Rainbow Cash & Carry (Pvt) Ltd v Falcon Foods (Pvt) Limited

The Plaintiff and Defendant entered into a lease agreement in mid-2016 for several warehouses in Harare. The lease agreement stipulated rent payable in United States Dollars (US$) and contained a clause requiring any variation to be recorded in writing. No written variation was ever executed. The Defendant stopped paying rent from February 2020. The Plaintiff claimed arrear rentals of US$135,931.36 for Warehouse No.1 and Office No.4 for the period February 2020 to June 2021 (warehouse) and February 2020 to October 2021 (office). The Defendant admitted liability but disputed the amount and currency, arguing it owed only ZWL$98,216.91. The dispute centered on whether SI 33/2019, which introduced the RTGS dollar and regulated foreign currency obligations, converted the contractual US$ obligation into local currency or merely regulated the mode of payment.

• Whether SI 33/2019 altered the base currency of the lease agreement from US$ to ZWL$ or merely regulated the mode of settlement of foreign currency obligations
• Whether the Defendant's failure to respond to the Plaintiff's letter of 16 October 2020 constituted an admission of the debt and its currency
• The proper calculation of rent arrears including the correct area of the leased premises and the applicable rental rate per square metre
• Whether a sum of US$73,232.13 mentioned in correspondence related to rent arrears or a separate joint venture obligation
• Whether the office space was shared between the parties from April 2020 to October 2021, thereby reducing the Defendant's rental liability

1. The Defendant shall pay the Plaintiff the sum of US$129,276.54 (one hundred and twenty-nine thousand, two hundred and seventy-six United States Dollars and fifty-four cents), or the equivalent in RTGS$ convertible at the interbank rate prevailing at the time of payment being arrear rentals owed to the Plaintiff by the Defendant. 2. Costs of suit.

SI 33/2019 does not purport to amend or vary the base currency of existing contracts between private parties, but rather regulates the mode of settlement of obligations sounding in foreign currency. Where a contract expressly requires variations to be in writing, no oral or implied variation will be recognized. Section 4(1)(e) of SI 33/2019 applies to obligations arising after the effective date, requiring settlement in US$ or its equivalent at the prevailing interbank rate. The terms of a written lease agreement remain binding on the parties absent a written variation as required by the contract itself, regardless of subsequent currency regime changes introduced by statutory instrument.

The court expressed concern about the lack of mathematical precision in the lease contract, noting that it was silent on critical details such as the exact square metres being rented, the size of particular warehouses, and the charge per square metre. The court also criticized the Plaintiff's pleadings for exhibiting "chameleonic features and tendencies at each and every turn," noting that the claim changed significantly from the particulars of claim to the evidence at trial. The court observed that "it is always desirable that litigants know their story and never without good cause depart from it in their pleadings including their testimonies under oath." The court commented on the apparently cordial relations between the parties in April 2020 when the advertisement board was placed, noting that had the Defendant been unhappy with any sharing of office space, he would likely have protested at the time.

This case is significant in Zimbabwean commercial law for its interpretation of SI 33/2019 in the context of pre-existing contractual obligations denominated in foreign currency. The judgment clarifies that SI 33/2019 did not operate to convert the base currency of existing contracts from US$ to local currency, but rather regulated the mode of settlement of such obligations. The case reinforces the principle of sanctity of contract, particularly the requirement that variations to written contracts must themselves be in writing where the contract so provides. It also provides guidance on the interaction between statutory currency regulations and private contractual arrangements during Zimbabwe's currency transition period. The judgment demonstrates the court's approach to dealing with inconsistent pleadings and the importance of maintaining clarity and consistency in litigation.