Isoquant Investments (Pvt) Ltd t/a Zimoco v Planning and Design Studio Consultants (Pvt) Ltd and City of Harare

On 20 July 2015, the applicant obtained judgment against the first respondent for US$53,301.00 with interest and costs in case number HC 412/13. On 6 April 2016, the first respondent offered to settle the judgment debt by providing seven high-density residential stands measuring 200 square metres each at US$7,500 each (total value US$52,500). The applicant responded on 16 May 2016 accepting the offer but stating the outstanding amount was US$56,498, representing 8 stands of 200 square metres each. In an undated letter, the first respondent provided stand numbers for seven stands, but these now measured 300 square metres each. A site visit was conducted. The first respondent later claimed it had settled the debt by payment on 15 October 2021. The applicant sought an order confirming the compromise agreement and directing transfer/cession of the properties.

• Whether a valid compromise agreement was reached between the parties regarding settlement of the judgment debt
• Whether the applicant's request for 8 stands constituted a counter-offer that nullified the original offer
• Whether the first respondent's subsequent offer of 7 stands measuring 300 square metres constituted a new offer
• Whether the applicant accepted this new offer by conduct, creating a tacit contract
• Whether payment of the judgment debt by the first respondent after the compromise was valid to discharge the obligation
• Whether the claim had prescribed after more than 5 years

The court ordered: (1) The offer of seven specific stands (numbered 5344-5350), each measuring 300 square metres, constitutes a compromise of the court order dated 20 July 2015 in case HC 412/13; (2) The respondents must take all necessary steps to sign all relevant documents to effect cession and/or transfer of the immovable properties within 30 days of service of the order; (3) Should the respondents fail, refuse or neglect to sign such documents, the Sheriff of the High Court is authorized to sign them; (4) Each party shall bear its own costs.

When parties compromise a judgment debt through a settlement agreement, the compromise creates new contractual rights and obligations that supersede and extinguish the original judgment debt. Once a valid compromise is reached, the debtor cannot unilaterally choose to discharge the obligation by reverting to payment of the original judgment debt. A compromise need not be in writing and can be established through the conduct of the parties, forming a tacit contract. In analyzing whether a compromise was reached, ordinary contract law principles apply: a counter-offer destroys the original offer and constitutes a new offer; acceptance must correspond exactly with the offer; and silence or conduct can constitute acceptance of a new offer, creating a binding tacit contract.

The court noted that the applicant "sat on its laurels" without ensuring that the compromise came to fruition, which influenced the decision on costs despite the applicant being the successful party. The court also observed that amending the draft order to include the specific stand numbers would not prejudice the first respondent. The court noted that the first respondent initially raised prescription as a preliminary issue but this was abandoned at the hearing after exchanges with the court.

This case is significant in Zimbabwean law for clarifying the legal principles governing compromise of judgment debts. It establishes that: (1) A compromise agreement, even if not reduced to writing or made a court order, creates new contractual rights that extinguish the original judgment debt; (2) Parties cannot unilaterally revert to discharging the original judgment debt after reaching a compromise; (3) Tacit contracts can be formed through conduct and correspondence between parties; (4) The principles of offer and acceptance, including counter-offers, apply to compromise agreements. The case provides guidance on how courts will analyze a series of negotiations to determine whether a valid compromise was reached, applying general contract law principles to the specific context of judgment debt settlement.