The applicant, a British Virgin Islands company, purchased Bankers Acceptances (BAs) from Interfin Bank Limited between 2011-2012 on a buy-back basis. As security, Interfin Bank ceded various agreements and security through a Security Assignment and Security Trust Deed concluded in April 2012. In June 2011, Interfin Bank was placed under curatorship, and the Curator (Mr Peter Bailey) confirmed the validity of the Agreements in September 2012 and honored them, collecting funds on behalf of the applicant and paying US$5,472,304.74. In February 2015, Interfin Bank was placed in final liquidation and the second respondent (Deposit Protection Corporation) was appointed liquidator. The liquidator refused to confirm the validity of the Agreements despite meetings and numerous reminders from the applicant. This prevented the applicant from proceeding with legal proceedings to recover outstanding amounts. The applicant sought a declaratory order confirming the enforceability of the Agreements, while respondents filed a counter-claim seeking to set aside the Agreements.
1. The Assignment and Security Trust Deed concluded between the applicant and Interfin Bank in April 2012 were declared binding and enforceable on the 1st and 2nd respondents; 2. The 1st and 2nd respondents were ordered to adhere to the terms of the Security Assignment Agreement and Security Trust Deed dated April 2015; 3. The counter-claim was dismissed; 4. The applicant's legal practitioners were authorized to serve the order on respondents; 5. The 1st and 2nd respondents were ordered to pay the applicant's costs on a legal practitioner and client scale.
The binding legal principles established are: (1) Where a curator acting under section 55(2)(e) of the Banking Act accepts and honors agreements within his capacity, reports such conduct to the Reserve Bank which tacitly approves, those agreements are valid and binding on subsequent liquidators who cannot impugn them without following proper legal channels; (2) A liquidator sued in their official capacity for failing to discharge administrative duties reasonably and fairly under the Administrative Justice Act can be sued without leave of court, as the cause is against the liquidator personally, not the company in liquidation; (3) The purchase of Bankers Acceptances on Zimbabwe's open money market by foreign investors does not require exchange control approval where the Reserve Bank has opened the market to foreign investors; (4) Section 330 of the Companies Act requiring registration applies only where a foreign company intends to establish a place of business in Zimbabwe, not for participation in money market transactions; (5) Undue preference provisions of the Insolvency Act do not apply where no debtor-creditor relationship exists and the bank merely acted as an agent for channeling funds.
The court observed that where a curator or liquidator fails to act reasonably and fairly in conducting their duties, they can be sued without leave of court - it is only the company under liquidation that requires such leave. The court also noted that respondents had various channels available to challenge the curator's decision (through the Insolvency Act, Companies Act, Administrative Court, and Banking Act) but failed to utilize any of them. The court commended the approach adopted by counsel to argue the matter holistically rather than dealing with preliminary points separately. The court further observed that respondents' failure to respond to the applicant's queries for four months despite numerous reminders demonstrated a failure to act reasonably and promptly as required of administrative authorities.
This case establishes important principles regarding the validity and continuity of contractual obligations when a bank transitions from curatorship to liquidation in Zimbabwe. It clarifies that: (1) a liquidator who steps into the shoes of a curator cannot unilaterally set aside valid agreements accepted by the curator without following proper legal procedures; (2) liquidators can be sued in their official capacity without leave of court where the cause of action concerns their administrative conduct rather than claims against the company in liquidation; (3) the Administrative Justice Act applies to liquidators as administrative authorities who must act reasonably, promptly and fairly; (4) foreign investors in Zimbabwe's money market instruments do not require exchange control approval or local branch registration for such transactions; and (5) tacit approval by regulatory authorities (such as the Reserve Bank) of a curator's actions creates binding obligations on subsequent liquidators. The judgment reinforces the principle that liquidators cannot rely on technicalities to avoid valid contractual obligations entered into during curatorship, particularly where regulatory oversight existed.