Maxwell Matsvimbo Sibanda v Gwynne Anne Stevenson

On 28 February 2007, the plaintiff entered into a deed of sale with the defendant for the purchase of immovable property at 47 Addington Lane Ballentine Park, Harare. The purchase price was stated as GBP180,000 payable in six installments of GBP30,000 each. The defendant was a non-resident living outside Zimbabwe. The deed also required payment of rent at GBP250 (payable in Zimbabwe dollar equivalent at official mid-bank rate) and commission to the selling agent at 7.5% calculated at parallel market rate. On 30 March 2007, the plaintiff tendered payment of the first installment in Zimbabwe dollars (Z$14,400,000), which was rejected by the defendant who demanded payment in British pounds sterling. The defendant purported to cancel the deed of sale on 27 April 2007 for non-payment. The plaintiff had no foreign currency account and never obtained exchange control authority to make payment to a non-resident. The plaintiff sued seeking to enforce the deed and pay in Zimbabwe dollars; the defendant counterclaimed for the sale to be declared void.

• Whether the purchase price was payable in British pounds sterling or Zimbabwe dollar equivalent thereof
• Whether there was consensus ad idem between the parties regarding the currency of payment
• Whether the sale contravened the Exchange Control Act and Regulations, rendering it illegal, void and unenforceable
• Whether payment to a non-resident in Zimbabwe without exchange control authority was lawful
• Whether the plaintiff established a prima facie case sufficient to resist absolution from the instance

The defendant was granted absolution from the instance with costs.

The binding legal principles established are: (1) Where a contract clearly specifies payment in foreign currency without providing for payment in local currency equivalent, the court will enforce payment in the specified foreign currency according to the plain meaning of the contract; (2) Payment to or for the credit of a non-resident in Zimbabwe without exchange control authority is unlawful under section 10(1) of the Exchange Control Regulations SI 109/96, regardless of whether payment is tendered in local or foreign currency; (3) A tender of payment made in contravention of exchange control regulations is unlawful and of no force or effect; (4) Courts will not enforce contracts or accept tenders of payment that violate exchange control laws; (5) For absolution from the instance, the test is whether the plaintiff has adduced evidence upon which a court, applying its mind reasonably, could or might find for the plaintiff - that is, whether a prima facie case has been established.

The court made several non-binding observations: (1) The provision for commission payment at the parallel market rate was clearly illegal, though it was what the parties agreed to; (2) Even if the court were to accept payment was to be in Zimbabwe dollars (which it did not), any purported payment would still be unlawful without exchange control authority; (3) The court noted it would be "an exercise in futility" to put the defendant on her defence given the plaintiff's failure to establish a prima facie case; (4) The court observed that the decision in HC 161/08 should assist the parties in relation to the connected case HC 3212/08 brought by Brian Stevenson seeking eviction and holding over damages; (5) The court noted that the plaintiff's calculations and correspondence suggested he was using parallel market rates to assess his ability to acquire the requisite foreign currency, indicating his awareness that foreign currency payment was required.

This case is significant in Zimbabwean contract and exchange control law for several reasons: (1) it demonstrates the principle that clear, unambiguous contractual terms will be enforced according to their plain meaning; (2) it confirms that where parties specify different currencies and exchange rates for different obligations in the same contract, the court will give effect to those distinctions; (3) it reinforces the mandatory nature of exchange control regulations requiring authority before making payments to non-residents; (4) it establishes that courts will not enforce contracts involving unlawful payments under exchange control regulations, even where the payment would be in local currency; (5) it illustrates the application of the absolution from the instance procedure where a plaintiff fails to establish a prima facie case; and (6) it demonstrates that non-variation clauses in contracts will be enforced in the absence of written amendments signed by parties.