Clause  2 of the General Conditions provided that the Seller was to tender transfer of the property within a reasonable period of the date of acceptance of this offer and the Purchaser was to provide the Seller's Conveyancers with the requirements  specified in Clause 2 within fourteen days of the date of such tender of transfer. The Conveyancers were to be Messrs Gutu & Chikowero. Vacant possession was to be given to the Purchaser by mutual agreement.

It is common cause that the agreement, notwithstanding the actual date of its conclusion and signature (29 December 2006), was dated 8 September 2006.

On 10 January 2007, Murenga Estate Agents wrote to the conveyancers with instructions to attend to the transfer of the property advising in the letter that the purchase price had been paid direct to the appellant.  The conveyancers, in turn, wrote to the appellant on 3 January 2007 requesting the title deeds for the whole property as well as the permit to subdivide, among other things, to enable them to attend to the transfer.

Vacant possession of the property was given to the respondent on or about 1 February 2007. In or about April 2007, the appellant advised the respondent that when the surveying process was completed he might expect to lose or gain 100 square meters. After the completion of the process it turned out that the respondent had gained 47 square meters. The appellant asked him to pay 10 million dollars for this extra piece of land but he could only afford $3,000,000= which, and that is common cause, he paid to the appellant.

Thereafter, matters dragged on until 5 January 2009 when the conveyancers wrote, again, to the appellant's legal practitioners requesting the documents necessary to process the transfer and advising that the purchase price had been paid to the appellant. The response was a request for proof of payment of the purchase price. On 30 January 2009, proof of payment in the form of a letter of confirmation by Murenga Estate Agents that the purchase price had been paid, was forwarded to the appellant's legal practitioners.

On 3 February 2009, the appellant's legal practitioners wrote to the respondent's legal practitioners alleging, inter alia, that their client was resiling, on their advice, from the agreement which they alleged was illegal. They tendered the purchase price, should any remain, after deducting rentals calculated from the date of occupation by the respondent on 1 February 2007.

It was following these events that the respondent lodged a court application in the court a quo seeking an order compelling the appellant to pass transfer of the property to him failing which the Sheriff or his lawful deputy be authorized to effect the transfer on the appellant's behalf. He based his application on the fact that he had paid the purchase price for the property and that the appellant was not entitled to be unjustly enriched at his expense.

The application was opposed by the appellant who, in turn, filed a counter application for the eviction of the respondent from the property as well as payment of rentals at the rate of USD$250= per month from 1 February 2007. The basis of the counter application was that the respondent had not paid the purchase price of the property.

On behalf of the appellant, it was argued before the court a quo that the agreement, being in contravention of the Stamp Duties Act, and in fraudem legis, was illegal and could not be enforced by the court.

The respondent, however, sought the relaxation of the application of the in pari delicto rule on the grounds of public policy which, it was submitted, should properly take into account the doing of simple justice between man and man….,.

The court a quo found that it was the appellant who had hatched the plan to understate the purchase price of the property in order to avoid payment in terms of the Stamp Duties Act [Chapter 23:09]. It found, further, that the appellant, through his agent, Murenga Estate Agents, had received the full purchase price of the property. It granted the order sought by the respondent for the transfer to him of the property and dismissed the counter-claim by the appellant.

THE ISSUES ON APPEAL

The grounds of appeal, as amended, raise three issues, namely;   

(i) The correctness of the finding of the court a quo that the respondent had paid the full purchase price of the property;

(ii) Whether the court erred in enforcing a contract which was found by it to be illegal and which was, in any event, prohibited by section 39 of the Regional Town and Country Planning Act; and

(iii) Whether the court erred in finding that the appellant would be unjustly enriched if the counterclaim were granted. 

I deal with each issue in turn.

In this application, the relief sought is as follows:

“It is ordered that:

1. Number 57 Borrowdale Township 6 of Lot 7b of Borrowdale, also known as Number 9 Hunt Road Borrowdale within five (5) days of granting of this order.

2. The first respondent shall make transfer of Stand Number 57 Borrowdale Township 6 of Lot 7b of Borrowdale, also known as Number 9 Hunt Road Borrowdale, into the Applicant's names within five (5) days of the granting of this order failing which the Deputy Sheriff be and is hereby empowered to sign all relevant documents in effecting the transfer.

3. The first respondent shall bear the costs of this application.”

The dispute in casu revolves around a property known as Stand Number 57 Borrowdale Township 6 of Lot 7b of Borrowdale, also known as Number 9 Hunt Road, Borrowdale.

The property belongs to the first respondent.

In September 2004, the first respondent indicated a desire to dispose of the property. A Mr. Oliver Chitsinde, “father and natural guardian” of both applicants expressed an interest to buy the property in the names of the applicants who were minors. The offer to purchase the property resulted in a transaction involving three agreements. The agreements quoted three different prices, namely $572 million, $400 million and $320 million (i.e. Zimbabwe dollars).  The agreements were all signed on the same day i.e. 8 September 2004. 

It later turned out that the reason for three agreements was to enable the first respondent to reduce his liability in respect of Capital Gains Tax.

On 16 September 2005, the first respondent, through court application HC4673/05, sought to cancel the Sale Agreement alleging breach by the applicants. On 28 May 2008, and as a result of that court application, this court ruled in favour of the first respondent and issued the following order-

“1. It is declared that the Sale Agreement between the applicant and the respondents for the purchase and sale of Stand 57 Borrowdale Township 6 of Lot 7B of Borrowdale Estate is null and void.

2. Consequent upon the declaration in para 1 above, first and second respondents and all those claiming occupation through them shall vacate the property within thirty (30) days of the date of this order.

3. There will be no order as to costs.”

The applicants were duly evicted from the property on the basis of the above order.

The above order was, however, challenged by the applicants in the Supreme Court. On 26 May 2009 the Supreme Court issued the following order-

“It is ordered that:-

1. By consent the appeal be and is hereby allowed.

2. The order of the Court a quo is amended by the deletion of para 2, with para 3 of the order becoming para 2.

3. The costs of this appeal shall be borne by the respondent.”

The deletion by the Supreme Court of para 2 of the High Court order had the effect of denying the first respondent the power to evict the applicants from the property.

Prior to the finalization of the appeal in the Supreme Court the applicants had “managed to interdict the first respondent from alienating or encumbering the property in anyway.”

The papers before me indicate that the confirmed final relief following the interdict referred to above was to the effect that the Agreement of Sale earlier entered into by the first respondent with a third party for the transfer of the property to that third party was cancelled. The property therefore still belongs to the first respondent and hence the relief sought herein against him.

The plaintiff in this matter issued summons out of this court claiming a decree of divorce, custody of the minor children of the marriage, and other ancillary relief.

Four issues were referred to trial in terms of a joint pre-trial conference minute filed by the parties on 27 November 2008. The issues were agreed to as follows:

1. Whether the marriage has irretrievably broken down.

2. Who amongst the parties should have custody of the minor children and who should have reasonable access to them?

3. In what way and/or in what sum should the non-custodial parent contribute towards the minor children's maintenance?

4. What constitutes the parties' marital estate and how should it be distributed between the parties upon divorce?

At the commencement of the trial, the defendant conceded that the marriage had irretrievably broken down.

Therefore, the only issues that remained for determination by the court related to the custody and maintenance of the minor children and division of the property.

The plaintiff testified that he married the defendant on 2 May 1987. The marriage between them has irretrievably broken down as they have lived apart from 2002 when the defendant went to work in the United Kingdom. He is of the view that the marriage can no longer be resuscitated.

Three children were born out of the marriage. The eldest is a major and is living with the defendant and studying at a University in the United Kingdom. The two minors live with the plaintiff in Zimbabwe where they attend school, save for a brief period in 2004 when they relocated to the United Kingdom but had to come back when the defendant fell ill.

On 13 August 2002, and during the subsistence of the marriage, they purchased an immovable property being a certain piece of land situate in the District of Salisbury called Stand 322 Vainona Township of Vainona measuring 4,164 square meters otherwise known as Number 5 Otter Road, Vainona. The purchase price of the property was Z$38,000,000 (thirty eight million dollars). The plaintiff stated that this amount included the transfer costs and the furniture which they took over from the previous owner.

The plaintiff stated that in order to raise the purchase price the defendant sent 10,000 British pounds as her contribution towards the purchase price. He converted this money on the informal market at a rate of $1 to Z$1,000 and obtained Z$10 million. They sold a property which they owned in Marimba Park for Z$20 million. The plaintiff paid Z$11 million from his earnings from buying and selling cars and took out a mortgage for $5 million.

The property is registered in the joint names of the parties.

He suggested that upon divorce the property be retained until the youngest child attains the age of 18 whereafter it should be sold and the proceeds shared equally between the parties.

The plaintiff further testified that in May 2003 he purchased a Pajero motor vehicle from Japan. He bought the motor vehicle with no assistance from the defendant. He sold the motor vehicle in 2005 so that he could raise money to collect the children from the United Kingdom after their mother fell ill.

With regards to the movable household goods he suggested that each party keep the items in their possession. It was his opinion that as the defendant had been living in the United Kingdom since 2002 she had acquired property there and therefore she should retain what she had acquired whilst he retained what had been accumulated in Zimbabwe....,.

In cross examination, it was put to the plaintiff that the free rate of exchange in July 2002 was US$1 to Z$1,400 and not Z$1,000 which he said he had exchanged the money. He denied that that was the exchange rate. He also denied that the defendant had sent him a further 3,000 pounds in August 2002. He stated that although he did not dispute that the money was withdrawn from her bank account he does not know what she used the money for. He however could not explain why the defendant had withdrawn the money a few days after signing the Agreement of Sale. He denied that she had contributed towards the construction of a wall around the property. He stated that it had only cost Z$1,8 million. He also conceded that although the defendant had made a withdrawal of 5,823 pounds from her account he did not know how she had used the money....,.

When questioned by the court, he stated that he was in a position to pay out the defendant her share of the immovable property if he was given an opportunity to do so. He also stated that he was happy to share the movable property as they had agreed prior to the commencement of the trial....,.

The plaintiff's evidence, in relation to his contributions towards the purchase price of the immovable property, did not ring true. Indeed, a mathematical calculation of the money, according to his evidence, would end up with a surplus amount. He stated that he contributed Z$11 million, the defendant paid Z$10 million, and the proceeds of Z$20 million from the proceeds of the Marimba Park house all went to the purchase price of the house. He also took out a loan of Z$5 million for transfer fees. Thus, the total amount raised was Z$46 million when the purchase price was only Z$38 million.

Throughout his evidence, and cross-examination, he insisted that he wanted to retain all the movable property which they acquired in Zimbabwe. It was only when he was questioned by the court that he stated that they could share the movables in accordance with the agreement that they had reached prior to the commencement of the trial....,.

The defendant confirmed that she and the plaintiff had agreed on the distribution of their movable property. She produced, by consent, exhibit 11 which shows how their property should be shared.

Thus, the only dispute between the parties related to the immovable property.

The defendant told the court that she had given the plaintiff 10,000 pounds. She produced a document which she downloaded from the internet which showed the exchange rates as at July 2002. The defendant urged the court to accept the rate on this document as opposed to the rate which the plaintiff had said he changed the money.

In August 2002, she sent a further sum of 3,000 pounds towards the purchase price of the property. The defendant testified that in November of 2002 she sent a further amount of 5,823=94 pounds to assist with renovations on the property. A wall was erected around the property and a new leather lounge suite purchased. They put in tiles in the swimming pool and relocated the gazebo from the tennis court to the swimming pool.

The defendant stated that, from her calculations, she had paid the full purchase price for the immovable property without the assistance of the plaintiff and she was thus entitled to a 90% share. She stated that if she were to be given a period of six months she would be able to pay him out.

In cross examination, the defendant maintained that the plaintiff did not contribute at all towards the purchase price of the immovable property. She was adamant that the black market rate upon which they changed their money was set by Government. She stood firm in her evidence that she had sent further amounts to the plaintiff towards the purchasing and renovations of the house....,.

I found the defendant to be a good witness who was fair and gave credit where it was due....,.

With regards to her evidence in relation to her contributions towards the purchase price of the house it was apparent that she had no real knowledge about the rates of exchange and had left the financial responsibility in the hands of the plaintiff. Whilst there was clear evidence that she had withdrawn various sums of money from her bank account in the United Kingdom there was no real link between the withdrawal and how the money was subsequently used....,.

MATRIMONIAL PROPERTY

The plaintiff and the defendant were both agreed on how they would share their movable assets.

The bone of contention remained with regards to how the immovable property should be shared. The plaintiff argued that he is entitled to 50% share of the property as he not only contributed towards the purchase price but he is also a registered owner. The defendant, on the other hand, submitted that she should get 90% of the property as she paid the whole purchase price of the property.

It is now settled that in order for the court to achieve an equitable distribution it must take into account all the factors that are set out in section 7(4) of the Matrimonial Causes Act. In making the award, the court must endeavor to place the parties in the position they would have been had the marriage continued. In Shenje v Shenje 2001 (2) ZLR 160 (H) GILLESPIE J stated that the court must consider all the factors set out in section 7(4) of the Matrimonial Causes Act. He stated as follows…,:

"The factors listed in the subsection deserve a fresh comment. One might form the impression, from the decisions of the court, that the crucial consideration is that of the respective contributions of the parties.

That would be an error.

The matter of the contributions made to the family is the fifth listed of seven considerations. The first four listed considerations all address the needs of the parties rather than their dues. Perhaps, it is time to recognize that the legislative intent and the objective of the courts, is more weighed in favour of ensuring that the parties needs are met rather than that their contributions are recouped."

The evidence led during the trial related to the amount contributed by each party towards the purchase and development of the matrimonial home.

Whilst there was very little dispute with regards the amount the defendant sent from the United Kingdom towards the purchase of the property, the dispute centered largely in regard to the exchange rate which was used to change the money from pounds to Zimbabwean dollars.

The court is faced with a real challenge as the parties both accept that the money was exchanged illegally using the black market rate. Being an illegal rate there is no documentation which sets out the actual rate of exchange. The problem is also compounded by the fact that such transactions are carried out on a willing buyer and willing seller basis after negotiating the rate of exchange. As the transaction is illegal nothing is written down, and, therefore, it is impossible to ascertain what the actual rate used was for the transaction.

The defendant sought to persuade the court to use a document which she had downloaded from the internet which set out the rate of exchange on the black market at that time. It was her belief that the document had emanated from the Government.

However, an examination of the document shows that it is not an official document but an article which was prepared by an individual quoting the Governor of the Reserve Bank. The rate of exchange on the document which she asked the court to accept is an illegal rate which is not recognized by the laws of this country. I thus had difficulties in accepting the document as proof of the exchange rate between the Zimbabwe dollar and the American dollar at the relevant time; it would mean an acceptance by the court of the black market rate.

The second point deals with illegality.

It is their argument that the transaction which involved the agreement to pay the applicant in the United States dollars was illegal. Sections (4) and (10) of the Exchange Control Statutory Instrument 109 of 1996 make it clear that such transaction is illegal unless authorised by the Exchange Control Authority. The parties contracted to deal in foreign currency in an unlawful manner. In other words, they agreed to commit a crime. In the circumstances they are both culpable.

The general rule is that the court cannot enforce a contract whose object is to commit an illegality.  The element of intention is crucial in this instance. If it is unilateral it is unenforceable at the suit of the party who is proved to have the intent to break the law at the time of the contract. If the intent was mutual the contract is not enforceable at all. This principle has been with us under the Roman Dutch and the English laws. See Hindley and Company Ltd v General Fibre Company Ltd [1940] 2KB 517 and Hire Purchasing Furnishing Company v Richens (1887) 20 QBD 387 CA.

For that reason no court will lend its support to a man who bases his cause of action upon an illegal or immoral act.

In casu, the parties knew that at the time, the country was going through economic hardships and the Zimbabwean dollar was tumbling uncontrollably. From an economic point of view they felt that it was only proper for them to transact in foreign currency which was in direct contravention of the provisions of the Exchange Control Regulations. By acting in this manner, they were no doubt mutually committing an offence. It is for that reason that applicant cannot be allowed to enforce an illegal contract….,.

What cannot escape this court is that this was an illegal contract and the law, as stated above, is also clearly laid down in Heyns v Heyns 1978 RLR 324 (A); York Estates Ltd v Wareham 1950 (1) SA 125 (SR) where LEWIS ACJ said:

“As a general rule, a contract or agreement which is expressly prohibited by statute is illegal, null and void even when, as here, no declaration of nullity has been added by the statute.”

The position is that the contract becomes a nullity and not even the principle of equity can rescue it.

The parties have made submissions on the merits, but, in view of the points raised in limine, it is not necessary to proceed to determine the issue any further.

Order

The appellant was charged with, and convicted of, the crime of theft as defined in section 113(1) of the Criminal Law [Codification and Reform] Act [Chapter 9:23].

The State allegations were that, on 17 November 2012, and at Subdivision 5, Turkey Heart Farm, Lot 4 in Triangle, the appellant took the sum of $54,466=73 which he held in trust for and on behalf of a partnership which one Takundwa Madziva and him formed, and converted the amount to his own use. Nothing of the said sum was recovered according to the State.

The appellant tendered a plea of not guilty to the charge.

He admitted that Takundwa Madziva and him entered into a partnership for the production and sale of sugarcane grown from the land - Subdivision 5, Turkey Heart Farm, Lot 4, Triangle – which the Government allocated to the appellant under its Land Reform Programme. The two, he said, created the partnership in August, 2010 and, on 3 May, 2012, he terminated the partnership. He stated that he terminated the partnership when he realised that the agreement violated section 13 of the Agricultural Resettlement Act. He maintained the position that neither the partnership which he said was, or is, illegal and, therefore, of no force or effect or the partnership's representative, Takundwa Madziva, could successfully cause him to be prosecuted and convicted in a criminal court. He insisted that the only recourse which remained open to the purported partnership, or to its representative, was to approach the civil court for redress….,.

The appellant appealed against his conviction. His main ground of appeal, which the State was wise to make a concession to, was, or is, that the partnership which Takundwa Madziva and him formed in August 2010 was illegal and, therefore, no criminal liability could flow from it.

From a reading of the record, there is not doubt that the parties' partnership was the basis of the appellant's arrest, prosecution as well as conviction and sentence. The said partnership grew sugar-cane on the appellant's land, sold the same and realised the sum of $54,466=73 which the appellant, according to the respondent, converted to his own use to the total exclusion of his partner, Takundwa Madziva. The conduct of the appellant in the mentioned regard did not go down well with Takundwa Madziva. He caused the arrest and prosecution of the appellant.

The appellant's argument was, or is, that the partnership was a clear violation of the law. He stated that his conviction was not only improper but was also a serious misdirection on the part of the trial court.

In support of his position in this mentioned regard, the appellant referred the court to section 13(1) and (2) of the Agricultural Land Resettlement Act [Chapter 20:01]. The section reads:

“Prohibition of cession etc

1. A lessee shall not

(a) …,.

(b) Enter into a partnership for the working of his holding;

2. A transaction entered into by a lessee in contravention of subsection (1) shall be of no force or effect.” …,.

The wording of the above-cited section is not only clear and unambiguous but it is also mandatory in nature. There is no doubt that the appellant falls into the definition of lessee as contemplated by section 13 of the Agricultural Land Resettlement Act [Chapter 20:01]. He held, and holds, the land on which the purported partnership grew sugarcane in terms of an offer letter through which Government offered the land to him. He cannot, in terms of the law, enter into a partnership with any person(s) for working the land which Government offered to him. Any purported partnership which he entered into with some person or other in violation of that clear, unambiguous and mandatory provision of the Agricultural Land Resettlement Act [Chapter 20:01] is of no force or effect.

The State read the law correctly when the appellant filed an appeal with this court against conviction. It conceded, properly so, that the appellant's conviction was unsustainable. The court agrees with both parties in respect of this matter. It, in the premises, has no option but to sanction the appellant's prayer which the respondent supports.

The court has considered all the circumstances of this case. It is satisfied that the appellant was erroneously convicted. The court, in the premise, orders as follows:

1. That the appeal be and is hereby allowed.

2. That the conviction and sentence of the appellant be respectively quashed and set aside.

The plaintiffs are seeking to enforce an illegal agreement which is prohibited by law by the maxim ex turpi causa non oritur actio. This maxim, admits of no exception. In Dube v Khumalo 1986 (2) ZLR 103 (S), the Supreme Court held…, that:-

“The first rule is that an illegal agreement which has not yet been performed, either in whole or in part, will never be enforced. This rule is absolute and admits of no exception.”

The plaintiffs also submitted that estoppel operated against the respondent in this matter.

The submission is also devoid of any merit as the plaintiffs are seeking to enforce a contract prohibited by law. See York Estates Ltd v Wareham 1950 (1) SA 125 (SR)…, where the court stated that it was bound to refuse to enforce a contract even though no objection to illegality of the contract is raised by the parties. It went on to state that it would not enforce such a contract even though the plaintiff is innocent and the defendant is setting up illegality.

It was clear from Mr Tshuma that the Ministry never sanctioned the illegal allocations and that the plaintiff is the legal allotee of the Stand in question.

The defendant, Tendai Chinhomora, in turn, recounted how he went to the Ministry's offices in 1998 and then he bought the Stand in 1999. He referred the court to his bundle of documents which was produced as exhibits for purposes of showing he bought the Stand. It was clear from his evidence, oral and documentary, that when the advertisement by the Ministry was done in the press pertaining to the scheme for Stands he did not get a confirmation letter but that he saw one Mr Gahadzikwa and Mrs Mollen at Ministry offices and they advise him to go back home without any queries being raised. He proceeded, from 2004, to put up a structure and connected water and electricity. The defendant claimed for compensation pointing out the improvement effected to the Stand totalled US$16,000= and this included a durawall erected. In support of the claim, the defendant tendered before the court an Evaluation Report.

I propose to deal with the aspect of possession of the Stand by the defendant first and then revisit the issue of whether or not there is unjust enrichment occasioned.

As clearly pointed out by Mr Tshuma, whose evidence was clear and straightforward, leaving the court with no reason to disbelieve him, the plaintiff is the legal allotee of the land.

There was no double sale by the Ministry, but the defendant obtained the Stand through the conduct of some rogue and unscrupulous Ministry officials who sold the land on their own behalf and not the Ministry. Whether it was to the defendant's knowledge or with his participation, that is, acting in cahoots with the rogue officials or not, the fact that is clearly spelt out from evidence is that the defendant obtained the Stand through illegal means. The court cannot perpetuate on an illegality by imputing liability on the legal allotee whose lease was confirmed by confirmation letter and who signed a genuine lease agreement with the Ministry.

EXCHANGE CONTROL APPROVAL

The respondent contends that the appellant's claim is for payments in foreign currency that required Exchange Control approval at the relevant time and that that there is no proof that any such approval was ever obtained. Therefore, they are entitled to resist any claim for payments that were not duly authorized.

Section 11(1)(a) of the Exchange Control Regulations, 1996 prohibits any Zimbabwean resident from making any payment outside Zimbabwe without the approval of an exchange control authority. In terms of section 45(1) of the Exchange Control Regulations, 1996, a debtor may avoid payment solely on the grounds that the debt is not payable without the permission of an exchange control authority or that any such authority has not granted permission for payment of the debt.

It is common cause that some of the payments due to the appellant were made in Zimbabwe while others were to be made to the appellant outside Zimbabwe. The court a quo found that no exchange control permission was granted for any of the payments in question. The court also held that the onus to produce proof of any such approval fell on the appellant and that, having failed to discharge that onus, he was not entitled to enforce an illegal contract.

The first point to note is that this defence of illegality was not raised at any stage in the pleadings.

There is something which the court did not address at all.

It is that the accused person is said to be “a foreign currency exchange dealer.”  The question which arises is whether he is a legal dealer or illegal one. This was not canvassed at all, but, considering that the accused person resides at Lutumba Village, under Chief Sthaudze, and was transacting with the complainants, generally, from Dulibadzimu Bus Terminus in Beitbridge, the probability is that he is an illegal money changer. The complainants wanted to change currency illegally. That, on its own, is relevant in assessing sentence as it goes to the moral blameworthiness of the accused person. 

Illegality can only beget illegality….,.

This court cannot enforce an illegal contract.

Counsel for Turner & Sons further submitted, with reference to section 11(1) of the Exchange Control Regulations 1996 (SI 109/96) that on the applicant's own case, the agreement was illegal because payment of the balance of the purchase price was to be made outside the country.

Counsel for Dobrock (Pvt) Ltd, on the other hand, submitted that the contract was not illegal. He contended that there was nothing on the papers to show that the obligations of Dobrock (Pvt) Ltd would be met by it. Rather, so he opined, it was only in the nature of assistance between friends, between Peter Jameson Dobson and Antony Turner, which was permissible in terms of the Exchange Control Regulations.

There is a plethora of cases which have been determined by both the High and Supreme Court which are in point. My starting point is section 11 of the Exchange Control Regulations, S.I.109 of 1996. It reads:

"11(1) Subject to subsection (2), unless otherwise authorized by an exchange control authority, no Zimbabwean resident shall -

(a) Make payment outside Zimbabwe; or

(b) Incur any obligation to make payment outside Zimbabwe.

(2) Subsection (1) shall not apply to:-

(a) Any act done by an individual with free funds which were available to him at the time of the act concerned;

(b) Any lawful transaction with money in a foreign currency account."

Counsel for Turner & Sons contended that Dobrock (Pvt) Ltd was registered in Zimbabwe and was therefore resident in this country. This contention is, in my view, correct, as it reflects the position set out in section 3(1) of the Exchange Control Regulations, S.I.109 of 1996 for artificial persons. She further contended that Dobrock (Pvt) Ltd had not shown that it had been authorized by the Exchange Control Authority before it incurred the obligation to make payment outside Zimbabwe. It had not demonstrated that this was a lawful transaction with money in a foreign currency account. She contended, further, that the free funds exception was applicable to individuals and not to companies, and that Dobrock (Pvt) Ltd could not save the agreement on that basis as it was inapplicable to it.

In International Who's Who Ltd v Bernstein Clothing (Pvt) Ltd SC28-99, MUCHECHETERE JA considered the effect of section 8(1) of the Exchange Control Regulations RGN 399/77 where the respondent, a limited liability company, registered locally, incurred an obligation to pay 20,450 Swiss francs to the appellant, a limited liability company registered in England, in Johannesburg for transmission to Vaduz, Switzerland. The respondent raised a point in limine averring illegality. At page 4-5 of the cyclostyled judgment, the learned Judge of Appeal stated as follows:

"At the outset, I should state that I agree with Mr Moyo's submission that the contract between the parties was illegal, invalid and unenforceable because it was in breach of section 8(1) of the said Regulations. The provisions of the section are peremptory. See Abreu v Campos 1975 (1) RLR 198 and Swart v Smuts 1971 (1) SA 819 at 829-30.

As already indicated above, the appellant conceded that no authority had been obtained by the parties from the relevant authority for any payment outside Zimbabwe when the contract was entered into. On the law, see Macape (Pty) Ltd v Executrix, Estate Forrester 1991 (1) ZLR 315 at 320D-E where McNALLY JA said:

'In other words, when one is concerned with payments INSIDE Zimbabwe (section 7 of the said Regulations) it is perfectly lawful to enter into the agreement to pay. But without authority from the Reserve Bank, the actual payment may not be made. By contrast, when dealing with payments OUTSIDE Zimbabwe (section 8 of the said Regulations) it is unlawful even to enter into the agreement to pay without first obtaining the authority of the Minister which has been delegated to the Reserve Bank.'…,.

See also Abreu v Campos, supra; Young v Van Resnburg 1991 (2) ZLR 149 (S) at 155; Adleu v Elliot 1988 (2) ZLR 283 (S) at 287.”

The facts in Young v Van Resnburg 1991 (2) ZLR 149 (S) are distinguishable from the present matter. It involved individuals who were foreign residents. Its importance, in my view, lies in the sentiments of KORSAH JA…, where he agreed with Mr de Bourbon in that case that subparagraph 8(1)(a), which barred a Zimbabwean resident from doing any act, outlawed the doing of even a single act. It is noteworthy that section 8 of the 1977 Regulations is the precursor to section 11 in the 1996 Regulations even though there are some variations in the wording of the two sections in these respective Regulations.

In International Who's Who Ltd v Bernstein Clothing (Pvt) Ltd SC28-99, MUCHECHETERE JA agreed with the observation of Mc NALLY JA in Macape (Pty) Ltd v Executrix, Estate Forrester 1991 (1) ZLR 315 that an agreement to pay outside Zimbabwe by a resident, without Exchange Control authority, where the resident was not an individual without free funds or where the resident was not utilising money in a foreign currency account, was void ab initio.

In Hattingh and Others v Van Kleek 1997 (2) ZLR 240, where a foreign visitor to Zimbabwe, Van Kleek, who was not aware that the Exchange Control Regulations prohibited local residents from incurring obligations to pay money abroad, agreed to give a loan to a Zimbabwean to be used to develop a Safari business and the money loaned was to be paid into that Zimbabwean's bank account outside Zimbabwe, and that Zimbabwean, and two other locals, signed a promissory note to repay the loan; the High Court then ordered the locals to repay the loan. They appealed on the basis that they acted illegally by incurring an obligation to make payment outside Zimbabwe without the requisite exchange control authority. The appeal was dismissed.

KORSAH JA held, at page 244D, that:-

“Section 8 of the Regulations only prohibits, but does not declare void or illegal, the transactions enumerated therein”; and found that the transactions did not contravene section 8 of the Regulations.

At page 246B he stated:

“The cases clearly show that where a contract is, on the face of it, legal but by reason of a circumstance known to one party only, is forbidden by statute, it may not be declared illegal so as to debar the innocent, party relief, for to deprive the innocent person of his rights would be to injure the innocent, benefit the guilty and put a premium on deceit.”

The facts of Hattingh and Others v Van Kleek 1997 (2) ZLR 240 are distinguishable from the present matter. In addition, in casu, both parties were aware that their agreement fell foul of the Exchange Control Regulations.

In Greebe & Another v Famaps Investments (Private) Limited & Anor HH124-04, MAVANGIRA J dealt with the question whether a local resident could withhold and keep the assets that accrued to him from a sale by another local resident of those assets situated in Zimbabwe in circumstances where no payment was made abroad as agreed, on the basis that to do so would violate section 11(1)(b) of the Exchange Control Regulations, 1996, S.I.109 of 1996.

She held that while the agreement contravened section 11 of the Regulations, the facts called for a relaxation of the par delictum rule for if she were to decline to do so, she would reward the purchaser by giving him a premium for deceit.

In Adleu v Elliot 1988 (2) ZLR 283 (S) GUBBAY JA…, recognised that in oral contracts the court had the power to determine whether the terms of that contract required exact performance or the performance of some equivalent act. He stated thus:

“The application of this broad principle [that it is not for the court to remake a contract of the parties in line with INNES CJ in Ambrose and Aitken v Johnson and Fletcher 1917 AD 327 at 343 and the remarks of BEADLE CJ in Holmes v Palley 1975 (2) RLR 98 (AD) at 105C that one party to a contract was not entitled to expect that it will be carried out in a different manner than agreed because of the absence of prejudice] does not, of course, preclude a court from determining whether the parties to an agreement intended that a particular term thereof was to be fulfilled in forma specifica, that is, in the exact manner agreed upon by the parties or per acquipollens, that is, by some equivalent act…,.

Where the agreement is in writing and the language employed is sufficiently clear, the common intention of the parties must be extracted from the agreement itself. But, if the language is ambiguous or where the agreement of the parties was oral, then the court is obliged to have regard to the surrounding circumstances, and to any other admissible evidence in order to ascertain whether the common intention of the parties was to be fulfilled in forma specifica or whether performance thereof by some equivalent act would suffice.”