Martha Tumani Rukuni v The Minister of Finance and The Securities Commission of Zimbabwe

### Preamble
1
HH 340-2012
HC 6887/11
MARTHA TUMANI RUKUNI
versus
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Opposed Application

HARARE, 31 July and 13 September 2012

T. Mpofu, for the applicant
R.H. Goba, for the 1st respondent
D. Ochieng, for the 2nd respondent

PATEL J: The applicant in this matter was appointed in 2008 as a commissioner of the 2nd respondent, the Securities Commission of Zimbabwe (the Commission), by the 1st respondent, the Minister of Finance (the Minister). She seeks an order setting aside the decision of the Minister taken in May 2011 terminating her tenure as commissioner. Both respondents resist the application on the ground that the applicant’s removal from office was lawful under the governing enactment.

Background

The salient facts in casu are not in dispute. They emerge fairly clearly from the relevant correspondence between the parties. The applicant was appointed to the Commission on 1 September 2008. At the time of her appointment, she was asked to declare her assets and business interests. Among other things, she duly disclosed that she was a member of the board of OK Zimbabwe Ltd (OK Zim), a company listed on the Zimbabwe Stock Exchange. One other commissioner was also in the position of holding office in a listed entity. Subsequently, on 19 January 2010, her term of office was fixed for 4 years and was set to expire on 31 August 2012.

Thereafter, her status as commissioner was not questioned until 1 February 2010, when it was discussed by the full
 Commission. The latter resolved (by a majority of 3 to 2) that there was a potential conflict between the office of commissioner and tenure on the board of a listed entity. The Chairman of the Commission then wrote to the Minister on 23 February 2010 setting out its position. The Minister wrote back on 24 May 2010 directing that the two commissioners should elect between their office as commissioners and their tenure on the boards of listed entities. The applicant replied by refusing to comply with this directive and stating that she would only resign upon being compensated for the loss of fees for the remaining period of her office on the Commission. The Minister then formed the view, citing a specific instance of conflict involving another listed entity, that the applicant’s office as commissioner was inconsistent with her tenure on the board of OK Zim. He consequently wrote to the Commission on 12 May 2011 directing the applicant and the other commissioner in question to vacate their office as commissioners. Eventually, on 21 June 2011, the applicant wrote to the Commission claiming compensation in the sum of US$80,707 for the remaining term of her office. This claim was declined by the Chairman of the Commission on the ground that the Securities Act did not provide for such compensation.

The applicant avers that the Minister’s decision is contrary to section 3(1)(a) of the Administrative Justice Act [Chapter 10:28] in that he failed to act lawfully, reasonably and fairly. She accordingly seeks an order setting aside his decision to terminate her term of office. The Minister’s defence is that he was entitled to so act in terms of section 10(2)(e) of the Securities Act [Chapter 24:25] because the prevailing circumstances justified his decision. Moreover, he exercised his discretion reasonably after giving the applicant ample time to elect which post she wished to retain. The Commission takes the stance that the purpose of disqualifying dual tenure is to ensure transparency and integrity. There was a conflict of interest in the applicant’s tenure on the Commission as well as the board of OK Zim because of her access to information through these posts and the fiduciary duties that she owed to both. If a commissioner were allowed to sit on the board of a listed entity, this would undermine the purpose of the Securities Act and the integrity and independence of the Commission as a regulator of the securities and investment sector. In response, the applicant avers that the provision of the Act relied upon by the Minister only applies to a material change of circumstances that occurs during a commissioner’s tenure of office. It does not apply to her situation as she was appointed to the Commission after full scrutiny and disclosure of her OK Zim position.

Relevant Provisions of the Securities Act

Section 9 of the Securities Act regulates the terms of office and conditions of service of commissioners. In particular, subsections (3) and (4) stipulate as follows:

“(3) Every commissioner shall give his or her whole time to the service of the Commission and shall not engage in any other occupation unless the Minister, on the Commission’s recommendation, has permitted any commissioner to do so.

(4) Subject to subsection (3), commissioners shall hold office on such terms and conditions as the Minister may fix for commissioners generally.”

Section 10 of the Act governs the vacation of office by commissioners and, by virtue of subsection (1)(d), a commissioner shall vacate office if he or she is required to do so in terms subsection (2) or (3). The latter subsection deals with the situation of absence without leave from three consecutive meetings of the Commission. Subsection (2) provides that:

“The Minister may require a commissioner to vacate office if –

(a) the commissioner has been guilty of conduct which renders him or her unsuitable to continue to hold office as a commissioner; or

(b) the commissioner has failed to comply with any condition of his or her office fixed in terms of section nine; or


(c) the commissioner is mentally or physically incapable of efficiently performing his or her duties as a commissioner; or

(d) the commissioner contravenes section sixteen; or

(e) the commissioner or his or her spouse engages in any occupation, service or employment, or holds any asset, which in the Minister’s opinion is inconsistent with his or her duties as a commissioner.”

Also pertinent for present purposes is section 16 of the Act which enjoins commissioners to disclose relevant interests, assets and connections, including every occupation, service or employment which a commissioner or his or her spouse engages in for remuneration. Subsection (2) requires such disclosure before a commissioner performs any function as such, while subsections (3) and (4) call for disclosure after appointment to office. Subsection (5) prohibits a commissioner from taking part in the consideration or discussion of any matter involving a conflict of interest or from voting on any such question before the Commission. Subsection (6) makes it an offence for any person to contravene subsection (2), (3), (4) or (5).

Whether Power to Remove from Office Exercised Lawfully

One of the ancillary issues raised in argument at the hearing of this matter pertains to the full-time versus part-time status of commissioners. Adv. Mpofu took the position that all the present incumbents were engaged on a part-time basis and that section 9(3) of the Act is only applicable to full-time commissioners and therefore did not apply to the applicant. In this regard, I agree with Adv. Goba that the applicant and her colleagues could only have been appointed under section 9 of the Act. Subsections (1) and (2) provide for the appointment of every commissioner for a term of four years, with the possibility of reappointment for a further four year period. Thereafter, by dint of subsection (3), every commissioner must devote his or her whole time to the service of the Commission, unless otherwise authorized by the Minister either before or after his or her appointment. Again, subsection (4) also applies to all commissioners so that they hold office on such terms and conditions as the Minister may fix for commissioners generally. In short, I am quite unable to perceive in these provisions any distinction between part-time and full-time appointments to the Commission. In my view, every commissioner must devote himself or herself to the work of the Commission and is expressly precluded from engaging in any other occupation, unless permitted to do so by the Minister. In the instant case, the applicant was so authorised prior to her appointment, with specific reference to the corporate interests and positions that she had declared at that time.

The real issue at hand is not whether the applicant was a part-time appointee but whether she was lawfully required to vacate her office as commissioner. In this regard, it is common cause that the Minister proceeded to act under paragraph (e) of section 10(2) of the Act. The applicant contends that the Minister was not so empowered to act. On her behalf, Adv. Mpofu submits that paragraph (e), taken in the context of section 10(2) as a whole, is to be construed prospectively. The provision is concerned with changed circumstances and not the pre-existing situation that was specifically approved by the Minister. There was no change in the applicant’s circumstances, nor had any actual conflict of interest materialised as envisaged in section 16(5), that entitled the Minister to act as he did.

For the respondents, it is submitted that section 10(2)(e) is couched in the present or future continuous tense and may be applied at any time in order to give effect to the provisions of the Act. It is further argued that the Minister also acted impliedly under section 10(2)(b) as read with subsections (3) and (4) of section 9. In other words, the applicant’s failure to comply with her altered conditions of service entitled the Minister to demand that she vacate her office.


It is not in dispute that the Minister initially approved the applicant’s appointment to the Commission being fully cognisant of her post on the board of OK Zim. He only changed his position after receiving the Commission’s recommendation on the matter. He then applied his mind to the situation and, having concluded that there was a potential conflict of interest, he called upon the applicant to elect between the two posts. When she failed to do so, he invoked section 10(2)(e) of the Act and required her to vacate her office on the Commission. In my view, he was perfectly entitled to do so. I do not think that section 10(2)(e) can be interpreted so as to be confined to changed circumstances. It is a perpetual provision with infinite effect. I am fortified in this construction by sections 11 and 24(1) of the Interpretation Act [Chapter 1:01] which restate the common law position as follows:

“11. Every enactment shall be construed as always speaking, and if anything is expressed in the present tense it shall be applied to the circumstances as they occur so that effect may be given to each enactment according to its true spirit, intent and meaning.”

“24(1). Where an enactment confers a power, jurisdiction or right, or imposes a duty, the power, jurisdiction or right may be exercised and the duty shall be performed from time to time as occasion requires.”

In the instant case, the fact that the Minister had previously approved the applicant’s position did not preclude him from forming the opinion at a later stage, provided of course that he did so fairly and on reasonable grounds, that her continued tenure on the board of OK Zim was inconsistent with her duties as a commissioner. The proper exercise of this discretion would not only accord with the intrinsic objects of the Securities Act, viz. integrity and transparency in the regulation of the securities market, but would also be incumbent upon the Minister in the fulfilment of his statutory duties. In short, it would be necessary to effectuate the provisions of the Act.


In light of the foregoing conclusion, it does not seem necessary for me to deal with the additional argument proffered by both counsel for the respondents. However, it may be as well to do so for the sake of completeness. The argument proceeds on the basis that, by accepting the Commission’s recommendation to avoid any conflict of interest as contemplated in section 9(3) of the Act, the Minister altered the applicant’s conditions of service in terms of section 9(4). The effect of this alteration was to prohibit any commissioner from sitting on the board of a listed entity. Thereafter, when the applicant failed to relinquish her post on the board of OK Zim, he acted under section 10(2)(b) and required her to vacate her office on the Commission. It does not matter that he did not specifically cite that provision or that he cited the wrong provision. This does not invalidate the exercise of his power to remove from office, so long as authority for his action exists in any one or more of the five grounds enumerated in section 10(2). Reliance for these propositions is placed upon Baxter: *Administrative Law*, at p. 366, and the decision in *Masiyiiwa v* TM Supermarkets 1990 (1) ZLR 166 (S) at 170-171. However, in the quotation from Baxter referred to by Adv. *Goba*, the learned author is concerned more with the form in which an administrative decision is communicated to the person or persons affected rather than its substance or the reasoning behind it. As for *Masiyiiwa’s* case, I cannot see any authority for the argument propounded by Adv. *Ochieng* in the passage that he cites.

I agree with Adv. *Ochieng* that section 9(4) of the Act is “always speaking” and that the powers thereunder are exercisable from time to time as exigency and discretion may dictate. This approach accords with sections 11 and 24(1) of the Interpretation Act cited earlier. I also accept that the power to fix conditions of service would by necessary implication include the power to alter those conditions, subject to such limitations as would apply to the exercise of any statutory power. However, it is arguable whether the Minister did in fact alter the conditions of office for commissioners generally in the manner envisaged by section 9(4). His letters to the Commission in that regard do not purport to do so in clear terms and make no specific reference to section 9(4). Be that as it may, it seems to me that there is considerable merit in Adv. Mpofu’s objections to this additional argument on behalf of the respondents. The Minister’s letters and, more significantly, his opposing affidavit make no mention whatsoever of section 10(2)(b). They are explicitly confined to section 10(2)(e) as the legal basis for requiring the applicant to relinquish her post. Moreover, the applicant has come to court specifically to challenge the Minister’s exercise of this power. I accordingly take the view, in keeping with the intention behind section 3(1)(c) of the Administrative Justice Act, that the Minister’s defence must be limited to the reasons that he has cited. It cannot be extended to encompass provisions of the Act not relied upon in his opposing papers.

To conclude this aspect, I am satisfied that the circumstances expressly relied upon by the Minister, viz. the potential conflict of interest giving rise to inconsistency with the applicant’s duties as a commissioner, entitled him to invoke section 10(2)(e) of the Act as a proper basis for requiring the applicant to vacate her office. It follows that the exercise of his discretion in that regard cannot be set aside as having been unlawful. What remains to be considered is whether or not this discretion was exercised reasonably and fairly.

**Reasonableness and Fairness under the Administrative Justice Act**

Subsections (1) and (2) of section 3 of the Administrative Justice Act prescribe the duties of administrative authorities generally, as follows:

“(1) An administrative authority which has the responsibility or power to take any administrative action which may affect the rights, interests or legitimate expectations of any person shall –

(a) act lawfully, reasonably and in a fair manner; and

(b) act within the relevant period specified by law or, if there is no such specified period, within a reasonable period after being requested to take the action by the person concerned; and
(c) where it has taken the action, supply written reasons therefor within the relevant period specified by law or, if there is no such specified period, within a reasonable period after being requested to supply reasons by the person concerned.

(2) In order for an administrative action to be taken in a fair manner as required by paragraph (a) of subsection (1), an administrative authority shall give a person referred to in subsection (1) –
(a) adequate notice of the nature and purpose of the proposed action; and
(b) a reasonable opportunity to make adequate representations; and
(c) adequate notice of any right of review or appeal where applicable.”

Subsection (3) of section 3 permits an administrative authority to depart from any of the requirements referred to in subsection (1) or (2) under specified circumstances, including the need to promote efficient administration and good governance as well as the public interest. Section 4 of the Act sets out the forms of relief that are available against non-compliance with section 3. In this regard, section 5 delineates the diverse factors that the Court may have regard to for the purposes of determining whether or not an administrative authority has failed to comply with the provisions of section 3. In the context of the reasonableness or otherwise of an administrative action, the Court is enjoined to consider, inter alia, whether the action taken is so unreasonable that no reasonable person would have taken it, whether there is any evidence or other material which provides a reasonable or rational foundation to justify the action taken, and whether an irrelevant matter has been taken into account or a relevant matter has not been taken into account.

A point that was raised and argued at the hearing of this matter relates to the degree of unreasonableness that must be shown in order to render an administrative action or decision reviewable. The traditional approach under the common law is to require gross irrationality, as opposed to mere unreasonableness, as a ground of review. The degree of unreasonableness must be such that something else can be inferred from it, viz. that the administrative authority was actuated by mala fides or some ulterior motive or that it failed to apply its mind to the matter. See Union Government (Minister of Mines and Industries) v Union Steel Corporation (South Africa) Ltd 1928 AD 220 at 237; The Administrator Transvaal & The Firs Investments (Pty) Ltd v Johannesburg City Council 1971 (1) SA 56 (A) at 79-80. The position in England is precisely the same and is aptly captured in the celebrated case of Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1947] 2 All E R 680 (CA).

There is some basis for the proposition that section 3(1)(a) of the Act goes beyond the common law to embrace mere unreasonableness as a proper ground for review. Firstly, there is the decision in Dombodzvuku & Another v Sithole NO & Another 2004 (2) ZLR 242 (H) at 247, where it was suggested, obiter and without further analysis, that a decision can be reviewed even if it is only unreasonable simpliciter. Secondly, section 2(2) of the Act defines its scope in the following terms:

“The provisions 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 action to which this Act applies.”

In my view, this interpretive aid does not really take the matter further. Even if the provisions of the Act are to be construed as being additional or supplemental to any other right of review, it does not follow that they operate to override or modify the common law. This is particularly so in light of the time-honoured presumption against any ouster or modification of the common law in the absence of express provision or necessary intendment to that effect. I am unable to read the injunction in section 3(1)(a) to “act lawfully, reasonably and in a fair manner” as having any such effect. My view is emboldened by the factors set out in section 5 illustrating non-compliance with section 3. These factors are perfectly consonant with common law grounds of reviewability. This applies equally to the criteria relating to reasonableness prescribed in paragraphs (j) to (m) of section 5. Indeed, the criterion in paragraph (j), viz. “the action taken is so unreasonable that no reasonable person would have taken it” is virtually *ad idem* with the test expounded by Lord Greene MR in the *Wednesbury Corporation case, supra*, at 683. In the result, I am firmly of the view that the threshold of reasonableness required by section 3(1)(a) of the Act has not been modified to any degree beyond the parameters of the common law.

Whether Removal from Office Effected Reasonably and Fairly

Adv. *Mpofu* submits that the Minister acted unreasonably and unfairly for several reasons. He changed his perception of the applicant’s tenure on the Commission and proposed that she make an election between her posts on the Commission and the board of OK Zim. The applicant then made a counter-proposal for compensation. The Minister did not deal with that proposal and his failure to do so was both unreasonable and unfair. It was clearly adverse to the applicant’s interests and contrary to her legitimate expectations. It was also contrary to statute because the power to remunerate the applicant for her remaining term of office, although not expressly provided for in the Securities Act, was necessary or incidental to the Minister’s express powers under that Act.

While I accept that the Minister enjoys powers correlative to those expressly vested in him under the enabling Act – as is clearly contemplated in section 24(2) of the Interpretation Act – I do not accept that the power to remunerate or compensate a commissioner for his or her remaining tenure on the Commission is reasonably necessary or incidental to his power to appoint commissioners and fix their terms and conditions of office under sections 5(1) and 9(4) of the Act. Even if this power were to be
 necessarily implied, it is a fundamental principle of our law that no State official can expend public moneys or commit himself to any such expenditure unless this is expressly provided for by or under statute. See *Chapfika v Reserve Bank of Zimbabwe* 2007 (2) ZLR 337 (H) at 343-344.

In the instant case, after receiving the Commission’s recommendation that commissioners should not sit on the boards of listed entities, the Minister decided that this practice was contrary to good governance because of its inherent conflict of interest. At the same time, he gave the two commissioners concerned the option to remain on the Commission or relinquish their posts in the listed entities. The applicant did not comply with that directive and insisted that she would only resign from the Commission after receiving compensation for her remaining term of office. In response, the Minister extended the deadline for the commissioners to make their election. Again, the applicant did not heed that directive. Eventually, almost one year after his initial decision on the matter, the Minister directed that the two commissioners vacate their office in terms of section 10(2)(e) of the Act.

On these facts, which are common cause, I am unable to find anything unreasonable or unfair in the Minister’s decisions or actions. As regards his appreciation of the potential conflict of interest and the principles of good governance, this Court cannot interfere simply because it might have arrived at a different decision on the same facts. The Court cannot usurp the Minister’s functions and substitute his opinion and discretion with its own. As for the Minister’s decision to remove the applicant from office, she has not demonstrated that he was actuated by *mala fides* or some ulterior motive or that he failed to apply his mind to the matter. Having regard to all of the relevant circumstances, I am satisfied that the decisions impugned by the applicant were not so unreasonable that no reasonable person in the Minister’s position would have made them.


Turning to the alleged unfairness of the Minister’s actions, it seems to me that he afforded the applicant ample and adequate opportunity to make representations. Furthermore, he fully considered the many representations that the applicant did put forward. The only issue that he did not address was the applicant’s claim for compensation. In principle, an administrative authority has a duty to make a determination on every relevant issue and a duty to give reasons for his decision. However, as I see it, the question of compensation was collateral and consequential to the decision as to whether or not the applicant should continue in office. The decision to terminate her tenure stands on its own and it is that decision that the applicant seeks to overturn. In any event, as I have already stated, there was no legal basis upon which the Minister could have lawfully compensated the applicant in the absence of any statutory provision therefor. Thus, the question of compensation becomes irrelevant to the fairness or otherwise of the Minister’s decision to remove the applicant from office. It follows that the Minister cannot be said to have acted in an unfair manner.

Disposition

To summarise all of the foregoing, the applicant has failed to establish that the Minister contravened section 3(1)(a) of the Administrative Justice Act in any way by acting unlawfully, unreasonably or in an unfair manner. Consequently, her claim to set aside the Minister’s decision terminating her tenure of office cannot succeed.

As regards costs, it must be accepted that the applicant’s removal from office cannot be attributed to any fault or misconduct on her part. Moreover, I take the view that this application raises matters of significant public importance warranting a departure from the ordinary rule that costs should follow the cause.

In the result, the application is dismissed with each party bearing its own costs.


Gill Godlonton & Gerrans, applicant’s legal practitioners
Civil Division of the A-G’s Office, 1st respondent’s legal practitioners
Coghlan Welsh & Guest, 2nd respondent’s legal practitioners
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