MAKARAU JP: At the trial of this matter, the
defendants were in default. They were duly served with the notice of the trial
on 1 October at their chosen address for service. The plaintiff moved for
default judgment to be entered against the defendants as prayed for in the
summons. Entertaining doubts as to whether or not the plaintiff's claim was
sound, I requested the plaintiff to address me on whether or not the original
contract between the parties was not in contravention of the Exchange Control
Regulations and thus unlawful. The plaintiff, who appeared before me in person,
opted to file written head of argument even though in terms of the rules, he is
not required to do so.
The
plaintiff's written submissions have now been filed.
The
facts giving rise to this claim are commonplace. They epitomize the trading
pattern in the country prior to February 2009 when the fiscal authorities
officially authorised the populace to trade in multi currencies that they
identified.
On
31 July 2008, the defendants contracted with a freight company trading under
the name Dunquist freight (Private) Limited to convey consignments from Harare and Mazoe to Lusaka.
The parties agreed on a fee of US$6 500-00. This was at a time when the
official currency of trade in the country was the now defunct local currency. A
deposit in the sum of US$3000-00 was paid leaving a balance of $3500-00. The freight company ceded its
rights to collect the debt to the plaintiff who, on 12 March 2009, issued
summons against the defendants claiming the balance due.
In
view of the fact that the defendants were in default at the trial of the
matter, it is not necessary in my view that I set out the details of the plea
that they had filed in the matter. Suffice it to say that the matter was
defended and a pre-trial conference held at which the parties filed to settle the
matter, which in my view is quite simple. As I have indicated above, the issues
raised in the defendants' plea fell by the wayside when the defendants failed
to attend court for trial and had I been satisfied with the plaintiff's cause
of action, I would have been enjoined to enter judgment in favour of the
plaintiff as prayed.
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. In testing whether a
transaction that is paid for in foreign currency is illegal or not, I have
invariably sought guidance from the decision by CHINHENGO J in Matsitka v Jumvea Zimbabwe (Private) Limited and Another
2003 (1) ZLR 71 (H). In that case, both parties, as in this case, were resident
in Zimbabwe.
The one sold to the other a motor vehicle. The price of the vehicle was
denominated in foreign currency. The court held that the transaction was
illegal as it contravened the provisions of the regulations.
I see no distinction between
the facts in the Matsika case and the
facts before me.
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 payment
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.
It
has not been advanced before me that to make the loss lie where it falls will
enrich the defendants at the expense of the plaintiff. The true value of the
services rendered to the defendants have not been shown to me and in the
absence of such evidence, I cannot hold that the freight services rendered the
defendants are so out of proportion with the payment made for such services
that I must interfere by relaxing the rule operating against the contract. (See
Edson Mudzivo and Another v Norest
Nyamakope HH120/09 and Maxwell
Tawodzera and Another v Danny Masukuma HH 124/09).
On
the basis of the foregoing, I cannot grant default judgment as prayed for.
In
the result I make the following order:
The plaintiff's claim is dismissed with costs.