MONEYLENDER Homelink (Private) Limited has lost a Supreme Court appeal where it sought to compel a Zimbabwean living abroad, Clever Maputseni, to repay a US$450 000 (ZW$48 million) loan advanced to him in 2018 strictly in United States dollars.
The bulk of the loan, though expressed in US dollars, was disbursed in the local currency, court papers seen by the Zimbabwe Independent this week show.
The Supreme Court ruling was handed down by Justices Mavangira, Uchena and Chitakunye on Tuesday this week.
In its ruling, the Supreme Court said Homelink’s appeal had no “merit.”
“Notably, it would also be absurd for the appellant (Homelink) to be paid United States dollars for a loan largely disbursed in local currency.
“The argument that it must be so because the loan agreement stipulated that loan repayments were to be in United States dollars is a roundabout way of surreptitiously resorting to the first ground of appeal which the appellant clearly realised did not stand scrutiny,” reads part of the ruling.
Prior to the latest Supreme Court ruling, the High Court had handed down a similar judgement.
This prompted Homelink to appeal at the Supreme Court.
Conflict between the parties arose from a loan agreement under which Homelink extended US$450 000 to Maputseni for the purpose of purchasing a piece of land measuring 8 242 square metres in Helensvale.
The same land was also used as security for the loan.
Subsequently, a mortgage bond was registered in favour of Homelink (Private) Limited in the sum of US$450 000.
As shown by the Supreme Court documents, though the loan agreement was “expressed in United States dollars, it was disbursed in two parts or tranches.
US$5 682 was disbursed on September 13, 2018.”
“The greater part of the loan in the amount US$444 341,15 was disbursed on November 16, 2018 after the separation of RTGS dollars and nostro foreign currency bank accounts and it was disbursed in RTGS dollars or local currency at the rate of one-to-one to the US dollar.
“The reason for disbursement of the greater part of the loan in RTGS dollars remains unexplained in the papers,” the Supreme Court highlights as it stated the factual background of the dispute.
Under the loan agreement, the parties agreed to a 10% per annum interest on the loan.
They also agreed that interest was to be calculated on the outstanding US dollar balance at the prevailing interest rate.
The Supreme Court, in its ruling stated that: “It was also agreed that repayments would commence on 0ctober 30, 2018 and that the principal balance, interest and charges accruing thereon shall have been paid in full by September 30, 2033.”
At the time the loan agreement was concluded, the United States dollar was the dominant legal tender, alongside other currencies.
Zimbabwe passed Statutory Instrument (SI) 133 in 2019 which reintroduced the local currency trading at par with the green back.
In its judgement, the apex court sought, as part of its determination, to establish whether the loan extended to Maputseni by Homelink could be classified as a foreign or domestic loan.
It established that the loan extended to Maputseni was a domestic loan as shown by the nature of the agreement between the parties.
“The issue for determination by this court is whether or not the loan agreement entered into and between the parties is a foreign loan which gave rise to a foreign obligation payable in foreign currency by the respondent Maputseni,” court papers gleaned by the Independent read.
“The loan has all the characteristics of a domestic loan which falls under the ambit of the provisions of the Act.
The loan cannot by any stretch of imagination, be defined as a foreign loan.”
Maputseni argued that a foreign loan, as shown by court papers, to be defined as such, would entail one of the parties being a foreign entity.
“The court thus correctly found that the loan agreement was not a foreign loan and did not create foreign obligation on the part of the respondent,” the court papers stated.
Homelink’s appeal was dismissed with costs.