The
plaintiff issued summons against the defendant on 19 May 2007 seeking
an order for the payment of damages in the sum of $20 billion.
In
her declaration, she averred that she had purchased, from the
defendant, certain immovable property situate in the district of
Kariba for the sum of $180 billion which she paid in full. At the
time of the agreement of sale, the defendant had already sold the
same property to a company going by the name of Woolwork Investments
(Pvt) Ltd. On account of this prior sale, the plaintiff further
averred that the sale to her was a fraud as the defendant knew he had
disposed of his rights in the property and had none to sell to the
plaintiff. Thus, she claimed damages from the defendant.
The
claim was defended.
The
matter proceeded to a pre-trial conference where, due to the plea
that had been taken by the defendant, the issues for trial were
settled as follows:
1.
Whether the plaintiff and the defendant entered into an agreement of
sale in respect of House No.52 Beira, Mahombekombe, Kariba;
2.
Whether the defendant breached the agreement of sale by failing to
transfer the property to the plaintiff;
3.
Whether, as a result of the breach, the plaintiff is entitled to
consequential damages, and, if so, the quantum thereof;
4.
Whether the plaintiff is entitled to costs on a legal practitioner
and client scale.
At
the trial of the matter, the parties advised that the defendant was
no longer defending the claim and that the sole issue that fell for
determination in this matter is the quantum of damages due to the
plaintiff.
The
parties further narrowed down the issue between them to one of
establishing the current market value of the property. The defendant
agreed that such would represent the quantum of damages due to the
plaintiff.
It
is pertinent at this stage to note that prior to the matter being set
down for hearing, the plaintiff had applied to amend her declaration
to increase the amount of damages sought to US$35,000=. No objection
having been raised against the amendment, I duly granted it with the
consent of the defendant.
The
plaintiff called the evidence of one Emmanuel Mutambirwa. He is
employed by the City of Harare as a Chief Valuations Officer. He
holds a Diploma in Quantity Surveying, a Bachelor of Banking and
Commerce degree and an MBA, amongst his qualifications, all of which
are set out in the report that he compiled on the value of the
property in dispute. In or about October 2008, he visited the
property in question and formed the opinion as to the value of the
property. He revisited his opinion on 12 February, and, taking into
account the trends in the property market, revalued the property at
US$35,000=.
The
witness, who, in my view is well qualified to give values of
properties, gave his evidence well. He was understandably excited in
having to be the first to testify in the matter and at times would be
unnecessarily argumentative in his responses to questions put to him
in cross-examination. All in all, I have little difficulty in
accepting that he gave me his honest opinion on the value of the
property in dispute.
The
defendant also testified as to the value of the property.
He
averred that he purchased the property from his employer, on a date
that he cannot recall, for the sum of $150,000=. In his opinion, if
he were to sell the property on the date of the trial, he would not
ask for more than US$5,000=.
Clearly,
the defendant is not an expert in the field and his opinion, as to
the value of the property, is of marginal probative value.
The
issue that has exercised my mind in this matter is not so much the
current market value of the property in dispute, but, rather,
whether, in the circumstances of this matter, I can award damages
sounding in foreign currency.
In
his address, counsel for the plaintiff was of the view that I can,
following the decision in Makwindi
Oil Procurement (Pvt) Ltd v National Oil Company of Zimbabwe
1988
(2) ZLR 482 (SC). On his part, counsel for the defendant confined
himself to arguing that the plaintiff had not sufficiently proved her
claim.
Makwindi
Oil Procurement (Pvt) Ltd v National Oil Company of Zimbabwe
1988
(2) ZLR 482 (SC)
was a ground breaking decision seeking to reconcile two conflicting
judgments of this court.
In
1985, MFALILA J, in National
Food Distributors v Weltman
1985 (2) ZLR 310 (HC), had held that in the face of exchange control
restrictions, Zimbabwe courts could not freely give judgments in
foreign currency even where the proper law of contract is foreign
law. Anyone seeking redress in Zimbabwean courts would have to state
their claim and have their judgment in Zimbabwean currency. In 1988,
ADAM J took a different position in the Makwindi
Oil Procurement Company
matter, a decision that was then taken on appeal.
After
reviewing the trend in English and South African cases on the issue,
GUBBAY CJ was of the view that in the absence of any legislative
enactments which require our courts to order payment in local
currency only, the innovative approaches taken in England and in
South Africa, in making orders in foreign currency had to be adopted.
This would bring Zimbabwe into line with many foreign legal systems.
Specifically
regarding the award of damages in foreign currency, the learned judge
appears to have fully endorsed the approach taken by the House of
Lords in two appeals held concurrently were unanimous that that the
approach taken earlier would also apply to claims for damages.
In
allowing the appeal that was before them, GUBBAY CJ held, on the
facts of the matter before the court, that the plaintiff, a company
that conducted business in this country and was subject to exchange
control regulations, and had to purchase its foreign currency using
local currency, had failed to persuade him that its loss was in
United States Dollars. He was of the view that the loss of foreign
currency was felt or borne by the national foreign currency reserve
and not by the plaintiff itself.
From
his judgment, it appears to me that GUBBAY CJ was approving the
approach by LORD WILBERFORCE in Owners
of the MV
Eleftherotria v Owners of the MV
Despina
R [1971]1 All ER 421 (HL)…, where he stated:
“It
appears to me that the plaintiff, who normally conducts his business
through a particular currency, and who, when other currencies are
immediately involved, uses his own currency to obtain those
currencies, can reasonably say that the loss he sustains is to be
measured not by the immediate currencies in which the loss first
emerges but by the amount of his own currency, which, in the normal
course of operation, he uses to obtain those currencies. This is the
currency in which his loss is felt, and is the currency which it is
reasonably foreseeable he will have to spend.”
In
the same year that the Supreme Court handed down its judgment in
Makwindi
Oil Procurement (Pvt) Ltd v National Oil Company of Zimbabwe
1988
(2) ZLR 482 (SC),
a similar approach was taken in South Africa in Elgin
Brown and Hammer v Dampskibsselskabet Torm Ltd
1988 (4) SA 671 (NPD).
After
citing the passage I have cited above from Owners
of the mv Eleftherotria v Owners of the mv Despina
R [1971]1 All ER 421 (HL), the learned judge in that matter proceeded
to hold that the court has a discretion which currency to award the
judgment in, and, with refreshing clarity, had this to say about
claims for damages…,:
“Where
a loss is in fact suffered in a foreign currency, there is, as I see
it, no reason not to assess and quantify the damages in that
currency; indeed, not to do so might be to deny a plaintiff the
amount of his actual loss.”
In
the matter before him, the learned judge observed that the main heads
under which the loss suffered by the plaintiff were either in the
sense of money actually expended or money not received. These amounts
were all in foreign currency, and, in the opinion of the learned
judge, the plaintiff's loss was felt in foreign currency. That
being so, the only way the plaintiff could be compensated properly
for its loss was to grant judgment in foreign currency.
A
review of the authorities on the matter appears to me to indicate
that where there is no statutory bar, the courts can award judgments
sounding in foreign currency. For damages claims, the plaintiff must
prove that his or her loss was suffered in foreign currency, or, put
in the language of LEON J in Elgin
Brown and Hammer v Dampskibsselskabet Torm Ltd
1988 (4) SA 671 (NPD), the plaintiff must prove that he or she felt
the loss in a foreign currency.
In
casu,
the plaintiff has approached the court for damages arising out of the
failure of the defendant to transfer to her certain immovable
property. I am persuaded that the property may command a purchase
price of the amount of the claim by the plaintiff. However, it has
not been argued before me that the property does not have a value in
local currency. I would want to believe that it still has, but, as
implicit in counsel for the applicant's
submissions, the United States Dollar and other foreign currencies
from the region have become the de
facto
currencies of Zimbabwe. The local currency has been rendered
valueless by inflation.
In
my view, the facts of this matter and the challenges posed by the
hyperinflationary environment that Zimbabweans find themselves
operating under present a res
nova
that was not envisaged by the decisions that I have referred to
above. The issue that arises is whether a claim for delictual damages
may be redressed in foreign currency where it has been felt in both
the local and the foreign currency but the local currency has been
ravaged by inflation and is de facto valueless.
The
authorities seem to suggest that where the loss has been suffered in
a particular currency, there is no good reason why the court should
not award damages in that currency. They do not seem, to me, to
proceed further to hold that where a loss has been suffered, the
plaintiff may choose that currency in which he or she would like the
loss to be redressed.
In
my view, the facts of this matter present a situation where a loss
has indeed been suffered. The loss so suffered has been calculated in
one foreign currency as opposed to the local currency for the reasons
given by counsel for the applicant.
It
appears to me that the issue I have to determine is whether to extend
the approach that has been taken in Makwindi
Oil Procurement (Pvt) Ltd v National Oil Company of Zimbabwe
1988
(2) ZLR 482 (SC)
and be innovative enough to suggest that where a loss has been
suffered and can be calculated in both the local and in a foreign
currency, the court has a discretion to award judgment in that
currency that will redress the injury suffered and adequately
compensate the plaintiff for the loss. It would then follow that
where that currency is the foreign currency as opposed to the local
currency, then judgment should be in the foreign currency - for, to
award damages in the local currency, where the local currency has
been rendered valueless by inflation might be to deny a plaintiff the
redress that he or she seeks.
I
must confess that I find this approach attractive.
It
is not in violation of any statutory provision governing exchange
control. It does not render the local currency any less legal tender
than do other judgments expressed in foreign currency. It is simply
an act of applying the approach to a situation that has arisen due to
the ravages of inflation and one that could not have been anticipated
when Makwindi
Oil Procurement (Pvt) Ltd v National Oil Company of Zimbabwe
1988
(2) ZLR 482 (SC)
was decided. Like the Law Lords in 1975, I am merely opting for a
more realistic approach to the current economic conditions prevailing
in the country, and, as GUBBAY CJ observed in Makwindi
Oil Procurement (Pvt) Ltd v National Oil Company of Zimbabwe
1988
(2) ZLR 482 (SC)…,:
“That
the majority of the Law Lords succeeded in surmounting (such) an
obstacle and opted for a more realistic approach to modern economic
conditions, is strongly illustrative of the concept, never to be
overlooked, that the law is a living system that adapts to the
necessities of present times and is to be given new direction, where,
on principle and in reason it appears right to do so.”
In
the result, I make the following order:
Judgment
with costs is hereby entered for the plaintiff in the sum of
US$35,000=.
