The Law and the Pauper in Zimbabwe

The law is a reflection of the community consciousness. Our laws are rooted within the boundaries of our Constitution. As such the law works within the Constitutional values and principles. Anything contrary to this is both unlawful and unconstitutional. It is often said, no one is above the law, but what happens when the law is inherently an illegality and irrational in and of itself? This is the story of Ms A, a victim of irrational laws. This is a classic case of the law being oblivious of the pauper. As such the law has a multidimensional effect, in which the poor suffer the most.

Ms A, aged 56 was employed in another country, as a domestic worker. She had the vision to build her own house upon retirement. As such, she opened a savings account with XYZ (ltd) PVT. XYZ (ltd) PVT advised Ms A to open a Unit account and a Diamond account for savings and retirement investments respectively. Ms A acted on XYZ (ltd) PVT’s recommendation and invested up to R28 000 with it. She invested her money with XYZ (ltd) PVT with confidence that XYZ will keep it safe until she requests for it. To her surprise, upon claiming she was advised that her investments had been redenominated from USD to RTGS at a rate of 1:1.

The Constitution is the supreme law of the country and any law, practise, custom or conduct inconsistent with it is invalid to the extent of the inconsistency. As such the obligations imposed by the Constitution are binding on every person, natural or juristic, including the State and all executive, legislative and judicial institutions. Agencies of government at every level, and must abide by them. In this instance, the Exchange Control Directives RT 120 of 04 October 2018 arbitrarily converted Ms A’s property of $4000 into something else by imposing an RTGS value. In enacting such a directive, the executive and its agents blatantly violated the right to property.

It is true in law that the golden rule of statutory interpretation is that the court must deduce a basic meaning of what the legislature intended when it passed a law as written in a statute. The Zambezi case interprets the provisions of S.I 33/2019 and S.I 212/2019. In the case, the parties were in contention over the value of the money paid in fulfilment of a debt. A debt is USD was paid in RTGS at a rate of 1:1 in terms of section 4 of SI 33/19. In this case, the court takes a positivist approach in which it made an armchair interpretation of the law.

By deciding that assets and liabilities must have a price that is pegged and frozen in time, the judiciary acted as a major player in the market. By such interpretation, the value of goods and services that must be subject only to market principles are now subject to court rulings. Such a decision is detrimental as it disadvantages sellers or creditors at the expense of buyers or debtors.

It is my view that this judgment was in error as the Supreme Court considered only a certain section of the law without taking into account its wholistic meaning. This judgment has left a lot of valuable assets and liabilities at values that fixed in time and any variation from the initial opening balances that were pegged at the previous one-to-one would be wrong according to the law. It is quintessential that all companies follow the laws of the land, but this judgment renders financial statements an unfair presentations of companies’ respective positions. Statements of Financial Positions for assets and liabilities that were valued in United States dollars immediately before the effective date now have values frozen in RTGS at one as to one. This remains the position for both natural and juristic persons unless there is another statute or probably a challenge on the judgment on Constitutional grounds of deprivation of property that overturns this judgment.

In a potentially far-reaching judgment, the High Court has declared INVALID the RBZ Exchange Control Directive No. R120/2018 because it’ is irrational to change the currency of a bank account by simply renaming it. In the case, well known as the Zhou case, the honourable judge differentiated the case from the Zambezi case thereby coming to a separate conclusion. In the case, the Plaintiff had deposited money into their bank with the hope to withdraw it on request. Upon making their request, the bank informed the Plaintiff that it could not deposit the USD amount through the operation of law as all debts were denominated to RTGS. The facts in the case are similar to that of Ms A. Ms A like the Plaintiff deposited money in good faith and with confidence that the bank will payback on her request.

Judge Zhou appreciates that the law does not work in isolation and that the law has a ripple effect in society. It is true in law that a banker and client relationship goes beyond the contractual obligations. A depositor deposits money with a bank with a mandate to reinvest the money and an obligation to pay it when requested. In the Zhou case, the bank highlighted that it only changed the value of the money unilaterally through the operation of law. Such an operation of law in which persons wake up to find their hard-earned investments devalued overnight caused a shock to the society without fail.

The directives offend the sense of justice, in that they devalue a person’s property by arbitrarily converting the existing USD account balance into something else by imposing an RTGS value. This is a blatant manifestation of bad governance and a violation of the right to property. In limiting the right to property, in Section 71(2) of the Constitution of Zimbabwe, the law of general application S.I20/20 relied on fails to take into account that there are other less restrictive means of achieving the purpose of the limitation, which is stabilizing the economy and currency.

There are prospects of success in Ms A’s case. Ms A is a victim like many more paupers in Zimbabwe. The law of general application is unfair as it fails to apply less restrictive means to achieve economic stability. The directives have caused more damage than the expected benefit. Despite affecting both the rich and the poor, the poor suffer the most. The directives arbitrarily dispossess of one’s property without any reasonable grounds for doing so or any attempt to use less restrictive means to achieve the purpose of economic stability.

NB. the opinion is silent on SI 30/19, which has since been incorporated into the Finance Act, 2019. This is a challenge to SI 120/18 which creates NOSTRO NFC accounts and RTGS accounts and changed the denomination of money in the ‘RTGS’ accounts.

Authored by Takudzwanashe Edward Mudzuri ( Candidate Attorney, LAWMAN LAW CHAMBERS)

2 Thoughts to “The Law and the Pauper in Zimbabwe”

  1. oxype

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