1.
Defendant's
special plea in bar
2.
Defendant's
exception
3.
Plaintiff's
exception to defendant's exception
4. Plaintiff's
application to strike out
KAMOCHA J: The plaintiffs' claim in this matter was for payment of the
sum of ZAR4 627 863,93 being the
purchase price of goods sold by the first plaintiff to the defendant at the
defendant's special instance and request in or about February/March 2008 which
was manufactured and delivered by the 2nd plaintiff to the defendant
on or about the 18th March 2008 and which was invoiced on the 18th
March 2008 and payable within 30 days of date of invoice.
In the alternative, the claim was
for payment of the sum of ZAR 4 627 863,93 being the amount by which defendant
had been unjustly enriched at the expense of the 2nd plaintiff as
the result of the 2nd plaintiff manufacturing and delivering goods
valued at ZAR 4 627 863,93 to the defendant at the defendant's special instance
and request on or about the 18th March 2008.
In their amended declaration the
plaintiffs had this to say.
Main Claim: Actio Venditi
In or around April 2008 at Bulawayo,
the defendant, represented by Mr Eddie Cross, duly authorized and Mr Simon
Spooner, duly authorized by Mr Cross, entered into an oral agreement with the 2nd
plaintiff represented by Mr Laurence Zlattner, in terms whereof, the 2nd
plaintiff undertook, at defendant's behest, to manufacture 200 000 garments,
commonly known as “T-shirts” and as many head scarves, commonly known as “doeks
or bandanas” as could be manufactured from the material on hand, but at least
30 000 (hereinafter referred to as “the goods”) which the 1st
plaintiff sold to the defendant for defendant to use in its then forthcoming
election campaign, for the agreed sum of ZAR4 965 723 including VAT. Given the size of the order, 2nd
plaintiff agreed to manufacture the total order in batches, to accommodate
defendant's express stipulation that the total order be ready for defendant to
use in its then forth coming election campaign as aforesaid. It was an express, alternatively implied term
of the parties' agreement that, given the size of the order, defendant would
pay on tender of delivery of each batch of goods supplied. To comply with its contractual obligation,
the defendant expressly agreed to effect payment to the 1st plaintiff.
By its agreement aforesaid,
defendant became contractually liable to pay the 1st plaintiff the
contract price in South Africa, and simultaneously incurred contractual
liability to 2nd plaintiff for the manufacture of the goods.
In accordance therewith, 2nd
plaintiff duly manufactured the said goods and delivered to the defendant goods
in batches to the value of ZAR 4 672 215,37, including VAT comprising 149 887 articles or approximately 74% of
the contract goods, payable on tender of delivery and demand, but defendant, in
breach of its contractual obligation, notwithstanding having accepted delivery,
had allegedly refused to pay, despite demand.
Defendant's failure to pay for the goods thus far delivered to it
constituted a material breach of an express, alternatively, implied term of
agreement, entitling plaintiffs to claim the full contract price ex vendito.
At the defendant's request the 2nd
plaintiff had withheld delivery of the balance of the manufactured goods,
namely 30 000 single jersey T-shirts being finished goods ready for dispatch,
to the value of ZAR772 800 and 5 393 single jersey T-shirts, being finished
goods ready for dispatch, to the value of ZAR 143 885,24 and 7 368 single
jersey T-shirts, being goods comprising “work in progress” to the value of ZAR
196 578,24 pending defendant's advice of readiness to receive such goods, which
goods subject to such stipulation, the2nd plaintiff thereby again tendered
against payment by defendant of the total balance due of ZAR340 463,48.
Pursuant to plaintiffs' performance
of the agreement as aforesaid, 2nd plaintiff rendered to defendant
the invoice for the manufacture of the goods, dated 18th March 2008
for ZAR 4 627 863,93,
including VAT, being the amount due for the goods (a) manufactured and
delivered; and (b) manufactured but in respect of which delivery had been
withheld but tendered, for the reasons given.
The said invoice constituted
plaintiffs' demand and expressly stipulated that interest accrues at 8% per
annum within 30 days of the date of the invoice. Accordingly, defendant was allegedly liable
for interest on the total sum due, mora
ex re, from 17 April 2008 to the date of final payment.
In the result plaintiffs prayed for
judgment and costs against defendant in the sum of ZAR4 627 863,93, together
with interest at 8% per annum from 17 April 2008 to the date of payment.
ALTERNATIVE CLAIM: UNJUST ENRICHMENT
It was alleged that alternatively
and in any event, that by reason thereof, defendant had been unjustly enriched
at 2nd plaintiff's expense in that:
Pursuant to the contract entered
into as averred, in performing its obligations thereunder, 2nd
plaintiff allegedly used its resources and incurred the following liabilities
in producing the contract goods; inter alia, manufacturing costs, wages, the
cost of engaging a sub contractor in Harare, namely, Kataura Enterprises (Pvt)
Ltd to assist in fulfilling the contract order, deferring its normal customers
and rescheduling other deliveries, to give priority to defendant, and the costs
of purchasing raw materials as well as machinery which had to be secured
through deposits and the expectation of payment by defendant.
By taking delivery, without payment
of approximately 92% of the contract goods, and using them for its intended
election campaign purposes, and by assuming the contractual obligation,
defendant had been enriched at plaintiff's expense.
The plaintiffs had been allegedly
impoverished by the enrichment of the defendant, the casual connection being
the contractual obligation referred to above in particular the costs and
liability incurred by plaintiffs in expectation of payment by defendant. The said enrichment was unjustified.
The 2nd plaintiff
rendered to defendant its invoice dated 18th March 2008 for ZAR4 627 863,93 including VAT, being
the amount due for the goods manufactured and delivered and manufactured, but
in respect of which delivery had been withheld but tendered, for the reasons
given. The said invoice constituted
plaintiffs' demand and expressly stipulated that interest accrues at 8% per
annum within 30 days of the date of the invoice. Accordingly, defendant was allegedly liable
for interest on the total sum due, ex
mora re from 17 April 2008 to the date of final payment.
Having regard to the terms of the
founding contract, defendant had accordingly, been allegedly unjustly enriched
at plaintiffs expense in the sum of ZAR4 627 863,93 together with interest at
8% per annum from 17 April 2008 to the date of final payment, and costs of
suit.
Wherefore, in the alternative, 2nd
plaintiff prayed for judgment and costs against defendant on the basis of
unjust enrichment in the sum of ZAR4 627 863,93 together with interest at 8%
per annum from 17 April 2008 at the date of final payment.
DEFENDANT'S PLEA
The defendant denied that it had
authorized Mr Eddie Cross or Mr Spooner to enter into the alleged
contract. It averred that neither Mr
Cross nor Mr Spooner had authority to enter into contracts on its behalf. It denied that it had purchased anything from
the first plaintiff and denied liability to pay VAT in South Africa.
It averred that any valid order
would have been written not oral and would have been authorized by the
defendant's Director General.
It denied being party to the agreement
between the plaintiffs and Mr Cross and Mr Spooner and further denied that it
had expressly agreed to effect payment to the 1st plaintiff the
contractual price in South Africa as such agreement would have been illegal.
It pleaded that it had not received
the goods and averred that a goods received voucher would have been issued to
second plaintiff had the goods been received.
It went on to state that annexures
“A” to the further particulars supplied by plaintiff alleged that some
deliveries were made on 25 June 2008, and on 13 August 2008 when in fact it had
very publicily resiled from the Presidential run-off election on 20 June
2008. Therefore, if the plaintiff
continued to manufacture after 20 June 2008 then it voluntarily assumed the
risk that it would receive no payment.
In the event of there being a valid
contract for the plaintiffs to supply the defendant with election campaign
materials a material term of the contract would have been that the plaintiffs
had to deliver well before the election and any delivery after the election
would have been a material breach.
Defendant denied that it had
contracted to pay for goods and further denied that it had requested second
plaintiff to withhold delivery of further items nor that it had received any delivery
from the plaintiff and insisted that there had been no contract between the
parties. It denied having agreed to any
interest rates and averred that the interest claimed was usurious and illegal.
It was finally averred that
plaintiffs should have made the demand to Mr Cross and Mr Spooner since they
were the parties to the contract and prayed for the dismissal of the
plaintiffs' claims with costs.
In relation to the alternative claim
defendant maintained that it had not taken delivery of any goods pursuant to
any contract of sale and averred that it had not been unjustly enriched in the
alleged amount or at all. It reiterated
that the interest claimed was illegal and prayed for the dismissal of the
alternative claim with costs.
PLAINTIFFS' REPLICATION TO
DEFENDANT'S PLEA ON THE MERITS
The plaintiffs maintained that Mr
Cross and Mr Spooner had the authority of the defendant to enter into a
contract on its behalf. In the event
that it was found that they had no authority to represent the defendant it was
averred that they had ostensible authority to do so by reason of the following
facts:-
- On or about November 2007, in
anticipation of the 28th March 2008 Zimbabwe Presidential
Elections, Mr Cross, who at the material time was a member of the
Defendant's National Executive Committee, and, by widely disseminated
public knowledge, was a senior member of defendant's hierarchy, acting on
behalf of defendant, allegedly entered into a similar contract with second
plaintiff for the manufacture and supply of garments that second plaintiff
manufactures within its normal business.
The order was for 60000 T-shirts, 60 000 bandanas and 40 000 wraps,
known colloquially as “Zambians”.
That the contract/order was performed
by second plaintiff and paid for by defendant without demur or deviation. Such payment was allegedly effected through
defendant's hierarchical process. At no
time did defendant deny Mr Cross's authority to represent it in that
transaction. In upholding the said earlier
contractual obligation entered into by Mr Cross, and by making such payment,
defendant thereby represented to second plaintiff by its conduct, that Mr Cross
was duly authorized to enter into such agreements on behalf of defendant.
It was alleged that the second plaintiff was induced, to its
prejudice, by the said representation to believe that Mr Cross was duly
authorized to enter into subsequent agreement on behalf of defendant, concluded
in April 2008, which pertained to the re-run of the said Presidential Election,
and, acting on the strength of that belief, second plaintiff, to its detriment
and prejudice, entered into the agreement concluded in April 2008, and the said
transaction was confirmed and ratified by Mr Cross. Second plaintiff transacted the April 2008
contract, to its detriment, on the basis of the aforesaid representation,
inducement and belief.
In the result, defendant was estopped from denying that Mr
Cross and Mr Spooner had the authority to represent it, more particularly, as
the payment for the March Election and April re-run were matters not only of enormous
public interest and debate, but the payment for the contract transacted by Mr
Cross had been obviously released as a result of processing through defendant's
payment process. Moreover, it was
alleged that Mr Cross and Mr Spooner had in fact admitted that they had been
duly authorized.
The plaintiffs alleged that an arrangement had been made
whereby the goods were collected by the defendant as and when they were
manufactured and required by defendant.
The second plaintiff would advise defendant when goods were ready for
delivery and defendant would in turn collect them as it wished to. As and when significant volumes had been
manufactured, second plaintiff would advise defendant, thereby tendering
delivery, whereafter defendant would determine when to collect in whole or in
part.
Plaintiffs averred that they had documentary evidence of the
goods collected and such documents had been repeatedly made available to
defendant. In addition, contemporaneous
electronic mail correspondence between Mr Cross, Mr Spooner and Chris Mbanga,
affirmed that there had been complete verification of the numbers and that
distribution was complete.
In respect of goods for which delivery thereof had been
tendered, but collection by defendant had not been effected, such goods still
awaited collection.
It was plaintiffs' averments that the goods had been
manufactured and delivery thereof tendered to defendant in terms of the
contract long before defendant decided on 20 June 2008 to withdraw from the
Presidential run-off Election. The fact
that defendant effected ten collections after that date was wholly in
defendant's hands and did not mean that manufacture was after that date, in
fact, manufacture had been effected long before that date and delivery tendered
in accordance with the on-going interactions with defendant's representatives.
It was contended
that the fact that defendants collected goods on 25 June 2008 and 13 August
2008 constituted their acknowledgement that they were bound by the terms of the
contract which they were still implementing.
The plaintiffs denied any voluntary assumption of risk as inferred by
defendant.
Finally, it was
alleged that Mr Spooner had requested second plaintiff to diminish the original
order, which plaintiff did, and to hold certain manufactured stocks of which
delivery had been tendered pending later collection. It was, accordingly, submitted that the
parties had indeed entered into a contract through their duly authorized
representative.
DEFENDANT' S SPECIAL PLEA IN BAR
After receiving the plaintiffs'
claims the defendant filed its special plea in bar of the claim. It denied that it was obliged to the
plaintiffs either in contract or in delict.
Defendant stated that it was a
political association with its headquarters in Zimbabwe and was accordingly a
Zimbabwean based association.
It stated that the contract alleged
by the plaintiffs would have been tainted with illegality for want of
compliance with Exchange Control Act [Chapter 22:05] as read with the Exchange
Control Regulations, 1966 contained in Statutory Instrument 109 of 1996 as the
alleged contract would have required payment to be made by defendant to first
plaintiff outside Zimbabwe.
The defendant did not have any free
funds nor did it then hold any money in a foreign currency account.
It was contended that the alleged
contract was void for illegality and the plaintiff's claims ex contracti should be dismissed.
DEFENDANT'S AMENDED EXCEPTION
Further, the defendant excepted to
the second plaintiff's declaration pertaining to the alternative claim on the
ground that it disclosed no cause of action or alternatively on the ground that
it was vague and embarrassing and bad in law in particular.
It was alleged in the amended
exception that the plaintiff had not stated in its declaration on which
specific ground of enrichment it sought to sue. It claimed that the cause of action had not been properly
identified. In the result the claim was
vague and embarrassing.
In the alternative to the above it
was alleged that to the extent that plaintiff claims in its response to the
initial exception that it sought to found its claim on a general action for
unjust enrichment, plaintiff had failed to make the allegations necessary to
found its claim on such an action. To
found its claim on a general action for unjust enrichment, second plaintiff
must have alleged that:
(a)
The
defendant was enriched;
(b)
The
plaintiff was impoverished by the enrichment of the defendant;
(c)
The
enrichment was unjustified;
(d)
The
enrichment does not come within the scope of one of the classical enrichment
actions.
In casu, the 2nd plaintiff had
averred that it had delivered goods worth ZAR3 762 215,37 to defendant yet it
sought to recover the sum of ZAR4 965 723,00 together with interest thereon at
8% per annum.
Paragraph B7 of the plaintiff's
declaration averred that the plaintiffs were claiming the full contract price ex vendito. By claiming the same amount in unjustified
enrichment as it claims ex vendito, 2nd
plaintiff was attempting to claim a profit.
That was unacceptable and rendered the plaintiff's claim bad in law as
well as vague and embarrassing.
It alleged that plaintiff had not
given any admissible quantifiable figure of money that it sought to claim in
unjustifiable enrichment. The amount
sought was based on evidence from a contract in violation of sections 4, 10 and
11 of the Exchange Control Regulations and thus the court had no evidence on
which it could be requested to find for the plaintiffs. The claim was therefore allegedly vague and
embarrassing and bad in law.
It was alleged that plaintiff sought
to enforce a contract under the law of unjustified enrichment when it performed
under a contract. Its declaration in
paragraph C1 incorporated averments made in contract and at paragraph C7 it
couched its enrichment action “having regard to the founding contract
aforesaid”. The plaintiff insisted on
the founding contract's validity it be enforced by way of unjustified enrichment. That was approbation and reprobation, vague
and embarrassing and incurably bad in law.
It was submitted that the
plaintiff's declaration in its alternative claim was bad in law and lacking in
averments necessary to sustain the identified cause of action as stated above
in that plaintiff did not unequivocally allege that there had been unjustified
enrichment. In fact, plaintiff insisted
that there was a contract in force. Meaning that the enrichment would therefore be justified. The approbation and reprobation rendered the
claim vague and embarrassing and bad in law.
In paragraph B1 and B2 of its
declaration plaintiff specifically stated that goods allegedly delivered were
for use in the Presidential Election campaign for the election due on 29 June
2008. As such delivery of any goods after
29 June 2008 would mean that such goods would not have enriched the defendant's
estate as they could no longer be used and therefore could not be claimed in an
action based on unjustified enrichment. Plaintiff's averments to that extent, therefore, failed to sustain the
cause of action in that they do not support any averment that defendant was
enriched.
The plaintiff had not alleged that
the enrichment did not come within the scope of one the classical enrichment
actions. That allegation was necessary
before any purported reliance on the general unjustified enrichment action,
consequently, the averments in the plaintiff's declaration failed to sustain
the cause of action by failing to make that allegation. Failure in that regard rendered the claim
vague and embarrassing.
Finally, defendant stated that in
paragraph 4 of the amended declaration it was alleged that the defendant had
used the goods “for its intended election campaign purposes.” That was an admission that the goods had been
consumed. Accordingly, it was submitted,
that that was bad in law and embarrassing to allege in the same breath that the
defendant had been enriched.
In the premises, defendant prayed
that the alternative claim be dismissed with costs on the Law Society Tariff.
PLAINTIFFS' REPLICATION TO
DEFENDANT'S SPECIAL PLEA IN BAR
The plaintiffs alleged that the
defendant's denial of an obligation “in delict” was vague and embarrassing,
superfluous, disclosed no offence (sic) and was itself excipiable by reason of
the fact that plaintiffs had not claimed in delict. In any event, defendant's denial of a
contracted obligation was vague and embarrassing to plaintiffs given that such
denial avoids traversal of the alternative claim based on the general action
against unjust enrichment. The said
vague traversal allegedly militated against Rule 104 (4) of the rules of this
court which stipulated that a party denying an allegation shall not do so
evasively, but shall answer the point of substance.
The plaintiffs claim that as a political
party the defendant had access to external donor funds at the material time.
They went on to allege that the
illegality was not a matter to be raised by special plea and denied that the
contract was illegal for want of compliance with Exchange Control Regulations
of 1996, published in Statutory Instrument 109 of 1996, more particularly,
inter alia, by reason of section 45 thereof, and more particularized by
plaintiffs, defendant had allegedly agreed that first plaintiff would be an ad
stipulator, hence defendant could not raise a contrary stance.
As the payment was at defendant's
express request and behest, as particularized in the declaration and further
particulars, defendant was estopped from asserting to the contrary. It was averred that the legality or otherwise
of the contract was a matter of law. It
was further denied that the contract was void for illegality and was averred
that the defendant could not approbate and reprobate the existence of the contract,
by denying its existence, and, simultaneously purporting a challenge its
legality.
In the result it was prayed that at
the hearing of evidence on the special plea, it be dismissed with costs on the
Law Society Tariff.
PLAINTIFFS' RESPONSE TO DEFENDANT'S
EXCEPTION
The plaintiffs' in their response to
the defendant's exception, alleged that the exception was an abuse of court
process, by reason of the fact that Zimbabwe law recognized a general action
for unjust enrichment, and by reason of the fact that the alternative claim was
based on the general action for unjust enrichment. Hence, second plaintiff denied that the
alternative claim was vague and embarrassing or bad in law.
In response to paragraph B2 (a) (b)
and (c ) the plaintiff repeated that the averments in those paragraphs were bad
in law and constituted an abuse of court process in that defendant had failed
to identify a straight forward cause of action in that the plaintiffs'
allegations were necessary to found a conductio
indebiti, which is an entirely separate cause of action, and ignored their
alternative cause of action, as pleaded, namely, the general action for unjust
enrichment, accepted as being part of Zimbabwe law since 1996.
Plaintiff averred that goods to the value of ZAR3 672 215,37
were manufactured and delivered to defendant, which goods comprised
approximately 74% of the defendant's contractually stipulated order. The difference between the figure of ZAR 3
672 215,37 and the total amount claimed related to the balance owing as had
been averred in paragraph B3 of the main claim, and was due.
In answer to paragraph B3.2 the plaintiffs averred that the
paragraph repeated and compounded the alleged misunderstanding of the law and
their claim for the general action for unjust enrichment, rather than a conditio indebiti. It was contended that rather, it was
defendant's exception that was bad in law.
The reference to specific performance was vexatious in that it ignored
the cause of action, as expressly stated as being the actio venditi. Further, the reference to the purported “guise” was
equally vexatious in that it misidentified the cause of action, being the
general action for unjust enrichment.
Their explanation for not averring that delivery was in error
was that their alternative claim did not sound in the conductio indebiti, as no question of error arose, neither did it
sound in conditio sine causa, hence
there was no necessity to allege that the delivery was not due. The averments for the main claim for the full
contract price ex vendito had been
incorporated by reference in the alternative claim for the general action for
unjust enrichment.
In answer to the suggestion that the defendant had used the
goods for its intended election campaign purposes the plaintiffs were admitting
the goods had been consumed accordingly.
It was bad in law and embarrassing to allege in the same breath that
defendant had been enriched. The
plaintiffs averred that accepting delivery and consuming the goods constituted
an admission of unjust enrichment, as there was no denial of the averment that
the goods were used. In addition, it
constituted unjust enrichment for the purposes of the general action or unjust
enrichment, as those facts pertained to the element of the said cause, that the
defendant had been enriched by such impoverishment, and that the enrichment was
unjustified.
The plaintiffs concluded by praying that the defendant's
exception be dismissed with costs on the Law Society Tariff.
PLAINTIFFS' EXCEPTION TO DEFENDANT'S
EXCEPTION
Plaintiffs excepted to the
defendant's exception (to the plaintiffs' alternative claim of unjust
enrichment) as being bad in law, vague and embarrassing, disclosing no
defendant to plaintiffs' alternative claim thus:
It was alleged that paragraph 2
thereof incorrectly stated the requirements for a conductio indebiti as being the requirements for the general action
for unjust enrichment. As a proposition
of law, that was incurably bad, at variance with established superior court
authority.
The requirements stated in paragraph
2 (a), (b) and (c) seriatim were the requirements for the conductio indebiti, which pertained to when enrichment arose from a
payment in error. The general action for
unjust enrichment was not available if one of the classical enrichment actions
such as the conductio indebiti, was
available. Since plaintiffs did not aver
performance to be in error, they did not rely on the conductio indebiti.
It was alleged that paragraph 3.1
was argumentative in that it obfuscated the value of the goods delivered and
ignored the pleaded facts pertaining to the balance of the claim.
Paragraph 3.2 allegedly ignored the
cause of action, as was expressly stated as being the actio venditi and not specific performance. In addition, the reference to the purported
guise, “misidentified” the cause of action being the general action for unjust
enrichment, established in Zimbabwe law since 1996.
It was averred that it was bad in
law to allege that a party was claiming under a cause of action not even
pleaded, as the defendant had allegedly by the assertion that “the plaintiffs'
claim that it had performed under a contract and now seeks to recover the full
contract price under the conditio
indebiti”. The plaintiffs had not
claimed under the conditio indebiti
at all.
It was further alleged that paragraph
4 compounded defendant's misunderstanding of the alternative claim in that the
paragraph alleged that there was no averment that delivery had not been done in
error nor that it had been due, the reason for that being that plaintiffs were
not claiming delivery in error, nor were they claiming a conditio sine causa or causa data non secuta, which would be
appropriate for performance which was not due.
In alleging in paragraph 4 that:
“Confusingly paragraph C 7 of those that the defendant had been unjustly
enriched in the same amount as the contract price ex vendito” defendant had confused the import of plaintiffs;
alternative claim.
In as far as paragraph 5 was
concerned it was alleged that its meaning was obscure. To the extent that the meaning could be
understood, it was bad in law, contradictory, vague and embarrassing, and
disclosed no defence to the claim, by reason of the fact that per contra, the
averment of accepting goods without paying for them, and consuming them,
constituted an admission of unjust enrichment, as there was no denial of the
averment that the goods were used. In
addition it was alleged that it constituted unjust enrichment for the purposes
of the general action for unjust enrichment, as those facts pertained to the
elements of the said cause namely that the plaintiff had been impoverished,
that the defendant had been enriched by such impoverishment, and that the
enrichment was unjustified.
In the result the plaintiffs prayed
that the exception to defendant's exception be upheld and defendant's exception
be held to be bad in law, vague and embarrassing, disclosing no defence to the
plaintiffs' alternative claim.
Plaintiffs prayed for costs on the Law Society Tariff.
PLAINTIFFS' APPLICATION TO STRIKE OUT
The plaintiffs applied to strike out
paragraph 5.2 of the defendant's plea and paragraph 1 of the defendant's
special plea in bar, filed of record on 30 November 2009 as being bad in law,
vague and embarrassing, disclosing no defence to plaintiffs' claim for the
following reasons:
Ex facie paragraph 5.2 of the plea, defendant
having denied the existence of the contract in paragraphs 3, 4.2, 5.4 and 6.1,
yet approbates and reprobates by relying on the merits, and resorting to
argumentative and irrelevant conjecture.
As the averments in that paragraph allegedly disclose no defence, are
irrelevant, and constituted approbation and reprobation, paragraph 5.2 of the
plea ought to be struck out as it is conjectural argumentative and irrelevant.
Further, it was alleged that ex facie paragraph 1 of the special
plea, the defendant's denial of an obligation “in delict” was vague and
embarrassing, superfluous, disclosed no offence, and was in itself excipiable
by reason of the fact that plaintiffs had not claimed in delict. Accordingly the alleged offending averment
ought to be struck out.
Further, ex facie paragraph 3 of the special plea, defendant relied on
illegality. That was a matter of
substantive law which ought to be raised in a plea on the merits rather than by
way of special plea, as the averment of illegality was neither a plea in bar
nor in abatement. Hence the paragraph
ought to be struck out.
It was prayed that the above
mentioned paragraph be struck off on the Law Society Tariff.
I now turn to deal with the
defendant's special plea in bar as provided for in Order 21 Rule 137 (1)(a) of
the High Court Rules and recites as follows:-
“137 Alternatives
to pleading to merits:
(1) A
party may –
(a) Take
a plea in bar or in abatement where the matter is one of substance which does
not involve going into the merits of the case and which if allowed, will
dispose of the case.”
What comes out from the above is that the requirements of a
special plea are that:
(a)
The
matter must be one of substance;
(b)
Which
does not involve going into the merits of the case; and
(c)
If
allowed, disposes of the case
In the case of Brown
v Vlok 1925 AD 56 which was quoted in
George v Lewe and another 1936 CPD 402 at 406 INNES CJ had this to say:
“Now a plea in bar is one which, apart from the merits,
raises some special defence not apparent from the declaration – for in that
case it would be taken by way of exception – which either destroys or postpones
the operation of the cause of action.”
The plea in bar is not predicated on
a denial of any facts set out in the declaration as that would involve going
into the merits of the case made by the plaintiffs in their declaration. The plea proceeds on the basis that the
allegations in the plaintiffs' declaration are correct but should nevertheless
be disposed of for one reason or another that does not appear ex facie the pleadings. In Scuddingh
v Vitenhage Municipality 1937 CPD 113
the court had this to say in respect of a plea in bar at 119:
“It (a special plea) is the type of plea the object of which
is to avoid the necessity of going into the merits of the plaintiff's claim
because of the existence of certain circumstances not apparent from the
declaration which either bar or postpone the claim made.”
The courts have stated repeatedly
that the purpose of a special plea is to permit the defendant to achieve a
prompt resolution of a factual issue which founds a legal argument which
disposes of the plaintiffs' claim as called for by rule 137 (1) (a) above. See for instance Doelcam (Pvt) Ltd v Pitchamick
and Others 1999 (1) ZLR 390
The issue that the defendant raised
in this matter is that of illegality. In
that the plaintiffs were attempting to enforce a contract tainted with
illegality for want of compliance with the Exchange Control Act [Chapter 22:05]
as read with the Exchange Control Regulations, 1996 contained in Statutory
Instrument 109 of 1996 as the contract would have required payment to be made
by defendant to first plaintiff outside Zimbabwe.
Ideally a plea of illegality should
be raised before the trial and not in
limine as stated in Abreu v Campos 1975 (1) RLR 198 at page 204H –
205A. In Adler v Elliot 1988 (2)
ZLR 283 (S) illegality was raised as an exception as it appeared on the
papers. Illegality was also raised as an
exception that the summons disclosed no cause of action in the case of York Estate Ltd v Wareham 1950 (1) 3A 125 (SR) where the summons had set out the
factual basis that was then used to argue the point of illegality. In Barker
v African Homesteads Touring and Safaris
(Pvt) Ltd and Anor 2003 (2) ZLR 6 (S) illegality for contravening section 8
(now section 11) of the Exchange Control Regulations raised in limine was upheld both by the High
Court and an appeal in the Supreme Court resulting in the plaintiffs' claim
being dismissed. Consequently, the
submission by the plaintiffs that illegality should not have been raised as a
special plea and can only be raised on the merits is clearly untenable.
The relevant provisions of the
Exchange Control Regulations of 1996 recite thus:
“10 (1) Unless otherwise authorized by an exchange control authority, no
person shall, in Zimbabwe –
(a)
Make
any payment to or for the credit of a foreign resident; or
(b)
…;
or
(c)
Place
any money to the credit of a foreign resident; or
(d)
…”
Section 11 of the said regulations provides as follows:
“11 (1) Subject to
subsection (2) unless otherwise authorized by an exchange control authority, no
Zimbabwean resident shall:
(a)
Make
any payment outside Zimbabwe; or
(b)
Incur
any obligation to make a 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; or
(b) any lawful
transaction with money in a foreign currency account.”
It is common cause that the first
plaintiff Cabat Trade & Finance (Pvt) Ltd is a foreign resident. The transaction which entailed making a
payment to it contravened the provisions of section 10(1)(a) and (c) supra.
The transaction does not end there in its contravention of the
regulations but further violates section 11 (1)(a)and (b) supra in that the
defendant is not an individual but a political association with locus standi and power to sue and to be
sued with its headquarters in Zimbabwe and is therefore a Zimbabwean
resident. Similarly the first plaintiff
is not an individual but a company incorporated with limited liability
according to the laws of the Republic of South Africa. It is therefore a South African resident – a
foreign resident.
The contract entailed making payment
by the respondent or placing any money to the credit of the foreign resident –
the first plaintiff in violation of section 10(1)(a) and (c).
The first plaintiff cannot have
recourse to the provisions of section 11(2)(a) as those provisions are only
available to individuals with free funds which were available at the time of
the act concerned not companies and political associations. In Barker
v African Homesteads Touring and Safaris
(Pvt) Ltd and Anor 2003 (2) ZLR (s) the Supreme Court held that violation
of section 11(1)(a) and (b) of the regulations as read with section 11(2)
barred both actual payment and an agreement to make payment outside Zimbabwe
without authorization by the Exchange Control Authority, except where that was
done by an individual with free funds available to him or her at the time of
the act concerned. In the absence of
such authorization, the court held the contract illegal and unenforceable. Hence, both the making of the contract and
the performance undertaken were unlawful.
SANDURA JA at page 10D-E had this to say:
“In the present case, as the alleged agreement to pay the sum
of $32 500 to Barker in Australia had not been authorized by the Exchange
Control Authority, cadit questio. That is the end of the matter. The agreement is illegal and unenforceable.”
The above applies with equal force in casu as the agreement to pay the sum
of ZAR 4 965 723 together with interest at 8% per annum from 17 April 2008 to
the date of final payment to Cabat Trade & Finance (Pvt) Ltd in South
Africa had not been authorized by the Exchange Control Authority it is illegal
and unenforceable.
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 at 109D-G 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 seek to enforce an
illegal agreement which the courts have repeatedly stated can never be
enforced.
The plaintiffs sought to rely on the
provisions of section 45 of the regulations but that section only relates to
debts lawfully incurred or contracts lawfully entered into. Those provisions do not avail the agreement
under consideration which was illegal and unenforceable.
The plaintiffs had claimed the
amount of ZAR4 965 723 together with interest at the rate of 8% per annum from
17 April 2008 to the date of final payment in the alternative on the basis of
the doctrine of unjust enrichment. In my
view, that also cannot avail the plaintiff as unjust enrichment cannot be used
to enforce an illegal agreement or achieve anything of that nature.
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) at 128 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
settling up illegality.
Moreover, defendant cannot be prevented from relying on the
illegality or unenforceability as a defence, no matter how unfair that may be
to the plaintiff.
In the light of the foregoing I would allow the plea in bar
which disposes of the case. The need to
deal with defendant's exception, the plaintiffs' exception to the defendant's
exception and plaintiffs' application to strike out does not arise.
In the result it is ordered that the plaintiff's main and
alternative claims be and are hereby dismissed with costs on the ordinary
scale.
Messrs Joel Pincus, Konson &
Wolhuter plaintiffs'
legal practitioners
Messrs Honey, Blanckenberg
defendant's legal practitioners
