CHIWESHE
JA: This
an appeal against the whole judgment of the High Court (the court a
quo)
sitting at Harare dated 1 March 2022, setting aside the second
appellant's decision to deny the respondent leave to sue the first
appellant and granting the respondent leave in terms of section 6(b)
of the Reconstruction of State Indebted Insolvent Companies Act
[Chapter
24:27]
(the Act) to institute proceedings against the first appellant for
damages for breach of contract.
Aggrieved
by the decision of the court a
quo,
the appellants have noted the present appeal for relief.
THE
PARTIES
The
first appellant is a company under administration pursuant to the
provisions of the Act. The second appellant is the administrator to
the first appellant.
In
terms of the Act, a company under reconstruction, such as the
appellant, cannot be sued without leave granted by its administrator.
The
third respondent is a company duly registered in terms of the laws of
Zimbabwe.
FACTUAL
BACKGROUND
On
17 August 2017 the first appellant and the respondent entered into an
agreement in terms of which the respondent was to hire out to the
first appellant certain equipment for use at its mining operations.
It was a term of the agreement that the first appellant would pay the
respondent the sum of US$220,000-00 as mobilisation and
demobilisation fees for the equipment. It was a further term of the
agreement that in the event of termination by either party, fourteen
(14) days written notice shall be given to the defaulting party,
calling upon it to remedy its breach within those fourteen (14) days
failing which the agreement would be cancelled by the aggrieved
party.
On
31 January 2018, the first appellant addressed to the respondent a
letter headed “Notice to terminate - equipment hire agreement”
wherein it notified the respondent that it intended to terminate the
agreement with effect from 15 February 2018. The first appellant
alleged that the respondent had breached the agreement in a material
way in that “since their commissioning to date, none of the hired
excavators has been able to achieve the agreed monthly production
target and none has been able to achieve 85% availability”.
The
respondent's view was that the first appellant's letter of
termination did not comply with the provisions of the termination
clause of the agreement. It therefore considered such termination to
be unlawful.
The
respondent contended that as a result, it suffered damages in the sum
of US$4,000,000-00, representing the full contract price it would
have realised had the contract run its full course.
It
also contended that the first appellant owed it the sum of
US$220,000-00 being the mobilisation fees.
By
the time of this fall out the first appellant had been placed under
reconstruction in terms of the Act and the second appellant was
appointed as its administrator.
The
respondent wrote to the second appellant seeking leave to sue the
first appellant. Leave to sue was denied for the reason, inter
alia,
that the respondent's case had no merit and that instead it was
first appellant who should be suing the respondent whom it had
overpaid.
Aggrieved
by the stance taken by the first appellant to deny it leave to sue
the first appellant, the respondent approached the court a
quo
seeking
review of the second appellant's decision. It listed grounds for
review as follows:
“(a)
Gross unreasonableness of the decision arrived at.
(b)
Unfair withholding of leave to sue.
(c)
Bias or interest in the cause.”
After
a full hearing the court a
quo
granted the application for review and issued the following order:
“1.
The second respondent's decision of 29 March 2021, denying the
applicant leave to sue the first respondent be and is hereby set
aside.
2.
The applicant is granted leave in terms of section 6(b) of the
Reconstruction of State Indebted Insolvent Companies Act [Chapter
24:27] to institute proceedings against the first respondent for
damages for breach of contract and unpaid mobilisation costs.
3.
Each party shall bear its own costs.”
It
is that order that is the subject of this appeal.
GROUNDS
OF APPEAL
The
grounds of appeal are as follows:
“1.
The court a
quo
erred in granting the respondent 'leave to sue' when such relief
cannot be granted by a court acting in accordance with section 4 of
the Administrative Justice Act [Chapter 10:28].
2.
Furthermore the court a
quo
misdirected itself setting aside second appellant's administrative
decision in circumstances where the said court makes no finding of
illegality, gross impropriety, manifest irrationality, arbitrariness
or a failure by the administrative authority to apply his mind to the
facts of the matter.
3.
The court a
quo
also
erred in enquiring into the merit of the disputation inter parties
instead of evaluating whether, in the circumstances, the respondent
was entitled to negation of the moratorium enjoyable by the first
appellant under section 6(b) of the Reconstruction of State Indebted
Insolvent Companies Act [Chapter
24:27].
4.
Concomitant to the aforementioned ground, the court a
quo
further erred in granting the respondent unconditional leave to
institute proceedings against the first appellant in circumstances
where the putative claim was not cognizable at law.”
RELIEF
SOUGHT
The
appellants seek the following relief:
“1.
That the instant appeal succeeds with costs.
2.
That the order of the court a
quo
be set aside and substituted with the following:
(i)
The application is dismissed.
(ii)
The applicant shall pay the respondent's costs.”
THE
ISSUES
The
grounds of appeal raise the following issues:
1.
Whether or not it was competent for the court a
quo
to grant leave to sue acting in accordance with section 4 of the
Administrative Justice Act [Chapter 10:28] (AJA).
2.
Whether or not the court a
quo
erred in setting aside the second appellant's decision in the
absence of a finding of illegality, gross impropriety, irrationality,
arbitrariness or a failure by the administrator to apply his mind to
the facts of the matter.
3.
Whether or not the court a
quo
erred in enquiring into the merits of the matter instead of
determining whether in the circumstances it was proper to protect the
first appellant against the suit as provided for by the Act.
4.
Whether or not the putative claim was recognized at law.
ANALYSIS
The
application for review in the court a
quo
was premised on the provisions of section 4 of AJA, which reads:
“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 3
may apply to the High Court for relief.
2.
Upon an application being made to it in terms of subsection (1), the
High Court may, as may be appropriate:
(a)
confirm or set aside the decision concerned;
(b)
refer the matter 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 3.
2.
Directions given in terms of subsection (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.
3.
The High Court may at any time vary or revoke any order or direction
given in terms of subsection (2).”
The
appellant contends that AJA does not give the court a
quo
the power to substitute the decision of the second respondent with
its own.
It
is argued that in doing so the court a
quo
assumed power where none was provided for thereby usurping the
function of Parliament.
The
respondent has argued to the contrary, expressing a position which in
my view, correctly interprets AJA on the point.
It
is a position which accords with previous decisions of this Court in
similar cases.
The
question whether a court approached under the AJA may substitute its
own decision for that of the administrative authority was answered in
the affirmative in Gwaradzimba
v Gurta
AG SC 10/15 where it was held that -
“This
ground of appeal by the appellant is without merit.
This
ground of appeal challenges the competency of the order made by the
court a
quo,
whose effect was to effectively rule out any opportunity for the
appellant to consider the merits of the respondent's request to it,
for leave to sue an entity under its administration. As already
indicated, the court a
quo
did
not grant any of the specific forms of relief provided for in section
4 of the Act.
I
am satisfied, in any case, that the propriety of the relief granted
by the court a
quo
is put beyond doubt when regard is had to section 2(2) of the Act,
which reads as follows:
'(2)
The provision of this Act shall be construed as being in addition to,
and not as limiting, any other right to appeal against, bring on
review or apply for any other form of relief in respect of any
administrative actions to which this Act applies.' (my emphasis)
Related
to the circumstances of this case, I find that while section 4(2) of
the Act lists the types of relief the High Court could have granted,
that list is not exhaustive. Rather, it is additional to any other
relief that may be sought in respect of any administrative action
relevant to the Act.
The
respondent's application to the appellant for leave to sue SMM,
dated 3 August 2023 was, for over a year and in the words of the
court a
quo
“met
with deafening silence” from the latter. Not only was there
silence, no reasons were proffered for it within a reasonable or any,
period at all.
In
my view, the High Court could have sent the matter back to the
administrator with specific instructions or conditions on how to
address the respondent's request for leave, it was nevertheless,
within its competence in terms of section 2(2) of the Act, to grant
the relief sought. I am persuaded that a proper case has been made
for the leave in question to be granted by the court a
quo.”
Accordingly
the appellant's contentions to the contrary have no merit.
The
appellants submit that the court a
quo
should not have set aside the second appellant's decision in the
absence of a finding of illegality, gross impropriety, irrationality,
arbitrariness,
or failure by the administrative authority to apply his mind to the
facts of the matter.
It
is further submitted that the court a
quo
erred in enquiring into the merit of the matter instead of
determining whether in the circumstances it was proper to protect the
first appellant against the suit as provided for by the Act.
In
deciding to decline leave to sue, the second appellant considered
that there was no merit in the respondent's intended suit. He held
for instance that the respondent had on the whole, been overpaid in
respect of the mobilisation fees and advance payments. However, the
second appellant did not, through evidence, demonstrate the alleged
over payments and the extent of such overpayment. Any overpayment
should surely have been proved by reliance on proof of payment such
as receipts.
Further,
as correctly observed by the court a
quo,
the second respondent failed to apply his mind to the question
whether the agreement had been properly terminated.
In
terms of the agreement, a party seeking to terminate the same must
give fourteen (14) days notice to the defaulting party, calling upon
it to remedy the alleged breach. In the event that the defaulting
party fails to remedy the breach within the notice period, and only
then, is the aggrieved party entitled to terminate the agreement.
In
casu
the first appellant addressed a letter of notice to terminate. The
same letter also served as the actual letter of termination. As
observed by the court a
quo:
“The
termination of the agreement could only have been done pursuant to a
notice to remedy the alleged breaches. I do not believe that the
intention of the parties was that the same notification letter served
as the termination letter. The court's view is that the two
processes cannot be combined.”
The
court a
quo
also noted that attached to the second appellant's report was an
internal report highlighting the defects found on the respondent's
equipment. There was no indication whether that report had been
shared with the respondent, and if so, what the respondent's
comments thereon were.
In
other words, there was no evidence that the respondent had been heard
on that point contrary to the “audi
alteram partem”
rule.
The
inconsistencies in the second appellant's reasons for declining the
respondent's request for leave to sue the first appellant are
glaring. The court a
quo
correctly
noted these inconsistencies and granted the respondent's
application for review.
The
court a
quo
did not make the traditional finding of illegality, gross
impropriety, irrationality, arbitrariness,
or
failure
on the part of the second appellant to apply his mind to the facts
before him.
That
on its own does not constitute a misdirection given the circumstances
of this case.
The
court a
quo
was
of the view that the application for leave to sue had not been
properly dealt with. It gave reasons for that view based on the
papers before it. It described the second appellant's decision as
being “contradictory” and “inconsistent” with the facts
before it. It observed that certain evidence had not been shared with
the respondent, who could not have been heard on that point. It also
found that some critical positions had been taken in the absence of
supporting evidence.
In
short, the court a
quo
found that the second appellant acted irrationally and failed to
apply his mind to the facts before it.
The
second appellant, by not hearing the respondent on aspects of the
evidence placed before him by the first appellant, breached a
fundamental rule of natural justice, the need to hear both parties to
the dispute before a decision is taken.
The
decision of the court a
quo
cannot be impugned. On the whole the second appellant's decision
was grossly irrational.
The
appellants have criticised the court a
quo
for
determining the merits of the case instead of determining the
application for review placed before it.
This
criticism is unwarranted.
The
court a
quo
was
alive to the fact that in an application for review the court should
not interrogate the merits of the matter. It categorically stated as
follows:
“I
have already highlighted that, it is not within the purview of this
Court to interrogate the merits or demerits of the appellant's
claims against the first respondent.”
Indeed
in finding against the appellants the court a
quo
did not determine the merits of the dispute between the parties. It
merely granted leave for the respondent to sue the first appellant.
On the contrary, it was the second appellant who based his reasons
for refusal of leave to sue on the merits of the respondent's case.
Assuming
the second appellant acted properly in determining the merits of the
case, all the court a
quo
did
was to examine the manner in which that determination was arrived at.
It
found that the second appellant's decision was at variance with the
evidence placed before him, that he had not properly applied his mind
to the facts before him and generally that the decision was grossly
irrational.
It
also found that the second appellant had breached the rules of
natural justice.
All
these short comings are recognized grounds of review.
We
agree with counsel for the respondent that the decision of the court
a
quo
cannot be faulted. In the case of Reserve
Bank of Zimbabwe vs Granger and Anor
SC34/2000
this Court held that:
“A
gross misdirection of facts is either a failure to appreciate a fact
at all or a finding that is contrary to the evidence actually
presented, or a finding that is without factual basis or based on
misrepresentation of facts.”
The
findings of the second respondent fail to meet the required standards
of a trier of facts. For that reason they were grossly irregular.
Mr
Mapuranga,
for
the respondent, submitted that the appellant's fourth ground of
appeal, raised belatedly, has no merit.
Mr
Zhuwarara,
for the appellants, sought to argue that the respondent's putative
claim was not cognizable at law and for that reason the second
appellant could not have granted leave to sue on such a defective
claim.
We
agree with Mr Mapuranga
that the respondent's suit for breach of contract is clearly
recognized at law. To argue otherwise is an attempt to turn the law
of contract upside down.
The
appellants further argued that the respondent's intended claim is
in United States dollars contrary to the provisions of Statutory
Instruments 33 of 2019 which require that the transaction which arose
in January 2018 be denominated in RTGS dollars at the rate of 1:1
with the United States dollar.
In
support of this contention the appellants relied on the decision in
the case of Zambezi
Gas Zimbabwe (Pvt) Ltd v N.R Barber (Pvt) Ltd and Anor
SC3/20 wherein Malaba CJ had this to say:
“… the
Presidential Powers (Temporary Measures) Amendments of Reserve Bank
of Zimbabwe Act and issue of Real Time Gross Settlement Electronic
Dollars (RTGS Dollars) (SI 33/19) expressly provides that assets and
liabilities, including judgment debts, denominated in United States
dollars immediately before the effective date of 22 February 2019
shall on or after the aforementioned date be valued in RTGS dollars
on a one to one rate.”
Further
reliance was placed on the remarks of Dube J (as she then was) in
Manica
Zimbabwe (Pvt) Ltd
HH705/20 where she correctly held that:
“…the
effect of the Zambezi Gas case is that these provisions affect those
assets and liabilities that existed prior to the effective date, were
valued and expressed in United States dollars and were still so
valued and expressed on the effective date, other than those referred
to in section 44C(2) of the principal Act, which shall be deemed to
be values in RTGS dollars at a rate of one to one to the United
States dollar. These legislative provisions prevent a court from
awarding a judgment sounding in foreign currency unless in the case
of the exceptions listed.”
The
respondent has submitted that its putative claim is one for damages.
A
claim for breach of contract is an unliquidated claim and as such
cannot be affected by the provisions, of SI 33 of 2019.
We
agree with those submissions.
The
value of the claim is still to be assessed by a competent court.
In
the Zambezi
Gas case supra,
Malaba CJ clarified the positions as follows:
“If,
for the example, the value of the assets and liabilities was,
immediately before the effective date, still to be assessed by
application of an agreed formula, section 4(1)(d) of SI 33/19 would
not apply to such a transaction even if the payment would thereafter
be in United States dollars. It is the assessment and expression of
the value of the assets and liability in United States dollars that
matters.”
In
any event section 3(1) of SI 33/2019 amended the Reserve Bank Act by
the insertion after section 44B thereof of section 44C which it
provides for the issuance and legal tender of RTGS dollars. Section
44C(2) provides as follows:
“(2)
The issuance of any electronic currency shall not affect or apply in
respect of -
(a)
Funds held in foreign currency designated accounts, otherwise known
as 'Nostro FCA account' which shall continue to be designated in
such foreign currencies; and
(b)
Foreign loans and obligations denominated in any foreign currency,
which shall continue to be payable in such foreign currency.”
Thus
the above provisions provide exceptions to the general rule that all
assets and liabilities denominated in United States dollars on or
before the effective date shall be deemed to be payable in RTGS at
the rate of 1:1.
The
payment of foreign obligations in foreign currency is thus
permissible.
As
long as these exceptions exist, the respondent cannot be denied leave
to sue in United States dollar terms. The onus will be on the
respondent to convince the trial court that his case is covered by
either of those exceptions. The second appellant cannot take it upon
himself to make that determination.
DISPOSITION
The
appellant's grounds of appeal are without merit.
It
is now settled that a court seized with a review application brought
under section 4 of AJA may grant a remedy other than those specified
therein. Indeed section 2(2) of that Act specifically bestows upon a
court the liberty to do so. It provides in clear and unambiguous
language, that:
“The
provision of this Act shall be construed as being in addition to, and
not as limiting any other right to appeal against, bring on review or
apply for any administrative actions to which this Act applies.”
Any
argument to the contrary by the appellants is misplaced.
Although
the court a
quo
does
not formally make a finding as to illegality, gross impropriety,
irrationality or arbitrariness,
the record shows that the decision was replete with the same. The
fact that the court
a
quo
found the decision riddled with inconsistencies and contradictions
suffices in the circumstances of this case. Further, the court a
quo
found that the second appellant had not complied with the rules of
natural justice, a clear ground of review.
In
general where a reviewing court finds the decision under review to be
ultra
vires
the
enabling
legislation
it should set it aside and refer the matter back to the
administrative authority for a fresh decision.
In
Affretair
(Pvt) Ltd v MK Aircines (Pvt) Ltd
1996 (2) ZLR 15 (5) this Court held that:
“…the
ordinary course is to refer back because the court is slow to assume
a discretion which has by statute been entrusted to another tribunal
or functionary. In exceptional circumstances, this principle will be
departed from the overriding principle is that of fairness.”
The
appellants have criticised the court a
quo
for usurping the second appellant's discretion. However as
indicated in the Affretair case supra,
the rule is not absolute. In an appropriate case, a court may decline
to refer back and instead substitute the decision of the tribunal
with its own. In particular the court may, at its own discretion,
make the substitution:
(a)
Where the end result is a foregone conclusion and it would be a waste
of time to remit the matter; or
(b)
Where further delay would prejudice the applicant; or
(c)
Where the extant of bias or incompetence displayed is such that it
would be unfair to force the applicant to submit to the same
jurisdiction; and
(d)
Where the court is in as good a position as the administrative body
or functionary to make the appropriate decision.
(see
the Affretair case supra).
The
court a
quo
acted within its discretion in substituting as it did, the decision
of the second appellant with its own. Its reasons for doing so can be
gleaned from the tenor of its judgment, namely the extent of the
incompetence displayed by the second appellant.
The
record shows that the court
a quo
did not determine the merits of the matter as alleged by the
appellant. It is also not correct that the respondent's putative
claim was not recognized at law. As already shown the respondent was
perfectly within the law in seeking to mount its claims.
For
these reasons the appeal has no merit. It must be dismissed. Costs
will follow the cause.
In
the result it is ordered as follows:
1.
The appeal be and is hereby dismissed.
2.
The appellants shall jointly and severally pay the costs of the
appeal, the one paying the other to be absolved.
MAVANGIRA
JA: I
agree
BHUNU
JA: I
agree
Dube,
Manikai & Hwacha,
appellant's legal practitioner
Rubaya-Chinuwo
Law Chambers, respondent's legal practitioners
