LEGAL OR FICTITIOUS CURRENCY? An Insight Into The Landmark Judgment In Penelope Douglas Stone & Richard Stuart Beattie v CABS, RBZ & Anor HH-118-23



Penelope Douglas Stone and Richard Harold Stuart Beattie (Hereinafter referred to as Stone Beattie) were two of the many Zimbabweans who were affected by the Reserve Bank of Zimbabwe (RBZ) Directives (R)T 120/18, later supported by SI 33 of 2019 and Finance Act 2 of 2019 whose effect was to convert United States dollar balances held in bank accounts to Zimbabwean dollars depending on the source of funds.


The RBZ and the Ministry of Finance passed a number of laws in which all assets and liabilities which were expressed in United States dollars (Referred to as the USD) before 22 February 2019 were converted to local currency at the rate of one as to one with the Zimbabwean dollar.

The implication of the new policy and law was that if you had 1(one) United States dollar in your account, that became equivalent to 1(one) Zimbabwean dollar.  RBZ claimed that it has an international facility to ensure that the value remained one-as-to-one with the United States dollar.

Thus when Stone Beattie attempted to withdraw USD $142 000 from their bank account which they held with CABS, they were advised that the bank could only pay the $142000 in Zimbabwean dollars. Aggrieved by the response from CABS, the Applicant filed an application in the High Court seeking an order that would enable them to claim $142000 in USD.

The Applicant’s argument, in summary, was that in terms of the banker-customer relationship, CABS was obliged to pay them $142000 USD, not Zimbabwean dollars since they had deposited the funds in USD currency. The High Court in HH 287-20 granted the application and ordered CABS to pay $142000 in USD. Aggrieved by this decision, the Respondents successfully appealed to the Supreme Court in SC 15-21. The judgment of the High Court was set aside.  

In 2021, the Applicants came back to the High Court with the same suit but different claims and arguments. This time, instead of simply claiming $142000 in USD, the Applicants also challenged the constitutionality of the laws which had been used to deprive them of the right to claim funds in USD. One major reason for the application is the subsequent developments that have since taken place after the pronouncement of one as to one exchange rate.  The introduction of the auction system for instance in February 2019, saw the Zimbabwean dollar lose value against the USD with the RBZ’s latest report (20 February 2023) showing that the Zimbabwean dollar is trading at $871.1363 to the US dollar.

To further prove the aforementioned fact, the Applicants placed reliance on a statement by His Excellency, President Emmerson Mnangagwa on 7 May 2022 in which he admitted that the Zimbabwean dollar has been losing value against the USD since the introduction of the auction system. The President has pledged compensation but only for those who held less than USD $1000 in their accounts at the material time.

Over and above the arguments advanced by the parties, the High Court under HH 118-23 handed the landmark judgment which declared the said directives and laws in violation of section 71 of the Constitution. Consequently, CABS was ordered to pay the Applicants $142000 in USD.

Implications of the judgment

The judgment which affirms the rights to property remains suspended until confirmed by the Constitutional Court or appealed successfully by the Respondents. If confirmed, the judgment permits persons who held USD deposits in bank accounts before 22 February 2019 to claim payment in USD as opposed to local currency at the rate of one-as-to-one with the Zimbabwean dollar. The judgment will benefit those whose funds were affected by the RBZ directives but whose balances have been sitting idle in their accounts since 2019. In other words, they did not withdraw their funds or use them in one way or the other.

However, these claims may be curtailed by prescription. This refers to the right to claim a debt within a certain period. In Zimbabwe, ordinary debts prescribe after 3 years meaning one must claim a debt within 3 years from the date that it becomes due. For the purposes of prescription, we begin counting the days from the date that the debtor makes a demand for their funds. In this case, as correctly noted by Mr. Biti on a radio broadcast on ZiFM on 20 February 2023, those account holders who may have written letters of demand to their respective banks in 2019 requesting payment may not recover their funds since 3 years have elapsed.

The Applicant’s perspective.

The judgment is welcome because it affirms the constitutional right to property under section 71 of the Constitution as well as the banker-customer relationship. If a person deposits funds in USD, they should withdraw in USD or its equivalent at the prevailing interbank rate as opposed to the rate of one with the local currency. It is a public secret that the one-as-to-one policy was premised on the existence of a facility that would maintain that value. It is also common cause that the subsequent introduction of the auction system in 2019 has seen the erosion of value in the Zimbabwean dollar against the USD. Therefore it is no longer tenable to insist that depositor withdraws their money at a rate that is now fictitious and no longer practical given the current state of affairs. It is only fair that depositors are able to claim their original currency or the true equivalent of their value.

Over and above the fairness point, the judgment restores confidence in the public thereby confirming that they can deposit funds in banks and still be able to claim back those funds in the same currency or its true equivalent of local currency.

Banks' perspective.

It is the perspective of the bank, CABS which raises an interesting legal issue. The law obliges Banks to follow RBZ directives failure of which practicing licenses may be revoked. In this case, CABS refused to pay the Applicants in USD because the RBZ had directed against this. Its argument was that its hands were tied. Equally, the Applicants wanted their funds in USD, the currency in which they had deposited the money.

A slightly similar scenario but with different facts arose in Standard Chartered Bank Limited v China Shougang International SC 49-13. In that case, the Appellant was directed by the RBZ to pay certain sums of money to it. When the Respondent, an account holder demanded payment, the Bank pleaded impossibility on the basis that it had paid that money to RBZ pursuant to a directive. The Respondent sued the Bank and won the matter. The courts held that the bank's money had been paid to RBZ, not the depositors. Therefore, the bank was still obliged to pay the depositor back their money.

The case confirms the principle that whatever laws the regulator (RBZ) passes do not extinguish liability on the bank towards its depositors. In other words, the Bank may take the loss for actions caused by its regulators. In this matter, should the Constitutional Court confirm this decision, CABS is obliged to pay the Applicants in USD.

Financial institutions & creditors

The lastest judgment by the High Court creates both happiness and unease in different people for various reasons. When the laws which were declared unconstitutional were passed, banks for example lost the rights to claim exclusively in USD on mortgages as debtors discharged their obligations in Zimbabwean dollars. If the debtors had not yet settled their obligations, the bank can equally demand payment in USD subject to prescription. Inversely, financial institutions and creditors are now exposed to multiple claims from debtors claiming payment in USD on the basis of the judgment. The takeaway here is that the judgment like any other has those who will benefit from it and those who may not.

Former employees

After the said laws were passed, there are employees whose contracts were terminated and the employers have not paid damages up to date. This may be an opportunity to claim back the aforesaid damages in USD subject to prescription (expiration of the right to claim a debt). The prescription of labour claims is 2 years meaning one must claim a debt within 2 years from the date from which it became due. Having said so, prescription might be a hurdle to former employees whose contracts were terminated around 2018-2020 since 2 years may have already elapsed.


Whilst there is some delight in this judgment, it remains suspended until confirmed by the Constitutional Court. For now, there is good cause for celebration because the rights to property under section 71 of the Constitution have been affirmed. The courts have restored sanity to the land by making a pronouncement that restores confidence to the public.


The contents and suggestions contained in this article are for information purposes only and are not for the purpose of providing legal advice. 

If need be, you should contact the author to obtain advice with respect to any particular issue or problem aforementioned herein. 

Contact details are; Cell: +263 718832210 or 

Lincoln Majogo is a registered legal practitioner, notary public, and conveyancer practicing in Zimbabwe. He writes in his personal capacity.



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