Business / Economy
Supreme Court to decide on Zimdollar labour awards
17 May 2012 at 20:27hrs | Views
THE Supreme Court is set to determine how litigants who obtained court orders in Zimdollars can be compensated in the prevailing multi-currency system.
Parliament did not prescribe the exchange rate for the conversion of the Zimdollar to multi-currency and this has brought challenges before the courts.
Since the introduction of the multi-currency regime in 2009, the Labour Court, High Court, Supreme Court and the magistrates' courts have been inundated with applications for conversion of claims from Zimbabwe to United States dollars.
Such cases have been common in the Labour Court.
The Supreme Court's full bench is expected to decide in a case in which 39 Fleximail Private Limited workers who were awarded damages for unlawful dismissal in Zimdollars rejected the Z$12 594,77 (revalued) cheque issued by their employer in
February 2009 in settlement of the amount due.
The issue is perceived to be important and judges felt it must not be determined by the ordinary three judges of appeal, but a full bench.
The workers argued that when they were given the money it had already become moribund.
An appeal was filed at the High Court, and a judge ruled that the 39 should be paid in US dollars since the Zimdollar was no longer in use.
The matter then spilled into the Supreme Court when Fleximail contested the High Court's decision arguing that compensation should be made in Zimdollars because the order for payment was made in 2007 when that currency was still in use.
The Supreme Court invited Advocate Thabani Mpofu as a friend of the court (amicus curiae) to assist the bench in arriving at a proper decision.
Initially, the matter had been set down before three judges but it was resolved that the matter required a full bench consisting five Supreme Court judges.
In heads of argument filed by Fleximail at the Supreme Court, it was stated that the workers were not entitled to payment in US dollars.
"The long and short answer to this issue is that the respondents (workers) are not entitled to payment in United States dollars, both in law and on the facts.
"Honourable judge of the court aquo (High Court) grossly erred by not only overriding the well-entrenched principle of currency nominalism, which stipulates that all debts are to be paid in the currency that they are denominated in.
"The court aquo failed to uphold the principle that even though a court can give judgment in foreign currency, an applicant must first prove his loss in that currency," the company argues.
Fleximail also argues that the Zimdollar was never demonitised by the legislature and that it remained legal tender in terms of the Reserve Bank Act.
The workers argue that the High Court correctly ordered the payment in US dollars because Zimdollars were no longer in use.
They argue that payment in local currency was like paying the aggrieved party in stones.
"If the courts were to allow what appellant (Fleximail) seeks, what a greater example could there be of the law being highly discriminatory between the rich and the poor?
"Workers created real value during this period, which even in Zimbabwe dollars was quickly transformed by virtually all businesses into hard assets either of the brick and mortar type or foreign currency bought on the black market using what businesses called the Old Mutual Implied Rate.
"But the poor worker who could not even access his or her money locked up in banks had no such option," they say.
The workers described the payment in Zimdollars as a "naked attack on the sanctity of contract doctrine or palpable inequity that offends Zimbabwe's notions of elementary justice".
The workers added that the High Court decision was legally correct.
"The ruling of the court a quo is consistent with the fundamental principles of quantification of damages under contract law, and with the requirements of the Labour Act.
"The doctrine of currency nominalism and precedents cited by appellant are inapplicable. The relief sought by appellant is against public policy and rule of law considerations," read the papers.
A declaration in favour of the payment in Zimdollars, the workers say, would make a mockery of the justice delivery system in Zimbabwe.
Adv Mpofu, a friend of the court, found that the Zimdollar was still legal tender but suggested that Government has to find a way to ensure that holders of the old currency do not lose.
He cited the case law, which he described to be the only one in Zimbabwe saying it found nothing wrong in ordering a debt to be acquitted in the new currency when there are changes in currency.
"Lessons from the past therefore show, it is submitted, that by no lawful device can debts properly incurred disappear simply because there has been a change in currency.
"The lawful devices that are there, are per contra meant to provide a method by which such debts can be made good," he stated.
Adv Mpofu noted that the Zimdollar was never demonitised. He said it is only demonitised when the President recalls it by a Statutory Instrument.
The cheque rejected by the workers, according to Adv Mpofu, was not legal tender and its rejection was to some extent justified.
The Supreme Court is expected to hear the matter next month.
Parliament did not prescribe the exchange rate for the conversion of the Zimdollar to multi-currency and this has brought challenges before the courts.
Since the introduction of the multi-currency regime in 2009, the Labour Court, High Court, Supreme Court and the magistrates' courts have been inundated with applications for conversion of claims from Zimbabwe to United States dollars.
Such cases have been common in the Labour Court.
The Supreme Court's full bench is expected to decide in a case in which 39 Fleximail Private Limited workers who were awarded damages for unlawful dismissal in Zimdollars rejected the Z$12 594,77 (revalued) cheque issued by their employer in
February 2009 in settlement of the amount due.
The issue is perceived to be important and judges felt it must not be determined by the ordinary three judges of appeal, but a full bench.
The workers argued that when they were given the money it had already become moribund.
An appeal was filed at the High Court, and a judge ruled that the 39 should be paid in US dollars since the Zimdollar was no longer in use.
The matter then spilled into the Supreme Court when Fleximail contested the High Court's decision arguing that compensation should be made in Zimdollars because the order for payment was made in 2007 when that currency was still in use.
The Supreme Court invited Advocate Thabani Mpofu as a friend of the court (amicus curiae) to assist the bench in arriving at a proper decision.
Initially, the matter had been set down before three judges but it was resolved that the matter required a full bench consisting five Supreme Court judges.
In heads of argument filed by Fleximail at the Supreme Court, it was stated that the workers were not entitled to payment in US dollars.
"The long and short answer to this issue is that the respondents (workers) are not entitled to payment in United States dollars, both in law and on the facts.
"Honourable judge of the court aquo (High Court) grossly erred by not only overriding the well-entrenched principle of currency nominalism, which stipulates that all debts are to be paid in the currency that they are denominated in.
"The court aquo failed to uphold the principle that even though a court can give judgment in foreign currency, an applicant must first prove his loss in that currency," the company argues.
Fleximail also argues that the Zimdollar was never demonitised by the legislature and that it remained legal tender in terms of the Reserve Bank Act.
They argue that payment in local currency was like paying the aggrieved party in stones.
"If the courts were to allow what appellant (Fleximail) seeks, what a greater example could there be of the law being highly discriminatory between the rich and the poor?
"Workers created real value during this period, which even in Zimbabwe dollars was quickly transformed by virtually all businesses into hard assets either of the brick and mortar type or foreign currency bought on the black market using what businesses called the Old Mutual Implied Rate.
"But the poor worker who could not even access his or her money locked up in banks had no such option," they say.
The workers described the payment in Zimdollars as a "naked attack on the sanctity of contract doctrine or palpable inequity that offends Zimbabwe's notions of elementary justice".
The workers added that the High Court decision was legally correct.
"The ruling of the court a quo is consistent with the fundamental principles of quantification of damages under contract law, and with the requirements of the Labour Act.
"The doctrine of currency nominalism and precedents cited by appellant are inapplicable. The relief sought by appellant is against public policy and rule of law considerations," read the papers.
A declaration in favour of the payment in Zimdollars, the workers say, would make a mockery of the justice delivery system in Zimbabwe.
Adv Mpofu, a friend of the court, found that the Zimdollar was still legal tender but suggested that Government has to find a way to ensure that holders of the old currency do not lose.
He cited the case law, which he described to be the only one in Zimbabwe saying it found nothing wrong in ordering a debt to be acquitted in the new currency when there are changes in currency.
"Lessons from the past therefore show, it is submitted, that by no lawful device can debts properly incurred disappear simply because there has been a change in currency.
"The lawful devices that are there, are per contra meant to provide a method by which such debts can be made good," he stated.
Adv Mpofu noted that the Zimdollar was never demonitised. He said it is only demonitised when the President recalls it by a Statutory Instrument.
The cheque rejected by the workers, according to Adv Mpofu, was not legal tender and its rejection was to some extent justified.
The Supreme Court is expected to hear the matter next month.
Source - TH
