Agricircle (Private) Limited v The Master of the High Court and Cecil Madondo

### Preamble
1
HH 376-21
HC 206/20
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AGRICIRCLE (PRIVATE) LIMITED                                                                 HC 206/20

versus

THE MASTER OF THE HIGH COURT

and

CECIL MADONDO

CECIL HONDO MADONDO                                                                               HC 592/20

versus

AGRICIRCLE (PRIVATE) LIMITED

and

RODRECK ITAYI MUSIYIWA

and

NEW CORPORATE INVESTMENTS THREE (PRIVATE) LIMITED

and

SHOWNCIFF SERVICES (PRIVATE) LIMITED

and

BATCO (PRIVATE) LIMITED

and

PETRONETS INVESTMENTS (PRIVATE) LIMITED

HIGH COURT OF ZIMBABWE

ZHOU J

HARARE, 15 October 2020 & 15 July 2021

Opposed Applications

H. Muromba, for the applicant in HC 206/20 & 1st respondent in HC 592/20

G. R. J. Sithole, with him L. T. Kafesu, for the 2nd respondent in HC 206/20 & applicant in HC 592/20

ZHOU J: This judgment is in respect of two related applications involving, to a large extent, the same parties.  In Case No. HC206/20 the applicant seeks an order for the setting aside of the decision of the first respondent approving the second respondent’s bill of costs on the grounds that it is unreasonable, unfair and unlawful.  The application is being made in terms of s 4(1) of the Administrative Justice Act [Chapter 10:28].  In Case No. HC 592/20 the applicant, who is the second respondent in HC 206/20, seeks an order that the first to seventh respondents pay the sum of $339 484.92 together with interest thereon at five percent per month from 27 December 2019 to the date of full payment.  The payment is remuneration for services rendered by the applicant as judicial manager of the second to seventh respondents.  For the avoidance of confusion, the parties shall be referred to herein by their names.

Background

Agricircle (Private) Limited (hereinafter referred to as “Agricircle”), which is represented by its director, Rodreck Itayi Musiyiwa (Musiyiwa) invested in the following companies which are cited as second to seventh respondents in HC 592/20: New Corporate Investments Three (Private) Limited, Central African Batteries (Private) Limited, Shownciff Services (Private) Limited, Batco (Private) Limited, and Petronets Investments (Private) Limited.  These companies had initially been placed under liquidation.  They were placed under judicial management after being removed from liquidation.  Cecil Hondo Madondo (hereinafter referred to as “Madondo) who was the liquidator became the judicial manager of the companies when they were placed under judicial management.  The companies were subsequently placed under a scheme of arrangement pursuant to an order of this court.  Agricircle, as the investor, agreed that it would pay Madondo’s fees for his work as judicial manager.  These fees were subject to approval by the Master of the High Court.

In or about November 2019 a dispute arose between Madondo and Agricircle over the bill which the former had raised in respect of his fees.  By letter dated 5th November 2019, Madondo presented to the Master his draft Bill of Costs for consideration.  The accompanying letter was copied to the legal practitioners for Agricircle.  Agricircle, through its legal practitioners, wrote to the Master on 7 November 2019 registering its objection to the bill.  The letter was delivered at the Master’s office on 8 November 2019 and at Madondo’s offices on 14 November 2019.  In that letter Agricircle disputes some of the attendances and costs included in the bill.  They asked that the bill be taxed and that they be notified of the taxation date.  On 14 November 2019, Madondo wrote to the Master objecting to the setting down of the taxation on the ground that it had been overtaken by events, in that the bill had been taxed and returned on 8 November 2019.  Madondo contended that Agricircle had been given an opportunity to comment on the bill before it was submitted to the Master for taxation.

On 19 November 2019 the Master wrote to the legal practitioners for Agricircle directing them to reduce their queries to writing to enable the other party to consider them.  On 21 November 2019 the legal practitioners for Agricircle wrote to the Master insisting on a set down of the taxation.  The Master responded to the letter by letter dated 26 November 2019, advising that the judicial manager’s feenote in question had been approved on 8 November 2019.

The parties’ contentions

The applicant’s complaint is that there was collusion between Madondo and the Master’s office to prevent it from making representations concerning the aspects of the bill of costs which it disputed.  It alleges that the bill was approved contrary to the provisions of the Administrative Justice Act and s 68(1) of the Constitution of Zimbabwe.  The allegation is made that the taxation was backdated to 8 November 2019.

The Master prepared a report in which he advises of his election to abide by the decision of the court save in relation to the costs which were sought against him which he contests.  In the report, the Master explains that judicial managers’ fee notes are approved by him without going through the process of taxation such as applies to legal fees.  The judicial manager’s fees, according to the Master, were approved in terms of s 308(1) of the Companies Act [Chapter 24:03], having regard to the reasonableness of the fee and the recommendations, if any which may have been communicated to his office.  The Master further explains that the letter of 19 November 2019 was meant to obtain details of the complaints which were being made otherwise the approval of the fee had already taken place on 8 November 2019.  Upon realising that the lawyers for Agricircle were engaging with his office on incorrect assumptions, the Master then informed them that the approval had actually taken place on 8 November 2019, which information was conveyed by letter of 26 November 2019.  He denies any misconduct as alleged by Agricircle.

In opposition, Madondo, has raised a plethora of points in limine.  These have been advanced under the following headings: that the deponent to the founding affidavit lacks locus standi to represent Agricircle; non-joinder; no proper second respondent; no cause of action; and, no leave of the court to sue second respondent.  On the merits, Madondo states that the dispute arises from two bills which Agricircle has failed to settle.  The first was a bill for ZW$156 887.64 which he reduced to ZW$130 104.72, but which Agricircle has not settled to date.  The second and final bill was discussed between Madondo and Agricircle before it was submitted to the Master for approval.  All the questions asked by Agricircle about the bill were answered and issues were clarified before the bill was submitted for approval.  The Master approved the bill on 8 November 2019 and returned it to him.  Letters from Agricircle’s legal practitioners asking for the setting down of taxation proceedings were written after the bill had been approved.  Madondo details instances where he alleges that Agricircle refused or failed to pay what was due to him, including reimbursing for expenses incurred such as the Scheme Chairman’s fees and expenses incurred in respect of advertising.  Madondo denies any contravention of the provisions of the Administrative Justice Act, and counterclaims through the counter-application for payment of the sum of $339 484.92.

Objections in limine

The authority of Rodreck Itayi Musiyiwa

Madondo takes the point that that there is no proof that Rodreck Itayi Musiyiwa is authorized to represent Agricircle in these proceedings in the absence of a resolution to that effect.  This is a point that almost every litigant seems to be obsessed with these days.  It is not in every case that a resolution of the board is required to be attached to the affidavit of a deponent in proceedings involving a company.  Where, as in the instant case, the deponent to the affidavit is a director of the company and has made the averment on oath that he has the authority to depose to the affidavit the onus is on the person challenging such authority to give evidence to contradict the assertions made by the deponent.  In this case, no such evidence was tendered.  After all, the documents before this court show that in all the dealings with Agricircle, Madondo was dealing with the same Musiyiwa whose authority he seeks to challenge now.  The objection in this respect is not properly founded; it is also not based on evidence.  Accordingly, it is dismissed.

Non-joinder

The alleged non-joinder pertains to the Scheme Manager and the companies which are under the scheme of arrangements.  A party is only entitled to participate in proceedings if that party has a direct and substantial interest in the subject matter and outcome of the proceedings, see Zimbabwe Teachers Association and Others v Minister of Education 1990 (2) ZLR 48 (HC) at 52F-53E.  The interest must be a legal interest.  No relief is being sought against these entities by the applicant in HC206/20.  The relief sought is for the setting aside of the approval by the Master of the fees charged by Madondo for his services as judicial manager.  These fees have nothing to do with the Scheme Manager or the companies under judicial management.  The fees were approved by the Master who is cited, and the approval was for the benefit of Madondo who is also cited.  The objection based on the non-joinder of the named persons is therefore without merit.

Incorrect citation of Madondo

The respondent’s contention is that Madondo ought to have been cited in his official capacity as the judicial manager rather than in his personal capacity.  While the fees in dispute are doe to him for services rendered in the capacity of judicial manager, the appointment to that office was personal.  Thus, he is the person who is entitled to the fees.  While it would have indeed be desirable and proper to clearly state that he is cited in his capacity as judicial manager, it seems to me that that omission does not render the proceedings fatally defective.  The founding affidavit makes it clear that he was the judicial manager and that the fees being questioned or disputed were due to him in that capacity, see paras 9 and 10 of founding affidavit in HC 206/20.  Thus the objection, while sound, does not invalidate the proceedings.  In any event, he was able to respond to all the issues raised and did so in that capacity albeit he states in the counter application that he is now a former judicial manager.  If he has since vacated the office it would not be proper to cite him in the capacity which he no longer holds.  For these reasons, the objection must fail.

No cause of action

The respondent’s objection advanced under this head pertains to the merits of the applicant’s claim.  The issues raised – namely – that the applicant was indeed given an opportunity to make representations on the fee note and that the first respondent acted properly in accordance with the law are the questions for determination on the merits.  For these reasons, the objection must fail.

The absence of leave to sue Madondo

Madondo states in his affidavits that he is a former judicial manager.  He also makes the point in the same affidavit that he has been cited in his personal capacity, which is contradictory to the ground of objection being taken.  Since he had ceased to be judicial manager at the time that the proceedings were instituted the ground of objection is not supportable.  Indeed, even in his counter application in HC 592/20 he does not cite himself in the official capacity of judicial manager (or former judicial manager).  He presents the application in his personal capacity. For these reasons, no leave was required to institute proceedings against him.  The objection is accordingly dismissed.

The jurisdiction of the court to determine the counter-application

In opposing the counter-application the respondents therein took the point that this court does not have jurisdiction to hear the matter because the parties consented to the jurisdiction of the Magistrates Court.  The jurisdiction of this court cannot be ousted by the parties’ consent to the jurisdiction of the Magistrates Court because its jurisdiction is conferred by law and not by the parties.  It cannot therefore be ousted by the parties.  The effect of the consent to the jurisdiction of the Magistrates Court is simply that even where it would otherwise have no jurisdiction to deal with the dispute between the parties owing to, for instance, the amounts involved, the parties submit themselves to its jurisdiction.  This simply means that either party has an election as to whether to institute the proceedings in this court or in the Magistrates Court notwithstanding the monetary dispute involved.  The objection is therefore dismissed.

That the counter-application is improperly before the court

The basis of this objection is that the counter-application has a different case number and was not filed together with the notice of opposition.  The date stamp shows that the counter-application and the opposing papers in HC 206/20 were filed on the same date.  The only anomaly is that the counter-application was given a different case number from the main application. However, this objection falls away because the counter-application was given a different case number and the two matters had been set down separately.  With the consent of the parties it was then directed that the two matters be heard together.  In the submissions in court both parties were clear that they would like one judgment to be rendered in respect of the two matters because of their connectedness.

Misjoinder of the second to seventh respondents in HC592/20

The ground of objection is that the second to the seventh respondents were improperly joined in the counter-application.  The second to seventh respondents are the companies which were placed under judicial management.  The objection is that they have no legal interest in the dispute raised by the counter-application, because Agricircle and not these companies, made the undertaking to meet all the costs of the judicial manager.  However, the draft order makes a claim for the recovery of the fees against these companies as well.  In the absence of the investor, nothing would stop the judicial manager from recovering his fees from the companies under his management.  Thus these companies are not only cited but relief is being sought against them.  They are therefore properly joined in the proceedings. Whether Madondo ultimately succeeds in proving their liability for the fees is a matter for the merits.  It cannot be raised by way of an objection in limine.  Accordingly, the objection is dismissed.

THE MERITS

Agricircle challenges the Master’s approval of the fee on the grounds that it is not lawful, reasonable and fair.  Section 3(1) of the Administrative Justice Act [Chapter 10:28] provides as follows:

“An administrative authority which has the responsibility or power to take any administrative action which may affect the rights, interests or legitimate expectations of any person shall –

act lawfully, reasonably and in a fair manner; and

. . .”

In the case of Awumey v Fort Cox Agricultural College 2003 (8) BCLR 861(Ck), the Court held that the right to lawful administrative action, as provided for in s 6 of the South African Promotion of Administrative Justice Act, encompasses common law requirements regarding the competence and qualification of administrators.  That reasoning applies equally in our case given the similarities in the wording of the two Acts.  An allegation that the Master did not act lawfully must be supported by evidence pointing to the law which was contravened by the action of the Master.  Lawfulness entails that the administrator making the decision must act in accordance with the dictates of the law and must have lawful authority for the decision.

The Master has explained that he authorized the fee charged by the judicial manager in the exercise of his powers as provided for in s 308 of the Companies Act [Chapter 24:03], which provided as follows:

“(1)	A provisional judicial manager and a final judicial manager shall be entitled to such reasonable remuneration for their services as may be fixed by the Master from time to time.

(2)	In fixing the remuneration of a judicial manager, the Master shall take into account the manner in which the provisional judicial manager or the final judicial manager has performed his functions and any recommendations by the members or creditors of the company relating to such remuneration.

(3)	Section 192 of the Insolvency Act [Chapter 6:04] shall apply, mutatis mutandis, with regard to any fixing of remuneration by the Master under this section.”

Section 192 of the Insolvency Act provides recourse to take on review the decision of the Master or an officer.  Agricircle has also made reference to the provisions of s 136(1) of the Insolvency Act which are as follows:

“The corporate rescue practitioner is entitled to charge an amount to the company for the remuneration and expenses of the practitioner in accordance with the Second Schedule item 1 which may be amended by the Minister from time to time by way of notice in the Gazette.”

What is clear from the cited provisions is the entitlement of the judicial manager to reasonable remuneration for his or her services.  Such remuneration must be fixed by the Master.  In the exercise of his powers of fixing the remuneration of a judicial manager the Master is enjoined by law to consider the manner in which the judicial manager has performed his functions as well as any recommendations made by the members or creditors of the company in connection with such remuneration.  The applicant’s contention is that in the instant case the Master did not fix the remuneration but merely rubberstamped and approved the fees as submitted by the judicial manager.  It is further contended that the Master did not even ascertain, as he was obliged to do, if the remuneration and expenses were prepared in accordance with the Second Schedule item 1 of the Insolvency Act.  There is a suggestion in the respondent’s opposing papers and the letters of 5 and 14 November 2019 that Agricircle had been presented with the draft fees and reviewed and agreed to them before they were submitted to the Master.  The extent to which the Master was furnished with the recommendations of Agricircle is not clear.  The assertion by the judicial manager that the bills were agreed to by the investor is inconsistent with the conduct of the same investor who called for a taxation meeting by letter dated 7 November 2019.  That letter was delivered to the Master on 8 November, the same day that it is alleged that the fees were fixed.  Clearly there was no agreement on the fee charged by the judicial manager.

The Master would have known on that date that there was a dispute and ought to have stayed approval pending receipt of written recommendations from Agricircle.  The Master only invited Agricircle to submit its representations on the fee charged in writing by letter dated 19 November 2019.  Yet by this day he had already approved the fee raised by the judicial manager.  The Master only informed the lawyers of Agricircle of the approval by letter dated 26 November 2019.  This was a complete departure from the letter of 19 November in terms of which he invited Agricircle to submit its representations in writing.  There was therefore no compliance with the requirements of the law, hence the approval cannot stand.

The former judicial manager submits that because he engaged Agricircle before submitting his fee to the Master for approval then there was compliance with the requirements of the law.  The provision requires that any recommendations regarding the fees be made to the Master, not to the judicial manager.  The court notes that even after the approval of the fee by the Master the judicial manager at some point reviewed the approved fee downwards from $156 887.64 to $130 104.72, and corrected what he refers to as “a typographical error”.  That development underscores the necessity for debatement of the fees before they are finally approved or fixed by the Master.

An administrative decision qualifies to be unreasonable if it is “one that a reasonable decision-maker could not reach”, see Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Tourism 2004 (4) 490(CC) para 44.  From the provisions of the Companies Act cited above, the Master was not merely supposed to approve a fee submitted by the judicial manager.  He is the authority responsible for fixing the fee, hence the need to take on board the concerns from the stakeholders referred to in the Companies Act.  In this case he proceeded without recourse to the investor.  When concerns were raised and a request was made for the fee to be taxed he did not readily disclose that he had approved the fee.  Instead, he invited representations only to turn around and state that he had already approved the fee even as he was busy inviting representations thereon.  This approach fails the test of reasonableness.

Fairness encapsulates the common law entitlement to natural justice but goes beyond the principles of natural justice, see Bel Porto School Governing Body v Premier, Western Cape 2003 (3) SA 265(CC), para 84.  Under the common law there are two rules of natural justice – namely – (a) audi alteram partem which enjoins that a person affected by a decision must be given a fair hearing by the decision-maker before the making of a decision, and (b) nemo iudex in sua causa, the rule against bias, which disqualifies a person from being judge in a cause in which they have an interest.  In casu, the right to be heard as expressed in the audi alteram partem rule obligated the Master to hear Agricircle before fixing the fees for the judicial manager.  In the case of De Lange v Smuts N.O 1998 (3) SA 785(CC), para 131, the Constitutional Court of South Africa articulated the constitutional justification of this aspect of fairness in the following terms: “Everyone has the right to state his or her case, not because his or her version is right, and must be accepted, but because, in evaluating the cogency of any argument, the arbiter, still a fallible human being, must be informed about the points of view of both parties in order to stand any real chance of coming up with an objectively justifiable conclusion that is anything more than chance.”  Procedural fairness enhances the quality of decision-making while at the same time protecting an individual’s dignity by allowing the individual an opportunity to participate in decisions affecting him or her.  In this case, as noted earlier on, the Master proceeded to make a decision on the reasonable fee for the judicial manager without hearing Agricircle.  The judicial manager, on the other hand, has shown a determination to defend the fee on the basis that he presented the figures to Agricircle before he submitted them to the Master.  But the obligation to hear the other side was on the Master.  When Agricircle expressed an intention to be heard the Master ought to have stopped the approval and entertained representations from it.  Instead, he proceeded to allow the fee proposed by the judicial manager then subsequently engaged Agricircle in discussion without disclosing that the fee it was complaining about had already been approved.  This information was only disclosed almost three weeks after the fee had been approved even though the Master had received communication from Agricircle on the same date that he is said to have approved the fee.  The approach of the Master thus made the involvement of Agricircle irrelevant.  There was therefore a failure of procedural fairness in the manner that the approval took place.

In light of the conclusions reached above, the claim for payment of the fees made in the counter-application cannot succeed.  The fee must be approved by the Master in a lawful, reasonable and fair manner.

Costs

Agricircle has sought costs against the Master and the former judicial manager on the attorney-client scale.  I do not believe that costs against the Master are warranted.  There is no impropriety that warrants punishing the Master by awarding costs against him.  The claim for costs against the Master must therefore fail.

Costs would normally follow the result.  However, there is a worrying feature of this case which justifies a departure from that principle.  The language used in the affidavits filed on behalf of Agricircle is highly intemperate, scurrilous and disrespectful of the court.  While the challenge to the Master’s decision has been found to be successful, there is no iota of evidence to justify the accusations of connivance and imputations of corruption which are implied in the papers filed on behalf of Agricircle.  The Master has been unduly accused of being deceitful, bringing the administration of justice into disrepute, being dishonest, acting in bad faith, being intent on circumventing a lawful process, acting disgracefully, among other descriptions.  This court has previously stated that it holds legal practitioners responsible for the language used in affidavits and other court documents, and has urged against the use of language that undermines the dignity of the court.  This is a matter in which because of the disrespectful language used the court must penalize the successful party by not awarding costs.  Accordingly, each party must bear its own costs.

Conclusion

In the result, IT IS ORDERED THAT:

The decision by the Master approving or fixing the remuneration to be paid to the second respondent in HC 206/20 be and is hereby set aside.

The application in HC 592/20 be and is hereby dismissed in its entirety.

The question of the reasonable remuneration to be paid to the second respondent in HC 206/20, who is the applicant in HC 592/20, is remitted to the Master who shall fix the reasonable remuneration after taking into account representations from both the former judicial manager and Agricircle (Private) Limited.

Each party shall bear its own costs.

Kantor & Immerman, legal practitioners for the applicant in HC 206/20 and the 1st - 7th respondents in HC 592/20.

Henning Lock, legal practitioners for the 2nd respondent in HC 206/20 and the applicant in HC 592/20