Harare Safari Lodge (Pvt) Ltd and Brett Allan McDonald v Blessed Runesu

The second plaintiff, Brett Allan McDonald, owned 100% of the shares in the first plaintiff company, Harare Safari Lodge (Pvt) Ltd, which purportedly owned immovable property known as McIlwaine 21 of Subdivision A of Glenroy of Oatlands (referred to as "Oatlands"). The property had been acquired by the state in 2005 under section 8 of the Land Acquisition Act, with a section 8 endorsement registered by the Registrar of Deeds on 1 January 2005. Despite this, on 14 December 2020, second plaintiff entered into an Agreement of Sale of Shares with the defendant, purporting to sell his entire shareholding in the company for USD$1,500,000.00, payable within 14 days. The agreement acknowledged that Oatlands had been subject to a section 8 acquisition order, yet still represented the property as an asset of the company. The purchase price was never paid. According to the defendant, he had been occupying the property since 2016 after assisting second plaintiff to eject invaders who had violently chased second plaintiff from the premises. Defendant claimed he only signed the agreement under duress and threats. Plaintiffs sought cancellation of the agreement and ejectment of the defendant, and subsequently filed an application for summary judgment when defendant filed a plea.

• Whether an application for summary judgment could succeed where the underlying contract is tainted with illegality
• Whether a contract purporting to sell shares in a company whose principal asset had been acquired by the state was illegal and unenforceable
• Whether the first plaintiff had locus standi to seek ejectment from property that had been acquired by the state
• Whether the defendant raised a bona fide defence sufficient to defeat summary judgment
• The application of the principles of illegality in contract, including in pari delicto potior est conditio defendentis and ex turpi causa
• Whether triable issues existed that required ventilation at trial

The application for summary judgment was dismissed with costs awarded to the defendant.

An illegal agreement will never be enforced by the courts - this rule is absolute and admits of no exception. Where a contract is tainted with illegality, particularly involving state-acquired land in violation of constitutional and statutory provisions, such illegality constitutes a bona fide and triable defence sufficient to defeat an application for summary judgment. The court must examine the defective contract to establish the existence and extent of the respective parties' blame, guilt or innocence, the nature of the illegality, its effect, and the culpability of the parties - matters that require full ventilation at trial and cannot be determined summarily. A party cannot successfully seek summary judgment on a contract that is illegal on its face, and a company cannot seek ejectment from property that has been acquired by the state and is no longer part of its assets. Summary judgment, being an extraordinary and drastic remedy, will not be granted where significant triable issues exist relating to illegality, unjust enrichment, and the parties' respective rights.

The court made several important observations beyond the strict ratio: (1) Courts expect demonstrable contrition from parties whose conduct has been tainted by allegations of illegality - in this case, not a shred of compunction could be detected in the pleadings, submissions or comportment of either party; (2) The court expressed bewilderment at how the parties thought they could transact over an asset vested in the state and avoid consequences; (3) The court noted the defendant's inconsistent version of events, particularly his claim that he resisted violent invaders on behalf of the second plaintiff but then succumbed to threats from the same plaintiff to sign the agreement - the more probable conclusion being that defendant was complicit in the illegal agreement; (4) The court observed that the sale of shares agreement, despite being elaborate and seemingly well-drafted by commercially alert parties, was replete with incongruencies and contradictions that rendered it a sham designed to disguise the sale of state-acquired land; (5) While not necessary to delve to the bottom of the illegality issue in a summary judgment application, the court indicated that any inquiry into illegality will inevitably consider unjust enrichment, and courts may prescribe appropriate remedies including injunction, disgorgement, chastisement or other sanctions meeting the justice of the case.

This case is significant in South African and Zimbabwean jurisprudence for several reasons: (1) It reaffirms the absolute principle that courts will not enforce illegal contracts, regardless of the circumstances; (2) It demonstrates that illegality constitutes a triable defence sufficient to defeat summary judgment, even where both parties may be complicit in the illegality; (3) It highlights the continuing effect of land reform legislation and state acquisition of land, showing that parties cannot circumvent constitutional and statutory provisions through creative contracting (such as selling shares in a company rather than land directly); (4) It emphasizes that courts expect contrition from parties whose conduct is tainted by illegality, and will scrutinize attempts by such parties to obtain judicial relief; (5) It illustrates the intersection between procedural law (summary judgment) and substantive law (illegality in contracts), showing that where fundamental questions of illegality, culpability, and unjust enrichment arise, matters must proceed to full trial rather than summary determination. The case serves as a warning against attempts to structure transactions to evade land reform legislation.