No. SC 114/02
Appeal No. 277/02
LEATHER PRODUCTS (PRIVATE) LIMITED
INTERNATIONAL FINANCE CORPORATION LIMITED
SHERIFF, MARONDERA, N.O.
COURT OF ZIMBABWE
CHEDA JA & ZIYAMBI JA
NOVEMBER 21, 2002 & JANUARY 16, 2003
for the appellant
P de Bourbon SC,
for the first respondent
appearance for the second respondent
This is an appeal against a judgment of the High Court which
dismissed with costs the appellants application
for an interim
interdict restraining the respondents from proceeding with the sale
in execution of the appellants property, pending
of an application for certain declaratory relief.
facts are these. The appellant is an exporter of wet blue hides
from Zimbabwe, for which it earns foreign currency.
On 10 March
1997 the appellant and the first respondent (the IFC) concluded
a loan agreement, in terms of which the
IFC disbursed to the
appellant US$300 000.00 to enable the appellant to conduct its
export business. The agreement specifically
provided that the loan
was to be repaid in United States dollars.
conducting its export business, the appellant reneged on the
agreement and did not pay the loan as previously agreed.
the IFC instituted legal proceedings against it in the
High Court and obtained a judgment for payment of
(a) US$300 000.00;
(b) US$155 122.05, being
interest on the sum of US$300 000.00 up to 1 January 2002;
(c) US$62 111.26,
being interest on overdue capital and interest;
interest on the sum of US$300 000.00, calculated from 2 January
2002 to the date of payment in full;
(e) Commitment fees of US444.41;
commission and costs of suit on a legal practitioner and client
judgment was not satisfied, the IFC sued out a writ of execution and
the appellants property was subsequently attached.
negotiations aimed at reaching a settlement were embarked upon but
without success. The appellant then tendered payment
of the full
judgment debt in Zimbabwe dollars, the United States
dollars payable in terms of the judgment having been converted to
Zimbabwe dollars at the official exchange rate of US$1
= Z$55. The
tender was rejected by the
IFC which insisted that payment had to be in foreign currency as
agreed. Consequently, the appellant filed an urgent application
the High Court seeking an interim interdict restraining the
respondents from proceeding with the sale in execution, pending the
determination of an application for an order directing that payment
of the judgment debt be made in the Zimbabwe dollar equivalent
foreign currency due, the conversion being at the official rate
obtaining on the date of payment.
application was dismissed with costs. Aggrieved by that decision,
the appellant appealed to this Court.
requisites for the grant of an interim interdict are well
established. They are: (a) a prima
right; (b) a well-grounded apprehension of irreparable harm if the
interim interdict is not granted and the ultimate relief is
granted; (c) that the balance of convenience favours the
granting of an interim interdict; and (d) that the applicant has no
judge in the court a quo
dismissed the appellants application because, in his view, the
appellant had not established a prima
right to the ultimate relief sought in the main application, i.e. an
order directing that payment of the judgment debt be made in
Zimbabwe dollar equivalent of the foreign currency due. In the
circumstances, he was of the view that the appellants application
for the ultimate relief was unlikely to succeed.
In my view,
the learned judge was correct. According to the loan agreement, the
appellant did not have the right to repay the
loan in Zimbabwe
dollars. In terms of that agreement, the appellant accepted the
of the Company (i.e. the appellant) is to pay in Dollars the
aggregate amount of the principal of, and interest, front-end
commitment fee on the loan, and any other amounts payable in Dollars
under this Agreement shall not be deemed to have been
discharged or satisfied by any tender of (or recovery under judgment
expressed in) any currency other than Dollars, except
to the extent
to which such tender (or recovery) shall result in the effective
payment of such aggregate amount in Dollars at the
pursuant to this Agreement and, accordingly, the amount (if any) by
which such tender (or recovery) shall fall short
of such aggregate
amount shall be and remain due to IFC as a separate obligation,
unaffected by judgment having been obtained (if
such is the case) for
any other amounts due under or in respect of this Agreement.
term Dollars was defined as the lawful currency of the
United States of America.
clearly, the parties specifically agreed that the loan would be
repaid in United States dollars and not in any other
This special stipulation distinguishes the present case from the case
Oil Procurement (Private) Limited v National Oil Company of Zimbabwe
1988 (2) ZLR 482 (S). In addition, unlike Makwindi Oil Procurement
(Private) Limited, a local company, the IFC is an international
financial institution with its headquarters in the United States of
America and normally conducts its business in United States
circumstances, the performance must be in
i.e. exactly in the manner specified in the loan agreement, unless
the appellant alleged and proved impossibility of performance,
it did not do.
Mr de Bourbon,
who appeared for the IFC, submitted that the law would fail the
parties if the appellant were permitted to pay the judgment debt
Zimbabwe dollars, bearing in mind the existence of a parallel market
on which the exchange rate is more attractive than the fixed
statutory exchange rate, as disclosed by the evidence led in
Limited v Kerr & Downey Safaris (Private) Limited
HH-94-2002 (not yet reported). He submitted as follows:
capital sum due in terms of the judgment is US$517 677.72 with
further interest from 2 January 2002. That capital
sum at 55:1
converts to $28 472 274.60.
effect, the appellant is saying that it will pay $28 472 274.60
in full satisfaction of its obligation to the first
pay that sum at the current parallel market rate (approximately
900:1) would mean an expenditure of US$31 635.86,
or 10.54% of
the original disbursement of US$300 000.00.
differently, the appellant stands to make a profit from the loan of
agree that that result would be grossly unfair and unjust and should
not be sanctioned by this Court.
who appeared for the appellant, submitted that the learned judge in
the court a quo
erred in holding that it was possible in this country to levy
execution in foreign currency. With respect, the learned judge did
not say that. On the contrary, he was alive to the fact that
execution could not be levied in foreign currency. In his judgment
he said the following:
also added that his client (i.e. the IFC) was aware that execution
was to be carried out in local currency. The issue of foreign
currency would be between it and the Government of Zimbabwe, in terms
of Articles of Agreement between it and the Zimbabwe Government.
(i.e. the appellant) also could not challenge the fact that despite
the fact that the sale in execution was to be in
local currency, the
first respondent (the IFC) was to negotiate with the Zimbabwe
Government in order to effectively have the judgment
in full as ordered in HC-1130-2002 without contravening any
provisions of the Exchange Control Act and Regulations.
understanding of Mr de Bourbons
argument was that after the sale in execution the proceeds thereof
would be converted to United States dollars in terms of an
agreement between the IFC and the Government of Zimbabwe. The
submission that such an agreement existed was not challenged in the
court a quo
and in this Court. I must, therefore, accept that such an agreement
exists, although the details thereof have not been given.
the fact that the appellant did not ask for the details of the
agreement must mean that it is aware of the terms of the
and that Mr de Bourbons
submission is correct.
circumstances, the appeal is devoid of merit and is, therefore,
dismissed with costs.
JA: I agree.
appellant's legal practitioners
first respondent's legal practitioners