Muhammad Akram v Olga Mukwindidza & Anor

The applicant, a Pakistani national, obtained a default judgment against the first respondent on 12 February 2018 for USD175,720 (plus interest and costs) arising from extortion, fraud and forgery. The first respondent had blackmailed him into paying large sums over a period, faking a pregnancy and obtaining a fake birth certificate. She was convicted criminally and the magistrate's court ordered restitution which she failed to pay, leading to fresh High Court proceedings. On 22 February 2019, S.I. 33/19 introduced the RTGS Dollar, converting USD-denominated assets and liabilities to RTGS dollars at 1:1, with certain exemptions. On 29 November 2019, the first respondent paid ZW RTGS190,000 to the Sheriff, purportedly discharging the judgment debt. The applicant argued the judgment debt fell within exemptions in s 44C(2) of the Reserve Bank Act as it originated from foreign currency cash deposits from offshore funds, and therefore remained payable in USD or at the prevailing exchange rate.

• Whether a judgment debt denominated in USD before the effective date of S.I. 33/19 was subject to conversion to RTGS dollars at 1:1 under s 4(1)(d) of S.I. 33/19
• Whether a judgment debt falls within the exemptions provided in s 44C(2) of the Reserve Bank of Zimbabwe Act based on the origin or source of funds underlying the judgment
• Whether payment of a converted amount in RTGS dollars extinguished a pre-existing USD-denominated judgment debt

The application was dismissed with costs on the ordinary scale.

A judgment debt denominated in United States dollars before the effective date of S.I. 33/19 (22 February 2019) is subject to conversion to RTGS dollars at a rate of 1:1 under s 4(1)(d) of S.I. 33/19, regardless of the origin or source of the funds underlying the judgment. The origin of liabilities is not a criterion for exclusion from the conversion provisions. Judgment debts do not fall within the exemptions provided in s 44C(2) of the Reserve Bank of Zimbabwe Act, which apply only to: (a) funds held in Nostro FCA accounts, and (b) foreign loans and obligations denominated in foreign currency. Payment of the converted RTGS amount extinguishes the judgment debt.

The court acknowledged that S.I. 33/19 changed the monetary landscape drastically, causing enormous losses to some people while conferring advantages on others. The court expressed sympathy for the applicant's situation, noting he had suffered gigantic losses and describing the case as almost qualifying as public interest litigation. The court stated the applicant could not be penalized for attempting to mitigate his losses, which is why costs were awarded on the ordinary scale rather than the higher scale sought by the first respondent. The court rejected the characterization of the application as an abuse of process, despite the matter having been authoritatively settled by the Supreme Court in the Zambezi Gas case.

This case reinforces and applies the binding Supreme Court precedent in Zambezi Gas Zimbabwe regarding the application of S.I. 33/19 and the conversion of USD-denominated judgment debts to RTGS dollars. It confirms that judgment debts, regardless of their origin or the source of underlying funds, do not fall within the exemptions in s 44C(2) of the Reserve Bank Act and are subject to mandatory 1:1 conversion. The case illustrates the profound impact of S.I. 33/19 on existing legal obligations and the court's strict interpretation of statutory exemptions. It establishes that courts will not look behind or beyond judgment debts to consider the origin of funds when applying currency conversion legislation.