CASE NO.: A 165/2011
REPORTABLE
IN THE HIGH COURT OF
NAMIBIA
In the matter between:
THE ROAD FUND
ADMINISTRATION
…................................................APPLICANT
vs
THE
GOVERNMENT OF THE REPUBLIC OF NAMIBIA ….........1ST
RESPONDENT
THE
CABINET OF THE GOVERNMENT OF NAMIBIA …...........2ND
RESPONDENT
THE MINISTER OF FINANCE
…..........................................3RD
RESPONDENT
THE
MINISTER OF WORKS AND TRANSPORT ….....................4TH
RESPONDENT
THE
AUDITOR-GENERAL
…........................................................5TH
RESPONDENT
PENDA
KIIYALA
….......................................................................6TH
RESPONDENT
DESMOND
BASSON
…................................................................7TH
RESPONDENT
TALASKA
KATJIRURU
…............................................................8TH
RESPONDENT
CORAM: MILLER, AJ
Heard on: 08 July 2011
Delivered on: 12 July
2011
JUDGMENT:
MILLER, AJ:
[1] In this matter the Applicant, which is the Road Fund
Administration, instituted certain proceedings against eight
Respondents by way of Notice of Motion. In part A of the Notice of
Motion the Applicant seeks the review and setting aside of certain
decisions taken by the 1st, 2nd and 3rd
Respondents all related in some sense or the other to the suspension
of certain officials of the Applicant being the sixth, seventh and
eight respondents and the institution of disciplinary proceedings
against them.
[2] As part B of the
relief claimed the Applicant seeks relief on an urgent basis and in
essence asks this Court to order that the relief sought in paragraph
A of part 1 of the Notice of Motion shall operate as interim orders
pending the final determination of the relief sought in part A of the
Notice of Motion.
[3] Part B of the Notice
of Motion was enrolled for hearing before me on Friday the 8th
of July 2011 at 09:00 in the morning. Mr Corbett appeared for the
Applicant before me and Mr Semenya SC assisted by Mr Akwenya
represented the 1st, 2nd and 3rd
Respondents.
[4] The remaining
Respondents did not oppose the relief sought in part B of the Notice
of Motion. I heard argument from counsel, where after I indicated
that I will deliver a Judgment which I am now proceeding to do.
[5] The facts of this
matter are in so far as they are relevant not in dispute. What is in
dispute is in essence the authority of the 1st, 2nd
and 3rd Respondents to have issued certain instructions to
the Applicant pursuant to the Applicant’s decision to suspend
the officials, including the Chief Executive Officer, who is the 6th
Respondent as well as the 7th and the 8th
Respondents and to institute disciplinary proceedings against them.
[6] I wish to indicate at
the outset that I am not called upon in these proceedings to make any
final determination as to whether the decisions of the 1st ,
2nd and 3rd Respondents should be reviewed and
set aside or otherwise.
[7] The proceedings
before me are confined to the granting or otherwise of interim relief
and any relief I grant is temporary in its nature and will endure
only until such time as a final determination has been made by this
Court or a bench differently constitutes as to whether the decisions
of the 1st, 2nd and 3rd Respondents
should be reviewed and set aside. That in itself may require me to
revisit the form of the relief sought in that part of the Urgent
Application heard by me in the event that I am persuaded that I
should grant relief in some form or another.
[8] The Applicant was
established as a juristic entity by legislation being the Road Fund
Act, Act 18 of 1999 which together with and subsequent to the
promulgation of the State Owned Enterprises Governance Act 2 of 2006,
governed the establishment and functioning of the Applicant. The
legislation envisaged the establishment of a Board of Directors of
the Applicant in Section 4 of the Road Fund Administration Act.
Section 4(1) provides as follows:
“There
shall be a Board of Directors of the administration which shall
subject to this Act be responsible for the policy, control and
management of the administration”.
[9]
Section 2 of the Road Fund Administration Act provides that the
Applicant once established will be a juristic person which implies
that it is a body corporate in some sense or another of the word.
[10]
The Act further provides for the appointment of a Chief Executive
Officer and Section 7 of that Act provides for the vacation of the
office of the directors appointed and in sub-section (2) thereof, the
removal of a director in certain circumstances. These are the
incapacitation of a director by virtue of physical or mental illness,
or if the Minister after giving the director an opportunity to be
heard is satisfied that such director for any good reason is unable
or unfit to discharge the functions of a director.
[11]
In so far as the State and Enterprises Governance Act, Act 2 of 2006
is concerned, it is relevant to have regard to the provisions of
Sections 15 and 17 of that Act, as well as Section 18. Section 15
provides for the procedure for the appointment of board members and
alternate board members of State owned enterprises of which the
Applicant is one. Section 17 makes provision for the conclusion of a
governance agreement with the board and provides that the Council
must within one month of being constituted, enter into a written
governance agreement with the board of the State owned enterprises in
relation to a number of factors, provided for in that particular
section. Section 18 of the Act provides that the Minister must enter
into a performance agreement with directors appointed in terms of
that Act.
[12]
I pause to indicate that the Respondents did not place before me, if
it exists any governance agreement it had entered into with the board
of the Applicant nor did it place before me if it exists any
performance agreement it had entered into with individual board
members of the Applicant.
[13]
It follows from what I have indicated that the relationship between
the 1st, 2nd and 3rd Respondents and
the Applicant is governed to a large extent, not only by the Road
Fund Administration Act but also by the State Owned Enterprises
Governance Act. These regulate relationship between the board of
State owned enterprises such as the Applicant and the Government.
[14]
I have indicated that the facts are by and large common cause and
they are the following: The board of the Applicant initiated an
enquiry into certain perceived irregularities and malpractices, on
the part of the Chief Executive Officer of the Applicant, the 6th
Respondent Mr Penda Kiiyala. It required and commissioned an
independent enquiry and report by a firm of auditors Messrs Deloitte
and Touche and were in due course provided with a provisional report.
That report alerted the board to the possibility that certain
irregularities had been committed, by the 6th, 7th
and 8th Respondents in relation to a contract entered into
between the Applicant and Iroko, relating to the collection of fees
at the Noordoewer border post. It also alerted to the Board to the
possibility that certain other irregularities are being committed.
These concerned salary increases, transfers of funds, procurement of
legal practitioners and the like all of which was not authorized.
[15]
The board of the Applicant as a consequence resolved to suspend the
6th, 7th and 8th Respondents and
thereafter proceeded to institute disciplinary proceedings against
those Respondents. These proceedings have commenced in the sense that
charges had been prepared and an initiator and a chairperson to chair
the disciplinary hearing had already been appointed.
[16]
The Applicants also advised the Respondents, 1st, 2nd
and 3rd Respondents of these developments in the affairs
of the Applicant. The Applicants’ decisions when considered by
1st, 2nd and 3rd Respondents were
questioned. The 1st, 2nd and 3rd
Respondents concluded that a different course of action was called
for. They were of the view that the perceived irregularities should
be investigated by the Auditor-General and they were of the view that
in order to save costs and expenditure no parallel investigation
should be conducted by any other entity. It was also of the view that
pending the findings of the Auditor-General the suspension of the
6th, 7th and 8th Respondents should
not be given effect to and should be suspended so to speak until the
recommendations of the Auditor-General who is the 5th
Respondent were made known. It was not contended that the applicant’s
decisions were irregular or not lawful in any sense. The first,
second and third respondents were of the opinion simply that other
alternatives were more expedient.
[17]
The general view that the 1st, 2nd and 3rd Respondents took was
articulated in certain decisions conveyed to the Applicant in the
form of certain letters which were addressed to the Applicant. It
also required the board of the Applicant to recuse itself from the
activities of the Applicant pending the final determination or
recommendations of the Auditor-General.
[18]
Initially the Respondents took the point in their papers that the so
called request for recusal to which the board of the Applicant
consented rendered the board in operative to the extent that it is no
longer functioned as a board. In argument before me Mr Semenya
rightly conceded that such could not be the case and that the board
of the Applicant continued to function as an existing board.
[19]
Certain other points in limine were raised which I need to
dispose of at the outset. It was stated by the 1st, 2nd
and 3rd Respondents that no Certificate of Urgency had
been attached to the papers as required by the Rules of this Court.
The existence of a valid resolution to bring the Application was
raised as a point in limine. There was a point taken that the
relief sought by the Applicant was not urgent and there was a point
taken that the board members of the Applicant should have been cited
in their individual capacities. All these were abandoned by Mr
Simenya during the course of argument with the exception of the point
in limine relating to the urgency of the matter which was
argued before me.
[20]
The issue before me which as I have indicated concerns the authority
and power of the 1st, 2nd and 3rd
Respondent to make the orders and directives that they did. In
essence the stance adopted by the Applicant is the following:
Firstly, the Applicant contends that the board of the Applicant is an
independent body. That it is the board of the Applicant which has the
power and the sole power to order the suspension of its employees and
to institute disciplinary proceedings where appropriate. This point
although opposed on the papers was conceded in argument by Mr
Semenya. He in fact conceded that the decisions by the board of the
Applicant to suspend the 6th, 7th and 8th
Respondents and to institute disciplinary proceedings, against them
did not require the prior consent or the subsequent approval of the
3rd Respondent who is the Minister of Finance. This
concession which in my view was rightly made clearly impacts on the
relief claimed by the Applicant both in so far as its entitlement
thereto and the urgency of seeking the relief is concerned.
[21]
In so far as the 1st, 2nd and 3rd
Respondent contend, that the instructions issued to the Applicant
fall within the powers of the 3rd Respondent as well as
the 1st and 2nd Respondent; reliance is placed
on Articles 40 and 41 of the Constitution. It was within the power of
the 1st, 2nd and 3rd Respondents to
override as it were the decisions of the board of the Applicant and
to issue different instructions which required compliance by the
Applicant. To place this in context one needs to consider the type of
instructions issued. These instructions will to a large extent, if
given effect to substantially delay, the process instituted by the
Applicant to suspend and discipline by way of disciplinary action,
the 6th, 7th and 8th Respondent.
[22]
Firstly, it was conveyed to the Applicant that the 1st and
2nd Respondents resolved that the Auditor-General conduct
an audit into the Applicant in order to establish the accuracy of the
allegations and conclusions made in respect of certain reports
commissioned by the Applicant and to advise the 1st
Respondent on the appropriate measures to address the identified
problems and for the Auditor-General to advise the first Respondent
on which employees would need to be suspended so that the Applicant
to give way for an investigation to take place.
[23]
It is apparent from these instructions that the validity of the
decision by the board of the Applicant to suspend its employees was
put in issue. This particular decision was extended by further
decisions conveyed in a letter dated the 13th of June 2011
in which the board of the Applicant was directed to await the
conclusion of the Auditor-General’s audit before undertaking
disciplinary proceedings against the 6th, 7th
and 8th Respondents. A further direction to the board was
that any disciplinary action against the 6th, 7th
and 8th Applicants be based on the Auditor-General’s
audit. The board was further directed to comply with the directive of
the 2nd Respondent which is the Cabinet concerning the
suspension of staff members and a further instruction that the board
be directed to seek the opinion of the 3rd Respondent
before taking any disciplinary action in respect of the 6th,
7th and 8th Respondent.
[24]
I indicated earlier that Mr Semenya in argument before me conceded
that the decision to suspend and take disciplinary action against the
6th, 7th and 8th Respondent was a
decision solely within the powers of the Applicant and its Board. I
also indicated, that such, concession resonates in relation to the
decisions taken by the 1st, 2nd and 3rd
Respondents concerning the institution of disciplinary proceedings
and suspension of the 6th, 7th and 8th
Respondents. That concession if correctly made has in its wake the
fact that any decision taken by the 1st, 2nd
and 3rd Respondents regarding the institution of
disciplinary proceedings and the pre-requisites which must be met or
otherwise before such action can be instituted, is ultra vires the
powers of the 1st, 2nd and 3rd
Respondents at least on a prima facie basis as I will indicate
during the course of the Judgment.
[25]
Despite the fact that the concession was made I am in any event of
the view that the reliance by the Respondents on Sections 40 and 41
of the Constitution is misplaced. Article 41 of the Constitution
deals only with the accountability of Ministers for the
administration of their Ministries and does not deal at all with the
powers and functions of Ministers and duties of Ministers in relation
to parastatal organisation like the Applicant. In so far as
parastatals are concerned Article 40(a) of the Constitution provides:
The members of Cabinet
shall have the following functions
to direct, coordinate
and supervise the activities of Ministries
and local departments
including parastatal enterprises and
to review and advise
the President and the National Assembly on the desirability and
wisdom of the any prevailing subordinate legislation, regulations and
orders pertaining to such parastatal enterprises regard being have to
the public interest”.
[26]
I do not interpret Section 40(a) of the Constitution as giving the
Cabinet the power to make executive decisions in relation to the
affairs of parastatals. Their duty is plainly to direct, supervise
and control. The making of executive decisions where Parliament had
enacted provisions for the establishment of an independent board is
as far as the executive functions are concerned first and foremost
and exclusively, the functions of the board.
[27]
Some argument was placed before me by the Respondents relating to
corporate governance and the functions of the 1st, 2nd
and 3rd Respondents in relation to corporate governance.
Admittedly the Applicant is not a corporate entity as created in
terms of the Company’s Act. It does not have articles of
association. Instead, Section 15 of the State Owned Enterprises Act
seems to provide some mechanism in terms of which the relationship
between the Minister, Government and the board are governed.
[28]
But given the fact that the Applicant is not a commercial enterprise
it is nonetheless my view that the centre piece of corporate
governance and corporate entities is the fact that a board must be
independent and must not be subject to the dictates of shareholders
or in this particular instance cabinet ministers. The remedies
provided for the Minister and Government is to be found in those
provisions relating to the removal and disqualification of board
members in the event that it is considered that the board members and
the board do not function in a manner suitable to the achievement of
the objects of the enterprise thus created.
[29]
I have indicated that I am not called upon finally to determine these
issues. I need only to be satisfied that as one leg of the enquiry
the Applicants have established on a prima facie basis that
they have a right and entitlement to relief. What I have stated in
relation to the duties and functions of the Board on the one hand and
Government on the other are prima facie views and in my view
there is much to be said for the argument at least prima facie
that the decisions taken by the 1st, 2nd
and 3rd Respondents were decisions that were not within
their power to make. As I have indicated the final determination of
these issues is best left for determination by the Court hearing the
main Application seeking final declarations in that regard. I need
also mention that in my view the relationship between Ministers and
Cabinent on the one hand and State owned enterprises on the other,
differ from the relationship between Ministers on the one hand and
State departments and ministries on the other hand.
[30]
It would seem to me that it is for that reason that the Constitution
deals with these two matters separately and makes specific provision
in Article 41 for ministerial accountability as far as ministries are
concerned. As far as ministries are concerned the Minister is for all
practical purposes the head of that particular Ministry and the
Minister certainly has the power to issue executive orders and
directions, in so far as that ministry is concerned and that is so in
view of the fact that the Minister is finally accountable to Cabinet
for the affairs of that particular Ministry.
[31]
In the case of parastratals where legislation makes provisions for
the establishment of a board different considerations apply. The
board is established to make the executive decisions. It is not in my
view within the powers of the Minister to assume the functions of the
board and to make executive decisions which are reserved for decision
and determination by the board.
[32]
There is merit in the argument by Mr Corbett that in this particular
instance the Minister in effect assumes the functions of the board
and no longer exercised mere supervisory powers but sought to
exercise executive powers. The decisions taken by the board were in
effect nullified and substituted by the decisions taken by
Government. Prima facie I therefore conclude that the
Applicants have established a clear right.
[33]
But there are further requirements. These were articulated in the
Supreme Court of Appeal in South Africa in the decision of Hix
Networking Technologies versus Systems Publishers (Pty) Limited
1997(1) SA 391 AD, which decision I may add was quoted with
approval in this Court in several other decisions. On page 398 of
that report the requisites stated are the following:
prima
facie right which I have indicated I find the Applicant has
established in this particular case.
a
well grounded apprehension of irreparable harm if the relief is not
granted.
That
the balance of convenience favours the granting of an interim order
and
that
the Applicant has no other satisfactory remedy.
[34]
To this I must add that whether or not to grant interim relief is a
discretionary remedy which vests in this Court and that I have a wide
discretion in this matter. In dealing with the further requirements
it is clear that the Applicant has no other remedy than to seek the
review of the decision. It follows that this particular requirement
has been met.
[35]
As far as the balance of convenience is concerned it is my view that
the balance of convenience taking into account the totality of the
facts and circumstances of this case equally favour the Applicant. If
the relief is not granted the effect would be that the process of
suspension and the taking of disciplinary action will grind to a halt
until the final determination of these issues. Once more I emphasise
the concession made that the decisions taken by the 1st,
2nd and 3rd Respondents regarding the
suspension and the institution of disciplinary proceedings were ulta
vires powers of the 1st, 2nd and 3rd
Respondents and the balance of convenience will then indicate that
the process invalidly challenged by the 1st, 2nd
and 3rd Respondents should not be kept in abeyance pending
the final determination of this issue. It is also in the interest of
the 6th, 7th and 8th Respondents who
are suspended albeit it with pay, that their disciplinary
action should be concluded as speedily as possible. Depending on
which way the disciplinary proceedings are determined the
consequences for the 6th, 7th and 8th
Respondents may be far reaching and devastating and in my view they
should not be left in anticipation of the final determination of the
disciplinary process pending the final determination of this Review
Application.
[36]
In so far as the issue of irreparable harm is concerned, much of the
same considerations apply as apply to the determination of the
balance of convenience. It follows that for these considerations and
for the reasons I already gave that the Applicant is entitled to some
interim relief.
[37]
I indicated earlier in the Judgment that in deciding upon what
interim relief I am to grant it may be necessary to have regard to
the manner in which the prayers for interim relief was formulated.
The relief claimed in part A the Applicant seeks a final order
reviewing the decisions mentioned in paragraphs 1.1 to 1.3.5 of the
Notice of Motion and declaring them null and void.
[38]
In so far as the interim relief is concerned the Applicant requires
and seeks relief that I issue interim orders reviewing and declaring
null and void those decisions. It does not seem to me to be
appropriate that I should even on an interim basis review temporarily
and set aside temporarily the decisions which the Applicant seeks to
have finally reviewed at a later stage. It follows that for those
reasons I should grant interim relief which takes a different form.
[39]
I may also indicate prior to making any orders that Mr Corbett
conceded in argument before me that at last as far as prayer 1.1.1 is
concerned that the Applicant is not entitled to that relief. Prayer
1.1.1 relates to the decision to appoint the Auditor-General to
conduct an investigation into the Applicant and to advise the 1st
Respondent on appropriate measures to address the identified
problems. That concession was in my view correctly made.
[40]
I also foresee no problem in so far as the Respondents require the
Auditor-General to advise the 1st Respondent on which
employees would need to be suspended. What the 1st, 2nd
and 3rd Respondents are empowered to do once it receives
that advice is another matter. But there can be no complaint if the
1st, 2nd and 3rd Respondents seek
advice from the 5th Respondent as to what ought to be
done.
[41]
In so far as prayer 1.2 is concerned and that relates to the approval
of the decision by the Applicant’s board to suspend the 6th,
7th and 8th Respondents, I must add for the
reasons I have given, that falls outside the power of the 3rd
Respondent and that in any event such approval is not a pre-requisite
to the suspension.
[42]
I am of the view that the decisions articulated in paragraphs 1.3
through to 1.3.5. should be the subject of some relief, in the manner
in which I will formulate it.
[43] It follows in my
view that the following orders are appropriate:
I dispense with the full
and proper compliance with the Rules relating to service and time
limits as set out on Rule 6.12 of the Rules of this Court by reason
of the urgency of the matter.
I order that pending the
final determination of the proceedings for the relief claimed in
Part A of the Notice of Motion, the 1st, 2nd
and 3rd Respondents are interdicted and restrained from
implementing or requiring the Applicant to give effect to the
following decisions taken by the 1st, 2nd and
3rd Respondents.
The decision taken on
24th May 2011 not to approve the suspension of the 6th,
7th and 8th Respondents pending the advice to
be furnished by the Auditor-General.
The decision taken on
13th June 2011 by the 3rd Respondent to the
effect that the board be directed to await the conclusion of the
Auditor-General’s report, audit before undertaking the
disciplinary action against the 6th, 7th and
8th Respondent.
The board be directed
that disciplinary action against the 6th, 7th
and 8th Respondents be based on the Auditor-General’s
audit.
The decision that the
Board be directed to comply with directive of Cabinet, the 2nd
Respondent, concerning the suspension of the stuff members and,
1.3.5, the board be
directed to seek the opinion of the 3rd Respondent
before taking any disciplinary action in respect of the 6th,
7th and 8th Respondents.
[44] Finally the 1st,
2nd and 3rd Respondents are ordered to pay the
costs of the proceedings before me jointly and severally the one
paying the others to be absolved.
______________
MILLER, AJ
of one instructing and
one instructed counsel of the proceedings
ON BEHALF OF THE
APPLICANT Mr. Corbett
Instructed by:
Conradie & Damaseb
ON BEHALF OF 1, 2 &
3 RESPONDENTS Mr. Likwenya
Assisted by: Mr.
Semenya
Instructed by:
Government Attorney
Road Fund Administration v Government of the Republic of Namibia and Others (A 165/2011) [2011] NAHC 219 (12 July 2011);