In a judgment handed down on 16 April 2014, the High Court made an order setting aside the decision of the appellant refusing the request made by the respondent for leave to institute civil proceedings against SMM Holdings (Pvt) Ltd.
The court further granted leave to the respondent to institute the proceedings and ordered the appellant to pay the costs of the application.
This appeal is against that judgment.
FACTUAL BACKGROUND
SMM Holdings (Pvt) Ltd (“SMM”) is a company under a reconstruction order issued by the Minister of Justice, Legal & Parliamentary Affairs in terms of the Reconstruction of State–Indebted Insolvent Companies Act [Chapter 24:27] (“the Reconstruction Act”). The appellant was appointed administrator of SMM in September 2004. Upon such appointment, the appellant was conferred, by law, with the power, inter alia, to raise money, in order to turn around the fortunes of the company.
In 2008 and 2009, the appellant sought loans, on behalf of SMM Holdings (Pvt) Ltd (SMM), in order to purchase spares and other consumables from various South African suppliers. The spares and consumables were meant to capacitate Shabani Mine so that its mining operations could continue. As at 31 December 2010, the total amount outstanding on the two loans was US$3,635,158=31 which amount the appellant acknowledged was due and owing.
Efforts by the respondent to recover the debt were in vain.
Accordingly, in June 2012, the respondent made a written request to the appellant to grant it leave to institute proceedings against SMM Holdings (Pvt) Ltd (SMM) in terms of section 6 of the Reconstruction of State Indebted Insolvent Companies Act [Chapter 24:27] (the Reconstruction Act).
On 28 August 2012, the appellant, through his legal practitioners, declined to give such leave.
Consequently, the respondent filed a court application, in November 2012, seeking an order setting aside the decision of the appellant refusing it leave to institute civil proceedings, and for the court itself to grant such leave.
PROCEEDINGS IN THE HIGH COURT
The application before the High Court was made in terms of section 4 of the Administrative Justice Act [Chapter 10:28].
The basis of the application was that the decision of the appellant, refusing leave to institute proceedings, was contrary to the intention of the legislature, grossly unreasonable, made in bad faith, and constituted an abuse of authority; that, it was an unlawful deprivation of the right of the respondent to obtain judgment in a court of competent jurisdiction; that, it was not a fair decision, regard being had to the fact that the debt in question was incurred during the administration period; that, there was no rational basis for the decision, and, lastly, that the appellant had failed to comply with his duty and obligations as an administrative authority as provided for in section 3 of the Administrative Justice Act.
In his opposing papers, the appellant justified the refusal of the grant of leave on the basis, that, there was need, in the short term period, to preserve the assets of the company pending its full recapitalisation and subsequent re-opening of operations. He further averred, that, were the respondent to obtain judgment against SMM Holdings (Pvt) Ltd (SMM), and, thereafter, proceed to execute on that judgment, SMM would, in the result, have to be liquidated, thus negating the whole purpose of reconstruction.
In heads of argument filed by both parties, various issues were identified as requiring determination.
The appellant, inter alia, submitted that the application filed by the respondent was a review application. He further submitted, that, on the papers, the application did not comply with the requirements for review. Indeed, the presiding judge, in his judgment, accepted that the issue that fell for determination, amongst others, was whether the application was properly before the court.
Notwithstanding the fact that the propriety of the application had been put in issue, the court a quo, in its judgment, did not deal with the submission, but, took the view that the substantive issue falling for determination was the extent to which the respondent could exercise the discretion bestowed on him.
The court reached the conclusion, that, the decision to refuse leave was wrong, unfair, and in breach of section 3 of the Administrative Justice Act.
The court consequently set aside the decision.
The court considered it unnecessary to decide whether or not the decision refusing leave was grossly unreasonable “in the Wednesbury sense”. The court was also of the view, that, this was a proper case for it to grant the leave which the appellant had refused. Consequently, the court granted such leave in paragraph [2] of the operative part of its judgment.
APPELLANT'S SUBMISSIONS ON APPEAL
In submissions before this Court, the appellant has argued, that, the court a quo erred in failing to determine the question whether the application filed by the respondent was properly before it, and, in particular, whether the application complied with the requirements of Order 33 of the Rules of the High Court.
He further submitted, that, the fact that the court a quo proceeded to deal with the merits of the application suggests a tacit acceptance by the court that the matter was properly before it.
The absence of reasons for such tacit acceptance, and the failure by the court to expressly deal with the issue, constitute a serious misdirection.
He has further submitted, that, on the authority of Minister of Local Government, Rural and Urban Development & Anor v Silas Machetu & 3 Ors SC34-12, there is little doubt this was an application for review. The present application, having been filed some three months after the making of the decision, was therefore not properly before the court.
The appellant also submitted, that, the refusal to grant leave was not unreasonable, unfair, or wrong.
Lastly, he submitted, that, in terms of the Administrative Justice Act, it is not permissible for the court itself to substitute its own decision in place of that of the administrator.
RESPONDENT'S SUBMISSIONS ON APPEAL
In submissions before us, the respondent has argued, that, the Administrative Justice Act, in effect, created a new jurisdiction not only in respect of the obligations of an administrative authority, but, also, in respect of the manner in which challenges to such administrative authority could be made.
In the absence of a provision in the Administrative Justice Act requiring applicants to comply with Order 33 of the High Court Rules, no obligation arises to comply with the various provisions under Order 33. To the contrary, it is the provisions of Order 32, and, in particular, Rule 226 of the High Court Rules 1971, which are applicable.
Consequently, in the absence of any period stipulated by the Minister in terms of section 10(2)(b) of the Administrative Justice Act, no time limits apply to applications in terms of section 4 of the Administrative Justice Act.
On the question whether the court a quo failed to resolve the issue raised by the appellant, namely, that the proceedings, being of the nature of a review, were subject to the provisions of Order 33 of the High Court Rules, the respondent has submitted, that, it is quite permissible for a court not to deal with each and every submission raised by the parties and instead confine itself only to those issues which are critical to its decision.
The respondent has further submitted, that, the central issue that fell for determination before the court a quo was whether the appellant, as an administrative authority, acted lawfully, reasonably, and in a fair manner in declining to give the necessary leave for the institution of proceedings against SMM Holdings (Pvt) Ltd (SMM). On the facts, it is quite clear that the decision of the appellant was irrational and unreasonable.
The respondent has further argued, that, section 6(b) of the Reconstruction of State-Indebted Insolvent Companies Act [Chapter 24:27] (the Reconstruction Act) is not valid in terms of the current Constitution, regard being had to the provisions of section 69 of the Constitution, which provide for the right of access to the court for the resolution of any dispute.
Lastly, the respondent has submitted, that, section 4 of the Reconstruction of State Indebted Insolvent Companies Act [Chapter 24:27 (the Reconstruction Act) cannot be interpreted as preventing the High Court, in an appropriate case, from substituting its own decision for that of the administrative authority.
ISSUES FOR DETERMINATION BEFORE THIS COURT
A number of issues arise from the heads of argument and oral submissions made by counsel. However, it is essential to deal, first, with the submission whether the court a quo erred in not dealing with the preliminary point taken by the appellant in the Court a quo, that, the application before it, having been one of review, was not properly before it....,.
Consequently, the failure by the court a quo to specifically determine the question whether or not the application was properly before it, its tacit acceptance that this was the position, and the consequent failure on its part to give reasons why it had proceeded to deal with the substantive issues in the light of the preliminary point taken, vitiated the proceedings.
In the light of the above conclusion, it becomes unnecessary to deal with the rest of the issues raised by the parties to this appeal.
DISPOSITION
In the circumstances, it seems to me that the most appropriate course would be for this matter to be remitted to the court a quo for a determination whether, in the first instance, the application was properly before it, and, if so, whether the decision of the appellant denying leave is, on the facts and the law, sustainable.
In the result, this court makes the following order:
1. The appeal is allowed, with the costs of the appeal being in the cause with those in Case No. HC13496/12.
2. The judgment of the court a quo is set aside.
3. The matter is remitted to the court a quo for a determination of the preliminary point taken by the appellant, and, thereafter, if need be, the substantive issues raised by the parties.
