BERE J: A brief resume of the broadly common facts in
this case are as follows:
The
plaintiff is a citizen of Zimbabwe
residing in this country and was the registered owner of a toyota hiace bearing registration number AAZ
7054 (the vehicle).
The
defendant is a company duly registered in accordance with the company laws of
this country and caries out the business of among other things selling motor
vehicles at stand 3250, Kenneth
Kaunda Avenue, in Harare.
On
10 October 2007 the plaintiff and the defendant entered into a written
agreement (exhibit 1) wherein the latter undertook to sell on behalf of the
former its motor vehicle and undertook to pay the plaintiff a straight payment
of USD14,000 from the proceeds of the sale.
It
is not in dispute that the parties' written agreement was subsequently altered.
Therein lies the point of divergence.
Both
parties were not in agreement as to the exact nature of the amendments to exh
1.
According
to the plaintiff the amendment to exh 1 was merely a reduction of the payment
due to him from USD14,000 to USD12,000.
The
defendant, on the other hand contended that the amendment was to the effect
that the plaintiff would pocket the equivalent of USD12,000 which amount was
pegged at Z$96 billion.
Further
it is not in dispute that the instant transaction was not a “once off one”. The
parties had dealt with each other in the past as evidenced by exhibits 2 and 3
which confirm that the defendant had on two separate occasions sold two motor
vehicles on behalf of the plaintiff and paid the latter in foreign currency.
These transactions were completed without difficulties.
Following
disagreement over the payment of the amount due to the plaintiff, the plaintiff
issues summons out of this court for an order against the defendant as
follows:
(a) Payment
in the sum of USD12,000 (twelve thousand United States dollars),
(b) Interest
on the aforesaid amount at the prevailing United States of America Treasury
rate with effect from 21st February 2008 to date of final payment.
(c) Costs
of suit.
Alternatively -
(a) Damages
in the sum of USD12,000 (twelve thousand United States dollars).
(b) Interest
on the above sum at the prevailing United States of America Treasury rate with
effect from the 21st of February 2008 to the date of final payment.
(c) Costs
of suit.
On 13 February 2009 the parties
filed a joint pre-trial conference minute which identified basically two issues for
determination at the trial of this matter and I have had to be guided by those
issues.
FACTUAL
ASSESSMENT OF THE EVIDENCE
In
this regard, two documents were tabled in these proceedings for consideration.
The
plaintiff gave evidence and maintained that the agreement governing the
transaction between the parties is as endorsed in exh. 1 and signed by both
parties. According to the plaintiff the original agreement which was signed by
both parties on 10 October 2007 was to the effect that his motor vehicle would
be sold by the defendant and he would be given USD14,000.
The
plaintiff went further to say that the original agreement was subsequently
altered on 4 February 2008 by reducing USD 14 000 to USD 12 000 and that when
this was done, both parties endorsed their signatories on exh. 1.
Exhibit
1, indeed confirms that both parties to the agreement signed to confirm the
amendments. The plaintiff has urged the court to accept exh. 1 as the full text
of the parties agreement.
The
defendant's representative on the other hand has implored the curt to accept
that the transaction between the parties was governed by exh. 4 which made reference
to the payment in Zimbabwe
dollars of the equivalent of US$12,000 which conversion was agreed at Z$96
billion at the time.
The
position as put forward by the defendant is fraught with a number of
challenges.
Firstly,
exh.4 is a photocopied document and in that regard its evidential value is
compromised.
There
was no convincing explanation given by the defendant as to why the original
document could not be produced. It was only when the defendant's
representative, Mr Douglas Tanyanyiwa was giving evidence in chief that he
tried desperately to suggest that the plaintiff had taken this exhibit at a
time when Mr Tanyanyiwa himself was attending to some labour officers who had
visited him at his company.
Surprisingly
this suggestion was never put to the plaintiff by way of cross-examination. One
could not help but conclude that the suggestion by Mr Tanyanyiwa that he was
advised by the labour officers (which incidentally was hearsay evidence) that
the plaintiff had snatched the original document of exh. 4 was clearly an
afterthought.
In
any event, and as already stated the evidential value of exh. 4 is severely
compromised in the light of the Civil Evidence Act
which spells out circumstances when the court may accept copies of documents.
The
other challenge which the court could not overlook is the fact that the
endorsements on exh. 4 were unilaterally done by the defendant's
representative. There is nowhere on that documents where the plaintiff signed
to acknowledge his alleged agreement to receive $96 000 000 000 (then) as the
equivalent of US$12 000.
It
must be understood that the main reason why parties prefer written and signed
agreements like exh. 1 is that the parties desire that they be bound by such
agreements particularly in the event of a dispute like what has happened in
this case. Reference to such documents is easier as opposed to relying on
verbal agreements.
It
is highly unlikely that the plaintiff, having earlier on signed exh. 1 would
have subsequently consented to the amendments as they appear in exh. 4 and
proceeded not to sign for such amendments.
Exhibits
2 and 3 show a consistent pattern in the manner the plaintiff and the defendant
were conducting their business. Exh. 1 is equally consistent with those two
exhibits.
The
evidence of Noah Silvester Gomera was unable to add value to the defendant case
as he admitted that he had no independent knowledge as regards how the
transaction with the plaintiff was conducted.
The
court had no difficulties in accepting the version of the plaintiff as
representing the true position in this matter. Exhibit 1 must be conclusive in
so far as it deals with the undertaking of the parties to each other.
THE
LEGALITY OR OTHERWISE OF THE AGREEMENT
Flowing
from the findings of the court, the inevitable question that cannot avoid
scrutiny is whether or not the agreement entered into by the plaintiff and the
defendant was legal. This issue assumes dominant consideration because of the
conflicting positions adopted by the respective legal counsels for both the
plaintiff and the defendant.
The
plaintiff's counsel was of the firm view that the agreement between the parties
as captured in exh. 1 was perfectly legal and this court should enforce it.
The
defendant's counsel was of a different view. Counsel's contention was that the
transaction by the two parties was premised on dealing in foreign currency and
that to indulge in such a transaction at the time the parties needed to have
obtained exchange control authority.
THE
LEGAL POSITION
The issue before me is not a novel
one as this court has had the occasion to deal with similar situations in the
past. See the following cases for guidance; Wycliff Matsika
and Lloyd Gambiza .
In
the Matsika case the issue which the court had to determine was crisply put by
the learned judge in the following;
“I became concerned that one issue
had not been dealt with to my satisfaction – the issue being whether the
parties were entitled under our law to transact business in foreign money i.e.
in United States
dollars. In other words the question which vexed me was whether two Zimbabweans
both resident in the country, were entitled to buy and sell in United States
dollars”.
After a thorough analysis of the
case before him the learned judge concluded that the transaction was in fact in violation of s
4(1)(a)(ii) of the Exchange Control Regulations.
Following
on the decision in Matsika case (supra)
the learned judge who dealt with the Gambiza case concluded the transaction
therein was a violation of the same exchange control regulations.
There
is a slight distinction though from the above referred cases from the instant
case. Whereas in the two cases (supra)
there was evidence that foreign currency had actually changed hands in the
instant case the parties had only made an undertaking to exchange the foreign
currency once the transaction had been concluded.
However,
this distinction must not cloud issues in this matter. The agreement between
the parties cannot be looked at in a vacuum. There is need to consider the
history of the two parties as captured by exh(s) 2 and 3 which were tendered by
the plaintiff himself in a bid to strengthen his case. In my view, those two
confirmed transactions clearly demonstrate a stout effort by both parties to
flout the exchange control regulations with their eyes wide open. The record of
proceedings in this case will show that even when the two parties engaged in
this transaction they both knew that they were flouting the regulations in
question. To that extent it cannot escape one's mind that this particular
transaction was tainted with illegality.
During
submissions counsel for the plaintiff referred me to the case of Barker
as authority for the support of the plaintiff's position. With respect, that
case was referred to out of context in that in that case the Supreme Court was
called upon to deal with violations of s 11, of the Exchange Control
Regulations which section was designed to control payments by Zimbabwean
residents outside Zimbabwe or to incur an obligation to make a payment outside
Zimbabwe subject to certain conditions being fulfilled.
In
the instant case the issue involved two Zimbabweans, one being the plaintiff
and the other being a representative of his duly registered Zimbabwean company.
The transaction involved providing services to each other and paying each other
in this country in foreign currency. To that extent therefore the distinction
between these two cases is quite clear.
Different
considerations apply to these two sets of transactions. See the case of Barker
(supra) and Macafe (Pty) Ltd.
Having
determined that the agreement entered into by the parties was an illegal one, I
turn now to consider whether the plaintiff case is sustainable or not given the
fact that the plaintiff's suit was in essence meant to enforce this contract.
In
dealing with this issue I find the views by GUBBAY JA in the case of Dube to be
quite instructive. The then learned judge of appeal put the position succinctly
in the following:
“There are two rules which are of
general application: the first is that an illegal agreement which has not yet
been performed, either in whole or in part will never be enforced. This rule is
absolute and admits no exception. See Mathews
v Robinowitz 1948(2) SA 876 (W) at 878; York
Estates Ltd v Warcheam 1950(1) SA 125 SR at 128. It is expressed in the
maxim ex turpi causa non oritur action.
The second is expressed in another maxim in
pari delicto potior est condition possidentis,
which may be translated as meaning 'where the parties are equally in the wrong,
he who is in possession will prevail'. The effect of this rule is that where
something has been delivered pursuant to an illegal agreement the loss lies
where it falls. The objective of the rule is to discourage illegality by
denying judicial assistance to persons who part with money, goods or
incorporeal rights, in furtherance of an illegal transaction. But in suitable
cases the courts will relax the par
delictum rule and order restitution to be made. They will do so in order to
prevent injustice, on the basis that public policy 'should properly take into
account the doing of simple justice between man and man' As was pointed out by
STRATFORD CJ in Jaybay v Cassim 1939 AD 537 at 544-545…….”
In
the case before him the learned judge, with the concurrence of the other judges
of appeal went on to relax the par
delictum rule and granted relief to the plaintiff.
I
consider that the overriding factor in the majority of the cases where the par delictum rule is relaxed is that the
party seeking relief will not be seeking to enforce an illegal agreement.
I
also make a further observation that almost invariably where parties enter into
illegal agreements there is an element of unjust enrichment particularly where
courts have declined to relax the par
delictum rule. In other words one of the parties to the illegal transaction
comes out of it with burnt fingers whilst the other stands to benefit. Such is
the hazardous nature of entering into an illegal transaction.
In
the case before me it is clear that the plaintiff, in both the main and the
alternative claim has sought to enforce the illegal contract. In this regard
one needs to go no further than a rudimentary perusal of the summons commencing
action.
From the evidence given and accepted
by the court the conduct of the parties in this case is quite reprehensible.
They have a very clear history of transgressing the Exchange Control
Regulations as in force then as confirmed by exhibits 2 and 3. The conduct of the parties disable the
plaintiff from the benefit of a 'once off' transaction. They had systematically
connived to act in the way they did fully aware of the existence of the prohibitive
Exchange Control Regulations. In my view courts must frown at such conduct and
must not be seen to aid and abet such unacceptable conduct. In my view this is
a clear case where loss should lie where it falls”.
The issue of costs
I
accept the position that the issue of costs is largely at the discretion of the
court provided of course that such discretion is judiciously exercised. In this
regard I find the views of YOUNG J quite apposite when he stated as follows:
“In ordinary litigation the rule is
of course that in the absence of special circumstances costs should follow the
event, and judicial discretion is geared to that principle”. See also the case of Kruger Brothers and
Wasserman.
In
the case before me, I consider that there are special circumstances warranting
a departure from the general rule as regards the question of costs.
The
plaintiff has lost the motor vehicle which he delivered to the defendant in
pursuance of an illegal transaction. The defendant has benefited from such a
transaction in that he has not paid anything to the plaintiff.
It
is an elusive concept to try and do justice between man and man but I believe
an attempt should be made to disgorge the defendant of the benefit it has
obtained through this illegal transaction by denying it costs in this
litigation.
It
was for these reasons that at the conclusion of this trial I made the following
order:
(a) That
the plaintiff's claim be and is hereby dismissed.
(b) That
there will be no order as to costs.
Wintertons. plaintiff's legal practitioners
F.G.
Gijima and Associates,
defendant's legal practitioners
