Homelink (Private) Limited v Clever Maputseni

On 17 August 2018, the parties entered into a loan agreement effective 30 October 2018. The appellant, a registered money lender in Zimbabwe, granted the respondent, a Zimbabwean national living in the diaspora, a loan of US$450,000 to purchase immovable property in Harare. The property was mortgaged as security. The loan was to be repaid by 30 September 2033 with variable interest at 10% per annum calculated on the outstanding balance expressed in United States dollars. The loan was disbursed in two tranches: US$5,685.85 on 13 September 2018 in US dollars, and US$444,341.15 on 16 November 2018 in RTGS dollars at a one-to-one rate. Following the promulgation of S.I. 33/2019 on 22 February 2019 (later incorporated into the Finance (No. 2) Act, 2019), which converted USD-denominated assets and liabilities to RTGS dollars at a one-to-one rate, a dispute arose as to whether the loan should be repaid in US dollars or RTGS dollars. The respondent applied to the High Court for a declaration that payment in RTGS dollars constituted full settlement. The High Court granted the declaratur on 8 September 2020. The appellant appealed.

• Whether the matter was moot given alleged payments made by the respondent after the High Court judgment
• Whether the loan agreement constituted a 'foreign loan' or 'foreign obligation' excluded from the operation of s 4(1)(d) of S.I. 33/2019 and s 22(1)(d) of the Finance (No. 2) Act, 2019 by virtue of s 44C(2)(b) of the Reserve Bank of Zimbabwe Act
• Whether the court could override the parties' contractual agreement to repay in US dollars in light of the statutory conversion provisions

The appeal was dismissed with costs on the ordinary scale.

A loan agreement does not constitute a 'foreign loan' or 'foreign obligation' excluded from currency conversion legislation under s 44C(2)(b) of the Reserve Bank of Zimbabwe Act where: (1) both the lender and borrower are Zimbabwean entities/nationals; (2) the agreement is executed in Zimbabwe; (3) the purpose of the loan is the purchase of property in Zimbabwe; and (4) the loan is disbursed substantially in local currency. Such domestic loans fall squarely within the provisions of s 4(1)(d) of S.I. 33/2019 and s 22(1)(d) of the Finance (No. 2) Act, 2019, which deem all assets and liabilities valued in US dollars immediately before 22 February 2019 (except excluded foreign obligations) to be converted to RTGS dollars at one-to-one. Where clear statutory provisions apply, the legislature's intention takes precedence over the parties' contractual intentions, including agreed repayment currencies.

The Court observed that it would be absurd for a lender to receive repayment in US dollars for a loan that was substantially disbursed in local RTGS currency. The Court also noted that it is beyond the scope of the Reserve Bank of Zimbabwe to convert what is factually a domestic loan into a foreign loan through the granting of exchange control approvals. The Court remarked on the appellant's failure to produce the allegedly crucial RBZ approval document (GR4268), noting that courts decide matters on the basis of evidence placed before them and cannot take into account evidence not presented. While the appellant urged a 'wider' or 'more generous' definition of 'foreign loan', no specifics were provided as to the nature or source of such a definition.

This case provides important clarification on the application of Zimbabwe's currency conversion legislation (S.I. 33/2019 and the Finance (No. 2) Act, 2019) to domestic loan agreements. It establishes that the classification of a loan as 'domestic' or 'foreign' depends on objective factual criteria including the nationality and domicile of the parties, the place of execution, the purpose of the loan, and the currency of disbursement - not merely on the contractual designation of the repayment currency. The judgment affirms that statutory currency conversion provisions override contractual terms where the loan does not qualify as a 'foreign loan' or 'foreign obligation' under s 44C(2)(b) of the Reserve Bank Act. It demonstrates the limits of contractual freedom when legislation intervenes in the public interest to regulate currency matters. The case also illustrates the proper approach to determining mootness where parties dispute whether a controversy has been resolved.