Court name
High Court
Case number
PA 90 of 2005

Open Learning Group Namibia Finance CC v Permanent Secretary of the Ministry of Finance and Others (PA 90 of 2005) [2006] NAHC 1 (10 January 2006);

Media neutral citation
[2006] NAHC 1



CASE NO.: (P) A 90/2005




Requirements for valid
administrative action:
non-compliance with procedures prescribed
by law renders action ultra vires and therefore unlawful; to
be valid administrative action must be clear, not ‘vague and

Article 18 of the
considered against the backdrop of claim that public
authority’s decision terminating a contract not ‘administrative
action’ and, therefore, not subject to review because such conduct
‘purely commercial’.

of an ‘administrative act’

CASE NO.: (P) A 90/2005


the matter between:











on: 2005.06.10

on: 2006.01.10


The initial relief sought in this application was an urgent interim
order pending the hearing of a review application, coupled with a
review application in terms of Rule 53 of the Rules of Court.
Although the matter commenced as one of urgency, a modus vivendi
was reached (costs being reserved) between the applicant and the
respondents, and only the review application was set down and argued
before me. Consequently, I here deal only with the review
application. The review application involves the vexed question: in
what circumstances will the contractual arrangements entered into by
a public authority be immune from administrative law review? Mr.
Smuts SC appears for the applicant, while Mr. Louw SC, assisted by
Mr. Boesak, appears for the respondents.

The affidavits

[2] The main affidavit in
support of the review application is deposed to by Theresa de Meillon
who is employed as the financial manager of the applicant. She was so
employed at the time the events giving rise to this application took
place. There are supporting affidavits accompanying hers. The
answering affidavits in opposition to the interim relief are deposed
to by Magdalene Heydenrych (on behalf of the first to third
respondents), and Rachelle Metzler (on behalf of the fourth
respondent). Heydenrych is the deputy director: Accounting and
Financial Control (Department State Accounts) in the Ministry of
Finance, while Metzler is the manager of Micro Lending and Credit
Agreements of the Namibia Financial Institutions Supervisory
Authority (NAMFISA), a creature of statute
She is a subordinate of, and reports to, the fourth respondent.

[3] Both Heydenrych and Metzler
have personal knowledge of the events to which they depose giving
rise to the present application. Their affidavits are also supported
by confirmatory affidavits to the extent they rely on hearsay. The
affidavits of Heydenrych and Metzler are also relied on in opposition
to the review application in so far as they traverse allegations in
support of that review application.

[4] The above set of initial
affidavits is followed by an affidavit deposed to by the first
respondent in opposition to the review application on behalf of all
the respondents. For that purpose the first respondent’s affidavit
incorporates, by reference, the allegations of Heydenrych and Metzler
in the initial set of affidavits referred to in the preceding
paragraph. The first respondent’s affidavit is also supported by
confirmatory affidavits in so far as he relies on hearsay. There is
then a further affidavit deposed to by Quinton van Rooyen whose
purpose is to introduce an additional review ground founded on
alleged impermissible bias on the part of the fourth respondent,
against the applicant. This affidavit is then followed by an
answering one deposed to by the fourth respondent, Frans van

[5] All critical averments by
and on behalf of the parties on which I rely for the conclusions to
which I come, must be taken as either being within the personal
knowledge of the deponents, and if not, as properly confirmed by
confirmatory or supporting affidavits.

[6] A regrettable feature of
this case is that both parties have opened themselves to the
accusation of exaggeration and elaborate ex post facto
in the effort to explain away facts which, in
certain respects, are patently and objectively not in their favour.
In significant respects cold facts are, I regret to say, smothered
with tendentious interpretation whose only object is to fit the
mould. The record runs into some 680 pages and is repetitive and
prolix, a fact evidenced by the length of this judgment. In view of
the significant overlap in the affidavits and in an attempt to avoid
prolixity in this judgment, I have chosen to deal with each party’s
case as a compendium, weaving together, as much as possible, the
allegations by the deponents of each side - instead of summarising
every affidavit in chronological order - save where circumstances
just do not allow that.

The varied aspects of the

[7] The interim relief is no
longer a live issue. Only the issue of costs remains in respect of
it. The main live issue – which is the subject of this judgment -
is the review application aimed at setting aside alleged decisions of
the first and fourth respondents on the review grounds identified in
the affidavit of de Meillon. There is a further review ground
introduced by Quinton van Rooyen alleging impermissible bias. The
case has another aspect to it: an application by the applicant to
compel the production of parts of the record which, it is alleged,
had not been disclosed, but later abandoned in favour of an
application simply to discover specific documents allegedly having a
bearing on the issue of bias. In the view that I take of this matter
overall, I do not deal with the aspects of the case relating to the
alleged impermissible bias, or the allegedly incomplete record or
missing documents.

The Background

[8] On 17 February 2005,
Theresa de Meillon of the applicant wrote a letter to the fourth
respondent in the following terms:

I refer to our
telephonic conversation this morning .We hereby request written proof
of our registration with NAMFISA as a micro-lender. Attached please
find a copy of our registration with the Ministry of Finance-
Financial institutions.”

In reply to this letter, the
applicant received one dated 21 February 2005 from the fourth
respondent in the following terms:


1. Your letter of
17 February 2005 refers. I also refer to your letter dated 23
September 2002 wherein you informed us that Open Learning Group
Namibia Finance CC is not a Microlender. Furthermore, in your
business you “…allow registered students to pay off their study
fees…in the same way as an article bought on Hire Purchase.”

2. We subsequently
confirmed in our letter dated 24 September 2002, that, in view of the
modus operandi of Open Learning Group Namibia Finance CC (OLGN), it
was not regarded as a Micro lender by NAMFISA.

3. We, at the
time, informed you that NAMFISA regarded the operations of OLGN as
credit extension which would be subject to the maximum finance
charges applicable to credit grantors in terms of the then Exemption
Notice No. 135 of 06 August 2002, published in Government Gazette No.
2782 of 06 August 2002.

4. Also, since
OLGN is regarded as a credit grantor in terms of Section 1 of the
Usury Act, 1968 (Act No. 73 of 1968), they have not been charged any
levies as payable by Micro lenders, as they have been deregistered
as a Micro lender with effect from 24 September 2002 based on your

5. It therefore
follows that we cannot issue you with proof of registration with
NAMFISA as a Microlender.

6. We therefore,
advise that OLGN is not regarded as a Microlender in terms of
Section 15(A) of the Usury act, 1968, bust as a credit grantor.

Yours faithfully



(Underlining is mine)

[9] Then on 9 March 2005, the
applicant received a letter from the 1st respondent
stating as follows:

The payroll
deduction facility granted to Open Learning Group of Namibia (OLGN
Finance CC) is hereby revoked as it is not in compliance with our
statutory requirements in this regard. Access to the payroll
will be terminated with effect of the date of this letter – payment
for the month of March 2005 will however still be made as the payroll
has already been processed. APS, service provider for the PDMS has
been informed accordingly.” (my emphasis)

[10] It is these two letters
that have precipitated the present review application.

The following relief is sought
in it:

1. Reviewing
and correcting or setting aside the decision(s) taken by the first
respondent in or about 9th March 2005 to revoke the
applicant’s payroll deduction facility, as is set out in annexure
“D” to the applicant’s founding affidavit.

2. Declaring
the aforesaid decision unconstitutional, and/or null and void.

3. Reviewing
and correcting or setting aside the decision taken by the fourth
respondent conveyed to the applicant on or about 21st
February 2005 to deregister the applicant as a mircolender with
retrospective effect to 24th September 2002, set out in
the fourth respondent’s letter dated 21st February 2005,
annexed as “P” to the applicant’s founding affidavit.

4. Declaring
the aforesaid decision unconstitutional, and/or null and void.

5. Declaring
that the applicant remains a duly registered mircolender.

6. Ordering
that the respondents pay the applicant’s costs jointly and
severally, the one paying, the other to be absolved.

7. Granting
such further and/or alternatively relief as this Honourable Court
deems fit.

[11] The review grounds are
stated as follows in respect of both letters:

In respect of
both the first respondent’s revoking decision ad the fourth
respondent’s decision to “deregister” the applicant as a micro
lender, the grounds for review are as follows:

51.1 the
respective decision-makers acted ultra vires their statutory
powers and their decision-making was accordingly a nullity.

51.2 the
decision-makers failed to:

(a) apply the
audi alteram partem rule;

(b) inform the
applicant of facts which it considered detrimental to its

(c) recognize and
apply the applicant;’ legitimate expectation to procedural

51.3 the
decision-makers failed to understand and appreciate the nature of
their respective statutory powers, discretion and functions vested in

51.4 the

(a) failed to
take relevant considerations into account;

(b) took
irrelevant considerations into account;

(c) failed to
give proper weight to considerations;

(d) failed to
apply substantive fairness;

51.5 the
decision-makers failed to apply their minds properly to the
respective matters;

51.6 the
decision-makers failed to apply the principle of equality provided
for in the Constitution;

51.7 the
decision-makers failed to furnish reasons for their respective

51.8 the
respective decisions were materially influenced by an error of law;

51.9 the decisions
are not rationally connected to the purpose of the empowering
statutory provision (if any);

51.10 the
decisions were taken for reasons not authorized by the empowering
provision or for an improper purpose;

51.11 the action
taken by the respective decision-makers consists in law of a failure
to take a decision;

51.12 the
decision-makers ignored:

(a) Article 18
of the Constitution;

(b) regulation 5
of the regulations referred to above.”

[12] The applicant was
established in 1999 to provide loans (referred to as micro -loans in
the founding papers) to students who pursue distance teaching courses
with Open Learning Group (PTY) Ltd established in 1995.The applicant
and OLG (PTY) Ltd are, together, known as the Open Learning Group
Namibia (OLGN). The students are mostly in fulltime employment and
the dispute relates to those students employed by the third
respondent and therefore on its payroll. To be able to directly
recover the instalments in repayment of the loans given by the
applicant, the applicant applied for and was granted a deduction code
on the third respondent’s payroll so that deductions are made from
the salaries of these government employees by their employer and then
paid over directly to the applicant.

[13] Without the deduction code
facility, applicant would have had to obtain debit orders from those
of its debtors who have bank accounts, or rely on direct payments to
it from those debtors who do not have any bank accounts. For that
reason, the applicant describes the deduction code as an ‘extremely
important asset’ of a business such as the one it carries out. The
applicant further alleges that the importance of the deduction code
it enjoys from the third respondent is highlighted by the fact that
there is at the moment a moratorium placed on such facilities by the
third respondent. This, it alleges, makes a business with a deduction
code one of ‘considerable value’. It was because of this, it
further alleges, that Trustco
bought out one Christiaan Zaayman’s member’s interests in the

[14] It is not in dispute that
the applicant was ‘approved as a registered micro lender’ by the
first respondent on 10 July 2000. In a letter bearing the same date,
the applicant was advised by the first respondent to ‘comply’
(sic) with s 15A of the Usury Act, 73 of 1968 which provides as

The Minister
may from time to time by notice in the gazette exempt the categories
of money lending transactions, credit transactions or leasing
transactions which he may deem fit, from any of or all the provisions
of this Act on such conditions and to such extent as he may deem fit,
and may at any time in like manner revoke or amend any such

[15] On the same date, the
applicant was also issued with a ‘certificate of registration’ by
the first respondent in his then capacity as Registrar of Financial
Institutions in the following terms:

I hereby
certify that OLGN FINANCE CLOSE CORPORATION has been approved in
terms of section 3 of the Conditions determined under the Usury Act
No. 73 of 1968 as amended by section 15A of the Usury act No. 73 of
1968, as a person entitled to carry out such a business of micro
loan transactions and who is registered with the Permanent

(My underlining)

[16] It is common cause that
the fourth respondent had since become the statutory successor to the
first respondent as Registrar (of Financial Institutions) by virtue
of an amendment to s 1 of the Usury Act, 73 of 1968 ( ‘the Usury
Act’ ) in the Schedule to the NAMFISA Act in the following terms:

‘‘ ‘registrar’
means the person appointed in terms of section 5 of the Namibia
Financial Institutions Supervisory Authority Act , 2001, as the chief
executive officer of the Namibia Financial Institutions Authority or
a person appointed by the Minister , subject to the provisions of the
Public Service Act , 1995…’’

[17] On 6 August 2002 , the
second respondent published Notice No.136 in Government Gazette
2786, in terms of s 15A of the Usury Act (hereafter ‘the exemption
notice’) which, in Part 1 (Cancellation of registration as a
microlender), inter alia, provides as follows:

5. (1) Subject
to the provisions of this clause, the Registrar may, by notice in
writing to a microlender,
and from a date specified in the
notice, cancel the microlender’s registration under clause 4 if the

  1. fails to comply
    with any condition imposed by the Registrar in terms of that clause;

  2. ceases to
    conduct the business for which the microlender is registered;

  3. is found guilty
    of an offence under section 14 of the Act;

  1. If the
    Registrar proposes to cancel the registration of a microlender, the
    Registrar must give the microlender written notice of his or her
    intention to cancel the registration.

  2. A notice in terms
    of sub clause (2) must -

(a) specify the
reason for the proposed cancellation
; and

(b) invite the
microlender to submit to the Registrar in writing
, within 30 days
of the date of the notice, any representations which the microlender
may wish to make in relation to the proposed cancellation.” (my

[18] De Meillon alleges that
some time after 6 August 2002, and subsequent to the publishing of
the exemption notice, a meeting was called by Heydenrych,
representing the second respondent, with all the micro lenders. At
this meeting, De Meillon alleges, Heidenrych advised them that all
those using deduction codes on the third respondent’s payroll had
to enter into a formal business agreement with the third respondent.
The microlenders were also informed by Heidenrych that they had to
apply to the fourth respondent for a deduction code as, without such
application, they would not be able to use deduction codes anymore.
The applications were to be screened by the fourth respondent. De
Meillon alleges that she duly applied for a deduction code by
completing the documentation provided for the purpose and delivered
the same to the third respondent, and continued to be allowed by the
second respondent to use the deduction code while the ‘screening’
process was underway.

[19] According to the
applicant, the screening process was only completed in August 2003,
whereupon the applicant was invited to sign the written business
agreement. This agreement was concluded on 22 August 2003. Clause 2
of the Agreement provides, in part, as follows:

The lender
shall apply in writing for a deduction code and submit to the
Ministry the following requirements as attachments:

Registration certificate as a Micro-lender issued by NAMFISA in
terms of section 15A of the Usury Act;

2.1.2 Certificate
issued by NAMFISA that the Micro-lender is in good standing with

2.2 The Lender
further guarantees that all information submitted in 2.1

above are
substantially true and correct and should it in any event no longer
be substantially true and correct , the lender shall inform and
advise the Ministry and NAMFISA thereof within 30 days of such event
taking place.

2.4 Should the
lender be granted a deduction code in terms of this Agreement as
approved lender, Government shall be deemed to have entered into this
agreement with the Lender and the lender shall be bound by the terms

2.6 The Minister
warrants that all the terms and conditions of this Agreement comply
with Treasury instructions and its requirements thereof (sic).”

[21] Clause 2.3 of the
agreement states:

The Lender
[applicant] is required to sign and submit this agreement without
or modification other than for the purposes of
providing details of the Lender and its address as contemplated in
this Agreement.’’

The agreement (in clause 4)
then mentions the creation of a register for deduction codes and then
in clause 4.4 states:

The register
allows the Ministry and NAMFISA
to regulate loan
deductions from the payroll …’’

Clause 8 states:

‘’The Lender
shall develop and invest in a social upliftment program in Namibia
and provide details thereof in an annual report to the Ministry.”

Then it states in clause 9:

The Lender
shall submit itself to the supervision and control of the Ministry
which shall monitor substantial compliance by
the Lender with this agreement”.
Clause 13 states that the
agreement shall remain in force for 4 years, either party having the
right to terminate it by giving 6 months’ written notice.

Clause 10 of the Agreement
deals with breach of contract and provides for circumstances in
which the Ministry of Finance may terminate it in the event of breach
of its terms by the applicant. It has no such specific provision in
favour of the applicant, perhaps understandably.

[22] Clause 12 is the dispute
resolution clause which provides as follows:


12.1 Any issue
arising from the interpretation and implementation of this Agreement
shall be resolved through negotiations between the Parties.

12.2 In the event
of the Parties failing to reach an agreement, the matter shall be
referred for arbitration to a mutually agreed upon arbitrator for
final decision in terms of the Arbitration Act 42 of 1965.”

[23] De Meillon annexes to her
founding affidavit a letter dated 7 January 2002
from NAMFISA to the applicant, from which the following is apparent:

a) Since its registration as
microlender, the applicant failed to pay levies due and payable and
prescribed by law;

b) An extension was granted for
defaulters but applicant still did not pay

c) Interest would be charged on
all late payments.

[24] It is common ground that
in a letter to NAMFISA of 24 February 2003, de Meillon had stated
that the applicant was not a micro lender. The applicant acknowledges
that again on 23 September 2003, de Meillon wrote a letter to NAMFISA
in the following terms:


This letter serves
to inform you that Open Learning Group is not a Micro-Lender. The
that we were allocated by the Ministry of finance was however, issued
as if we were a Micro-lender because they do not have a code for our
type of business.
In our business we allow registered students to
pay off their study fees over a period of twelve (12) months in the
same way as an article bought on Hire Purchase.” (My emphasis)

[25] De Meillon alleges that
she did not receive a reply to this letter and if applicant received
such a letter she would, because of her position, have been aware of
it. De Meillon now alleges in the founding affidavit that:

I have now been
advised and accept however that the contention advanced in this
letter is entirely legally unsound as my argument failed to
conceptualise the different functions of the two entities within the
Group. The essential nature of the applicant, being the financing
entity of the group, is in fact to provide loan financing of a micro
lending nature to students acquiring materials and for their study
fees. It is OLGN (Pty) Ltd that makes the study material available to
the students’.

[26] She then, on behalf of the
applicant, tenders all the outstanding levies due and payable, and
adds that her intention at the time in insisting that the applicant
was not a micro-lender ‘was to avoid payment of levies if at all
possible’. She says she ‘was aware that registration as a micro
lender was vital for the deduction code and certainly would not have
contemplated cancellation of registration of applicant as a micro
lender.’’ De Meillon avers that at the time, NAMFISA never
accepted her contentions that the applicant was not a micro lender,
and says that the fact that NAMFISA wrote the letter dated 7 January
2003 demanding payment of levies, was proof of the fact they still
regarded applicant as a micro lender notwithstanding its assertion
that it was not. The applicant’s case is that the following
additional facts show that NAMFISA regarded applicant as a micro

(a) Applicant was invited by
NAMFISA to a meeting held with the microlending industry on 12
December 2002. This, she alleges, could not be the case if applicant
was deregistered as a micro lender.

(b) Applicant was invited to
and received minutes of a meeting convened by NAMFISA on 8 August
2003 with the microlending industry;

(c) Applicant was invited to
another meeting between NAMFISA and micro lenders held on 12 March

(d) On 4 February 2004 the
fourth respondent sought certain information from applicant qua micro

(e) At some point after the
applicant said it was not a microlender, Metzler conducted an
investigation and came to the conclusion that the applicant is still
a registered microlender, a conclusion she duly recorded on official

(f) In the 2004 Annual report
of NAMFISA the applicant is recorded as a microlender, not as a
credit grantor as now alleged by the fourth respondent.

[27] Besides being regarded by
NAMFISA as a micro lender at all material times, de Meillon says, the
applicant continued to also regard itself as a micro lender. One such
circumstance it gives as proof is the fact that the principal member
of the applicant (Zaayman) sold his entire members’ interest in the
applicant to Trustco, warranting that the applicant was entitled to a
deduction code from the third respondent in terms of the formal
business agreement entered into with the third respondent. She
alleges that TRUSTCO would not have bought the members’ interest
had the applicant not possess a deduction code. (The difficulty for
the applicant here is that it is Zaayman who warranted and not the
applicant. There is no legal identity between the two.)

[28] De Meillon then alleges
that she advised NAMFISA’s Metzler of the acquisition of the
applicant by TRUSTCO and requested to be furnished with proof of
registration as microlender. It was then that the applicant received
the letter from the fourth respondent asserting that applicant was
already deregistered – which letter is the subject of the present
review application. She says that considering that her father
(Zaayman) had warranted to TRUSTCO that the applicant enjoyed the
benefit of a valid deduction code (an assertion which is not
factually correct) , she got worried for her father’s sake and
decided, without reference to the new owner of the applicant, to
apply for a licence. This is what she said in the letter of 1 March
2005 addressed to NAMFISA:

Your letter,
dated 21 February 2005… has reference. Open Learning Group Namibia
is for the first time since registration as a micro lender at the
Ministry of finance in the position to perform as one. From the 1st
of March 2005 our operations can change from the ‘hire purchase
basis, reference from our letter to NAMFISA dated 23rd of
September 2002, to a full micro lending institute
. We want to
register at NAMFISA as a micro lender as from today and be charged
levies payable by Micro lenders. We will appreciate it if NAMFISA
will take our application in consideration and provide us with all
necessary documents and licenses.

Etc, etc.’
(emphasis provided)

[29] De Meillon also annexes to
her papers a letter dated 3 March 2005 and written by Quinton van
Rooyen, the principal of TRUSTCO ( the new owner of the applicant ),
to the first respondent in which he said the following:

Trustco Group
International acquired the total issued membership of OLGN Finance CC
and the total issued shareholding of its sister company Open Learning
Group (Namibia) (Pty) Limited on 16 February 2005. The operations of
the two entities were taken over on 28 February 2005.

We have received
guarantees from the seller, Mr. Christiaan Zaayman that the close
corporation is the beneficial holder of a micro financing payroll
deduction facility from the Ministry of finance. On 25 February 2005
we were put in possession of a letter from NAMFISA indicating that
the close corporation has requested that Namfisa deregister them as a
micro lender and consequently their registration certificate has thus
been withdrawn on their request. It seems that the Ministry of
Finance was uninformed of this fact. The close corporation currently
does not engage in classical consumer micro financing but limits
itself to the granting of study loans to individuals. As new owners
we want to continue with this trend. We request an urgent meeting
with the Ministry of Finance to bring the close corporation in line
with your requirements.

Etc, etc.”

This letter was copied to
Heidenrych of NAMFISA.

[30] De Meillon alleges that
she had not seen the letter of NAMFISA’s Boni Paulino, dated 24
September 2002, until around the 3rd of March 2003. That
letter reads as follows:

We take
cognisance of your advices and agree that the Open Learning Group is
no Micro –lender per se. However, as a group assisting students to
pay off their study fees over a period of twelve months, at an agreed
interest rate, OLGN is subject to the provisions of the Usury Act
1968 … and the Regulations issued by NAMFISA.

It therefore
follows, that the credit extension operations of OLGN should not
exceed the maximum annual finance charges rates …’

[31] The applicant’s case is
that Paulino was incorrect in accepting de Meillon’s contention
that the applicant was not a micro-lender and that, in any event, the
letter does not mention that the applicant is to be ‘deregistered.’
The applicant says that at no stage did it cease to carry on the
business for which it was registered and that de Meillon’s
erroneous contentions in the past indicating the contrary did also
not result in the applicant ceasing to carry on the business of
micro-lender. How she could then in writing say to NAMFISA that the
applicant is not a microlender and that the code they got was because
none existed for their type of business, is not explained.

[32] It is the applicant’s
case further that at no stage did it receive a notice from the fourth
respondent to cancel its registration as required by paragraph 5 (2)
of the exemption notice. Relying on the exemption notice, the
applicant alleges that the fourth respondent did not comply with
paragraphs 5 (1) and (2) of the exemption notice and, therefore,
could not cancel applicant’s registration. The action of fourth
respondent to ‘deregister’ applicant is therefore ultra vires,
de Meillon states.

[33] De Meillon also denies the
allegation by the fourth respondent in his letter of 10 March 2005
that the applicant, through misrepresentation, obtained the deduction
code from the first respondent while it had already been deregistered
on 24 September 2002. De Meilon then states:

The applicant
was at no stage given any hearing of any nature prior to and in
respect of the revoking decision .Considerations detrimental to the
applicant were not disclosed to the applicant prior to the making of
the revoking decision.”

The applicant’s case is that
it was entitled to be heard by the respondents before a decision
adverse to it was taken ; that it is not clear on what statutory
basis the third respondent purported to take the revoking decision;
or what facts the first or other respondents took into consideration
in taking decisions adverse to its interests.

The first to third
respondents’ case

[34] In opposition to the
review application , Heydenrych , who is responsible for the
administration of the third respondent’s payroll deduction
facilities involving about 80 000 public servants, says the Ministry
of Finance is responsible for granting stop order deduction
facilities to financial service providers such as insurance companies
and banks. In return, the Ministry received a commission. That
commission payable by holders of deduction codes is no longer payable
to the Ministry but to an independent third party (APS
specially contracted by the Ministry to administer its deduction
codes through a computer- based system. Heydenrych says that there is
a high demand for deduction codes, caused primarily by the
mushrooming of money lenders. This, she says, resulted in the third
respondent requiring ‘all institutions afforded deduction
facilities to enter into business agreements aimed at formalizing the
granting, administration and termination of such facilities’. The
applicant entered into one such agreement and, in terms of it, one
could only be afforded a deduction facility if that person ‘is
registered and remains registered as a microlender with NAMFISA’.

[35] The first to third
respondents’ case is that the applicant, in terms of the business
agreement, represented and guaranteed that it was registered as a
microlender and in good standing with NAMFISA. Heydenrych says that
she learnt in correspondence
from NAMFISA to the first respondent that the applicant had
previously advised NAMFISA that it is not a micro lender but a credit
grantor and that NAMFISA accepted that contention. She avers she was
shocked by that because those facts were never disclosed to the first
to third respondents by the applicant. She avers that at the time the
applicant entered into the business agreement those facts had already
existed and had the third respondent known of them (I assume through
disclosure by the applicant) ‘it would not have entered into the
business arrangement for the deduction facility with the applicant.’
Heydenrych states that the fact that the applicant, in the business
agreement, guaranteed that it was duly registered and in good
standing with NAMFISA, was therefore a misrepresentation intended to
induce the third respondent to enter into the agreement aforesaid.
She says that it was because of this misrepresentation that the third
respondent terminated the business agreement with applicant in the
letter of 9 March 2005.

[36] What is next testified to
by Heydenrych (paragraphs 5.3 – 5.6) is at the heart of this
matter. In essence what she says is that the third respondent’s
letter of 9 March 2005 revoking the deduction code amounts to the
exercise of a common law right to rescind the agreement entered into
between the parties based on the misrepresentation of the applicant;
the contract entered into between the parties being a ‘purely
commercial’ arrangement beyond the scope of administrative law
review as the third respondent was not acting from a position of
authority when it entered into the agreement, and did not purport to
cancel the contract in the exercise of a public duty, or the
implementation of legislation. For this reason, she says, the relief
sought by the applicant, based as it is on article 18 of the Namibian
constitution, is wholly inappropriate and should instead have been
founded on an action procedure for breach of contract. Article 18 of
the Constitution provides as follows:

bodies and administrative officials shall act fairly and reasonably
and comply with the requirements imposed upon such bodies and
officials by common law and any relevant legislation, and persons
aggrieved by the exercise of such acts and decisions shall have the
right to seek redress before a competent Court or Tribunal.”

[37] On behalf of the first,
second and third respondents it is stated that allowing access to the
third respondent’s payroll by means of a deduction code, is
entirely discretionary and not something it is by law compelled to
do; and that it is done in pursuit of a commercial activity by the
third respondent – and that rights and obligations of the parties
are governed by the terms of the business agreement. How a deduction
code which could be terminated for valid commercial reasons could be
central to applicant’s business, the respondents say, is
particularly ‘unfathomable’ and only shows that it is a business
fraught with risk. The respondents also say that the deduction code
is not the only means by which applicant could recover its loans from
the debtors.

[38] The respondents deny that
the alleged meeting with microlenders to which the applicant was
allegedly invited took place at all, or that the matters applicant
says were discussed there, were indeed discussed.

[39] The respondents also
attach a letter dated 15 July 2002 to microlenders amending the
initial conditions of the approval given for the use of the payroll
deduction facility to the applicant. The applicant received one. This
letter is instructive in that it unilaterally changes the conditions
under which the deduction code is given and carries the heading

1. The Ministry
has concluded its investigation into the existing deductions
facilities on our payroll on both registered and unregistered micro
lenders as well as new applicants and established that:

1.1 The current
payroll system, as administered by the Ministry of Finance was
implemented in 1976. The payroll is currently running at maximum
capacity and faces severe constraints with regard to the number of
employees and total number of deductions that it can be process
efficiently. (Total of 360 000 transactions are being processed
monthly for 80 000 officials.)

1.2 Lack of proper
appraisal of lenders resulted in over commitment of staff to debt and
ultimately in zero salaries.

1.3 The above
calls for urgent measures to be taken in order to protect the
payroll systems’ integrity and capabilities.

2. The
conditions attached to your deduction code has therefore been amended
as follows:

2.1 Payment of
commission/administration costs of N$13.00 per person, per
transaction, per month;

2.2 Submission
of quarterly and annual reports;

2.3 Limitation
of number of transactions to 1 200 per month.

3. The
abovementioned facility may continue for a period of one year.

4. Notice has also
been given to all new applications that the ministry will not be able
to approve more/new deduction code facilities and you are therefore
requested to adhere to the set conditions as Treasury will enforce
strict control over the existing deduction code holders.



(emphasis supplied)

[40] First to third respondents
aver that all existing deductions code holders (including the
applicant) were automatically granted access to the third
respondent’s computer –based deduction code facility on condition
that they conclude written agreements with the fourth respondent and
that they were not required to submit a new application with the
Ministry of Finance for the grant of deduction codes.( There is no
explanation what would have happened if existing deduction code
holders refused to sign the agreement , although from the averments
in the passage quoted below it is clear that the codes would not
have been extended in that event.) The respondents also deny that
there was any screening process conducted before the introduction of
the formal business agreement. Heydenrych then says:

12.10 I must
emphasize that at no stage prior to, during, or after the
implementation of the PDMS was there an interruption in deduction
facilities availed to the applicant. Applicant and others who had
pre-existing deduction facilities were in a privileged position, and
were not in a danger of losing such facilities due to the changes
brought about by the PDMS, subject thereto that they had to
conclude a business agreement
with the third respondent.” (My

[41] The respondents deny that
the applicant at all times continued to regard itself as a registered
microlender. As regards the reference to “statutory requirements”
in the revoking letter of 9 March 2005, the respondents say that the
reference to “statutory” is erroneous and should have been a
reference to “contractual” requirements as no such statute
exists and that the State Finance Act
does not have any provision with direct bearing on this type of
contract. (I pause here to mention that I understand this averment to
mean that the business agreement is not executed on the authority of
any law.)

[42] As regards the failure to
afford an opportunity to the applicant to be heard before the alleged
deregistration, the respondents say, in effect, that it was not
necessary as fourth respondent only did that which applicant had
asked for.

[43] The respondents say that
the applicant obtained the deduction code on the basis that it was a
microlender, and guaranteed (in the business agreement) it was a
microlender registered as such with NAMFISA; but considering the
applicant repeatedly informed the fourth respondent it was not, the
respondents say that the third respondent entered into the agreement
with applicant (for a deduction code) due to a misrepresentation and
fourth respondent was entitled to terminate it for that reason. Since
the agreement was terminated in the exercise of a right deriving from
contract, the respondents say, the applicant could not be afforded a
right to be heard.

[44] The respondents say that
the applicant failed to make use of the dispute resolution mechanism
provided for in the agreement entered into between the parties -
which document they say should govern the relationship between the
parties and the operation of the deduction code.

The fourth respondent’s

[45] An affidavit on behalf of
the fourth respondent is deposed to by Rachel Metzler. She was
closely associated with the present matter from inception. She says
that the applicant is a “financial intuition” as contemplated in
s 3 of the NAMFISA Act read with the Usury Act. The applicant
therefore falls for regulation by NAMFISA.

[46] Metzler explains the
interaction between the NAMFISA Act and the Usury Act and submits

a) the Minister had duly
exempted certain money transactions from some of the provisions of
the Usury Act in terms of the exemption notice ;

b) the exemption notice defines
a micro loan transaction and exempts it from the provisions of the
Usury Act on condition the person advancing the loan is registered as
a micro lender with the Registrar and at all times complies with the
exemption notice; and that should a micro lender no longer comply
with the exemption notice, its money lending business would no longer
be exempted from the provisions of the Usury Act. (The respondents’
case being that by declaring it was not a microlender, the applicant
voluntarily brought itself under the regime of the Usury Act
and ceased being a microlender.)

c) the benefit of conducting a
micro loans business under the exemption notice is that a higher
finance charge rate applies;

d) registration as a micro
lender is not compulsory or compellable under law and is voluntary
and a micro lender not complying with the exemption notice is subject
instead to the provisions of the Usury Act.

[47] Apart from these legal
consequences, Metzler says, registration as a micro lender is also
advantageous from a business perspective as one could enter into a
business agreement with the Ministry of Finance for a deduction

She says that the registration
as a micro lender is a pre-condition for access to a deduction
facility, in terms of the agreement entered into between the third
respondent and the applicant on 22 August 2003. She also says that
the Registrar, in the performance of his powers and responsibilities
under the Usury Act, acts as an administrative official and that his
decisions are therefore subject to review.

[48] Metzler says that the
applicant’s assertions that it was not a microlender meant that the
applicant was never a micro lender and did not operate as such. She
then makes the following assertion:

8.3 The
applicant thereby informed Namfisa that it never was a micro lender
and that it did not operate as such, notwithstanding that the
applicant was registered as a micro lender already in 2000.”

[49] Metzler then says that the
procedure provided for in paragraph 5 of the exemption notice for
cancelling the registration of a registered microlender, does not
apply to an entity which requests the Registrar to cancel its
registration as microlender on the basis that it is not a microlender
since inception; and that the fact that on 27 July 2000 applicant
obtained a deduction code from the Ministry of Finance, was unknown

[50] Metzler also asserts that
because of the teething problems attendant upon NAMFISA taking over
in 2001 the responsibility of supervising financial institutions,
‘the database did not flag microlenders not registered anymore,
with the result that communication has been directed to them where it
concerned the entire micro lending industry.’ She offers this as
the reason why the applicant remained on the database of registered
microlenders after cancellation of such registration by NAMFISA at
applicant’s request in September 2002. Metzler also explains this
as the reason why applicant received pro forma letters
intended for microlenders. This, she says, also explains the
invitations to the applicant to attend the meetings called with the
microlending industry. Metzler denies NAMFISA treated the applicant
as a microlender after it stated that it was not one.

[51] Metzler says that after
the applicant’s second letter saying that it was not a microlender;
the fourth respondent never required the applicant to pay statutory
levies. It was for this reason that the fourth respondent never
issued summons for arrear levies as he was entitled and empowered to
do under the NAMFISA Act
She also denies the applicant continued to consider itself as a
microlender after saying it was not.

[52] The first respondent
(Calle Schleitwein) as the incumbent Permanent Secretary of the
Ministry Finance deposes to an answering affidavit in opposition to
the review application. He seeks to deal with the merits of the
review application and describes his affidavit as the ‘formal’
answer on behalf of all the respondents and incorporates, by
reference, the contents of the affidavits deposed to by Heidenrych
and Metzler in opposition to the urgent interim relief.

[53] Schlettwein says it is
“irregular” for the respondents to continue to avail a deduction
code to the applicant in view of the applicant having forfeited the
status of microlender. He in ,essence, repeats the argument that
the decision to revoke the deduction code is not an ‘administrative
act’ and that the prior decision deregistering the applicant only
gave effect to the wishes of the applicant and that the fourth
respondent therefore did not take an administrative decision.

[54] Schlettwein confirms what
is deposed to by Heidenrych and Metzler on the merits of the review
application. He says that initially the Treasury Instructions applied
by the Ministry of Finance did not allow for any deduction facility
to be granted to micro lenders, but that this position changed and
that a new dispensation was introduced, through the amendment of
Treasury instructions, whereby formal contracts could be entered into
between the Ministry and different financial service providers for
the granting of deduction code facilities. This appears to be in
conflict with the respondent’s version as summarised in paragraph
41 above.

[55] Schlettwein says that
Treasury Instructions are not legislative instruments but a mere
recordal of the internal workings of Treasury. He says that the
Treasury Instructions do not create rights and obligations between
the Government and an outside party. In so far as they relate to the
payment of salaries by the Government, he says, Treasury Instructions
form part of the employment relationship between the Government, as
employer, and its employees, and do not operate for the benefit of
third parties such as the applicant.

[56] Schlettwein says that
NAMFISA’s database shows applicant as a credit agreement company
and not a microlender, although the internal administrative system of
NAMFISA failed to have the applicant removed from the database as a
microlender after deregistration.

[57] To buttress the case that
the applicant was not only deregistered as a microlender but was also
not treated as one, Schlettwein adds that NAMFISA did not require
applicant to submit prescribed returns as a microlender; did not
require the applicant to pay prescribed levies and did not subject
applicant to routine inspections to vet its contracts with customers;
all, he says, proving that applicant was never regarded as a
microlender by the fourth respondent after it said so itself.

[58] Schlettwein also makes the
point that the fact de Meillon on 1st March 2005 (after being told
that the applicant had been deregistered) wrote to apply for the
status of microlender is proof positive that she accepted the
applicant was not a microlender. He also says that the letter of 3rd
March 2005 by Quinton van Rooyen to the Ministry also confirms he
accepted that the applicant was not a microlender. He says that he
revoked the deduction code enjoyed by the applicant because of the
applicant’s misrepresentation which vitiated the consensus between
the Ministry and the applicant. The agreement was void because of the
misrepresentation and the deduction code fell away.

[59] Schlettwein says that the
applicant is not a microlender for another reason- and that is
because it engages in credit transactions and not in money
lending transactions
as defined in Item 1 of the exemption
notice. As a credit grantor, applicant could not be registered by
NAMFISA as it would not benefit from the exemption notice and was
instead subject to the Usury Act regime. He continues that the
business of applicant is in the nature of a credit transaction
as defined in s 1 of the Usury Act, as no cash is paid to the client
by the applicant or to any one: applicant only collects debts of the
company and does not extend loans. Schlettwein also adds that the
applicant did not levy interest at a microlenders’ rate. He also
says that the reference by NAMFISA to applicant as microlender in its
2004 annual report was done in error.

[60] Schlettwein denies that
applicant ever submitted documents to NAMFISA for screening or that
the Ministry ever requested a screening process and specifically
denies a screening process took place before the applicant was made
to sign the business agreement.

[61] De Meillon deposed to a
further affidavit to deal with the answering affidavit of
Schlettwein, and in it she says that the Treasury Instructions are a
form of subordinate legislation. She says that the business agreement
is derived from statute, being the State Finance Act; ss 23 and 24 of
which are specifically referred to in the business agreement in
Clause 1.1.4. De Meillon persists that the Treasury Instructions
create rights and obligations between the third respondent and third
parties such as applicant.

[62] De Meillon says that it is
clear from the affidavit of Schlettwein that Heidenrych, by her own
admission, investigated the issue of whether or not applicant was a
microlender following a meeting of 19 April 2002, and concluded that
applicant was still a micro lender. She adds that the admitted
amendment of Treasury Instructions- to facilitate deduction codes -
points to them being of a legislative character.

[63] Van Rensburg, in so far as
it is relevant to the review application, denies that he took any
administrative decision concerning the applicant which is reviewable,
and relies on the same grounds advanced by the other deponents on
behalf of the respondents.

[64] De Meillon deposes to a
Replying Affidavit dealing with Schlettwein’s affidavit. In it she
takes the view that the first respondent cannot now, in the answering
affidavit, change the basis for the decision-making by saying that
the decision to revoke the deduction code was founded in contract,
when , previously, it was said to be founded on statutory authority
and says that shift in stance justifies the grant of the relief

[65] De Meillon avers that the
allegation in the founding papers that in saying that the applicant
was not a microlender she failed to conceptualise the different
functions of the entities within OLGN Group, is not denied by the
respondents and that the fourth respondent himself, as recently as
March 2005, confused the different entities in OLGN, as exemplified
by his reference to the applicant as Open Learning Group Namibia CC
(something which does not exist) and the applicant as a ‘company’
when it is in fact a close corporation. She goes on to say that the
fourth respondent misled the third respondent by letter of 21st
February 2005 which resulted in the revoking letter of 9 March 2005.

[66] Applicant submits that
Article 18 of the Constitution applies to the decision-making
regarding the deduction code; that the applicant had no choice in the
wording of the agreement of 22 August 2003; that the cancellation of
the agreement cannot affect vested rights, and that even if the
agreement were cancelled, applicant would be able to continue to use
the deduction code in respect of the agreement pre-dating the
business agreement. Applicant also maintains that the terms of the
agreement of 22 August 2003 were prescribed by the third respondent
unilaterally, implying an unequal if coercive relationship.

[67] De Meillon also says that
any representation made to second and third respondents in relation
to the applicant being in good standing with NAMFISA, was made by the
fourth respondent after completing the screening process, as fourth
respondent submitted the document to second and third respondents and
assured the second respondent that applicant complied with the
requirements in order to enter into the business agreement. Applicant
therefore denies that it made any representation to the third
respondent which could be said to have resulted in being false and
therefore necessitating, on the part of the first respondent, the
revocation of the deduction code.

[68] De Meillon also says that
the admission by the respondents that the reference to ‘statutory’
in the letter of 09 March 2005 is erroneous, should result in it
being reviewed as there is in that letter no reference to
cancellation of an agreement or to any misrepresentation on
applicant’s part.

[69] As for the allegation that
the applicant should have relied on the dispute resolution clause in
the business agreement after the deduction code was revoked,
applicant says that nothing prevents the Court from reviewing the
decision revoking the deduction code pending the arbitration
proceedings provided for under the agreement.

[70] De Meillon persists that
applicant never submitted a certificate of good standing with NAMFISA
to the first respondent, and that the allegation that the applicant
did so is based on hearsay and liable to be struck.

[71] Applicant maintains that
the fourth respondent failed to show who in fact (and when) took the
decision to deregister the applicant and that that is fatal to the
case of the respondents that the applicant was ever deregistered.

[72] None of the parties
applied for the hearing of oral evidence to resolve any disputes on
the facts. Therefore, where genuine disputes of fact exist they have
to be resolved on the basis of the facts set out by the applicant
which are not (or cannot be) disputed. The facts set out by the
respondents must be accepted, unless they are so far-fetched that
they can be rejected on the papers.

The deregistration (or
cancellation of registration as microlender)

[73] This aspect of the case
can be easily disposed off. The respondents take the attitude that
the applicant ceased being a microlender - it would appear when
Paulino (of the fourth respondent) in his letter of 24 September
2002, in response to the assertion by de Meillon that the applicant
was not a microlender, agreed that ‘’ Open learning Group is
no Micro-lender per se. However, as a group assisting students to pay
off their study fees …at an agreed interest rate, OLGN is subject
to the provisions of the Usury Act 1968… and the Regulations issued
by NAMFISA. It therefore follows, that the credit extension
operations of OLGN should not exceed the maximum annual finance
charges rates…’’

[74] The respondents say that
the fourth respondent, in so doing, only gave effect to the wishes of
the applicant and took no decision that could be reviewed. In the
written heads of argument Mr Louw, for the respondents, pursues this
line of reasoning in the following way:

was no administrative act taken…a fact was merely recorded. The
recordal of a fact is not the making of a decision…’’

(Vide paragraph 71 of the heads of argument.) Earlier on (vide
paragraph 37 of the same heads of argument) Mr Louw argues: “In
so far as NAMFISA is concerned, the essential case of the respondents
is that NAMFISA did not take an administrative step when it
the applicant. All it did was to comply with a
special request of the applicant’’.
To say that no
administrative step was taken, while at the same time conceding that
fourth respondent ‘deregistered’ the applicant is a contradiction
in terms. Besides, fourth respondent’s letter of 24 September 2005
states in relevant part:

Also , since
OLGN is regarded as a credit grantor in terms of section 1 of the
Usury act …they have not been charged any levies as payable by
micro lenders, as they have been deregistered as a micro lender
with effect from 24 September 2002,
based on your advice”.
(Emphasis supplied)

[75] This is repeated in fourth
respondent’s letter of 10 March 2005 to applicant where it is said,
inter alia,

Also, in support of your application to the Ministry of finance, you
used the defunct licence …dated 10 July 2000. That approval was
revoked on 24 September 2002 when OLGN was deregistered as a
(emphasis supplied)

How, in the light of all this,
Mr. Louw can persist that the fourth respondent did not ‘deregister’
the applicant, is beyond me. I am satisfied that the applicant made
out a case that a decision was taken by the fourth respondent
‘deregistering’ it as a microlender.

[76] The applicant had been
properly registered as a microlender on 10 July 2000. Could that
status be forfeited in the manner suggested by the respondents? I
think not. Mr Smuts for the applicant submits, and I agree, that the
statutory scheme provides for a very specific procedure according to
which a registered microlender may lose that status: vide paragraph 5
of the exemption notice. It is common ground that the fourth
respondent never followed that procedure. The fourth respondent takes
the view (as do the other respondents) that it was not necessary.
They are wrong. The applicant remains a duly registered microlender.
It can only lose that status on the grounds and in terms of the
procedure laid down in paragraph 5 of the exemption notice. Paragraph
5 is couched in peremptory terms and I see nothing in the exemption
notice, or the NAMFISA Act, that it must not have that effect.
Besides, it is not the respondents’ case that there has been
substantial compliance with it. On the contrary, they admit a total
failure to follow the cancellation procedure. A decision or action
will generally be ultra vires if there has been a failure to
observe a mandatory procedural requirement. In Fredericks v
Stellenbosch Divisional Council
1977 (3) SA 113, officials
demolished dwellings of squatters without giving the requisite notice
and their action was held to be unlawful. By parity of reasoning, a
‘deregistration’ or (to use the phraseology of the exemption
notice) cancelling the registration of a microlender without
complying with the provisions of paragraph 5 of the exemption notice,
is ultra vires.

[77] It is common ground that
the applicant did not meet its obligations as microlender, and
successfully evaded the financial consequences of being a microlender
while seeking to retain the benefits of it, by saying that it was
something other than what, in law, it was. I have to accept that the
fourth respondent and NAMFISA advised the applicant that they
accepted that the applicant was not a microlender. The question,
however, is did that have the result that the respondents contend
for, i.e. that in law the applicant ceased to be a microlender? For
the reasons set out above, the answer must be in the negative.

[78] I am satisfied that the
applicant had made itself guilty of conduct which could, subject to
the fourth respondent complying with the clear terms of paragraph 5
of the exemption notice, have resulted in the applicant being
stripped of its status as a microlender, for, by de Meillon’s own
admission, applicant was acting in fraudem legis in avoiding
paying levies it was obliged to pay as a microlender. (Conduct is in
fraudem legis when it is ‘designedly disguised so as to
escape the provisions of the law’: Dadoo Ltd and Others v
Krugersdorp Municipal Council 1920 AD 530 at 548.)
However, the
fact that the applicant professed that it is not in fact a
microlender does not alter the position that it remained one in the
eyes of the law.

[79] Until its registration as
microlender ceased in the way prescribed by law, the applicant was a
microlender and the fourth respondent could still have exacted due
compliance (by the applicant) with all the obligations flowing from
that status. If the reasoning of the respondents is carried through
to its logical conclusion , i.e. that the mere assertion that the
applicant is not a microlender made them lose that status without the
need for cancellation of registration, they could- by a mere say so-
avoid the obligations the law imposes on them. A Court of law
accepting such reasoning is dangerous as it may set a precedent to be
invoked by others wishing to avoid onerous obligations imposed by law
as a consequence of assuming a certain status, through registration,
by merely saying they are not what they were originally registered

[80] The fourth respondent is
therefore not entitled to act as if the applicant is not a
microlender; and to the extent he or his subordinates took decisions
to denude applicant of that status, they acted ultra vires
their powers. The only way they can and could achieve that result is
by following the procedure provided for in paragraph 5 of the
exemption notice for which there is, prima facie, a very
strong case and a proper basis in law. I cannot agree with Mr Louw
for the respondents that the fourth respondent only gave effect to
the wishes of the applicant and for that reason the decision should
not be reviewed or set aside. That would render paragraph 5 of the
exemption notice a dead letter and of no consequence. The relief
directed at the review and setting aside of the fourth respondent’s
conduct exemplified in its letter of 24 September 2003, 21 February
2005 and 10 March 2005 must therefore succeed. This finding and
conclusion make it unnecessary for me to resolve the monumental
differences that have arisen on whether the fourth respondent at all
events treated applicant as a microlender in spite of it saying it
was not one.

The revocation of the
deduction code

[81] The next issue I must
resolve is the decision of the first respondent to revoke the
deduction code granted to the applicant. Central to the respondent’s
case in opposition to the challenge to the revocation of the
deduction code, is the argument that the revocation was merely an
exercise of a common law right to terminate a contract on account of
a misrepresentation by the applicant.

[82] My conclusion that the
applicant throughout remained a microlender must affect the
respondents’ stance that the revoking letter of 9 March 2005 was
necessitated by the misrepresentation of the applicant. The applicant
remained a duly registered micro lender and there could have been no
misrepresentation of that fact.

[83] I apprehend though that
that is not the end of the matter, as the second limb to the
respondents’ argument appears to be that even if there was no
proper basis, under the agreement, to terminate the deduction code,
the proper way for the applicant to proceed was by way of action for
breach of contract; for, the argument goes, the relationship under
which the deduction code exists is one of a purely commercial nature
and not in the exercise of a public duty or implementation of
legislation. Before I deal with this argument, I first need to
dispose off one matter on which there is a dispute.

The reference to ‘statutory
requirements’ in letter of 9 March 2005 (the revoking letter)

[84] In the case at bar, the
first respondent maintains that he terminated the business agreement
concluded with the applicant because of a misrepresentation. As must
by now be obvious, the revoking letter points to non-compliance with
statutory requirements as the reason for the withdrawal of the
deduction code. The first respondent now maintains that is wrong as
he had in mind (or should have referred to) applicant’s
non-compliance with ‘contractual’ requirements. He maintains that
he is a layman and made a mistake. I find this difficult to accept.
This version is far-fetched and stands to be rejected on the papers
for the following reasons: the respondents’ case is that the
business agreement was a major shift in redefining the relationship
between the third respondent and microlenders in how their
relationship concerning deduction codes was to be dealt with
thenceforth. If I understand the respondents’ case properly, the
deduction code now exists only under and by virtue of the business
agreement. Legislation has nothing to do with it. Could the first
respondent, in circumstances where the agreement assumed such a
central place, have made a mistake about whether he purported to act
in reliance thereon or in the exercise of a public power? I think

[85] I accept the first
respondent is a layman in the sense he is not a lawyer, but he is no
ordinary layman: he is the administrative head of perhaps the most
technical and complex department of state - the ministry of finance -
administering a myriad of very technical and complex legislation and
international instruments in, especially, matters fiscal. Did he
really not know the difference between when to refer to a contract
and when to refer to a statute? Again I think not.

[86] Besides, the first
respondent had at his disposal and for the asking, legal advice from
the office of the government attorney on the proper thing to do in
the situation. Assuming he would always act as the diligens
paterfamilias would do in such a situation, I must assume that
if he needed legal counsel before acting in the way he did because he
thought the matter involved a legal difficulty, he would have done
so. Since he did not seek such legal advice at the time he took the
revoking decision, it means he considered his position and concluded
he did not require such advice. In those circumstances, I cannot
accept that the first respondent was in error or inadvertently
referred to ‘statutory requirements’ because he is a layman.

[87] I am accordingly compelled
to reject the first respondent’s version that in revoking the
deduction code he relied on private law remedies. Having, as he did,
relied on statute or a public power for his action, and to the extent
that he did not identify the relevant statutory provision and the
respects in which the deduction code was not in compliance therewith
and who was to blame for that, he was acting unreasonably. (The
revoking letter states that the deduction code is not in compliance
with statutory requirements: there is no mention in it of any breach
on the part of the applicant of any statute or condition under which
it was granted.) What exactly the fourth respondent was doing is
therefore unclear if one accepts, as I do, that there was no
misstatement by the applicant in respect of its status as a

[88] Administrative action must
be clear in order to be valid, and the action of the fourth
respondent fails the test of clarity as it is ‘vague’ and
‘uncertain’ (See: Lawrence Baxter Administrative Law (1984)
p 531, and the authorities there collected.)

[89] In revoking the deduction
code the first respondent was also acting in clear breach of the most
basic tenet of the law that a person must be given an opportunity to
be heard (audi alteram partem) and to be informed of
considerations adverse to them before any decision affecting them is
taken. The principle is so trite as not to require any authority.

[90] It is common cause that
the applicant was not afforded the opportunity to be heard before the
deduction code was revoked. Mr Louw for the respondents conceded in
argument that once I find that the decision revoking the deduction
code amounts to administrative action that would be the end of the
matter as there was no compliance with the audi rule. I agree.
On that ground alone this Court can set the decision aside without
considering the other review grounds relied upon by the applicant.
Therefore, unless the first respondent satisfies me that there are
other reasons why the decision should not be set aside in spite of
this, it must give way.

[91] Mr Louw’s fallback
position is that the revoking decision is not an ‘administrative
act’ as it arose in consequence of a ‘purely commercial’
arrangement between the third respondent and the applicant. He argues
that the Treasury Instructions make provision for an employee of the
third respondent to request an accounting officer, through a stop
order facility, to deduct monthly amounts from such employee’s
salary and pay to a specified beneficiary, such as a creditor. That
the third respondent as employer does so at the direction of the
employee and not a third party such as the applicant. That the third
respondent retains the right to determine in what circumstances it
will deduct amounts from the salary of the employee for payment to
third parties such as applicant; and that the employee has no right
to claim that deductions be made and paid over to third parties. That
there is no statutory provision (the proper submission should be that
there is no statutory compulsion) for the third respondent to pay the
remuneration of employees to third parties. That there is no law
enjoining the state to bind itself to third parties to pay over the
salaries of employees to such third parties; and that everything is
triggered by a contractual agreement between the fourth respondent
and the employee in terms of which the employee mandates the third
respondent to pay specified amounts to third parties such as the
applicant, but that this does not mean a contract comes into
existence between the third respondent and the third party.

[92] Mr. Louw then submits as

The business
agreement would merely facilitate the flow of funds from the state as
employer to the beneficiary of the employee. I is a mere systems
agreement and does not create any rights on the part of the
microlender to claim that any specific amount be paid over by the
employer to the micro lender. The employee must always first
authorise the deduction.’’

He submits further that:

The benefit
which accrues to the micro lender through the agreement is that it
obtains payment of the debt owing to it by the employee from the
employer. The quid pro quo the State receives is that the whole of
the deduction system relating to micro lenders is taken up by Avril
and the micro lenders pay Avril for the service.

The payroll
deduction facility is not a function of government , is not a feature
of government , is not something that government procures for itself
, does not concern a governmental function but is merely a side
benefit , triggered by the employee requesting the employer to pay
over a part of the monies the employer owes to a third party.’’

Elsewhere Mr Louw argues:

relationships between the Ministry and APS on the one hand and
between the Ministry and the micro lenders on the other, are purely
contractual in nature. No micro lender has any right to demand and to
be granted deduction codes by the Ministry’’.

[93] I do not understand Mr.
Louw to be submitting that the granting of deduction codes by the
third respondent is not sanctioned by law. I think Mr Louw’s point
rather is that third parties such as the applicant have no right to
demand a deduction code in virtue of a right given by statute. For
present purposes I will accept that proposition to be legally sound.
The granting of deduction codes therefore seems to me to be some kind
of ‘benefit’ or ‘concession’ (and I use the terms advisedly
in the sense of denoting a precarious advantage) granted to financial
service providers by the third respondent at the behest of its
employees. That said, subject to the rider that it is not contrary to
any existing law, or is not contra boni mores, the absence of
a statutory provision requiring the grant of a benefit by a public
authority does not make such grant any less an exercise of a public
which is subject to judicial review.

[94] It cannot be correct that
just because a benefit or concession granted by a public authority is
not prescribed by statute, a public authority can act capriciously
and whimsically in respect of it. Where a public authority so acts
as to create or bestow a benefit or concession- in circumstances
where it is under no statutory duty to do so - those enjoying such
benefit acquire a legitimate expectation to be heard before any
action adverse to the enjoyment of that benefit is taken. Put simply,
the public authority granting the benefit must respect the dictates
of the constitution; it must act fairly and reasonably. The reason is
simple: relying on such benefit the grantee may organise his or her
affairs in reliance on such benefit or concession – affairs which
may be negatively affected by a summary withdrawal of the benefit or
concession. That, in casu, the applicant, relying on the
benefit of the deduction code, organised its affairs to its financial
advantage - and that a potential disruption would ensue in the wake
of its withdrawal - is amply demonstrated on the papers. As is clear
from the agreement, the applicant is also required to invest
resources in a ‘social upliftment programme’. It therefore
assumed a financial risk in entering into the agreement. The
applicant therefore had a legitimate expectation to be heard,
assuming the withdrawal of the code constitutes administrative

[95] I still need, therefore,
to consider whether the revoking decision is an ‘administrative
act’. In casu that inquiry necessarily involves considering
whether our law recognises, in the sphere of the actions of
government, the ‘purely commercial decision’ versus
‘administrative decision’ dichotomy. I am not aware of any post
1990 Namibian decision, and none has been cited to me, which deals
with this issue. The constitution does not deal with the issue in
those specific terms either. I have already quoted article 18 of the
constitution which requires that administrative officials shall act
fairly and reasonably. I need to mention at the outset that the
constitution does not mention the nature of the action in relation to
which the administrative officials must act fairly and reasonably.
What it requires is that when administrative officials act as such,
i.e. as administrative officials, they must act fairly and

[96] No doubt, the common law
informs, but does not limit, the exact scope of article 18. That much
is now settled: See The Chairperson of the Immigration Selection
Board v Frank and Another
2001 NR 107(SC) at 170, and Government
of the Republic of Namibia v Sikunda
2002 NR 203 (SC) at 226 -29.
In context, Mr Louw’s submission amounts to this: in concluding
the business agreement granting the deduction code and later revoking
it, the first respondent was not acting as an administrative
and must be deemed to have been acting as a private
person. It postulates that where the State enters into contract, not
acting from a position of authority, unequal bargaining position, or
in furtherance of, compliance with or implementations of legislation,
it is not taking ‘administrative action’ , if in relation to
that contract , it chooses to act in a procedurally unfair manner vis
a vis the other contracting party. In other words, the State enjoys
absolute freedom to contract and act as would private contractants
and not be subject to a public duty to proceed fairly and reasonably.

[97] I propose, first, to
survey comparative jurisprudence from selected jurisdictions with
written constitutions containing a bill of rights such as our own.


[98] In Australia, in addition
to federal legislation, i.e. Administrative Decisions (Judicial
Review Act)
Act 1977 (Cmwlth), the various states of Australia
have specific legislation providing for ‘judicial review' by the
courts of administrative decisions of public bodies and officials. In
a long line of cases, the courts in Australia have held that the
actions of government agencies governed by contract, entered into
with persons who then have cause to complain about those actions,
must be impugned in pursuit of private law remedies – not by means
of judicial review.

[99] In Australian National
University v Burns (1982) 43 ALR 25
the Court was called upon to
decide whether a decision of a statutory body to dismiss an employee
was a decision made ‘under an enactment’ such as was contemplated
by the Administrative Justice Review Act, when there was a
contract between the University and the employee and the University
relied thereon in dismissing the employee. Bowen CJ and Lockhart J
held (at 31-32):

In one sense
every decision of the Council may be said to be made ‘under’ the
University Act namely, in the sense of in pursuance of or under its
authority. Section 23 is, in effect, the charter of the Council. It
confers the widest powers upon the Council including the power of
appointing professors and other University staff.

Although s 23
confers no power in express terms to remove or suspend professors and
others, such power arises from the more general powers conferred by
the section on the Council after the express reference to the powers
of appointment. In our opinion the control and management of the
affairs of the appellant must include the suspension or removal of
its deans, professors and others.

that s 23 was the source of the Council’s power to appoint and
dismiss the respondent in 1966, it does not follow that the decision
to dismiss him was made under the University Act. It was not a
decision to dismiss the respondent simpliciter. It was a
decision to dismiss him on a particular ground namely, that he had
become permanently incapacitated from performing the duties of his
office. This was one of the grounds expressly provided for in
condition 2(b) (ii) of the conditions of appointment which formed
part of the respondent’s contract of engagement. The University act
prescribes no essential procedural requirements to be observed before
a professor is dismissed and lays down no incidents of a professor’s

In our opinion the
rights and duties of the parties to the contract of engagement were
derived under the contract and not under the University Act. Section
23 empowered the Council to enter into the contract on behalf of the
appellant. Even if the Council , in considering the position of the
appellant under the contract , might be said to be acting under s 23,
the effective decision for dismissal taken and notified to the
respondent was directly under the contract’’.

[100] Therefore, “a
grant of authority to make contracts and employ staff does not mean
that when a staff member is dismissed for breach of contract the
statute under which the employer is operating has played a relevant
part in the legal force or effect of the decision’’
, per
Gleeson CJ in Griffith University v Tang [2005] HCA 7, para
18. In the Griffith University case, Gleeson CJ further said
(in Para 81): ‘’ If the
decision derives its capacity to bind from contract or some other
private law source, then the decision is not ‘’ made under ‘’
an enactment ‘’;
and, in paragraph 82, the learned Chief
Justice said: ‘’… a
statutory grant of a bare capacity to contract does not suffice to
endow subsequent contracts with the character of having been made
under that enactment


[101] In Douglas College v
Douglas / Kwantlen Faculty Association and Others
[1990] 3 S.C.R.
570 , a constitutional question before the Court, was whether the
Canadian Charter of Rights and Freedoms ( equate it to Namibia’s
Bill of Rights) applied to the negotiation and administration of a
retirement provision in a collective agreement which provided for
mandatory retirement at age 65; and whether that provision or its
application was ‘’law ‘’ as that term is used in s 15 (1) of
the Charter which prohibits discriminatory laws based on , amongst
others, age. Two faculty members who were about to be retired filed a
grievance challenging the collective agreement as violating s 15(1)
of the Charter.

[102] The majority of the Court
(Dickson CJ, et La Forest and Gonthier JJ) held, La Forest J writing
on behalf of the majority:

“… the college
is a Crown agency established by the government to implement
government policy. Though the government may choose to permit the
college board to exercise a measure of discretion , the simple fact
is that the board is not only appointed and removable at the pleasure
by the government ; the government may at all times by law direct its
operation. Briefly stated, it is simply part of the apparatus of
government both in form and in fact. In carrying out its functions,
therefore, the college is performing acts of government, and I see no
reason why this should not include its actions in dealing with
persons it employs in performing these functions.”(at 584).

His Lordship continued (at

“… I am of the
view that the collective agreement is law. It was entered into by a
government agency pursuant to powers granted to that agency by
statute in furtherance of government policy. The fact that the
collective agreement was agreed to by the appellant association does
not alter the fact that the agreement was entered into by government
pursuant to statutory power and so constituted government action. To
permit government to pursue policies violating Charter rights by
means of contracts and agreements with other persons or bodies cannot
be tolerated. The transparency of the device can be seen if one
contemplates a government contract discriminating on the ground of
race rather than age. It may be that age can constitute a rational
basis for a party to agree to contract out of certain rights and thus
be open to the defences of waiver or estoppel or again that it may in
certain circumstances constitute a reasonable limitation under s. 1.
These are issues, however, which were not before the Board or the
courts below and I refrain from commenting upon them further”.

[103] Sopinka J’s was a lone
voice when he said (at 616 -17):

While I do not
dispute that ‘law’ is not confined merely to legislative
activity, I am of the view that an element of coercion must be
present even in government ‘activity’ or ‘program’ for such
to be reasonably characterized as law. This element of imposition or
prescription by the state distinguishes law from voluntarily-assumed
rights and obligations.

The Charter was
intended to protect the individual from the coercive power of the
state and not against the individual’s own voluntary conduct in
dealing with state entities’’’.
(Emphasis provided)

[104] The Canadian approach
differs from the Australian one in that the latter seems more
readily to find that the pursuit of policy by an agency of
government by means of consensual commercial agreement with a third
party, does not insulate the resultant government action from the
purview of judicial review.

South Africa

[105] At the outset three
decisions of the South African Appellate Division are worthy of
special mention: Mustapha v Receiver of Revenue, Lichtenburg 1958
(3) SA 343 (A), Administrator, Transvaal v Zenzile 1991 (1) SA 21 (A)
and Cape Metropolitan Council v Metro Inspection Services (Western
Cape) CC and Others 2001 (3) SA 1013 (SCA).
These cases (and the
approaches they represent) are so ably summarised and analysed by
Cora Hoexter in his article “Contracts in administrative Law:
Life after Formalism? 2004
SALJ pp 595-618.

[106] In Mustapha, the
Minister, exercising statutory powers, had granted permission to
occupy a piece of land to a litigant –a transaction recorded in an
agreement which, amongst others, gave the Minister power to withdraw
the permission by giving three months’ notice at any time. The
Minister withdrew the licence on the racial ground that the occupier
was an Indian. On appeal the Appellate Division took the view that
because the relationship between the Minister and the occupier was
created by contract, the motive for the withdrawal was irrelevant
because in giving the notice the minister was exercising a
contractual right and not a statutory power. The relationship was
seen as that between two private individuals where discriminatory
motive is irrelevant.

[107] In a powerful dissent,
Schreiner JA said the following in the Mustapha matter:

Although a permit
granted under s 18(4) of Act 18 of 1936 has a contractual aspect, the
powers under the section must be exercised within the framework of
the Act and the regulations which are themselves, of course,
controlled by the Act. The powers of fixing the terms of the permit
and of acting under those terms are all statutory powers. In
exercising the power to grant or renew, or to refuse to grant or
renew, the permit, the Minister acts as a State official and not as a
private owner, who need listen to no representations and is entitled
to act as arbitrarily as he pleases, so long as he breaks no
contract. For no reason or the worst of reasons the private owner can
exclude whom he wills from his property and eject anyone to whom he
has given merely precarious permission to be there. But the Minister
has no such free hand. He receives his powers directly or indirectly
from the statute alone and can only act within its limitations,
express or implied. If the exercise of his powers under the
subsection is challenged the Courts must interpret the provision,
including its implications and any lawfully made regulations, in
order to decide whether the powers have been duly exercised…”

[108] Hoexter op cit (at
599) characterises the reasoning in Mustapha as the ‘purely
contractual approach’ depicting

“… relations
between the parties [a public authority and private contractant] as a
matter of ‘pure contract’, a matter of consensus governed by
private law alone. Here the legislative framework for the relations
between the parties is made to seem unimportant, and the public
nature of one of the parties is irrelevant. The duties of the parties
are all seen to be contained in express or implied terms of the
contract. The rules of administrative law are thus sidelined. They
are applicable only if, and to the extent that, the parties have seen
fit to include them, either expressly or impliedly, in that

After a thorough review of the
cases founded on the Mustapha reasoning, Hoexter op cit
comments (at 602): “Purely
contractual reasoning has often been used to defeat a claim to
procedural fairness’’.

[109] In Administrator,
Transvaal v Zenzile
1991(1) SA 21 (A) errant employees who , in
terms of express provisions of their employment contracts allowing
the employer the right of termination on 24 hours’ notice, were
dismissed without procedural fairness, succeeded to have their
dismissals set aside at first instance. The employer appealed
maintaining the matter was ‘purely contractual’. The Appellate
Division was not impressed by that argument. Hoexter JA said (at 36
F-I -37 C):

“…one then has
the situation in which the respondents were summarily dismissed for
misconduct by the decision of public officials representing the
Administration who were empowered to do so by the provisions of the
Code. The exercise of a statutory power to dismiss is not deprived of
its intrinsic jural character simply because a corresponding right to
dismiss exists at common law or that provision for it may be made in
a contract. The common law or contractual right gains an added
dimension and is invested with special significance by its express
enactment in a statute. This consequence cannot be ignored; and it
lays the foundation for the classic formulation of audi rule.

One is here
concerned with two separate and logically discrete inquiries. The
fact that by the law of contract an indisputable right may have
accrued to an employer to dismiss his employee does not, for the
purposes administrative law, mean that the requirements of natural
justice can have no application in relation to the actual exercise of
such right. And when, as here, the exercise of the right to dismiss
is disciplinary, the requirements of natural justice are clamant.

It is trite,
furthermore, that the fact than an errant employee may have little or
nothing to urge in his own defence is a factor alien to the inquiry
whether he is entitled to a prior hearing.”

(Also see: Administrator,
Natal, & Another v Sibiya & Another
1992 (4) SA 532 (A)
at 538 G-I, and Bullock NO v Provincial Government, Northwest
2004 (5) SA 262 (SCA).)

[110] Coming against the
backdrop of the above cases, Cape Metropolitan Council v Metro
Inspection Services
is a difficult act to follow. In that case, a
public authority which had statutory powers to collect levies and
arrears of the same (including the power to contract out that power),
outsourced the power to collect levies to a third party, a body
corporate, after calling for tenders, who performed the function of
collecting levies on behalf of the public authority in consideration
of payment of commission. The public authority later established,
following a tip-off, that the body corporate had been submitting
fraudulent claims for commission over a period of time and summarily
cancelled the contract whilst there was an investigation going on.
The body corporate challenged the decision on the basis that it was
not procedurally fair administrative action. It succeeded at first
instance, but on appeal the Supreme Court of Appeal found against
them. The Court reasoned in para 18 as follows:

The appellant
is a public authority and, although it derived its power to enter
into the contract with the first respondent from statute, it derived
its power to cancel the contract from the terms of the contract and
the common law. Those terms were not prescribed by statute and could
not be dictated by the appellant by virtue of its position as a
public authority. They were agreed to by the first respondent, a very
substantial commercial undertaking. The appellant, when it concluded
the contract, was therefore not acting from a position of superiority
or authority by virtue of its being a public authority and, in
respect of the cancellation, did not, by virtue of its being
authority, find itself in a stronger position than the position it
would have been in had it been a private institution. When it
purported to cancel the contract it was not performing a public duty
or implementing legislation; it was purporting to exercise a
contractual right founded on the consensus of the parties in
respect of a commercial contract. In all these circumstances it
cannot be said that the appellant was exercising a public power.
Section 33 of the Constitution is concerned with the public
administration acting as an administrative authority exercising
public powers, not with the public administration acting as a
contracting party from a position no different from what it would
have been in had it been a private individual or institution.”

(For a critique of the Court’s
reasoning, see Pretorius op cit pp 389-90.) It is now accepted
that Cape Metropolitan

the proposition that a public authority’s invocation of a power of
cancellation in a contract concluded on equal terms with a major
commercial undertaking, without any element of superiority or
authority deriving from its public position, does not amount to an
exercise of public power.”
(per Cameron JA in Logbro
Properties CC v Bedderson NO and Others 2003 (2) SA 460 at

[111] Cape Metropolitan
confirms (para 17) that whether or not conduct is administrative
depends on the nature of the power being exercised, the
source of the power, the subject – matter, whether it involves the
exercise of a public duty and how closely related it is to the
implementation of legislation.

That approach was sanctioned
by the Constitutional Court in President of the Republic of South
Africa v South African Rugby Football Union
2000 (1) 1, para
143. In my view it is the approach which applies to article 18 of the
Namibian constitution.

[112] The decision of the
Supreme Court of Appeal in Logbro is significant for the
following reasons: first, it overrules the conclusion of the majority
of the Court in Mustapha and confirms the dissenting judgment
of Shcreiner JA supra. Second, it makes clear that Cape
is not authority for the general proposition that a
public authority empowered by statute to contract may exercise its
contractual rights without regard to public duties of fairness.
Third, it confirms that Cape Metropolitan is to be confined to
its facts (as to which also see Bullock at 269.) Fourth, it
makes clear that whether or not a public authority’s exercise of
powers enjoyed under contract renders it subject to the duty to act
fairly, will depend on all the circumstances.

[113] In Logbro, a
contract concluded by a public authority entitled it not to assign
any reasons for the acceptance or non-acceptance of a tender , to
withdraw the property placed on tender from such tender at any stage
and without giving reasons , and not to consider tenders which did
not comply with the requirements . The public authority relied on the
contract. The Court held (per Cameron JA) at para 7:

Even if the
conditions constituted a contract…, its provisions did not exhaust
the [public authority’s] duties toward the tenderers. Principles of
administrative justice continued to govern that relationship, and
[the public authority] in exercising its contractual rights in the
tender process was obliged to act lawfully, procedurally and fairly.
In consequence, some of its contractual rights –such as the
entitlement to give no reasons – would necessarily yield before its
public duties under the Constitution and any applicable

[114] Pretorius op cit pp
386 -87
highlights the dilemma confronting us in this branch of
the law in the following way:

Although public
bodies should be required, as a general proposition, to comply with
the audi rule before deciding to terminate a contract, this
rule should not be regarded as being immutable or of universal
application. In determining when a public body should act in a
procedurally fair manner in exercising its right to cancel a
contract, the focus should be on the nature and purpose of the
contract, rather than on the source of the power to terminate the
contract. More specifically, public bodies should be permitted to
terminate contracts of a ‘purely commercial’ nature, as opposed
to ‘governmental’ contracts (or ‘administrative agreements’,
as they are sometimes called), without having to hear the other
party. It is necessary to differentiate between these two categories
of contract because public bodies often operate in an ordinary
commercial capacity. In practice, it may be difficult to distinguish
between these too categories of contract, because governmental
contracts often have a commercial dimension, and vice versa.”

[115] Reading the cases and the
literature it becomes very clear that it is important to appreciate
the need for the state to be allowed sufficient space (what is
sometimes referred to as the ‘freedom of play in the joints of the
executive’) to operate in the business environment and to be
governed by the ordinary rules of contract and private law generally;
assuming the risks and enjoying the benefits available in private
law. Setting aside a decision of a public authority is a matter not
to be taken lightly. It more than likely will have serious budgetary
consequences. In that sense, the Court’s review jurisdiction is an
extra-ordinary remedy
Those who contract with the state must be alive to that reality. On
the other hand, the state is sui generis in that whatever it
does is for a public purpose and that imposes on it the duty to act
fairly and in the public interest. For that reason its actions must
always seek to give effect to the ethos of the Constitution. That
may, in certain circumstances, require the state’s actions in the
commercial sphere be subjected to public law standards rather than
those of the private law. Where does one draw the line then?

[116] In my view the solution
does not lie in an approach which holds that as long as
government’s dealings with others is regulated or brought into
being by contract , remedies can only lie in contract or private law
for those who have cause to complain about a public authority’s
malfeasance arising from such relationship, just as it cannot lie in
an approach which postulates that all actions of a public authority
( including those founded in contract) will always be subject to
judicial review , and that a claim that resort to judicial review is
inappropriate as recourse should have been had to private law
remedies instead, should always fail for that reason.

[117] The drift of authority
from the leading South African cases which I have examined establish
that each case must be approached on its facts in determining whether
or not a particular decision of a public authority terminating a
contract amounts to administrative action and therefore judicial
review should avail. I follow that approach in interpreting article
18 of the Namibian constitution. I agree with Pretorius supra
that the focus should be on the “nature and purpose of the
contract, rather than on the source of the power to terminate the
.” Factors such as whether or not there was an element
of coercion or prescription; whether there was equality of bargaining
power; whether the agreement was required under statute or was
intended to carry out legislation- will be considerations to be had
regard to. They cannot, by any means, be the sole or defining
criteria for the intervention of the Court through judicial review.
In view of the extra-ordinary character of this remedy, it is, in my
view, just as important a consideration- in deciding whether judicial
review should avail – whether the applicant for review could
adequately and effectively have protected his rights through the
pursuit of private law remedies. It should be borne in mind that Rule
53 offers tactical procedural advantages (e.g. disclosure by the
respondent decision-maker of the record (discovery effectively) and
the right to supplement, including the fact this sort of matters are
heard more speedily). The Court should therefore also be concerned
about giving an unfair advantage to a litigant by availing judicial

[118] The Court should refuse
to come to the assistance of the party who comes to it on review if
the review procedure amounts to an abuse of the process of Court. In
circumstances where the applicant for review has a choice between
proceeding on review or under contract, he must set out facts which
satisfy the Court judicial review under Rule 53 is justified.

Principles to the facts

[119] The third respondent’s
actions leading to the agreement resemble what Sopinka J referred to
in the Douglas case as an imposition or prescription
by an administrative body characteristic of the exercise of coercive
. I therefore agree with Mr. Smuts’ submission to that
effect. I cannot accept Mr Louw’s submission that this was an
arms-length transaction in the sense that the applicant had a free
choice to enter into it or not. True, the applicant can, through
means other than the deduction code facility, secure payment from its
debtors in the employ of the third respondent; but left with the
option of relying on those rather risky methods as opposed to
deduction code facilities which guarantee payment ( as is common
cause), the choice to opt out was really illusory. It had to sign the
agreement or forfeit the deduction code.

[120] The decision that there
should be a business agreement in the first place
(considering that until then microlenders using deduction codes did
not have to enter into one) was that of the third respondent, taken
unilaterally. The applicant had no say in it. The terms of the
contract could not be negotiated either as the agreement makes clear
in the clauses cited in paragraph 21 above. They were to be accepted
as is or there would be no deduction code availed. This conduct
echoes the words of Cameron JA in Logbro (at para. 11):

In the present
case, it is evident that the province itself dictated the tender
conditions, which McLaren J held constituted a contract once the
tenderers had agreed to them. The province was thus undoubtedly, in
the words of Streicher JA in Cape Metropolitan, ‘acting from
a position of superiority or authority by virtue of if its being a
public authority’ in specifying those terms. The province was
therefore burdened with its public duties of fairness in exercising
the powers it derived from the terms of the contract.”
apply this reasoning to the facts of the case at bar.

[121] Significantly, the
agreement also constitutes the vehicle through which NAMFISA was to
‘regulate’ the applicant. That much is clear from an analysis of
the agreement in paragraph 21 of this judgment. NAMFISA’s
regulatory powers are therefore incorporated in it. The effect of
that has not been properly explained on the papers.

[122] For all of these reasons
the agreement is, in my view, merely a memorial of a scheme whereby
third respondent extends deduction codes to microlenders who are
otherwise not entitled to claim it as of right. It hardly fits the
description of a recordal of agreed terms. From the history of how
the scheme has operated, I gain the impression that under that scheme
whenever circumstances changed, the third respondent would
unilaterally change the terms under which deduction codes are
availed. The agreement only formalises that scheme. I do not discern
any departure from the scheme through the conclusion of the
agreement. The contractual relationship between the parties is
therefore ‘framed’ by the principles of administrative justice
and governs first, second and third respondents’ exercise of the
rights derived from it.

[123] I conclude therefore that
the agreement being relied upon by the first, second, and third
respondents to avoid review proceedings is in reality an expression
of government action. What it does under and through it is therefore
subject to judicial review. Government is under no compulsion to
grant deduction codes to financial service providers. If it does,
however, it must realise that it creates, by that very act, rights
and expectations in favour of those who rely on it and arrange their
business affairs accordingly. Government cannot act capriciously and
whimsically in relation to the relationship it creates with others as
a consequence of choosing to grant deduction codes, just because it
is extending a benefit for which there is no provision specifically
made in law.

Applicant a credit grantor,
not a microlender?

[124] I do not intend to deal
in great detail with this aspect of the respondents’ defence. It is
best disposed off without regard to the merits of the allegation as
it may in due course be properly ventilated at an appropriate forum.
The applicant alleges that it gives loans to students and receives
payment back over a period of time, with interest. The loans are used
to further studies. It applied to the first or third respondent for
registration on the basis that it was a micro lender and was
registered as such. The scheme under which that registration took
place has, as I have shown a very specific procedure for dealing with
entities registered as such but who are no longer microlenders.

[125] The argument that the
applicant is not a microlender can only avail the respondents as a
sword, not as a shield. The respondents, in my view, can only sustain
such argument in one of two ways: by seeking the cancellation of the
registration of the applicant in terms of the exemption notice, or by
seeking a declarator that the applicant is not a micro lender as it
does not carry on such business. There is no application for
declaratory relief before me. The transparency of the device becomes
apparent when one considers the effect of upholding it. What it will
mean, if upheld, is that the Court will hold that the applicant is
not a microlender, while the decision registering it as such had not
been set aside. Specific relief should have been sought asking the
Court to declare, both that the applicant is not a microlender and
that the decision in terms of which it was registered, be set aside.
I do not think it is open to the respondents, when faced with a
review application such as the present, to argue, without seeking
specific declaratory relief in those terms, that the applicant is not
a microlender. This defence too must therefore fail.

[126] Costs must follow the
result. I wish to repeat though that this record is unnecessarily
burdensome and the case could, on both sides, have been fought on a
much narrower focus. There is also, as I earlier remarked, gratuitous
ex post facto rationalisation on both sides. The Court’s
displeasure must be shown with an appropriate costs order. In the
nature of things such order will only affect the successful party.

[127] The conclusion that the
deregistration and revoking decisions constitute reviewable
administrative action implies that the applicant was entitled to
interdict the same on an urgent basis. To the extent that it took
steps to protect its rights on an urgent basis, the applicant is
entitled to the costs occasioned thereby.

[128] Accordingly, I order as

1. The decision by the first
respondent contained in the letter dated 9 March 2005 revoking the
deduction code facility enjoyed by the applicant on the payroll of
the third respondent , is hereby reviewed and set aside as being
unlawful and unconstitutional.

2. The decisions of the fourth
respondent contained in letters dated 24 September 2002, 21 February
2005 and 10 March 2005 (or expressed in any other form), purporting
to cancel the registration of the applicant as a micro lender, or
having the effect of treating the applicant as if it is no longer a
micro lender, are declared to be of no force or effect as being ultra
and unlawful.

3. The respondents are
condemned in costs, jointly and severally, the one paying, the other
to be absolved. The costs allowed to the applicant shall be reduced
by 20%.




Instructed By: van der
Merwe-Greeff Inc.


Assisted by Mr A Boesak

Instructed By:
Government Attorneys

Financial Institutions Supervisory Authority Act, 3 of 2001

is common cause that this action was taken by the first respondent
after receiving a letter from the fourth respondent on 22 February
2005, wherein fourth respondent informed the first respondent that
the applicant had stated it was not a micro lender- a fact accepted
by the fourth respondent; specifically drawing first respondent’s
attention to the deduction code.

is common cause that by agreement dated 16 February 2005 Trustco
Group International (Pty) Ltd ( Trustco) bought Zaayman’s
interests in the applicant, Zaaiman warranting that he (sic) is “
the holder of a salary deduction code entitling it(sic) to claim
deductions in respect of monies due from the salaries of Government

is common cause that the reference to 2002 is wrong and should be

refers to the deduction code on the third respondent’s payroll.

Payment Services (Pty) Ltd.

is the letter dated 22 February 2005 by the fourth respondent to the
first explaining that based on such assertions by the applicant,
NAMFISA acceded to the deregistration of applicant as a micro lender
and then draws first respondent’s attention to the deduction code

No 31 of 1991.

25 provides for different kind of levies and the power is given in s
25(4) for NAMFISA to recover unpaid levies through judicial process.

It is not inconsistent with the Constitution to
recognize that the State (the same cannot be said of other creatures
of statute) because it possesses legal personality has, through its
government departments, inherent power to conclude contracts:
Minister of Home Affairs American Ninja v Partnership Santam
Versekeringsmaatskappy Bpk
1964(1) SA 546. Diedericks v
Minister of Lands
1964(1) SA 49 (N). I do not share Pretorius’
misgiving (Daniel Malan Pretorius ‘’ The defense of the realm:
Contract and natural justice’ (2002) 119 SALJ 374 at p 384) that
this inherent power may not have survived the Constitution. To hold
that it did not survive the Constitution will paralyze the state
machinery and result in administrative atrophy of unimaginable

See the Indian case of Tata Cellular v Union
of India
[1993] INSC 335 at para 86, quoting Clive Lewis
‘’Judicial Remedies in Public Law’’ 1992, pp 294-95 as
follows: “The courts now recognise that the impact on the
administration is relevant in the exercise of their remedial
jurisdiction. Quashing decisions may impose heavy administrative
burdens on the administration, divert resources towards reopening
decisions, and lead to increased and unbudgeted expenditure. Earlier
cases took the robust line that the law had to be observed, and the
decision invalidated whatever the administrative inconvenience
caused. The courts nowadays recognize that such an approach is not
always appropriate and may not be in the wider public interest. The
effect on the administrative process is relevant to the courts’
remedial discretion and may prove decisive. This is particularly the
case when the challenge is procedural rather than
substantive…”( my emphasis)