This is an appeal against part of the judgment of the High Court sitting at Bulawayo, dated 2 May 2019.
The court a quo granted the following order:
1. That, the purported Deed of Sale concluded by the parties on 26 January 2010, in respect of a portion of Umguza 100 Acre Lot 5A be and is hereby confirmed to be null and void for want of compliance with the mandatory provisions of the Regional, Town and Country Planning Act [Chapter 29:12].
2. That, the plaintiff's claim for payment by the defendant of reasonable rentals and holding over damages be and is hereby dismissed with costs.
3. That, the plaintiff be and is hereby ordered to pay to the defendant the sum of $125,000 being compensation for improvements effected by the defendant on the plaintiff's property.
4. That, the prescribed rate of interest be levied on the amount under (3), supra, with effect from 24 June 2015 to the date of full payment.
5. That, the plaintiff pays costs of suit.
The part under appeal relates to paragraphs 3, 4 and 5 of the order. The appellant is also aggrieved by the court a quo's failure to pronounce itself on the claim for eviction in that order.
THE FACTS
The facts that are relevant to this appeal are common cause. The appellant sadly passed away on 24 August 2019, before the appeal was heard. He was, by order of this Court, substituted, on 22 July 2020, by his duly appointed executor dative, who also happens to be his son.
The appellant is the registered title holder of Umguza 100 Acre Lot 5A in the District of Bulawayo measuring 67,2123 hectares held under Deed of Transfer No.74/91 (the immovable property). It is situated in the outskirts of Bulawayo and falls under the administrative jurisdiction of the Umguza Rural District Council.
On 17 August 2000, the appellant sought, but failed, to obtain a sub-division permit for the property into units of less than five (5) hectares. The responsible authority adjudged any plots that were less than five (5) hectares not to be viable for agriculture.
The respondent resided on a fully developed six (6) acre plot in the vicinity of the appellant's immovable property.
On 12 January 2010, in anticipation of an agreement of sale to be consummated with the appellant, the respondent sold his plot for the sum of R225,000.
On 26 January 2010, the parties concluded a written agreement for the sale of 10 acres (4,047ha) of the immovable property (the plot) for the sum of US$20,000.
A deposit of US$10,000 was to be paid before the respondent could take occupation.
The balance was payable at the rate of US$2,000 per month from 1 May 2010.
The other terms and conditions of the agreement were that the respondent would “pay the cost of all transactions connected with the transfer of the property, all charges of capital gains, and draw electric power to the homestead of the seller.”
The respondent duly paid the deposit and took occupation on 1 April 2010.
His building plans were approved by the Umguza Rural District Council on 3 April 2010. He constructed a three bedroom cottage and a four bedroom main house in 2010. In 2011, he installed electricity infrastructure for his two dwellings and the appellant's homestead but only drew electricity to his dwellings. He flushed a borehole previously sunk by the appellant, constructed two (2) septic tanks and two (2) blair toilets. He also put up a perimeter fence around “his” plot.
It was common cause that he expended the total sum of US$34,158=75 and R2,220 on these developments.
The relationship between the appellant and the respondent deteriorated soon after the respondent took occupation of the property.
The appellant refused to accept the instalments tendered by the respondent and demanded that the respondent keep his money while he kept his land.
The respondent tendered the balance of the purchase price, and, when it was rejected, he issued summons for specific performance in HC491/11.
Thereafter, with the help of their legal practitioners, a compromise was reached between the parties but was not honoured.
In the result, the appellant then sued the respondent for the payment of the balance of the purchase price, in the sum of US$10,000, in HC2828/12.
During this tumultuous period, unbeknown to the respondent, the appellant sought to regularize the sale of the plot by applying for a subdivision permit to the department of Physical Planning Offices in Bulawayo on 10 January 2011.
It was only in or about October 2012 that the respondent became aware that the appellant did not have a sub-division permit entitling him to subdivide the immovable property and sell the plot.
On 27 February 2013, acting on the appellant's request, the respondent paid US$550 to the appellant's former legal practitioners for the processing of a belated sub-division permit.
Notwithstanding that the immovable property measured 67,2123ha, a permit for the subdivision of the immovable property into two Stands measuring 4,047 and 37,6961 hectares was duly issued on 29 April 2013.
The permit, however, turned out to be a fake document.
Acting on the erroneous belief that the permit was genuine, on 6 June 2013 and 30 January 2014, the respondent paid US$5,000 and US$4,000, respectively, towards the purchase price.
The respondent, therefore, paid to the appellant a total sum of US$19,000 for the purchase of the plot.
He, in addition, expended US$34,158=75 and R2,220 in the development of the immovable property.
By the time a pre-trial conference was held a quo, both parties had withdrawn their earlier actions against each other.
THE PARTIES RESPECTIVE CLAIMS IN THE COURT A QUO
At the pre-trial conference, the parties agreed, inter alia, that their agreement of sale was invalid and illegal for breaching section 39(1)(i) and section 40 of the Regional, Town and Country Planning Act. This was because it had been concluded without a subdivision permit.
Consequently, the appellant tendered the purchase price of US$19,000 and sought the eviction of the respondent from the plot.
He also claimed an ascertainable amount for unjust enrichment for the period of the respondent's stay to the date of his eviction.
The quantum for the enrichment claim was based on what the appellant perceived to be the reasonable rentals that the respondent would have paid for the occupation of the property.
He, therefore, claimed US$18,000 for the occupation of the plot from March 2010 to April 2015 and “holding over damages at the rate of US$10 per day…, from 1 May 2015 to the date of vacation” and costs on the higher scale.
The respondent contested the action.
He disputed being unjustly enriched and averred, that, he was a bona fide occupier by virtue of the invalid agreement. He also averred, that, in the absence of a lease agreement, the appellant did not have a valid cause of action for the payment of reasonable rentals and holding over damages.
He, in turn, counter claimed for unjust enrichment for the improvements he had made on the immovable property.
He averred that the appellant was enriched at his expense by these improvements.
He further alleged that the appellant was enriched by the payment of US$19,000 towards the purchase price and US$550 for the procurement of the subdivision permit.
The respondent, therefore, sought the repayment of the denominated amounts; a refund of the expenses incurred in erecting the electricity infrastructure; and the depreciated replacement cost (being the current cost of reproduction or replacement of an asset less deductions for physical deterioration, obsolescence and optimization) of the improvements he made on the plot.
He specially entreated the court to award him “such payments as will be sufficient to enable the defendant to purchase a property of comparable value including all the improvements he had effected.”
He also sought interest at the prescribed rate from the date of summons to the date of payment in full and costs on the higher scale.
In his plea to the counter-claim, the appellant, again, tendered the refund of US$19,000.
He disputed to being unjustly enriched by the developments made by the respondent on the immovable property. He averred, that, the respondent had failed to draw electricity to his homestead and had fraudulently facilitated the issuance of the fake permit. He also alleged that the respondent's dwellings were constructed without his authority and that he was therefore a mala fide occupier. Lastly, he stated that these dwellings would not be useful to him.
The two issues referred to trial a quo where whether or not:
1. The appellant was entitled to a reasonable rental arising from the respondent's occupation of the plot; and
2. The defendant has been unjustly impoverished, and plaintiff unjustly enriched, as a result of the alleged developments made by the defendant upon the plot; and, if so, the quantum thereof.
THE FINDINGS OF THE COURT A QUO
The court a quo confirmed the invalidity of the agreement of sale on the ground that it was contrary to the mandatory dictates of sections 39(1)(i) and 40 the Regional, Town and Country Planning Act.
The confirmation was in accordance with established authority emanating from this Court in such cases as X-Trend–A Home (Pvt) Ltd v Hoselaw (Pvt) Ltd 2000 (2) ZLR 348 (S) and City of Gweru v Kombayi 1991 (1) ZLR 333 (S).
It held, on the authority of Magodora & Ors v Care International Zimbabwe 2014 (1) ZLR 397 (S)…, that a lease agreement could not possibly be extrapolated from the invalid agreement of sale; and, resultantly, dismissed the claim for rentals and holding over damages sought by the appellant in the main.
It is clear from a reading of the judgment, that, the court a quo did not relate the request for reasonable rentals and holding over damages to the appellant's own enrichment claim against the respondent.
The appellant pleaded such a cause of action.
He testified during the trial, that, the respondent derived benefit from the farming activities he conducted on the plot. He also asserted that another benefit that accrued to the respondent was in the form of rental savings that he would have been obliged to pay elsewhere but for his stay on the plot.
These assertions were not, and could not, be controverted by the respondent.
However, it appears that counsel for the appellant misconceived the appellant's case and did not pursue the claim to fruition.
The court a quo, on the basis of credibility findings and the probabilities of the case, further found the respondent to have been a bona fide occupier and the appellant a mala fide seller.
Consequently, it relaxed the in pari delicto rule in favour of the respondent.
It, thus, held that the appellant had been unjustly enriched at the expense of the respondent, who was concomitantly impoverished by the transaction.
The court a quo, therefore, upheld the respondent's counter claim.
In computing the measure of the benefit that accrued to the appellant, the court a quo applied the pari delictum rule.
In the exercise of its broad discretion, it relaxed the pari delictum rule in a bid to do justice between the two protagonists.
It had no difficulties in finding the appellant to have been enriched in the sum of US$19,550 constituted by the payments towards the purchase price and the facilitation of the procurement of the sub division permit.
The correctness of this finding is beyond question.
After all, the appellant did not retract his tender of US$19,000, and conceded the payment of US$550 for the stated purpose.
The parties disagreed on whether or not the respondent was entitled to compensation for the improvements that he made on the immovable property.
The appellant submitted a quo that the respondent was not entitled to the value of the improvements:
(i) Firstly, because the respondent had not properly framed them under the enrichment cause of action in his pleadings.
(ii) The second was that the improvements were not, nor would they be, useful to him.
He, in any event, agitated for their urgent removal from his property.
The court a quo held, that, while on the pleadings, the cause of action for the improvements was poorly and inelegantly framed, the respondent had obliquely included them in his enrichment cause.
Further, that the purported defective pleadings had, in any event, been amplified and cured:
(i) Firstly, by the inclusion of the developments in the second issue referred to trial at the pretrial conference; and
(ii) Secondly, by the overwhelming evidence adduced by the respondent at the trial together with the scope and tenor of the questions asked and answers rendered during cross examination.
The court a quo also held, on the authority of Reza v Nyangani 2001 (1) ZLR 202 (S)…, that usefulness was to be measured objectively, and not subjectively, on the basis of added value.
It, therefore, found the improvements to be objectively useful to the appellant. It also found that they could not be removed because they were fixed to the immovable property.
The court a quo estimated the added value of the improvements at $125,000 and not US$132,833=33 claimed by the respondent.
It adopted the lowest depreciated replacement value of $90,000 provided in one of the three valuation reports produced in January 2018. The court a quo then added the depreciated replacement value of the plot, estimated in two of the valuation reports at $35,000, to this figure.
It, therefore, awarded the aggregate amount of $125,000 to the respondent as a fair and equitable amount that adequately represented the enrichment that accrued to the appellant and constituted his concomitant impoverishment.
Lastly, the court a quo declined to immediately evict the respondent from the immovable property on two grounds:
(i) The first was that he had a real improvement lien on the property, dischargeable on full payment of the award.
(ii) The second was that the respondent had invested all the resources he had on the plot.
To evict him from the plot, empty-handed, would not only be intolerable, but, would consign him and his family to the indignity of homelessness and destitution.
I quote below the concluding remarks of the court a quo in this regard. At p15 of its cyclostyled judgment, it stated that:
“This Court firmly believes that this is a proper case to exercise its discretion in the interest of equity and fairness by ordering that the defendant be evicted only upon payment of the full compensation ordered by the court per the defendant's counter-claim. This is mainly because the defendant has a real lien over the portion of the land in issue.”…,.
Notwithstanding the firm belief, the court a quo omitted to make the contemplated order of eviction in the final order that issued.
THE GROUNDS OF APPEAL
The appellant initially raised six grounds of appeal. At the commencement of the appeal hearing, in Bulawayo, counsel for the appellant moved for the deletion of the second ground of appeal and the amendment of the fourth ground.
Counsel for the respondent did not oppose the amendments.
We, accordingly, granted the amendments by consent of the parties.
Resultantly, the following five grounds of appeal remained in contention:
1. The Honourable Court a quo misdirected itself in law in holding, that, despite the respondent's failure to plead unjust enrichment with regards to the improvements upon the property at issue, such failure to specifically plead unjust enrichment was curable by the evidence.
2. The court a quo misdirected itself at law by failing to order either for or against the appellant on a claim of eviction of the respondent from the appellant's land when such a claim was put before the court a quo for determination by that court.
3. The court a quo misdirected itself in its application of the law in awarding what amounts to contractual damages in the relaxation of the in pari delicto principle in that the court a quo relied on valuations provided by the respondent, when, in fact, the court a quo could only have relied on the actual proof of expenditure upon such land having been pleaded and proof provided.
4. The Honourable Court a quo erred in ordering that interest on the judgment debt be paid by the appellant from 24 June 2015, when, in fact, the valuation relied upon for the monetary award in issue was done in 2018.
5. The Honourable Court a quo misdirected itself at law by ordering that the appellant pays the costs, when, in fact, the appellant was partially successful in the court a quo.
The relief sought from these grounds of appeal was:
(i) Firstly, that the appeal succeeds with costs.
(ii) Secondly, that the judgment a quo be altered by setting aside the paragraphs relating to the payment of the sum of $125,000, interest, and costs. These were to be substituted by an award for the payment of the purchase price paid of $19,000 and the actual expenditure proved to have been incurred in the improvements to the immovable property in the sum of $34,158=75 and ZAR2,220. The interest on these sums was to run from the date of the order and each party was to bear his own costs.
The appellant further sought the inclusion of an order of eviction to the substituted order.
THE ISSUES FOR DETERMINATION
The issues that arise from the grounds of appeal are these:
1. Whether or not the court a quo erred in finding that the respondent had proved his case and was therefore entitled to damages for unjust enrichment.
2. Whether or not the court a quo erred in relaxing the pari delicto rule and in awarding the respondent compensation in the nature of contractual damages.
3. The date on which interest should commence to run and the appropriateness of a cost order against the appellant a quo.
THE CONTENTIONS BEFORE US
During counsel for the appellant's oral submissions, it appeared to the court that the parties required an opportunity to attempt settlement of the matter. Counsel for the respondent was amenable to such a course of action.
The parties requested for a period of three (3) weeks to pursue the attempt at settlement.
We accorded them the opportunity to do so. The matter was accordingly postponed for continuation in Harare on 24 August 2020.
The attempt at settlement was, however, not successful.
The appeal proceeded in Harare.
Mr G Ndlovu, substituted Mr Masiye-Moyo as counsel for the appellant at the resumed hearing.
Counsel for the appellant made the following submissions:
That, the court a quo erred in awarding compensation for improvements under the enrichment cause in circumstances where the respondent had not specially pleaded such a cause.
While he conceded that the respondent had, in oral testimony, specifically premised his claim for compensation for the improvements on unjust enrichment, he argued that oral testimony could not, in law, cure such a glaring defect in his pleadings.
We directed counsel for the appellant's attention to the averments, as amended by consent of the parties at the hearing a quo on 16 January 2018, embodied in paragraphs 3, 4 and 5 of the respondent's counterclaim (on p40 of the record of proceedings) and paragraph 4.1 of his replication to the appellant's plea in reconvention (on p48 of the record of proceedings).
Counsel maintained, that, these averments did not specifically plead unjust enrichment in respect of the improvements but only did so in regard to the purchase price and the amount paid to procure the subdivision permit.
Counsel for the appellant further argued, that, as no contractual rights could ever arise or be enforceable from an illegal agreement, it was incompetent:
(i) Firstly, for the respondent to pray for “contractual damages” under an enrichment claim; and
(ii) Secondly, that while the court a quo correctly relaxed the in pari delicto principle in this case, it was also incompetent for it to award such “contractual damages” to the respondent.
The court a quo had done so, the argument went, by awarding compensation which included the amount of money that the respondent would require to purchase a piece of land similar in size to the one he had lost; and, by further awarding an aggregate sum which would enable the respondent to erect structures of an equivalent value to the improvements.
He contended, that, an award of compensation based on improvements was limited to the actual expenses incurred by the respondent.
He also contended, that, it was against public policy, and therefore improper, for any court of law to accord judicial recognition to and approval of an illegal and void agreement. To do so would undermine the tenets of public policy upon which the in pari delicto principle was premised.
Lastly, he conceded that an improvement lien constituted part of our law.
He, however, argued that such a right of retention could not avail any party whose improvements flowed from an illegal agreement.
Concomitantly, the court a quo, therefore, misdirected itself in failing to grant the order of eviction to the appellant.
Counsel for the respondent made contrary submissions:
(i) Firstly, he contended that the respondent had actually pleaded unjust enrichment not just for the actual expenditure he incurred in purchasing the plot, in procuring the permit, and drawing electricity to the appellant's homestead, but, also for the improvements.
(ii) Secondly, that, on the authority of Reza v Nyangani 2001 (1) ZLR 202 (S) and Derby Farms (Pvt) Ltd v Chirunga HH82-07…, once the court relaxed the in pari delicto rule it had the further discretion to do justice between the parties by awarding an equitable amount of the value added by the improvements. In so doing, the court could consider the real and not the nominal value of the improvements.
He argued, that, in Reza v Nyangani 2001 (1) ZLR 202 (S), this Court had ignored the exact expenditure that had been incurred in favour of the depreciated replacement value of the improvements. This was because, by the time the dispute was adjudicated, the actual expenses were too negligible while the depreciated replacement value, which catered for the fall in the value of money, represented the fair and equitable value added to the property by the improvements.
He, therefore, contended, that, the respondent was entitled to the value added to the immovable property by the improvements and not just the actual expenditure he had incurred.
Hence, his submission that the correct value added to the immovable property by the improvements was constituted by the depreciated replacement value of such improvements.
Finally, he submitted that the invocation of the improvement lien was again an exercise of the court's discretion, which the appellant had not, and could not, impugn on any of the irrationality grounds known to our law articulated in the case of Hama v National Railways of Zimbabwe 1996 (1) ZLR 664 (S).
He, however, conceded, in exchanges with the court, that the court a quo failed to capture the conditional eviction of the respondent in the operative part of its order.
He entreated us to exercise the powers conferred on the Supreme Court by section 22(1)(b)(ix) of the Supreme Court Act [Chapter 7:13] to “correct” the order and achieve justice between the parties.
In reply, counsel for the appellant, argued that both this Court and the High Court had adopted the depreciated replacement value in decided cases because of the endemic hyperinflation that characterized the local economy at the time.
He sought to distinguish the two cases cited by counsel for the respondent from the present case on the basis, that, this country did not experience similar inflationary pressures but was stable between 2010, when the actual expenses were incurred, and 2019, when the enrichment order was granted.
Counsel for the appellant, however, conceded that this Court could, in terms of section 22(1)(b)(ix) of the Supreme Court Act, correct the omission to grant the conditional eviction in the operative part of the order of the court a quo rather than remit the case for this to be done.
THE LAW
The requirements for an action of unjust enrichment were set out by ZIYAMBI JA in Gamanje (Pvt) Ltd v City of Bulawayo SC94-04…, in the following terms:
“The requirements for an action for unjust enrichment are:
(i) Firstly, that the defendant has been enriched by the receipt of a benefit;
(ii) Secondly, that he has been so enriched at the expense of the plaintiff;
(iii) Thirdly, that the enrichment is unjustified (in the sense that it would be unjust to allow the defendant to retain the benefit);
(iv) Fourthly, that the enrichment must not come within the scope of one of the classical enrichment actions; and
(v) Fifthly, there must be no positive rule of law which refused an action to the impoverished person.
See Industrial Equity v Walker 1996 (1) ZLR 269 AT P 300; See also Wille's Principles of South African Law, 8th edition, at pp633-5.”
To the same effect is Du PLESSIS in his seminal work The South African Law of Unjustified Enrichment, Juta, 2012…, where he writes that:
“To succeed with a claim based on unjustified enrichment, the plaintiff must meet four general requirements, or, as it is sometimes said, four general elements of enrichment liability have to be present. (i) First, the defendant must be enriched;
(ii) Secondly, the plaintiff must be impoverished;
(iii) Thirdly, the defendant's enrichment must be at the plaintiff's expense; and
(iv) Finally, the defendant's enrichment must be unjustified, which means that it must be without legal ground (sine causa).”
ANALYSIS AND APPLICATION OF THE LAW TO THE FACTS
Whether or not the court a quo erred in finding that the respondent had proven his case and was therefore entitled to damages for unjust enrichment
In the court a quo, and in this Court, the appellant conceded that the respondent had pleaded and proved unjust enrichment in respect of the part payment of the purchase price in the sum of US$19,000.
Counsel for the appellant, however, argued a quo, and in this Court, that, the respondent was not entitled to the measure of enrichment based on the valuations produced a quo:
(i)...,.
(ii) Secondly, because the award granted a quo was for contractual damages and not for unjust enrichment....,.
Whether or not unjust enrichment exists is a factual finding: see Evans v Rapper SC55-04…,.
In the present matter, the court a quo made the factual finding that the appellant had been enriched at the expense of the respondent and was therefore entitled to recoup the value of the enrichment.
That finding has not, and on the facts, cannot be impeached by the appellant.
The existence of the improvements was not disputed a quo. Nor were the valuation reports, on which they are all itemized, controverted.
Indeed, the appellant accepted, that, the respondent expended US$34,158=87 and R2,220 in making the improvements.
I am satisfied, that, the court a quo correctly found that the respondent had proved his case for unjust enrichment on a balance of probabilities.
It seems to me, therefore, that the first ground of appeal was misconceived and cannot succeeded.
The measure of the award for the improvements is closely linked with the second issue, to which I now turn.
Whether or not the court a quo erred in relaxing the pari delicto rule and in awarding the respondent compensation in the nature of contractual damages
In our law, a court is precluded from enforcing an illegal contract which has not been performed in whole or in part. The rule is of absolute application. It emanates from the maxim ex turpi causa non oritur actio. It is based on the principle of public policy that prohibits the recognition and enforcement of illegal contracts that are contrary to law: see York Estates Ltd v Wareham 1950 (1) SA 125…, and Dube v Khumalo 1986 (2) ZLR 103 (SC)…,.
The in pari delicto potior est conditio possidentis maxim is a fraternal twin to the ex turpi causa maxim.
In Dube v Khumalo 1986 (2) ZLR 103 (SC), GUBBAY CJ translated it to mean "where the parties are equally in the wrong, he who is in possession will prevail."
The learned CHIEF JUSTICE further explained the import and purpose of the rule.
The import of the maxim is that where something has been delivered pursuant to an illegal agreement, the loss lies where it falls.
The purpose 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.
It, however, is not an inflexible rule.
In appropriate cases, the courts will relax the rule and order restitution on the public policy ground of preventing injustice by rendering simple justice between the parties involved in the illegal transaction.
It is applied so as to release the parties from the harmful effects of their illegal agreement and is inspired by, and anchored on the public policy principles of justice and equity whose focus is to prevent unjust enrichment: see Rubin v Botha 1911 AD 568…,.; Jajbhay v Cassim 1939 AD 537…,.; Chioza v Siziba SC04-15…,.; and Du PLESSIS, The South African Law of Unjustified Enrichment, Juta, 2012…,.
Counsel for the appellant argued, that, the court a quo erred in relaxing the in pari delictum rule in a manner that resultantly enforced the illegal agreement.
He further argued, that, the award of the value of improvements as at the date of judgment, and not the actual amount expended in rendering the improvements, constituted enforcement of the illegal agreement.
Counsel for the appellant failed to impugn the exercise of the court a quo's discretion in relaxing the in pari delictum rule.
In the present matter, the respondent sought to unravel the effects of the illegal agreement and not to enforce it.
He acted in the same fashion as did the appellant in the analogous case of Chioza v Siziba SC04-15, in which an agreement consummated between the parties was void and illegal for violating section 44 of the Stamp Duties Act [Chapter 23:09] and section 39 of the Regional Town and Country Planning Act. At para [32] ZIYAMBI JA pertinently held that:
“[32] Where a party to an illegal contract seeks not to enforce the illegal contract, but to obtain relief from the consequences of his illegal action, the courts have, in order to prevent an injustice, or to satisfy the requirements of public policy, or obviate a situation where one party is unjustly enriched at the expense of the other, intervened and granted relief from the rigid application of the rule.”
I, therefore, agree with counsel for the respondent, that, the court a quo properly exercised its discretion in relaxing the in par delictum rule in order to do just between the two protagonists.
The further question raised by the appellant is whether restitutio in integrum applies solely to contractual damages and not unjust enrichment.
The answer to the question requires an appreciation of the differences between compensation for unjust enrichment, on the one hand, and contractual and delictual damages, on the other.
In The South African Law of Unjustified Enrichment, Juta, 2012 …, Du PLESSIS distinguishes unjustified enrichment, on the one hand, from contract and delict, on the other, in the following manner:
“Unjustified enrichment, like the law of contract and delict, is a source of obligations. But, unlike contract, unjustified enrichment creates obligations by force of law, and not by virtue of the actual or deemed consent of the parties; and, unlike delict, the purpose of imposing liability is not to balance out a loss with an award of damages, but to correct a gain by obliging the defendant to return or surrender enrichment to the plaintiff. Put more simply, unjustified enrichment gives rise to an obligation to provide restitution…, or to a right of retention or the power to remove the improvements.”
There is no magic attached to restitutio in integrum.
Regarding contractual damages, it is a term of art which denotes the unwinding or unravelling, physically or by payment of a monetary equivalent, of what has been done back to its original or pre-contractual position: see Extel Industrial (Pty) Ltd v Crown Mills (Pty) Ltd 1999 (2) SA 719 (A)…,.; and Sackstein NO v Proudfoot SA (Pty) Ltd 2006 (6) 358 (SCA)…,.; and Mackay v Fey NO 2006 (3) SA 182 (SCA)…,.; Jacobs v United Building Society 1981 (4) SA 37…,.; and Du PLESSIS, The South African Law of Unjustified Enrichment, Juta, 2012…,.
It appears to me, that, unjust enrichment, which seeks to avoid manifest injustice, has the same effect of unravelling the benefit accrued to the enriched as does restitutio in integrum in contractual matters. The difference being, that, restitutio in integrum in unjust enrichment is invoked by operation of law while restitutio in integrum in contract is premised on actual or deemed consent of the contracting parties.
However, both have the same effect.
This view is in consonance with the sentiment expressed in Robinson v Randfontein Estates GM Co. Ltd 1925 AD 173…, to the effect, that, the courts are willing to consider restitutio in integrum for unjust enrichment, if, in the pleadings, the claim for unjust enrichment is accompanied by a tender of what the claimant received: see also Du PLESSIS, The South African Law of Unjustified Enrichment, Juta, 2012 …,.
It appears to me, that, the willingness of the respondent to vacate the property, of course, subject to payment of the value by which he has enriched the appellant and concomitantly impoverished himself, constitutes the envisaged tender.
The respondent is therefore a suitable candidate for the extension of restitutio in integrum to him.
The real issue for determination is, therefore, whether the court a quo was correct in awarding a quantum based on the depreciated replacement value instead of the nominal value of the original amounts paid.
In Gamanje (Pvt) Ltd v City of Bulawayo SC94-04 …, this Court stated that:
“The value of the enrichment is the amount by which the appellant is enriched.”
According to Du PLESSIS, The South African Law of Unjustified Enrichment, Juta, 2012…, the measure of compensation for unjust enrichment in South Africa has faithfully followed the principles of the classical Roman Dutch law writers. He observes that:
“The most important of these principles is that the measure of the defendant's liability is the lesser of the plaintiff's impoverishment and the defendant's enrichment at the time of the institution of the action: see Skyword (Pvt) Ltd v Peter Scales (Pvt) Ltd 1979 (1) SA 570 (R); Jan Van Heerden & Seuns BK v Senwes Bpk [2006] 1 All SA 44 (NC) para 47.2; Mndi v Malgas 2006 (2) SA 182 (E) para [25]; and Kudu Granite Operations (Pty) Ltd v Cartena Ltd 2003 (5) SA 193 (SCA) para (17).”
At some point, the Zimbabwean courts subscribed to the same principle.
One need only refer to Skyword (Pvt) Ltd v Peter Scales (Pvt) Ltd 1979 (1) SA 570 (R) and the High Court decision of Reza v Nyangani 2000 (1) ZLR 398 (H).
The parting shot was fired by McNALLY JA in the appeal case of Reza v Nyangani N.O. 2001 (1) ZLR 203 (S)…, and followed by ZIYAMBI JA in Chioza v Siziba SC04-15…,.
I derive the following six principles that are relevant for assessing compensation in claims for unjust enrichment in Zimbabwe, as espoused by McNALLY JA in Reza v Nyangani NO 2001 (1) ZLR 203 (S).
1. The court has a broad discretion, which is circumscribed by the facts of the case, to effect an equitable remedy between the contesting parties. The exercise of the wide discretion can be traced to the Civil Law as adopted by the courts of Holland.
2. A bona fide occupier is entitled to compensation for necessary and useful expenses less an equitable amount for his use and occupation of the land.
3. Usefulness does not connote aesthetics or personal likes and dislikes of the owner, but denotes added value to the property.
4. The general common law principle for awarding an enrichment claim is that the improver plaintiff is entitled to the lesser of the amount between his impoverishment and the owner defendant's enrichment (which Du PLESSIS, The South African Law of Unjustified Enrichment, Juta, 2012…, labels the “double ceiling rule”: see Skyword (Pvt) Ltd v Peter Scales (Pvt) Ltd 1979 (1) SA 570 (R) 573.
5. The measure of compensation (quantum) takes into account the actual expenses incurred by the occupier plaintiff in 'purchasing'; preserving or protecting the property; and any resultant physical and legal fruits that accrue to him from the occupation. These benefits that accrue to the occupier must per force be discounted from the added value.
6. In the Zimbabwe setting, in order to achieve an equitable and fair result to the parties, the common law position must necessarily take into account the prevailing economic and monetary factors, such as currency revaluations and rampant inflation, which impact on the value of the enrichment.
In Chioza v Siziba SC04-15…, this Court stated that:
“[39] In my judgment, this is a suitable case for making an exception to the strict application of the par delictum rule. The justice of the case would be met by remitting the matter to the court a quo for the reasons advanced by counsel for the respondent. Such a course would enable the respondent to recover the value of the money paid under the illegal contract and the appellant, on payment of compensation, to recover possession of the property.”…,.
Additionally, paragraph 3 of the order in Chioza v Siziba SC04-15 discloses how the value of the money paid was to be computed. It reads:
“The matter is remitted to the court a quo for hearing of evidence to enable it to determine -
(i) The value of the property, including any improvements made thereon by the respondent;
(ii) The amount by which the appellant has been enriched at the expense of the respondent;
(iii) The amount by which the respondent should be compensated by the appellant; and
(iv) To make such order as to it seems appropriate in order to achieve justice between the parties.
(v) An order in terms of para (iv) herein may set a period during which the amount determined in para (iii) shall be paid by the appellant to the respondent, failing which payment the Deputy Sheriff shall transfer the property to the respondent.
In Reza v Nyangani, the impoverished improver's actual expenses were in the sum of $15,934=78. He, however, claimed the value of improvement of $90,000 from the enriched beneficiary. The High Court awarded him the right of removal. On appeal, this Court set aside the order and substituted it with an award of $60,000 (which discounted labour costs), as at the date of judgment in the High Court. It made the pertinent observation, at p206C, that;
'If one were simply to add up Reza's expenses in 1992 and 1993 one would come to a ridiculously low figure, given that the cost of the building materials has escalated enormously since then.
We are dealing with an equitable remedy.
This gives the judge a very wide discretion as was stressed by both INNESS CJ in Fletcher & Fletcher v Bulawayo Waterworks Co. Ltd 1915 AD 636 at 649 and OGILVIE THOMPSON JA in Nortje v Pool NO 1966 (3) SA 96 (A) at 103H.
The approach was endorsed by FAGAN J (as he then was) in Wynland Construction (Pty) Ltd v Ashley-Smith & Ors 1985 (1) SA 534 (C) at 538G. One must be careful to be fair to both parties.'”
Again, in Chioza v Siziba SC04-15, the impoverished purchaser had paid a purchase price of $25,000 and other ascertainable costs of a Stand and for effecting transfer.
The effect of the order of this Court negated the strict application of the common law position of paying the lesser amount between the value of the improvement and the actual expenses incurred by the impoverished buyer. Rather, it sought the value added by the improvement as at the prospective date of the valuation to be carried out at the instance of the court a quo.
These two case authorities underscore the wide equitable discretion the court of first instance has in computing compensation for the enhanced improvements as at the date of judgment.
The court a quo adjudged the structures to be useful improvements. The improvements are enumerated in three evaluation reports that were procured by the respondent from different valuators on 8 and 9 January 2018.
The valuations were based on the depreciated replacement value, which denotes the amount it would cost the respondent to put up similar structures, and the cost of purchasing a similar sized piece of land.
The replacement by a similar piece of land was valued at $35,000 and of the improvements at $90,000; being the lower of the three valuations based on the parity rate of US$1 to RTGS$1.
The invoices filed of record by the respondent covered the period from September 2009 to 22 February 2011. The aggregate expenses that were actually incurred by the respondent in making the improvements in 2009, 2010 and 2011 was in the sum of US$34,818=92.
In the exercise of its equitable discretion, the court a quo declined to assess the reasonable rental that the respondent would have incurred on the property on the basis that the parties never concluded a lease agreement.
It accepted the lower of the evaluations, inclusive of the value of the land, and computed the enhanced value at US$125,000.
It awarded this amount to the appellant in the prevailing local currency at the parity rate of 1:1 between the USD and the RTGS.
I take judicial notice of the notorious fact, that, between 2010 and 19 February 2019, the value of improvements denominated in United States dollars did not change. However, the introduction of the RTGS dollar, initially at par with the USD, but, gradually depreciated in response to market forces, introduced hyper inflationary pressures into the local economy.
By the time the order was granted, the United States dollar value of the improvements had not changed while the RTGS value of the same improvements had dramatically changed.
Accordingly, the submission advanced by counsel for the appellant, that the court a quo erred in computing the enrichment award on the depreciated replacement value instead of on the actual expenses incurred by the respondent was, therefore, incorrect.
In the circumstances, I am therefore satisfied that the court a quo properly exercised its discretion in both relaxing the in pari delictum rule and in assessing the value of the compensation due to the respondent.
Accordingly, the third ground of appeal ought to fail.
The only thing that exercised my mind was whether or not to remit the matter a quo for new evaluations to be undertaken in the light of the ravages of inflation that have continued to beset our local currency.
I decided against such a course of action after taking into account that a fair award of compensation for the value of improvements ought rightly to have taken into account the value by which the respondent was enriched, and the appellant impoverished, by his long 11 year stay at the plot.
In doing so, I am cognisant of the fact that the appellant's claim in that regard was misconceived by his own counsel, and the court, who regarded it simply as a claim for rentals and holding over damages.
The onus was, of course, on the appellant to establish the value of that enrichment. He failed to do so.
In any event, no appeal was raised on this point.
