The plaintiffs claim in this matter was for payment of the sum of ZAR4,627,863=93 being the purchase price of goods sold by the first plaintiff to the defendant, at the defendant's special instance and request in or about February/March 2008, which was manufactured and delivered by the second plaintiff to ...
The plaintiffs claim in this matter was for payment of the sum of ZAR4,627,863=93 being the purchase price of goods sold by the first plaintiff to the defendant, at the defendant's special instance and request in or about February/March 2008, which was manufactured and delivered by the second plaintiff to the defendant on or about the 18th March 2008 and which was invoiced on 18 March 2008 and payable within 30 days of date of invoice.
In the alternative, the claim was for payment of the sum of ZAR4,627,863=93 being the amount by which the defendant had been unjustly enriched at the expense of the second plaintiff as the result of the second plaintiff manufacturing and delivering goods valued at ZAR4,627,863=93 to the defendant at the defendant's special instance and request on or about 18 March 2008.
In their amended declaration, the plaintiffs had this to say.
Main Claim: Actio Venditi
In or around April 2008, at Bulawayo, the defendant, represented by Mr Eddie Cross, duly authorized, and Mr Simon Spooner, duly authorized by Mr Cross, entered into an oral agreement with the second plaintiff, represented by Mr Laurence Zlattner, in terms whereof, the second plaintiff undertook, at the defendant's behest, to manufacture 200,000 garments, commonly known as “T-shirts” and as many head scarves, commonly known as “doeks or bandanas” as could be manufactured from the material on hand, but, at least 30,000 (hereinafter referred to as “the goods”) which the first plaintiff sold to the defendant for the defendant to use in its then forthcoming election campaign, for the agreed sum of ZAR4,965,723 including VAT.
Given the size of the order, the second plaintiff agreed to manufacture the total order in batches, to accommodate the defendant's express stipulation that the total order be ready for the defendant to use in its then forthcoming election campaign as aforesaid.
It was an express, alternatively, implied term of the parties agreement, that, given the size of the order, the defendant would pay on tender of delivery of each batch of goods supplied.
To comply with its contractual obligation, the defendant expressly agreed to effect payment to the first plaintiff.
By its agreement aforesaid, the defendant became contractually liable to pay the first plaintiff the contract price in South Africa, and, simultaneously, incurred contractual liability to the second plaintiff for the manufacture of the goods.
In accordance therewith, the second plaintiff duly manufactured the said goods and delivered to the defendant goods, in batches, to the value of ZAR4,672,215=37 including VAT, comprising 149,887 articles or approximately 74% of the contract goods, payable on tender of delivery and demand; but, the defendant, in breach of its contractual obligation, notwithstanding having accepted delivery, had allegedly refused to pay, despite demand.
The defendant's failure to pay for the goods thus far delivered to it constituted a material breach of an express, alternatively, implied term of agreement, entitling the plaintiffs to claim the full contract price ex vendito.
At the defendant's request, the second plaintiff had withheld delivery of the balance of the manufactured goods, namely, 30,000 single jersey T-shirts being finished goods ready for dispatch, to the value of ZAR772,800 and 5,393 single jersey T-shirts, being finished goods ready for dispatch, to the value of ZAR143,885=24 and 7,368 single jersey T-shirts, being goods comprising “work in progress” to the value of ZAR196,578=24 pending the defendant's advice of readiness to receive such goods; which goods, subject to such stipulation, the second plaintiff thereby again tendered against payment by the defendant of the total balance due of ZAR340,463=48.
Pursuant to the plaintiffs performance of the agreement as aforesaid, the second plaintiff rendered to the defendant the invoice for the manufacture of the goods, dated 18 March 2008, for ZAR4,627,863=93 including VAT, being the amount due for the goods:
(a) Manufactured and delivered; and
(b) Manufactured but in respect of which delivery had been withheld but tendered, for the reasons given.
The said invoice constituted the plaintiffs demand, and expressly stipulated, that, interest accrues at 8% per annum within 30 days of the date of the invoice. Accordingly, the defendant was allegedly liable for interest on the total sum due, mora ex re, from 17 April 2008 to the date of final payment.
In the result, the plaintiffs prayed for judgment and costs against the defendant in the sum of ZAR4,627,863=93 together with interest at 8% per annum from 17 April 2008 to the date of payment.
ALTERNATIVE CLAIM: UNJUST ENRICHMENT
It was alleged, that, alternatively, and in any event, that, by reason thereof, the defendant had been unjustly enriched at the second plaintiff's expense in that:
Pursuant to the contract entered into as averred, in performing its obligations thereunder, the second plaintiff allegedly used its resources and incurred the following liabilities in producing the contract goods; inter alia, manufacturing costs, wages, the cost of engaging a sub-contractor in Harare, namely, Kataura Enterprises (Pvt) Ltd to assist in fulfilling the contract order, deferring its normal customers and rescheduling other deliveries, to give priority to the defendant, and the costs of purchasing raw materials as well as machinery which had to be secured through deposits and the expectation of payment by the defendant.
By taking delivery, without payment, of approximately 92% of the contract goods, and using them for its intended election campaign purposes, and by assuming the contractual obligation, the defendant had been enriched at the plaintiff's expense.
The plaintiffs had been allegedly impoverished by the enrichment of the defendant, the casual connection being the contractual obligation referred to above, in particular, the costs and liability incurred by the plaintiffs in expectation of payment by the defendant. The said enrichment was unjustified.
The second plaintiff rendered to the defendant its invoice, dated 18 March 2008, for ZAR4,627,863=93 including VAT, being the amount due for the goods manufactured and delivered and manufactured, but, in respect of which delivery had been withheld but tendered, for the reasons given.
The said invoice constituted the plaintiffs demand, and expressly stipulated that interest accrues at 8% per annum within 30 days of the date of the invoice. Accordingly, the defendant was allegedly liable for interest on the total sum due, ex mora re from 17 April 2008 to the date of final payment.
Having regard to the terms of the founding contract, the defendant had accordingly been allegedly unjustly enriched, at the plaintiffs expense, in the sum of ZAR4,627,863=93 together with interest at 8% per annum from 17 April 2008 to the date of final payment, and costs of suit.
Wherefore, in the alternative, the second plaintiff prayed for judgment and costs against the defendant, on the basis of unjust enrichment, in the sum of ZAR4,627,863=93 together with interest at 8% per annum from 17 April 2008 at the date of final payment.
DEFENDANT'S PLEA
The defendant denied that it had authorized Mr Eddie Cross or Mr Spooner to enter into the alleged contract. It averred, that, neither Mr Cross nor Mr Spooner had authority to enter into contracts on its behalf.
It denied that it had purchased anything from the first plaintiff and denied liability to pay VAT in South Africa.
It averred, that, any valid order would have been written, not oral, and would have been authorized by the defendant's Director General.
It denied being party to the agreement between the plaintiffs and Mr Cross and Mr Spooner, and, further, denied that it had expressly agreed to effect payment to the first plaintiff the contractual price in South Africa as such agreement would have been illegal.
It pleaded, that, it had not received the goods and averred that a goods received voucher would have been issued to the second plaintiff had the goods been received.
It went on to state, that, annexures “A” to the further particulars supplied by the plaintiff alleged that some deliveries were made on 25 June 2008 and on 13 August 2008, when, in fact, it had very publicily resiled from the Presidential run-off election on 20 June 2008. Therefore, if the plaintiff continued to manufacture after 20 June 2008, then, it voluntarily assumed the risk that it would receive no payment.
In the event of there being a valid contract for the plaintiffs to supply the defendant with election campaign materials, a material term of the contract would have been that the plaintiffs had to deliver well before the election, and, any delivery after the election would have been a material breach.
The defendant denied that it had contracted to pay for goods and further denied that it had requested the second plaintiff to withhold delivery of further items nor that it had received any delivery from the plaintiff, and insisted that there had been no contract between the parties.
It denied having agreed to any interest rates and averred that the interest claimed was usurious and illegal.
It was finally averred, that, the plaintiffs should have made the demand to Mr Cross and Mr Spooner since they were the parties to the contract and prayed for the dismissal of the plaintiffs claims with costs.
In relation to the alternative claim, the defendant maintained that it had not taken delivery of any goods pursuant to any contract of sale, and averred that it had not been unjustly enriched in the alleged amount or at all.
It reiterated that the interest claimed was illegal and prayed for the dismissal of the alternative claim with costs.
PLAINTIFFS REPLICATION TO DEFENDANT'S PLEA ON THE MERITS
The plaintiffs maintained that Mr Cross and Mr Spooner had the authority of the defendant to enter into a contract on its behalf. In the event that it was found that they had no authority to represent the defendant, it was averred that they had ostensible authority to do so by reason of the following facts:
1. On or about November 2007, in anticipation of the 28 March 2008 Zimbabwe Presidential Elections, Mr Cross, who at the material time was a member of the defendant's National Executive Committee, and, by widely disseminated public knowledge, was a senior member of the defendant's hierarchy, acting on behalf of the defendant, allegedly entered into a similar contract with the second plaintiff for the manufacture and supply of garments that the second plaintiff manufactures within its normal business. The order was for 60,000 T-shirts, 60,000 bandanas and 40,000 wraps, known colloquially as “Zambians”.
That the contract/order was performed by the second plaintiff, and paid for by the defendant without demur or deviation.
Such payment was allegedly effected through the defendant's hierarchical process.
At no time did the defendant deny Mr Cross's authority to represent it in that transaction. In upholding the said earlier contractual obligation entered into by Mr Cross, and by making such payment, the defendant thereby represented to the second plaintiff, by its conduct, that Mr Cross was duly authorized to enter into such agreements on behalf of the defendant.
It was alleged, that, the second plaintiff was induced, to its prejudice, by the said representation to believe that Mr Cross was duly authorized to enter into subsequent agreement on behalf of the defendant, concluded in April 2008, which pertained to the re-run of the said Presidential Election, and, acting on the strength of that belief, the second plaintiff, to its detriment and prejudice, entered into the agreement concluded in April 2008, and the said transaction was confirmed and ratified by Mr Cross. The second plaintiff transacted the April 2008 contract, to its detriment, on the basis of the aforesaid representation, inducement, and belief.
In the result, the defendant was estopped from denying that Mr Cross and Mr Spooner had the authority to represent it, more particularly, as the payment for the March election and April re-run were matters not only of enormous public interest and debate, but the payment for the contract transacted by Mr Cross had been obviously released as a result of processing through the defendant's payment process.
Moreover, it was alleged that Mr Cross and Mr Spooner had, in fact, admitted that they had been duly authorized.
The plaintiffs alleged, that, an arrangement had been made whereby the goods were collected by the defendant as and when they were manufactured and required by the defendant. The second plaintiff would advise the defendant when goods were ready for delivery and the defendant would, in turn, collect them as it wished to. As and when significant volumes had been manufactured, the second plaintiff would advise the defendant, thereby tendering delivery, whereafter the defendant would determine when to collect in whole or in part.
The plaintiffs averred, that, they had documentary evidence of the goods collected and such documents had been repeatedly made available to the defendant. In addition, contemporaneous electronic mail correspondence between Mr Cross, Mr Spooner, and Chris Mbanga, affirmed that there had been complete verification of the numbers and that distribution was complete.
In respect of goods for which delivery thereof had been tendered, but collection by the defendant had not been effected, such goods still awaited collection.
It was the plaintiffs averments that the goods had been manufactured and delivery thereof tendered to the defendant in terms of the contract long before the defendant decided, on 20 June 2008, to withdraw from the Presidential run-off election.
The fact that the defendant effected ten collections after that date was wholly in the defendant's hands and did not mean that manufacture was after that date; in fact, manufacture had been effected long before that date and delivery tendered in accordance with the on-going interactions with the defendant's representatives.
It was contended, that, the fact that the defendant collected goods on 25 June 2008 and 13 August 2008 constituted their acknowledgement that they were bound by the terms of the contract which they were still implementing. The plaintiffs denied any voluntary assumption of risk as inferred by the defendant.
Finally, it was alleged that Mr Spooner had requested the second plaintiff to diminish the original order, which the plaintiff did, and to hold certain manufactured stocks of which delivery had been tendered pending later collection.
It was, accordingly, submitted that the parties had indeed entered into a contract through their duly authorized representative.
DEFENDANT'S SPECIAL PLEA IN BAR
After receiving the plaintiffs claims, the defendant filed its special plea in bar of the claim. It denied that it was obliged to the plaintiffs either in contract or in delict.
The defendant stated, that, it was a political association with its headquarters in Zimbabwe and was accordingly a Zimbabwean based association.
It stated, that, the contract alleged by the plaintiffs would have been tainted with illegality for want of compliance with the Exchange Control Act [Chapter 22:05] as read with the Exchange Control Regulations 1996 contained in Statutory Instrument 109 of 1996 as the alleged contract would have required payment to be made by the defendant to the first plaintiff outside Zimbabwe.
The defendant did not have any free funds nor did it then hold any money in a foreign currency account.
It was contended, that, the alleged contract was void for illegality and the plaintiff's claims ex contracti should be dismissed.
DEFENDANT'S AMENDED EXCEPTION
Further, the defendant excepted to the second plaintiffs declaration pertaining to the alternative claim on the ground, that, it disclosed no cause of action, or, alternatively, on the ground that it was vague and embarrassing and bad in law in particular.
It was alleged in the amended exception, that, the plaintiff had not stated in its declaration on which specific ground of enrichment it sought to sue. It claimed that the cause of action had not been properly identified. In the result, the claim was vague and embarrassing.
In the alternative to the above, it was alleged, that, to the extent that the plaintiff claims, in its response to the initial exception, that it sought to found its claim on a general action for unjust enrichment, the plaintiff had failed to make the allegations necessary to found its claim on such an action.
To found its claim on a general action for unjust enrichment, the second plaintiff must have alleged that:
(a) The defendant was enriched;
(b) The plaintiff was impoverished by the enrichment of the defendant;
(c) The enrichment was unjustified;
(d) The enrichment does not come within the scope of one of the classical enrichment actions.
In casu, the second plaintiff had averred that it had delivered goods worth ZAR3,762,215=37 to the defendant, yet, it sought to recover the sum of ZAR4,965,723 together with interest thereon at 8% per annum.
Paragraph B7 of the plaintiff's declaration averred, that, the plaintiffs were claiming the full contract price ex vendito.
By claiming the same amount in unjustified enrichment as it claims ex vendito, the second plaintiff was attempting to claim a profit. That was unacceptable and rendered the plaintiff's claim bad in law as well as vague and embarrassing.
It alleged, that, the plaintiff had not given any admissible quantifiable figure of money that it sought to claim in unjustifiable enrichment. The amount sought was based on evidence from a contract in violation of sections 4, 10 and 11 of the Exchange Control Regulations, and, thus, the court had no evidence on which it could be requested to find for the plaintiffs. The claim was therefore allegedly vague and embarrassing and bad in law.
It was alleged that the plaintiff sought to enforce a contract under the law of unjustified enrichment when it performed under a contract.
Its declaration, in paragraph C1, incorporated averments made in contract and at paragraph C7 it couched its enrichment action “having regard to the founding contract aforesaid.”
The plaintiff insisted on the founding contract's validity it be enforced by way of unjustified enrichment. That was approbation and reprobation, vague and embarrassing and incurably bad in law.
It was submitted, that, the plaintiff's declaration, in its alternative claim, was bad in law and lacking in averments necessary to sustain the identified cause of action as stated above, in that the plaintiff did not unequivocally allege that there had been unjustified enrichment.
In fact, the plaintiff insisted that there was a contract in force. Meaning that the enrichment would therefore be justified. The approbation and reprobation rendered the claim vague and embarrassing and bad in law.
In paragraph B1 and B2 of its declaration, the plaintiff specifically stated that goods allegedly delivered were for use in the Presidential election campaign for the election due on 29 June 2008. As such, delivery of any goods after 29 June 2008 would mean that such goods would not have enriched the defendant's estate as they could no longer be used, and, therefore, could not be claimed in an action based on unjustified enrichment. The plaintiff's averments to that extent, therefore, failed to sustain the cause of action in that they do not support any averment that the defendant was enriched.
The plaintiff had not alleged that the enrichment did not come within the scope of one of the classical enrichment actions.
That allegation was necessary before any purported reliance on the general unjustified enrichment action; consequently, the averments in the plaintiff's declaration failed to sustain the cause of action by failing to make that allegation. Failure in that regard rendered the claim vague and embarrassing.
Finally, the defendant stated, that, in paragraph 4 of the amended declaration, it was alleged that the defendant had used the goods “for its intended election campaign purposes.” That was an admission that the goods had been consumed. Accordingly, it was submitted, that, that was bad in law and embarrassing to allege in the same breath that the defendant had been enriched.
In the premises, the defendant prayed that the alternative claim be dismissed with costs on the Law Society Tariff.
PLAINTIFFS REPLICATION TO DEFENDANT'S SPECIAL PLEA IN BAR
The plaintiffs alleged, that, the defendant's denial of an obligation “in delict” was vague and embarrassing, superfluous, disclosed no offence (sic) and was itself excipiable by reason of the fact that the plaintiffs had not claimed in delict.
In any event, the defendant's denial of a contracted obligation was vague and embarrassing to the plaintiffs given that such denial avoids traversal of the alternative claim based on the general action against unjust enrichment.
The said vague traversal allegedly militated against Rule 104(4) of the rules of this court which stipulated that a party denying an allegation shall not do so evasively, but shall answer the point of substance.
The plaintiffs claim, that, as a political party, the defendant had access to external donor funds at the material time.
They went on to allege, that, the illegality was not a matter to be raised by special plea and denied that the contract was illegal for want of compliance with the Exchange Control Regulations of 1996, published in Statutory Instrument 109 of 1996, more particularly, inter alia, by reason of section 45 thereof; and more particularized by the plaintiffs, the defendant had allegedly agreed that the first plaintiff would be an ad stipulator, hence the defendant could not raise a contrary stance.
As the payment was at the defendant's express request and behest, as particularized in the declaration and further particulars, the defendant was estopped from asserting to the contrary.
It was averred, that, the legality or otherwise of the contract was a matter of law.
It was further denied, that, the contract was void for illegality and was averred that the defendant could not approbate and reprobate the existence of the contract, by denying its existence, and, simultaneously purporting a challenge its legality.
In the result, it was prayed that at the hearing of evidence on the special plea, it be dismissed with costs on the Law Society Tariff.
PLAINTIFFS RESPONSE TO DEFENDANT'S EXCEPTION
The plaintiffs, in their response to the defendant's exception, alleged that the exception was an abuse of court process, by reason of the fact that Zimbabwe law recognized a general action for unjust enrichment, and, by reason of the fact that the alternative claim was based on the general action for unjust enrichment. Hence, the second plaintiff denied that the alternative claim was vague and embarrassing or bad in law.
In response to paragraph B2(a)(b) and (c), the plaintiff repeated that the averments in those paragraphs were bad in law and constituted an abuse of court process in that the defendant had failed to identify a straight forward cause of action in that the plaintiffs allegations were necessary to found a conductio indebiti, which is an entirely separate cause of action, and ignored their alternative cause of action, as pleaded, namely, the general action for unjust enrichment, accepted as being part of Zimbabwe law since 1996.
The plaintiff averred, that, goods to the value of ZAR3,672,215=37 were manufactured and delivered to the defendant, which goods comprised approximately 74% of the defendant's contractually stipulated order. The difference between the figure of ZAR3,672,215=37 and the total amount claimed related to the balance owing as had been averred in paragraph B3 of the main claim, and was due.
In answer to paragraph B3.2 the plaintiffs averred, that, the paragraph repeated and compounded the alleged misunderstanding of the law and their claim for the general action for unjust enrichment, rather than a conditio indebiti.
It was contended that, rather, it was the defendant's exception that was bad in law.
The reference to specific performance was vexatious in that it ignored the cause of action, as expressly stated as being the actio venditi. Further, the reference to the purported “guise” was equally vexatious in that it mis-identified the cause of action, being the general action for unjust enrichment.
Their explanation for not averring that delivery was in error was that their alternative claim did not sound in the conductio indebiti, as no question of error arose, neither did it sound in conditio sine causa, hence there was no necessity to allege that the delivery was not due. The averments for the main claim for the full contract price ex vendito had been incorporated by reference in the alternative claim for the general action for unjust enrichment.
In answer to the suggestion that the defendant had used the goods for its intended election campaign purposes, the plaintiffs were admitting the goods had been consumed accordingly.
It was bad in law and embarrassing to allege, in the same breath, that the defendant had been enriched.
The plaintiffs averred, that, accepting delivery and consuming the goods constituted an admission of unjust enrichment, as there was no denial of the averment that the goods were used.
In addition, it constituted unjust enrichment for the purposes of the general action or unjust enrichment, as those facts pertained to the element of the said cause, that the defendant had been enriched by such impoverishment, and that the enrichment was unjustified.
The plaintiffs concluded by praying that the defendant's exception be dismissed with costs on the Law Society Tariff.
PLAINTIFFS EXCEPTION TO DEFENDANT'S EXCEPTION
The plaintiffs excepted to the defendant's exception (to the plaintiffs alternative claim of unjust enrichment) as being bad in law, vague and embarrassing, disclosing no defendant to plaintiffs alternative claim thus:
It was alleged, that, paragraph 2 thereof incorrectly stated the requirements for a conductio indebiti as being the requirements for the general action for unjust enrichment. As a proposition of law, that was incurably bad, at variance with established superior court authority.
The requirements stated in paragraph 2(a), (b) and (c) seriatim were the requirements for the conductio indebiti, which pertained to when enrichment arose from a payment in error. The general action for unjust enrichment was not available if one of the classical enrichment actions, such as the conductio indebiti, was available. Since the plaintiffs did not aver performance to be in error, they did not rely on the conductio indebiti.
It was alleged, that, paragraph 3.1 was argumentative in that it obfuscated the value of the goods delivered and ignored the pleaded facts pertaining to the balance of the claim.
Paragraph 3.2 allegedly ignored the cause of action, as was expressly stated as being the actio venditi and not specific performance. In addition, the reference to the purported guise “mis-identified” the cause of action being the general action for unjust enrichment, established in Zimbabwe law since 1996.
It was averred, that, it was bad in law to allege that a party was claiming under a cause of action not even pleaded, as the defendant had allegedly by the assertion that “the plaintiffs claim that it had performed under a contract and now seeks to recover the full contract price under the conditio indebiti.” The plaintiffs had not claimed under the conditio indebiti at all.
It was further alleged, that, paragraph 4 compounded the defendant's misunderstanding of the alternative claim in that the paragraph alleged that there was no averment that delivery had not been done in error nor that it had been due, the reason for that being that the plaintiffs were not claiming delivery in error, nor were they claiming a conditio sine causa or causa data non secuta, which would be appropriate for performance which was not due.
In alleging, in paragraph 4, that: “Confusingly paragraph C7 of those that the defendant had been unjustly enriched in the same amount as the contract price ex vendito” the defendant had confused the import of the plaintiffs alternative claim.
In as far as paragraph 5 was concerned, it was alleged that its meaning was obscure. To the extent that the meaning could be understood, it was bad in law, contradictory, vague and embarrassing, and disclosed no defence to the claim, by reason of the fact that, per contra, the averment of accepting goods without paying for them, and consuming them, constituted an admission of unjust enrichment, as there was no denial of the averment that the goods were used.
In addition, it was alleged, that, it constituted unjust enrichment for the purposes of the general action for unjust enrichment, as those facts pertained to the elements of the said cause, namely, that the plaintiff had been impoverished, that the defendant had been enriched by such impoverishment, and that the enrichment was unjustified.
In the result, the plaintiffs prayed that the exception to the defendant's exception be upheld and the defendant's exception be held to be bad in law, vague and embarrassing, disclosing no defence to the plaintiffs alternative claim. The plaintiffs prayed for costs on the Law Society Tariff.
PLAINTIFFS APPLICATION TO STRIKE OUT
The plaintiffs applied to strike out paragraph 5.2 of the defendant's plea and paragraph 1 of the defendant's special plea in bar, filed of record on 30 November 2009, as being bad in law, vague and embarrassing, disclosing no defence to the plaintiffs claim, for the following reasons:
Ex facie paragraph 5.2 of the plea, the defendant having denied the existence of the contract in paragraphs 3, 4.2, 5.4 and 6.1, yet approbates and reprobates by relying on the merits, and resorting to argumentative and irrelevant conjecture.
As the averments in that paragraph allegedly disclose no defence, are irrelevant, and constituted approbation and reprobation, paragraph 5.2 of the plea ought to be struck out as it is conjectural, argumentative, and irrelevant.
Further, it was alleged that ex facie paragraph 1 of the special plea, the defendant's denial of an obligation “in delict” was vague and embarrassing, superfluous, disclosed no offence, and was in itself excipiable by reason of the fact that the plaintiffs had not claimed in delict. Accordingly, the alleged offending averment ought to be struck out.
Further, ex facie paragraph 3 of the special plea, the defendant relied on illegality. That was a matter of substantive law which ought to be raised in a plea on the merits rather than by way of special plea, as the averment of illegality was neither a plea in bar nor in abatement. Hence, the paragraph ought to be struck out.
It was prayed that the above mentioned paragraph be struck off on the Law Society Tariff.
I now turn to deal with the defendant's special plea in bar as provided for in Order 21 Rule 137(1)(a) of the High Court Rules and recites as follows:
“137 Alternatives to pleading to merits
(1) A party may –
(a) Take a plea in bar or in abatement where the matter is one of substance which does not involve going into the merits of the case, and which, if allowed, will dispose of the case.”
What comes out from the above is that the requirements of a special plea are that:
(a) The matter must be one of substance;
(b) Which does not involve going into the merits of the case; and
(c) If allowed, disposes of the case.
In the case of Brown v Vlok 1925 AD 56 which was quoted in George v Lewe and Another 1936 CPD 402…, INNES CJ had this to say:
“Now, a plea in bar is one which, apart from the merits, raises some special defence not apparent from the declaration, for in that case it would be taken by way of exception, which either destroys or postpones the operation of the cause of action.”
The plea in bar is not predicated on a denial of any facts set out in the declaration, as that would involve going into the merits of the case made by the plaintiffs in their declaration. The plea proceeds on the basis that the allegations in the plaintiffs declaration are correct but should nevertheless be disposed of for one reason or another that does not appear ex facie the pleadings.
In Scuddingh v Vitenhage Municipality 1937 CPD 113 the court had this to say in respect of a plea in bar…,.:
“It (a special plea) is the type of plea the object of which is to avoid the necessity of going into the merits of the plaintiff''s claim because of the existence of certain circumstances not apparent from the declaration which either bar or postpone the claim made.”
The courts have stated, repeatedly, that, the purpose of a special plea is to permit the defendant to achieve a prompt resolution of a factual issue which founds a legal argument which disposes of the plaintiffs claim as called for by Rule 137(1)(a) of the High Court Rules above.
See, for instance, Doelcam (Pvt) Ltd v Pitchamick and Others 1999 (1) ZLR 390.
The issue that the defendant raised in this matter is that of illegality: in that the plaintiffs were attempting to enforce a contract tainted with illegality for want of compliance with the Exchange Control Act [Chapter 22:05] as read with the Exchange Control Regulations 1996 contained in Statutory Instrument 109 of 1996 as the contract would have required payment to be made by the defendant to the first plaintiff outside Zimbabwe.
Ideally, a plea of illegality should be raised before the trial and not in limine as stated in Abreu v Campos 1975 (1) RLR 198…,.
In Adler v Elliot 1988 (2) ZLR 283 (S) illegality was raised as an exception as it appeared on the papers.
Illegality was also raised as an exception that the summons disclosed no cause of action in the case of York Estate Ltd v Wareham 1950 (1) 3A 125 (SR) where the summons had set out the factual basis that was then used to argue the point of illegality.
In Barker v African Homesteads Touring and Safaris (Pvt) Ltd and Anor 2003 (2) ZLR 6 (S) illegality for contravening section 8 (now section 11) of the Exchange Control Regulations, raised in limine, was upheld both by the High Court and an appeal in the Supreme Court resulting in the plaintiffs claim being dismissed.
Consequently, the submission by the plaintiffs, that, illegality should not have been raised as a special plea and can only be raised on the merits is clearly untenable.
The relevant provisions of the Exchange Control Regulations of 1996 recite thus:
“10(1) Unless otherwise authorized by an exchange control authority, no person shall, in Zimbabwe –
(a) Make any payment to or for the credit of a foreign resident; or
(b)…,.; or
(c) Place any money to the credit of a foreign resident; or
(d)…,.”
Section 11 of the Exchange Control Regulations of 1996 provides as follows:
“11(1) Subject to subsection (2) unless otherwise authorized by an exchange control authority, no Zimbabwean resident shall:
(a) Make any payment outside Zimbabwe; or
(b) Incur any obligation to make a payment outside Zimbabwe.
(2) Subsection (1) shall not apply to –
(a) Any act done by an individual with free funds which were available to him at the time of the act concerned; or
(b) Any lawful transaction with money in a foreign currency account.”
It is common cause that the first plaintiff, Cabat Trade & Finance (Pvt) Ltd, is a foreign resident.
The transaction, which entailed making a payment to it, contravened the provisions of section 10(1)(a) and (c) of the Exchange Control Regulations of 1996.
The transaction does not end there in its contravention of the Exchange Control Regulations, but, further, violates section 11(1)(a) and (b) in that the defendant is not an individual but a political association with locus standi and power to sue and to be sued, with its headquarters in Zimbabwe, and is therefore a Zimbabwean resident.
Similarly, the first plaintiff is not an individual but a company incorporated with limited liability according to the laws of the Republic of South Africa. It is therefore a South African resident – a foreign resident.
The contract entailed making payment, by the respondent, or placing any money to the credit of the foreign resident, the first plaintiff, in violation of section 10(1)(a) and (c) of the Exchange Control Regulations of 1996.
The first plaintiff cannot have recourse to the provisions of section 11(2)(a) of the Exchange Control Regulations as those provisions are only available to individuals with free funds which were available at the time of the act concerned, not companies and political associations.
In Barker v African Homesteads Touring and Safaris (Pvt) Ltd and Anor 2003 (2) ZLR (S), the Supreme Court held, that, violation of section 11(1)(a) and (b) of the Exchange Control Regulations, as read with section 11(2), barred both actual payment and an agreement to make payment outside Zimbabwe without authorization by the Exchange Control Authority, except where that was done by an individual with free funds available to him or her at the time of the act concerned.
In the absence of such authorization, the court held the contract illegal and unenforceable. Hence, both the making of the contract, and the performance undertaken, were unlawful.
SANDURA JA, at page 10D-E, had this to say:
“In the present case, as the alleged agreement to pay the sum of $32,500 to Barker in Australia had not been authorized by the Exchange Control Authority, cadit questio. That is the end of the matter. The agreement is illegal and unenforceable.”
The above applies with equal force in casu as the agreement to pay the sum of ZAR4,965,723 together with interest at 8% per annum from 17 April 2008 to the date of final payment to Cabat Trade & Finance (Pvt) Ltd, in South Africa, had not been authorized by the Exchange Control Authority, it is illegal and unenforceable.
The plaintiffs are seeking to enforce an illegal agreement which is prohibited by law, by the maxim ex turpi causa non oritur actio. This maxim admits of no exception.
In Dube v Khumalo 1986 (2) ZLR 103 (S) the Supreme Court held at 109D-G that:
“The first rule is that an illegal agreement which has not yet been performed, either in whole or in part, will never be enforced. This rule is absolute and admits of no exception.”
The plaintiffs seek to enforce an illegal agreement which the courts have repeatedly stated can never be enforced.
The plaintiffs sought to rely on the provisions of section 45 of the Exchange Control Regulations, but, that section only relates to debts lawfully incurred or contracts lawfully entered into. Those provisions do not avail the agreement under consideration which was illegal and unenforceable.
The plaintiffs had claimed the amount of ZAR4,965,723 together with interest at the rate of 8% per annum from 17 April 2008 to the date of final payment, in the alternative, on the basis of the doctrine of unjust enrichment.
In my view, that also cannot avail the plaintiff as unjust enrichment cannot be used to enforce an illegal agreement or achieve anything of that nature.
The plaintiffs also submitted, that, estoppel operated against the respondent in this matter.
The submission is also devoid of any merit as the plaintiffs are seeking to enforce a contract prohibited by law: see York Estates Ltd v Wareham 1950 (1) SA 125 (SR)…, where the court stated, that, it was bound to refuse to enforce a contract even though no objection to illegality of the contract is raised by the parties. It went on to state, that, it would not enforce such a contract even though the plaintiff is innocent and the defendant is settling up illegality.
Moreover, the defendant cannot be prevented from relying on the illegality or unenforceability as a defence, nomatter how unfair that may be to the plaintiff.
In the light of the foregoing, I would allow the plea in bar which disposes of the case. The need to deal with the defendant's exception, the plaintiffs exception to the defendant's exception, and the plaintiffs application to strike out does not arise.
In the result, it is ordered that the plaintiffs main and alternative claims be and are hereby dismissed with costs on the ordinary scale.
