London-listed Cambria Africa PLC has won a legal case against Breastplate Services trading as Nemchem International over payment of outstanding shares obligation in United States dollars under a legal agreement signed by the two parties.
The dispute arose from a 2016 agreement where Cambria sold its entire issued share capital of its Zambian unit, Milchem for US$46 347. The full amount was to be paid by March 31, 2016.
The nature of the agreement between the parties was exclusively to be settled in hard currency and to be deposited into a Nostro account registered in Cambria’s name in a Zimbabwean bank. But Nemchem has been refusing preferring to settle the outstanding amount in Zimbabwe
In his judgment this week for case number HC 235/18 HMT 55/19, High Court’s Justice Isaac Muzenda said: “The defendant is ordered to pay plaintiff the sum of US$31 400.
Interest thereon at the prescribed rate of interest per annum from January 19, 2018 to the date of payment in full and final settlement and cost of suit ordinary scale.”
This is the first time a judgment of this nature has been passed since the introduction of Statutory Instrument 142 of 2019 which banned the use of foreign currencies for transacting purposes in Zimbabwe, leaving the Zimbabwe dollar as the sole legal tender in the country.
This could open the floodgates of lawsuits from contracting parties who entered agreements of sales in United States dollars.
It is understood that the defendant, Nemchem International paid US$6 347 on unspecified date. A further US$8 600 payment was made two years later in 2018, leaving a balance of US$31 400. A misunderstanding arose pertaining to interest to be paid which accumulated to US$40 000 as per the agreement signed in September 2017. The issue was further
complicated by another case where the two parties where the defendant was involved in a deal involving Leopard Rock Hotel, a facility linked to Cambria Africa.
Since then, Nemchem International, however, has been refusing to pay the balance plus compound interest in US dollars. Instead, Nemchem wanted to pay the outstanding balance in Zimbabwe dollars, prompting the plaintiff to approach the High Court in order to force the defendant to pay the balance and interest in greenback.
Under the Statutory Instrument 33 of 2019, government in February this year introduced the RTGS dollars as a currency to operate side by side with the bond note and coin as a form of settlement currency in Zimbabwe, joining a basket of multi-currencies.
In June, government banned the use of multi-currency, leaving the Zimbabwe dollar as the sole legal tender in Zimbabwe under SI 142 of 2019. This is the instrument the defendant wanted to take advantage of. They said there a “supervening impossibility”. But, SI 142 of 2019, does not bar the defendants from depositing the balance into the plaintiff’s Nostro account. However, payment made in Zimbabwe during transactions should be in local or domestic currency.
The judge noted that the outstanding balance was supposed to be paid by March 31,2016 and the parties agreed that the term sheet was a legal binding document and accurately recorded the intentions of the parties.