Exodus and Company (Private) Limited v Sicilia Virginia Shavi

On 11 June 2014, the appellant and respondent entered into an agreement for the sale of land during the multi-currency era. The purchase price was US$60,000.00, with a deposit of US$18,000.00 and monthly installments of US$691.00 for 120 months starting 31 July 2014. The agreement contained clause 3.5 which provided that if Zimbabwe's currency system changed from multi-currency, the seller could choose the currency for outstanding amounts, convert at an exchange rate determined by the seller where multiple exchange rates existed, or cancel the agreement if the buyer disagreed. In October 2019, the appellant claimed arrears of US$9,619.13 payable in Zimbabwean dollars at the prevailing interbank rate. The respondent defended on the basis that the debt was converted to Zimbabwe dollars by operation of law (SI 33/2019, SI 212/2019, SI 213/2019, and Finance Act No. 2 of 2019) at a rate of 1:1, and that she had paid the balance in full. The respondent counterclaimed for transfer of the property. The Magistrate Court dismissed the appellant's claim and upheld the counterclaim. The appellant appealed to the High Court.

• Whether the principle of sanctity of contract should prevail over statutory provisions regulating currency conversion
• Whether the appellant could lawfully apply the interbank rate to enforce payment of instalments under clause 3.5 of the agreement
• Whether the respondent had paid the purchase price in full by paying in RTGS dollars at a 1:1 conversion rate as prescribed by law
• Whether contractual provisions providing for alternative exchange rates can override mandatory statutory provisions on currency conversion
• Whether the respondent was entitled to transfer of the property

The appeal was dismissed with costs on the ordinary scale. The Magistrate Court's order dismissing the appellant's claim and upholding the respondent's counterclaim was confirmed.

Contractual provisions must be read in light of and in compliance with statutory requirements, and cannot override mandatory provisions of law. Where legislation prescribes a specific exchange rate for the conversion of pre-existing US dollar obligations (in this case, a 1:1 rate under SI 33/2019 and section 22 of the Finance Act No. 2 of 2019), parties cannot rely on contractual clauses to impose different exchange rates, even where such clauses were agreed in anticipation of currency changes. The doctrine of sanctity of contract does not permit parties to contract out of statutory obligations relating to currency and monetary policy. Assets and liabilities denominated in US dollars before 22 February 2019 (the effective date) must be converted to RTGS dollars at the statutory rate of 1:1, and payment in RTGS dollars at this rate constitutes lawful discharge of the obligation.

The court observed that while the appeal was dismissed, costs at a higher scale were not justified as the appeal was neither frivolous nor vexatious, nor was it an abuse of court process. The court noted that clause 3.5 was agreed to by the parties in anticipation of currency changes, which were "inevitable," demonstrating that such changes did indeed occur in 2019. The court acknowledged the well-established principle of sanctity of contract and that courts should not rewrite contracts for parties, citing several authorities including Book v Davidson 1988 (1) ZLR 365 (S) and Magodora v Care International Zimbabwe 2014 (1) ZLR 397 (S), but emphasized that this principle must yield to statutory requirements.

This case is significant in Zimbabwean jurisprudence as it affirms the supremacy of statutory law over contractual provisions in matters of currency regulation and monetary policy. The judgment clarifies that parties cannot contract out of mandatory statutory provisions governing currency conversion, even where they have expressly anticipated currency changes in their agreement. The case reinforces the principle that contractual terms must be interpreted and applied in compliance with the law, and that the doctrine of sanctity of contract does not permit parties to circumvent statutory obligations. It provides important guidance on the interpretation and application of SI 33/2019 and the Finance Act (No. 2) of 2019, particularly the mandatory 1:1 conversion rate for pre-existing US dollar obligations. The case demonstrates the limits of freedom of contract where public policy, as expressed through legislation on monetary matters, is at stake.