Tarsisio Malunga and Bertha Malunga v Alex Elias Wede

The plaintiffs, a husband and wife, sued the defendant for refund of £40,000 plus interest arising from the nullification of an agreement of sale for Stand 413 Hatfield Township. The agreement had been declared null and void for illegality by the High Court on 17 April 2008 under case number HC 5429/07. The plaintiffs had paid towards the purchase price of £37,000: (a) £17,000 on 19/05/2006; (b) £1,000 on 15/05/2006; (c) Z$5,000,000,000 on 10/07/2006; (d) £1,000 on 04/08/2006; and (e) £1,000 on 30/10/2006. The payments in pounds sterling were made from funds earned in the UK and remitted through the Reserve Bank of Zimbabwe Homelink facility. A dispute arose regarding whether a balance of £4,200 remained outstanding. The defendant obtained a default judgment cancelling the agreement and evicting the plaintiffs. The plaintiffs sought restitution of the purchase price paid. The defendant tendered US$30,000 in settlement, which was accepted on condition that the value of the Z$5 billion payment remained a live issue for trial.

• Whether the plaintiffs are entitled to restitution of sums paid to the defendant towards the purchase price in light of the order nullifying the agreement for illegality
• What value in pounds sterling should be ascribed to the sum of Z$5,000,000,000 paid by the plaintiffs as part of the purchase price
• Whether the defendant is entitled to set off any sums claimed as rentals and damages for breach of agreement from the sums paid by the plaintiffs
• The appropriate remedy

The court ordered: (1) The defendant pay the plaintiffs the sum of £32,800.00; (2) The defendant pay interest at the legally prescribed rate from the date of service of summons to date of payment; (3) The defendant pay the costs of suit.

Where a contract is declared null and void for illegality and one party has been restituted of property through eviction of the other party, that party is obliged to restitute the purchase price paid. Although a void agreement creates no enforceable rights, the court has jurisdiction to order restitution to restore parties to the status quo ante and prevent unjust enrichment. The par delictum rule may be relaxed in suitable cases to prevent injustice and do justice between man and man. A party seeking restitution does not seek to enforce the void agreement but seeks equitable relief. A party cannot claim damages for breach of a contract declared void ab initio as this would constitute enforcement of an illegal contract which the court cannot countenance.

The court observed that restitution in cases of illegal contracts is not claimable as of right but depends on the court's discretion to do justice between the parties. The court noted the distinction between cancellation of an agreement (which retains rights accruing up to the date of cancellation) and nullification (which gives rise to no rights at all). The court also commented that to allow a strict application of the par delictum rule would result in the defendant retaining both the property and the purchase price paid, which would be grossly inequitable and against public policy. The court took judicial notice of the hyperinflation affecting the Zimbabwe dollar at the relevant time and its subsequent demonetization, making exchange rate calculations impractical.

This case is significant in Zimbabwean law for clarifying the application of restitutionary principles where a contract is declared void for illegality. It demonstrates that while the par delictum rule generally bars claims arising from illegal contracts, courts will order restitution to prevent unjust enrichment and do justice between the parties. The judgment distinguishes between enforcing a void contract (impermissible) and ordering restitution to restore the status quo ante (permissible). It also provides practical guidance on valuing payments made in a demonetized currency by using the parties' own agreed position on outstanding balances. The case reinforces that a party cannot simultaneously benefit from having a contract declared void while retaining benefits received under it.