MANGOTA
J:
On
29 January, 2015 the court appointed the second respondent
[“Militala”] in the position of provisional judicial manager for
Tetrad Investment Bank Limited [“the bank”]. The appointment was
at the instance of the bank.
On
16 March, 2015 Militala submitted to the bank his fee note of
$144,900.00. The note was for the work which he, through his company
- Petwin Executor and Trust (Pvt) Ltd performed for the bank in
February, 2015.
On
1 April, 2015 the applicant, which claimed to be the beneficial owner
of the bank, raised an objection with the first respondent. The
objection related to Militila's fee note for February, 2015.
Following
the objection, the first respondent invited the applicant and the
second respondent to a meeting at its offices. The meeting took place
on 15 June, 2015. At the meeting, the first respondent agreed with
the applicant that Militala should produce an itemized bill of costs
which pertained to the work he did for the bank in February, 2015.
On
18 June, 2015 Militala submitted to the first respondent an itemized
bill of costs for February, 2015.
On
25 June, 2015 the first respondent handed down a ruling in which, the
applicant's objections notwithstanding, it approved of Militala's
fee note for February, 2015.
On
4 May, 2015 Militala presented to the bank four invoices. These were
for work which he said he did for the bank in March, April, May, and
June, 2015. The four invoices had a total of $274,563.00.
The
first respondent's ruling of 25 June 2015 remained a cause of
concern to the applicant. It, therefore, applied to the court for a
review of the same. Its grounds for review were, in essence, that the
first respondent acted grossly unreasonably and irrationally:
(a)
in accepting Militala's February invoice without requesting proper
proof of how Militala allocated his time to his work given the fact
that he neglected to draft a proper bill of costs;
(b)
in authorizing payment to Militala when the latter was illegally
appointed by the Bulawayo High Court in contravention with section 57
of the Banking Act;
(c)
in failing to apply its mind to the matter and accepting that
Militala could have provided meaningful services to the bank;
(d)
in accepting that the fees which Militala charged were reasonable
“when there were only 160 working hours in February and only 672 in
the entire month”;
(e)
in failing to provide proper reasons for its decision and failing to
justify why it dismissed the applicant's objection.
It
insisted that Militala failed to comply in any meaningful respect
with Statutory Instrument 107/2011. He did not provide a taxed bill
of costs, it said. It, accordingly, moved the court to:
(i)
set aside the first respondent's decision of 25 June, 2015;
(ii)
order Militala to refund $144,900.00 it paid to him with interest of
5% per annum calculated from the date of his receipt of the money to
the date of payment of the same;
(iii)
interdict the first and third respondents from making any further
payment to Militala without a court order;
(iv)
order the respondents to pay, jointly and severally the one paying
the others to be absolved costs of this application on a higher
scale.
The
first respondent did not oppose the application. It, however, made
comments on the applicant's grounds for review. These from part of
the record.
The
third respondent supported the application in part and opposed it in
part.
It
opposed the applicant's prayer which called upon it to pay the
costs of the application let alone on a punitive scale. It moved the
court not to order it to pay costs of the application on whatever
scale.
The
second respondent opposed the application in a strenuous manner.
He
submitted that the first respondent applied its discretion properly
and judiciously to the case which was then before it. He insisted
that the applicant's grounds for review were without foundation and
were misconceived. He stated that his decision to resign from the
position of provisional judicial manager for the bank was not as a
result of the suit which the applicant filed seeking his removal. He
said his decision in the mentioned regard was guided by his personal
and professional considerations which were not relevant to the
application. He made reference to Annexures D which the applicant
attached to the application. He also referred to Annexure F which he
said clarified the contents of Annexure D. He said the time sheets
for February, 2015, Annexure F, showed the amount of time which each
director, consultant and clerk spent on the judicial management work
of the bank and the sum of money which was due to each for February,
2015.
The
first respondent, he argued, considered the contents of the annexure
against the objections of the applicant and properly allowed payment
of his fees.
He
insisted that the contents of the invoices for March, April, May and
June, 2015 should be disregarded because they did not relate to the
first respondent's decision which the court was called upon to
review. He submitted that the court properly and lawfully appointed
him as the bank's provisional judicial manager. He said he acted as
such until the day that he opted to resign. He stated that it was
inconsiderate for the applicant to remain oblivious to the fact that
several persons performed the work of judiciously managing the bank.
He
averred that statutory instrument 107/2011 did not apply to the first
respondent or to judicial managers. The instrument, he said, related
to legal practitioners and the latter's work.
He
submitted that the application was frivolous, vexatious and an abuse
of court process. He moved the court to dismiss it with costs on a
punitive scale.
The
unlawfulness or otherwise of Militala's appointment as provisional
judicial manager does, in a large measure, depend on the
circumstances which led to the same. It is evident that Militala did
not move the court to appoint him to the position of provisional
judicial manager. It is equally evident that the court did not mero
motu appoint him to the same. The bank petitioned the court to
appoint Militala as its provisional judicial manager. In moving the
court as it did, the bank was not oblivious to the existence of
section 57 of the Banking Act [Chapter 24:20] [“the Act”]. It
was, in the court's view, thoroughly aware of the section. Its
knowledge of the section notwithstanding, the bank petitioned the
court to appoint Militala not in terms of section 57 of the Act but
in terms of section 302 of the Companies Act [Chapter 24:03].
Reference
is made in this regard to para (b) of the order which falls under
case number HC219/15.
The
applicant stated that it was the beneficial owner of the bank. It did
not explain itself on what it meant by the statement “beneficial
owner of the bank”. However, if its relationship with the bank was
that of the owner and the owned, as it would have the court
understand, the bank would not have moved in the direction which it
did. It would not, in other words, have petitioned the court to
appoint Militala as its provisional judicial manager before it
consulted, and agreed with, the applicant in respect of Militala's
appointment to the position. It is apparent that the bank did not
consult the applicant when it (the bank) petitioned the court to
appoint Militala. If the applicant was consulted in regard to the
appointment, the applicant would have advised the bank to petition
the court and have the provisional judicial manager appointed in
terms of section 57 of the Act and not in terms of section 302 of the
Companies Act as occured in casu.
The
apparent absence of consultation of the applicant by the bank tends
to place the applicant's claim as to its relationship with the bank
into some doubt.
The
court appointed Militala to the position of provisional judicial
manager on 29 January 2015. He, in line with his mandate, convened
the first meeting of creditors of the bank on 22 and 24 April, 2015
in Harare and Bulawayo respectively. The applicant, it was observed,
did not, at that stage or at any stage before those dates, raise any
issue about the lawfulness or otherwise of Militala's appointment
as provisional judicial manager for the bank. The only matters which
the applicant raised with the first respondent then were in the
letter which it addressed to the first respondent on 1 April, 2015.
The matters referred to Militala's alleged incompetence and
inexperience in working as a provisional judicial manager for the
bank. Other matters which the applicant raised in the letter related
to what it termed Militala's intention to work for short term
personal gains and/or his being “inappropriately qualified to take
the institution into the future.” The letter also raised concerns
about Militala's first fee note of February, 2015.
It
said nothing about the lawfulness or otherwise of Militala's
appointment as provisional judicial manager for the bank.
As
Militala's appointment had not been placed into issue, the first
respondent's ruling was conspicuously silent on it. The ruling
cannot, therefore, be faulted. The applicant's ground for review
which related to the appointment of Militala was misplaced. It sought
to criticize the first respondent on a matter which had not been
placed before the first respondent for determination. The criticism
was unfair, unjustified and unreasonable under the circumstances.
The
first time that the applicant placed the appointment of Militala into
question was in the letter which it addressed to the first respondent
on 16 July, 2016. It wrote the letter through its legal
practitioners, Venturas & Samukange. The letter reads, in part,
as follows:
“We
refer to your ruling CRI/15 dated 25 June 2015. As you aware the
Reserve Bank of Zimbabwe appointed the Depositor's Protection
Corporation in terms of the Banking Act [Chapter 24:20] section 65A
to be the Judicial Managers for Tetrad Holdings (Private) Limited
after Winsley Militala had been illegally appoint outing (sic)
provisional judicial manager by the High Court, Bulawayo. We are
advised that the former judicial manager……..
Our
instructions from the shareholders of Tetrad Holdings are that you
should reject any further claim on the following basis:
(i)
Mr Militala was unlawfully and wrongfully appointed as a judicial
manager.
(ii)
He was not appointed in terms of the amendment to the Banking Act
Section 65(a) 2012.
(iii)
The High Court Buawayo was misled.
(iv)
It is subject of investigation why Mr Mlotshwa and Mr Militala
decided to use the High Court in Bulawayo considering that all
parties are in Harare ……”
The
applicant repeated the same allegation in the letter which its legal
practitioners, Venturas Samukange, addressed to the third respondent
on 7 August, 2015. The letter which the applicant attached to the
application as Annexure J reads, in part, as follows:
“As
was explained to you at our meeting with Mr Samukange and Mr Venturas
at our offices on 13 July, 2015 Militala was illegally appointed and
his fees are hence unlawful and illegal. There is no basis for these
fees given the contravention of the Banking Act section 57 in his
appointment ….”
The
issue which related to Militala's appointment as provisional
judicial manager for the bank fell outside the four corners of the
matters which the court was moved to consider and determine. However,
in the interests of fairness and justice as well as a desire on the
part of the court to clarify the issue for the benefit of not only
the parties to this application but also of all those who may want to
raise the same matter in future, the court made up its mind to place
a proper and correct interpretation on section 57 of the Act.
The
section makes reference to special provisions relating to winding up
or judicial management of (a) banking institution. It reads:
“(1)
Notwithstanding anything to the contrary in the Insolvency Act
[Chapter 6:04] or the Companies Act [Chapter 24:03] -
(a)
The Reserve Bank shall have the right to apply to the High Court for
–
(i)….
(ii)
an order placing any banking institution under judicial management or
provisional judicial management in terms of the Companies Act
[Chapter 24:03]; and the Reserve Bank shall have the right to oppose
any such application made by any other person:
(b)
The Reserve Bank shall appoint the Deposit Protection Corporation as
the provisional liquidator, provisional judicial manager, liquidator
or judicial manager, of a banking institution; (emphasis added)
(c)………….
(2)
……….”
Section
57 of the Act, it is evident, confers some rights on the Reserve Bank
of Zimbabwe.
It
has a right to apply to this court to have any banking institution
placed under judicial management or provisional judicial management.
It also has a right to oppose any other person's application to
have a banking institution placed under judicial management or
provisional judicial management.
The
fact that the Reserve Bank has a right to oppose the application of
another person or entity entails that the section does not confer
upon it the exclusive right to always apply to court for the
placement of any financial institution under judicial management or
provisional judicial management. Some person other than it may apply
and, in the event of that occurring, the Reserve Bank has a right to
oppose the application. Where it chooses to exercise its right in
terms of the section, the Reserve Bank is, in terms of para (b) of
subsection (1) of the section, precluded from appointing a
provisional liquidator, provisional judicial manager, liquidator or
judicial manager of a banking institution outside the Deposit
Protection Corporation.
The
above is a clear and unambiguous interpretation of the section which
MAFUSIRE J exercised his mind upon when the applicant whose
application is before the court raised the same matter with him in an
urgent chamber application filed under case number HH898/15.
The
court associates itself with the learned judge's observations which
read:
“Thus
section 57 of the Banking Act does not say that whenever a banking
institution is placed under judicial management or provisional
judicial management only the DPC shall be appointed as the judicial
manager or provisional judicial manager. The section does not say
only the Reserve Bank shall be the entity with the exclusive right or
power to petition for the placement of banking institutions under,
inter alia, judicial management or provisional judicial management.
All that section 57 of the Banking Act does say and do, in brief, and
for the present context is to add the Reserve Bank to the list of
those persons that may move for the placement of a company, that is a
banking institution, under, inter alia, judicial management or
provisional judicial management, and to say where the Reserve Bank
has done that, its choice of judicial manager or provisional judicial
manager, shall be confined to the DPC. The Reserve Bank is also
empowered, by section 57, to oppose the placement at the instance of
anyone else other than itself, of a company that is a banking
institution, under judicial management or provisional judicial
management notwithstanding the provisions of the Insolvency Act or
the Companies Act”.
The
above is the correct position of the law on the aspect which the
applicant placed before the court for consideration. The applicant's
averments were misplaced. They did not and do not, therefore, hold.
Militala
worked as provisional judicial manager for the bank from the date of
his appointment (i.e 29 January, 2015). He continued to work as such
up until 29 June, 2015 when he resigned from the same. His effective
date of resignation was 1 July, 2015. It was for the mentioned
reasons, if for no other, that Militala submitted to the bank his fee
notes for March, April, May and June, 2015. Those were additional to
the fee note of February, 2015 which note is the subject of the
present review application.
In
his opposition to the application, Militala moved the court not to
consider the fee notes for March, April, May and June 2015 as part of
the review process. He stated in regard to paras 20-21 and 23-25 as
follows:
“6.
The content of these paragraphs is extraneous as it related to
matters that transpired after the delivery by the first respondent of
the decision which the applicant applies to be reviewed. The
inclusion of these paragraphs and the appendices thereto is thus
unwarranted and should be disregarded by the court.”
The
first respondent echoed the views of Militala in regard to the matter
at hand. It did so when it made comments on the applicant's grounds
for review. It stated as follows:
“DECISION
BEING BROUGHT UNDER REVIEW
Though
the application does not expressly identify the decision being
brought under review it is apparent that the decision is the decision
of the Master of High Court of 25 June, 2015 fixing the remuneration
of the Provisional Judicial Manager of Tetrad Investment Bank (“the
Bank”). The comments that follow are thus made on the premise that
the above–cited decision is the decision being brought under
review. ….. …..
The
particularisation of the decision being brought under review is
important because everything that happened after the making of the
decision could not form the basis of the review. It will be seen that
paragraphs 20,21, 23, 24 and 25 of the applicant's founding
affidavit relate to events that occurred well after the decision of
25 June, 2015 and would be irrelevant to the review of the said
decision.” (emphasis added).
Militala
and the first respondent took a correct approach of the matter which
related to the current application. The court remains of the firm
view that the four fee notes for March, April, May and June, 2015 do
not fall within the scope of what it was called upon to review. The
notes fall outside the review application. They are not part of the
decision which the first respondent made on 25 June, 2015. A reading
of the applicant's grounds for review supports the position which
the court took of the matter. None of the six grounds which the
applicant advanced has any bearing on the four fee notes which
Militala submitted after his first fee note of February, 2015. All
the six grounds for review related to the decision of the first
respondent as regards Militala's fee note of February, 2015.
The
court established that Militala was property and validly appointed in
terms of the law. It accepted that he worked for the bank as its
provisional judicial manager. He necessarily had to receive
remuneration for his work.
The
first respondent was, in terms of the law, charged with the
responsibility of fixing Militala's remuneration. He drew his
powers in the mentioned regard from section 308 of the Companies Act.
The section reads:
“REMUNERATION
OF JUDICIAL MANAGERS
(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.”[emphasis added]
Two
important matters stand out clearly from a reading of the above cited
section.
The
first is that the Master cannot have a one-size fits all tariff when
he fixes the remuneration of a provisional judicial manager or a
final judicial manager. The law-maker was alive to the fact that
companies differ in size, scope as well as in their operations; such
that when they fall sick and are due for judicial management, the
appointed judicial manager has to use his or her skills to bring to
life that small, or that medium-sized company, or that once
upon-a-time, very big corporation back to life. The Master,
therefore, was or is enjoined at law to apply the reasonable man
test; the objective, as opposed to the subjective, test to ascertain
if the work which the judicial manager performed in an effort to
breathe life into the company was or is commensurate with what the
judicial manager proposed as his/her fees for the work.
Where
the Master remains satisfied, on an objective test, that the work
which the judicial manager conducted is in sync with the proposed
fee(s), the Master fixes the fee(s) as proposed or with some
adjustment(s).
It
was for the mentioned reasons, if for no other, that the legislature
stated that the Master has a discretion to fix the fees proposed by
the judicial manager on a “from time to time” basis.
The
second matter which stands out in the section is that, in fixing the
judicial manager's fees, the Master is invariably guided by the
recommendations of the members or creditors of the company. It is
such recommendations as measured against the work of the judicial
manager read together with his or her proposed fees that the Master
makes adjustments in the interest of fairness and a desire to do
justice as between the parties whose case may be before the Master at
any given time.
A
recommendation and a criticism are words which are miles apart.
Oxford Dictionaries Language matters define the word recommendation
to mean “advice, counsel, guidance, submission, suggestion,
proposal, exhortation.” Cambridge Advanced Learner's Dictionary &
Thesaurus define recommendation as “advice telling someone what the
best thing to do is”.
Cambridge
English Dictionary define the word criticism as the act of saying
that something or someone is bad. Dictionary.com refers to criticism
as the act of passing judgment as to the merits of anything.
When
Militala submitted his first fee note, Annexure D, to the bank, the
applicant recommended that the figures in the annexure be further
explained. The first respondent agreed with the recommendation.
Annexure F, Militala's Time Sheet for February, was a result of the
applicant's recommendation to the first respondent, who was
properly guided by the same. The letter which the applicant addressed
to the first respondent on 1 April, 2015 was not a recommendation. It
was a criticism of Militala's alleged incompetence. Similarly, the
second letter which the applicant addressed to the first respondent
on 24 June, 2015 was yet another criticism of Militala's work. None
of the two letters contained any recommendations which should have
assisted the first respondent to see matters more differently than
Militala had presented them to it in his Time Sheet for February.
The
applicant's conduct fell outside section 308(2) of the Companies
Act.
The
applicant, therefore, has no one to blame but itself for choosing to
follow the route which the law did not prescribe for it. Its grounds
for review based on the work which Militala performed for the bank
could not, therefore, hold. It did not make any recommendations. It
presented a critique which was of no assistance to the first
respondent.
On
16 July, 2015 the applicant's legal practitioners, Venturas &
Samukange, addressed a letter to the first respondent. It called it
Annexure G. The annexure reads, in part, as follows:
“……….
We are advised that the former judicial manager, Petwin Executor and
Trust Company (Private) Limited was paid almost two weeks ago an
amount of US144,900. We have been advised by the new judicial manager
that Mr Militala intends to submit a further claim.” [Emphasis
added].
The
applicant acknowledged, as late as July, 2015, that Militala, through
his company, performed work as provisional judicial manager for the
bank. In its application for the removal of Militala from the
position of provisional judicial manager, the applicant cited
Militala as the first respondent and his company, Petwin Executors
and Trust Co (Private) Limited, as the second respondent.
Notwithstanding
that acknowledgment, the applicant, for some unexplained reasons
insisted that Militala should have worked a provisional judicial
manager by himself or with assistance from some members of staff of
the bank. Its argument in the mentioned regard was the basis for the
ground which read:
“1st
respondent acted grossly unreasonably in accepting that the fees were
reasonable when there were only 160 working hours in February and
only 672 hours in the entire month”.
Militala's
response was loud and clear.
He
submitted that his team had to be involved in the judicial management
work. He stated, and correctly so, that he could not rely on the
management which had failed. He said he could not review the work of
the bank's management using the same management.
The
first respondent echoed the substance of Militala's views on the
same matter.
The
court is in agreement with the view which Militala and the first
respondent took on this aspect of the application. It, in this
regard, finds fortification in the remarks of Tett and Chadwick who
stated in their Zimbabwe Company Law, 2nd Edition, p 172 as follows:
“…..
the effect of a judicial management order is to take away management
and control from the directors, and place it in the hands of the
judicial manager and his nominees'[emphasis added]
The
applicant did not agree with the decision of the first respondent. It
is, however, one thing for a party not to agree with the decision
reached. It is yet another thing to assert, as the applicant did,
that the first respondent failed to provide proper reasons for its
decision or that it failed to justify why it dismissed its objection.
Annexure
B which the applicant attached to its application constitutes the
first respondent's decision.
It
arrived at that decision not on the basis of any recommendations
which the applicant submitted to it. It reached it on the basis of
the applicant's criticism of the work of Militala. The outcome of
the applicant's attitude is reflected in para 4 of the first
respondent's ruling. The paragraph reads:
“This
recommendation is unreasonable and unfair. Firstly, it asks the
Master to reject the whole fee note, as if to say the pjm is not
entitled to any remuneration. Secondly, and because of the blanket
rejection proposed by the members, it does not suggest what level of
remuneration would have been reasonable in the circumstances. It is
unreasonable for the members to just say the fees are too high
without suggesting and justifying a different level of fees.”
The
first respondent was candid to state in the decision that it ploughed
through each and every item which was included in Militala's fee
note and the objections which the applicant raised item by item. It
saw no merit in the objections. Its judgement was clear, cogent and
to the point. It was balanced and it took into account the concerns
of both parties whose case was before it. It justified the conclusion
which it reached to the total satisfaction of the court.
The
applicant's ground for review which hinged on statutory instrument
107/2011 was, in the court's view, just raised for the sake of it.
The
applicant who was ably legally represented should have known that the
instrument was not for, and does not apply to, judicial managers. It
applied to legal practitioners and the latter's work. The court
was, therefore, at a loss as to the reasons which persuaded the
applicant to make reference to a law which was totally inapplicable
to its application.
The
court considered all the grounds which the applicant advanced for
review of the first respondent's decision of 25 June, 2015. It was
satisfied that none of the grounds which the applicant advanced had
any merit. It made up its mind to, and did actually, decide the
application on the basis of the substance of the same as opposed to
valid technical issues which the second respondent raised in his
heads of argument. The application was, in the court's view, an
exercise in futility. The applicant's approach as well as its
attitude did not assist its case. The application fell on all fours.
It is, accordingly, dismissed with costs.
Venturas
& Samukange, applicant's legal practitioners
National
Prosecuting Authority, respondent's legal practitioners
