Lovemore Hamilton Pazvakavambwa v Portcullis (Private) Limited t/a Financial Clearing Bureau

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LOVEMORE HAMILTON PAZVAKAVAMBWA
versus
PORTCULLIS (PRIVATE) LIMITED
T/A FINANCIAL CLEARING BUREAU

HIGH COURT OF ZIMBABWE
PATEL J

Opposed Application

HARARE, 7 June 2011 and 13 September 2011

M. Nkomo, for the applicant
E.K. Mushore, for the respondent



      PATEL J:      The background to this matter is as follows. The

respondent’s business is to collect, store and disseminate public

information on persons likely to use the banking services or credit

facilities of financial institutions. In terms of the respondent’s standard

contract with its clients, the latter use its centralised system to check the

antecedents of their customers so as to avoid the possibility of civil or

criminal default. According to the Preamble to that contract, the

respondent operates a credit protection bureau on behalf of the

Zimbabwe Financial Clearing Association (ZFCA). The ZFCA provides

information for its registered and associated members, on a confidential

basis, as to the creditworthiness of persons and companies referred to it

by its members for research. The contract is concluded between the

respondent and any client who is a ZFCA member subscriber and who

wishes to join the respondent in order to utilise its services.

      The applicant was employed by the National Insurance Company

of Zimbabwe (NICOZ) as its Managing Director until his dismissal in 1996.

Subsequently, in 1997, he was convicted on five counts of contravening
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section 3(1)(f) of the Prevention of Corruption Act [Chapter 9:16].

Following his conviction, he was sentenced to a fine of $30,000 or 5 years

and 8 months imprisonment in default of payment of the fine. He

appealed to the Supreme Court, but his conviction and sentence were

both upheld.

      The matter was reported in The Herald of 31 July 1998. According to

that report, the applicant made four unlawful donations and corruptly

sanctioned a loan to a co-operative of which he was a member. He was

found guilty of corruption for having deliberately concealed these five

transactions from the NICOZ Board. The respondent then extracted the

report and kept a record of it in its database. The contents of that record

are contractually availed to and accessed by financial institutions wishing

to establish the creditworthiness of prospective customers. The effect of

this listing is that the applicant has been unable to access banking

services and loans from financial institutions.

      The applicant’s lawyers have written to the respondent and its

lawyers requesting that he be de-listed from the respondent’s database.

He has not received any response to this request. He now seeks an order

declaring unlawful his continued listing on the respondent’s database. He

also seeks an order directing the respondent to expunge his name from

its database.


The Arguments

      The applicant contends that he continues to be denied access to

banking services and loans despite having served his criminal sentence.

There is no law that authorises the respondent’s blacklist or any legal

basis for his listing being maintained. Moreover, the maintenance of

criminal   records    ad    infinitum   is   unreasonable    and    causes
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disproportionate prejudice to past offenders. It should therefore be

declared unlawful as being contrary to the public policy of rehabilitating

offenders and the right of offenders to reintegrate into society. The

relevant contracts between the respondent and its clients are also

contrary to public policy.

      In this regard, Mr. Nkomo submits that these contracts must

operate within the bounds of reasonableness. The period over which the

database records are maintained, i.e. in perpetuity, is unreasonable and

contrary to the sentencing policy of rehabilitation. In the instant case,

having regard to the sentence imposed upon the applicant, a period of 5

years would have been reasonable. He further submits that the right to

freedom of expression and information is not absolute and must be

balanced against the rights of other individuals and broader public policy.

The rights of the applicant have been violated for an unreasonable period

of time. The prejudice occasioned to the applicant is greater than the

prejudice likely to be suffered by the respondent. In this respect, the

interests of the individual should take precedence over the rights of

juristic persons.

      The respondent’s case is that it provides a service to banks at their

request. The banks rely on the information provided in dealing with

grants of credit to their customers. The respondent does not decide

whether or not to grant credit. The decision in each case lies with the

bank concerned. The respondent is merely a custodian of information in

the public domain or contained in public court records. There is no law

that precludes anyone from maintaining a database of records in the

public domain. The respondent is operating lawfully and in good faith. In

any event, it is not practically possible to expunge from its records what

has already happened. This would entail a breach of its duty of care to
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enable its clients to make sound decisions on credit clearance and the

grant of banking facilities. Allowing the relief sought by the applicant

would assist him in concealing facts of importance to banks in deciding

whether or not to grant credit.

       Adv. Mushore, for the respondent, submits that it would be

contrary to public policy to prevent the dissemination of public

information. This is underscored by the constitutional right to the

freedom of expression and information. She further submits that the

declaratory order sought by the applicant is incapable of being granted

inasmuch as the dissemination of information of a criminal conviction

cannot be declared to be unlawful. For that reason, and because the

application is unwarranted and without merit, the applicant’s conduct

should be disapproved by an award of costs on a higher scale or de bonis

propriis.


Freedom of Expression and Information

       Section 20(1) of the Constitution of Zimbabwe guarantees the

freedom of expression, viz. the freedom to hold opinions and to receive

and impart ideas and information without interference. Section 20(2)(a)

allows for derogations from this freedom under the authority of any law

to the extent that the law in question makes provision in the interests of

defence, public safety, public order, the economic interests of the State,

public morality or public health. Section 20(2)(b) permits further

derogations under the authority of any law for the purpose of, inter alia,

protecting the reputations, rights and freedoms of other persons or the

private lives of persons concerned in legal proceedings. However, any

such derogation is not permissible where it is shown not to be

reasonably justifiable in a democratic society.
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        It will be noted that section 20(2)(a) does not contemplate the

possibility of any derogation under the specific head of public policy.

Nevertheless, it seems to me that the public policy of Zimbabwe should

be a legitimate consideration in assessing the constitutionality of any law

formulated or conceived under section 20(2)(b) to restrain any act or

conduct impinging on the reputations, rights and freedoms of other

persons. In other words, conduct in pursuit of the freedom of expression

or information may be lawfully curtailed where it is contrary to any public

policy pertaining to the rights and freedoms of others.


Public Policy and Reasonableness

        As was clearly recognised by Hungwe J in Tel-One (Pvt) Ltd v

Communications & Allied Services Workers Union of Zimbabwe HH 74-2007

at p. 4, the concept of public policy in any given society is an elusive one,

depending upon transient and sometimes subjective views on what is in

the public benefit or what constitutes the public good. See also my

observations in Gramara (Pvt) Ltd & Another v Government of the Republic of

Zimbabwe & Others HH 169-2009 at p. 14. Nevertheless, it is generally

accepted that an act will be regarded as being contrary to the public

policy of Zimbabwe if it violates notions of elementary justice or

constitutes a palpable inequity that would hurt the conception of justice

in Zimbabwe. See the remarks of Makarau J in Pamire & Others v

Dumbutshena N.O. & Another 2001 (1) ZLR 123 (H) at 128.

        I do not think it can be disputed that sentencing policy in criminal

matters, as enunciated through legislation and the courts, is an integral

part of the public policy of Zimbabwe. It is also well established that our

sentencing policy is geared towards the rehabilitation of offenders and

their   reintegration   into   society.   The   question   that   arises   for
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determination in casu is whether the retention of a criminal record in

perpetuity on the database of a credit protection bureau, for disclosure

to its clients on a confidential basis, violates our notions of elementary

justice or constitutes a palpable inequity that is contrary to public policy.

        A South African case that is clearly germane to this question is that

of Ebrahim t/a Broadway Fisheries v Mer Products CC & Another 1994 (4) SA

121 (C). The court in that matter was seized with the issue of liability

arising from the respondents having divulged, confidentially and within

their    particular   trade,   adverse    information     relating     to   the

creditworthiness of the applicant. This resulted in credit to the applicant

being curtailed and his business activities being severely hampered. It

was held by Williamson J, at 123A-C, that:

               “The swopping of information about the creditworthiness of
        clients or prospective clients in a trade is the most natural and
        normal thing and everybody in business would know this.
        Applicant obviously knew it for he gave trade references. Provided
        the information is given honestly and bona fide I can see absolutely
        nothing wrong with this practice.”

        It was argued for the applicant in that matter that, even if the

respondents were merely acting in good faith within the normal

parameters of business, their actions could nevertheless be wrongful if,

according to the boni mores of the community, the exercise of their rights

was unreasonable. Reliance was placed in this connection on the decision

in Hawker v Life Offices Association of South Africa & Another 1987 (3) SA 777

(C) at 781D-I, where Howie J stated:

                “However, insofar as counsel sought to contend that
        unreasonableness did not result in unlawfulness, I disagree. If
        interference with another’s subjective right is unreasonable
        according to the standard of the boni mores of the community then
        it is unjustifiable and thus unlawful.
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             …Whether respondent’s action in the present matter was
      unreasonable and thus unlawful involves a weighing up of the
      particular conflicting interests of the parties, their relationship to
      one another, the circumstances of the case and considerations of
      social policy. Law of South Africa vol 8 para 20 and see the dicta
      quoted by Van Heerden and Neethling (op cit at 70), especially in
      Atlas Organic Fertilisers (Pty) Ltd v Pikkewyn Ghwano (Pty) Ltd and
      Others 1981 (2) SA 173 (T) at 188H-189A, where the importance is
      stressed of having regard to ‘the morals of the market place, the
      business ethics of that section of the community where the norm is
      to be applied’.”

      Reverting to Ebrahim’s case, at 126A-C, Williamson J concluded as

follows:

             “The creditworthiness of clients or potential clients is a
      matter of vital interest and any information honestly given to
      people who are legitimately interested in it does not, in my view,
      attract liability, no matter the consequences to the client. …If one
      were to enquire of the notional reasonable man in the marketplace
      in which these parties operate whether he thought that the
      behaviour of either respondent conflicted with the boni mores of
      the community, I am sure that there would be shocked surprise
      that such a question could even arise on the facts of this case.”

      Mr. Nkomo submits that Ebrahim’s case is distinguishable from the

present in that the Court is confronted with the blacklisting of the

applicant on the basis of a criminal judgment as opposed to the

exchange of information as a matter of course within a closed business

community. He further submits that such sharing of information on

creditworthiness is not the same as the blacklisting of the applicant by a

credit bureau.

      In my view, Ebrahim’s case is not distinguishable on the facts in the

present case, which also involves an exchange of information within a

closed business community, namely, the financial institutions that are

members of the ZFCA and the respondent. The information distributed
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by the respondent is confined to this closed community. Moreover, it

cannot be said that the respondent’s database consists of a “blacklist”

inasmuch as it is not a national credit protection agency whose

information is accessible to the public at large. Rather, it gathers relevant

information for capture on its database and is contractually bound to

furnish any information in its possession to a client subscriber who

makes an enquiry pertaining to that client’s existing or prospective

customers.


Duration of Information

      I now turn to consider the indefinite period for which the

information in casu has been retained on the respondent’s database. In

this regard, Mr. Nkomo relies upon the provisions of the South African

legislation governing credit bureaux to argue that the perpetual

retention of this information is unreasonable and disproportionately

prejudicial to the applicant.

      According to its long title or preamble, the object of the National

Credit Act No. 34 of 2005 is to regulate credit information in South Africa

and to establish national norms and standards relating to consumer

credit. Section 73 of the Act requires the framing of regulations

prescribing the time frame and the form and manner in which consumer

credit information held by credit bureau must be reviewed, verified,

corrected or removed. Such regulations, as enacted in May 2006 and

amended in November 2006, prescribe the maximum retention periods

for which consumer credit information may be displayed and used for

purposes of credit scoring or credit assessment. The prescribed period

for civil court judgments and rehabilitation orders is 5 years, while the

applicable retention period for administration orders and sequestrations
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is 10 years. Liquidations form the one category in relation to which

information may be displayed and used for an unlimited period.

      In support of his argument, Mr. Nkomo also cites section 3 (now

repealed and replaced by Act 23 of 2004) of the Prevention of Corruption

Act [Chapter 9:16]. This section empowered the convicting court to give

summary judgment in favour of the accused’s principal in addition to

passing sentence on the convicted person. Such judgment would have

the same effect as if the judgment had been given in a civil action

instituted in the convicting court. Consequently, so it is argued, the

maximum retention period of 5 years prescribed for civil judgments

under the National Credit Act should serve as an appropriate guideline in

the present matter. What this argument overlooks is that the summary

judgment envisaged by this provision may be granted in addition to the

criminal sentence imposed on the convicted person. Consequently, any

supposed correlation between the two becomes tenuous and of no

particular assistance in the present matter.

      As for the broader submission, while I might be inclined to accept

the South African legislation as affording a useful analogy to some

extent, I do not think that the argument for applying those provisions can

be sustained in casu. Firstly, the South African law provides for the

registration of credit bureaux nationally and governs consumer credit

information generally. It also prescribes maximum retention periods for

the specific purpose of credit scoring or credit assessment. Its basic

objective, as I perceive it, is to regulate the provision of consumer credit

in the national marketplace, not only by financial institutions but by

business enterprises of all kinds. In the instant case, however, we are

concerned with a somewhat different scenario, i.e. the accessing of

relevant information by a limited group of financial institutions under the
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terms and conditions of a subscription contract, concluded with a single

credit protection bureau affiliated to a financial clearing association, the

ZFCA. Secondly, and more significantly, the South African law is centred

on information pertaining to civil liabilities and obligations and the

judgments of civil courts. It is wholly unconcerned with information

relating to criminal convictions and sentences imposed in the criminal

context. This is for the obvious reason that criminal liability is a totally

distinct and separate matter calling for entirely different legislative

treatment, assuming that such is possible in any event.

      Quite apart from the fact that there is no relevant legislation on

the point, it seems to me virtually impossible to assess what would

constitute an appropriate period for retaining the record of a criminal

conviction and resultant sentence. The length of a sentence of

imprisonment does not necessarily afford a useful guide because of the

infinite variability of criminal sentences. For instance, a custodial term

may be imposed as an option to the payment of a fine, it may be wholly

or partially suspended subject to the fulfilment of one or more

conditions, it may be fixed to run concurrently or consecutively in the

case of several counts, or it may be reduced by way of remission during

the course of incarceration itself. There is also the situation of habitual

offenders who might be subjected to the operation of previously

suspended sentences or who are serving several sentences arising from

multiple offences committed at different times. In short, any attempt to

rely upon temporal proportionality as a criterion for assessing the

reasonableness of retaining criminal records would be purely arbitrary

and nothing more than an exercise in imprecision.

      In any event, it is axiomatic that criminal conduct is morally more

reprehensible than civil misconduct and that its consequences are
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inherently more serious than the implications of civil liability. This is well

illustrated by the 20 year period of prescription applicable to the

prosecution of criminal offences generally (other than murder) in terms

of section 23(2) of the Criminal Procedure and Evidence Act [Chapter

9:07]. A fortiori, it seems logical to postulate that there can be no

prescriptive period for the retention of records relating to proven

criminal conduct. Moreover, the fact that a person convicted of a crime

involving dishonesty has served his sentence does not necessarily mean

that he is reformed and that he is no longer a credit risk. In each case, a

proper assessment would have to be made by the financial institution

concerned on the basis of all relevant information, i.e. the individual’s

past record as well as such additional information as he proffers in order

to demonstrate that he is now creditworthy. For all of the foregoing

reasons, I am not convinced that the retention of a criminal record on a

creditworthiness database for an indefinite duration can logically be

characterised as being disproportionate or unreasonable.


Conclusions

      In the instant case, it is common cause that the respondent avails

its database to its client subscribers in terms of its standard contract and

under the strictest confidentiality. The relevant information is only

furnished to a subscriber member with a genuine interest in that

information, i.e. one that requires it in order to evaluate the

creditworthiness of persons seeking its credit or other financial facilities.

This information is not disseminated indiscriminately to all and sundry.

As discussed in the South African cases cited earlier, the respondent

operates in good faith to furnish relevant information on a confidential

basis to persons with a legitimate interest in that information.
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      In any event, insofar as concerns the information specifically

relating to the applicant himself, it is information that was initially

published in and extracted from the public domain. The fact that it has

been retained on the respondent’s database for an indefinite period does

not, as I have concluded above, detract from the reasonableness or

legitimacy of the respondent’s actions.

      In the final analysis, it is necessary in each case to balance the

social policy of rehabilitation and reintegration of offenders as against

prevailing community interests and standards. I have no doubt that the

closed financial community within which the respondent operates its

service would not find anything objectionable in the conduct complained

of by the applicant. As for the larger community, the applicant has failed

to persuade me that the notional reasonable man on the proverbial

commuter omnibus would consider that conduct to be unreasonable. All

in all, I am satisfied that the service provided by the respondent and the

underlying standard contract with its subscriber clients are not contrary

to public policy.

      As for costs, Ms. Mushore for the respondent has not established

any convincing ground for an award of punitive costs as against the

applicant or his counsel. I do not consider the applicant’s claim to be

merely frivolous or vexatious. He obviously bears a genuine grievance

and the arguments advanced on his behalf by Mr. Nkomo were not only

of considerable substance but also meritoriously delivered. In any event,

I take the issues raised by this application to be matters of considerable

public importance. Accordingly, in keeping with past judicial practice in

relation to such matters, I am disinclined to award any costs against the

applicant, even though he has not succeeded in these proceedings.

      In the result, the application is dismissed with no order as to costs.
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Donsa-Nkomo & Mutangi, applicant’s legal practitioners
Atherstone & Cook, respondent’s legal practitioners