The applicant was employed by the first respondent from 1 August 2005 and resigned on 31 May 2007. The first respondent operated a voluntary motor vehicle scheme for employees, which the applicant refused to join. Nevertheless, the first respondent provided him with a motor vehicle (Mazda B2500) for use during his employment. Upon resignation, the applicant presented a handwritten agreement dated 8 June 2007 to purchase the vehicle for $130.5 million (representing the car value less 50% deduction), proposing to pay $10 million deposit and the balance by 20 July 2007. This agreement was signed by the applicant and the first respondent's Human Resources and Finance Managers. The agreement falsely represented that the applicant had made 50% repayments through deductions and had an outstanding motor vehicle loan. On 27 June 2007, after reviewing records, the first respondent discovered the applicant had never joined the motor vehicle scheme, had made no monthly payments, and cancelled the agreement. The vehicle was subsequently allocated to the third respondent, a member of the scheme. The applicant then applied for an order compelling the first respondent to hand over the vehicle to him.
The applicant's application was dismissed with costs on the legal practitioner and client scale.
A contract induced by fraudulent misrepresentation of material facts is voidable at the election of the innocent party. Where a party deliberately misrepresents material facts that form the basis of an agreement, and the innocent party would not have entered into the agreement but for the misrepresentation, the innocent party is entitled to cancel the agreement. Misrepresentation is established where: (1) false representations of fact are made; (2) the representations are material to the agreement; and (3) the innocent party would not have contracted on those terms but for the misrepresentation.
The court observed that a litigant who persists with an application premised on fraudulent misrepresentation, even after the deceit has been discovered and exposed, demonstrates bad faith and should be penalized through an adverse costs order on the legal practitioner and client scale. The court noted that had the applicant reflected on his deceitful conduct, he would not have persisted with what was "an apparently hopeless application." This observation serves as a warning that courts will use costs orders as a deterrent against frivolous or vexatious litigation based on dishonest conduct.
This case is significant in Zimbabwean contract law as it illustrates the consequences of fraudulent misrepresentation in contractual agreements. It demonstrates that contracts induced by willful misrepresentation of material facts are voidable at the option of the innocent party. The case also establishes that parties who persist with litigation based on fraudulent misrepresentation, even after discovery of the deceit, may be subject to punitive costs orders (legal practitioner and client scale) to deter such conduct and compensate the innocent party for unnecessary litigation expenses.