High Court throws out US$360 million cession, rules US$105,000 land deal illegal

HARARE – A High Court dispute involving a US$105,000 property deal and a subsequent US$360 million cession has ended with the court cancelling an earlier order that forced the transfer of a Borrowdale Brooke property that the judge ruled never legally existed.

Justice Neville Wamambo set aside a default judgement that had compelled Erarah Investments (Private) Limited to transfer a property described as “Unit 61 in Stand 668 Borrowdale Brooke Township” to Dove Wings Investments (Private) Limited.

The court ruled that the transaction on which the claim was based was illegal and unenforceable.

The case arose from a 2002 agreement in which Erarah Investments sold what was described as “Unit 61” to Irvine’s Day-Old Chicks (Private) Limited for US$105,000.

In 2004, Irvine’s allegedly ceded its rights to Dove Wings Investments for US$360 million. However, the court found that at the time of both transactions, no subdivision permit existed to create “Unit 61” under Zimbabwean law.

Justice Wamambo ruled that selling or transferring a portion of land without a valid subdivision permit violates the Regional, Town and Country Planning Act and renders such agreements null and void from the start.

The court found that the only subdivision permit issued by the City of Harare created Stands 814 to 820 and made no mention of “Unit 61.”

“The application of this settled law to the present facts is straightforward. It is common cause that at the time the 2002 agreement was concluded, and at the time of the 2004 cession, no subdivision permit existed that authorised the creation of ‘Unit 61.’

The only permit, SD/1330, created Stands 814 to 820. ‘Unit 61’ is absent.

“Therefore, the agreements purporting to sell and cede ‘Unit 61’ were agreements for the change of ownership of a portion of property without the requisite permit. They were prohibited by section 39 and are, as a matter of law, void ab initio,” the judge noted.

The judge also rejected arguments that Erarah Investments had accepted the earlier judgement by engaging in correspondence about the possible transfer.

The court held that the communications were consistent with a party acting under a mistaken understanding of the law and did not amount to acceptance of the judgment.

The court ruled that the original order was impossible to carry out because Stand 668 no longer exists in its original form and “Unit 61” has no legal or registered identity.

The judge said that the courts cannot be used to legalise illegal transactions. Doing so, he added, would undermine the authority of the law and the role of the judiciary.

“The law is clear, established, and commands adherence. No legal sophistry can circumvent the fundamental principle that an agreement in violation of a peremptory statutory provision is a nullity,” Justice Wamambo stated.

The High Court granted Erarah Investments permission to challenge the original claim and ordered Dove Wings Investments and Irvine’s Day-Old Chicks to pay legal costs jointly.