CASE NO: SA 2/2006
IN THE SUPREME COURT OF NAMIBIA
In the matter between:
PERMANENT SECRETARY IN THE
MINISTRY OF FINANCE First Appellant
MINISTER OF FINANCE Second Appellant
GOVERNMENT OF THE REPUBLIC OF NAMIBIA Third Appellant
REGISTRAR OF MICRO LENDING AND CREDIT
AGREEMENT Fourth Appellant
OLGN FINANCE CC Respondent
Coram: MARITZ JA, CHOMBA AJA and GIBSON AJA
Heard: 4 October 2006
Delivered: 7 May 2020
Summary: The Ministry of Finance operated a scheme in terms of which the respondent, upon registration as a micro lender, could recover from the Ministry’s payroll debts owed to it by its students who were civil servants and to whom study materials were being provided on credit. A deduction code was created by the Ministry in favour of the respondent following an application for it. On 23 September 2002, the respondent addressed a letter to Namibia Financial Institutions Supervisory Authority (NAMFISA) informing it that the respondent was not a micro lender as debts owed to it by its students were recovered on a basis akin to a hire purchase. NAMFISA agreed with the mere say so by the respondent that it was not a micro lender. It informed the respondent that it regarded the respondent as a credit grantor. NAMFISA later informed the respondent that the respondent had been deregistered as a micro lender. This development resulted in the Ministry revoking the pay roll deduction facility previously granted to the respondent.
The respondent then brought a review application in the High Court seeking the setting aside of the decision by the Ministry to revoke its pay roll deduction facility. The decision was set aside as unlawful and unconstitutional.
On appeal, the Supreme Court had to decide, amongst others, whether the decision to cancel the respondent’s registration as a micro lender was done procedurally; whether the decision to cancel the respondent’s registration as a micro lender was an administrative decision or not; whether given the discretionary nature of the review remedy, the respondent’s ‘opportunistic’ conduct in its deregistration as a micro lender disqualified it from benefiting from the exercise of a discretionary power; alternatively whether the discretionary power should be exercised in favour of the respondent as the respondent allegedly unreasonably delayed launching the review application, and whether the payroll deduction facility was lawfully cancelled.
Held, that the cancellation of the respondent’s registration as a micro lender was not done procedurally as it did not comply with the procedure set out in Government Notice 136 of 6 August 2002, which in peremptory terms required giving an opportunity to the person or entity affected by the decision to be heard.
Held, that the decision to cancel the respondent’s registration as a micro lender was an administrative decision taken by an administrative functionary on behalf of a public body which was bound by Article 18 of the Namibian Constitution to act fairly, reasonably and to comply with the law.
Held, that although the respondent’s conduct was opportunistic, this consideration was more relevant to the issue of costs as it was extricable from the issue of delay. As to the argument based on unreasonable delay, held that the review application was timeously launched and there was therefore no need to determine the issue of the exercise of discretion.
Held, that the appeal was dismissed, but to register the court’s displeasure with the respondent’s conduct, no order as to costs was made in its favour.
CHOMBA AJA (GIBSON AJA concurring):
- The cliché goes that justice delayed is justice denied. While acknowledging that truism, I, at the same time harbour the sincere hope that in this matter both the appellants and respondent, or at least one of the sides, will have a sigh of relief that at long last their expectations for justice have been vindicated.
- This appeal was heard in October 2006, i e over 12 years ago. At the conclusion of the hearing, the judge presiding opted to prepare the judgment of the court. Regrettably, after an inordinately long period, it turned out that owing to a physical indisposition he could not achieve what he had promised to do. Thereafter, the Honourable Chief Justice strove to locate the remaining two members of the Bench, so that they could between them prepare the long awaited judgment.
- The dilemma in which the learned Chief Justice found himself arose from the combined effect of the provisions of the Namibian Constitution and the Supreme Court Act 15 of 1990, which require that at least three judges must sit, for the purposes of hearing appeals or determining matters referred to the Supreme Court by the Attorney-General. Those provisions further require that the judgment of the court must, at the very least, be that of the majority of the coram. That means that out of the coram of three judges, two of them must consent. Where a majority cannot be constituted, the law requires that the matter at the bar should be adjourned so that it must be heard and determined de novo.
- The position in this case that only two judges were available has reportedly been considered by the legal practitioners of both sides in the current matter. They sought more time to consult their clients. After a relatively long wait, it was found inappropriate to have this case heard afresh and legal practitioners on both sides, therefore, resolved that they would rather have the judgment prepared by the remaining members of the original coram.
- It is evident that the volume of work involved at the hearing of this matter in the court a quo was substantial. That is also true of the amount of work entailed in the hearing of the appeal. Naturally, therefore, it stands to reason that the legal costs so far involved cannot be anything other than colossal. I therefore believe that it was pragmatically correct for the parties and their legal practitioners in this matter to have resolved against a de novo hearing of the appeal.
- The Open Learning Group Namibia Finance CC (the close corporation) through a one Albie S Oelofse, applied to the Ministry of Finance (the Ministry) for the close corporation to be registered as a micro lender. The application was successful and it was so registered on 10 July 2000. A certificate of registration as such was issued on the same date. In due course, the close corporation additionally applied for a payroll deduction code facility and that application having been successful, deduction code 17 was created in its favour by the Ministry’s Treasury. The payroll deduction code was designed to enable the close corporation to recover debts owed by students to whom study materials were supplied on credit. A beneficiary of such deduction facility was required to pay periodic levies to Namibia Financial Institutions Supervisory Authority (NAMFISA) an institution which was created to oversee the operations of micro lenders.
- On two occasions, a senior functionary in the close corporation addressed letters to NAMFISA to inform the addressee that the close corporation was not a micro lender. It was elaborated in the two letters that in its business, the close corporation allowed students to pay off their debts over a period of 12 months in the same way as an article bought on hire purchase.
- The upshot of the said denials was that the General Manager: Investment Institutions Department at NAMFISA addressed a letter to the Open Learning Group agreeing that the close corporation was not a micro lender and was to be treated in accordance with the provisions of the Usury Act 73 of 1968 and in accordance with the regulations issued by NAMFISA. That notwithstanding, NAMFISA at a later stage sent another letter notifying the close corporation that the said corporation had been deregistered as a micro lender. In yet another later development, the Permanent Secretary at the Ministry addressed a letter notifying the close corporation that the payroll deduction facility extended to the close corporation was to be revoked, effective from the end of March 2005.
- The actions of deregistration and revocation were the immediate cause for the filing of an application for judicial review which was lodged in the court below. The present appeal is an outcome from the judicial review proceedings in the court a quo.
- The review proceedings ended by the trial judge making the following order, viz:
‘Accordingly, I order as follows:
- The decision by the first respondent contained in the letters dated 9th March, 2002 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.
- The decision 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 a micro lender, are declared to be of no force or effect as being ultra vires and unlawful.
- 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%.’
Needless to record that aggrieved by that decision, the then respondents lodged an appeal in this court leading to the present judgment.
Arguments and background
- It is apposite at the outset to record that in the court a quo the decisions of deregistration and revocation were both held to constitute administrative actions and hence amenable to judicial review. To the contrary, the appellants now argue that the decision to deregister the respondent as a micro lender amounted merely to a withdrawal of the respondent’s registration as a micro lender at the respondent’s own disavowal. As to the first appellant’s decision to revoke the respondent’s payroll deduction facility, it is contended by the appellants that that was merely an exercise of the common law right of rescinding an agreement on the basis of a material misrepresentation on the part of the respondent.
- The disavowal contentions are premised on the following circumstances. On 20 June 2000 Mr Oelofse, submitted an application to the Ministry for the close corporation to be accorded the status of micro lender. In consequence thereof, on 10 July 2000, approval was granted and the close corporation was registered as a micro lender as per annexure ‘A’ on page 35 of the record of proceedings in the court below. Consequently, on the same date, the close corporation was certificated a micro lender, as per annexure ‘B’ at page 36 of the record.
- The Ministry operated a scheme whereby a micro lender could recover from the Ministry’s payroll debts owed to it by the civil servants to whom study material were being provided on credit by the Open Learning Group Namibia (Pty) Ltd, a sister company within the Group. To that end, a deduction code was created by the Ministry in favour of the close corporation as per annexure ‘C’ at page 37 of the record. That facility was created in favour of the close corporation based on an application which was submitted by the Group Managing Director, Mr Chris Zaayman.
- The foregoing scenario notwithstanding, on 23 September 2002 Ms de Meillon, the Financial Manager of the close corporation, wrote a letter to Ms Rachelle Metzler an officer at NAMFISA. I quote below the full message conveyed by that letter:
‘This letter serves to inform you that Open Learning Group Namibia is not a micro lender.
The code 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 their study fees over a period of twelve months in the same way as an article bought on hire purchase.
. . . .’
In the ensuing paragraphs, I shall refer to that letter as a disavowal letter.
- To that letter there was a response under the signature of one, Boni K Paulino. The response was dated 24September 2002. It conveyed the following message:
‘Dear Ms Meillon,
Re: Status of OLGN
I refer to your letter dated 23 September 2002 and wish to respond as follows:
We take cognizance of your advices and agree that the Open Learning Group is not a micro lender per se. However, as a group that is 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 (Act No 73 of 1968) and regulations issued by NAMFISA.
It therefore, follows that the credit extension operations of OLGN should not exceed the maximum annual finance charges rates as detailed in the Government Notice No 135 of 6 August 2002, issued in accordance with section 2 of the Usury Act, 1968.
Should you require more clarification on this issue do not hesitate to contact (sic) our office.
Boni K Paulino
General Manager: Investment Institutions Department.’
- On 22 February 2005, the Chief Executive Officer of NAMFISA, addressed a letter as per annexure ‘RM2’ to the Permanent Secretary at the Ministry. The essence of the message conveyed by that letter was to update the addressee on some developments which had taken place relating to the close corporation. There were four enclosures in that letter, one of which is of immediate relevance. It was a letter written on 17 February 2005 by Ms de Meillon to Ms Rachelle Metzler of NAMFISA. Its message was curt and read as follows:
‘I refer to our telephone 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.
Theresa de Meillon
- Another enclosure was a letter marked annexure ‘AF’ which emanated from NAMFISA and was signed by its Registrar: Micro Lending and Credit Agreements, and was addressed to the Principal Officer of the close corporation. Because its importance I propose to, and do hereby, reproduce it in its entirely, viz:
‘The Principal Officer
Open Learning Group Namibia Finance CC
Private Bag 15001
- Your letter of 17 February 2005 refers. I also refer to your letter dated 23 September 2002 wherein you informed us that Opening Learning Group Namibia Finance CC is not a micro lender. Furthermore, in your business you “allow registered students to pay off their fees . . . in the same way an article is bought on hire purchase”.
- We subsequently confirmed in our letter dated 24 September 2002 that in view of the modus operandi of Open Learning Group Namibia CC (OLGN) it was not regarded as a micro lender by NAMFISA.
- We at the time informed you that NAMFISA regarded the operations of OLGN as a 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 6 August 2002, published in Government Gazette No 2782 of 6 August 2002.
- 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 micro lender with effect from 24 September 2002 based on your advice.
- It therefore follows that we cannot issue with proof of registration with NAMFISA as a micro lender.
- We therefore, advise that OLGN is not regarded as a micro lender in terms of section 15(A) of the Usury Act, 1968, but as a credit grantor.
I trust that the information furnished, will assist you in the matter. Kindly contact us in the event of you requiring more information in the matter.
Frans van Rensburg
Registrar: Micro Lending and Credit Agreements’
I shall hereafter refer to this letter as the deregistration letter.
- The letter marked ‘RM2’ mentioned in para , aute elicited a sharp reaction from the Permanent Secretary of the Ministry, Mr Schlettwein. His letter, marked ‘T’, was addressed directly to the Managing Director of the OLGN Finance CC. It was couched in the following terms:
Payroll Deduction Facility for Micro Lending purposes
The payroll deduction facility granted to Open Learning Group Namibia (OLGN) Finance CC) is hereby revoked as it is not in compliance with one 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 payment has already been processed APS, Services Provider for PDMS has already been informed.’
The above letter will henceforth be referred to as the revocation letter.
Issues for determination
Was the close corporation deregistered by virtue of a letter?
- The first issue which calls for discussion and determination is whether or not the close corporation was indeed deregistered via Paulino’s letter of 24 September 2002. According to the appellants, as I understand their arguments, that letter, having been an acceptance of De Meillon’s disavowal of the micro lender status of the close corporation, did occasion a deregistration. Is that conclusion defensible in law and/or fact?
- A close examination of Paulino’s letter shows that Paulino simply took cognisance of the assertion by De Meillon and agreed that the close corporation was not a micro lender. He consequently came to the conclusion that since a senior operative at the close corporation was claiming that it was operating on the basis of a hire purchase model, it was therefore subject to the provisions of the Usury Act 73 of 1968. Paulino then purported to advise that the close corporation should operate subject to the provisions of Government Notice No 135, which was issued in accordance with s 2 of the Usury Act. The effect of Paulino’s advice was that the close corporation was to operate on a credit extension basis.
- I find it surprising that Paulino readily agreed that the close corporation was not a micro lender, this at a time when there was in existence evidence on record to the contrary. At the time Paulino was reacting thus to De Meillon’s letter, there was in fact a record evidencing that the close corporation had been registered as a micro lender, a certificate to that effect was available and had been operative since 10 July 2000. NAMFISA, for which Paulino was the General Manager, had assumed responsibility for superintending over the operations of micro lenders since 2001. Therefore one can conclude, as I do, that all records and documents pertaining to the close corporation were transferred to NAMFISA after 2001 when the Ministry ceased to be responsible for the day to day operations of micro lenders. That being so, could easily, I believe have accessed the close corporations records. If he had done so he could, assuredly, have discovered that De Meillon’s assertions that the close corporation was not a micro lender were misleading. I consequently hold that Paulino was reckless when he failed to dutifully deal with the records of the close corporation at that point in time.
- Moreover, as recently as May 2002 vis-a-vis the timing of Paulino’s ready acceptance that the close corporation was not a micro lender, there had been an exchange of correspondence between the Open Learning Group Namibia and the Ministry. Mr Zaayman, on behalf of the Group had written a letter to the Ministry to request the recipient either to waive the payment of the levy or to reduce the amount thereof payable by micro lenders. In its response dated 2 May 2002, the Ministry sent to the close corporation the following message:
‘The matter has been investigated and the Ministry of Finance is unfortunately not able to decrease the administrative amount or to waive the payment thereof due to the fact that your company is still registered as a micro lender and payment of this fee is part of the conditions for your stop order facility.’
- There is an anomaly in the appellants’ story that the respondent’s deregistration as a micro lender took effect retrospectively from 24 September 2002. In para 5 of their heads of argument, the appellants make reference to the letter at annexure ‘F’ dated 24 February 2003. That was the letter which purported to give more details of De Meillon’s stand that the close corporation operated a hire purchase model of recovering the close corporation’s debts from its students. Commenting on the said annexure ‘F’, the appellants state in para 5.7 of their heads of argument as follows:
‘that letter had the desired effect.’
That statement was, quite obviously, a way of gainsaying the earlier statement that deregistration took effect on 24 September 2002. It is evident that after the introduction of the payroll deduction facility, the position was that that facility existed symbiotically, so to speak with, the status of a micro lender. The result then should have been that deregistration of the micro lender status should have fatally and contemporaneously affected the payroll deduction facility enjoyed by the close corporation. Looking at this situation from another angle, if indeed NAMFISA terminated the close corporation’s status as a micro lender effective from 24 September 2002, it was the bounden duty of Paulino, as General Manager: Investment Institutions Department to advise the Ministry to revoke the deduction facility contemporaneously. That was going to avoid the preposterous situation whereby the payroll deduction facility, extended to the close corporation by virtue of its status as a micro lender, continued to operate until the end of March 2005 when the Permanent Secretary at the Ministry revoked it.
- As if the foregoing therefore situation was not bad enough, on 7 January 2003, NAMFISA sent a letter specifically addressed to the Principal Officer of the close corporation. In the first two paragraphs the following was stated:
‘In terms of Section 25(1) of the Namibia Financial Instructions Supervisory Authority Act (Act No 3 of 2001) you are hereby reminded that the deadline for the first bi-annual payment of levies as prescribed by that Act was 30 June 2002.
The levies payable in terms of this notice must be paid to the Namibia Financial Institutions Supervisory Authority (NAMFISA) leg deposit of the amount in a bank account of the Authority, particulars are as follows . . .’
Furthermore, on 22 August 2003, the Government of the Republic of Namibia, represented by the Ministry entered into a business agreement with the close corporation. The subject-matter of the agreement was to spell out how the payroll deductions facility was going to operate. All the foregoing occurrences ran contrariwise to the stand portrayed in the heads of argument submitted by the appellants that the close corporation was deregistered effective from 24 September 2002, and that from that date the close corporation ceased to be regarded by the appellants as a micro lender.
Did the close corporation qualify to enter into the business agreement?
- Let me briefly interpose here to dispose of the appellants’ contention that the close corporation was not qualified to enter into the business agreement on 22 August 2003. Their argument was that the close corporation was deregistered as a micro lender effective from 24 September 2002. In the preceding paragraphs, I have dismissed the notion that Paulino’s letter of that date effected the close corporation’s deregistration as a micro lender. It is also evident from the preceding paragraphs that well after 24 September 2002, NAMFISA and the Ministry interacted with the close corporation in its capacity as a micro lender. In the event, and for the purpose of this case, I hold the view that the business agreement dated 22 August 2003 was properly and competently concluded with the close corporation as an existing micro lender.
- In this case, there was an indisputable reason which could have justified deregistration of the close corporation as a micro lender. It has been noted that the corporation was registered as a micro lender upon its own application. That was in the year 2000. However, on 18 February 2002 the close corporation, through its managing director, addressed a letter to the Ministry seeking a waiver of the requirement for it to pay levies which were payable by micro lenders, or a reduction of the amount from N$13 per deduction. That letter received a negative response from the Ministry’s Accountant–General who in his letter dated 2 May 2002 expressed himself in the following terms:
‘1. Your letter dated 18 February 2002 refers.
2. The matter has been investigated and the Ministry of Finance is, unfortunately, not able to decrease the administration amount or waive the payment thereof due to the fact that your company is still registered as a micro lender and payment of this fee is part of the conditions for your stop order facility.’
- That the close corporation was in breach of the requirement to pay levies payable by micro lenders is evident from Ms de Meillon’s letter of 1 March 2005. It read as follows:
‘For the attention of Mr Frans van Rensburg, NAMFISA.
Your letter dated 21 February 2005 with regard to the aforementioned topic has reference.
Open Learning Group Namibia is for the first time since registration as a micro lender at the Ministry of Finance in a position to perform as one. From 1 March 2005 our operations can change from hire purchase basis, reference from our letter to NAMFISA dated 23 September 2002, to 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 licences.’
- That letter was a clear confession that the close corporation had not been paying any levies at all since its registration as a micro lender. Payment of levies was stressed by the Account-General as one of the conditions which micro lenders were required to observe in order to retain their micro lender status. The question, therefore, ensues whether the non-observance of the peremptory requirement to pay levies had automatically resulted in loss of the close corporation’s status as a micro lender. Another related question is whether a disavowal by the close corporation of its status as micro lender was enough to remove that. The appellants’ case, as I understand them, is that disavowal is indeed enough to achieve that result.
- On 6 August 2002, the Government of the Republic of Namibia published Government Notice No 136 as per Gazette No 2782. It was titled ‘Notice in terms of Section 15A of the Usury Act No 73 of 1968’. Clause 5(1) of that Notice prescribed the procedure to be followed when it becomes necessary to cancel the registration of a micro lender from the register of micro lenders. In para 9 of the appellants’ arguments, their legal practitioner plainly admitted on behalf of the appellants that NAMFISA did not follow that procedure. The legal practitioner justified the side-tracking of the procedure ‘because he (meaning the relevant officer of NAMFISA) merely withdrew the registration at the applicant’s (meaning the close corporation’s) insistence that it was not a micro lender’.
- With due respect to the learned legal practitioner. I think he was just engaging in rhetoric when he argued that there was a mere withdrawal and not a cancellation of the respondent’s registration as a micro lender. When a person withdraws a registration, the intention of such action is that the status which was created by the registration should be terminated. Therefore the registration, to all intents and purposes, ceases to exist. In other words, the registration is cancelled implicitly. But the law requires that in order to cancel a registration of a micro lender, a prescribed procedure shall be followed. That law is to be found in Government Notice 136 which was published in Government Gazette No 2782 of 6 August 2002, pursuant to s 15A of the Usury Act.
- Clause 5 of the schedule appended to that Government Notice is of particular relevance to that procedure. In sub-clause (1) thereof, it is provided that subject to the provisions of that clause, the registrar may by notice in writing to the micro lender, and from a specified date in the notice, cancel the micro lender’s registration under clause 4 if the micro lender –
- fails to comply with any condition imposed by the Registrar in terms of that clause.
Sub-clause (2) provides that if the registrar proposes to cancel the registration of a micro lender he or she must give the micro lender concerned a written notice of the intent to cancel the registration. The registrar must thereafter invite the micro lender to submit to the registrar in writing, within 30 days from the date of the notice, representations which the micro lender may wish to make in relation to the proposed cancellation. The registrar is given 30 days within which to consider the representations, if any, given by the micro lender. After that period, the registrar may either cancel the registration or decide to not cancel the same. Having made a decision one way or the other, the registrar must immediately, in writing, inform the micro lender of his or her decision. The micro lender is given a further opportunity to make representations in the event of the registrar’s decision being adverse. Depending on the circumstances prevailing, the registrar may confirm or rescind an adverse decision thereafter.
- Let me briefly at this point consider specifically whether clause 5 embraces an option whether or not to comply with its provisions. In sub-clause (1) thereof it states:
‘(1) subject to the provisions of this clause, the Registrar may by notice in writing to a micro lender, and from a date specified in the notice, cancel the micro lender’s registration under clause 4 of the micro lender.’
There then follows a list of three alternative punishable breaches which, if committed, would lead to cancellation of a micro lender’s registration, viz:
- failure to comply with conditions of business qua micro lender;
- ceasing to conduct micro lender business; and
- committing an offence under s 14 of the Usury Act.
At first blush the sub-clause appears to give the registrar a mere option to cancel a registration because the sub-clause uses the permissive verb ‘may’. However, in sub-clause (2) of the clause it provides:
‘(2) If the Registrar proposes to cancel the registration, the Registrar must give the micro lender a written notice of his intention to cancel the registration.’ (The underlining is mine).
Therefore within the spirit of sub-clause (2), it is clear that the registrar is peremptorily required to give the intended micro lender adequate time within which to be heard and time within which to appeal against any adverse action taken after the micro lender had made his initial representations. In other words, the periods in which the registrar and the micro lender are required to act in a particular way are prescribed and are peremptory.
- In the result, I am satisfied and feel sure that in substance, the provisions of clause 5 are compulsive after the registrar has proposed to cancel the registration. I therefore, re-affirm my earlier holding that no deregistration occurred effective from 24 September 2002, that being the date of Paulino’s letter earlier referred to. There was failure to comply with clause 5.
- Additionally, I can safely state that clause 5 aforesaid derives its efficacy from Art 18 of the Namibian Constitution which provides as hereunder:
‘18. Administrative bodies and administrative officials shall act fairly and reasonably and comply with the requirements imposed upon such bodies and officials by the 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.’ (The underlining is mine).
Acting fairly and reasonably, no doubt, embraces the notion of requiring such functionaries to comply with the audi alteram partem maxim. By the fourth appellant’s failure to comply with the requirements of that maxim, the respondent was denied its constitutional right to be heard.
Was the decision to deregister administrative or not?
- From the foregoing paragraphs it must now be patent that the issue which, as others, has generated contention has been obliquely considered and resolved. However, for the sake of ensuing that no stone is left unturned, I shall now consider whether or not the decision of deregistration was or was not an administrative action. To start with, I shall set out the positions which the respective parties herein have assumed in addressing this appellate court on this issue.
- In paragraph 11 of their heads of argument, the appellants state as follows:
‘11. The review is misconceived. There was no administrative decision to cancel the applicant’s registration. All that took place was that the fourth respondent acceded to the request by the applicant not to treat it as micro lender.’
On the other hand, the position argued by the respondent on this point is that the action which the appellants took was indeed an administrative action. I propose to examine the appellants’ contentions first, and if after doing so I find that their argument is persuasive, then there will be a need to expose the respondent’s arguments to a similar test. If, however, I remain unpersuaded by the appellants’ arguments that will be the end of the contest on this particular issue.
- Before arriving at the stand stated in paragraph 11 of their heads of argument, the appellants argued their case as per paragraphs 9 through to 10.4. In that vein, they started by conceding that the fourth appellant did not comply with the provisions of clause 5 because, according to them, the fourth appellant did not cancel the respondent’s registration as required by that clause. Their argument was that the fourth appellant merely withdrew the respondent’s registration at the respondent’s insistence that it was not a micro lender. They further argued that the respondent mischaracterised the nature of the registration as a micro lender. They contended that in terms of s 15A of the Usury Act, the Minister may exempt categories of money lending transactions from the ambit of the said Act. They then referred to the Exemption Notice of 2002 which defined a micro loan transaction in fixed terms. They pointed out that under terms of the exemption, condition 2 of that Notice, a transaction was exempted from the provisions of the Usury Act on condition that the person advancing the loan amount was registered as a micro lender with the registrar and at all times complies with the exemption notice.
- The appellants further argued that registration as a micro lender was not compulsory or compellable under the law, and non-compliance with the Exemption Notice was not an offence. They then concluded that a request not to be governed by the Exemption Notice must be adhered to by the registrar. In the result, they asserted that if the applicant (that is the respondent herein) asks not to pay levies because the applicant is not a micro lender, the fourth appellant cannot continue to treat it as a registered micro lender.
- With due respect to the appellants, if their arguments as summarised in the preceding paragraph were reflective of the correct legal position, then clause 5 would be of nugatory effect. However, the respondent is an entity which was registered as a micro lender, and for that matter at the respondent’s own formal request. We are also dealing with a respondent which in February 2002 had sought that its legal duty to pay levies be either waived or that the levy amount be reduced. Unfortunately for it, both requests were declined by the Ministry. The rejection was based on the ground that the respondent had a bounden duty to pay levies qua micro lender. We also know that on a proper reading of clause 5, it was tailored to be involved in cases in which micro lenders have willy-nilly ceased to exist as micro lenders. In my considered opinion, therefore, it is wishful thinking to imagine that a micro lender can be formally declassified as such based simply on a situation portrayed in the appellants’ arguments.
- To wrap up and zero in on the question whether the deregistration decision was an administrative action or not, the letter which actually used the word ‘deregistration’ in relation to the termination of the respondent as a micro lender, was the letter written by Mr Frans van Rensburg, the then Registrar: Micro Lending and Credit Agreements at NAMFISA. That was the letter which ignited the occurrences leading to the current court proceedings. In the letter, the author made reference to Paulino’s letter to which was attributed the reason for the close corporation’s deregistration as a micro lender. As the registrar at NAMFISA, a statutory body, Van Rensburg was undoubtedly an administrative official. Similarly NAMFISA, having been established under a statute going by the same name, that is Act 3 of 2001, fell squarely within the category of public institutions contemplated by Art 18 of the Namibian Constitution. As such official, Van Rensburg was required to act fairly and reasonable by complying with the common law and any relevant legislation, which in this case was Government Notice No 136 of 1968. Not only was Van Rensburg an administrative functionary, even the responsibility which he discharged by writing the letter purporting to deregister the close corporation was of an administrative nature.
- I therefore refuse to accept the argument that the application which eventually led to the current appeal proceedings was misconceived. I hold and determine that Van Rensburg’s decision as per his letter dated 21 February 2005, was an administrative decision. In the event, it is inopportune for me to advert to the respondent’s argument on this point.
Should the respondent be beneficiary of a discretionary remedy?
- In ground 12, the appellants contend that even if the fourth appellant’s withdrawal of the respondent’s registration as a micro lender was to be seen as an administrative decision to cancel the close corporation’s registration, the respondent’s review application must fail because:
‘12(1) review is a discretionary remedy and the respondent’s opportunistic conduct in relation to its registration as a micro lender disqualifies it from being the beneficiary of any discretionary exercise of the power of review by this court, alternatively
12(2) the applicant has delayed unreasonably in bringing this review.’
- Having stated the above, the appellants went on to argue that since the letter of deregistration was dated 24 September 2002, and as the launching of the review application occurred on 18 March 2005, the launch was irredeemably belated. According to that argument, the respondent had been aware since 24 September 2002 that the registration as a micro lender had lapsed, but the respondent did nothing until 18 March 2005. In support of that argument, the appellants cited a number of authorities including the following:
- Namibia Grape Growers and Exporters Association & others v Ministry of Mines and Energy & others 2004 NR 194 (SC); and
- Krűger v TransNamib Ltd (Air Namibia) & others 1995 NR 84 (HC) at 89A-H or 1996 NR 168 (SC) at 174I.
Other cases cited on this point are Lion Match Co Ltd v Paper Printing Wood and Allied Workers Union & others 2001 (4) SA 149 (SCA) and Wolgroeie v Afslaers (Edms) Bpk v Munisipaliteit van Kaapstad 1978 (1) SA 13 (A).
- In the Namibia Grape Growers case, the view expressed by the learned Strydom ACJ, who delivered the unanimous judgment of the court stated as follows on the point:
‘Because no specific time is prescribed for the institution of review proceedings, the courts, as part of their inherent power, have laid down that a review must be brought within a reasonable time. The requirement of reasonable time is necessary in order to obviate possible prejudice to the other party and because it is in the interest of the administration of justice and the parties that finality should be reached in litigation. Where the point is biased that there has been an unreasonable delay, the court must first determine whether the delay was unreasonable. This is a factual inquiry depending on the circumstances of each case. Once it is satisfied that the delay is unreasonable, the court must determine whether it should condone the delay. In this regard the court exercises a discretion.’
In Krűger v TransNamib Ltd, the unanimous view of the court was that it was satisfied that the court a quo was correct in its finding that there was an unreasonable delay in launching the review application, with the result that the application came to grief and was not allowed.
- In the current case, the alleged delay was based on the timing of Paulino’s letter dated 24 September 2002. I have already determined that that letter did not occasion any deregistration of the close corporation’s status as a micro lender. Therefore, it is unnecessary for me to recapitulate the reasons for that conclusion. Having come to that conclusion, it is otiose to proceed to the stage of ascertaining whether there was any reasonable or unreasonable delay in instituting the judicial review application. I have instead determined that the purported action of deregistration was the one taken by Mr van Rensburg as per his letter of 21 February 2005. Therefore the application for review having been launched on 18 March 2005 that very year can hardly be said to have been belated. Quite clearly, the application was timeously launched and therefore the consideration of a discretion is obviated. In the final analysis, the 12th ground of appeal is dismissed subject to what I am to state in the next paragraph.
- Notwithstanding the foregoing conclusion, I accept that that part of the 12th ground of appeal which refers to Ms de Meillon’s conduct as having been opportunistic was well founded. That is because after her denials that the close corporation was a micro lender, as per annexures ‘E’ and ‘F’ to her founding affidavit, she later found herself eating a humble pie. That is evident from paragraph 20 of her founding affidavit. In obvious reference to the letters marked ‘E’ and ‘F’ she deposed as follows:
‘. . . I accept that it is clear from an ordinary application completed by the students applying for funding that the applicant (i.e. the respondent herein) is indeed a money lender as envisage in the regulations. . . . I accordingly tender on behalf of the applicant all outstanding levies due and payable. I stress that my intention was to avoid payment of levies if at all possible. I was aware that registration as a micro lender was vital for the deduction code and certainly would not have contemplated cancellation of the registration (of the applicant) as a micro lender.’
That statement quite clearly shows that Ms de Meillon was opportunistic. However her conduct in that vein is extricable from the issue of timeliness in launching the review application. I shall, however, advert to this issue in another context in the judgment.
Revocation of the payroll deduction facility
- The next series of heads of argument on behalf of the appellants start at para 21 and go right up to para 30. They fall under the rubric ‘The contract between the parties and its termination’. The arguments thereunder deal with revocation of the payroll deduction facility. In essence the appellants’ arguments in those paragraphs boil down to stating that the business agreement, which was concluded between the Government of the Republic of Namibia on one hand and a representative of the close corporation on the other, was the usual type of contract.
- In elaborating on the foregoing, the appellants asserted that the business agreement was framed as an ordinary contract which included terms to be expected in a standard commercial contract. They listed these as including a breach clause, a clause against cession and assignment, a mediation and arbitration clause, a clause empowering the parties to terminate the contract on notice, a clause dealing with costs of drafting the agreement, a governing law clause and a domicilium clause. It is their argument that the contract was not concluded pursuant to a statutory power vested in the second or third appellant. They argued also that the agreement in the instant case did not even entail a public interest in any material respect.
- From the foregoing, the appellants concluded that the conduct of the first appellant in cancelling the contract fell to be determined in accordance with the law of contract with the following consequences: if the first appellant was justified in law to terminate the contract because of a material breach of the terms of the contract, then the cancellation was good. I understand from this argument that the respondent would not have just cause in law to institute any claim or proceeding against the appellants. If, on the other hand, the cancellation was bad and amounted to repudiation, then the respondent’s remedy would be in a claim for damages or specific performance, but not judicial review.
- It was the further contention of the appellants that the court a quo erred by holding that the revocation of the payroll deduction code facility was subject to Art 18 of the Constitution. It was consequently wrong, they argued, for the judge a quo to have followed the ratio decidendi in the South African decisions in Logbro Properties v Bedderson No & others 2003 (2) SA 460 (SCA) and Bullock No & others v Provincial Government, North-West Province & others 2004 (5) SA 262 (SCA). They argued that both these cases were public sector dismissal cases and therefore rightly fell to be considered subject to the provisions which are equivalent to Art 18 of the Constitution.
- The appellants further contended and tried to persuade this court to instead apply the ratio decidendi in Cape Metropolitan Council v Metro Inspection Services (Western Cape) CC & others 2001 (3) SA 1013 (SCA). In that case, it was held that the exercise by a public authority of a power under a contract to terminate it did not amount to an administrative action and therefore was not subject to the constitutional obligation of procedural fairness, let alone a judicial review.
- The concept of a typical contract is that there must be a quid pro quo so that no party should be in a weaker or stronger position than the other. In the ensuing paragraphs therefore, I shall put under scrutiny the content of the business agreement between the parties hereto signed on 22 August 2003 in order to determine whether or not it has the mantle of quid pro quo concept, a spirit of reciprocity.
- Before I move to consider individual clauses of the business agreement, it is necessary to observe that the very idea of entering into such an agreement was conceived and imposed by the Ministry on behalf of NAMFISA. This is evident from the fact that none of the operative clauses were discussed, let alone agreed upon, by any participating micro lender, and in particular the respondent to this appeal. In that vein I agree with the judge a quo when he observed that the agreement constituted a vehicle through which NAMFISA, the fourth appellant, was to regulate the respondent as a micro lender. I further endorse the judge a quo’s view that the agreement was merely a memorial of the scheme whereby the Government of the Republic of Namibia was to extend payroll deduction code facilities to micro lenders which were otherwise not entitled to claim payroll deduction code facilities.
- Clause 13 stands out as a provision which puts the respective parties to the agreement on an even keel, so to speak. It provides, inter alia, that either party shall have the right to terminate the agreement by giving the other party six months prior notice. That notwithstanding however, in clause 10, dealing with breach of contract, the provision is one sided. It gives the Ministry the right to terminate the contract in the event of any of the circumstances specified in sub-clauses 10.1.1 to 10.1.3. These are:
- if the micro lender commits a breach of the terms of the contract and fails to remedy such breach within a period specified by the ministry;
- if the micro lender is found guilty by a competent court of any contravention having been committed in relation to the agreement; and
- the micro lender allows any final judgment against him to remain unsatisfied for a period of seven days or longer and fails timeously to take the necessary steps to rescind such judgment.
Upon examination of the breaches listed above it readily becomes apparent that they are such that they could be committed by the Ministry also. Yet the implication is that the Ministry was implicitly allowed to commit similar breaches with impurity.
- Other imbalances are discernible in the following other clauses of the agreement:
required a micro lender to sign the agreement without alteration or modification save alteration or modifications providing details of the micro lender and its address;
empowered the Ministry to warrant that all terms and conditions of the agreement comply with treasury instructions; and
empowered the Ministry and NAMFISA to regulate loan deductions and allowed the Ministry to verify whether approved micro lenders were complying with the terms and conditions of the agreement.
- Further, at the tail end of argument paragraph 21, it was averred that the conclusion or termination of the contract did not affect the public interest. In the teeth of the argument, clause 8 was couched as follows:
‘The lender shall develop and invest in a social program in Namibia and provide details thereof in an annual report to the ministry.’
- It is to be observed at the very outset that the requirement for the micro lender to create and invest in a social programme was obligatory. The programme itself envisaged in the quoted extract was no doubt intended to uplift the well-being of a group of persons who were considered by the Ministry to be deprived of some social amenities. However the category of the persons contemplated in clause 8 were not parties, but strangers, to the business agreement. In short, those persons were members of the public. To that extent, therefore, one can state, as I do, that clause 8 was intended to serve a public interest. Consequently, it was not logical, in my view, to argue, as the appellants argue, that a termination of the agreement in such a situation would not affect the public interest in a material particular. For that reason, I cannot, and do not, accept that argument.
Letter of revocation
- I now turn to the revocation letter, and specifically to the reason given for revoking the respondent’s payroll deduction facility. The first appellant, being the author of the letter, somewhat anomalously gave the reason for the intended revocation as being that ‘the payroll deduction facility is not in compliance with our statutory requirements in this regard’. Literally interpreted, that letter did not particularise any wrong doing committed by the respondent to justify the revocation. Rather what was remiss according to the letter, was that the payroll deduction facility was not in compliance with the statutory requirements. However, when one appreciates that the first appellant’s revocation was immediately preceded by adverse reports which the first appellant had received from NAMFISA concerning the respondent in its capacity as a beneficiary of the payroll deduction facility, then it becomes clear that the revocation was prompted by one of those reports.
- As observed by the court a quo, the first appellant effectively meant that the reason for the revocation was the failure on the part of the respondent to comply with the Ministry’s statutory requirements. However, when he came to court to fight off the judicial review application, first appellant recanted the reference to the failure to comply with statutory requirements. He explained that not being a legal practitioner he did not appreciate the connotation of failing to comply with statutory requirements. In fact, in his affidavit opposing the application for judicial review, the first appellant deposed that the revocation letter was not premised on any statutory provision.
- The adverse reports referred to in paragraph  hereof relate to the letters dated 23 September 2002, 24 September 2002, 17 February 2005 and lastly the one dated 21 February 2005. The first of those letters was the one by which De Meillon had informed NAMFISA that the close corporation was not a micro lender and that the deduction code facility allocated to it by the Ministry was erroneously allocated because the Ministry did not have a code suitable for the close corporation’s type of business. The second one was in similar vein, except that it gave more details of the hire purchase system. The third letter contained a request by De Meillon that NAMFISA provide proof of the close corporation’s registration with NAMFISA as a micro lender. The fourth and last letter was the deregistration letter which has already been discussed herein.
- In paras , ,  and  herein I have highlighted provisions of the business agreement which clearly show the inequality to bargain between the parties thereto. I have shown the Ministry, represented by the first appellant, and the second appellant, as having been in a dominant and commanding position, while the respondent was forced to be, and was, in a submissive situation. The imbalance between the parties emerges particularly and graphically in clause 8 thereof whereby the respondent was imperatively required to develop and invest in a social upliftment programme to cater for strangers to the contract, those being inevitably, members of the public.
- There is, therefore, no doubt in my mind that the situation presented by the business agreement was one in which the respondent was entitled to have a legitimate expectation that it should be given an opportunity to be heard before being exposed to punitive action to be taken by the first appellant. The first appellant was, after all, the administrative head of the Ministry and as such personality he was one of those contemplated by Art 18 of the Constitution as being one of the administrative officials required to act fairly and reasonably, and to comply with the requirements imposed upon such officials by common law and any relevant legislation.
- I have earlier briefly discussed the appeal ground referring to the court’s discretion with reference to unreasonable delay in instituting judicial review applications. In that argument, it was alleged in particular that the respondent’s conduct was opportunistic in relation to the respondent being a micro lender. I expressed agreement with the tag of opportunistic behaviour based on the conduct of Ms de Meillon. That was because, on a number of occasions, she had adamantly denied that the close corporation was a micro lender, but subsequently she was forced to eat a humble pie by admitting that the close corporation was a micro lender after all. I, however, concluded that that conduct was excisable from the argument of unreasonable delay in lodging the review application. I then stated that I would deal with the issue of opportunistic behaviour later. It is now appropriate that I discuss that issue.
Was respondent ‘opportunistic’?
- As far back as 23 September 2002, Ms de Meillon wrote the letter marked annexure ‘E’ denying that the close corporation was a micro lender. That was stated despite the fact that on 20 June 2000, the then Principal Officer of the close corporation, and the corporation’s auditors, namely Price Waterhouse Coopers, submitted to the Ministry an application for conferment on the close corporation of the status of micro lender. The application was successful and on 10 July 2000 approval was granted as reflected by the letter marked annexure ‘A’ on page 35 of volume 1 of the record of appeal. A certificate of registration as a micro lender was issued to the close corporation on the same date. Surprisingly, on 24 February 2003 Ms de Meillon wrote another letter of denial of the status of micro lender (vide annexure ‘F’ on page 49 volume 1).
- An attractive benefit which the respondent acquired upon being registered as a micro lender was that the collection of study fees from students who were employed as civil servants was done on a stop order basis through the payroll deduction facility. In other words, the Ministry was required to debit salaries of such students and pay over the amounts due directly to the micro lender, thus saving the micro lender the burden of soliciting payment directly from the students. There was later a development whereby a service provider, Avril Payment Solutions (Pty) Ltd, was engaged as a middleman in that process. In return for the service received in that regard, a micro lender was required to pay a periodic levy to NAMFISA.
- On its own admission, the respondent, despite having been registered as a micro lender, did not pay any such levies. The evidence of such default emerged from Ms de Meillon’s own founding affidavit in support of the application for judicial review. In paragraph 20 of that affidavit, as noted earlier, Ms de Meillon deposed as follows:
‘. . . I accept that it is clear from an ordinary application form completed by students applying for funding, that the applicant is indeed a micro lender as envisaged in the regulations. I attach one such form marked “G”.
I accordingly tender, on behalf of the applicant all outstanding levies due and payable. I stress that my intention was to avoid payment of levies if at all possible. I 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). This eventually would have imperilled the applicant’s business as I stress below.’
- Additionally Ms de Meillon was indeed greatly appreciative of the payroll deduction facility extended to the respondent. I quote again her own sentiment as expressed in paragraph 16 of her affidavit supporting the review application:
‘As I have indicated, the payroll deduction facility is an essential component of the applicant’s business and the applicant has, pursuant to this agreement (ie the business agreement), continued to utilise it to recover the loan instalments of students to purchase educational materials through the OLGN Group . . . .’
- It is helpful to cast our mind back to the letter dated 18 February 2002, marked as annexure ‘S’ in volume 5 of the record of appeal at page 492. It was written by Mr Zaayman, the father of Ms de Meillon and Managing Director of the Open Learning Group Namibia, for clarity’s sake I hereby quote that letter, viz:
Open Learning Group Namibia (OLGN) is a Namibian Educational Institution which offers distance study courses to Government Employees in Namibia. All the educational courses offered by OLGN are fully recognised by the Namibian Qualifications Authority.
Government Employees pay for their study courses by way of monthly deductions from their salaries. The administration of this deduction is done by the Ministry of Finance and OLGN pays an administrative fee of N$13.00 per deduction.
OLGN wishes to kindly request that the administrative fee of N$13.00 per deduction be waived or in the alternative be decreased. OLGN offers the following arguments in support of this request:
- OLGN is not a micro-lender and does not own revenue by lending out money against interest charges.
- OLGN allows students to pay off their study courses in twelve instalments and in this way facilitates greater access to educational opportunities for Namibia.
We trust that this request will meet with your favourable consideration.
The Accountant-General in the Ministry sent a reply dated 2 May 2002 and the main text of which has been set out in para  above.
- Needless to mention that Ms de Meillon, as the Financial Manager of the close corporation, was a senior official in that corporation, as such functionary, she knew that the corporation was a registered micro lender – reference has indeed been made to her knowledge in the connection in her founding affidavit; and she must have been aware also of the information elicited from the Ministry’s Accountant-General concerning a micro lender’s duty to pay levies. It was therefore, hypocritical for her to maintain that the corporation was not a micro lender.
- With all that knowledge on her part, it is mind boggling that after the close corporation had secured registration as a micro lender, Ms de Meillon started feigning that the close corporation was not a micro lender. She even went to the extent of spuriously explaining that the close corporation recovered debts from its students pursuant to a hire purchase system. In point of fact, at the time when she was so feigning, the close corporation was even enjoying the benefit of a stop order facility in relation to the recovery of students’ indebtedness.
- In the light of all the foregoing, I hereby unhesitatingly, infer that this whole judicial matter was brought about because of Ms de Meillon’s insincerity. That insincerity was partly anchored in her own words when she deposed that ‘if the levies were not payable by the applicant, it would be most beneficial to the group’s business . . .’. I take with a pinch of salt her explanation that in pursuing the argument that the close corporation was not a micro lender she had failed to conceptualise the different functions of the two entities within the group, namely the Open Learning Group Namibia Close Corporation and the Open Learning Group Namibia (Pty) Ltd.
- Ms de Meillon was the Accountant and Financial Manager of the Open Learning Group Namibia Finance Close Corporation. The application for registration as a micro lender was made on behalf of the very entity and did not include the Open Learning Group Namibia (Pty) Ltd. Additionally, the review application was made by the close corporation alone. Thirdly, it is apparent from the papers that the review applicant, that is the close corporation, was legally represented from inception of the review proceedings and all the way up to the end of the proceedings in the court below. Therefore, Ms de Meillon had adequate opportunity to be legally guided by her team of learned legal practitioners.
- In the final analysis, I am satisfied and feel sure that the decision of revocation amounted to an administrative action. I have earlier on in this judgment also found and determined that the decision of deregistration was also an administrative action. Both decisions were, therefore, amenable to be assailed by way of judicial review. I, therefore, uphold the decisions of the court a quo and dismiss the appeal on both limbs.
- Normally costs follow the event. However, in the instant case this court must register its displeasure at the conduct of the respondent’s main witness, Ms de Meillon. The appellants labelled her conduct as opportunistic. I agree. May, I go further and label her also as an insincere witness. She went to the extent of spuriously explaining that the Open Learning Group Namibia Finance Close Corporation had been recovering debts from indebted students following a hire purchase method. She made that explanation at a time when she must have known that the institution for which she was vouching was in fact a beneficiary of a payroll deduction facility, a stop order facility. As if that was not bad enough, she also failed to ensure that the close corporation met its obligation of paying periodic levies to NAMFISA.
- In the light of all the foregoing, I hereby make the following order:
- The appeal is dismissed on the substantive issues.
- Parts 1 and 2 of the order of the court a quo are endorsed.
- The order in part 3 made by the court a quo is set aside.
- Each party shall bear its own costs in this court and in the court below.
APPELLANTS: M Chaskalson, SC
Instructed by the Government Attorney
RESPONDENT: D F Smuts, SC (with him R Heathcote)
Instructed by Van der Merwe-Greeff Andima