KUDYA
AJA:
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 paras 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 5
hectares. The responsible authority adjudged any plots that were less
than 5 hectares not to be viable for agriculture.
The
respondent resided on a fully developed 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 (4.047 ha) 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 2 septic tanks and 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 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
sub-division 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 subdivision permit.
Notwithstanding
that the immovable property measured 67.2123 ha, a permit for the
sub-division 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 counterclaim 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 ss39(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) at p398F 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 subdivision
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, firstly, by the inclusion of the developments in
the second issue referred to trial at the pre-trial conference. And
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) at 205G 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. The first was that he had a real improvement
lien on the property, dischargeable on full payment of the award. 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. (Underlining
of the court a
quo).”
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, Mr Masiye-Moyo,
for the appellant, moved for the deletion of the second ground of
appeal and the amendment of the fourth ground.
Advocate
Nkomo,
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
Mr Masiye-Moyo's
oral
submissions, it appeared to the court that the parties required an
opportunity to attempt settlement of the matter. Mr Nkomo
was amenable to such a course of action.
The
parties requested for a period of 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 Mr Ndlovu's
attention
to the averments, as amended by consent of the parties at the hearing
a
quo
on 16 January 2018, embodied in paras 3, 4 and 5 of the respondent's
counterclaim (on p40 of the record of proceedings) and para 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.
Mr
Ndlovu
further
argued that, as no contractual rights could ever arise or be
enforceable from an illegal agreement, it was incompetent, firstly,
for the respondent to pray for “contractual damages” under an
enrichment claim. And 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.
Mr
Nkomo
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, supra, and Derby Farms (Pvt) Ltd v Chirunga
HH82/2007 at p15, 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, supra,
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, Mr Ndlovu,
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 Mr Nkomo
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.
Mr
Ndlovu,
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 at p8 in the following terms:
“The
requirements for an action for unjust enrichment are, firstly, that
the defendant has been enriched by the receipt of a benefit;
secondly, that he has been so enriched at the expense of the
plaintiff; thirdly, that the enrichment is unjustified (in the sense
that it would be unjust to allow the defendant to retain the
benefit); fourthly, that the enrichment must not come within the
scope of one of the classical enrichment actions; and 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 at p24 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.
First, the defendant must be enriched; secondly, the plaintiff must
be impoverished; thirdly, the defendant's enrichment must be at the
plaintiff's expense and 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.
Firstly,
because unjust enrichment was not specifically pleaded and could not,
as held by the court a
quo,
be properly cured by evidence.
Secondly,
because the award granted a
quo
was for contractual damages and not for unjust enrichment.
The
law on what constitutes a cause of action is settled.
A
cause of action is simply a factual conspectus, the existence of
which entitles one person to obtain from the court a remedy against
another person. In other words, it is an entire set of facts upon
which the relief sought stands: see Peebles
v Dairiboard (Private) Limited
1999 (1) ZLR 41 (H) at 54E-F and Abrahamse
& Sons v SA Railways and Harbours
1933 CPD 626 at 637.
To
determine whether the respondent raised an enrichment cause on the
improvements, regard must be had to his plea to the appellant's
declaration in the main matter and to the subsequent averments he
made in his counterclaim.
The
facts pleaded by the respondent upon which his relief rested appear
in para 10.2 of his plea and para 3 of the appellant's replication
in convention; paras 2, 3, 4 and 5 of his counterclaim, as amended on
the first day of trial a
quo
(16
January 2018). It is also necessary, for completeness, to refer to
para 1 of the appellant's plea to the counterclaim and para 1 of
the respondent's replication. I set these below.
“RESPONDENT'S
PLEA IN CONVENTION
10.2
The defendant avers that if the contract were to be found to be null
and void then he stands to be prejudiced and the plaintiff to be
unjustly enriched because in pursuit of his obligations in terms of
the sale, he had built a house on the land, paid US$19,000 to the
plaintiff, commenced to draw electricity to the plaintiff's
homestead and through his own funds facilitated the issue of a
subdivision.
WHEREFORE,
the defendant prays for the dismissal of the plaintiff's claims
with costs on the punitive scale.
In
the event, however, that the Honourable Court holds that the
agreement
is null and void,
then the defendant prays that the plaintiff be
ordered to compensate the defendant in such sum of money as at the
time of judgment would be sufficient for the defendant to acquire a
property of comparable value including
all improvements effected by the defendant on the land in issue, a
refund of the money spent in drawing electricity for the plaintiff's
benefit and money spent in procuring a subdivision permit.
RESPONDENT'S
COUNTERCLAIM
1.…….
2.
On 26 January 2010, the parties entered into an agreement of sale
wherein the plaintiff sold and the defendant purchased an undeveloped
piece of land identified in the agreement of sale as 'a portion of
land 10 acres in extent being part of Plot 5A 100 Acres Lot,
Bulawayo'.
3.
In pursuit of his obligation in terms of the agreement of sale, the
defendant paid to the plaintiff the total sum of US$19,000 and, inter
alia,
for the benefit of the plaintiff commenced drawing electric power to
the defendant's homestead and paid for the procurement of a
subdivision permit by the plaintiff.
4.
The defendant avers that the plaintiff has been unjustly enriched at
his expense in that the defendant paid to the plaintiff the sum of
US$19,000 which the plaintiff accepted and further commenced to draw
electricity for the benefit of the plaintiff, and paid to the
plaintiff US$550 to procure or cause the procurement of a subdivision
permit at his expense.
5.
The
defendant, as he is entitled to do, had developed the piece of land
and he will be unfairly prejudiced if the improvements were to accrue
to the plaintiff without any compensation from him.”
THE
APPELLANT'S REPLICATION IN CONVENTION
Ad
paragraph 10.2
Plaintiff
denies that he stands to be unjustly enriched from the property built
by the defendant and avers that:
3.1
Defendant built the property contrary to a warning against such
development by the plaintiff.
3.2
Plaintiff has no use for the property so built by the defendant as he
already has other plans with regards to the use of the land upon
which the defendant built the property.
THE
APPELLANT'S PLEA TO THE COUNTERCLAIM
1.
There is no cause of action disclosed in the counter-claim.
THE
RESPONDENT'S REPLICATION TO THE COUNTERCLAIM
1.
Ad para 1
This
is disputed. The
defendant's cause of action is founded on a claim of unjust
enrichment.
Ad
para 4
4.1
The defendant will accept payment in the sum of US$19,550 and persist
in its claim
for damages as contained in the counterclaim.”
(Underlining for emphasis)
The
above pleadings clearly show that the respondent specifically pleaded
to an enrichment claim in respect of improvements in defence to the
main action but did not specifically carry this through to the
counterclaim.
The
substance of the enrichment cause is, however, embodied in para 5 of
the counterclaim.
The
deliberate use of choice words such as 'developed piece of land'
'improvements' 'unfairly prejudiced' 'accrued to plaintiff
without compensation' connote a direct benefit to the appellant at
the expense of the respondent and clearly encapsulate all the four
requirements of an enrichment cause recognised in our law.
I
am satisfied that the court a
quo's
finding that the respondent did plead unjust enrichment in his
counterclaim is unassailable.
But,
even if it had not been so pleaded, such a failure would, as was
noted en
passant
by the court a
quo,
have been cured by the evidence led at the trial. This finding
accords with both judicial precedent and the academic works of
reputable legal writers.
In
Mtuda
v Ndudzo
2000 (1) ZLR 710 (H) at 719B-F, GARWE J, as he then was, held that
where an issue is not raised in the pleadings but has been identified
for determination at a pre-trial conference and fully canvased at the
trial, even if an amendment is not moved, a court is entitled to
adjudicate on it.
This
effectively means that a defective pleading will be cured by
evidence.
To
similar effect is Herbstein
and Van Winsen's Civil Practice of the High Courts of South Africa
5th
ed by Cilliers et
al
at p575-576 where it is stated that:
“Even
where no amendments have been applied for, both trial and appeal
courts have adjudicated on issues not raised on the pleadings but
fully canvassed at the trial.”
Again
du
Plessis, supra,
at p3 footnote 10 writes that:
“A
plaintiff who initially pleads the incorrect action may be allowed to
amend his claim (see Hughes
v Levy
1907 TS 276). But even if such a plaintiff did not amend his claim,
the court can still award the action that he should have relied on,
as long as its requirements were fully canvassed in evidence and the
defendant would not be prejudiced by reliance on the incorrect action
in the pleadings.…If
the pleadings contain some of the customary allegations of a specific
enrichment claim, and the defendant was alive to the basis of the
claim, the defendant may not maintain a passive stance; he must raise
an exception if he considers that the case has not been properly
pleaded.”
(My underlining for emphasis).
I
note in passing, that the underlined words also accorded with Order
21 Rule 137 of the High Court Rules, 1971.
It
is apparent to me that, in the present case, the symbiotic
relationship between the main claim and the counterclaim birthed the
twin issues that were referred to trial at the pre-trial conference.
The second issue thereof aptly captured the enrichment cause.
The
appellant clearly understood that respondent's claim for the
improvement “damages” was predicated upon the unjust enrichment
cause.
This
is further confirmed by the excerpt of the evidence in chief of the
appellant, which appears at p325-326 of the record:
“Q.
The point I am putting across to you which he said is that if you had
to live with the improvements without him receiving compensation, you
would have benefitted because you have buildings now?
A.
I do not benefit anything from the building, if he decides to go and
destroy those buildings I will still not benefit anything I would
remain the same person.…. I would not do anything with the
development or the houses he constructed because I have my own house
which is very comfortable.
Q.
What would you do if he left everything, what are you going to do?
A.
It would be his own fault due to his stubbornness. I would destroy
the buildings or leave them like that without anyone occupying them.”
The
record of proceedings further reveals the prominence to which the
enrichment cause was fully ventilated during the cross examination
and re-examination of the appellant.
In
the same vein, the respondent fully canvassed the enrichment cause on
the improvements in his evidence in chief, under cross examination
and in re-examination.
Under
cross-examination (p382 of the record), the respondent maintained
that para 5 of his counterclaim constituted an unjust enrichment
cause of action.
The
response appeared to have stopped counsel in his tracks for counsel
subsequently, in his follow up question, in that cross examination,
properly conceded (at p387 of the record) that unjust enrichment
constituted the respondent's cause of action in respect of the
improvements.
Whether
or not unjust enrichment exists is a factual finding. See Evans
v Rapper
SC55/04 at p5. 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 at p128 and Dube
v Khumalo
1986 (2) ZLR 103 (SC) at p109.
The
in
pari delicto potior est conditio possidentis
maxim is a fraternal twin to the ex
turpi causa
maxim.
In
Dube
v Khumalo, supra,
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 at 578-581; Jajbhay
v Cassim
1939 AD 537 at 544-545; Chioza
v Siziba
SC4/15 at para (27); and Du Plessis, supra,
at p204.
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.
Mr
Ndlovu
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
SC4/15,
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 Mr Nkomo,
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
at p1 and footnote 3 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) at 732B; and
Sackstein
NO v Proudfoot SA (Pty) Ltd
2006 (6) 358 (SCA) para (11); and Mackay
v Fey NO
2006 (3) SA 182 (SCA) at para (10);
Jacobs
v United Building Society
1981 (4) SA 37 at 39C-E; and Du Plessis p70 para 4.4.2.2.
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
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 at 198 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, supra,
p70 footnote 69.
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
the Gamanje
case, supra,
at p10, this Court stated that:
“The
value of the enrichment is the amount by which the appellant is
enriched.”
According
to Du Plessis, supra,
at p378, 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, supra,
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 NO
2001 (1) ZLR 203 (S) at 205C-206D and followed by ZIYAMBI JA in
Chioza
v Siziba, supra
at para (39).
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 the former case.
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 at p380 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
the Chioza
v Siziba
case,
supra,
at para [39] 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.”(my
emphasis)
Additionally,
para 3 of the order in the Chioza
case 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) 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,
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 Mr Ndlovu
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.
The
date on which the appropriate interest commences to run
In
respect of contractual damages, unless stated in the contract,
interest normally
commences
to run on the date the subject matter of the claim was made.
In
respect of interest for unjust enrichment, interest is normally
claimed from the date of summons.
However,
this Court in Reza
v Nyangani
suggested that interest should commence to run for the depreciated
replacement cost, from the date of judgment a
quo.
This is because the award granted is often different from the actual
expenses incurred.
The
submission by Mr Ndlovu
that the interest should have commenced to run on the date of
judgment is therefore correct. The fourth ground of appeal is,
therefore, upheld.
The
failure to make a substantive order of eviction
In
Director
of Customs & Excise v ABSA Bank & Anor
1998 (2) ZLR 71 (S) at 73F-74A, it was held that an improvement lien
was a real lien that conferred rights of retention until the amount
that is due is paid. The holder of the lien is entitled to retain it
until paid for value of the expenditure not just his expenses.
Further,
that equity requires that he be evicted after paying for the
improvements. See Hales
v Doverick Investments (Pvt) Ltd
1998 (2) ZLR 235 (H) at 253F-G.
It
was common cause before us that the second ground of appeal ought to
succeed.
The
court a
quo
misdirected itself in failing to make a conditional order for
eviction as it had intimated in its reasons for judgment. See Wepener
v Schraader
1903 TS 629 at 637.
In
the exercise of the powers reposed in this Court by section
22(1)(b)(ix) of the Supreme Court Act, I will correct the order of
the court a
quo
in this respect.
COSTS
In
respect of the costs a
quo,
it seems to me that the appellant was properly mulcted with costs on
the ordinary scale. He sold the plot to the respondent well knowing
from his 2000 debacle that he could not sell an unsub-divided plot
let alone one less than 5 hectares in size.
Both
counsel are agreed that each party should bear its own costs on
appeal. Each party will accordingly bear its own costs.
DISPOSITION
The
appellant partly succeeds in regards to the second ground of appeal.
The court a
quo
“omitted” to impose conditional eviction in its order. It also
wrongly imposed interest from the date of the counterclaim instead of
the date of its order. Ground of appeal 4 also succeeds. The other
grounds of appeal fail.
Accordingly,
it is ordered that:
1.
The appeal succeeds in part with each party bearing its own costs.
2.
The order of the court a
quo
is set aside in respect of para 4 and substituted with the following:
“4.
The prescribed rate of interest in respect of the amount in para 3
shall be with effect from 2 May 2019.
5.
The respondent shall vacate the immovable property within two weeks
of the payment of the judgment debt together with interest thereon at
the prescribed rate failing which the Sheriff or his Deputy shall
evict him from the immovable property.”
GUVAVA
JA: I
agree
UCHENA
JA: I
agree
Masiye-Moyo
and Associates,
appellant's legal practitioners
Calderwood,
Bryce Hendrie & Partners,
respondent's legal practitioners
