Court name
Supreme Court of Zimbabwe
Case number
SC 9 of 2003
Civil Appeal 413 of 2002

Privatisation Agency of Zimbabwe and Another v Ukubambana Kubatana Investements (Pvt) Ltd. and Another (13/02) (SC 9 of 2003, Civil Appeal 413 of 2002) [2003] ZWSC 9 (02 April 2003);

Law report citations
Media neutral citation
[2003] ZWSC 9













REPORTABLE
(7)


Judgment
No. SC 9/03


Civil
Appeal No. 413/02








(1)
PRIVATISATION AGENCY OF ZIMBABWE


(2) THE
PRESIDENT OF THE REPUBLIC OF ZIMBABWE v





(1)
UKUBAMBANA KUBATANA INVESTMENTS (PRIVATE) LIMITED


(2)
FINANCIAL TRUST OF ZIMBABWE








SUPREME
COURT OF ZIMBABWE


CHIDYAUSIKU
CJ, CHEDA JA & GWAUNZA JA


HARARE,
FEBRUARY 17 & APRIL 3, 2003








A
P de Bourbon SC
,
with him
F
Girach
,
for the appellants





P
Nherere
,
for the first respondent





C
C Seddon
,
for the second respondent






GWAUNZA JA:
This is an appeal against a judgment of the High Court, in terms of
which the first appellant (“the PAZ”) was
ordered to announce to
the bidders, of which the first respondent was one, the results of an
open tender floated by the PAZ pursuant
to a document entitled
“Information Memorandum” dated 19 July 2001. The court
a quo
also ordered the second respondent to forthwith allot the shares,
subject to the same tender, to the winning bidders.






Mr Seddon,
who appeared briefly for the second respondent, informed the Court
that his client had chosen not to be an active party to these
proceedings, preferring instead to abide the Court’s judgment.
Consequently, there is effectively only one respondent before
the
Court, that is, the first respondent. I shall hereinafter refer to
the first respondent as just “the respondent”.





The
tender in question involved some 88 526 968 shares in three
demerged companies of the company formerly known as Astra
Limited.
The shares were held by the second respondent for and on behalf of
the Government of Zimbabwe, which was, therefore, the
beneficial
owner thereof.






It is not in
dispute that the PAZ was established by the Government of Zimbabwe in
September 1991 with a mandate to spearhead, advise
and manage the
Government’s privatisation programme in a transparent manner. In
dispute was the status of the PAZ. In its founding
affidavit, the
respondent had referred to the PAZ as a “legal entity”
established by the Government of Zimbabwe. The PAZ disputed
this
status, and instructed its legal practitioners to address a letter to
the respondent’s legal practitioners, stating that the
PAZ was not
a legal entity but “merely a unit in the Office of the President
and Cabinet”. Consequently, it was further stated
in the letter,
the PAZ did not have the necessary
locus
standi

to be cited as a respondent in the matter. The letter went on to
say that, as the proper respondent should have been the Head of
the
Office of the President and Cabinet in his official capacity, the
respondent was obliged to adhere to the requirements of the
State
Liabilities Act [
Chapter 8:14]
(“the Act”). These entailed the giving of notice and other
requirements specified in the Act.





This
letter, which ended by inviting the respondent to withdraw its court
application, prompted the deponent to its founding affidavit
to file
a supplementary founding affidavit restating, in greater detail, the
respondent’s position that the PAZ was a legal entity
separate from
the Government and with the capacity to sue and be sued in its own
right.






Thus, apart
from the merits of the application, the court
a quo,
as does this Court, had to determine the issue of the PAZ’s
rightful status. The learned trial judge was satisfied, from a
reading
of the papers before him, that the PAZ had a “
sui
generis
”
status, quite different from that of other Government departments or
agencies. He stated at pp 236 and 239 of the record:





“It
seems to me that PAZ has, from a reading of the [PAZ] publication
,
a
sui generis
status quite different from that of other Government departments or
agencies. …





Having
regard to these terms in the (Information) Memorandum, one is left in
no doubt that the bidders and their guarantors were entering
into a
contract and assumed rights and obligations, not as against the
Government of Zimbabwe, but as against an entity established
by
Government to transact the business concerned. It would, in my
view, not have been in the contemplation of the bidders and their
guarantors that they were entering into a contract, not with PAZ, but
with Government.”





He
then went on to deal, at length, with the merits of the application
and then made the order now being appealed against.





It
is correctly averred for the respondent that the matter of the PAZ’s
status is crucial to both the procedural question of whether
the case
was properly before the court and the substantive question as to
whether or not there was a contract between the respondent
and the
PAZ.






I agree with
the submission by Mr 
Nherere,
for the respondent, that a finding to the effect that the PAZ was not
a juristic person would effectively dispose of the matter.





I
shall, therefore, consider at the outset the question of whether or
not the PAZ was a juristic person, capable of being sued in
its own
right.






Mr de Bourbon,
for the appellants, contends that the PAZ does not fall into any of
the recognised categories of artificial persons which, broadly,
are
(i) the State; (ii) bodies specifically incorporated by statute, such
as local authorities, statutory corporations, statutory
boards or
commissions; (iii) corporate bodies registered under more general
legislation, such as companies or pension or provident
funds; and
(iv) corporate bodies under the common law. He contends the PAZ was
established by the Office of the President and Cabinet
to undertake
the functions set out in that Office’s Circular Letter No. 1
of 2000, and as such has no different a legal status
to the many
other separate groupings organised within the Government, such as the
Department of Immigration. He also contends that
the functioning of
the Government in any country requires that it be able to create and,
where necessary, disband departments, agencies
and other bodies to
fulfil its obligations. As an administrative action, Mr 
de Bourbon
further contends, the creation or disbandment of such a body creates
no legal
persona
nor destroys any legal
persona
different to the Government itself. Finally, Mr 
de Bourbon
submits that the PAZ cannot be a
universitas,
since it does not meet the legal requirements of such an entity. In
this respect, he contends that the PAZ is not an association
of
persons for a specific objective, nor did any group of persons
contractually bind themselves to create the PAZ and be bound by
any
constitution thereof.






While
conceding that the PAZ was established by an administrative Act,
rather than an Act of Parliament, Mr 
Nherere,
for the respondent, contended that that fact alone was not decisive.
Rather, the Court should look at the entity that the Government
intended to create, and did create – its nature, the purpose of its
establishment, its powers and its other attributes. If, in
judging
these factors, the Court is satisfied that the PAZ, as an entity, has
the characteristics of a juristic person, then such
it should be
adjudged to be.






Mr Nherere
relies for this contention on the following dictum by WESSELS JA
in
Morrison
v Standard Building Society

1932 AD 229 at 238:






“In
order to determine whether an association of individuals is a
corporate body which can sue in its own name, the court has to
consider
the nature and objects of the association as well as its
constitution, and if these show that it possesses the characteristics
of
a corporation or
universitas,
then it can sue in its own name. Nor can I see any valid objection
to such a society suing in its own name.”






Since the PAZ
was, to go by Mr 
de Bourbon’s
categorisation, neither the State nor a creature of statute, the only
possible category it could fall into was that of corporate
bodies
under the common law, i.e. a
universitas.






It appears
to me there is therefore no better method to determine the status of
the PAZ as a juristic person, or
universitas,
than that suggested in the dictum cited above. However, before the
test spelt out therein can be effectively applied to the
circumstances
of the case at hand, it is necessary to set out what
are generally accepted as the characteristics of a
universitas.
The following passage in Herbstein & van Winsen’s
The
Civil Practice of the Supreme Court of South Africa

4 ed at p 156 is instructive in that respect:






“A
universitas
is a legal fiction, an aggregation of individuals forming a
persona
or entity having the capacity of acquiring rights and incurring
obligations to as great an extent as a human being. The main
characteristics
of a
universitas
are the capacity to acquire certain rights as apart from the rights
of the individuals forming it, and perpetual succession. The
right
to hold property in its own name is often given as one of its
features. (
Webb
& Co Ltd v Northern Rifles, Hobson & Sons v Northern Rifles

(1908 TS 462);
Cassim
v Molige

(1908 TS 748); and others). If an association of persons possesses
these characteristics it is a
universitas,
but if it lacks any, it is not. Thus a body having perpetual
succession but no power to hold property apart from its members has
been held not to be a ‘
universitas’
(
Jeschin
v Kopuno Sick Benefit and Benevolent Society

1936 WLD 9).”






In applying
this expanded test to the facts of this case, the first point to
consider, in my view, is whether or not the PAZ represented
“an
association of individuals” who came together to create an entity
with a
persona
separate from the association. The definitions of a
universitas
given in the authorities cited start from the premise that a
universitas
is an association of natural rather than artificial persons. This
requirement seems to be accepted as a
sine
qua non
,
an absolute necessity. Indeed counsel for the appellants submitted
he had been unable to find any case law or text law authority
for the
proposition that one or more artificial persons can associate
together for the purposes of creating a
universitas.






On the evidence before the Court,
it was the Government, as an artificial person, that established the
PAZ. It is not suggested
that an aggregation of individuals came
together to create the PAZ.






In the light
of the foregoing, I find that the PAZ does not meet the most basic of
all the requirements of a
universitas,
that is, that it must be a legal fiction representing an association
of individuals for stated objectives. On that basis alone,
the
application should have been dismissed.






There
is, in any case, other evidence before the Court to fortify this
finding and to support the appellant’s assertion that the
PAZ did
not have an existence independent of the Government.






There is, firstly, the contract
of employment entered into between the Government and one Innocent
Gadaga, an investment analyst/banker
and signed by the parties on
3 September 1999. It was submitted for the appellants that the
contract was an example of the
contracts signed by all personnel
recruited to work for the PAZ. The contract makes it clear that it
was between the Government
and the employee concerned. The
implication of this is that those tasked with the responsibility of
running the affairs of the
PAZ were contracted to do so as employees
of the Government not of the PAZ.





Secondly,
the document produced by the PAZ, which both parties have cited,
informs that the PAZ was established by the Government
out of the
need to create a single “semi-autonomous” institution that would
be responsible, on a day to day basis, for the privatisation
of
State-owned enterprises. The use of the terminology
“semi-autonomous” rather than “autonomous” is, in my view,
further
confirmation that the Government did not mean, in this
respect, to establish an entity separate from itself.






Thirdly,
there is the question of the PAZ’s right (or lack thereof) to own
property in its name. One of the accepted characteristics
of a
universitas
is that it has the right to own property in its own name. There is
no evidence before the Court to suggest that the PAZ had such
a
right. The Cabinet Memorandum which sets out the functions of the
PAZ, significantly, does not make any reference to any such
right.
The Memorandum officially publicised the existence and mandate of the
PAZ, and should have been the one to contain such
information, had
that been the intention. Cogent proof of the PAZ’s inability to
own property in its own name is to be found
in the fact that the PAZ
did not own the disputed shares; nor was it going to receive for
itself the sale price. The learned trial
judge was alive to this
circumstance, as evidenced by his observation at p 32 of the
cyclostyled judgment that:






“… the
relief sought is to compel PAZ to announce the results and allot the
shares. The relief sought does not mean that after allotment
the
owner

of the shares will automatically transfer the shares to the winning
bidder although it would be expected to do so.” (my emphasis)





It
is not in dispute that the shares in question were held by the second
respondent for and on behalf of their beneficial owner,
the
Government. As submitted for the appellants, the proceeds from the
sale of the shares would accrue to the Government, not the
PAZ.






It is, in my
view, correctly contended for the appellants that this confirms that
the PAZ was not autonomous of the Government,
and that it was
established merely to fulfil administrative responsibilities towards
a legitimate Governmental objective. That
its rôle was merely
facilitative is put beyond doubt when one considers the PAZ’s
functions, set out in Cabinet Circular Letter
No. 1 of 2001.
The emphasis there is on its functions as an advisor to the
Government on issues pertinent to the privatisation
process, the
preparation of detailed work plans for privatisation of designated
enterprises, and assistance to line Ministries in
the identification
of local and/or external consultants. The PAZ also acts as a
Secretariat for the Inter- Ministerial Committee
on Commercialisation
and Privatisation of Parastatals.






The fourth
consideration relates to the constitution. In terms of the dictum
cited above (per WESSELS JA in
Morrison
v Standard Building Society supra
),
the constitution of a
universitas
should offer some guidance on the true nature of the association.
The assumption, again, is that a
universitas
has a constitution.
In
casu
,
apart from there being no evidence to suggest that the PAZ had a
written constitution, there is also, in fact, no document on file
purporting to be the one in terms of which the PAZ was established.
There are, instead, documents referring simply to the establishment
by the Government of the PAZ “in September 1999” as a
“semi-autonomous” privatisation agency. While a supporting
affidavit
from the Secretary to the President and Cabinet, Dr Utete,
might have helped clarify the intention of the Government concerning
the status of the PAZ, the absence of such an affidavit, as correctly
contended for the appellants, does not carry the respondents’
case
any further. Thus, the PAZ again fails to meet another important
requirement for a
universitas.







On the
authorities cited above, an association must possess
all
the characteristics of a
universitas
for it to be so regarded. The PAZ, as is evident from the foregoing
and despite its
modus
operandi

which persuaded the learned trial judge to a contrary view, lacks
several of the characteristics of a
universitas.
It is, therefore, not a
universitas.







As it also
does not fall into any of the other categories of corporate entities
that have been mentioned above, the conclusion is
inevitable that the
respondent has failed to prove that the PAZ is an entity separate
from the Government nor, consequently, that
it has the
locus
standi

to be cited as the respondent in this matter.







It is
correctly contended for the appellants that the Government, as the
beneficial owner of the shares in question, had a real, direct
and
substantial interest in the outcome of the litigation. The
respondent should therefore have complied with the State Liabilities
Act, in terms of giving the requisite notice and, thereafter, joined
the additional appellant in this case as a party to the proceedings.

This is because the President is the one vested with the executive
authority of Zimbabwe by virtue of s 31(H)(1) of the
Constitution
of Zimbabwe. The respondent’s failure to join the
Government as a party, in the light of my determination of the status
of the
PAZ, is fatal to these proceedings.






That
being the case, I do not consider it necessary to go into the merits
of the respondent’s case against the appellants.





The
appeal, accordingly, succeeds.





It
is, in the premises, ordered as follows –





1. The
appeal is allowed with costs.






2. The order
of the court
a quo
is set aside and substituted with the following –







“The application is dismissed
with costs”.














CHIDYAUSIKU
CJ: I agree.














CHEDA
JA: I agree.















Costa &
Madzonga
,
appellants' legal practitioners


Dube,
Manikai & Hwacha
,
first respondent's legal practitioners


Coghlan,
Welsh & Guest
,
second respondent's legal practitioners