Stella Mundi (Private) Limited v Murimi Two Four Seven (Private) Limited & Anor

### Preamble
Judgment No. SC 56/25
Civil Appeal No. SC 601/24
1
REPORTABLE (56)
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REPORTABLE (56)

STELLA     MUNDI    (PRIVATE)     LIMITED

v

MURIMI     TWO     FOUR     SEVEN     (PRIVATE)     LIMITED     (2)    THE     SHERRIFF    OF     ZIMBABWE     N.O

SUPREME COURT OF ZIMBABWE

BHUNU JA, MAKONI JA & MATHONSI JA

HARARE: 7 MARCH 2025 & 10 JULY 2025

E. Donzvambeva, for the appellant

E. Mubaiwa with C. Madhlabe, for the first respondent

MAKONI JA:

This is an appeal against the whole judgment of the High Court, Commercial Law Division, (‘court a quo’) dated 4 October 2024 wherein it dismissed the appellant’s application for a declaratur.

BACKGROUND FACTS

The facts relevant for the determination of this matter are largely common cause.  The appellant is an agricultural company set up by the Zimbabwe Catholic Bishops Conference of the Catholic Church to run specific agro-projects on church farms. Whereas, the first respondent is an agro-technology entity offering among other services, the hiring out of farm equipment and general agricultural advisory services.  The second respondent is the Sherriff of Zimbabwe, who was cited in his official capacity as an officer in charge of executing court judgments.

On 1 June 2022, the appellant and the first respondent entered into a written agreement whereby the first respondent was engaged 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 the first respondent instituting proceedings under HCHC 321/24 wherein it claimed an amount of US$ 242,682.70.  That matter was settled in terms of a consent order with the capital sum being reduced to USD $187,754.42 pursuant to a deed of settlement.  The consent order reads as follows:

“1. The defendant shall pay an amount of US $187,954.42 2. The amount referred to above shall be paid through the plaintiff’s legal practitioners` Trust Account as follows;

(a) US$30,000 on or before 31 July 2024,

(b) US$30,000 on or before 31 August 2024,

(c) US$37,954.42 on or before 30 September 2024,

(d) US$30,000 on or before 31 October 2024,

(e) US$30,000 on or before 30 November 2024,

(f) US$30,000 on or before 31 December 2024

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

3. Each party to bear its own costs.”

In spite of the order, the appellant breached it. It failed to remit the very first instalment that fell due on 31 July 2024.  The first respondent responded to the breach by issuing out a writ which second respondent duly executed by attaching, on 8 August 2024, Stella Mundi`s vehicles and other movables. The removal of the goods was scheduled for                              15 August 2024.  In an effort to remedy the situation it had found itself in, the appellant effected payments totalling Zig 2,588,439 into the first respondent`s bank account.  These payments, made between 14 and 15 August 2024, were a conversion of the judgment debt of USD $187, 754, 42 to the local Zig currency at a rate of one US dollar to 13, 7863 Zig.

Notwithstanding the payments made, the second respondent proceeded to the appellant’s farm on 21 August 2024 to attach the appellant’s property.  Irked by the attachment of its property, the appellant filed an urgent application for a declaratur and consequential relief under HCHC 619/24, in the court a quo.  The appellant sought the following relief:

“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 its agents on the 14 and 15 August 2024 into the first 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 first respondent;

The notice of seizure and attachment of the applicant’s property issued by the second respondent on 21 August 2024 at the instance of the first 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 first respondent be and is hereby ordered to pay the applicant’s costs on a legal practitioner and client scale.”

SUBMISSIONS BEFORE THE COURT A QUO

Mr. Donzvambeva for the appellant, took the position that because it had extinguished the judgment debt, the appellant was entitled to the relief sought.  According to counsel, the appellant’s rights arose from its settlement of the judgment debt in Zig.  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 be converted to the local currency before it could be settled.

Secondly, counsel 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.  In furthering his argument, counsel placed reliance on the case of Makwindi Oil Procurement (Pvt) Ltd v National Oil Co of Zimbabwe 1988 (2) ZLR 482(S) at p 492. He also referred the court to s 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 s 22 of the Finance Act, together with the Supreme Court decision in Zambezi Gas Zimbabwe (Private) Limited v N.R. Barber (Private) Limited & Anor 2020 (1) ZLR 138 (S) declared the judgment debt under consideration as a local obligation.  In light of that, counsel submitted that the debt was payable in local currency at the applicable exchange rate as at the date of payment.  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 ss 2 (6) and 7 of SI 60/24. Be that as it may, counsel admitted two things; (i) the direct payment into applicant`s bank account and (ii) in Zig rather than USD constituted a departure from, but not a breach of, the terms of the order.

Per contra, Mr Madhlabe, for the first respondent, 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 a declaratur and the parties were bound by the original order whose legal effect counsel submitted was sacrosanct.

Counsel further contended that the court was faced with an extant court order which remained unsatisfied.  Accordingly, counsel submitted, that the writ was validly procured and the execution properly carried out. The attempt to settle the judgment debt in Zig offended the clear terms of the court order.  Counsel also argued that the application for a declaratur was a disingenuous ploy to circumvent an order, whose issuance the appellant had consented to.  In emphasizing the sacrosanct nature of an extant court order, counsel relied on the authority of Sunko Mauritius & Anor v Versapak Holdings (Pvt) Ltd & Anor SC 2/22 at para 20.

FINDINGS OF THE COURT A QUO

The court stated that, all the appellant needed to do in order to succeed was to satisfy the requirements for a declaratur.  It stated that the appellant had to firstly prove that it had a direct and substantial interest in the subject matter then the court would consider whether the appellant’s rights warranted a discretionary intervention. The court highlighted that Mr Donzvambeva’s reliance on Makwindi, supra was misplaced as it was a 1988 judgment and since then, the monetary regime in Zimbabwe has changed.

[12]   The court a quo found that s 22 (1) (d) of the Finance Act referred to assets and liabilities which were in existence immediately before the first effective date, 22 February 2019.  It stated that the judgment debt in casu, was issued on 30 June 2024, and did not meet such description.  Further, the court found that s 7 of SI 60/24 related to debts previously valued and expressed in Zimbabwe dollars.  Accordingly, the judgment debt once again, failed to meet that qualification.

Additionally, the court a quo found that, the argument that the Zig stands as the ‘sole legal tender’ to be used exclusively as the local currency could not be sustained.  It held that the judgment debt was born out of the deed of settlement.  Which constituted a new contract.   Accordingly, it held that the parties agreed that the obligation would be met in USD.  To support that finding, the court made reference to this Court’s judgment of Breastplate Service (Pvt) Ltd v Cambria Africa PLC SC 66/20 at p 10.

In line with the above, the court a quo found that, 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 appellant was unable to demonstrate the existence of a right warranting the declaratur it sought, especially where the declaratur concerned carried the effect of setting aside an extant court order issued by consent.  In that regard, the court a quo dismissed the application for a declaratur with costs.  It found nothing that warranted punitive costs on either of the parties.

Aggrieved by the decision of the court a quo, the appellant noted an appeal on the following grounds:

GROUNDS OF APPEAL

“The court a quo erred at law by having accepted that the country is operating in a multi-currency regime which is strictly regulated by statute not giving effect to the relevant statutory provisions contained in s 2 (6) of Statutory Instrument 60 of 2024 and those contained in ss 20 and 22 of the Finance Act (No. 2), 2029 which amended the Reserve Bank of Zimbabwe Act.

The court a quo erred in concluding that there was neither statutory sanctuary nor causa for the declaratory and consequential relief sought when the proceedings had been necessitated by the first respondent’s attempts to unlawfully execute against the appellant’s property after the judgment debt had already been settled in the Zimbabwe Gold (Zig) currency.

The High Court erred at law in finding that a judgment debt borne out of a deed of settlement cannot be settled in any other currency apart from that expressed in the deed of settlement or contract circumstances (sic) where such a judgment debt is included in the statutory definition of financial or contractual obligations.

The court a quo erred at law in basing its conclusion on s 22(1)(d) of the Finance Act (No.2), 2019 as opposed to s 22(1)(e) thereof in finding that a judgment debt issued on 30 June 2024 did not meet the description in the relevant section.

The High Court erred at law in failing to consider the appellant’s submission that payment of the judgment debt into the first respondent’s bank account as opposed to paying into the first respondent’s legal practitioner’s trust account did not prejudice the first respondent and in any event, the order being an order ad pecuniam solvendam, there was performance per aequipollens (in an equivalent manner) in that the judgment debt was paid.

The High Court erred in departing from the common law position that execution cannot be levied in foreign currency, and in the process violated the stare decisis principle of law.

The High Court grossly misdirected itself in the exercise of its discretion on the issue of costs by not awarding costs on a higher scale to the appellant when justification for such an order of costs had been established by the appellant on the papers which were before the court.”

SUBMISSIONS ON APPEAL

Mr Mubaiwa for the first respondent raised a preliminary objection that the appellant’s notice of appeal was fatally defective for the reason that the relief sought was incompetent.  It was his argument that the relief sought by the appellant is not capable of resolving the dispute between the parties.  He that the court a quo determined the matter on a consideration of only one of the requirements of the application for a declarator, namely whether the appellant established a right worthy of protection, and did not proceed to determine the rest of the requirements of the application as this had become unnecessary.  In that regard, so he argued, there are relevant aspects of the matter which are still to receive judicial consideration at first instance.  Where that is the case, so he contended, the only relief that may be sought on appeal is one that remits the matter to the court of first instance so that the first instance considerations may be made.  Mr Mubaiwa further submitted that the position of the law is that a complaint that the court a quo should have done something that it did not do earns the relief of remittal.  The court of appeal may not deal with issues of the granting of a declaratur that were not dealt with by the court a quo at first instance.  He relied on the case of Mutasa & Anor v The Registrarof Supreme Court & Ors SC 27/18 at p 8 where this Court stated the following:

“Clearly the Supreme Court cannot grant a declaratur in the first instance, even where the parties may be in agreement and approach the court by consent seeking an order beyond the courts’ jurisdiction, such consent does not and cannot compel a judge to issue an order beyond his or her jurisdictional authority.”

After engagement with the court Mr Mubaiwa abandoned the preliminary objection, and rightly so, after conceding that the defect in the relief sought related to a question of incompetence and not the exactness of the relief sought.  This did not render the whole appeal defective, as such relief could be amended.  See Gula Ndebele v Chinembiri Bhunu SC 34/10 which is a judgement of three judges and further agreed to by the then Chief Justice.

Mr Donzvambeva then moved the court to allow an amendment to the relief sought to an alternative prayer remitting the matter to the court a quo if the court were to find merit in the appellant’s contentions.  Mr Mubaiwa was not opposed to the application and it was accordingly granted by consent.

[18]  In addressing the Court on the merits, Mr Donzvambeva conceded, properly so in our view, that reliance on Makwindi supra, in the court a quo, was misplaced as the currency regime during that time was different from the current one.  He however maintained his contention that the Zimbabwe Gold (‘Zig’) currency, being legal tender in this country, the judgment debt could be settled in Zig.  He submitted that in terms of s 44(D) (6) of the Reserve Bank Act [Chapter 22:15] a tender in Zig is legal tender alongside all the other currencies as provided for in s 44(A) of the Act.  For that proposition he relied on Breastplate supra para 18-20 p 139.  He argued that the fact that the order by consent was expressed in USD did not take away the appellant’s right to pay in local currency.  He further submitted that the payment of the judgment debt directly into the first respondent’s bank account as opposed to paying into the first respondent’s legal practitioners’ trust account did not prejudice the first respondent.

[19]   In response, Mr Mubaiwa contended that the appellant ought to have settled the judgment debt in United States Dollars (‘USD’) as was stated in the consent order. Counsel’s argument was that the Zig is the legal tender in Zimbabwe ‘alongside’ prescribed currencies like the USD.  As such, he submitted that the appellant could not be allowed to consent to a judgment debt in USD and later switch to settle the debt in Zig.  Counsel also argued that the appellant had received its funding in USD, therefore, it was obliged to settle the debt in USD.

[20] In his final submissions, counsel contended that the appellant had not satisfied the requirements for a declaratur because it did not have any real right in the subject matter of the dispute.

ISSUES FOR DETERMINATION

[21] The two issues that arise in this appeal are; whether or not the appellant satisfied the first requirement for the grant of a declaratur and whether or not an award of costs on a higher scale against the first respondent was justified.

ANALYSIS

Whether or not the appellant satisfied the first requirement for the grant of a declaratur.

[22] The crux of the matter lies on whether the first requirement for a declaratur was met. Section 14 of the High Court Act [Chapter 7:06] clothes the High Court with power to deal with applications for a declaratur.  Section 14 provides:

“14 High Court may determine future or contingent rights.  The High Court may, in its discretion, at the instance of any interested person, inquire into and determine any existing, future or contingent right or obligation, notwithstanding that such person cannot claim any relief consequential upon such determination.”

[23]   The provision has been defined in a number of cases in our jurisdiction.  In Streamsleigh Investments (Pvt) Ltd v Autoband Investments (Pvt) Ltd 2014 (1) ZLR 736 (S) at 750C, it was held that:

“A declaratory order under s 14 of the High Court Act [Chapter 7:06] is appropriate to determine any existing, future or contingent right or obligation. An applicant for a declaratory order must be an interested person in the sense of having a direct and substantial interest in the subject matter of the suit which could be prejudicially affected by the judgment of the court. In addition, an applicant must establish that some tangible and justifiable advantage in relation to its position with reference to an existing, future or contingent legal right or obligation may appear to flow from the grant of the declaratory order sought. See Johnsen v Agricultural Finance Corporation 1995 (1) ZLR 65 (S) at 72E-F; Munn Publishing (Pvt) Ltd v Zimbabwe Broadcasting Corporation 1994 (1) ZLR 337 (S) at 344.”                    (my emphasis)

[24]   The basis on which a declaratur may be granted was also outlined in Dongo v Naik and Ors SC 52/20 at para 12 where it was stated that:

“Before a court can exercise its discretion to grant a declaratur, it must satisfy itself that the person seeking such relief has a real interest in the matter and that there is an existing, contingent or future right to protect. Cilliers AC, Loots C and Nel HC in their book Herbstein and Van Winsen, The Civil Practice of the High Courts of South Africa (5th edn, Juta and Co. Ltd, Cape Town 2009) state as follows in this regard at p 1433 to 1434:

‘It is a trite principle of the common law that an applicant seeking a declaratur must have a direct interest in the right to which the order will relate. The right must attach to the applicant and not be a declaration of someone else’s right. It is essential for a prospective litigant to have the necessary locus standi in law when commencing proceedings…. This requires that a litigant should be both endowed with the necessary capacity to sue, and have a legally recognised interest in the relevant action to seek relief.’”

[25]   As is clear from the above authorities, what is required to be satisfied in an application for a declaratur is firstly whether the party seeking the relief has a real interest in the subject matter of the suit or put differently a legally recognised interest in the relevant action to seek relief.  Secondly whether there is an existing, contingent or future right to protect.  In this case we are concerned with whether the appellant had a real and substantial interest in the subject matter of the suit.

[26]   The background facts in this matter are similar to those in the Zambezi Gas case supra in that the appellant, in that matter, filed an urgent chamber application in the court a quo seeking an order for stay of execution and a declaratory order to the effect that a judgment debt had been fully discharged in terms of SI 33/19.  The court in that matter observed that the matter of the dispute between the parties was the correct interpretation of s 4(1)(d) of SI 33/19.   In analysing the relief which was sought in the Zambezi Gas case, this Court stated at p 142E the following:

“In seeking the declaratory order, the appellant sought an authoritative statement on the discharge of the financial obligations it owed to the first respondent in terms of the order of the court a quo following payment of the amount of money it considered was an exchange rate statutorily prescribed for the kind of debt in question”.

Similarly, the appellant in this matter sought an authoritative statement on the discharge of the financial obligations it owed to the first respondent in terms of the consent order after it had made payment in Zig currency at the prevailing interbank rate in settling the judgment debt.

[27]   In casu, the appellant relied on s 20 of the Finance Act which provides as follows:

“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 be 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).”

[28]   It further relied on s 22(1)(d) and (e) of the Finance Act which provide as follows:

“22 Issuance and legal tender of RTGS dollars, savings, transitional matters and validation

(1) Subject to s 5, for the purposes of s 44C of the principal Act, the Minister shall be deemed to have prescribed the following with effect from the first effective date—

(a) …

(b) …

(c) …

(d) that, for accounting and other purposes (including the discharge of financial or contractual obligations), all assets and liabilities that were, immediately before the first effective date, valued and expressed in United States dollars (other than assets and liabilities referred to in s 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 dealers exchange the RTGS dollar for the United States dollar on a willing-seller willing-buyer basis.”

[29]  It is important to note that SI 60/24 introduced the Zig currency in substitution of the RTGS dollar.  Its purpose was to replace the RTGS with the Zig. Section 2(6) of SI 60/24 provides as follows:

“(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 s 44A.”

[30]   The matter of the dispute between the parties in casu is the interpretation of the above ‘statutory sanctuary’ to determine whether the appellant discharged its obligations in terms of the court order.  By placing the above statutory provisions before the court                        a quo for interpretation the appellant laid a basis for establishing its right to seek the declaratur.  The court a quo therefore misdirected itself when it stated the following;

“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.”

[31]   The appellant is correct in its submission that the court a quo did not relate to subsection (e) of s 22 (1).  In dealing with s 22 the court stated.

“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, s 7 of SI 60/24 relates to debts previously valued and expressed in Zimbabwe dollars. The judgment debt once again, fails that qualification.”

If it had related to that sub- section, it might have arrived at a different conclusion regarding whether the appellant had a real and substantial interest to seek the declarator.  Whether the appellant will be able to establish the other requirements for the grant of a declaratur is still to be seen.

In the circumstances, it is appropriate to remit the matter to the court a quo to allow it to exercise its discretion, as a court of first instance, in determining all the other requirements for the grant of a declaratur.  In view of the above finding, it will not be necessary to consider the remaining issue.  Regarding costs, the appellant, having been successful, is entitled to costs.

DISPOSITION

[32]  It is accordingly ordered as follows:

The appeal be and is hereby allowed with each party bearing its own costs.

The judgment of the court a quo is set aside.

The matter is remitted to the court a quo, before the same Judge, for a determination of the other requirements for a declaratur.

BHUNU JA		:	I agree

MATHONSI JA	:	I agree

Wintertons, appellant’s legal practitioners

Hove Legal Practice, first respondent’s legal practitioners