Source: Landmark ruling clears way for fraud lawsuit -Newsday Zimbabwe
A HIGH COURT landmark ruling has cleared the way for a major fraud lawsuit to proceed after throwing out the defendant’s claim that the case was filed too late.
Justice Gladys Mhuri ruled that allegations of fraud do not expire under the country’s prescription laws.
The case centres around a 2008 loan and a subsequent property transfer that plaintiffs allege were built on a foundation of fraudulent documents and “sham” agreements.
The legal battle involves businessmen David Ephrage Tafangenyasha Muchinguri and Darryl Nyasha Muchinguri, and their company Sagnol International (Pvt) Ltd, who are suing Frank Buyanga, Zimcor Trustees Ltd, Cont River Investment (Pvt) Ltd and the Registrar of Deeds.
The plaintiffs were seeking an order setting aside the simulated agreement of sale entered into by and between the first plaintiff and the second defendant dated December 1, 2008.
They were also seeking an order declaring null and void and, therefore, setting aside the purported transfer of shareholding in and change of directorship of the third plaintiff effected by the first defendant and an order declaring null and void and, therefore, setting aside the purported sale and subsequent transfer of stand 1860 Marlborough Township to the third defendant.
The plaintiffs were also seeking an order directing fourth defendant to revive third plaintiff’s ownership of stand 1860 Marlborough Township of Marlborough held under Deed of Transfer No 2884/2002 and cancellation of Deed of Transfer No 3033/2009 in terms of section 8(2) of the Deeds Registries Act [Chapter 20:05].
The only defending party, Cont River Investment, had filed a special plea arguing that the plaintiffs’ claims had prescribed or expired.
It contended that the lawsuit, filed in May 2023, came more than a decade too late, as the key events — a 2008 share sale agreement and a 2009 property transfer — occurred over 12 years prior.
Justice Mhuri rejected that argument, siding with the plaintiffs’ assertion that their case was based not on a contract, but on fraud.
“As submitted by 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,” he ruled.
“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.”
The plaintiffs’ case alleges that a December 1, 2008 US$20 000 loan granted by Zimcor Trustees Ltd was disguised as a “simulated agreement of sale” for shares valued at ZWL1 trillion because Zimcor was not a registered money-lender.
They further allege that Buyanga later fabricated 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 dismissed, the substantive case seeking to nullify the agreements and reverse the property transfer will now move forward.
Justice Mhuri ordered the third defendant, Cont River Investment, to pay the costs of the unsuccessful special plea.
The first, second and fourth defendants did not enter an appearance to defend the claim.
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