MALUNGA & ANOR v WEDE

HIGH COURT, HARARE

[Civil Trial HH 362-16]

February 8 and June 15, 2016

FOROMA J

Contract law  –  Agreement declared null and void  –  What rights accrue to the parties from such an agreement  –  Restitution  –  Use of mathematical formula to arrive at the correct value.

The parties concluded an agreement for the sale of an immovable property which agreement was subsequently declared null and void by the court after plaintiffs had prestated. On the basis of the court order declaring the agreement null and void, plaintiffs brought an action for restitution. Defendant argued that nothing could derive from an agreement which the court had already held to be null and void.

Held, that a cancelled agreement retains the rights accruing up to the date of cancellation whereas an agreement that is null and void does not give rise to any rights at all and the court cannot enforce any in respect thereto.

Held, further, that a void agreement does not create rights as between the respective parties. Where an agreement is nullified the position is that the parties revert to the status quo ante and the court can only assist the parties revert to the status quo ante. If any price or part thereof had been paid, the one who received payment of the price has an obligation to refund it as not to do so would result in one of the parties being unjustly enriched. A party to a void agreement who approaches the court to enforce its right to restitution does not seek to enforce the void agreement but seeks the doing of justice between man and man.

Held, further, that in ordering restitution, the court is at large to adopt a mathematical formula which yields a determination of the true value of foreign currency at any given time. This approach is a recognition of the fluidity of the exchange rates during the period of hyperinflation in Zimbabwe.

Cases cited:

African Banking Corporation Ltd v Rainsford 1912 SR 157, referred to

Dube v Khumalo 1986 (2) ZLR 103 (S), not followed

Musingarambwi v Dewa HH 413-15 (unreported), referred to

Petersen v Jajbhay 1940 TPD 182, referred to

York Estates Ltd v Wareham 1949 SR 197; 1950 (1) SA 125 (SR), referred to

L Uriri, for the plaintiff

OT Sanyika, for the defendant

FOROMA J:

The plaintiffs in this matter who are husband and wife sued the defendant for refund of the sum of £40 000 and interest thereon at the rate applicable to the British Pound in the United Kingdom and costs of suit. The plaintiffs’ claim arises from the nullification of an agreement of sale of the defendant’s stand situated in Hatfield Estate (“the stand”). The agreement of sale was declared to be null and void for illegality by the High Court on the 17th April 2008 under case number 5429/07. The plaintiffs claimed that in ordering their eviction on the basis that the agreement was null and void the court failed to order restitution of the purchase price to them.

The defendant defended the plaintiffs claim pleading among other things (i) that the defendant did not owe the plaintiffs the sum of US$ 40 000 as the matter was res judicata and (ii) disputed at any rate that the sum of ZWD 5 000 000 000 forming part of the plaintiff’s claims converted to £15 000 as it was never agreed that it would be converted to pound sterling and (iii) that there were no rights that the plaintiff could exercise as arising from an agreement ruled void ab initio. Before the commencement of trial the parties agreed and requested that the court deal with the dispute as a stated case which the court acceded to. A statement of agreed facts was filed by the parties. The agreed facts are outlined as follows:

“1. That on the 5th of June 2006 the parties herein entered into an agreement of sale by which the first and second plaintiffs purchased and the defendant sold certain immovable property namely the stand.

2. That in terms of that agreement the purchase price of the property was 37 000 pounds sterling.

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