The Trustees for the Time Being of the MTU Family Trust v Tapuwa Evans Chidemo

On 15 February 2019, the plaintiff (MTU Family Trust) and defendant entered into an agreement of sale whereby the defendant sold 2,500 ordinary shares in Derwent Lodge Private Limited to the plaintiff for USD $36,000. The shares were coupled with the right to possession of Flat 19 Derwent Lodge in Harare. The plaintiff paid the full purchase price and took occupation around 15 March 2019. Before the defendant could effect transfer of the shares, the National Prosecuting Authority instituted forfeiture proceedings (HC 7264/19) on the basis that the property was tainted. The defendant lost those proceedings and the shares were forfeited to the State, confirmed by the Supreme Court on 29 February 2024 in SC 321/22. The defendant thus became incapable of transferring valid title to the plaintiff. On 3 April 2024, the plaintiff rescinded the sale agreement and demanded a refund. The plaintiff had recovered USD $2,000 from trust funds, leaving a balance of USD $34,000 claimed. The defendant raised two defences: prescription and that payment should be in RTGS dollars at 1:1 parity under SI 33 of 2019.

• Whether the plaintiff's claim had prescribed under the Prescription Act, specifically whether the three-year prescription period commenced on the date of the agreement (15 February 2019) or when the cause of action arose (29 February 2024)
• Whether the plaintiff was entitled to repayment of USD $34,000 at a 1:1 parity rate in terms of SI 33 of 2019, or at the prevailing interbank rate

1. The preliminary point on prescription was dismissed. 2. The defendant was ordered to pay the plaintiff the sum of USD $34,000 or its equivalent in local currency at the prevailing interbank rate on the date of payment. 3. The defendant was ordered to pay the costs of suit on the ordinary scale.

1. For purposes of prescription under the Prescription Act (Chapter 8:11), the cause of action in a claim for refund of purchase price due to failure to transfer arises when the impossibility of transfer is established, not on the date of the original sale agreement. Prescription begins to run only when the creditor becomes aware of all facts from which the debt arises. 2. In terms of SI 33 of 2019, debts arising before the effective date (22 February 2019) that were valued in United States dollars are subject to conversion under s4(1)(d), but following the Constitutional Court decision in Unifreight Africa Limited v Mashinya CCZ 13/24, such debts must be discharged in Zimbabwean dollars at the interbank rate prevailing at the time of payment, not at the 1:1 parity rate.

The court observed that it could not possibly be correct that prescription started to run on the day parties appended their signatures to the agreement, as no cause of action arose at that time until it became apparent that transfer was no longer possible. The court also noted that costs claimed at a higher scale in the heads were not justified, limiting the award to costs on the ordinary scale as claimed in the summons.

This case is significant in Zimbabwean jurisprudence for clarifying two important legal principles: (1) it provides guidance on when prescription commences in cases involving sale agreements where transfer becomes impossible due to subsequent forfeiture proceedings, establishing that the cause of action arises when impossibility of performance is confirmed, not at the date of contract; and (2) it applies and clarifies the operation of SI 33 of 2019 regarding currency conversion, particularly following the Constitutional Court's authoritative interpretation in Unifreight that liabilities arising before the effective date of SI 33/2019 must be discharged in Zimbabwean dollars at the prevailing interbank rate rather than at 1:1 parity. The case demonstrates the courts' approach to balancing contractual obligations with subsequent monetary policy changes.