In a landmark ruling that reaffirmed the position of February 2019 set by the Reserve bank governor John Mangudya and the Minister of Finance Mthuli Ncube, Supreme court chief justice Luke Malaba declared that any debts incurred before 22 February 2019 in US dollars could be settled in Zimbabwean dollars at 1:1. The case was brought forward by NR Barber who sought to have Zimbabwe Gas pay US$3885000 plus interest for work carried out in May 2018.
As many analysts said at the time SI 33 of 2019 had clear winners and losers and chief amongst the winners were though who owed debts. While the law has been in place for almost a year this was an attempt to use case law to create a precedent that could see those who lost out by being paid in Zimbabwean (or RTGS) dollars recover their losses. Of course, the government of Zimbabwe is one of the biggest debtors in the country with government debt being around US$9 billion at the time SI 33/19 was introduced.
Barber offered services to Zambezi Gas Zimbabwe services in May 2018 and invoiced them for US$3 885 000.00. In May 2019, post-S.I 33 of 2019 the Zambezi Gas, following a high court order went on to pay Barber RTGS$ 4 136 806.54, being debt plus interest. However, Barber insisted and made an application that it was still owed US$ 3 992 018.31 as the amount paid was just US$144 778.23 according to the payment date’s interbank rate in May. Barber engaged the Sheriff, to attach Zambezi properties in Hwange to settle the outstanding debt of US$3 992 018.31.
In his ruling, Chief Justice Malaba said: “The High Court further erred in failing to find that the US dollar debt was capable of being discharged at a rate of one US dollar to One Rtgs dollar as specified in Section 4(1)(d) of SI 33/19 and therefore failing to find that the appellant fully discharged the debt on 21 May 2019”. In conclusion, Chief Justice Malaba ruled ” The payment of Rtgs$ 4 136 806.54 made by the appellant was in full and final settlement of the debt in terms of Section 4(1) (d) of the Statutory Instrument 33 of 2019.”
What does it mean?
Well, almost a full year later the final nail has been put into the coffin of any US dollars that were owed before 22 February 2019 being paid as US dollars. Debtors will celebrate if they had not already done so for fear of legal recourse. Those who held on to amounts owed and devalued at them at interbank or another rate will now prepare to write down the value of the debts. Huge losses are set to be incurred.