Court rules that US$ debts be settled in RTGS
CHIEF Justice Luke Malaba has ruled that debts which were incurred in United States dollars before February 22, 2019 can be discharged in local Zimbabwean currency at the rate of 1:1.
Malaba made this conclusion in a Supreme Court appeal filed by Zambezi Gas Zimbabwe (Private) Limited, against N.R. Barber (Private) Limited and the Sheriff of Zimbabwe.
“This is an appeal against the decision of the High Court (“the court a quo”) dismissing an urgent chamber application for an order declaring that the payment made to the first respondent (N.R. Barber (Private) Limited) in terms of a court order was a full and final settlement of the liability owed by the appellant (Zambezi Gas Zimbabwe (Private) Limited).
“The appeal succeeds. 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 February 22, 2019 shall on or after the aforementioned date be valued in RTGS dollars on a one-to-one rate,” Malaba ruled in a judgment justices Susan Mavangira and Nicholas Mathonsi agreed to.
He said that the High Court order in terms of which Zambezi Gas was obliged to pay the judgment debt owed to N.R. Barber (Private) Limited, which was denominated in United Stated dollars, was made before February 22, 2019.
“The judgment debt and its evaluation fell within the ambit of the provisions of Section 4 (1) (d) of Statutory Instrument (SI) 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,” Malaba said.
According to court papers, N.R. Barber instituted proceedings against Zambezi Gas for payment of US$3 885 000 for services rendered. On June 25, 2018, the High Court ordered Zambezi Gas to pay back the amount claimed together with interest, before the firm filed an appeal.
The appeal was however, dismissed last May, but the firm went on to deposit $4 136 806,54 in Zimbabwean currency into N.R. Barber’s account, as settlement for the debt.
N.R. Barber’s lawyers wrote to Zambezi Gas, claiming the amount that was deposited was less than the amount ordered by the court, arguing that the money was only equivalent to US$144 788,23 in terms of the interbank rate. The parties were once again involved in a legal battle, resulting in the Supreme Court judgment.
“Once a conversion of the value of an asset or liability denominated in US dollars is made to the value of RTGS dollars, the converted value remains the same, as the two different currency denominations both carry value. No exchange rate can be applied as the judgment debt remains a judgment debt with a value after it is converted to the local currency.
“The RTGS dollar has the value given under the one-to-one rate and it remains on that value even after the effective date. The first respondent and likewise the court a quo were wrong at law in trying to find parity by adding value on the RTGS dollar through the interbank rate,” Malaba said.
“The order of the court a quo is set aside and substituted with the following: it is declared that the appellant’s payment of RTGS$4 136 806,45 is a full and final settlement of the first respondent’s judgment debt.