Venetian Blinds Specialists Limited V APEX Holdings (Private) Limited

### Preamble
1
HH 408-2012
HC 1658/08
VENETIAN BLINDS SPECIALISTS LIMITED
versus
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VENETIAN BLINDS SPECIALISTS LIMITED
versus
APEX HOLDINGS (PRIVATE) LIMITED

HIGH COURT OF ZIMBABWE
PATEL J

Civil Trial

HARARE, 4 and 11 September and 8 November 2012

J. R. Tsivama, for the plaintiff
A. B. Chinake, for the defendant

PATEL J: The proceedings herein stem from a decision of the Supreme Court in SC 13/12 setting aside the earlier judgment of this Court in HH 87-2010 and remitting the matter for determination after hearing evidence on two specific issues. The first relates to the rate of exchange applicable at the time when the defendant paid the sum of MK4,819,512 in discharge of the judgment of the Malawi High Court. The second pertains to the rate of interest, if any, applicable to the sum of US$848,662 awarded by the Supreme Court of Malawi. As was specifically pointed out in HH 87-2010, no evidence on these issues was adduced by the plaintiff at the previous trial.

The Evidence

Harry Mukaka is employed by the National Bank of Malawi as its Head of Treasury. He has an MBA degree in financial management and is familiar with exchange rates in Malawi. He produced a bundle of documents [Exhibits 6 & 7] showing rates of exchange for the Malawi Kwacha as at 12 March 2004. As against the United States Dollar the applicable rate was 107.7941. The same rate was also applied at that time by the Reserve Bank of Malawi. Under cross-examination, the witness accepted that there was probably a parallel market for foreign currency with different rates and that this would entail distortions in the currency market.


He also stated that the plaintiff was a long-standing client of the National Bank of Malawi. However, he was not being paid any fee for attending the trial.

Mario de Angelis has been the Managing Director of the plaintiff company since 1973. The award made by the High Court of Malawi was for the payment of MK4,819,512.25 comprising special damages (MK1,500,000) loss of profit (MK120,928.50) plus interest (MK3,048,583.75) and costs (MK150,000). The defendant’s lawyers in Malawi had agreed this figure but only remitted MK4,000,000 to the plaintiff’s lawyers on 12 March 2004. As at that date, this amount converted to US$37,107.78. The Supreme Court of Malawi awarded the sums of US$884,662.50 as special damages and MK120,928.50 plus interest for loss of profit. As at 12 March 2004, the latter award amounted to MK3,169,512.25 which converted to US$29,403.39. The amount paid less the amount due left a credit margin of US$7,704.39. The plaintiff’s claim now stands at US$848,662.50 less US$7,704.39, i.e. US$840,958.11 (as per the amended summons dated 28 August 2012) plus interest at 5% per annum from 12 September 2007 to the date of payment. Under cross-examination, the witness conceded that the defendant had transferred the full agreed amount of MK4,819,512.25 to its own lawyers in Malawi on 16 February 2004.

Patrice Chikumbudzo Nkhomo has been a practising lawyer in Malawi since he obtained his first law degree in 1989. He joined a legal firm in Blantyre in 1996 and became its senior partner in 2009. His firm represented the plaintiff in both courts in Malawi and he has been familiar with that case at all relevant times. According to this witness, the law in Malawi governing the payment of interest is as follows. Contractual or discretionary interest must be specifically claimed and pleaded before it can be granted. However, statutory interest applies by operation of law and is neither pleaded nor specifically spelt out in the order of the court. The latter operates by virtue of section 65 of the Courts Act of Malawi [Exhibit 1]. The applicable rate is 5% percent per annum and this has not been altered since the inception of the Courts Act. Section 65 applies generally to every judgment. The courts in Malawi have jurisdiction under the common law to order payments in foreign currency or its Malawi Kwacha equivalent. Any such order is payable or enforceable in the Malawi Kwacha equivalent as at the date of payment or execution. The general application of section 65 has never been disputed through litigation and there is therefore no written judgment on the matter. Where a judgment is expressed only in foreign currency, the debtor has an option to pay in that currency or its Malawi Kwacha equivalent. Interest is calculated as at the date of payment or execution, as may be applicable. Interest begins to run from the date of judgment, which in this case was 11 September 2007. The Supreme Court of Malawi ordered the payment of US$848,000 as special damages in place of the High Court award of MK1,500,000. The interest component was not stated because it was automatically applicable in terms of section 65. On 12 March 2004, his firm received MK4,000,000 from the defendant’s lawyers in satisfaction of the High Court of Malawi judgment, even though the defendant had paid the full MK4,800,000 to its own lawyers. He could not explain what happened to the remainder. At the end of his testimony, the witness was directed to furnish both counsel with copies of Malawi Supreme Court judgments expressed in convertible currency.

Exchange Rate Applicable to Malawi Kwacha Payment

Harry Mukaka testified that the applicable rate of exchange as between the Malawi Kwacha and the United States Dollar as at 12 March 2004 was 107.7941. His evidence in this regard was unchallenged and there appears to be no reason for departing from it. It follows that the amount of MK4,000,000 that was paid by the defendant in satisfaction of the Malawi High Court judgment equated to US$37,107.78. The only question that remains is how much of this amount is to be apportioned towards satisfaction of the judgment of the Malawi Supreme Court.

It is common cause that the Supreme Court awarded the sums of US$884,662.50 as special damages and MK120,928.50 plus interest for loss of profit. The latter award, which was the same as that granted by the High Court, amounted to MK3,169,512.25 as at 12 March 2004. This figure was specifically agreed by the defendant’s lawyers in Malawi as being due to the plaintiff for loss of profit. As at the date of payment, this amount converted to US$29,403.39. The payment of MK4,000,000.00, equating to US$37,107.78, effectively discharged the Malawi Kwacha award and left a credit margin of US$7,704.39. The award for special damages in the sum of US$848,662.50 must therefore be reduced by US$7,704.39, leaving an outstanding balance of US$840,958.11. This is the amount that the plaintiff now claims (in terms of its amended summons) and to which it is entitled under the Supreme Court judgment.

Rate of Interest Applicable to Foreign Currency Award

Patrice Nkhomo testified as to the interest rate applicable to judgment debts under the laws of Malawi. He was specifically directed by the Court to furnish copies of Malawian judgments, expressed in convertible currency, in order to buttress his testimony. He duly furnished a total of 7 judgments, which I shall deal with individually.

*Mbalale v Press (Holdings) Limited* 9 MLR (SCA): This judgment does not appear to have any bearing on the issue at hand. It is not at all clear why it was submitted for consideration.

*Osman v Mahomed* 9 MLR 195 (HC): Judgment in this case was for the plaintiff for MK420, without reference to any interest due.

*Press (Agencies) Limited v Mkwarira* 9 MLR (HC): The court entered judgment for the defendant in the sum of MK1808.89, with no mention of interest.


Suleman v National Insurance Company Ltd [1996] MLR 68 (HC): The plaintiff’s claim for interest from a date preceding the date of judgment was rejected on the ground that section 65 of the Courts Act prescribed interest on any award only with prospective effect, i.e. from the date of judgment.

Sacramie v Ali [1997] 2 MLR 245 (HC): Judgment was entered for the plaintiff in the sum of £20,733.02 plus costs, in terms of Order 42 rule 1(5) of the Rules of the Supreme Court 1965 in respect of the award in foreign currency, without any reference to the interest element.

Simiyoni v Kanyatula [1999] MLR 382 [SCA]: The court rejected the appellant’s specific plea for interest at 46% per annum and applied the rate of 5% prescribed by section 65 of the Courts Act. The court noted that section 65 usually applied to judgment debts. However, it exercised the discretion to grant the statutory interest rate pursuant to section 11(a)(v) of the Courts Act which confers jurisdiction to direct interest to be paid on debts generally. The court ordered payment of an amount of K226,061.43 and expressly awarded interest of 5% per annum on that amount from a date preceding the date of judgment.

Karonga Manufacturers Association v Development of Malawi Traders Trust [1999] MLR [SCA]: The court referred to section 65 of the Courts Act and specifically applied that rate in the circumstances of the case. It ordered the Registrar to make the award based on this interest rate on a claim in Malawi Kwachas.

Section 65 of the Courts Act [Chapter 3:02] of the Laws of Malawi stipulates that:

“Every judgment in civil proceedings shall carry interest at the rate of five per centum per annum or such other rate as may be prescribed.”

The provision is clear and unambiguous in that it applies to every civil judgment. What the provision does not make clear is whether it also extends and applies to judgment awards.
 denominated in foreign currency. The Malawian decisions submitted on behalf of the plaintiff do not really provide any meaningful answer to this question. In the decisions dealing with awards in Malawi Kwachas, the courts have either expressly ordered the payment of statutory interest or not made any mention of the interest due. What does emerge by necessary implication from these decisions is that a claim for statutory interest does not have to be specifically pleaded. However, it does not follow that statutory interest need not be specifically ordered or awarded as part of the court’s judgment. The only judgment in convertible currency (Sacramie’s case) was founded on the rules of court for the award in foreign currency. It seems to me that, if an award in foreign currency is specifically provided for by enactment, the same should apply to the interest component payable on any such award.

In addition to the foregoing reservations, my disinclination against applying statutory interest in casu is fortified by the reasons that I expounded in my earlier judgment in this matter. For the sake of completeness, it is necessary to repeat them.

Firstly, in the absence of any clear indication to the contrary, it must be assumed that section 65 of the Courts Act is confined to claims sounding in the official currency of Malawi. As I have already noted, there is nothing in that provision to suggest that it extends equally to claims sounding in all foreign currencies. As a matter of rational financial principle, the permissible rate of interest applicable to civil claims in foreign currency will inevitably vary according to the currency concerned.

Secondly, and more importantly, what is sought herein is the recognition of a foreign judgment. If our courts are to accord such recognition, they must do so on the judgment ex facie, as duly certified by an authorised official of the foreign court in question. To accept the plaintiff’s claim involves having to materially modify the expressly stated terms of the foreign judgment on the basis of a point of foreign law that has not been duly proven in terms of section 25 of our Civil Evidence Act [Chapter 8:01]. Neither the expert evidence adduced on behalf of the plaintiff nor the reported judgments from Malawi produced by that expert conclusively support the construction that the plaintiff seeks to impose upon section 65 of the Malawi Courts Act.

In the premises, I take the view that the plaintiff has failed to prove, in accordance with section 25 of the Civil Evidence Act, that it is entitled to any interest on the United States Dollar award as from 12 September 2007. This claim cannot be allowed upon the proper recognition of the judgment of the Supreme Court of Malawi. However, what can be claimed and allowed is interest at the rate prescribed in Zimbabwe, either as from the date of summons in this matter or as from the date of judgment herein. Although the plaintiff has not specifically made this claim, it seems to me just and equitable that it be granted in the circumstances of this case as from the date of this judgment.

Disposition

As regards costs, Mr. Tsivama contends that this trial could have been avoided had the plaintiff verified the applicable exchange and interest rates on its own initiative. This, therefore, warrants an award of costs on a punitive scale. Mr. Chinake counters that this prayer is unsubstantiated by any assertion of untoward conduct on the part of the defendant or by any case authority on the point. Moreover, the points of law that have arisen for determination in this matter are both novel and demanding of judicial exposition. I fully agree. The applicability of the statutory rate of interest in Malawi was obviously not incontestable. I would also add that this trial would not have been necessary had the plaintiff itself adduced the requisite evidence at the original trial. It should certainly have done so as regards its claim for statutory interest. Nevertheless, it must be accepted that the plaintiff has substantially succeeded in its principal claim for recognition and enforcement of the Malawian judgments. It is therefore entitled to its costs, but only on the ordinary scale.

In the result, it is declared that the judgments of the Malawi High Court and Supreme Court, handed down on 11 February 2003 and 11 September 2007 respectively, be recognised as legally binding and enforceable in Zimbabwe. Accordingly, the defendant is ordered to pay the plaintiff the sum of US$840,958.11 with interest thereon at the prescribed rate, calculated from the date of this judgment to the date of payment in full, and costs of suit on the ordinary scale.

Sawyer & Mkushi, plaintiff’s legal practitioners
Kantor & Immerman, defendant’s legal practitioners
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