Tian Ze Tobacco Company (Private) Limited v Anxious Jongwe Masuka

The applicant (a tobacco merchant) and respondent (a tobacco grower) entered into a tobacco farming contract. The applicant obtained foreign exchange approval from the Reserve Bank of Zimbabwe and advanced United States Dollars denominated tobacco inputs to the respondent. The respondent failed to pay for the tobacco farming inputs and on 20 January 2017 acknowledged his indebtedness of US$93,914.89, undertaking to pay the debt in full on or before October 2019. From 13 January 2020 to 18 May 2021, the respondent made minimal payments totaling US$1,762.21, leaving an outstanding balance of US$83,937.52. The respondent defended the claim arguing he had paid the debt in full in local currency, relying on Finance Act No. 2 of 2019 which allegedly converted USD obligations to RTGS dollars at 1:1. The applicant had previously issued summons in the magistrate's court (Case No. Com 1231/19) but withdrew the matter due to currency issues and re-instituted proceedings in the High Court.

• Whether the applicant was entitled to summary judgment
• Whether the applicant approached the court with dirty hands
• Whether the applicant was forum shopping by withdrawing the magistrate's court case and filing in the High Court
• Whether the application was res judicata
• Whether the debt was repayable in United States Dollars or in local currency (RTGS/ZWL)
• Whether tobacco merchants who distribute foreign currency denominated inputs are entitled to repayment in foreign currency under Section 44C(2) of the Reserve Bank Act and Exchange Control Circular No. 7 of 2019

1. The application for summary judgment was granted. 2. Respondent was ordered to pay USD$83,937.52 or its equivalent in local currency (ZWL$) at the prevailing official exchange rate on the day of payment. 3. Interest at the prescribed rate per annum from date of summons to date of full and final payment was awarded. 4. Costs of suit on an attorney-client scale were awarded against the respondent.

1. Summary judgment will be granted where a defendant has no bona fide defence to a plaintiff's claim and has entered an appearance to defend solely for the purpose of delay. 2. Where tobacco growers receive USD-denominated input loans pursuant to foreign exchange approval from the Reserve Bank of Zimbabwe, repayments to the tobacco merchant must be in foreign currency (or local currency equivalent at the official exchange rate) in terms of Section 44C(2) of the Reserve Bank Act as amended by SI 33/2019 and Exchange Control Circular No. 7 of 2019, to protect the merchant's investment in offshore funds. 3. Such foreign currency denominated tobacco input loans fall within the exception to the currency conversion provisions of Finance Act No. 2 of 2019 and remain payable in foreign currency. 4. Res judicata only applies where a matter has been litigated to finality and determined on the merits; withdrawal of proceedings before final determination does not trigger the exception. 5. Withdrawing proceedings to correct defects (such as currency clarity) and refiling does not constitute forum shopping or approaching the court with dirty hands.

The court observed that the requirements for summary judgment are stringent and plaintiffs must bring themselves squarely within the provisions of the rules. The court noted that summary judgment is a drastic remedy that takes away from defendants safeguards guaranteed by a full trial, and is based on the supposition that the plaintiff's claim is beyond impeachment on any material basis. The court commented that the respondent was raising frivolous defences despite being aware of court pronouncements on repayment of foreign denominated inputs, which justified the award of costs on an attorney-client scale. The court also noted that the respondent would have sold his tobacco in foreign currency, implicitly suggesting an element of inequity in the respondent's attempt to repay in devalued local currency what he received and profited from in foreign currency.

This case is significant in Zimbabwean commercial law and agricultural financing as it reinforces the protection afforded to tobacco merchants who advance foreign currency denominated inputs to tobacco growers. The judgment clarifies that statutory instruments (Finance Act No. 2 of 2019) converting USD obligations to RTGS at 1:1 do not apply to foreign loans and obligations, which remain payable in foreign currency under Section 44C(2) of the Reserve Bank Act. The case demonstrates the application of summary judgment principles where defences are frivolous and raised solely for dilatory purposes. It also clarifies the principles of res judicata, forum shopping, and approaching the court with dirty hands in the context of withdrawing and refiling actions. The decision upholds the sanctity of foreign currency denominated contracts in Zimbabwe's agricultural sector and provides certainty to tobacco merchants regarding recovery of offshore funds advanced to growers.