NBS Fined Contempt: Harare High Court Rules on Treasury Bill

• The National Building Society (NBS) was fined US$10,000 for contempt by the Harare High Court for defying an order to transfer a US$5 million Treasury Bill.
• Justice Faith Mushure ruled that the September 2025 order had an "in rem character," binding NBS despite its claims of being a "stranger" to the original proceedings.
• The court clarified that Treasury Bills are government debt securities, not Bills of Exchange under the relevant Act, dismissing NBS's defense.
• NBS's refusal was deemed deliberate and in bad faith, with the court noting its legal advice was sought after deciding not to comply.
• Both NBS and ADC Capital were found to have deliberately collaborated to frustrate Stratus Capital Partners' efforts to enforce the judgment.

Justice Mushure stressed that a court order remains binding on all parties until it is lawfully altered or discharged, asserting that allowing parties to disregard extant orders would lead to an “intolerable” situation.

The National Building Society (NBS) has been penalized with a US$10,000 fine by the Harare High Court for contempt, following its refusal to comply with a judicial directive concerning a US$5 million Treasury Bill. Justice Faith Mushure, presiding over the Commercial Division, determined that the financial institution had treated a binding court order with “disdain” by failing to transfer the specified Treasury Bill to Stratus Capital Partners. This ruling also mandates NBS to cover Stratus' legal expenses on a punitive legal practitioner-and-client scale.

The core of the dispute revolves around a government-issued Treasury Bill that was initially traded between Stratus Capital Partners and ADC Capital (Private) Limited. Subsequently, ADC Capital transferred this security to NBS. When the initial sale agreement between Stratus and ADC was terminated, Justice Mushure issued an order in September 2025, instructing ADC to return the instrument. Crucially, this order explicitly extended its reach to “any persons holding and/or claiming the Treasury Bill through” ADC.

Despite being the established holder of the Treasury Bill, NBS resisted compliance. The building society contended that it was a “stranger” to the original legal proceedings and had acquired the bill independently as a “holder in due course.” However, Justice Mushure firmly rejected these arguments, asserting that the relevant portion of her order possessed an “in rem character,” thereby legally binding any entity holding the bill by virtue of its connection to ADC. The court found NBS's actions necessitated an urgent application from Stratus Capital Partners to enforce the judgment.

Justice Mushure's judgment underscored the deliberate nature of NBS's non-compliance, noting that the institution was fully aware of its obligations but chose to disregard the court's directive. The judge's findings indicated that NBS had already decided against compliance before seeking legal counsel, with the subsequent legal opinion “coincidentally accord[ing] with that view.” This led to the conclusion that NBS's refusal was not only willful disobedience but also an act of bad faith (“mala fide”).

A significant aspect of the ruling clarified the legal status of Treasury Bills. NBS had attempted to invoke the provisions of the Bills of Exchange Act as part of its defense. However, Justice Mushure definitively stated that while Treasury Bills are negotiable instruments, they are fundamentally government debt securities and do not fall under the definition of bills of exchange. Consequently, the court found NBS's reliance on the Bills of Exchange Act to be flawed.

Furthermore, the court scrutinized other elements of NBS's defense. The building society claimed that an official Central Securities Depository (CSD) record identified it as the legitimate holder, yet it failed to present this record as evidence. The judge remarked that if the transaction had been conducted in good faith and for value, a proper CSD entry would have served as conclusive proof of acquisition. An alleged Memorandum of Agreement involving NBS, ADC Capital, and OK Zimbabwe also failed to withstand judicial review, as it was contingent on all parties signing, which OK Zimbabwe never did, rendering the agreement legally ineffective.

The court's findings revealed a concerted effort to obstruct the enforcement of its judgment. Justice Mushure observed that ADC Capital transferred the Treasury Bill to NBS on January 17, 2025, despite having previously undertaken to Stratus to return it. The judge concluded that both NBS and ADC Capital appeared to have “joined hands” in a deliberate attempt to thwart Stratus Capital Partners' efforts to enforce the court's ruling, describing these actions as neither accidental nor coincidental.

The Treasury Bill at the center of this dispute carries a maturity value of US$5 million, with its market value during the proceedings estimated between US$2.75 million and US$2.8 million. The Harare High Court emphasized the critical importance of upholding judicial authority. Justice Mushure stressed that a court order remains binding on all parties until it is lawfully altered or discharged, asserting that allowing parties to disregard extant orders would lead to an “intolerable” situation. This ruling serves as a significant affirmation of the judiciary's power to ensure compliance and deter defiance, particularly for financial institutions like the National Building Society in Zimbabwe.

This ruling serves as a stark warning to financial institutions and legal practitioners in Zimbabwe regarding the severe consequences of defying court orders, even when a party believes they are a 'stranger' or 'holder in due course.' It also provides critical clarification that Treasury Bills are not considered Bills of Exchange under the Bills of Exchange Act, impacting how these instruments are treated in transactions and disputes.

Source: Original reporting via legal news outlets