Laying Ghosts to Rest: The Case of Trojen Nickel Mine Limited v Reserve Bank of Zimbabwe

Laying Ghosts to Rest: The Case of Trojen Nickel Mine Limited v Reserve Bank of Zimbabwe

By Regis Chawatama

The issue of corporate foreign currency accounts (FCAs) which were transferred from different banks to the Reserve Bank of Zimbabwe (RBZ) in the year 2007 has been very topical for some time. These foreign currency accounts were transferred to the central bank pursuant to the famous RBZ directive of the 2nd of October 2007 calling for a Centralized FCA Management and therefore all Corporate and Non-Governmental Organizations FCA balances as at 1st October 2007 had to be lodged with the Reserve Bank. For the majority of these corporates and NGOs that was the last time they ‘saw’ their money and this ghost has continued to haunt them to this day.

On the 29th of May 2013, Justice Mathonsi, delivered what can only be described as a progressive judgment in the case of Trojan Nickel Mine Limited v Reserve Bank of Zimbabwe HH169/13. In this case Trojan Nickel Mine Limited (“Trojan) sued the Reserve Bank of Zimbabwe (RBZ) for the payment of money in excess of US$1 million, which money had been in its (Trojan’s) FCA with Banc ABC.  Banc ABC had transferred Trojan’s FCA to RBZ in compliance with the central bank’s aforesaid directive. Subsequent efforts by Trojan to access the money had proved fruitless resulting in Trojan filing a claim against RBZ  in the High Court of Zimbabwe for the ‘return’ of the money.

In court, the Reserve Bank sought to deflect the claim by arguing that it had no banking relationship with Trojan and therefore it did not owe it any duties normally associated with a banker and a depositor. In other words it argued that there was no nexus between Trojan and the Reserve Bank. The Reserve Bank even suggested in its defence that Trojan should have sued Banc ABC. Therefore, the argument by RBZ was that Trojan had no cause of action against it i.e. it had no legal basis for proceeding against it.

On the other hand, Trojan argued that it had a legal basis for proceeding against RBZ because it was the Central Bank which had caused Banc ABC to breach its contract with Trojan. Banc ABC had no option but to comply with the directive. Further, Trojan argued that in any event, it was entitled to recover from the RBZ on the basis of unjust enrichment.

It is submitted that both these arguments are legally sound and it was no surprise that they found favour with the Judge.

The Reserve Bank also sought to rely on a judgment by another High Court Judge, namely, Justice Bere, in the case of China Shougang International v Standard Chartered Bank Zimbabwe Limited HH310/11; where the Judge had stated in passing that there was no privity of contract between the central bank and a depositor at a bank.  However, the decision in that case was rightfully held to be  distinguishable from the Trojan matter because in that case the company had sued its own bank and not the RBZ and therefore the basis of the court’s decision would have no relevance to the Trojan case. Further, unlike the Trojan case where the RBZ had admitted that it had appropriated the depositor’s money, there was no such admission in the matter before Justice Bere in 2011.

In a judgment that took a swipe at the central bank’s mentality that it could just acquire money and refuse to repay it to the owner, Justice Mathonsi, in deciding in favour of Trojan, managed to lay the ghost of 2007 to rest! The Judge pointed out that it was very rare to have a situation where a depositor’s foreign currency balance is appropriated the way it was in the Trojan matter and by extension in many other similar cases. The Judge further emphasized the need to uphold the right to private property as sacrosanct and to protect people against arbitrary deprivation of the same. This surely augurs well with the new constitutional dispensation in our country.

In the end the Judge ordered RBZ to return the money to Trojan’s account with Banc ABC together with interest from the date of summons to date of payment. It remains to be seen whether the Reserve Bank will appeal against the judgment to the Supreme Court. Whether or not it will appeal is another matter but for now people can celebrate this progressive judgment – the ghost has been laid to rest!