Martha Rukuni v Minister of Finance N.O. & Anor

### Preamble
Judgment No. SC 125/20
1
Civil Appeal No. SC 306/12
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REPORTABLE		(117)

MARTHA     RUKUNI

v

MINISTER     OF     FINANCE     N.O     (2)     THE     SECURITIES     COMMISSION     OF     ZIMBABWE

SUPREME COURT OF ZIMBABWE

MALABA DCJ, ZIYAMBI JA &HLATSHWAYO JA

HARARE: JUNE 04, 2013, MARCH 14, 2016 & OCTOBER 6, 2020

T Mpofu, for the appellant

Ms C Garisenheta, for first respondent

Ms N Moyo, for second respondent

HLATSHWAYO JA: 	This is an appeal against the decision of the High Court, wherein the High Court dismissed the appellant’s application for an order in terms of s 4 of the Administrative Justice Act [Chapter 10:28]. Before finalization of the matter the court drew the parties’ attention to a potentially significant point of law not addressed on the papers or in submissions, viz., the implications to the appeal of s 7(2)(c)(i) of the Securities Act [Chapter 24:25] and to file any supplementary submissions they may wish to make on the point by 14 March 2016. Mr Mpofu, for the appellant filed supplementary heads of argument on the point. The other parties did not. The point of law, however, did not prove significant.

The facts of this matter are largely common cause. The appellant was in 2008 appointed by the first respondent to the post of Commissioner to the second respondent. Her appointment was to be of a 4 year term expiring at the end of August 2012.   Part of the letter of appointment read as follows:

“In terms of s 16 of the Securities and Exchange Act [Chapter 24:25], you are required to declare your assets and business interests and those of your spouse.”

The appellant duly accepted her appointment and in line with the above directive immediately declared that she sat on the Board of Directors of OK Zimbabwe Ltd, (OK) a company listed on the Zimbabwe Stock Exchange. Apart from the appellant, one other commissioner was also in the position of holding office in a listed entity.

This situation continued and the appellant carried out her duties as a Commissioner of the Securities Commission of Zimbabwe, while also sitting as a member of the Board of OK, until the occurrence of the following developments highlighted in the judgement a quo:

“Thereafter, her status as commissioner was not questioned until 1 February 2010, when it was discussed by the full Commission. The latter resolved (by a majority of 3 to 2) that there was a potential conflict between the office of commissioner and tenure on the board of a listed entity. The Chairman of the Commission then wrote to the Minister on 23 February 2010 setting out its position. The Minister wrote back on 24 May directing that the two commissioners should elect between their office as commissioners and their tenure on the boards of listed entities. The applicant (appellant) replied by refusing to comply with the directive and stating that she would only resign upon being compensated for the loss of fees for the remaining period of her office on the Commission. The Minister then formed the view, citing a specific instance of conflict involving another listed entity, that the applicant’s office as commissioner was inconsistent with her tenure on the board of OK Zim. He consequently wrote to the Commission on 12 May 2011 directing the applicant and the other commissioner in question to vacate their office as commissioners. Eventually, on 21 June 2011, the applicant wrote to the Commission claiming compensation in the sum of US$80,707 for the remaining term of her office. This claim was declined by the Chairman of the Commission on the grounds that the Securities Act did not provide for such compensation.”

The appellant, who was affected by this directive, objected on the basis that she had declared her interests in OK Zimbabwe, and the  first respondent despite being fully aware of such interest had still gone on to appoint her to the position of Commissioner. It was her view that in any event, she had done nothing in the course of her duties that could be viewed as amounting to a conflict of interests.

Further correspondence was exchanged between the parties and the situation culminated in the first respondent informing the appellant that he was exercising his discretion in terms of s 10(2)(e) of the Securities and Exchange Act [Chapter 24:25] and terminating her mandate as a Commissioner.

Aggrieved, the appellant filed an application with the High Court, in terms of s 4 of the Administrative Justice Act [Chapter 10:28], to have the decision of the first respondent set aside on the basis that the first respondent’s actions were irrational, unreasonable and the first respondent had not acted in a fair manner.

The first respondent opposed the application on the basis that s 10(2) (e) of the Securities and Exchange Act [Chapter 24:25] gave the Minister of Finance a discretion to terminate the mandate of a Commissioner if he formed an opinion that an inconsistency had arisen in a particular case. Section 10 (2) (e) states as follows:

10. (1)………………

(2) The Minister may require a commissioner to vacate office if—

(a) the commissioner has been guilty of conduct which renders him or her unsuitable to continue to hold office as a commissioner; or

(b) the commissioner has failed to comply with any condition of his or her office fixed in terms of section nine; or

(c) the commissioner is mentally or physically incapable of efficiently performing his or her duties as a commissioner; or

(d) the commissioner contravenes section sixteen; or

(e) the commissioner or his or her spouse engages in any occupation, service or employment, or holds any asset, which in the Minister’s opinion is inconsistent with his or her duties as a commissioner. (emphasis)

In reply, the appellant argued that s 10(2)(e) of the Act, relied upon  by  the  Minister,  only  applied  to  a  material  change  of  circumstances  that  occurs  during  a  commissioner’s tenure of office, not to events that occurred or were effective before her appointment. She stressed that after all she was appointed to the Commission after full scrutiny and disclosure of her position on the OK Zimbabwe’s board.

The  High Court dismissed the application, after making a finding that s 10(2)(e) of the Securities and Exchange Act [Chapter 24:25] indeed gave the Minister a discretion to terminate a Commissioner’s mandate if the Commissioner engaged in any activity proscribed by s 10(2)(e) of the Act. The court below held that s 10(2) (e) applied at all material times, not only to events that happened after the appointment, reasoning in the relevant portion of the judgment thus:

“I do not think that s 10(2) (e) can be interpreted so as to be confined to changed circumstances. It is a perpetual provision with infinite effect.  I am fortified in this construction by ss 11 and 24(1) of the Interpretation Act [Chapter 1:01] which restate the common law position as follows:

“11.	Every enactment shall be construed as always speaking, and if anything is expressed in the present tense it shall be applied to the circumstances as they occur so that effect may be given to each enactment according to its true spirit, intent and meaning.

“24(1)	Where an enactment confers a power, jurisdiction or right, or imposes a duty, the power, jurisdiction or right may be exercised and the duty shall be performed from time to time as occasion requires.”

“In the instant case, the fact that the Minister had previously approved the applicant’s position did not preclude him from forming the opinion at a later stage, provided of course he did so fairly and on reasonable grounds that her continued tenure on the board of OK Zimbabwe was inconsistent with her duties as a commissioner”

Dissatisfied with the above-mentioned judgment the appellant then noted an appeal with this Court. Her Grounds of Appeal are couched as follows:

That the court a quo erred in coming to the conclusion that the first respondent could competently act under and in terms of s 10(2) (e) of the Securities and Exchange Act in the absence of appellant’s changed circumstances.

The court a quo erred at any rate, in failing to come to the conclusion that the whole of s 10(2) is prospective in outlook and that being the case no valid action could be undertaken under s 10(2)(e) if the action relates to conduct which was in existence at the time of the appointment of a Commissioner

The court a quo further erred in finding that the first respondent’s actions did not breach the provisions of s 3(1) of the Administrative Justice Act, particularly in view of the fact that:

The reasons relied upon the by the first respondent could not legally justify the action that he had taken and he had some instances failed to proffer any reasons at all.

first respondent’s decision was unreasonable regard being had to his failure to deal with the issue of compensation which he was obliged by operation of the law to deal with which could not be ignored on the facts and which was made imperative by his failure to timeously deal with the whole matter.

The court a quo further erred in coming to the conclusion that s 3(1) of the Administrative Justice Act does not widen the ambit of common law and further erred in failing to appreciate that this Court had prior to the Act already widened such ambit.

The appellant prayed for relief as follows:

That the Appeal succeeds with costs.

The decision of the High Court is set aside and substituted with the following:

The first respondent’s decision to terminate applicant’s tenure be and is hereby set aside.

First and second respondents jointly and severally, the one paying the other to be absolved pay the costs of this Application.

It is clear from the above that only three issues form the gravamen of this appeal and their disposal would dispose of this whole matter. They are as follows:

That the court a quo erred in its interpretation of s 10(2(e) of the Securities and Exchange Act [Chapter 24:25].

That the first respondent’s action breached the provisions of the Administrative Justice Act  [Chapter 10:28]

That the appellant is entitled to compensation for her removal from the post of Commissioner.

The court will consider each in turn.

The interpretation of s 10(2) (e) of the Securities and Exchange Act [Chapter 24:25]

As a starting point the court a quo’s interpretation of s 10(2) (e) of the Securities and Exchange Act [Chapter 24:25], cannot be faulted. The provision is not intended to be just prospective and forward looking in its application but is “always speaking”.  The submission of Mr Mpofu who appeared for the appellant that that s 10(2) (e) is concerned with changed circumstances after appointment as Commissioner and not the pre-existing situation that was specifically approved by the Minister at the time the Commissioner was appointed fails to capture the full import of “always speaking”. Indeed, a change in circumstances post appointment would trigger the operation of the provision, but so too would a change in the operating environment affect previously accepted circumstances whether relating to pre- or post-appointment. For example, even if, as is alleged in this case, the Minister had accepted pre-appointment that the appellant was a board member of a quoted company, the Minister would be entitled to request the removal of the appellant if the operating environment makes her continued membership inimical to the carrying on of her duties. The question, therefore, is whether the Minister did make it clear why and how the circumstances he had accepted or condoned had become inimical to the carrying on of the appellant’s duties.

Did the Minister Act in a reasonable manner?

The position of the first respondent rested purely on s10(2)(e) of the Securities and Exchange Act [Chapter 24:25], but as noted above, in applying the provision, the Minister is required to act reasonably and fairly and to be fully alive and responsive to what he had earlier approved or condoned. The court is constrained to remind administrative authorities of the old legal adage, “quod approbo non reprobo”, which means simply, “that which I approve, I cannot disapprove.” Or to put it differently, the Minister cannot approbate and reprobate at the same time. This would appear to be the appellant’s position at its highest.  However, this must be weighed against the Minister’s responsibility to superintend the administration of the Act in a manner which fulfils its objectives and in the public interest. This may include changing his mind on earlier positions taken upon getting better advice subsequently or differently assessing the operating environment.

Section 3 of the Administrative Act [Chapter 10:28] states as follows:

3 Duty of administrative authority

(1) 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

act within the relevant period specified by law or,

if there is no such specified period, within a reasonable period after being requested to take the action by the person concerned; and

where it has taken the action, supply written

reasons therefor within the relevant period specified by law  or, if there is no such specified period, within a reasonable period after being requested to supply reasons by the person concerned.

In this matter, on the one hand the appellant disclosed her membership of the Board of OK holdings as required by s 16 of the Securities and Exchange Act [Chapter 24:25]. The first respondent, using his discretion accepted this and appointed her to the post of Commissioner all the same. A legitimate and very reasonable expectation was obviously created in the mind of the appellant that the issue of her board membership having been accepted and condoned, the issue would never threaten her appointment.  This type of situation must have been the one that exercised the mind of the learned GUBBAY CJ, in Minister of Information V PTC Managerial Employees Workers Committee 1999 (1) ZLR 128 (SC), when he stated:

“It has been said that legitimate expectations include expectations which go beyond enforceable rights, provided that they have some reasonable and rational basis. See Administrator,   A   Transvaal & Ors v Traub & Ors 1989 (4) SA 731 (A) at 756G. In that case, Corbett CJ cited with approval English authorities which lay down that even where a person claiming some benefit or privilege has no legal right to it, if he has a legitimate expectation of receiving the benefit or privilege, the court will protect the expectation by judicial review as a matter of public law. And that legitimate expectation may arise from an express promise given on behalf of a public authority or from the existence of a regular practice which the claimant can reasonably expect to continue. The doctrine was approved by this court in Metsola v Chairman, Public Service Commission & Anor 1989 (3) ZLR 147 (S); Health Professions Council v McGown 1994 (2) ZLR 329 (S); Taylor v Minister of   C   Education & Anor 1996 (2) ZLR 772 (S); and Mawenga v PTC 1997 (2) ZLR 483 (S).]”

However, on the other hand the Minister had a responsibility, upon subsequent better advice and reflection based on lived experience, to take appropriate steps to remedy the situation bearing in mind the legitimate expectations of the appellant. This Court is in agreement with the court below that he did so in a manner which does not violate the Administrative Justice Act:

“In the instant case, after receiving the Commission’s recommendation that commissioners should not sit on the boards of listed entities, the Minister decided that this practice was contrary to good governance because of its inherent conflict of interest. At the same time he gave the two commissioners concerned the option to remain on the Commission or relinquish their posts in the listed entities. The applicant did not comply with that directive and insisted that she would only resign from the Commission after receiving compensation for her remaining term of office. In response, the Minister extended the deadline for the commissioners to make their election. Again, the applicant did not heed that directive. Eventually, almost one year after his initial decision on the matter, the Minister directed that the two commissioners vacate their office in terms of s 10(2)(e) of the Act.”

On the above facts, the court a quo was unable to find anything unreasonable or unfair in the Minister’s decisions or actions. Neither does this Court.

The question of compensation

This Court has considered the question of compensation as it appears in the appellant’s grounds of appeal and it is of the firm view that this is a classic case where compensation should not be granted. The reasons are simple.

Firstly, the question of compensation was never raised in the appellant’s founding papers in the court a quo. Neither was it prayed for in the Draft Order placed before that court. All that the appellant sought before the High Court was that the first respondent’s decision removing her from her post as Commissioner be set aside. That was all. There was no relief sought as regards compensation. Neither was an amendment sought to include the relief of compensation. The issue only arises for the first time in the appellant’s Notice of Appeal before this Court.

This is patently improper. An appellant cannot seek an Appellate Court to determine an issue that was never placed before or sought in the papers in the court a quo.  This Court has made it clear on several occasions that an application stands or falls on its founding papers. See, Mangwiza v Ziumbe No & Anor 2000 (2) ZLR 489(SC). More recently in Muchini V Adams & Others SC 47/13, this Court held:

It is trite that an application stands or falls on the averments made in the founding affidavit.  See also Herbstein & van Winsen the Civil Practice of the Superior Courts in South Africa 3rd ed p 80 where the authors state:

“The general rule, however, which has been laid down repeatedly is that an applicant must stand or fall by his founding affidavit and the facts alleged therein, and that although sometimes it is permissible to supplement the allegations contained in that affidavit, still the main foundation of the application is the allegation of facts stated therein, because these are the facts which the respondent is called upon either to affirm or deny.”

This issue of compensation is not properly before this Court and there is no cause why the court should pronounce on it.  After all it is trite that an Appellate Court is not a court of first instance, but is there to examine whether a lower court misdirected itself at law or fact on the basis of the facts that were placed before it.

Secondly, the Application was brought to the High Court in terms of s 4 of The Administrative Justice Act [Chapter 10:28]. The Section states as follows:

4 Relief against administrative authorities

(1) Subject to this Act and any other law, any person who is aggrieved by the failure of an administrative authority to comply with section three may apply to the High Court for relief.

(2) Upon an application being made to it in terms of subs (1), the High Court may, as may be appropriate—

(a) confirm or set aside the decision concerned;

(b) refer the matter back to the administrative authority concerned for consideration or reconsideration;

(c) direct the administrative authority to take administrative action within the relevant period specified by law or, if no such period is specified, within a period fixed by the High Court;

(d) direct the administrative authority to supply reasons for its administrative action within the relevant period specified by law or, if no such period is specified, within a period fixed by the High Court;

(e) give such directions as the High Court may consider necessary or desirable to achieve compliance by the administrative authority with section three.

(3) Directions given in terms of subs (2) may include directions as to the manner or procedure which the administrative authority should adopt in arriving at its decision and directions to ensure compliance by the administrative authority with the relevant law or empowering provision.

It is clear from the above provisions that compensation is not part of the competent relief that a court may grant under the Act. The court has no discretion in this regard. There can be no other conclusion therefore except that the relief of compensation is not only incompetent but foreign to applications made to the court in terms of the Administrative Justice Act [Chapter 10:28]. This ground of appeal must therefore fail.

DISPOSITION

Before setting out its dispositive order, the court is constrained to comment that in 2013, after the High Court had heard this matter, the legislature through Act No. 2 of 2013 amended s 7(2) of the Securities and Exchange Act [Chapter 24:25], to prohibit the Minister from appointing anyone who sits on the board of a listed company, as a commissioner. Mr. Mpofu, for the appellant, in further submissions, suggested that this amendment shows that there was no law on the basis of which the first respondent had dismissed the appellant in the first place. However, this submission is without merit. If anything, the amendment is simply a translation of a policy position into law to guide future conduct and not to deal with the appellant’s situation.

On the issue of costs, this Court, like the court below, takes the view that each party must bear its own costs since the appellant’s removal from office was not due to any fault or misconduct on her part and the matter illuminated significant issues of public importance including and resulting in the amendment noted above. Therefore, a departure from the ordinary rule on costs is perfectly merited. The second respondent did not participate in this appeal, opting to abide the decision of this Court and therefore my not be mulcted in costs of this appeal.

As a result, the following Order is made:

The appeal is dismissed with each party bearing its own costs.

MALABA DCJ			:		I agree

ZIYAMBI JA			:		I agree

Gill, Godlontons and Gerrans, appellant’s legal practitioners

Civil Division of the Attorney General’s Office, for 1st respondent.

Coghlan Welsh and Guest, 2nd respondent’s legal practitioners