Africa-Press – Zimbabwe. THE Supreme Court has dismissed an appeal filed by Magic Software Enterprises Limited seeking to overturn a High Court judgment that declared that US$1 996 723,02 in Nedbank Zimbabwe was not a foreign loan.
Nedbank Zimbabwe had challenged Magic Software’s claim that its funds in the bank constituted a foreign loan and should not have been converted to RTGS dollars under the Reserve Bank of Zimbabwe Exchange Control Directive RT120/18.
In a judgment delivered by Justice Tendai Uchena, the court ruled that the High Court had correctly found that Magic Software, an Israel-based information technology company, allegedly failed to establish the necessary rights to warrant the granting of the declaratory order it sought.
Magic Software claimed that its funds, totalling US$1 996 723,02, constituted a foreign loan and should not have been converted to RTGS dollars under the Reserve Bank of Zimbabwe’s Exchange Control Directive RT120/18.
The case centred on a Leap Billing Upgrade Agreement between Magic Software and a local telecommunications firm.
Following alleged difficulties in remitting payments due to foreign currency shortages, the company allegedly deposited funds into a non-resident escrow account at Nedbank.
However, after the issuance of Directive RT 120/18, which mandated re-designation of foreign currency accounts, Nedbank allegedly converted the account to an RTGS currency account, prompting the appellant’s legal action.
Thembinkosi Magwaliba, the appellant’s counsel, argued that the conversion of the funds to RTGS dollars was unlawful, citing a breach of the Reserve Bank of Zimbabwe Act.
The High Court had previously ruled that Magic Software failed to provide sufficient evidence of the banking arrangements and a contract that governed the account.
Magwaliba contended that the bank had a responsibility to ensure the funds remained in foreign currency and to advise on the necessary exchange control approvals.
However, the respondent’s counsel, Thabani Mpofu, argued that the appellant’s claim had been prescribed and that funds deposited via a local RTGS platform were not foreign obligations, thus justifying the bank’s actions under the Reserve Bank Directive RT 120/18.
The Supreme Court agreed with the lower court’s assessment that the appellant allegedly did not provide sufficient evidence, including the contract governing the escrow account, to support its claims.
The judgment emphasised that the appellant had allegedly not proven that the funds were foreign currency obligations, as they originated from local RTGS electronic transfers.
“In view of the finding that the appellant’s failure to place the contract before the court a quo and its failure to prove the allegations it had said were contained in Annexures B and C, there is no need to determine the issue on whether or not the respondent correctly acted in terms of the contract when it, in terms of RT 120/18, re-designated the appellant’s account to an RTGS foreign currency account.
“The appeal should be dismissed because the appellant did not place before the court a quo evidence on which a declaratory order could be granted,” Justice Uchena ruled.
The judgment was agreed to by judges of appeal Justices Samuel Kudya and Felistus Chatukuta.
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