Agson Mafuta Chioza v Smoking Williams Siziba

In December 2006, the respondent saw an advertisement for Stand No. 1759, Waterfalls, for sale at $25,000,000. He visited the estate agent (Murenga) and agreed to purchase the property at the advertised price. The respondent paid the full purchase price of $25,000,000 via bank transfer. However, when the parties met to sign the agreement of sale on 29 December 2006, the agreement reflected the purchase price as only $8,000,000. The parties dispute who initiated this understatement: the appellant claimed the respondent wanted to evade stamp duties; the respondent claimed the appellant requested it to avoid taxes on medical debts. The agreement was also back-dated to 8 September 2006. The property sold was an unsubdivided portion of a larger stand, and no permit for subdivision existed at the time. The respondent took vacant possession on 1 February 2007. After subdivision, the respondent paid an additional $3,000,000 for extra square meters gained. In 2009, the appellant's lawyers advised him the contract was illegal and sought to resile from it, offering to refund the purchase price (less notional rent). The respondent applied for an order compelling transfer; the appellant counterclaimed for eviction and rental payments.

• Whether the court a quo erred in finding that the full purchase price of $25,000,000 had been paid to the appellant
• Whether the court erred in enforcing a contract found to be illegal under the Stamp Duties Act and the Regional Town and Country Planning Act
• Whether the strict application of the in pari delicto potior est conditio possidentis rule should apply or whether the rule should be relaxed to prevent unjust enrichment
• Whether the contract was illegal and unenforceable due to contravention of section 44 of the Stamp Duties Act (understatement of purchase price to evade stamp duty)
• Whether the contract was illegal and unenforceable due to contravention of section 39 of the Regional Town and Country Planning Act (agreement for sale of unsubdivided portion of property without a subdivision permit)
• Whether the appellant would be unjustly enriched if the counterclaim were granted

1. The appeal is allowed in part with each party paying its own costs. 2. The judgment of the court a quo ordering transfer of the property to the respondent is set aside with each party to pay its own costs. 3. The matter is remitted to the court a quo for hearing of evidence to determine: (i) the value of the property including improvements made 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; (iv) such order as seems appropriate to achieve justice between the parties; (v) the order may set a period for payment by the appellant to the respondent, failing which the Deputy Sheriff shall transfer the property to the respondent.

1. An illegal agreement that has not been performed will never be enforced by a court—the ex turpi causa non oritur actio rule is absolute and admits no exceptions. 2. The in pari delicto potior est conditio possidentis rule (where parties are equally in the wrong, the loss lies where it falls) may be relaxed in suitable cases to prevent injustice and unjust enrichment, guided by considerations of public policy. 3. Courts must distinguish between seeking enforcement of an illegal contract (which will never be granted) and seeking relief from the consequences of an illegal action (which may be granted where the in pari delicto rule is relaxed). 4. Public policy should properly take into account the doing of simple justice between individuals and preventing one party from being unjustly enriched at the expense of another. 5. An agreement for the sale of an unsubdivided portion of property without a permit granted under section 40 of the Regional Town and Country Planning Act contravenes section 39 and is illegal and unenforceable. 6. An agreement made to evade stamp duty by understating the purchase price contravenes section 44 of the Stamp Duties Act and is void. 7. Where both parties are in the wrong but one party would be unjustly enriched by strict application of the in pari delicto rule, the court may order restitution or compensation to achieve justice.

The Court took judicial notice that during the period in question (2006-2007), hyperinflation was affecting Zimbabwe's economy, making it in sellers' interests to recover sale proceeds quickly rather than await the transfer process when money would lose value. The Court expressed approval of the approach in Jajbhay v Cassim that courts should consider various degrees of turpitude in illegal contracts and that where the illegality falls within the category of crimes, civil courts can reasonably suppose criminal law provides adequate deterrent punishment and should not increase one party's punishment while enriching the other. The Court observed that strict application of the par delictum rule might not discourage illegal transactions but could promote 'a more reprehensible form of trickery by scoundrels'. The Court noted that a strict application leaving the appellant with title while the respondent retained possession could result in the appellant transferring title to a third party against whom the respondent would have no recourse.

This case is significant in Zimbabwean jurisprudence for its comprehensive treatment of the distinction between the ex turpi causa non oritur actio rule and the in pari delicto potior est conditio possidentis rule. It reaffirms that while illegal contracts will never be enforced by courts (ex turpi causa rule is absolute), the in pari delicto rule may be relaxed to prevent unjust enrichment and promote public policy considerations of simple justice between parties. The judgment demonstrates that courts will intervene to prevent one party from benefiting from illegal conduct at the expense of another, particularly where strict application of the rule would encourage trickery and result in manifest injustice. It provides important guidance on when exceptions to the in pari delicto rule should be recognized, emphasizing that public policy properly takes into account the doing of simple justice between individuals. The case also clarifies that agreements for sale of unsubdivided portions of property without the required subdivision permit under section 39 of the Regional Town and Country Planning Act are illegal and unenforceable, following X-Trend-A-Home (Pvt) Ltd v Hoselaw Investments (Pvt) Ltd.