Stella Mundi (Pvt) Ltd v Murimi Two Four Seven (Pvt) Ltd & Anor

### Preamble
1
HH 448-24
HCHC 619/24
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STELLA MUNDI (PVT) LTD

Versus

MURIMI TWO FOUR SEVEN (PVT) LTD

And

THE SHERIFF FOR ZIMBABWE NO

HIGH COURT OF ZIMBABWE

COMMERCIAL DIVISION

CHILIMBE J

HARARE 24 September & 4 October 2024

Opposed application for a declaratur

E. Donzvambeva for applicant

C.Madhlabe for first respondent

No appearance for second respondent

CHILIMBE J

BACKGROUND

[1] Applicant (“Stella Mundi”) approached the court on an urgent basis praying for a declaratur. The relief essentially   seeks a stay of execution of an original order granted by this court under case number HCHC 321/24.

[2] This original consent order, issued pursuant to a deed of settlement is extant and reads as follows; -

The defendant shall pay an amount of US$187,954.42

The amount referred to above shall be paid through the plaintiff’s legal practitioners` Trust Account as follows;

US$30,000 on or before 31 July 2024,

US$30,000 on or before 31 August 2024,

US$37,954.42 on or before 30 September 2024,

US$30,000 on or before 31 October 2024,

US$30,000 on or before 30 November 2024,

US$30,000 on or before 31 December 2024.

In the event of defendant failing to pay any installment on the due date as indicated above, the balance which remains outstanding shall immediately become due and recoverable.

Each party to bear its own costs.

[3] Much will turn on a comparison and import of the original consent order set out above, and the declaratory order sought herein. The latter is framed as follows; -

The payment of a combined sum of ZiG 2 588 439.00 (two million five hundred and eighty-eight thousand and four hundred and thirty-nine Zimbabwean Gold) by the Applicant and/or it’s agents on the 14 and 15 August 2024 into the 1 st Respondent’s bank account for a judgement debt of US$ 187 754.42 (one hundred and eighty-seven thousand seven hundred and fifty-four United states dollars and forty-two cents) being the equivalent amount of the judgement debt which was expressed in United States dollars at the official interbank rate between the United States dollar and the Zimbabwean Gold currency legally extinguished the Applicant’s indebtedness to the 1 st Respondent;

The notice of seizure and attachment of the Applicant’s property issued by the 2 nd Respondent on 21 August 2024 at the instance of the 1 st Respondent’s legal practitioners –ex post facto the satisfaction of the judgement debt by the Applicant by 15 August 2024- and after the communication of that fact to both Respondents is a legal nullity;

CONSEQUENTLY;

The Applicant’s attached property as described on the inventories to the notice of seizure and attachment dated 8 and 21 August 2024 respectively, be and is hereby immediately removed from judicial attachment.

The 1 st Respondent be and is hereby ordered to pay the Applicant’s costs on a legal practitioner and client scale.

THE DISPUTE BETWEEN THE PARTIES

[4] Mr. Madhlabe for the first respondent (“Murimi”) attacked the declaratory order sought as incompetent. He argued that Stella Mundi improperly sought to avoid, reverse and substitute an extant order of court under the guise of a declaratur. There was no basis for such order and the parties were bound by the original order whose legal effect counsel submitted was sacrosanct.

[5] Mr. Donzvambeva for Stella Mundi disputed these conclusions. He argued instead, that the events that unfolded post the issuance of the original order constituted a new cause of action justifying the prayer for a declaratur. Additionally, counsel contended that legal and statutory authority imbued Stella Mundi with rights warranting the court`s discretionary intervention. This matter essentially involved execution of the court`s judgment, a fact which further asserted this fresh causa.

[6] Before delving into these arguments, I will set out the factual basis of the dispute. Murimi is an agro technology entity offering among other services, the hiring out of farm equipment and general agricultural advisory services. Stella Mundi is an agricultural company set up by the Zimbabwe Catholic Bishops Conference of the Catholic Church to run specific agro-projects on church farms.

[7] By written agreement dated 1 June 2022, Murimi was engaged by Stella Mundi to provide land clearance, trenching, tilling, reaping, ploughing, disking, planting, “viconing”, booming, and trailer works at Driefontein Mission Farm, Mvuma. The parties had a disagreement along the way resulting in Murimi instituting proceedings under HCHC 321/24. It claimed therein, an amount of US$ 242,682.70. As noted above, this matter was settled in terms of the original consent order with the capital sum reduced to USD $187,754,42.

[8] By its own admission on the papers before me, Stella Mundi breached the terms of the court order. It failed to remit the very first instalment that fell due 31 July 2024. Murimi responded by issuing out a writ which second respondent duly executed by attaching, on 8 August 2024, Stella Mundi`s vehicles and movables.

[9] Removal of the goods was scheduled for 15 August 2024.Stella Mundi attempted to forestall same by effecting payments totalling ZiG2,588,439 into Murimi`s bank account. These payments, made between 14 and 15 August 2024, were a conversion of the judgment debt of USD $187,754,42 in the local ZiG currency at a rate of one US dollar to 13,7863 ZiG.Stella Mundi admitted that (i) this direct payment into applicant`s bank account and (ii) in ZiG rather than USD constituted a departure from, but not breach of, the terms of the order.

SUBMISSIOINS BY THE PARTIES

[10] In the main, the parties` respective arguments went as follows; -Mr Donzvambeva` s took the position that because it had extinguished the judgment debt, Stella Mundi was entitled to the relief sought. Settlement of the debt dissolved the causa forming the basis of issuance of the writ, so argued counsel citing CBZ Bank Limited v Business Environment Services (Pvt) Ltd HH 783-17. This was because firstly, at common law, a judgment debt sounding in foreign currency had to convert to the local currency before it could be settled.

[11] Secondly, Mr. Donzvambeva submitted that in any event, the statutory position was that judgment debts were defined as financial or contractual obligations. As such, these obligations were split between local and foreign. The judgment debt obtained in HCHC 321/24 was indisputably a local obligation. On that basis, it could only be met in local currency.

[12] Mr. Donzvambeva relied on the following dictum in Makwindi Oil Procurement (Pvt) Ltd v National Oil Co of Zimbabwe 1988(2) ZLR 482(S) where the court held as follows at page 492; -

“Fluctuations in world currencies justify the acceptance of the rule not only that a court order may be expressed in units of foreign currency, but also that the amount of the foreign currency is to be converted into local currency at the date when leave is given to enforce the judgment. Justice requires that a plaintiff should not suffer by reason of a devaluation in the value of currency between the due date on which the defendant should have met his obligation and the date of actual payment or the date of enforcement of the judgment. Since execution cannot be levied in foreign currency, there must be a conversion into the local currency for this limited purpose and the rate to be applied is that obtaining at the date of enforcement. [ Underlined for emphasis]

[ 13] Counsel also referred to section 22 of the Finance Act (No 2) of 2019 [ “the Finance Act”], and the Presidential Powers (Temporary Measures) (Amendment of Reserve Bank of Zimbabwe Act and Issue of Zimbabwe Gold Notes and Coins) Regulations, Statutory Instrument 60 of 2024 [“SI 60/24”]. His argument was that section 22 of the Finance Act, as read with the Supreme Court decision of Zambezi Gas Zimbabwe (Private) Limited v N.R. Barber (Private) Limited & Another 2020 (1) ZLR 138 (S) declared the judgment debt under consideration as a local obligation.

[14] In that regard, he submitted further that the debt was payable in local currency at an applicable exchange rate. Local currency was represented by the ZiG which was introduced by SI 60/24 on 5 April 2024. This position, according to counsel, was fortified by sections 2 (6) and 7 of SI 60/24 which I set out below; -

Section 2(6); - The tender of payment of ZiG notes and coins shall be legal tender in all transactions, alongside any other currency acceptable as legal tender as prescribed under section 44A.

Section 7: -For the purposes of section 44D of the principal Act as inserted by these regulations, the Minister shall be deemed to have prescribed that, with effect from the date of promulgation of these regulations(the “effective date”),for accounting and other purposes(including the discharge of financial or contractual obligations), all assets and liabilities that were, immediately before the effective date, valued and expressed in Zimbabwe dollars, shall be deemed to be values in ZiG at rate as converted in terms of section 6(1) [ Underlined for emphasis]

[15] It was his additional argument that it mattered not that settlement of the judgment debt was made directly into Murimi`s bank account rather than into that of its legal practitioners as stipulated in the court order. What was important was that Stella Mundi delivered value to Murimi is satisfaction of the consent order. The order was after all, one in pecuniam solvendum. For that reason, performance in forma specifica was not essential. The ZiG payment made by Stella Mundi therefore sufficed as performance in equivalent manner.

[16] Mr. Donzvambeva concluded his submissions by raising disquiet over the heads of argument filed on behalf of Murimi. He plainly accused opposing counsel of improper and selective citation of authorities, a charge which Mr. Madhlabe disputed amidst vehement protest. On the merits, counsel contended that the court was faced with an extant court order which remained unsatisfied.

[17] For that reason, counsel submitted that the writ was validly procured and execution properly carried out. The attempt to settle the judgment debt in ZWG offended the clear terms of the court order. And the present application was a disingenuous ploy to circumvent an order whose issuance Stella Mundi had willingly consented to. Counsel emphasised the inviolable nature of an extant court order and referred to the following remarks [at paragraph 20] in Sunko Mauritius & Anor v Versapak Holdings (Pvt) Ltd &Anor SC 2-22; -

“It is trite that once a court has made an order it binds all and sundry concerned. Everyone bound by the court order has a duty to obey the order as it is until it has been lawfully altered or discharged by a court of competent jurisdiction. In Hadkinson v Hadkinson [ 1952 2 All ER 567 (CA) at 569C] ROMER LJ recited the duty to obey court orders with remarkable clarity when he said:

“It is the plain and unqualified obligation of every person against or in respect of whom an order is made by a court of competent jurisdiction to obey it unless and until that order is discharged. The uncompromising nature of the obligation is shown by the fact that it even extends to where the person affected believes it to be irregular or even void.””

ANALYSIS OF THE ARGUMENTS

[18] This is an application for a declaratur whose requirements are well established at law. In order to succeed the applicant Stella Mundi must firstly prove that it has a direct and substantial interest in the subject matter. The court must then, in such event, consider whether Stella Mundi`s rights warrant a discretionary intervention. (See Johnsen v AFC 1995 (1) ZLR 65 (S)).

[19] According to Mr. Donzvambeva, Stella Mundi`s rights arose from its settlement of the judgment debt in ZiG. Its right to so settle the debt despite clear prescription in manner and currency, derived from common law and statute. Great reliance was placed on the decision of Makwindi Oil Procurement v Noczim (supra).

[20] It is essential that I comment on Makwindi Oil Procurement v Noczim; -specifically as it relates to the dispute before me, and generally as it applies to currency disputes. Makwindi was decided 4 years shy of 40 years ago in 1988. Insofar as the detail and particularity governing the applicable monetary regime in the jurisdiction is concerned, 1988 was an entirely different world. That fact on its own necessitates a closer reading of the decision given the kaleidoscope of changes that have coloured the monetary landscape of Zimbabwe during the period.

[21] In Makwindi, the issue of currency was still basically res nova. An entirely different suite of common law and statutory rules applied then. The below passage [ at page 486] from Makwindi exemplifies this aspect and draws attention to the matters the court in Makwindi was seized with; -

“This longstanding rule was reaffirmed in 1960 by the House of Lords in Re United Railways of the Havana and Regla Warehouses Ltd [1960] 2 All ER 332 (HL), and it was held applicable not only to a claim for damages but also to a claim for a debt in a foreign currency. Two alternative propositions were advanced to explain this result: the first was that foreign currency is a commodity and the remedy for failure to deliver a commodity is damages, not debt; the second was that, assuming foreign currency to be money and not a commodity, still an English court could not order specific performance of a contract to pay foreign currency, and the remedy was therefore to give damages for the sterling equivalent of the foreign currency at the date of the breach. The effect of the rule was, of course, that if the value of sterling in relation to the designated foreign currency declined between the date of breach and the date of judgment, the creditor suffered an irrecoverable loss.”

[22] The court was concerned with a classic case of local versus foreign currency. Presently, we are operating in a multi-currency regime strictly regulated by statute. In that regard, the general statement (underlined in paragraph [10] above) must be properly qualified by the context of present circumstance and specific statutory prescription.

[23] On the facts and circumstances of the matter before me, I am not satisfied that Makwindi stands as an incontestable authority that judgments debts and court orders sounding in foreign currency must in all instances, automatically convert into local currency prior to execution. On that basis, the first pillar of Stella Mundi`s argument falls.

[24] Mr Donzvambeva` s additional argument was that the court was herein faced with the same scenario in Zambezi Gas v NR Barber (supra). In that matter, the judgment debtor had unsuccessfully sought a declaratur from this court to the effect that its settlement in the then RTGS local currency extinguished the USD judgment debt. On appeal, the judgment debtor prevailed. The reason being that its rights were found to have been properly established given the following findings; -

“The Court holds that the Presidential Powers (Temporary Measures) (Amendment of Reserve Bank of Zimbabwe Act & Issue of Real Time Gross Settlement Electronic Dollars (RTGS Dollars)) (“S.I. 33/19”) expressly provides that assets and liabilities, including judgment debts, denominated in United States dollars immediately before the effective date of 22 February 2019 shall on or after the aforementioned date be valued in RTGS dollars on a one-to-one rate.

The order in terms of which the appellant was obliged to pay the judgment debt owed to the first respondent, denominated in United Stated dollars, was made before the effective date. The judgment debt and its evaluation fell within the ambit of the provisions of s 4(1)(d) of S.I. 33/19. The payment made by the appellant in fulfilment of the judgment debt is a full and final settlement of the liability owed by the appellant.”

[25] The situation in Zambezi Gas created neither question nor confusion as regards the judgment debtor`s right to settle a USD judgment debt in local currency. The execution process and developments associated with it created a new causa which earned the debtor in that matter declatory relief on appeal. This relief was extended because the peculiar circumstances of that matter so justified.

[26] In Mabhena v Golden Beams Development (Pvt) Ltd SC 29-23, the judgment debtor was not availed the same relief. Herein, Mr Donzvambeva, referred to section 22 (d) and (e) of the Finance Act which provides thus; -

(1) Subject to section 5, for the purposes of section 44C of the principal Act18, the Minister shall be deemed to have prescribed the following with effect from the first effective date19-

“(d) that, for accounting and other purposes (including the discharge of financial or contractual obligations20), 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 section 44 C (2) of the principal Act) shall on the first effective date be deemed to be values in RTGS dollars at a rate of one-to one to the United States dollar; and

(e) that, after the first effective date any variance from the opening parity rate shall be determined from time to time by the rate or rates at which authorised dealers21 exchange the RTGS dollar for the United States dollar on a willing-seller willing- buyer basis.”

[27] As I understood him, counsel`s position was that the USD judgment debt converted to an RTGS obligation in terms of section 22 (1) (d) of the Finance Act. It thereafter became payable in RTGS at an applicable exchange rate as per section 22 (1) (e). And given that the RTGS was succeeded by the ZiG per SI 60-24, the USD judgment debt translated into a ZiG obligation. This being the ZiG payment effected on 14 and 15 August 2024, thus generating the fresh causa justifying the relief prayed for.

[28] This argument, even by its own logic cannot sustain. Section 22 (1) (d) refers to assets and liabilities in existence immediately before the first effective date-22 February 2019. The judgment debt, issued under order of 30 June 2024, does not meet such description. Secondly, section 7 of SI 60/24 relates to debts previously valued and expressed in Zimbabwe dollars. The judgment debt once again, fails that qualification.

[ 29] Similarly, the argument that the ZiG stands as the “sole legal tender” to be used exclusively as the local currency cannot sustain. The judgment debt was born out a contract being the deed of settlement. Under that pact, the parties agreed that the obligation would be met in USD. The Supreme Court at page 10 in Breastplate Service (Pvt) Ltd v Cambria Africa PLC SC 66-20 held as follows regarding such contracts; -

“To conclude on this aspect, the concept of ‘legal tender’, in its ordinary signification, denotes money or currency in official circulation that must be accepted if offered in payment of a debt.  In the realm of contractual relations, what this means is that the debtor is entitled to settle his debt through the medium of legal tender and, conversely, the creditor is obliged to accept that tender.  On the other hand, unless explicitly proscribed by statute (as discussed below), there is nothing under the common law to preclude the debtor from discharging his debt in any currency or medium of exchange other than the officially designated legal tender, including any foreign currency, so long as the creditor is prepared to accept such payment in settlement of the debt.  This arises by virtue of the time-honoured doctrine of freedom of contract, which, in my view, remains intact and unimpaired by the provisions of S.I 142 of 2019.”

[30] In the absence of (i) proof of its entitlement to auto-convert the judgment debt from USD to ZiG, and (ii) an applicable statutory sanctuary, the applicant is unable to demonstrate the existence of a right warranting the declaratur it seeks. Especially where the declaratur concerned carries the effect of setting aside an extant court order issued by consent.

DISPOSITION

[31] The application cannot succeed. Nor will the attempt to impugn the style adopted by counsel for first respondent in framing his heads of argument. There were insufficient facts placed before me to conclude that the criticisms extended beyond mere differences of opinion or style. In Barker McCormac (Pvt) Ltd v Government of Kenya 1985 (1) ZLR 18 (H), the court sounded the reminder that statements in legal authorities needed to be viewed against the entire judgment rather than isolated quotations.

[32] Further, the complaint of impropriety is far removed from that which confronted MUREMBA J in in Dr. Mangezi v Dr Tipere Kasu HH 132-24, where the learned judge had to hand down the following guidance at page 3; -

“It is clear that the two cases that Mr Mboko referred to are of no relevance to the present case. They do not speak to Mr Mboko’s submission. Nowhere in these judgments did the Supreme Court or this court say that a party who intends to apply for rescission of default judgment must first apply to uplift a bar operating against them and neither did the two courts say that the applicant must first apply for condonation for the late filing of a plea. Why Mr Mboko decided that the two cases are applicable to the present matter is beyond comprehension. Legal practitioners have a duty to present relevant and persuasive arguments based on the correct law and relevant facts. Citing irrelevant cases can be detrimental to their credibility and the integrity of the legal process.  Legal practitioners who engage in such practices need some words of wisdom.”

[33] On costs, I note that whilst each party exhorted the court to levy the other with costs on a higher scale, I found nothing on the papers to warrant such order. It is a trite position at law that punitive costs will not be lightly granted. The question always, is for the court to inquire as to who, what and why it seeks to punish. This dispute retraces to what one might call currency dynamics, an inescapable reality in our jurisdiction. As such, it would be unfair to land the herein applicant with punitive costs for having merely explored its options in that regard.

Accordingly, it is ordered that; -

The application for a declaratur and consequential relief be and is hereby dismissed with costs.

Wintertons- applicant`s legal practitioners

Hove Legal Practice-first respondent`s legal practitioners

[CHILIMBE J___4/10/24]