RCM Civil (Private) Limited v Petrotrade (Private) Limited

In January 2012, the State Procurement Board published a tender for construction of a service station for the defendant. The plaintiff won the tender and entered into an agreement with the defendant to construct the service station. Under the agreement, the defendant was required to obtain an environmental impact assessment (EMA) certificate as required by law. On 3 September 2012, the defendant handed over the construction site to the plaintiff, who mobilized labour and machinery. On 13 September 2012, an EMA officer stopped all construction work because no EMA certificate had been obtained. The plaintiff remained on site on the defendant's assurances that the certificate was being processed. The EMA certificate was only issued on 23 October 2012, and work commenced on 13 November 2012. The plaintiff remained idle on site for two months, incurring costs of US$67,118.60 for hired equipment ($52,743), salaries ($9,200), and security ($5,175). The plaintiff sued for damages claiming the defendant's negligence and wrongful failure to obtain the EMA certificate caused these losses.

• Whether the defendant's failure to obtain an EMA certificate before commencement of works constituted negligence giving rise to a claim for damages
• Whether the agreement to commence construction works without an EMA certificate was illegal and therefore unenforceable
• Whether the court can take cognisance mero motu of the illegality of an agreement not raised by the parties
• Whether the plaintiff can recover damages under an illegal agreement based on the in pari delicto rule

1. The plaintiff's claim was dismissed in its entirety. 2. The plaintiff was ordered to pay the costs of suit.

An agreement to commence construction works in violation of section 97 of the Environmental Management Act (which requires an EMA certificate before implementing projects listed in the First Schedule) is illegal and therefore void and unenforceable. The ex turpi causa non oritur actio principle applies absolutely - no action can arise from an illegal agreement. Where both parties are in pari delicto (equally guilty) in entering an illegal agreement, the court will not allow the plaintiff to recover damages or performance under that agreement, particularly where doing so would be contrary to public policy and undermine the deterrent effect of statutory prohibitions designed to protect the environment and public safety. A court may and should raise the issue of illegality mero motu if it appears from the transaction itself or from the evidence before the court, even where not pleaded by the parties.

The court raised as a moot point (not having been canvassed by the parties) the question of whether it is competent for a contractor to contract out of a statutory obligation. This arose from the definition of "developer" in the Environmental Management Act, which includes "any person who proposes or undertakes to implement a project" - potentially including the plaintiff contractor, not just the defendant client. This raises the question whether the initial agreement placing the obligation to obtain the EMA certificate solely on the defendant was valid, given that the statutory obligation under section 98 may apply to both parties. The court noted this issue without deciding it.

This case is significant in Zimbabwean (and potentially South African) jurisprudence for several reasons: (1) It demonstrates the absolute nature of the ex turpi causa principle - illegal contracts are void and unenforceable regardless of the parties' awareness of the illegality. (2) It affirms that courts have a duty to raise illegality mero motu even where not pleaded by parties, if it appears from the evidence. (3) It illustrates the application of public policy considerations in determining whether to relax the in pari delicto rule, particularly in the context of environmental and safety legislation. (4) It emphasizes that agreements which contravene statutory requirements, especially those designed to protect public safety and the environment, will not be enforced and parties cannot recover losses arising from such illegal agreements. (5) It serves as a warning to contractors and developers that they cannot circumvent statutory compliance requirements by contractual agreements and will bear their own losses if they proceed in violation of the law.