Bank ordered to pay back debt in US$
DEPUTY CHIEF WRITER
THE High Court has ordered a building society to pay back a local firm its money deposited into the financial institution’s account in 2016 in United States dollars.
This was after the financial institution had sought to pay back the money using bond notes.
In the application, Penelope Douglas Stone and Richard Harold Stuart Beattie, who both trade as The Stone/Beattie Studios, who were represented by Tendai Biti, told the court that they had an agreement with the building society to ring-fence their account, following the introduction of bond notes in 2016.
The High Court agreed with the duo’s arguments and yesterday ordered the financial institution to pay back the money in United States dollars.
“In the result it is ordered that: the Exchange Control Directive … issued by the first respondent (RBZ) through its governor on October 4, 2018 be and is hereby declared to be invalid and is accordingly set aside.
“The respondent shall pay to the applicant the sum of US$142 000 in the currency of the United States of America or transfer that amount into a nostro foreign currency account as may be directed by the applicants within seven days from the date of this order together with interest thereon at the prescribed rate of five percent per annum from the 17th of October 2018, being the date of the letter of demand, to the date of full payment or transfer into the nostro foreign currency account as directed herein,” the High Court ruled.
In the application, the two applicants cited the building society, the RBZ and Finance minister Mthuli Ncube as the first, second and third respondents respectively.
“As at the end of October 2016, our account held with the first respondent that is account No. 1005428905, had the sum of US$142 000. This was hard currency that we had worked for and saved. It was hard currency that was essential to sustain our practice and indeed our livelihood,” the court was told.
The duo said in October and November 2016, there was no parallel exchange rate in Zimbabwe. They said the situation however, changed when the central bank made a major policy announcement which saw it introducing the bond note, which was not backed by any legal instrument.
Through an extraordinary Government Gazette, the president later passed and enacted the Presidential Powers (Temporary Measures) Amendment of the Reserve Bank Act on issue of Bond Notes Regulations 2016.
The pair said in order to protect their US$ deposit in their account, they wrote a letter to the building society in November 2016, advising the financial institution that there will no further deposits or withdrawals from the account.