Central Africa Building Society v Patience Magodo

The applicant (CABS) obtained judgment against the respondent for US$162,884.01 on a mortgage bond over her property. Before execution, the parties executed a deed of settlement on 17 November 2017 to allow instalment payments. The applicant's legal practitioners drafted and emailed a deed of settlement to the respondent. The respondent made unilateral alterations to the draft, specifically adding a clause linking the final mortgage balance to the outcome of pending labour court matters between the parties. She signed the altered deed and returned it. The applicant's legal practitioner signed and filed the altered deed on 27 November 2017 without noticing the changes. Upon later discovery of the alterations, the applicant's lawyers sent letters on 29 November 2017 and 22 January 2018 accusing the respondent of fraud and demanding she sign the original deed. The respondent did not deny making the alterations but argued the deed was binding once both parties signed. The applicant sought to set aside the entire deed of settlement on grounds of fraudulent procurement.

• Whether the respondent's unilateral alteration of the draft deed of settlement before signing constituted fraud
• Whether the applicant was induced to enter the contract by the alleged fraudulent misrepresentation
• Whether the applicant's legal practitioner's signature bound the applicant despite the alterations
• What are the essential elements required to establish fraud in contract law
• Whether the deed of settlement should be set aside in its entirety

The application was dismissed with costs awarded to the respondent.

For fraud to vitiate a contract and justify its rescission, the party alleging fraud must prove on a balance of probabilities that: (1) there was a representation (which may include non-disclosure); (2) the representation was false and intentional or negligent; (3) the representation induced the innocent party to enter into the contract; and (4) where damages are claimed, the party suffered damages. The mere fact that one party unilaterally altered a draft agreement before signing does not constitute actionable fraud if the other party's decision to sign was not induced by that alteration but resulted from the signing party's own negligence or error in failing to verify the document before signing. Where a legal practitioner signs a document without carefully checking its contents, this constitutes error or mistake on the part of the signing party, not fraud by the other party.

The court made important observations about proper procedure in application proceedings: Affidavits in applications must comply with Rule 58(4) of the High Court Rules and contain only facts upon which the party relies, supported by verifying documents where appropriate. It is improper practice for parties to plead and argue matters of law in affidavits. Legal contentions should be reserved for heads of argument and oral submissions. Legal practitioners who advise clients to include legal arguments and conclusions of law in affidavits are acting improperly. The court warned that it may in future strike out affidavits that do not comply with Rule 58(4), and that legal practitioners who draft non-compliant affidavits may face penalties. The court noted that non-compliance results in unnecessarily bulky applications and inconveniences the court.

This case clarifies the essential elements required to establish fraud as a ground for setting aside a contract in Zimbabwean law, particularly emphasizing that inducement is a critical element that must be proved. The judgment demonstrates that where a party's legal practitioner signs a contract without reading it carefully, the error lies with the signing party rather than constituting fraud by the other party. The case also provides important guidance on proper procedure in application proceedings, emphasizing that affidavits must be confined to facts and not contain legal arguments, as required by Rule 58(4) of the High Court Rules. The court warned that non-compliant affidavits may be struck out in future cases.