BHUNU
JA:
INTRODUCTION
This
judgment involves two consolidated appeals from the High Court (the
court a quo) being case numbers SC258/20 and SC285/20. The court
issued a consolidation order dated 29 March 2021 by consent of the
parties. Both appeals are based on the same record of proceedings and
issues in the court a quo under Case No. HC6503/19.
It
was therefore convenient to consolidate the two appeals because the
matter was determined by the same judge a quo on the same facts and
issues.
The
two appeals arise from the same judgement. Each appellant lodged its
own appeal against the same judgment in which they were contesting
parties.
[2]
Both appeals bring into question the judgment of the court a quo
which determined that the forensic audit conducted by the appellant
at the behest of the second respondent was an administrative action
subject to review by the court a quo.
In
consequence thereof the court a quo reviewed and set aside the
forensic audit for irregularity coupled with costs at the higher
scale.
CITATION
OF THE PARTIES
[3]
In this judgment the parties are cited as they appear in case number
SC258/20 notwithstanding that in the second appeal they are cited in
reverse order. BDO CHARTERED ACCOUNTANTS shall therefore be called
the appellant. ROBIN VELA the first respondent and the AUDITOR
GENERAL the second respondent.
[4]
The appellant, BDO CHARTERED ACCOUNTANTS, is a firm of accountants
conducting business under the partnership of Ngoni Kudenga, Gladman
Sabarauta, Martin Makaya, Gilbert Gwatiringa and Jonas Jonga.
[5]
The first respondent is the erstwhile board chairman of the National
Social Security (NSSA), a body corporate established in terms of s4
of the National Social Security Authority Act [Chapter 17:04].
[6]
The second Respondent is the Auditor General of Zimbabwe appointed in
terms of s310 of the Constitution.
POINTS
IN LIMINE
[7]
At the commencement of the hearing, counsel for the first respondent
raised two preliminary points for determination. After hearing
arguments from counsel, the court ruled that the two preliminary
points be determined in tandem with the main appeal.
[8]
The first point of objection in limine is that there is no appellant
before the court in this case. The second is that BDO ZIMBABWE
CHARTERED ACCOUNTANTS (BDO) the appellant in case number SC258/20 has
no right of appeal because it is not the party against whom judgment
was issued.
I
proceed to determine the two preliminary points in turn before
delving into the merits of the case.
WHETHER
THERE IS A PROPER APPELLANT BEFORE THIS COURT
[9]
Counsel for the first respondent Mr Mpofu's first contention is
that BDO, being a partnership, cannot sue or be sued in its own name
because it has no legal personality. It therefore has no locus standi
in any court of law.
For
that proposition of law he placed reliance on the case of Gariya
Safaris (Private) Limited v Van Wyk1
in which MALABA J, as he then was, observed that:
“A
summons has legal force and effect when it is issued by the plaintiff
against an existing legal or natural person. If there is no legal or
natural person answering to the names written on the summons as being
those of the defendant, the summons is null and void ab initio.”
[10]
On that score he submitted that BDO was improperly before the court
because it was a non-existent legal entity lacking the requisite
legal capacity to sue and be sued in its own name.
Mr
Matinenga, counsel for BDO, on the other hand countered that a
partnership being an association can sue or be sued in its own name
in terms of Order 2A of the High Court Rules, 1971.
[11]
I now proceed to resolve the two conflicting propositions of law
submitted by opposing counsel respectively.
[12]
The facts in the Gariya case (supra) are diametrically different from
the facts of this case.
In
that case the applicant had sued and obtained judgment against a
non-existent fictitious entity called Con and Son (Private) Limited
in the mistaken belief that it was a registered company. When it
turned out that it was in fact a fictitious unregistered company, the
applicant applied for its substitution with a natural person, one Van
Wyk, for purposes of execution alleging that he had acted
fraudulently as managing director of the fictitious company.
[13]
The court found no evidence of fraud and held as appears from the
headnote that:
“…in
the present case the proceedings and judgment following the issuing
of summons were null and void because the proceedings had been
brought before a non-existing defendant. Therefore there could be no
question of the substitution of a new judgment debtor.”
[14]
The main distinguishing feature in this case is that the appellant is
not a nonexistent party lacking the capacity to sue or be sued in its
own name.
While
at common law in the distant past partnerships, unregistered
associations, and clubs had no locus standi to sue or be sued in
their own names except through the names of their individual
membership, the law has since changed.
The
development and change of the archaic common law in this respect was
a progressive endeavour to facilitate easier citation of the parties
in a partnership without being bogged down in unnecessary cumbersome
citation technicalities.
[15]
The applicable law is to be found under Order 2A of the High Court
Rules, 1971 which rules were in force when the litigation commenced.
They have since been repealed and substituted by S.I 202 of 2021.
Order
2A is now r11 of the Supreme Court Rules 2018.
It
regulated the citation of partnerships, trusts, syndicates, clubs or
any other association which is not a body corporate. Mr Matinenga's
reliance on that Rule was therefore apposite.
[16]
The capacitation of partnerships, associations and clubs to sue and
be sued in their own names without the cumbersome need to cite each
and every member of the unincorporated entities in court proceedings
has been a welcome development both at home and in South Africa which
has similar jurisprudence as ours.
[17]
At home r7 of the High Court Rules 1971 provided the definition of an
association as follows:
“In
this Order, 'associate', in relation to —
(a)
a trust, means a trustee;
(b)
an association other than a trust, means a member of the association;
'association'
includes — (Emphasis provided)
(a)
a trust; and
(b)
a partnership, a syndicate, a club or any other association of
persons which is not a body corporate.”(Emphasis provided)
[18]
Undoubtedly r7 defines an association as including a partnership, a
syndicate, a club or any other association of persons which is not a
body corporate.
Rule
8 goes on to clothe members of such entities with locus standi to sue
or be sued in the name of the association as defined in the Rules. It
provides as follows:
“8.
Proceedings by or against associations
Subject
to this Order, associates may sue and be sued in the name of their
association.” (Emphasis provided).
[19]
Having conferred members of unregistered associations with locus
standi, the law maker was careful to render members of an association
accountable for their rights and obligations without hiding behind
the association's name.
To
that end r8A obliges an association engaged in legal proceedings to
provide the other party upon written request within 5 days with the
names and addresses of its associates at the material time when the
cause of action arose.
The
rule shields the other party against any prejudice that may arise
from the association's lack of legal or corporate status.
Thereafter
it proceeds to provide an elaborate procedure for obtaining the
relevant information. It provides as follows:
“8A.
Naming of associates
(1)
In any proceedings to which an association is a party, any other
party may, by written notice to the association, require a statement
of the names and places of residence of the persons who were the
association's associates at the time the cause of action accrued.
(2)
A person who receives a notice in terms of subrule (1) shall, within
five days after receiving it —
(a)
furnish the party concerned with a written statement containing the
required information; and
(b)
file a copy of the written statement with the registrar; and the
proceedings shall continue in the same manner, and the same
consequences shall follow, as if the associates had been named in the
summons or notice commencing the proceedings: Provided that the
proceedings shall continue in the name of the association except
where a writ of civil imprisonment is sought against an associate, in
which event the associate shall be specifically named in the civil
imprisonment proceedings.”
[20]
In interpreting the South African r14 which is similar to our r2A the
learned authors Herbstein & van Winsen2
articulate the mischief behind the change as follows:
“Rule
14 facilitates the citation of partnerships, firms and associations
as defendants, as well as allowing those entities to sue in their own
names. It has been held by the Supreme Court of Appeal that this Rule
enables members of an association to assert rights which they hold by
virtue of their membership in the name of the association.”
[21]
From the foregoing, it is plain that the primary distinguishing
feature between the Gariya Safaris case supra and this case is that a
partnership is covered by Order 2A of the High Court rules whereas an
unregistered company is not.
Since
the legislature has not altered the common law in respect of the
citation of unregistered companies the position remains the same.
The
Gariya Safaris case supra was therefore correctly decided because it
dealt with the citation of a nonexistent fictitious and unregistered
company which is not the case here. The decision in that case is
therefore irrelevant to the determination of the issues at hand in
this case.
[22]
Having said that, I find it ironic that it is the first respondent
who sued the appellant in case number HC60503/19 citing it in the
manner it now objects to.
I
therefore find no merit in the first point in limine. It is
accordingly dismissed without any further consideration.
[23]
I now turn to consider the second part of the objection in limine.
Whether BDO has no locus standi because it is not the party against
whom judgment was issued.
[24]
It is common cause that it is the first respondent who sued the
appellant to kick start the proceedings in this matter. In his
founding affidavit which appears at p3 of the record of proceedings
he cited the appellant as follows:
“BDO
ZIMBABWE CHARTERED ACCOUNTANTS (A firm of Accountants whose partners
are Ngoni Kudenga, Gladman Sabarauta, Martin Makaya, Gilbert
Gwatiringa and Jonas Jonga.”
[25]
In developing his argument Mr Matinenga submitted that r8 of the High
Court Rules 1971 provides for the citation in legal proceedings of
associations which are not body corporates.
Rule
8C allows a person to be sued in his/her trade name.
BDO
CHARTERED ACCOUNTANTS being the trade name of the appellant it may
sue or be sued in that name.
The
rule provides as follows:
“8C.
Proceedings by or against persons under their trade name
Subject
to this Order, a person carrying on business in a name or style other
than his own name may sue or be sued in that name or style as if it
were the name of an association, and rules 8A and 8B shall apply,
mutatis mutandis, to any such proceedings.”
[26]
The Appellant responded to the first respondent's suit in that
name. The first respondent went on to obtain judgment against both
the appellant and the second respondent with costs at the punitive
scale. He has not abandoned the order he obtained against the
appellant although he is now claiming that he obtained the judgment
against a non-existent party with no locus standi.
[27]
Having regard to the clear provisions of the law there can be no
denying that BDO ZIMBABWE CHARTERED ACCOUNTANTS, being the
Appellant's trade name, may sue or be sued in that name in terms of
r8C.
[28]
I therefore hold that the first respondent Robin Vella having sued
and obtained judgment with costs at the punitive scale against the
second respondent and the appellant, BDO ZIMBABWE CHARTERED
ACCOUNTANTS, has the locus standi to be heard on appeal to challenge
the judgment against it, independent of the Auditor General.
It
would, in my view, be manifestly unjust for the Court to sanction a
situation where the first respondent sues and obtains judgment
against the (appellant) with costs at the punitive scale and then bar
it from appealing the judgment on flimsy legal technicalities.
I
therefore find no merit in the respondent's second point in limine.
Doing otherwise will offend against the dictates of reason and
fundamental justice.
The
second point in limine is accordingly dismissed.
[29]
I now proceed to consider the appeal on the merits.
FACTUAL
BACKGROUND
[30]
The synopses of both appeals are to a large extent common cause. The
parties mainly differ on the interpretation and application of the
law to the facts.
The
undisputed facts are that the first respondent, Robin Vela, was the
board chairman of the National Social Security Authority (NSSA),
during the period extending from July 2015 to March 2018.
[31]
After he left employment with NSSA second respondent appointed the
appellant to conduct a forensic audit for the duration of his
employment with NSSA. In the exercise of its mandate the appellant
questioned a number of people including the first respondent.
[32]
At the conclusion of its investigations the appellant submitted an
adverse report against the first respondent. Some of the adverse
reports were that:
(a)
He was responsible for the overpayment of board fees.
(b)
He interfered in management issues.
(c)
His dealings with Medbank investments were not above board as a
result they yielded losses.
[33]
Disgruntled by the adverse audit report the first respondent sought
to impugn it on review. He thus filed an application in the court a
quo in terms of s(3)(1)(a) as read with s4 of the Administrative
Justice Act [Chapter 10:28] on the grounds that:
(1)
In carrying out the audit the appellant was exercising public power.
Its conduct in this respect was therefore liable to judicial review.
(2)
The appellant conducted the audit without the necessary jurisdiction.
(3)
The audit report was biased, malicious, irrational, incompetent and
unfair in contravention of s3(1)(a) of the AJA.
[34]
The appellant and the second respondent countered that the
appellant's conduct in compiling the audit report at the behest of
the second respondent was not subject to review because it was not an
administrative authority whose actions are subject to review. The
appellant's conduct was therefore neither an administrative
decision nor administrative action subject to review.
[35]
The appellant further argued that its agreement with the second
respondent to carry out the forensic audit was purely contractual
grounded in private law.
[36]
The allegations of bias, malice and incompetence were denied on the
basis that the audit did not target the first respondent personally
but NSSA in general. The allegations of unfairness, and irrationality
were likewise denied.
DETERMINATION
BY THE COURT A QUO
[37]
The court a quo found that the forensic investigation and the audit
report produced by the appellant were reviewable. It then proceeded
to review the appellant's conduct when producing the forensic audit
report.
[38]
At the conclusion of the review process the court a quo held that the
process leading up to the production of the audit report was fraught
with bias because there was unequal treatment of the first respondent
and two ministers of State allegedly involved in corrupt activities.
The failure to mention the impugned ministers' names in the
forensic report was held to amount to incompetence.
[39]
The court a quo also found that the appellant failed to give proper
consideration to the first respondent's answers.
It
then concluded that the first respondent was subjected to an unfair
process in that he was denied the right to be heard which is
guaranteed by s3 of AJA.
[40]
On that score the court a quo found that appellant in its exercise of
public authority while conducting the forensic audit fell foul of the
Administrative Justice Act as read with s309 of the Constitution.
Consequently it issued the following order:
“IT
IS ORDERED THAT:
3.
The forensic audit of the National Social Security [NSSA] for the
period 1 January 2015 to 28 February 2018 produced by the Auditor
General of Zimbabwe by BDO Chartered Accountants be reviewed and set
aside in all those respects that pertain, whether directly and/or
indirectly to the applicant.
4.
Costs of suit shall be borne by the second respondent on the higher
scale of legal practitioner and client scale.”
GROUNDS
OF APPEAL
[41]
Aggrieved by that order, the appellant lodged an appeal to this court
on the following 5 grounds:
“1
The High court erred in finding that the appellant's carrying out
of a forensic audit on the National Social Security Authority (NSSA)
at the behest of the Auditor General (second respondent) constituted
an administrative action which is subject to review at the first
respondent's instance and on the alleged grounds.
2.
The High Court erred in finding that the appellant in its report
under consideration exhibited bias against the first respondent when
there was no evidence supporting such finding.
3.
The High court erred in concluding that the appellant did not apply
its mind to the issues before it in the absence of any evidence
controverting the findings made in the audit report.
4.
The High court erred in concluding that the audit was unfair against
the first respondent in circumstances where he had been given an
opportunity to respond to the allegations against him and his
responses had been taken into consideration before drawing any
conclusions and which such conclusions are not only supported by the
evidence availed to the appellant but were properly explained in the
audit report.
5.
The High court erred in setting aside the audit report in all aspects
pertaining to the first respondent in the absence of evidence
demonstrating bias or incompetence or unfair treatment or pointing to
any irregularities in every such aspect.”
RELIEF
SOUGHT
[42]
The appellant's prayer is that the order of the court a quo be set
aside and replaced by an order dismissing the first respondent's
application with costs at an attorney client scale.
ISSUES
FOR DETERMINATION
[43]
Although the 5 grounds of appeal raise various issues for
determination, ground number one is capable of resolving the appeal
without delving into the other remaining grounds. This is because it
has to do with a challenge to the appellant's jurisdiction to
exercise public authority when contracted by a public authority to
perform specific tasks on its behalf.
[44]
The simple issue that then arises from the first ground of appeal is
whether the court a quo misdirected itself in holding that the
appellant was exercising public authority subject to judicial review
when it carried out the forensic audit for and on behalf of the
second respondent.
ANALYSIS
OF THE FACTS AND THE LAW
[45]
The facts of this case are by and large common cause. There are no
material disputes of facts. It is common cause that the appellant is
a private partnership carrying out business as a firm of Chartered
Accountants under the style of BDO CHARTERED ACCOUNTANTS.
In
that capacity it was contracted by the second respondent to carry out
the forensic audit in question for and on behalf of the Auditor
General.
It
compiled the report, submitted it to the second respondent and moved
out of the picture.
The
first respondent took umbrage with the report complaining that it put
him in bad light. He then took the appellant's conduct and
processes on review alleging various procedural irregularities
arguing that the appellant's conduct amounted to the exercise of
public power which is subject to review.
[46]
The appellant's contention is that it was and is not an
administrative authority. Accordingly, it did not take administrative
action by compiling the forensic audit report. Its conduct was purely
contractual. It conducted the forensic audit not as a public body but
a private partnership contracted by the second respondent. As such it
was not given authority to exercise administrative power or
authority. Its processes and conduct as a private entity were
therefore not subject to judicial review.
[47]
The first respondent accepted the factual position but contended that
the appellant was the agent of the second respondent. It is the hand
through which the second respondent acted, as such, the appellant's
conduct could not be separated from that of its principal. For that
reason it was exercising public authority when it conducted the
forensic audit on behalf of the second respondent. Its conduct and
processes were therefore subject to judicial review. So goes Mr
Mpofu's argument on behalf of the first respondent.
[48]
In countering the first respondent's appeal, Mr Matinenga submitted
that in taking the matter for review the first respondent
misconstrued and misunderstood the import and meaning of the term
administrative authority as defined in s 2(1) of AJA. The term is
defined as follows:
“'Administrative
authority' means any person who is -
(a)
an officer, employee, member, committee, council, or board of the
State or a local authority or parastatal; or
(b)
a committee or board appointed by or in terms of any enactment; or
(c)
a Minister or Deputy Minister authorised by any enactment to exercise
or perform any administrative power or duty; and who has the lawful
authority to carry out the administrative action concerned;”
[49]
The section is couched in clear and unambiguous language.
Nowhere
does it confer or suggest that a private entity not mentioned in the
section falls within the ambit or definition of administrative
authority. The non-mentioning of private entities as wielding
administrative authority means that they are excluded from having
such authority.
[50]
In developing his argument Mr Matinenga placed reliance on the case
of Chirwa v Transet3
which illustrates the attributes and characteristics which are
peculiar to an administrative authority through which it may be
defined and identified.
In
that case the Constitutional Court of South Africa observed that:
“Determining
whether a power is 'public' is a notoriously difficult exercise.
There is no simple definition or clear test to be applied. Instead it
is a question that has to be answered with regard to all relevant
factors including:
(a)
the relation of coercion or power that the actor has in its capacity
as a public institution;
(b)
the impact of the decision on the public;
(c)
the source of the power; and
(d)
whether there is a need for the decision to be exercised in the
public interest.
None
of these factors will be determinative; instead, a court must
exercise its discretion considering their relative weight in the
context.”
[51]
It is clear, as argued by Mr Matinenga, that the appellant does not
fit anywhere within the statutory definition of 'administrative
authority' or any of its attributes or characteristics laid down in
the Chirwa case supra.
[52]
With all due respect, Mr Mpofu's argument that the mere fact that
the second respondent hired the appellant as its agent, conferred
administrative authority on the appellant is misplaced.
This
is for the simple reason that s309 of the Constitution which creates
the office of Auditor General does not confer him/her with the power
to confer administrative authority on anyone. The section reads:
“309
Auditor-General and his or her functions
(1)
There must be an Auditor-General, whose office is a public office but
does not form part of the Public Service. [Subsection amended by Act
2 of 2021]
(2)
The functions of the Auditor-General are —
(a)
to audit the accounts, financial systems and financial management of
all departments, institutions and agencies of government, all
provincial and metropolitan councils and all local authorities;
(b)
at the request of the Government, to carry out special audits of the
accounts of any statutory body or government-controlled entity;
(c)
to order the taking of measures to rectify any defects in the
management and safeguarding of public funds and public property; and
(d)
to exercise other functions that may be conferred or imposed on him
or her by or under an Act of Parliament.
(3)
Public officers must comply with orders given to them by the (Auditor
General) in terms of subsection 2(c).”
[53]
It is plain that s309 of the Constitution confers administrative
authority on the second respondent and no one else.
Had
the law maker intended the Auditor General's agents to also wield
administrative power then, it would undoubtedly have said so. Its
silence means that Parliament had no intention whatsoever to confer
administrative authority on second respondent's private agents.
[54]
Section 9 of the Audit Office Act [Chapter 22:18] merely authorises
the second respondent to hire private auditors to carry out audits
and report to him/her in terms of the Act.
The
section does not authorise the second respondent to delegate his/her
administrative authority to the hired auditors who remain mere
functionaries or aids of the Auditor General without any power of
substitution.
[55]
In terms of the contract of service between the appellant and the
second respondent it is clear that the appellant was merely hired as
a vehicle to assist the second respondent to gather evidence in the
course of executing its functions as a public administrative
authority.
That
contract did not convert the appellant or confer administrative
authority on it.
By
carrying out investigations and submitting a forensic audit report to
the second respondent, the appellant was not rendering any decision.
It was merely providing the second respondent with the means to help
him/her to discharge his/her statutory functions.
DISPOSITION
[56]
The appellant not being a public administrative authority and not
having made any decision in that capacity the court a quo misdirected
itself and fell into grave error by holding that the appellant was
exercising public administrative authority when it carried out the
forensic audit in question.
[57]
The appellant not having made any public administrative decision when
compiling the forensic audit report, its conduct and processes in
that regard were not subject to judicial review.
[58]
That being the case all the other issues raised and the entire review
process carried out by the court a quo under case number HC6503/19
fall away.
[59]
Having regard to the complexity of the issues argued before us, it
can hardly be said that the appellant's pursuit of this case
amounts to an abuse of court process. Both parties had an arguable
case though the appellant emerged victorious. Costs follow the result
at the normal scale.
[60]
It is accordingly ordered that:
1.
The appeal succeeds with costs.
2.
The judgment of the court a quo is set aside and substituted with the
following:
“The
application be and is hereby dismissed with costs.”
MATHONSI
JA: I Agree
CHIWESHE
JA: I Agree
Sawyer
& Mkushi, the appellant's legal practitioners
Rubaya
and Chatambudza, the respondent's legal practitioners
1.
1996 (2) ZLR 246 (H)
2.
The Civil Practice of the High Courts and the Supreme Court of Appeal
of South Africa 5th ed vol 1 p150
3.
2008 (4) SA 367 (CC) at para 186
