Paul Chioniso Mawacha and Cecilia Mawacha v Sterby Nhamo and Innocent Nhamo and Director of Housing and Community Services – City of Harare

The plaintiffs (husband and wife) sold their rights, title and interest in property at 45 Maviyani Street, Mbare, Harare to the second defendant on 3 December 2007 for ZWL$5 billion. The first plaintiff was 73 years old, a retired painter who could not read or write well. The agreement was verbal, later memorialized on 12 February 2008. At the plaintiffs' request, part of the purchase price was paid in South African rands (ZAR10,000) and the remainder in local currency (ZWL$2.5 billion), to hedge against hyperinflation. The third defendant (City of Harare) approved the cession on the same date. The plaintiffs later sought to set aside the agreement, claiming the price was ridiculously low and alleging they were cheated. The second defendant counterclaimed for eviction of the plaintiffs' son Joel who remained in occupation of the property.

• Whether a valid contract of sale was concluded between the parties
• Whether the purchase price was so low as to vitiate the contract
• Whether part payment of the purchase price in foreign currency constituted illegality that nullified the contract
• Whether the illegality warranted setting aside the cession or whether the in pari delicto maxim applied
• Whether the second defendant was entitled to eviction of occupants

The plaintiffs' claims for declaration of nullity of the agreement and setting aside of the cession were dismissed. The plaintiffs and all those claiming occupation through them were evicted from Stand No. 6380 Mbare (45 Maviyani Street Mbare). The plaintiffs were ordered to pay the first and second defendants' costs on a legal practitioner and client scale for both the main claim and counterclaim, jointly and severally.

Where parties conclude a valid contract of sale but payment is made in violation of exchange control regulations at the special instance of the seller, and the contract has been fully performed by delivery and cession, the in pari delicto maxim applies: the loss lies where it falls. The court will not grant restitution where parties are equally in the wrong regarding the illegality. The illegality of the payment method does not vitiate an otherwise valid contract where the pretium was specified in local currency. Where relaxing the in pari delicto rule would result in unjust enrichment of one party who participated equally in the illegality, the court will maintain the status quo and may grant ancillary relief (such as eviction) to the party in possession.

The court observed that merely because parties cannot read or write does not make them unsophisticated for purposes of contractual capacity. The court noted that during hyperinflation, property values in newspapers from earlier dates provide more useful comparisons than later dates. The court commented that the plaintiffs were motivated by greed rather than principle in bringing their claim, justifying an award of costs on the attorney-client scale. The court also noted the practical difficulties of restitution where currency has been demonetized, observing it would be ridiculous to require repayment at the official exchange rate which would amount to US$83,333.33.

This Zimbabwean High Court case illustrates the application of the in pari delicto maxim in the context of partially illegal contracts, particularly where exchange control regulations have been violated. It demonstrates that courts will apply the principle that 'where parties are equally in the wrong, he who is in possession will prevail' when an illegal agreement has been fully performed, but may relax this rule to prevent injustice. The case also addresses the intersection of contract law and exchange control violations during Zimbabwe's hyperinflation period, and confirms that sophisticated commercial parties cannot later escape unfavorable bargains by relying on their own illegal conduct. While this is a Zimbabwean case, it may have persuasive value in South Africa given similar common law principles and exchange control frameworks.