Nyasha Matsika and Rufaro Matsika v Thomas Matano and Caroline Muranzi

The plaintiffs (husband and wife) claimed USD 17,888.00 from the defendants (also husband and wife) arising from an alleged investment agreement entered into in September 2008. The plaintiffs claimed they invested money into the defendants' business for stock purchase, to be repaid with interest at 5.5% per week. By 8 December 2008, the plaintiffs alleged USD 17,800.00 was due but unpaid. The defendants denied the claim and counterclaimed for return of their Mercedes Benz ML 320 which they alleged was unlawfully taken by the plaintiffs on 27 May 2010. The plaintiffs claimed the vehicle was voluntarily surrendered as security. The evidence revealed the parties had engaged in unauthorized foreign currency dealings from September 2008. The alleged investment agreement (Exhibit 1) was a poorly drafted document signed after November 2008 when Reserve Bank of Zimbabwe froze RTGS transactions. The second defendant denied signing it, and no handwriting evidence was led to prove her signature. The plaintiffs failed to produce work permits, business permits, payslips or bank statements to prove they had 'free funds' from South Africa as claimed.

• Whether the defendants owed the plaintiffs USD 17,800.00 under an investment agreement
• Whether the plaintiffs were entitled to interest at 5.5% from 8 December 2008
• Whether the plaintiffs' cause of action arose from an illegal transaction in violation of Exchange Control Regulations and if so whether they were entitled to relief
• Whether the first defendant was entitled to relief under the counterclaim
• Whether the principle against unjust enrichment applied to allow recovery despite illegality
• Whether the plaintiffs proved their claim on a balance of probabilities

Both the plaintiffs' claim and the defendants' counterclaim were dismissed. Each party was ordered to bear its own costs.

Where a party claims enforcement of a contract alleged to constitute an investment agreement: (1) The onus rests on the claimant to prove the existence and terms of the agreement on a balance of probabilities; (2) Where a party denies signing a document, the party relying on that document must prove the authenticity of the signature; (3) A document lacking essential details of an alleged agreement and prepared after the commercial relationship collapsed is insufficient to prove a binding contract; (4) Transactions in foreign currency without authorization from exchange control authorities in violation of statutory Exchange Control Regulations are illegal and unenforceable; (5) Claims that funds advanced were 'free funds' exempt from exchange control restrictions must be substantiated with objective documentary evidence; (6) The court cannot grant relief based on amounts not proven by admissible evidence, even where it accepts that some money changed hands; (7) The doctrine of unjust enrichment cannot be applied to prevent one party's enrichment from an illegal transaction where the court cannot determine the actual amounts involved; (8) A counterclaim for return of property already subject to a spoliation order in other proceedings is misplaced and should be pursued through execution or appeal processes in those proceedings.

The court observed that the relationship between the two families had collapsed following exchange control intervention in November 2008 when the Reserve Bank of Zimbabwe froze RTGS transactions. The court noted that a better document would have been a proper acknowledgment of debt by the second defendant or a properly witnessed agreement that also dealt with security for the debt, which would have made it easier to prove the parties' intentions. The court expressed surprise that essential evidence such as passports with work permit endorsements, payslips or bank statements were not produced when the plaintiffs claimed to be working and doing business in South Africa. The court also noted the confusion in Exhibit 1 where the amount was indicated as '15 506' without a dollar sign, with '$17 800-00' appearing below or outside the signatures. The court indicated it would have been inclined to find unjust enrichment but for the absence of evidence of actual amounts.

This Zimbabwean High Court case (which would be persuasive but not binding in South African courts) illustrates important principles applicable in South African law regarding illegal contracts and the burden of proof. It demonstrates that: (1) Courts will not enforce contracts that violate exchange control regulations, applying the in pari delicto rule; (2) The doctrine of unjust enrichment may provide relief where illegal contracts have been partially performed, but only where the court can determine actual amounts received; (3) Parties relying on documentary evidence must prove its authenticity when disputed, particularly signatures; (4) Claims of having 'free funds' or foreign income must be substantiated with objective documentary evidence such as work permits, bank statements or payslips; (5) Poorly drafted agreements lacking essential details will not be accepted as proof of contractual obligations; (6) Where both parties are equally culpable in illegal transactions, courts may exercise discretion on costs and let losses lie where they fall. The case serves as a cautionary tale about the importance of proper documentation, compliance with exchange control regulations, and the evidentiary burden on claimants.