Joice Teurai Ropa Mujuru and Ruzirun Investments (Private) Limited v Peppy Motors (Private) Limited t/a Agritech and Sabrina Sarpio and Tony Sarpio and The Sheriff

### Preamble

1

HH 436-21

HC 1296/20

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JOICE TEURAI ROPA MUJURU

and

RUZIRUN INVESTMENTS (PRIVATE) LIMITED

versus

PEPPY MOTORS (PRIVATE) LIMITED t/a AGRITECH

and

SABRINA SARPO

and

TONY SARPO

and

THE SHERIFF

HIGH COURT OF ZIMBABWE

ZHOU J

HARARE, 15 October 2020 & 1 September 2021

Opposed application

Ms G. Sithole, for the applicant

T. S. T. Dzvetero, for the 1st, 2nd & 3rd respondents

ZHOU J: This is an application for confirmation of the provisional order granted on 28 February 2020. The interim relief which was granted in that provisional order was for stay of execution of the judgment granted in favour of the respondents in Case No. HC 2954/18 pending the return date. The final order sought is for a declaration that the payment of RTGS$452 000.00 by the applicant fully discharged the applicant’s obligations under the judgment in HC 2954/18 and for an order for the release of any property which might or could have been attached in execution of that judgment. Applicants also seek costs against the first, second and third respondents on the attorney-client scale. The application is opposed by the three respondents against whom the order of costs is being sought.

The background facts to this matter are as follows: In 2018 the first, second and third respondents herein issued summons against the first and second applicants claiming money due in respect of farming equipment which had been sold to the applicants by the respondents. The proceedings were instituted under Case No. HC 2954/18. At the pretrial conference the parties concluded a deed of settlement and an order by consent was granted on 20 May 2019 based on the deed of settlement. In terms of the order by consent, judgment with costs of suit on the legal practitioner and client scale was granted against the applicants jointly and severally the one paying the other to be absolved, for payment of US226 000.00 in respect of the capital debt and a further US$226 000.00 representing interest on the capital sum. The payment terms would be as detailed in the deed of settlement. On 9 June 2019 the respondents’ legal practitioners wrote to the applicants’ legal practitioners demanding payment of the judgment debt at the interbank rate. Based on the interbank rate, the respondents demanded a sum of Z$7 423 413.30.

At the hearing of the application the respondents through counsel advised that the objections in limine, other than that of lis pendens which was explicitly abandoned, would be dealt with in the context of the merits.

The applicant’s position is that it was entitled to, and did pay, the amount due in the RTGS currency at the rate of 1:1 to the United States dollar by reason of the provisions of the Presidential Powers (Temporary Measures) (Amendment of Reserve Bank of Zimbabwe Act & Issue of Real Time Gross Settlement Electronic Dollars (RTGS Dollars)), Statutory Instrument 33 of 2019 which were enacted into the Finance (No. 2) Act, 2019. It seems to be common ground that the applicants did pay a total of Z$470 282.50 which, they submit, settled the judgment debt. However, the respondents insist that execution should proceed to recover the debt at the interbank rate on the basis that the deed of settlement was entered into and the order by consent was granted after the effective date of 22 February 2019. The respondents contend that the liability of the applicants falls outside the provisions of S.I. 33 of 2019.

The provisions of s 4(1) of the Statutory Instrument are as follows:

“For the purposes of section 44C of the principal Act as inserted by these regulations, the Minister shall be deemed to have prescribed the following with effect from the date of promulgation of these regulations (“the effective date”) –

That the Reserve Bank has, with effect from the effective date, issued an electronic currency called the RTGS Dollar;

That Real Time Gross Settlement System balances expressed in the United States dollar (other than those referred to in section 44C(2) of the principal Act), immediately before the effective date, shall from the effective date be deemed to be opening balances in RTGS dollars at par with the United States dollar; and

That such currency shall be legal tender within Zimbabwe from the effective date; and

That for accounting and other purposes, all assets and liabilities that were, immediately before the effective date, valued and expressed in United States dollars (other than assets and liabilities referred to in s 44C(2) of the principal Act) shall on and after the effective date be deemed to be values in RTGS dollars at a rate of one-to-one to the United States dollar…”

The implications and impact of the above provisions on liabilities that were in existence immediately before 22 February 2019 have been considered and authoritatively resolved in the case of Zambezi Gas Zimbabwe (Private) Limited v N. R. Barber (Private) Limited SC 3-20. At p. 9 of the cyclostyled judgment the Court said:

“What brings the asset or liability within the provisions of the statute is the fact that its value was expressed in United States dollars immediately before the effective date and did not fall within the class of assets and liabilities referred to in s 44C(2) of the Reserve Bank of Zimbabwe Act [Chapter 22:15] (“the principal Act”).”

What must be determined is whether the liability of the applicants to pay the amounts which are reflected in the deed of settlement and order by consent was in existence as at 22 February 2019 or only arose after 20 May 2019 when the deed of settlement was executed and the order by consent granted. Put differently, did the respondents’ asset (the outstanding purchase price) come into existence only on 20 May 2019 or it was already in existence as at 22 February 2019 when Statutory Instrument 33 of 2019 became effective? This issue is decidedly answered by reference to the plaintiffs’ declaration as amended in Case No. HC 2954/18. In para 7 of that declaration the respondents (who are the plaintiffs) allege that the agreement of sale with the applicants was entered into on 25 July 2014 and the final payment was due by April 2015. It is further stated that the outstanding capital balance was in the sum of USD$226 000.00 as at the due date. Clearly, therefore, the applicants’ liability to the first to third respondents was expressed in United States dollars well before the effective date. They therefore fall within the ambit of the provisions cited above. It does not matter that the parties continued to express the liabilities in United States dollars even after the effective date. The deeming effect of the Regulations means that the expression of those values must be read in light of the express provisions of the law. The deed of settlement and order by consent did not create any new liabilities but merely pronounced on the existing liabilities of the applicants. Any other reading of the law would defeat the very purpose of the law which was meant to convert assets and liabilities which existed at the time of the effective date and were expressed in United States dollars to RTGS at the rate of 1:1.

The respondents are, therefore, not entitled to recover the judgment debt at the interbank rate. The applicants’ obligation is to pay the debt in the local currency at the rate of 1:1 to the United States dollar. Since it has not been disputed by the respondents that what has been paid would discharge the debt if the rate of 1:1 is applied, this court comes to the conclusion that the applicants are entitled to confirmation of the provisional order.

In the result, IT IS ORDERED THAT:

The provisional order granted by this Court on 28 February 2020 be and is hereby confirmed.

G Sithole Law Chambers, applicants’ legal practitioners

Antonio & Dzvetero, 1st, 2nd & 3rd respondents’ legal practitioners