Court name
Supreme Court
Case number
SA 3 of 2005
Case name
Schweiger v Muller
Media neutral citation
[2012] NASC 20
Judge
Shivute CJ













REPORTABLE



CASE NO.: SA 3/2005


IN
THE SUPREME COURT OF NAMIBIA


In
the matter between:













HEINRICH
SCHWEIGER



Appellant






and













ERIKA
KäTHE MüLLER



Respondent






Coram:
SHIVUTE CJ and CHOMBA AJA


Heard
on: 11 October 2005


Delivered
on: 12 October 2012


______________________________________________________________________



APPEAL JUDGMENT



______________________________________________________________________





SHIVUTE
CJ (CHOMBA AJA CONCURRING):


Introduction




  1. The respondent, a German
    national with permanent residence in Namibia as plaintiff,
    instituted action in the High Court in terms of which she claimed
    repayment of forty thousand Deutschmark (DM40 000) from the then
    defendant and now appellant, a Namibian citizen. The respondent
    alleged that the agreement in terms of which she had paid the amount
    claimed from the appellant was illegal and unenforceable; that the
    appellant could not fulfil his obligations in terms thereof, and
    that she was unaware of the invalidity of the agreement at the time
    when the parties concluded same. The claim was principally based on
    the condictio indebiti and, in the alternative, on the basis
    of unjust enrichment.









  1. With regard to the main
    claim, the appellant denied that the agreement was illegal and
    unenforceable. He pleaded that the document referred to by the
    respondent as ‘the illegal agreement’ was not an
    agreement at all but a unilateral declaration by the appellant to
    renew the lease agreement on the same terms and conditions at the
    expiry of the then existing lease agreement. The appellant’s
    alternative defence was that if the agreement was illegal, then the
    respondent was not entitled to recover anything that was paid in
    terms of an illegal agreement. The appellant later amended his plea
    to abandon the alternative defence.









  1. The appeal in this
    matter was heard by a Bench consisting of me, my brothers O’Linn
    AJA and Chomba AJA. Our brother O’Linn became indisposed at
    the time the draft judgment was circulated for his consideration. To
    our regret, his health has not improved since then and he remains
    indisposed and unable to further deal with the appeal. Pursuant to
    the provisions of s 13(4) of the Supreme Court Act, 15 of 1990 and
    as discussed by this Court, amongst others, in Wirtz v Orford and
    Another
    2005 NR 175 (SC), my brother Chomba and I can validly
    and properly finalise the matter provided we agree on the judgment.








Background




  1. During 2001 or early
    2002 the respondent and the appellant entered into an oral agreement
    of lease in terms of which the respondent would rent from the
    appellant a house, certain ancillary rooms and livestock camps on
    the farm Gamikaub No. 78 in the District of Karibib, for a period of
    20 years, the rent being eighty thousand Deutschmark (DM80 000),
    payable in installments by January 2002.









  1. The parties later had
    regard to the provisions of the Agricultural (Commercial) Land
    Reform Act 6 of 1995 (the Act) and came to the realisation that in
    the light of certain provisions thereof, the agreement was
    prohibited and unenforceable.









  1. The parties consequently
    entered into two agreements on 9 July 2002, written in the German
    language and the sworn translations of which formed part of the
    record. The one was titled 'pachtvertrag' or lease agreement
    and the other styled 'vereinbarung' or written agreement. For
    convenience, the latter will be referred to herein as 'the invalid
    agreement'. The agreements were entered into personally by the
    parties and at Farm Gamikaub No. 78 in the District of Karibib,
    Republic of Namibia (the farm).









  1. The material terms of
    the lease agreement were, in summary, that the ‘house and
    ancillary rooms according to enclosure 1, additionally leased camps
    K1/K2/K3/K17’, on the farm ‘as highlighted in yellow’
    on a diagram attached to the lease agreement identified as
    ‘Enclosure 2’, would be leased to the respondent for a
    period of 9 years and 11 months with a one off rental fee of DM40
    000.









  1. The material terms of
    the invalid agreement were, briefly, that the appellant, at the
    expiry 'of the regular period of lease of 9 years and 11 months ...
    will conclude a new lease agreement with the respondent on the same
    terms and conditions;' that the appellant would ensure that the
    invalid agreement would be 'taken over...and be realized by the
    successors;' that the appellant was obliged to inform his heirs of
    the existence of the agreement, which in the event of his death was
    'to retain its validity'. The invalid agreement had also recorded
    that: the respondent and the appellant had previously concluded an
    oral agreement of lease for 20 years in respect of the farm; the
    respondent had paid a 'lease fee' of DM80 000 in respect of the
    lease of a period of 20 years, and the appellant was not in a
    position to refund the respondent half of the 'lease fee'.









  1. As previously mentioned,
    the respondent realised that whilst the lease agreement was valid
    and enforceable, the invalid agreement was in contravention of the
    Act. She accordingly instituted action for the repayment of the DM40
    000 she had paid to the appellant in terms of the invalid agreement.









  1. The respondent made an
    unopposed application in the High Court praying that the issue of
    whether the invalid agreement was legal, binding and enforceable be
    decided separately from any other issue in the action. The parties
    furthermore agreed that should the Court find the invalid agreement
    to be illegal and unenforceable then neither party would lead
    evidence. Instead, the appellant would repay the claimed amount to
    the respondent.









  1. The Court below ruled
    that the invalid agreement was in contravention of s 58(1)(b)
    of the Act and was thus illegal and void ab initio.
    Consequent to the ruling, counsel for the respondent moved for an
    order granting judgment for the respondent in the amount claimed in
    the summons, interest thereon at the rate of 20% per annum a tempore
    morae
    from 1 February 2002 to date of payment as well as costs
    of suit. Thereafter counsel for the appellant raised the issues from
    which date interest should run and at what rate. It was argued for
    the appellant that interest should run from the date of judgment as
    the parties had bona fide and voluntarily entered into the
    illegal agreement, that no demand had been made and the appellant
    was therefore not in mora. Counsel for the respondent ‘as
    a concession’ argued that the interest should instead run from
    the date on which the invalid agreement had been entered into,
    namely 9 July 2002.








Findings by the High
Court




  1. Having heard brief
    arguments on the date when interest should run, the learned Judge
    indicated that since she was going to give reasons for the ruling on
    the status of the invalid agreement in any event, she would reserve
    judgment on the issue of interest and give a ruling at the same time
    with the reasons for the earlier ruling. Subsequently, with regard
    to the legality and enforceability of the invalid agreement, the
    High Court found that the purpose of the legislature in enacting the
    Act was to preclude foreign nationals from enjoying any rights of
    tenure in respect of agricultural land for a period exceeding ten
    years. The Court further found that the invalid agreement in effect
    had purported to grant the respondent who, as mentioned already, is
    a foreign national the right to occupy the agricultural land in
    question for a period exceeding ten years and therefore effectively
    evaded the very prohibition contemplated by the Act. To that extent,
    so the Court a quo concluded, the agreement was in fraudem legis.
    The High Court found furthermore that because the invalid agreement
    was illegal, the respondent’s claim for DM40 000 had
    succeeded.









  1. As regards the date from
    which interest should run, the Court below made a finding that the
    respondent was entitled to restitution and to be placed in the same
    position that she was in immediately before the conclusion of the
    illegal agreement. The appellant was ordered to pay interest on the
    capital amount of DM40 000 at the rate of 20% per annum from 9 July
    2002 (being the date the invalid agreement was entered into by the
    parties) to date of payment. Appellant was furthermore ordered to
    pay costs of suit. The judgment of the Court a quo has since been
    reported at 2005 NR 98 (HC).








Counsel’s
submissions on appeal








  1. The appeal was argued by
    Mr Frank, SC on behalf of the appellant and by Mr Corbett on behalf
    of the respondent. The appeal was initially directed against the
    finding of the High Court that the invalid agreement was void ab
    initio
    as it had contravened s 58(1)(b) of the Act and
    the order that the appellant pay interest at the rate of 20% per
    annum on the amount of DM40 000 calculated from the date the invalid
    agreement was concluded. Counsel for the appellant, who is not the
    same counsel who represented the appellant in the Court below, in
    the end conceded that the High Court was correct in holding that the
    invalid agreement was in contravention of s 58(1)(b) of the
    Act and therefore illegal. Counsel for the appellant contended,
    however, that the Court a quo erred in deciding the matter on the
    basis of restitution. Once the invalid agreement had been found to
    be illegal, so counsel argued, the question of restitution did not
    arise at all. Instead, what should have been considered and decided
    was the issue whether the par delictum rule should be relaxed
    in the circumstances to allow the respondent to recover the DM40 000
    and interest. The respondent should have provided evidence to enable
    the Court a quo to make a decision whether there were circumstances
    present to relax the par delictum rule. Counsel continued to
    argue that there was no basis for the High Court to relax the par
    delictum
    rule so as to grant interest, because there was no
    material placed before that Court in this regard. It was counsel for
    the appellant’s further contention that the High Court had
    approached the matter as an ordinary contractual claim where
    rescission had to take place. In any event, so the argument
    proceeded, since the mora interest was way out of line with
    the bank interest, there was no basis for the Court a quo to relax
    the par delictum rule and to grant interest to the
    respondent.









  1. Counsel for the
    respondent on the other hand, drew the Court’s attention to
    the relevant provisions of the Act and the legal principles flowing
    from the application of s 58 of the Act which section, counsel
    maintained, had rendered the invalid agreement illegal. Respondent’s
    counsel furthermore advanced arguments on the principles of the
    condictio indebiti and the scope and ambit of the par
    delictum
    rule as well as principles of unjust enrichment.
    Counsel for the respondent argued that irrespective of how the
    invalid agreement was structured and designated, the intent and
    import thereof was to confer a right of possession of the
    agricultural land for a period exceeding ten years. In terms of the
    lease agreement, he continued to argue, DM40 000 would be payable in
    respect of each ten year period during which the respondent was in
    occupation of the land in question. He submitted that the
    requirements for relaxing the par delictum rule as set out
    and discussed in the decision of this Court in Ferrari v Ruch
    1994 NR 287 (SC) were not met and ordering that interest should
    be paid from the date on which the parties entered into the illegal
    agreement would not amount to enforcing the illegal agreement.








Issues on appeal




  1. As previously mentioned,
    it was conceded on behalf of the appellant that the invalid
    agreement was illegal. Hence, the issue regarding the validity of
    the said agreement need not be traversed in any greater detail. It
    is, nevertheless, necessary to refer to some of the provisions of
    the Act to ascertain whether the Court a quo was correct in its
    finding that the invalid agreement was illegal and whether the
    concession made by counsel for the appellant, that the Court below
    was correct in its holding, was properly made. The legislative
    purpose of the Act can be gleaned inter alia from the long title as
    well as other provisions of the Act. The long title of the Act reads
    as follows:









To provide for the acquisition
of agricultural land by the State for the purposes of land reform and
for the allocation of such land to Namibian citizens who do not own
or otherwise have the use of any or of adequate agricultural land,
and foremost to those Namibian citizens who have been socially,
economically or educationally disadvantaged by past discriminatory
laws or practices; to vest in the State a preferent right to purchase
agricultural land for the purposes of the Act; to regulate the
acquisition of land by foreign nationals …’.









  1. Section 58(1) of the Act
    provides that
    :









Notwithstanding anything to the
contrary in any other law contained, but subject to subsection (2)
and section 62, no foreign national shall, after the date of
commencement of this Part, without the prior written consent of the
Minister, be competent –








(a) to acquire agricultural land
through the registration of transfer of ownership in the deeds
registry; or








(b) to enter into an agreement with
any other person whereby any right to the occupation or possession of
agricultural land or a portion of such land is conferred upon the
foreign national –








(i) for a period exceeding 10 years;
or








(ii) for an indefinite period or for a
fixed period of less than 10 years, but which is renewable from time
to time, and without it being a condition of such agreement that the
right of occupation or possession of the land concerned shall not
exceed period of 10 years in total.’









  1. Section 59 of the Act
    reads as follows:




No person shall acquire and
hold, as a nominee owner, on behalf or in the interest of any foreign
national any agricultural land if the Minister's written consent
therefor has not been obtained as required by section 58.’









  1. In the event that
    agricultural land is unlawfully acquired or held, s 60 provides for
    remedies to the Minister in that regard. Section 61 deals with
    restrictions upon registration of agricultural land and states that:




(1) Notwithstanding anything to
the contrary in any law contained, the Registrar shall not register
any transfer of agricultural land or any lease or sublease in respect
of such land or any cession of such a lease or sublease, unless there
is submitted to the Registrar-



(a) a statement made under oath or
affirmation by or, in the case of a company or close corporation, on
behalf of the transferee, lessee, sublessee or cessionary, as the
case may be, declaring-



(i) his or her nationality or, in the
case of a company or close corporation, the nationality of each
member thereof and whether or not the company or close corporation is
a foreign national; and



(ii) whether or not the land to be
transferred or mentioned in the lease, sublease or cession, as the
case may be, will be held by him or her or it on behalf or in the
interest of any other person and, where applicable, giving
particulars of the name and nationality of that person or, in the
case of a company or close corporation, the name and nationality of
each member thereof; and



(b) if in the statement referred to in
paragraph (a), the transferee, lessee, sublessee or cessionary, as
the case may be, declares that he or she is not a Namibian citizen
or, in the case of a company or close corporation, that it is a
foreign national, or that the land in question will be held by him or
her or it on behalf or in the interest of another person who is not a
Namibian citizen or, in the case of a company or close corporation,
which is a foreign national-



(i) the written approval of the
Minister referred to in section 58; or



(ii) proof by affidavit in the form
and manner determined by the Registrar that he or she or it qualifies
for exemption from the provisions of section 58 by virtue of the
provisions of section 58(3) or 62,



and the Registrar may request the
transferee, lessee, sublessee or cessionary concerned to submit to
the Registrar such further proof as he or she may require that the
transferee, lessee, sublessee or cessionary may lawfully acquire or
hold such land in terms of this Part.’









  1. It is evident from the
    above provisions of the Act that the legislative purpose thereof is
    to provide for the acquisition of agricultural land by the state for
    the objective of land reform. Once such land has been acquired, the
    primary beneficiaries thereof are those Namibian citizens who do not
    own or have the use of any or adequate agricultural land and
    foremost those Namibian citizens who have been disadvantaged by past
    discriminatory laws or practices. In a nutshell, therefore, the
    purpose of the Act is, amongst other things, to address the pressing
    issue of land reform, a perennial problem associated with this
    country’s history. It is apparent from the relevant provisions
    of the Act that the purpose is also to regulate the acquisition of
    land by foreign nationals. I agree with counsel for the respondent’s
    submission, which submission also found favour with the High Court
    that the clear and unambiguous intention of the legislature in
    enacting the Act and s 58(1)(b)(ii) in particular was to
    preclude foreign nationals from enjoying any rights of tenure in
    respect of agricultural land in commercial areas for a period
    exceeding ten years without prior consent of the Minister. In so far
    as the invalid agreement therefore purported to grant the respondent
    the right of occupation and possession of commercial agricultural
    land for a period exceeding ten years apparently without first
    complying with the prerequisites set out in the Act, such agreement
    falls foul of the provisions of s 58(b)(ii) of the Act, is
    illegal and void ab initio. The Court below was entirely
    justified in coming to that conclusion. I am also persuaded that the
    concession made by counsel for the appellant to that effect has
    properly been made.










  1. The agreement being
    prohibited by law and the parties thereto therefore being in
    pari
    delicto
    ,
    as a general principle, the parties cannot get relief from the
    operation of the contract. However, it is trite that exceptions may
    be made depending on considerations of public policy and the need to
    do justice between individuals.
    1
    What remains to be
    considered, therefore, is whether the
    par
    delictum
    rule
    should be relaxed to order repayment of the lease amount and the
    payment of interest thereon. As already mentioned, the Court a quo
    ordered the repayment of DM40 000 and that int
    erest
    should be paid at a rate
    of 20% per
    annum
    from 9 July 2002 (being
    the date on which the agreement was entered into) to date of
    payment.










  1. The learned Judge’s
    reasoning was that the plaintiff should be placed in the position
    she was in immediately before the conclusion of the illegal
    agreement. It is clear from the above reasoning that the Court a quo
    approached the matter as an ordinary contractual claim where
    restitution had to take place. I agree with counsel for the
    appellant that as the agreement in terms of which the DM40 000 was
    paid to the appellant was illegal, the question of restitution did
    not arise. What remained to be considered and decided was the
    question whether the par delictum rule should be relaxed in
    the circumstances to allow the plaintiff to recover the DM40 000 and
    interest.










  1. In Amalgamated
    Society of Woodworkers of SA and Another v Die 1963
    Ambagsaalvereniging
    1968 (1) SA 283 (TPD) at 285D-F Moll AJ made
    the following pertinent observations in relation to the types of
    claims for interest:









Now it is clear, from the
decision of Union Government v Jackson and Others, 1956 (2) SA 398
(A.D.) at p.411, that a distinction must be drawn between a claim for
interest which forms an integral part of a plaintiff’s claim
for damages and in respect whereof the necessary foundation by way of
evidence must be laid and a claim for interest which “is a
consequential or accessory or ancillary obligation automatically
attached to some principal obligation by operation of law”.’









  1. Counsel for the
    respondent conceded that the respondent should have led evidence as
    to when interest should run, but contended that to ensure equity,
    the benefit the appellant received from the money should be repaid
    in the form of interest from the date of payment of the money to the
    respondent. In the alternative, counsel submitted that since it was
    not apparent from the record that there had been demand prior to the
    issuing of summons, interest should start to run at least from the
    date of the summons. Counsel for the appellant, on the other hand,
    argued with reference to a passage on page 510 of Christie’s
    The Law of Contract in South Africa, 5th ed. that
    if interest should run, it should run from the date of judgment and
    not before.










  1. This Court in Ferrari
    v Ruch
    considered the question whether or not a plaintiff is
    entitled to interest on the capital amount paid to the defendant in
    terms of a prohibited agreement and it has become necessary to refer
    to the relevant passages of the judgment in that matter at some
    length to reiterate the point that whereas such agreements cannot be
    enforced by virtue of the well-known maxim ex turpi causa non
    oritur actio
    (from a dishonourable cause an action does not
    arise) which is absolute and admits no exception, the maxim in
    pari delicto potior est conditio defendentis
    (in equal fault the
    condition of the defending party is better) in some cases may be
    relaxed to allow a plaintiff to recover money paid or property
    delivered to a defendant pursuant to an illegal agreement so as to
    prevent manifest injustices. At page 296G–297G Mahomed CJ
    rendering the judgment on behalf of the Court, succinctly and
    crisply put the position thus:









The object of the maxim
in pari delicto potior est conditio defendentis

is clearly to discourage illegal or immoral conduct, by refusing the
help of the courts to delinquents who part with money or chattels in
furtherance of prohibited agreements, but, if it was never capable of
relaxation, it might perpetuate immorality and cause gross injustice
in some cases (for example, where a seller of a prohibited article
refuses to deliver the prohibited article but still retains the
purchase price which has been paid to him).








Since Jajbhay's case therefore the
Courts in Southern Africa have often relaxed the strict operation of
the maxim in pari delicto potior est conditio defendentis in
order to do “simple justice between man and man”
(Petersen v Jajbhay 1940 TPD 182; Mancherjee v Bala
1946 WLD 503; Padayachey v Lebese 1942 TPD 11; Osman v Reis
1976 (3) SA 710 (C) at 712G-713A).








It is difficult and even undesirable
to lay down fixed rules to define the circumstances which would
permit the relaxation of the par delictum rule, but there are
clearly some considerations which are relevant to such an enquiry.








(1) It is clearly relevant to enquire
whether one party would unjustly be enriched at the expense of
another if the rule in pari delicto potior conditio defendentis
is not relaxed in a particular case. (Jajbhay's case supra
at 545.) This appears to be the dominant underlying motivation for
the relaxation of the rule in the cases of Petersen v Jajbhay,
Mancherjee v Bala, Padayachey v Lebese and Osman v Reis
(supra)
and in such cases as Mia v Mohideen, Bawa v Mohideen 1942 (2)
PH A 28 (W) and Albertyn v Kumalo and Others 1946 WLD 529.








(2) On the other hand the relaxation
of the rule can legitimately be resisted if it has the indirect
effect of enforcing the illegal agreement. (Venter v Vosloo
1948 (1) SA 631 (E), Rall v Bester 1951 (3) SA 541 (T) and
Essop v Abdullah 1986 (4) SA 11 (C) and Essop v Abdullah
1988 (1) SA 424 (A).)








(3) The fact that the plaintiff who
seeks the relaxation of the rule was aware of the fact that the
agreement entered into with the defendant was prohibited by law, is
not by itself a bar against his claim for recovery of moneys or
property which he has transferred to his adversary, pursuant to such
an agreement. (Jajbhay v Cassim (supra at 549), Petersen v
Jajbhay and Osman v Reis
(supra).) The logical corollary of that
proposition must be that the relative degrees of turpitude attaching
to the conduct of the parties in entering and implementing the
unlawful agreement, is a relevant consideration in determining
whether the rule should be relaxed in a particular case (Jajbhay v
Cassim
(supra at 544)).’














  1. At 300B-301A the learned
    Chief Justice continued to observe as follows:









The Court in Jajbhay
v Cassim
(supra) was
critical of some of the English cases dealing with the relief of
restitution in illegal contracts and I think that it is unnecessary
in dealing with this question to examine the historical evaluation of
the English learning on this problem or to enquire into the
theoretical foundations which support the exceptions to the
par
delictum
rule in English
law or to define the limits of those exceptions. Whatever be the
approach of English law to the problem, I am satisfied that the
Courts in this country have followed and should continue to follow
the approach articulated in
Jajbhay
v Cassim
(supra) and that
the
par delictum
rule should be relaxed in appropriate cases to prevent manifest
injustice. Thus approached, the plaintiff should in my view be
allowed to recover the capital transfers he made to the defendant in
terms of the relevant agreement of loan between the parties.








It does not follow from this
conclusion, however, that the plaintiff should also be entitled to
recover from the defendant the interest on that loan in accordance
with the terms of the unenforceable agreement. It may well be that
the defendant will unfairly have enjoyed the free and unfair use of
the capital sums of the loan if he is not compelled to pay the
interest thereon, but any order requiring the defendant to repay both
the original loan as well as the interest which was agreed upon
between the parties to the unenforceable contract would indirectly
constitute an order enforcing all the material terms of the
unenforceable contract. This is not permissible. For similar reasons
the Court in Rall v Bester (supra) refused a claim for
compensation made by the landlord of premises which had been
beneficially occupied by the defendant under an unlawful lease.








No reliance needs to be placed on the
terms of the unlawful contract itself, if interest on the capital
amounts of the loan constituted "fruits" of the original
delivery of capital, and therefore constituted a part of what the
defendant has to restore in making restitution, but such interest
cannot properly be equated with “fruits”.








Moreover there is no evidence that the
defendant ever enjoyed or still enjoys such "fruits" or
what the extent of this benefit was. These facts were simply not
properly ventilated in evidence. The plaintiff cannot in these
circumstances, recover any interest on the loans, without being
compelled to rely on the terms of the unlawful contract with the
defendant. This is precisely what he is not allowed to rely on, in
terms of the authorities.








In the result, the plaintiff is
entitled to the repayment of the capital amounts of the loan but not
the interest thereon.’ (Reference to some of the
authorities omitted.)














  1. It would appear from the
    above passages that interest and the capital must be dealt with
    separately following which it should be determined whether or not
    the respondent was unjustly enriched in respect of each separately.
    When making such enquiry one should not have regard to the
    unenforceability or illegality of the agreement in question. To do
    so would in effect result in the illegal agreement being enforced as
    if it were legal, which is not permissible in our law as also
    confirmed by Mohamed CJ in Ferrari v Ruch at 300E-G.










  1. In applying the above
    principles to the present matter, it is my view that whereas the par
    delictum
    rule should be relaxed to allow the plaintiff to
    recover the DM40 000, the rule should not be relaxed to award
    interest to the plaintiff from the date on which the invalid
    agreement was entered into by the parties. This would have the
    effect of enforcing the illegal agreement.










  1. However, the value of
    money does decrease with inflation and the capital amount no longer
    has the same value as it did when the invalid agreement was entered
    into by the parties. That notwithstanding, in the view I take of the
    matter, it would give effect to the principle of justice between
    individual and individual if both parties are to be put in the
    position they were in immediately prior to the conclusion of the
    illegal agreement and nothing more. Therefore, only the amount by
    which the appellant was actually enriched should be repaid. He only
    received the capital amount and there is no evidence that he had
    invested it or that he had earned interest on the capital amount in
    another manner. In the light of the paucity of material placed
    before the Court a quo as to when interest, if at all, should run
    and if so at what rate, there was no basis for that Court to award
    interest to the plaintiff from the date the agreement was entered
    into.










  1. The Court below in my
    respectful view overextended the principle of ‘putting the
    plaintiff in the position he was in prior to the conclusion of the
    illegal agreement’. Regard must be had to the fact that the
    appellant and the respondent were both unaware of the illegality of
    the agreement. Granting interest to the respondent on the capital
    amount and at the mora interest rate has a punitive effect,
    which is made harsher by the fact that there was no evidence that
    the respondent had been enriched by the interest which would be
    payable if an order to that effect is granted, thus making such an
    order unjustified. In my view, interest should run from the date of
    this judgment.









Costs




  1. Counsel for the
    appellant argued that if the appellant is successful on appeal, the
    normal rule that costs follow the event should apply. Counsel for
    the respondent, on the other hand, contended that should interest be
    ordered to be paid from the date of the summons, each party should
    pay their own costs. The appellant has been successful on appeal and
    I see no valid reason why he should not be entitled to costs. In the
    result, costs will follow the event.








Order




  1. In the result, the
    following order is made:









  1. The appeal is allowed
    with costs and the respondent is ordered to pay such costs, which
    include the costs of one instructed and one instructing counsel.









  1. The order of the Court
    below is set aside and substituted for the following order:








Judgment is
entered against the defendant for payment of the sum of DM40 000 or
the equivalent thereof in Namibia Dollars at the time of payment.’








  1. The appellant is ordered
    to pay interest on the sum of DM40 000 or the equivalent thereof in
    Namibia dollars from the date of this judgment to the date of
    payment at the rate prescribed by law.




















__________________


SHIVUTE
CJ























I
agree














____________


CHOMBA
AJA













APPEARANCES




























For
the appellant



Mr
TJ Frank SC







Instructed
by Andreas Vaatz and Partners



For
the respondent



Mr
AW Corbett







Instructed
by Basil Bloch Attorneys














1Jajbhay
v Cassim
1939; Rall v Bester 1951 (3) SA 541 at 545.