After hearing arguments from counsel on 7 May 2015, I granted the provisional order and said the reasons would follow. These are they.This matter has got a chequered history indeed.The applicant is an incorporation which provides national cellular telecommunications service in Zimbabwe, among other services, by virtue of a licence ...
After hearing arguments from counsel on 7 May 2015, I granted the provisional order and said the reasons would follow. These are they.
This matter has got a chequered history indeed.
The applicant is an incorporation which provides national cellular telecommunications service in Zimbabwe, among other services, by virtue of a licence issued in terms of the Postal and Telecommunications Act [Chapter 12:05] (the Act) by the first respondent (the Postal and Telecommunications Regulatory Authority), which is the statutory authority established in terms of the Postal and Telecommunications Act to superintend the licencing and regulation of telecommunication service in this country under the watchful eye of the second respondent (the Minister of Information, Technology, Postal and Courier Services), the Minister charged with the administration of the Postal and Telecommunications Act.
The applicant was initially issued with a national cellular telecommunications licence in May 1998. It was issued with a revised licence on 26 June 2002, a licence which, in terms of its clause 4 was, valid for 15 years from the date of its signing. That licence contains the terms and conditions under which the applicant is required to provide the service.
I have said that the relationship between the parties has had its fair share of problems.
At some point, because of the squabbles relating to the applicant's shareholding, which the regulatory authority insisted did not comply with the country's indigenisation laws, and, more importantly, with the terms of the licence, the authority cancelled the licence on 9 August 2007.
The applicant appealed that cancellation to the responsible Minister, in terms of section 96 of the Postal and Telecommunications Act, on 10 August 2007, and approached this court by urgent application in HC4301/07 for interim relief. This court, per MUSAKWA J, issued a consent order on 15 August 2007 to wit:
“It is hereby ordered that:
1. Pending the determination of the appeal by the second respondent, the order cancelling the licence and directing the applicant to switch off its telecommunications issued by the first respondent be and is hereby suspended.
2. There is no order as to costs.”
Just as well the applicant had the presence of mind to seek the suspension of the cancellation order, because it was not until 29 April 2010 that the Minister finalised the appeal - almost three (3) years later.
The Minister's decision, communicated by the Secretary for Transport, Communications and Infrastructural Development, on that date, is helpful:
“RE: TELECEL ZIMBABWE LICENCE
Your minute AM/mn/342/10 dated 28 April 2010 refers. The Ministry holds the view, that, cancelling Telecel Zimbabwe's licence is not tenable vis-a-vis the thousands of subscribers the mobile operator now has and the many negative messages such action would convey to potential investors, both in the sector and across the whole economy.
Thus, at a meeting between Honourable Minister N T Goche (MP) and Telecel's chief, Mr Kia Uebech, on 1 April 2010, Government's requirement that Telecel Zimbabwe reverts back to its original 60:40 position in respect of its local: foreign shareholding was stated/indicated.
Telecel undertook to address this challenge.
Clearly, it will be difficult for the Government to support the renewal of the licence come 2013 should Telecel fail to comply with Government's pre-condition. In our view, the ball is now in Telecel Zimbabwe's court.”
That way, the licence was reinstated on the understanding, that, the shareholding would be regularised to meet Government requirements.
Since 2010, the parties have been engaged in dialogue over the shareholding which went on and on with no end in sight. A lot has happened, including an agreement signed by the parties on 6 August 2013.
However, not happy with what the applicant had done, the first respondent, again, cancelled the applicant's licence, on 28 April 2015, on the basis that the applicant had failed to comply with the Postal and Telecommunications Act.
It then set about issuing a raft of provisions in its final regulatory order which reads:
“11. REGULATORY ORDER
HAVING REGARD to the provisions of the Act, Telecel licence conditions, persistent compliance default, all relevant evidence, and the submissions made by Telecel Zimbabwe Limited, POTRAZ hereby makes the following order in the exercise of its power under the Act.
11.1 Telecel's licence to provide National Cellular Telecommunications Service is hereby cancelled with effect from the date of this order.
11.2 Telecel immediately notifies its subscribers and relevant stakeholders of the termination of its licence upon receipt of this order.
11.3 Telecel ceases to operate its cellular telecommunications network and ceases to offer any communication service upon receipt of this order.
The effect of the cancellation is as follows:
(a) Radio frequency spectrum allocated to Telecel for the provision of cellular telecommunication services are hereby withdrawn with effect from the date of receipt of this order (see Annex 01 for the detailed spectrum information).
(b) Radio frequency spectrum allocated to Telecel for the establishment of Microwave Fixed Links in 7, 8, 13, 18, 22 and 23 GHz bands are hereby withdrawn with effect from the date of receipt of this order.
(c) Radio frequency spectrum allocated to Telecel for the establishment of a C-band VSAT Earth Station are hereby withdrawn with effect from the date of receipt of this order.
(d) The number resources used by Telecel Zimbabwe Limited to offer telecommunication services are hereby withdrawn with effect from the date of this order.
12. SPECIAL DISPENSATION TO TELECEL
NOTWITHSTANDING the provisions of subparagraphs 11.2 and 11.3 above, however, and being mindful of the disruptive effect of an immediate cessation of operations upon the subscribers and other stakeholders of Telecel, POTRAZ hereby grants a special dispensation to Telecel for it to continue with its operations for a period of thirty (30) days from the date of receipt of this order. The purpose of the dispensation will be to afford Telecel an opportunity, among other things, to:
12.1 Facilitate the migration of subscribers from Telecel to other licenced telecommunications operators.
12.2 Notify its employees and agents of the cancellation of its operating licence.
12.3 Notify its stakeholders in the mobile financial services sector of the cancellation of its licence.
12.4 Notify the general public of the cancellation of its licence.
12.5 Begin the process of decommissioning its telecommunications equipment, which process has to be completed within ninety (90) days calculated from the date of receipt of this order.”
Hence, on the stroke of the pen, and by Regulatory decree, scores of employees had lost employment and a number of subscribers had lost a service, never mind other stakeholders and never mind the labour laws of this country dealing with notice of termination of employment.
The applicant has now come to court, on an urgent basis, seeking the following relief:
“TERMS OF FINAL ORDER SOUGHT
That you shall show cause to this Honourable Court why a final order should not be made in the following terms:
1. That, pending determination of the finalisation of the appeal by the applicant pursuant to the provisions of section 96 of the Posts and Telecommunications Act [Chapter 12:05] that Regulatory Order No.1 of 2015 and special licence and concomitant dispensations imposed by the Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) be and are hereby suspended.
2. That, pending finality to the appeal process, as provided by the Posts and Telecommunications Act [Chapter 12:05] applicant shall not dispose of any movable assets or infrastructure without notice to the 1st, second, and third respondents.
3. That, there be no order as to costs.
INTERIM RELIEF (GRANTED)
Pending determination of this matter, the applicant is granted the following relief:
(a) That, first to third respondents be and are hereby interdicted from in any way of (sic) interfering with the normal business activities of the applicant pursuant to the provision of its telecommunication services and related business activities to the public and its subscribers in Zimbabwe.
(b) The dispensation time periods mentioned in Regulatory Order No.1 of 2015 and the cancellation of applicant's licence be and are hereby suspended until such time as there has been a final determination of (sic) a final order sought in terms of this application.”
In its founding affidavit, deposed to by Angeline Vere, its General Manager, the applicant states, that, after all its attempts to reduce its foreign shareholding to a level acceptable to the first respondent were rejected by the latter, which retains the exclusive right of approval in terms of clause 12 of the licence, the first respondent resorted to the drastic action of cancelling the licence on terms set out in the Regulatory Order aforesaid.
Clause 12 of the licence provides:
“12.1 Ownership
12.1.1 Foreign Investment and Shareholding Structure
1. The holder of this licence must be incorporated in Zimbabwe. The licencee shall ensure that the foreign ownership shall be limited to forty-nine percent (49%).
2. Changes in the shareholding structure, at any stage, must be approved by the Authority before it is effected.
3. In the event that the licencee's initial shareholding structure does not conform to the provisions of clause 12.1.1.1 the licencee shall, within five (5) years from date of signing of the licence, ensures (sic) that the foreign ownership is reduced to forty nine percent (49%.).”…,.
Over the years, the applicant has tried to comply by introducing a new partner to assume ownership of the 11 per cent balance of the 60 per cent shareholding held by the foreign partner, Telecel International Limited (TIL), but, the first respondent either rejected the proposed partner or insisted it had to be approved by the Minister.
At one stage, the applicant was told the 11 per cent shareholding could only be sold to the fourth respondent (Empowerment Corporation (Pvt) Ltd) which holds the other 40 percent stake.
The applicant introduced an Employees Share Ownership Scheme (ESOP) in terms of which its employees would own the 11 per cent shares currently in the hands of Telecel International Limited (TIL) in order to move the shareholding to indigenous people.
This was rejected.
It proposed listing on the Zimbabwe Stock Exchange as another option which was also rebuffed.
Instead, the first respondent cancelled the licence.
The reason given for the cancellation appears in paragraph 1 of the first respondent's “judgment” of 28 April 2015 which reads:
“1. INTRODUCTION
This case concerns Telecel Zimbabwe Limited (hereinafter referred to as 'Telecel') non-compliance with licence conditions, provisions of the Postal Telecommunications Act [Chapter 12:05] (hereinafter referred to as 'the Act') as read with Indigenisation and Economic Empowerment laws. The Postal Telecommunications Regulatory Authority of Zimbabwe (hereinafter referred to as 'POTRAZ') has to determine whether the licence issued to Telecel to provide National Cellular Telecommunication Services should be cancelled or not and issue an appropriate order.”
The applicant stated, that, following the cancellation and the “appropriate order” it has appealed to the second respondent (the Minister of Information, Technology, Postal and Courier Services), the responsible Minister, but, meanwhile, the Regulatory Order remains extant as the appeal does not have the effect of suspending the order appealed against.
Whichever way, it is unlikely that the Minister will dispose of the appeal before the expiration of the period of 30 days it has been given to close shop; a period which is unreasonable in the circumstances given that it employs more than 700 direct employees (at the hearing, counsel for the employees corrected that figure, there are 820 direct employees) whose employment contracts would have to be terminated.
In addition, in terms of the Postal and Telecommunications Act, they are entitled to 28 days during which to lodge an appeal.
The applicant therefore craves the interim relief aforesaid.
While the other respondents did not oppose the application; in fact, counsel for the fourth respondent (Empowerment Corporation (Pvt) Ltd) supported it, and counsel for the second and third respondents (Minister of Information, Technology, Postal and Courier Services N.O. and Chief Secretary in the Office of the President and Cabinet N.O.) had no submissions to make except that the Minister would await the appeal, the first respondent surprisingly opposed the application, vehemently, as if everything depended on the cancellation of the licence and the closure of the applicant....,.
What the applicant seeks is a temporary, interim, or interlocutory interdict.
HOLMES JA set out the requirements for the grant of such an interdict in Ericksen Motors (Welkon) Ltd v Proten Motors, Warrenton and Anor 1973 (3) SA …, (quoted with approval by SANDURA JA in Charuma Blasting and Earthmoving Services (Pvt) Ltd v Njainjai and Ors 2000 (1) ZLR 85 (S)…,.) as:
“The granting of an interim interdict pending an action is an extraordinary remedy within the discretion of the court. Where the right it is sought to protect is not clear, the matter of an interim interdict was lucidly laid down by INNES JA in Setlogelo v Setlogelo 1914 AD 221 at p227. In general, the requisites are:
(a) A right which 'though prima facie established, is open to some doubt'.
(b) A well-grounded apprehension of irreparable injury.
(c) The absence of ordinary remedy.
In exercising its discretion, the court weighs, inter alia, the prejudice to the applicant if the interdict is withheld against the prejudice to the respondent if it is granted. This is sometimes called the balance of convenience.
The foregoing considerations are not individually decisive, but, are interrelated; for example, the stronger the applicant's prospects of success the less the need to rely on prejudice to himself. Conversely, the more the element of 'some doubt' the greater the need for the other factors to favour him….,. Viewed in that light, the reference to a right which 'though prima facie established is open to some doubt' is apt, flexible, and practical, and needs no further elaboration.”
See also Bozimo Trade and Development Co. (Pvt) Ltd v First Merchant Bank of Zimbabwe Ltd & Ors 2000 (1) ZLR 1 (H)…,.
In respect of the establishment of a prima facie right, counsel for the applicant alluded to section 96 of the Postal and Telecommunications Act which gives the applicant a right to appeal the decision of the first respondent to the Minister and to section 71 of the Constitution of Zimbabwe relating to the right to protection of property.
On the other hand, counsel for the first respondent submitted, that, the applicant would not possibly have any right, prima facie or otherwise, when it has been operating outside the law, that is, without compliance with the indigenization laws of this country; which counsel for the applicant countered by submitting, that, the Indigenisation and Economic Empowerment Act [Chapter 14:33] only came into effect in April 2008 - long after the licence had been issued on 26 June 2002.
Counsel for the fourth respondent (Empowerment Corporation (Pvt) Ltd) brought a new dimension to the issue.
He submitted, that, to the extent that the cancellation is premised on indigenization laws, as stated in the first respondent's “judgment” the cancellation is invalid because the first respondent is not the enforcement authority of the Indigenization and Economic Empowerment Act; the Minister of Youth, Empowerment & Indigenisation is, in terms of section 5 thereof. It is him who initiates the process of cancellation for want of compliance with the Indigenisation and Economic Empowerment Act.
It is not necessary for me to determine all those issues because that is the province of the second respondent when dealing with the appeal. I am sitting only be decide whether a case had been made for an interim interdict.
I think it has been.
Section 96(1) of the Postal and Telecommunications Act [Chapter 12:05] provides:
“Subject to this section, any person who is aggrieved by -
(a) A decision of the Authority not to issue a licence or certificate; or
(b) Any term or condition of a licence issued to him, or a refusal by the Authority to specify a term or condition in a licence; or
(c) A refusal by the Authority to review a licence or certificate; or
(d) Any amendment of a licence or a refusal by the Authority to amend a licence; or
(e) The suspension or cancellation of a licence; or
(f) The grant or refusal to grant any approval or authority in terms of this Act; or
(g) The outcome of any mediation by the Authority of a dispute between licensees; or
(h) Such decision of the Authority as may be prescribed;
may, within twenty eight days after being notified of the decision or action of the Authority concerned, appeal, in writing, to the Minister, submitting with his appeal such fee as may be prescribed;
Provided that such appeal shall not suspend the operation of any licence or certificate issued by the Authority.”
After cancelling the applicant's licence, the first respondent issued a special licence, effective from 28 April 2015 to 26 May 2015, to facilitate only the winding up of the applicant's operations - presumably including the termination of the employment contracts of 820 employees.
Such termination would ordinarily require three (3) months notice, where there are good grounds, in terms of the Labour laws of this country.
The applicant cannot lawfully employ those employees after 26 May 2015.
All that against the backdrop of the applicant's right of appeal to the Minister, which right subsists until the expiration of 28 days, on 28 May 2015, if one includes weekends and public holidays.
By the time the applicant's right of appeal expires, the applicant would have closed down in terms of the Regulatory Order.
What that means, therefore, is that the Regulatory Order effectively obliterates the applicant's right of appeal reposed to it by section 96 of the Postal and Telecommunications Act.
Clearly, therefore, that Regulatory Order is not only unreasonable in the extreme in its effect, it also infringes upon the right of appeal given to the applicant by the Postal and Telecommunications Act. That right has been taken away.
More importantly, there is the possibility that the Minister may take a while to determine the appeal. There is no time limit given by the Postal and Telecommunications Act for him to determine an appeal.
Subsection (3) of section 96 of the Postal and Telecommunications Act only requires him to make an order on appeal “after due and expeditious inquiry.”
A precedent has already been set in that regard.
When the applicant appealed another cancellation by the first respondent, in August 2007, the Minister took almost three (3) years to determine the appeal.
In terms of section 68 of the Constitution, the applicant has a right to administrative conduct that is lawful, prompt, efficient, reasonable, proportionate, impartial, and both substantively and procedurally fair.
In terms of section 69 of the Constitution, it has a right to a fair hearing in the determination of its civil rights.
Those rights cannot be derogated from at the whim of an impatient and overzealous regulatory authority.
The concept of administrative justice is now embedded in our Constitution. It provides the skeletal infrastructure within which official power of all sorts, affecting individuals, must be exercised. The elements are:
1. Lawfulness, in that official decisions must be authorised by statute, prerogative, or the Constitution.
2. Rationality, in that official decisions must comply with the logical framework created by the grant of power under which they are made.
3. Consistency, in that official decisions must apply legal rules consistently to all those to whom the rules apply.
4. Fairness, in that official decisions should be arrived at fairly; that is, impartially in fact and appearance, giving the affected persons an opportunity to be heard.
5. Good faith in the making of decisions, in that the official must make the decision honestly and with conscientious attention to the task at hand having regard to how the decision affects those involved.
Where an administrative authority makes a decision which renders nugatory the right of the affected party to appeal, that decision cannot be said to accord with the dictates of administrative justice which I have set out above. It cannot be rational neither can it be fair, and, in fact, borders on unlawfulness.
I therefore entertain no doubt, that, the requirements of an interdict have been met.
The applicant does have a prima facie right to appeal which has been curtailed, if not negated. There has been an infringement of that right, which, if allowed to perpetuate, would adversely prejudice the applicant and its employees. It would have to close before it has exhausted remedies available to it.
In weighing the balance of convenience, as I am required to do, I can conceive of no prejudice that may be sustained by the first respondent, except for a wounded ego, which perhaps is the only reason why it chose to oppose the application.
It is a truism, that, the first respondent has acted in an overzealous and precipitate manner without regard to the rights of stakeholders in this matter. It has in fact proceeded roughshod over the rights of those that it is sworn to superintend, and, in so doing, it has created a train smash of gigantic proportions.
It is for these reasons that I granted the provisional order, as amended, the interim relief of which is in the following:
“INTERIM RELIEF GRANTED
Pending determination of this matter, the applicant is granted the following relief:
(a) That, first to third respondents be and are hereby interdicted from in any way interfering with the normal business activities of the applicant pursuant to the provision of its telecommunication services and related business activities to the public and its subscribers in Zimbabwe.
(b) The dispensation time periods mentioned in Regulatory Order No.1 of 2015 and the cancellation of applicant's licence be and are hereby suspended until such time as there has been a final determination or a final order sought in terms of this application.”
