The High Court has dismissed an appeal by a Harare law firm seeking US$50,000 in legal fees, ruling that the agreement it drafted for a US$2.5 million share sale in a land-owning company was illegal and therefore unenforceable.

In a judgment delivered in the Commercial Division of the High Court, Justices Joseph Chilimbe and Vivian Ndlovu upheld a Magistrates Court decision that had rejected the claim by Mundia & Mudhara Legal Practitioners against Bishop Chad Nicholas Gandiya and his wife, Faith Lucia Gandiya.

The law firm had sued the couple for payment of professional fees for drafting an agreement for the sale of shares in Gazala Estates (Private) Limited, a company that owns agricultural land.

According to court papers, the Gandiyas engaged the firm in October 2022 to prepare an agreement under which Ernest and Maggie Taurayi would sell their entire shareholding in the company to the couple for US$2.5 million.

The agreement required the buyers to pay an initial deposit of US$1.25 million within five days of signing, with the balance payable after the sellers successfully applied to have the farm removed from a government compulsory acquisition list.

After drafting the agreement and issuing invoices in line with the Law Society tariff, the law firm demanded payment of about US$50,000 in legal fees. The Gandiyas did not pay, prompting the firm to institute legal proceedings in the Magistrates Court in August 2023.

The couple opposed the claim, arguing that the agreement drafted by the lawyers was illegal because it violated statutory provisions regulating the transfer of shares in land-owning companies.

The lower court agreed with the Gandiyas, finding that the agreement breached Statutory Instrument 287 of 1999 and the Land Acquisition Act, which require ministerial notification and approval before a significant transfer of shares in a company owning agricultural land can take place.

Dissatisfied with that ruling, the law firm appealed to the High Court, arguing that its professional services were limited to drafting the document and that the legality of the contract between the parties should not affect its entitlement to payment.

The firm’s lawyer, Professor Lovemore Madhuku, argued that the court had improperly linked the claim for professional fees to the legality of the contract itself. He submitted that the drafting of the agreement constituted a completed professional service for which the firm should be paid, regardless of whether the parties later entered into an unlawful agreement.

However, lawyers for the Gandiyas argued that the drafting of the agreement could not be separated from the illegality of the transaction it facilitated.

In dismissing the appeal, Justice Joseph Chilimbe found that the agreement clearly provided for the transfer of the entire shareholding of Gazala Estates to the Gandiyas upon payment of a deposit, without compliance with statutory requirements.

The court held that this amounted to a “significant transfer of shares” in a land-owning company in violation of Statutory Instrument 287 of 1999, which prohibits such transfers without prior notification to and approval by the Minister.

Justice Chilimbe said the provisions of the agreement demonstrated that the transaction was structured to effect an immediate transfer of shares once the deposit was paid, which directly contravened the law.

He further noted that a clause allowing the buyers to retain the shares at a reduced price if the farm was not removed from compulsory acquisition effectively attempted to circumvent statutory requirements.

The judge ruled that contracts prohibited by statute are illegal and void, and courts cannot enforce them or grant relief arising from them.

“Against the clear illegality of the product of their toil, the appellants cannot succeed at law in getting an order of specific performance,” Justice Chilimbe said.

The High Court concluded that because the agreement drafted by the law firm violated statutory provisions governing land-owning companies, the firm could not enforce payment of the fees claimed.

The appeal was therefore dismissed with costs, leaving the Magistrates Court’s ruling in favour of the Gandiyas intact.