Mthuli Ncube, CABS lose US$142k case against architectural company

High Court judge Justice Martin Mafusire has ordered Central Africa Building Society (CABS) bank to pay an architectural company, Stone/Beatie Studio US$142 000, ending a dispute that has been raging for seven years, Nehanda Radio has established.

The High Court ruling came after business partners Penelope Douglas Stone and Richard Harold Stuart Beatie, represented by top lawyer Tendai Biti took CABS (first respondent), the Reserve Bank of Zimbabwe (RBZ) (second respondent) and the Ministry of Finance (third respondent) to court over US$142 000 deposited in its business account.

In their application, the applicants wanted a whole range of some financial legislation, and certain monetary policies or directives, set aside on the grounds of constitutional invalidity.

They first came to court in 2019. The subject matter was the same and the court ruled in their favour. It directed the first respondent to pay. The first respondent did not pay.

The applicants alleged that RBZ and the Ministry of Finance are partly the reason the first respondent will not pay.

All the respondents appealed separately and succeeded, vacating the judgement of the High Court in March 2021.

In August 2021 the applicants were back in this court. It was still the same subject matter. But the thrust was now different. They sought the following orders:

“that Exchange Control Directive No. R120/2018 issued by the Reserve Bank [is] unconstitutional and invalid as it violates s 71 of the Constitution,

“that the Exchange Control Directive No. RT120/2018 is grossly unreasonable and ultra vires s 35(1) of the Exchange Control Regulations, SI 109 of 1996, and is invalid,

“that s 44B(3) and (4) of the Reserve Bank Act are unconstitutional and invalid as they violate s 71 of the Constitution,

“that s 22(1)(b) and (d), s 22(4)(a) and s 23(1) and (2) of the Finance (No. 2) Act of 2019 are unconstitutional and invalid as they violate s 71 of the Constitution,

“that the conversion of the applicants’ USD142 000 to RTGS142 000 is unconstitutional and invalid as it violates s 71 of the Constitution,

“that the first respondent should pay to the applicants the amount of USD142 000.”

The applicants also wanted that the first respondent to pay interest on the aforestated amount at the rate of 5% per annum from 28 November 2016, to the date of payment, and that the respondents must pay costs of suit, jointly and severally, the one paying the other[s] to be absolved.

In his ruling, Justice Mafusire said that the “aforesaid paras 2.5 and 2.6 of the Exchange Control Directive RT120/2018 are impeachable because, among other things, they, together with the legislative provisions specifically singled out, were collectively the device by which the second and third respondents improperly interfered with the contractual rights and obligations as existing between the applicants and the first respondent, resulting in, among other things, the deprivation of the applicants’ right to property in breach of s 71(2) of the Constitution.”

“Additionally, paras 2.5 and 2.6 of the Exchange Control Directive RT120/2018 are ultra vires s 35(1) of the Exchange Control Regulations, 1996, in that they purported to arrogate to themselves the power which the Exchange Control Regulations did not have and, in the process purported to invade rights protected under s 71(2) of the Constitution. Accordingly, the following orders are hereby made:

“i/ Paras 2.5 and 2.6 of the Exchange Control Directive RT120/2018 dated 4 October 2018 are ultra vires s 35(1) of the Exchange Control Regulations, 1996, SI 109 of 1996, and are hereby set aside;

“ii/ Subject to s 175(1) of the Constitution of Zimbabwe.”

He stated that conversion of the amount of US$142 000-00 standing to the credit of the applicants’ savings account No. 1005428905 with the first respondent as at 28 November 2016 violated s 71 of the Constitution.

“Paras 2.5 and 2.6 of the Exchange Control Directive RT120/2018 aforesaid violate s 71 of the Constitution. Section 22(1)(b) and (d) and s 22(4)(a) of the Finance (No. 2) Act No. 7 of 2019 violate s 71 of the Constitution and are hereby set aside.

“The first respondent shall pay the applicants the sum of USD142 000, together with interest thereon at the rate of 5% per annum from 28 November 2016 to the date of payment.

The respondents shall pay costs of suit jointly and severally, the one paying the others to be absolved,” read the ruling.

CABS was represented by Mawere Sibanda while GN Mlotshwa & Company stood for RBZ.

The Civil Division of the Attorney-General’s Office represented the Ministry of Finance.

The controversial financial policies which led to this dispute were issued by Finance Minister Mthuli Ncube and RBZ governor John Mangudya in 2019.