Civil
Trial
MATHONSI
J:
It
is WALLIS JA, with HARMS AJ, VAN HEERDEN and MALAN JJA and PETSE AJA
all concurring who waxed lyrical in Executive Officer of the
Financial Services Board v Dynamic Wealth Ltd & Ors 2012 (1) SA
543 when he said:
“Ever
since the bursting of the South Sea Bubble in 1720 governments have
recognised the need, in the interests of the investing public, for
regulation of the financial services industry”.
The
plaintiff, a public company registered in Zimbabwe sued the defendant
for payment of US$1,007,541-30 together with interest at the
prescribed rate and costs of suit being the plaintiff's money
allegedly appropriated by the defendant from the plaintiff's bank
in pursuance of a Monetary Policy statement issued in terms of
section 46 of the Reserve Bank Act [Cap 22:15] (“the Act”) and a
directive issued to banks in terms of section 35(1) of the Exchange
Control Regulations Statutory Instrument 109/96.
The
defendant is established in terms of section 4 of the Act and is
charged with, inter alia the regulation of Zimbabwe's monetary
system, the supervision of banking institutions and the smooth
operation of the payment system as well as acting as banker and
financial advisor to, and fiscal agent of, the State.
It
is salutary that the defendant performs these functions in order to
regulate banking and protect the banking public.
In
the discharge of its duties aforesaid, the defendant issued a
Monetary Policy statement on 1 October 2007 centralising all foreign
currency accounts and directing the lodgement, at its doorsteps, of
all corporate foreign currency balances held by authorised dealers.
One
such authorised dealer is Banc ABC where the plaintiff maintained a
foreign currency account.
In
compliance with the monetary policy and a subsequent directive issued
by the defendant, Banc ABC lodged the plaintiff's foreign currency
balance with the defendant.
That
is the last time the plaintiff saw the money as the defendant did not
return it to Banc ABC as a result of which the plaintiff was unable
to access that money.
The
plaintiff then sued the defendant aforesaid seeking to recover the
money but the defendant contested the action averring in its plea
that there was no causal nexus between the parties given that the
plaintiff and the defendant did not enjoy any banking relationship
and that the plaintiff should have proceeded against its bank, that
is Banc ABC, and not against the defendant.
At
the pre-trial conference the parties agreed on the issues for trial
as:
“1.1.
whether or not the plaintiff has a cause of action against the
defendant.
1.2.
whether or not the defendant is obliged to pay the amount claimed or
any amount at all”.
When
the matter initially came before me for trial the parties were of the
view that the facts were generally common cause. They then requested
the deferment of the hearing to enable them firstly to agree on the
facts, prepare and file a statement of agreed facts as well as heads
of argument.
In
due course this was done and the statement of agreed facts signed and
filed by the parties reads:
“1.
The plaintiff is Trojan Nickel Mine Limited, a public company
registered in accordance with the laws of Zimbabwe.
2.
The defendant is the Reserve Bank of Zimbabwe. It is established in
terms of the Reserve Bank of Zimbabwe Act [Cap 22:45] (“the Act”)
with the power, amongst other things, to regulate the banking sector.
3.
The plaintiff, at all material times, maintained a foreign currency
account number ZWTROJ001CALUS0019 domiciled at Banc ABC, formerly the
African Banking Corporation.
4.
On 1 October 2007, the Governor of the defendant, Dr G. Gono, issued
a Monetary Policy Statement in terms of section 46 of the Act. The
Monetary Policy Statement provided in pertinent part as follows (the
emphasis is in the original statement):
'6.2.
In order to achieve the twin objectives of boosting exporter
viability and improving the economy's accountability for total
export and other foreign currency receipts, as well as ensuring
judicious allocation of the scarce foreign currency resources, it has
become necessary that the Reserve Bank introduces a new frame-work
where we pool our resources together without disadvantaging the
generators of that foreign currency.
6.3.
Within this spirit of preserving and promoting the welfare of our
generators of foreign currency, who are the geese that lay the golden
eggs, it has become necessary that the Central Bank centralises the
management of FCAs, along with the creation of an interest earning
investment window that boosts exporter viability.
6.4.
What this means is that, with immediate effect, all corporate FCA
balances at Authorised Dealers are to be lodged at the Reserve Bank,
such that each bank maintains mirror accounts for transactions
tracing purposes'.
5.
On 2 October 2007, the defendant's Division Chief, Exchange
Control, one M.B. Mpofu, directed a minute to the Head, Exchange
Control Department of all Authorised Dealers, which read(s) in
pertinent part as follows:
'Dear
Sir/Madam
DIRECTIVE
ISSUED IN TERMS OF SECTION 35(1) OF THE EXCHANGE CONTROL REGULATIONS,
STATUTORY INSTRUMENT 109 OF 1996
1.
INTRODUCTION
1.1.
Reference is made to the Mid-Year Monetary Policy Statement announced
by the Governor on 1 October 2007. In order to operationalize the
measures highlighted therein, Authorised Dealers are accordingly
directed as follows:………….
2.………
3.
CENTRALISED FCA MANAGEMENT
3.1.
Authorised Dealers are advised that, with immediate effect, all
Corporate and Non-Governmental Organisations (NGOs) FCA balances as
at 1 October 2007 shall be lodged with the Reserve Bank.
3.2.
Authorised Dealers shall transfer all their Corporate FCA (including
EPZ Companies) and NGOs balances to the Reserve Bank by close of
business on 2 October 2007, as directed by International Banking and
Portfolio Management Division, and submit to Exchange Control
individual exporter balances on those transfers made.
3.3.
Authorised Dealers are required to maintain mirror accounts for their
exporting clients indicating individual entitlements for transaction
tracking purposes.
3.4.
Authorised Dealers shall submit to the Exchange Control Inspectorate
monthly foreign currency account statements for their clients for
which global balances should be consistent with holdings at the
Reserve Bank's Internal Banking and Portfolio Management Division.
3.5.
All special FCAs (transitory accounts) and FCAs for International
Organisations, Embassies and Individuals shall remain with Authorised
Dealers.
3.6.
In order to ensure that exporters preserve the real value of the
foreign exchange deposits under the pooled framework, all such
deposits shall earn an all inclusive (interest) rate of 12% per annum
in foreign currency for USD, Pound, Euro, Pula and Rand.'
6.
The Ban ABC was and remains an Authorised Dealer.
7.
The plaintiff alleges that it had a foreign currency balance of
USD1,007,541- 30 as at 1 October 2007 in its FCA aforesaid.
8.
Banc ABC, pursuant to the directive in para 4 above, remitted the sum
of USD1,492,516-06 to the defendant.
9.
The plaintiff alleges that it has been unable to access its funds
from Banc ABC despite demand.
10.
The plaintiff has sued the defendant for:
'Payment
of an amount of USD1,007,541-30 which amount is due and payable to
the plaintiff by the defendant which amount represents the entire
balance of the money which was held by the plaintiff in a foreign
currency account in African Banking Corporation Limited which amount
was appropriated by the defendant some time in 2008 and which amount
despite demand, the defendant fails or refuses to pay.'
11.
The defendant has pleaded to the summons as follows:
'The
defendant pleads that there is no causal nexus between the plaintiff
and the defendant more particularly that:
(a)
The plaintiff and defendant have no banking relationship and the
defendant did not manage or keep a banking account of the plaintiff
and owed the plaintiff no duties normally associated with a banker
and its depositor.
(b)
The plaintiff's claim should be against its banker and not the
defendant. It is improper and there is no legal basis alleged which
would entitle the plaintiff to bring a claim against the defendant.
WHEREFORE
the defendant prays for the dismissal of the plaintiff's claim with
costs?'
12.
The parties have joined issue and agreed on the following issues for
disposition:
12.1
Whether or not the plaintiff has a cause of action against the
defendant.
12.2.
Whether or not the defendant is obliged to pay the amount claimed or
any amount at all.
13.
The parties respectfully pray that this honourable court may dispose
of the agreed issues on the basis of the facts agreed herein and
Heads of Argument to be filed by both parties.
DATED
AT HARARE this 22nd day of May 2013”.
The
statement of agreed facts is duly signed by counsel for the parties.
Mr
Uriri, who appeared for the plaintiff submitted that the plaintiff
does have a cause of action against the defendant because it is the
defendant which wrongfully procured a breach of the contract that
exists between the plaintiff and Banc ABC. He maintained that an
action exists in our law for the intentional and wrongful
interference with contractual rights.
In
addition, the plaintiff is entitled to recover from the defendant the
procured money on the basis of unjust enrichment, it having been
enriched at the expense of the plaintiff.
Mr
Uriri strongly argued that the directives issued to Authorised
Dealers by the defendant had the effect:
(i)
Firstly, of inducing Banc ABC to commit a breach of its contract
with the plaintiff; and
(ii)
Secondly, the directives intentionally and wrongfully interfered with
contractual rights.
Mr
Chitapi for the defendant did not address himself to that argument.
As far as he was concerned, there was no banker and client
relationship between the parties and for that reason the defendant
does not owe the plaintiff any duty.
Mr
Chitapi insisted that it is the plaintiff's bank which received the
money from the plaintiff and for that reason it is the one with the
obligation to pay the money to the plaintiff.
Mr
Chitapi further argued that the plaintiff's pleadings do not allege
a legal basis entitling it to bring a claim against the defendant
especially as the summons does not specify that the suit is based on
either contract or delict.
Relying
on the judgment of BERE J in China Shougang International v Standard
Chartered Bank Zimbabwe Limited HH310/11 where the learned judge
stated, obiter dictum, at p5 of the cyclostyled judgment, that there
was no privity of contract between the Central Bank and a depositor
at a bank.
I
do not think the decision in China Shougang International (supra)
needs to detain us at all because it is clearly distinguishable from
the present case.
In
that case the depositor had sued its own bank and the defendant (in
casu) was not cited as a party to the proceedings. More importantly,
apart from the fact that the claim was based on a banker and
depositor relationship and not on the procurement of the deposit by
the present defendant, there was also no admission by RBZ that it had
indeed appropriated the depositor's money.
I
agree with Mr Uriri that the question of wrongful procurement was not
placed before the court in that matter. Therefore the case is
distinguishable.
In
our law, it is generally accepted, and I did not hear Mr Chitapi
argue to the contrary, that an action exists for intentional
inducement of a breach of contract.
In
PQR Boberg, The Law of Delict, Vol 1, Juta & Co. Ltd at p38 the
point made that:
“It
is well established that the intentional inducement of a breach of
contract is an actionable wrong: see Atlas Organic Fertilisers (Pty)
Ltd v Pikkewyn Ghwano (Pty) Ltd 1981 (2) SA 173 (T) at 202G, and the
cases there cited”.
In
Dantex Investments Holdings (Pty) Ltd v Brenner & Ors NNO 1989
(1) SA 390 (AD) at 395D GROSSKOPF JA also made that point in stating:
“It
is clear that an interference with contractual rights can in certain
circumstances constitute a delict. What is less clear is what
precisely the requirements for liability are”.
See
also Roux v Hattingh 2012 (6) SA 428 and R.H. Christe, The Law of
Contract, 3rd ed, Butterworths at p551.
In
casu the defendant acted in terms of section 46 of the Act. That
section provides:
“In
June and December of each year, the Governor shall submit to the
Minister a policy statement containing –
(a)
a description of the monetary policy to be followed by the Bank
during the next succeeding six months, and a statement of reasons for
those policies; and
(b)
a statement of the principles that the Bank proposes to follow in the
implementation of the monetary policy; and
(c)
an evaluation of the monetary policy and its implementation for the
last preceding six months”.
In
order to implement the policy statement given in terms of section 46
to the effect that foreign currency balances were to be lodged with
the defendant, a directive was also issued to banks in terms of
section 35(1) of the Exchange Control Regulations Statutory
Instrument 109/96 instructing them to immediately lodge the foreign
currency balances with the defendant.
Section
35(1) of the regulations is of peremptory application. It reads:
“Authorised
dealers shall comply with such directions as may be given to them by
an exchange control authority relating to -
(a)
the exercise of any functions conferred on them by or under these
regulations;
(b)
the terms on which they are to exchange foreign currency for
Zimbabwean currency;
(c)
the offer of foreign currency in their possession for sale to the
Reserve Bank”.
It
was stated in China Shougang International (supra) that the directive
given by the Governor of the defendant was invalid for want of a
ministerial approval.
I
do not think it is necessary to discuss that issue in this case
because it is accepted that the directive was given.
To
that extent the plaintiff's bank was obliged to comply with the
directive in terms of the law. Doing otherwise would have resulted in
dire consequence to it, if not the loss of its banking licence.
It
is common cause that after appropriating the plaintiff's money, the
defendant did not return that money and has not even begun to give
any indication as when, if at all, it will repay the money.
It
has contented itself with hedging behind the non-existence of a
contractual relationship between it and the plaintiff. The proverbial
hiding behind a finger.
Quite
how and why the defendant could come to the conclusion that it can
just acquire the money and refuse to repay it to the owner is one of
the greatest unfathomable mysteries of this world.
There
can be no doubt that the right to private property is one of the
sacrosanct rights protected by law.
There
is little doubt that the plaintiff should be protected against the
arbitrary deprivation of its equity deposited at Banc ABC, which
institution was powerless against the defendant's directive and is
now unable to perform its contractual obligations, namely paying the
money to the plaintiff on demand.
To
my mind, the defendant intentionally induced Banc ABC to breach its
contract with the plaintiff.
I
have already stated that an intentional inducement of a breach of
contract is actionable in our law.
As
a corollary to that is the submission made on behalf of the plaintiff
that the directive which led to the appropriation of the plaintiff's
foreign currency balance at Banc ABC constitutes a wrongful
interference with contractual rights.
I
agree.
While
it is true that the defendant is the monetary authority charged with
the management of the banking sector and the formulation of banking
rules, I have not been directed to any authorities entitling the
defendant to proscribe the release of deposits to depositors or
indeed to interfere with bankers obligations to pay balances to their
clients on demand.
As
a matter of policy the security of bank deposits should forever be
protected by our courts.
Indeed
it would be an affront to the rights of depositors if ownership of
their property stored with banks and the culture of banking money
instead of keeping it under a pillow were to be rendered a serious
economic hazard and a ruinous activity.
Our
law, which protects ownership of property is founded on a rock of
wisdom. For that reason the courts should be clear, consistent and
firm in enforcing principles protecting deposits.
Needless
to say that the expropriation of export proceeds prior to
dollarization which have not been compensated is one of the major
factors inducing weak balance sheets of businesses resulting in poor
economic performance.
I
am persuaded that the plaintiff does have a cause of action against
the defendant based on the twin concepts of the intentional
inducement of a breach of contract and the wrongful interference with
contractual rights, for wrongful it is if the monetary regulatory
authority gives a directive for the appropriation of an individual's
equity in a bank and then failing to make good that equity.
Even
if I am wrong in that conclusion, the defendant cannot escape
liability on the basis of unjust enrichment.
It
is now accepted that the general enrichment action is recognised in
our law. See Industrial Equity v Walker 1996 (1) ZLR 269 (H) where
BARTLETT J stated at 298B-D:
“I
am of the respectful view that the principal requisites for a general
action on enrichment can be regarded as aptly summarised by Wouter de
Vos in Verry King saanspreeklikheid in die Suid Africkaanse Reg
(1958) as stated by Scholtens in the 1996 Annual Survey of South
African Law, 150 at 152 as:
'(a)
the defendant must be enriched;
(b)
the enrichment must be at the expense of another (i.e. the plaintiff
must be impoverished and there must be a causal connection between
enrichment and impoverishment);
(c)
the enrichment must be unjustified;
(d)
the case should not come under the scope of one of the classical
enrichment actions;
(e)
there should be no positive rule of law which refuses the action to
the impoverished person.
Obviously
these requirements can only be fulfilled if in any given case the
action is based on a defined set of circumstances.'”
I
am satisfied that all the requirements of unjust enrichment are met
in the present case.
It
is also not a case that would open floodgates because, rarely do we
have a situation where a depositor's foreign currency balance is
appropriated the way it was in this case.
Mr
Chitapi submitted that the plaintiff did not plead any case based on
delict and that for that reason the claim should fail.
I
am of the view that the manner in which the plaintiff pleaded its
case, predicating it mainly, on the fact that the amount claimed “was
appropriated by the defendant” was wide enough to encompass the
claim as it has been argued by counsel.
I
however, agree that it would be inappropriate, bearing in mind the
banking relationship between the parties, the defendant being “a
banker of banks” to direct that the money, be paid directly to the
plaintiff. The correct approach would be for the defendant to return
the money to Banc ABC, the plaintiff's banker.
Accordingly
it I ordered, that:
1.
Judgment is hereby entered in favour of the plaintiff as against the
defendant in the sum of USD1,007,541-30 together with interest a
tempoe morae at the prescribed rate from the date of summons to date
of payment.
2.
The defendant is directed to deposit the said sum of USD1,007,541-30
into the plaintiff's Banc ABC account number ZWTROJ001CALUSD0019 or
any other account held by the plaintiff at that bank.
3.
The defendant shall bear the costs of suit.
Atherstone
& Cook, plaintiff's legal practitioners
T.H.
Chitapi & Associates, defendant's legal practitioners
