RUKUNI v MIN OF FINANCE & ANOR 2012 (2) ZLR 205 (H)

Flynote

Administrative law — administrative decisions and acts — decision adverse to applicant — relief under Administrative Justice Act [Chapter 10:28] — unreasonable decision — degree of unreasonableness required to set aside decision — unreasonableness must show mala fides or ulterior motive

Stock exchange — Securities Commission — appointment and removal of commissioners by Minister of Finance — grounds for removal of commissioner — occupation inconsistent with office of commissioner — commissioner a director in company listed on stock exchange — Minister entitled to remove commissioner even if had been aware at time of appointment of commissioner's directorship — need for Minister to act fairly and on reasonable grounds

Headnote

The applicant was appointed in 2008 as a commissioner of the Securities Commission of Zimbabwe by the Minister of Finance. In May 2011 the Minister terminated her tenure as commissioner. At the time of her appointment, when asked to declare her assets and business interests, she disclosed that she was a member of the board of a company listed on the Zimbabwe Stock Exchange. One other commissioner was also in the position of holding office in a listed entity. In February 2010 the Commission resolved that there was a potential conflict between the office of commissioner and tenure on the board of a listed entity and told the Minister of its views. The Minister told the two affected commissioners that they should choose between their office as commissioners and their tenure on the boards of listed entities. The applicant refused to comply and said that she would only resign if compensated for the loss of fees for the remaining period of her office on the Commission. The Minister then formed the view that the applicant's office as commissioner was inconsistent with her tenure on the board of the company. He consequently wrote to the Commission directing the applicant and the other commissioner to vacate their office as commissioners. The applicant claimed compensation from the Commission for the remaining term of her office. This claim was declined by the Chairman of the Commission on the ground that the Securities and Exchange Act [Chapter 24:25] did not provide for such compensation.

The applicant argued that the Minister's decision was contrary to s 3(1)(a) of the Administrative Justice Act [Chapter 10:28], in that he failed to act lawfully, reasonably and fairly. The Minister argued that he was entitled to so act in terms of s 10(2)(e) of the Securities Act 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 took the stance that the purpose of disqualifying dual tenure is to ensure transparency and integrity and that there was a conflict interest in the applicant's tenure on the Commission as well as the board of the company because of her access to information through these posts and the fiduciary duties that she owed to both. Such a situation would undermine the purpose of the Securities Act and the integrity and independence of the Commission. In reply, the applicant argued that the provision of the Act relied upon by the Minister only applied to a material change of circumstances that occurs during a commissioner's tenure of office, not to her situation as she was appointed to the Commission after full scrutiny and disclosure of her position on the company's board. Paragraph (e), taken in the context of section 10(2) as a whole, had to be construed prospectively. The provision was concerned with changed circumstances, not a pre-existing situation that had been specifically approved by the Minister. There had been no change in the applicant's circumstances, nor had any actual conflict of interest materialised as envisaged in s 16(5), that entitled the Minister to act as he did.

One of the ancillary issues raised in argument at the hearing of this matter pertained to the full-time versus part-time status of commissioners.

Held, that there was no distinction in s 9 of the Securities Act between part -time and full-time appointments to the Commission. Every commissioner must devote himself 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 this 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.

Held, further, that the Minister was perfectly entitled to invoke s 10(2)(e), which could not be interpreted so as to be confined to changed circumstances. It is a perpetual provision with infinite effect. 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 company board was inconsistent with her duties as a commissioner. The proper exercise of this discretion would not only accord with the intrinsic objects of the 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.

The exercise of his discretion in that regard could not be set aside as having been unlawful. The remaining question was whether or not this discretion was exercised reasonably and fairly.

Held, further, that in deciding 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. 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. The threshold of reasonableness required by s 3(1)(a) of the Administrative Justice Act has not been modified to any degree beyond the parameters of the common law.

Held, further, that the power to remunerate or compensate a commissioner for his remaining tenure on the Commission was not reasonably necessary or incidental to the Minister's power to appoint commissioners and fix their terms and conditions of office under s 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.

Held, further, on the facts, that there was nothing unreasonable or unfair in the Minister's decisions or actions. The court could not interfere simply because it might have arrived at a different decision on the same facts, nor could it usurp the Minister's functions and substitute his opinion and discretion with its own. The applicant had not shown that the Minister was actuated by mala fides or some ulterior motive or that he failed to apply his mind to the matter. In all the circumstances, the decisions impugned by the applicant were not so unreasonable that no reasonable person in the Minister's position would have made them. As to the alleged unfairness of the Minister's actions, he afforded the applicant ample and adequate opportunity to make representations. He fully considered the representations that the applicant did put forward. The only issue that he did not address was the applicant's claim for compensation. However, 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 stood on its own.