Soiling Juliana Meadley v Carrack Investments (Pvt) Ltd and Others

The plaintiff, residing in the United Kingdom, executed a power of attorney in favor of the 2nd defendant (her cousin) to wind up her late husband's estate and dispose of farm property (Subdivision E of Umvutshwa) for her account and benefit. The 2nd defendant entered into an agreement of sale with the 1st defendant in November 2017 for US$390,000, with part of the purchase price consisting of two immovable properties (Harrisvale and Northend houses) to be registered in the 2nd defendant's name. When ZIMRA refused to assess capital gains tax on this arrangement because the properties were not in the 1st defendant's name, the parties drew up a second agreement and cancellation agreement in September 2019 to conceal the true nature of the transaction. The 2nd defendant failed to communicate with the plaintiff for two years and did not remit any proceeds to her. The plaintiff sought a declaration of invalidity of the agreements and eviction of the 1st defendant. The 1st defendant counterclaimed for specific performance.

• Whether the agreements of sale provided for the personal benefit of the 2nd defendant in violation of the power of attorney
• Whether the agreements contravened the Deeds Registries Act by not following the sequence of transfer
• Whether the agreements constituted tax evasion
• Whether the agreement violated SI 212/19 by providing for payment in foreign currency
• Whether the Master's consent was required as a condition precedent for the sale
• Whether illegal provisions could be severed to enforce the agreements
• Whether the 1st defendant was entitled to specific performance

1. A declaratory order confirming the invalidity of the agreement of sale as fraudulent, unlawful and illegal, designed to defraud the Zimbabwean fiscus and the plaintiff; 2. An order for eviction of the 1st defendant and all those claiming rights through it from Subdivision E of Umvutshwa; 3. The 1st defendant's counter claim dismissed; 4. The 1st and 2nd defendants to pay costs of suit on an ordinary scale jointly and severally, the one paying the other to be absolved.

A court will not enforce an illegal contract under the ex turpi causa non oritur actio maxim. Where agreements of sale: (1) violate the Deeds Registries Act by not following the statutory sequence of transfer; (2) constitute tax evasion by concealing taxable transactions; (3) contravene currency regulations; (4) lack required statutory consent (Master's consent for estate property); and (5) provide benefits to an agent contrary to his mandate - such agreements are void ab initio and unenforceable. The illegalities complained of cannot be severed where they are at the core of the contract. An agent who acts outside his mandate and arranges personal benefits contrary to express terms requiring him to act for the principal's account and benefit cannot bind the principal. Delivery of immovable property is achieved through registration of transfer at the Deeds Registry, not mere grant of possession. The in pari delicto rule may be relaxed to prevent unjust enrichment, but not to grant specific performance which would enforce an illegal agreement.

The court observed that it is impermissible to lead fresh evidence in closing submissions due to the obvious prejudice to the opposing party. The court noted that the principle of ostensible or apparent authority, which recognizes that a principal may be bound by unauthorized actions of an agent where such acts are generally within the scope of that type of agency, is distinguishable from situations where the agent, with the connivance of the other party, clearly exceeds his authority. The court commented on the need to carefully apply the relaxation of the in pari delicto maxim to do justice between parties while not directly recognizing an illegal contract, noting that this relaxation is based on recognition that one party may not be unjustly enriched at the expense of another.

This case reinforces fundamental principles of Zimbabwean contract and property law: (1) courts will not enforce illegal contracts under the ex turpi causa non oritur actio principle; (2) the Deeds Registries Act requirement that transfers follow the sequence of their causes is mandatory and cannot be circumvented; (3) agreements designed to evade tax are void and unenforceable; (4) agents acting outside their mandate, particularly where they arrange personal benefits contrary to the principal's interests, cannot bind the principal; (5) the in pari delicto rule may be relaxed to prevent unjust enrichment, but courts will not grant specific performance or damages that would enforce an illegal agreement; (6) illegalities at the core of a contract cannot be severed; (7) compliance with statutory requirements (such as Master's consent in estate sales and currency regulations) is essential for contract validity. The case demonstrates the courts' commitment to upholding statutory compliance and public policy in commercial transactions.