Is the “One-to-One” case a storm in a tea cup?
A note on the practical implications of the Supreme Court Ruling in Zambezi Gas Zimbabwe (Private) Limited v N. R Barber (Private) Limited and Another SC 3/20
On 20 January 2020, Chief Justice Malaba delivered judgment in the matter of Zambezi Gas Zimbabwe (Private) Limited v N. R Barber (Private) Limited and Another SC 3/20 in which he (with the concurrence of two other judges of appeal namely Justice Mavangira and Justice Mathonsi) held that all United States dollar denominated judgments that were obtained prior to 22 February 2019 (the effective date) are payable at a conversion rate of 1:1 to the Zimbabwean dollar.
The Supreme Court was interpreting the provisions of section 4 of Statutory Instrument Number 33 of 2019 i.e. the Presidential Powers (Temporary Measures) (Amendment of Reserve Bank of Zimbabwe Act and Issue of Real Time Gross Settlement Electronic Dollars (RTGS Dollars)) Regulations, 2019 published in Statutory Instrument Number 33 of 2019 (S.I 33 of 2019).
It is noteworthy that the S.I is now incorporated in the Finance Act Number 2 of 2019. The High Court (Justice Tagu) had held that section 4 of S.I 33 of 2019 is not applicable to judgment debts. Section 4 states the following:
“…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 section 44C 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 Supreme Court also relied on the provisions of section 20 of the Finance Act under Part V where the words “financial or contractual obligations” were defined to include judgment debts as follows:
“…’financial or contractual obligations’ includes (for the avoidance of doubt) judgment debts;…
‘judgment debt’ means a decision of a court of law upon relief claimed in an action or application which, in the case of money, refers to the amount in respect of which execution can levied by the judgment creditor; and in the case of any other debt, refers to any other steps that can be taken by the judgment creditor to obtain satisfaction of the debt (but does not include a judgment debt that has prescribed, been abandoned or compromised);”.
Implications of the Supreme Court judgment
Removal of confusion
The obvious consequence of the ruling is that is merely restated or confirmed the legal position that was already in place. Prior to the judgment, there had been confusion on whether or not “assets and liabilities” extended to judgment debts.
The Supreme Court held that to the judgment debtor, a judgment is a liability and to the judgment creditor, an asset. The Supreme Court stated that, “A judgment debt is thus a contractual obligation which can either be an asset to the party in whose favour it is made or a liability on the party against whom it is made”, thereby laying that confusion to rest.
However, as correctly pointed out in the judgment, the Finance Act Number 2 of 2019 had already addressed this confusion under section 20.
Clarification on those judgments denominated in other foreign currencies other than the United States dollars
The Supreme Court also went to state that the S.I does not apply to judgments expressed in any other currency which is not United States dollars such as those judgments in South African Rand, Canadian dollars or British Pounds.
In making the pronouncement in the preceding paragraph above, the Supreme Court also laid to rest the confusion regarding other judgments in foreign currency which is not United States dollars. This means that such judgments (expressed in other foreign currency other than United States dollars) are payable at the Interbank rate.
The tumult around the judgment is therefore not warranted since the Supreme Court only made a judicial pronouncement on a legal position that had already been in existence. One may therefore be excused for referring to the tumult around the judgment as “a storm in a tea cup”.
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