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Landmark ruling clears way for fraud lawsuit
3 hrs ago |
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A landmark High Court ruling has paved the way for a multimillion-dollar fraud lawsuit to proceed after Justice Gladys Mhuri dismissed a preliminary objection that the case had been filed too late, declaring that allegations of fraud do not expire under Zimbabwe's prescription laws.
The judgment, delivered at the Harare High Court, reaffirmed a key legal principle - that fraud, being an illegality, cannot be legitimised or shielded by the passage of time.
The case stems from a disputed 2008 loan agreement and a 2009 property transfer, which the plaintiffs - businessmen David Ephrage Tafangenyasha Muchinguri and Darryl Nyasha Muchinguri, along with their company Sagnol International (Pvt) Ltd - claim were based on fraudulent documents and sham transactions.
The defendants in the matter are Frank Buyanga, Zimcor Trustees Ltd, Cont River Investment (Pvt) Ltd, and the Registrar of Deeds.
The plaintiffs are seeking a series of court orders, including the nullification of a December 1, 2008 simulated sale agreement between the first plaintiff and Zimcor Trustees Ltd; the reversal of an alleged fraudulent transfer of company shareholding and directorship; and the restoration of ownership of Stand 1860 Marlborough Township, which they claim was wrongfully transferred to Cont River Investment.
They have also applied for the cancellation of Deed of Transfer No. 3033/2009 and the reinstatement of Deed of Transfer No. 2884/2002 under Section 8(2) of the Deeds Registries Act [Chapter 20:05].
However, Cont River Investment, the only defendant to appear in court, filed a special plea of prescription, arguing that the case was time-barred since it was lodged in May 2023, more than a decade after the transactions took place.
Justice Mhuri dismissed that argument, siding with the plaintiffs' contention that their claim was rooted in fraud rather than contract.
"As submitted by the plaintiffs, claims based on fraud are not debts and do not prescribe. Fraud is an illegality and anything based on an illegality is a nullity," ruled Justice Mhuri.
"Having found that the claim is based on a fraudulent agreement and fraudulent subsequent transactions, which fraud does not prescribe, it is also my finding that the special plea was not well taken and cannot be upheld. In my view, nothing stands on a fraud. A fraud is a nullity and, therefore, cannot prescribe."
According to court papers, the plaintiffs allege that Zimcor Trustees Ltd granted a US$20 000 loan to them in December 2008, disguised as a simulated sale of shares valued at ZWL1 trillion, because Zimcor was not a registered money-lender.
They further claim that Buyanga later fabricated company shareholding documents and a Capital Gains Tax Clearance Certificate to fraudulently transfer Stand 1860 Marlborough Township from Sagnol International to Cont River Investment in July 2009.
With the prescription plea now dismissed, the substantive fraud case will proceed to trial, where the plaintiffs seek to have the disputed transactions nullified and ownership of the Marlborough property restored.
Justice Mhuri also ordered Cont River Investment to pay the costs of the unsuccessful special plea.
The other defendants - Buyanga, Zimcor Trustees Ltd, and the Registrar of Deeds - did not enter appearances to defend the claim.
The judgment, delivered at the Harare High Court, reaffirmed a key legal principle - that fraud, being an illegality, cannot be legitimised or shielded by the passage of time.
The case stems from a disputed 2008 loan agreement and a 2009 property transfer, which the plaintiffs - businessmen David Ephrage Tafangenyasha Muchinguri and Darryl Nyasha Muchinguri, along with their company Sagnol International (Pvt) Ltd - claim were based on fraudulent documents and sham transactions.
The defendants in the matter are Frank Buyanga, Zimcor Trustees Ltd, Cont River Investment (Pvt) Ltd, and the Registrar of Deeds.
The plaintiffs are seeking a series of court orders, including the nullification of a December 1, 2008 simulated sale agreement between the first plaintiff and Zimcor Trustees Ltd; the reversal of an alleged fraudulent transfer of company shareholding and directorship; and the restoration of ownership of Stand 1860 Marlborough Township, which they claim was wrongfully transferred to Cont River Investment.
They have also applied for the cancellation of Deed of Transfer No. 3033/2009 and the reinstatement of Deed of Transfer No. 2884/2002 under Section 8(2) of the Deeds Registries Act [Chapter 20:05].
However, Cont River Investment, the only defendant to appear in court, filed a special plea of prescription, arguing that the case was time-barred since it was lodged in May 2023, more than a decade after the transactions took place.
Justice Mhuri dismissed that argument, siding with the plaintiffs' contention that their claim was rooted in fraud rather than contract.
"As submitted by the plaintiffs, claims based on fraud are not debts and do not prescribe. Fraud is an illegality and anything based on an illegality is a nullity," ruled Justice Mhuri.
"Having found that the claim is based on a fraudulent agreement and fraudulent subsequent transactions, which fraud does not prescribe, it is also my finding that the special plea was not well taken and cannot be upheld. In my view, nothing stands on a fraud. A fraud is a nullity and, therefore, cannot prescribe."
According to court papers, the plaintiffs allege that Zimcor Trustees Ltd granted a US$20 000 loan to them in December 2008, disguised as a simulated sale of shares valued at ZWL1 trillion, because Zimcor was not a registered money-lender.
They further claim that Buyanga later fabricated company shareholding documents and a Capital Gains Tax Clearance Certificate to fraudulently transfer Stand 1860 Marlborough Township from Sagnol International to Cont River Investment in July 2009.
With the prescription plea now dismissed, the substantive fraud case will proceed to trial, where the plaintiffs seek to have the disputed transactions nullified and ownership of the Marlborough property restored.
Justice Mhuri also ordered Cont River Investment to pay the costs of the unsuccessful special plea.
The other defendants - Buyanga, Zimcor Trustees Ltd, and the Registrar of Deeds - did not enter appearances to defend the claim.
Source - newsday
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