Court name
Supreme Court of Zimbabwe
Case number
SC 6 of 2008
Civil Appeal 118 of 2007

Trust Insurance Brokers v Minister of Finance and Another (18/07/01) (SC 6 of 2008, Civil Appeal 118 of 2007) [2008] ZWSC 6 (12 May 2008);

Law report citations
Media neutral citation
[2008] ZWSC 6

REPORTABLE
ZLR (5)





Judgment
No. SC 6/08


Civil
Appeal No 118/07








TRUST
INSURANCE BROKERS v (1) THE MINISTER OF
FINANCE (2) THE COMMISSIONER OF
INSURANCE








SUPREME
COURT OF ZIMBABWE


ZIYAMBI
JA
, MALABA JA &
GARWE JA


HARARE,
JANUARY 15 & MAY 13, 2008







D M
Campbell
, for the appellant





No
appearance for the respondents












ZIYAMBI JA: On 28 September 2005, the High Court
sitting at Bulawayo issued (in favour of the appellant) a provisional
order in
the following terms:



“TERMS OF FINAL ORDER SOUGHT



That you show cause to this Honourable Court why a final
order should not be made in the following terms:-





  1. That section 14 of the Insurance (Amendment)
    Regulations 2005 (No.6) (Statutory Instrument 59/2005) be and is
    hereby declared
    to be null and void and of no force and effect.









  1. That the respondents are to pay the costs of this
    application jointly and severally the one paying the other to be
    absolved.






INTERIM RELIEF GRANTED







Pending determination of this matter the applicant is
granted the following relief:-








  1. That the applicant is absolved from any obligation to
    register as an insurance broker under the provisions of section 14
    of the
    Insurance (Amendment) Regulations 2005 (No.6) Statutory
    Instrument 59/2005).









  1. That the second respondent is hereby interdicted from
    removing the name of the applicant from the register of Insurance
    Brokers
    as a consequence of any failure on the part of applicant to
    register itself as an insurance broker on or before 1 October 2005

    or from in any way treating the applicant as though it were no
    longer registered as a consequence of any such failure.”












Thereafter, on 23 January 2007, the matter came before
that Court for confirmation of the provisional order. This is an
appeal
against the order of the High Court discharging the
provisional order.







The sole issue for determination by this Court is
whether, in enacting s 14 of the Insurance (Amendment) Regulations
2005 (No 6)
SI 59 of 2005 (“the Regulations”), the first
respondent (“the Minister”) exceeded the authority given to him
by statute,
namely, s 89 of the Insurance Act [Cap 24:07] (“the
Act”). In other words, did the Act empower the Minister to enact s
14 of
the Regulations?







Section 89 of the Act provides as follows:



“89 Regulations



(1) The Minister may make regulations prescribing
anything which under this Act is to be prescribed or which, in his
opinion, is
necessary or convenient to be prescribed, for carrying
out or giving effect to this Act.







(2) Regulations made in terms of subsection (1) may
provide for -






  1. regulating the payment by registered insurance
    brokers in respect of insurance business placed with registered
    insurers;








  1. the information and returns to be supplied be
    registered insurance brokers to persons on whose behalf such
    insurance brokers have
    placed insurance business with registered
    insurers;








  1. the regulation and control of methods of obtaining or
    negotiating insurance business;








  1. the regulation, registration, licensing and control of
    insurance agents, the training and qualifications of such persons,
    the
    cancellations of licences issued to such persons or the
    withholding of the issue of licences to such persons;








  1. the fees to paid for registering persons, including
    societies, as insurers, for the inspection and copying of documents
    in terms
    of section seventy-seven, and for the registration and
    licensing of insurance agents;








  1. the establishment of advisory committees to advise the
    Commissioner on all matters relating to insurance and, in
    particular, to
    investigate and report to the Commissioner on any
    complaint or allegation in connection with insurance matters made in
    relation
    to an insurance agent, insurance broker, insurance company,
    society, co-operative insurance society or insurance association;








  1. the appointment of members to and the procedure at
    meetings of the advisory committee referred to in paragraph (f) and
    the functions,
    rights and privileges of such committees and their
    members, including the application,
    mutatis
    mutandis
    , of sections 9 to 13 and 15 to 19
    of the Commissions of Inquiry Act (Cap 10:07) in relation to such
    committees and the rights
    and obligations of any person appearing or
    required to appear before any such committee;








  1. the form in which an insurer may inform an insured
    person, in terms of section eighty-three A, of his duty to disclose
    material
    facts and circumstances. (paragraph as substituted by Act 3
    of 2004).














(3) Regulations made in terms of subsection (1) may
provide for penalties for any breach thereof or non-compliance
therewith:







Provided that no such penalty shall exceed a fine
of level five or imprisonment for a period of six months or both such
fine and
such imprisonment.”







The Regulations were enacted by the Minister acting in
terms of s 89(1). Sections 4 and 14 are set out below.







“Additional requirements relating to equity capital
of insurers and insurance brokers.











4. An insurer or insurance broker, or applicant for
registration as an insurer or insurance broker, shall comply with the
following
additional requirements for registration with respect to
its equity capital –






  1. every insurer or insurance broker must have at least
    three shareholders;









  1. no individual or individual and his or her close
    relatives may own or control, directly or indirectly, more than
    forty
    per centum of
    the voting shares of the insurer, insurance broker or applicant;








  1. no part of –







(i) the minimum paid-up equity capital of the insurer or
applicant insurer shall consist of borrowed funds;




(ii) the paid-up equity capital of the insurance
broker or applicant insurance broker that is used to determine
whether he or she
qualifies for registration in terms of section 3(2)
(iv) or (v) shall consist of borrowed funds.”







“14. Every registered insurer, mutual society and
insurance broker shall, no later than 1 October 2005, apply to be
registered under
the principal regulations as amended by these
Regulations, and every such insurer, mutual society and insurance
broker as fails
to do so shall, with effect from that date, be deemed
not to be registered”.







It will be seen that section 4 imposes additional
requirements for registration on insurance brokers already registered
while section
14 obliges every registered insurance broker to apply
for re-registration in terms of the Regulations. The penalty for
failure
to comply with section 14 is automatic de - registration.







Mr Campbell, on behalf of the
appellant, contended that s 89(1) does not give the Minister the
power to prescribe alterations to the qualifications
and requirements
laid down by Parliament in the Act for the registration of insurance
brokers, nor does it confer on the Minister
the power to de-register
insurance brokers who are duly registered in compliance with the
provisions of the Act.







There was no appearance on behalf of the respondents but
the Minister’s response, as expressed in his affidavit filed in the
High
Court as well as the heads of argument prepared on his behalf
and filed of record, is that the Minister has, in effect, been given

unfettered powers to prescribe anything
“which in his opinion is necessary to be prescribed” and that
accordingly, the Minister acted within his powers when he enacted
ss
4 and 14. The learned Judge in the court
a
quo
was of the same view. He said at p 5 of
the cyclostyled judgment:







“In my view the provisions of s 89 enjoins (sic)
the Minister with very wide powers. He may make regulations
prescribing anything which needs to be prescribed under the Act or

which, in his opinion, is necessary or convenient to be prescribed
for carrying out or giving effect to the Act. Although what
the
Minister did was not one of the things listed in section 89(2) I do
not believe that that list is exhaustive otherwise the
legislature
would not have reposed in him the power to prescribe anything which
in his opinion was necessary to prescribe … since
the Minister is
enjoined (sic)
with wide powers and discretion to prescribe
anything which in his opinion is necessary or convenient to be
prescribed it was within
his powers, in my view, to act as he did.”











Mr Campbell, however,
submitted that despite the general nature of its terms the power
given to the Minister in s 89(1) is not unlimited in
its application.
Firstly, it was limited to “anything which under this Act is to be
prescribed” and nothing in the Act requires
the Minister to
prescribe anything more pertaining to the registration of insurance
brokers than the forms and documents described
in s 35(2).
Accordingly, the power in s 89(1) to “prescribe anything which
under this Act is to be prescribed” does not empower
the Minister
to require insurance brokers who are already registered in terms of s
35 to possess additional qualifications and
to register again.







Secondly, he submitted, the power was limited to
regulating only those things which in the Minister’s opinion are
“necessary
or convenient to be prescribed for carrying out or
giving effect to” the Act. Re-registration, he submitted is not in
any way
“necessary or convenient … for carrying out or giving
effect to” the Act.







In response to the Minister’s averment in his
affidavit that “it became necessary to require all to come and
re-register”
to enable him to monitor their solvency and ensure the
correct maintenance of principles and practices in the industry and
that
“re-registration was the only avenue of taking stock”, he
submitted that the Minister already has those powers in ss 89(2) and

(3) of the Act.







If the Minister did exceed the powers granted to him by
Parliament in s 89 (1) then the Regulations would be void to the
extent
of such excess. I turn to examine the power conferred on the
Minister by Parliament in s 89(1) of the Act, namely:



“… anything which under this Act is to be prescribed
or which, in his opinion, is necessary or convenient to be
prescribed, for carrying
out or giving effect to this Act …”.











The power hereby conferred must be construed in the
light of the approach of the courts in such matters, which is, that
power will
only be given to a subordinate law-making body to alter an
enactment of Parliament in extraordinary circumstances. Thus in
Van
Heerden
N.O. and
Others vs Queens Hotel (Private Limited and Others
1,
MACDONALD, JP (as he then was) had this to say:



“the power of a subordinate law-making body to alter
the enactments of Parliament is so far-reaching in its implications
that it
will be readily understood that it is a power but rarely
granted and usually only for the most compelling reasons, for
example,
in times of dire emergency when the Parliamentary safeguards
inherent in the ordinary legislative process must perforce give way

to the need for swift and decisive action in the interests of the
safety and security of the State.”











The subordinate power must be construed strictly. The
following words by LORD SELBOURNE
2
were quoted with approval in the
Van Heerden
case,
supra:



“Now if anything be certain it is this that where
there are general words in a later Act capable of reasonable and
sensible application
without extending them to subjects specially
dealt with by earlier legislation, you are not to hold that earlier
and special legislation
indirectly repealed altered or derogated from
merely by force of such general words without any indication of a
particular intention
to do so.”







Thus, as it was put in the Van
Heerden case
3,
courts of law lean against implying an alteration or repeal of one
statute by another and for obvious reasons lean even more heavily

against implying that Parliament has conferred power on a subordinate
law-making body to alter or repeal an Act of Parliament.







In the instant case there is no express power conferred
on the Minister to alter the provisions of the Act
4
relating to the qualifications for registration of insurance brokers
or for their de-registration. In the absence of an express
power to
so alter the Act, the Court must ascertain from the language of the
enabling statute whether, notwithstanding the absence
of an express
provision, the clear intention of Parliament as expressed in the Act
was to grant the power to alter the Act.







Section 35(2) of the Act provides:



“(2) An application for registration as an insurance
broker shall be made to the Commissioner in the prescribed form and
shall be
accompanied by such documents as may be prescribed.







(3) If the Commissioner is satisfied that an applicant
in terms of this section —







  1. is not seeking to register under a name identical with
    the name of a person registered in terms of this Act, or so nearly
    resembling
    the name of such person as to be mistaken for it; or









  1. has not, under any law of any country -








(i) been adjudged or otherwise declared insolvent or
bankrupt and has not been rehabilitated or discharged; or







(ii) made an assignment to or arrangement or composition
with his creditors which has not been rescinded or set aside; or








  1. has not been convicted by any court wheresoever situate
    of any offence involving dishonesty, or of an offence in terms of
    this
    Act for which he was imprisoned without the option of a fine;
    or









  1. has not entered into an agreement relating to the
    preferential offer of insurance business with any person carrying on
    insurance
    business so as to impair his impartiality in placing
    insurance business; or









  1. is authorised, if he negotiates insurance business,
    other than life insurance business, to act as correspondent of
    brokers who
    are authorised by insurers in any country to place
    business with any such insurers;









the Commissioner shall register the applicant as an
insurance broker and shall issue him a certificate of registration.






(4) Notwithstanding anything contained in subsection (3)
if the Commissioner is of the opinion that it would not be in the
public
interest to approve an application for registration as an
insurance broker, he shall reject the application and notify the
applicant
in writing accordingly.”











In this section Parliament set the requirements for the
registration of insurance brokers. Once an applicant meets those
requirements
then, unless the Commissioner is of the opinion that it
would not be in the public interest to approve his application, the
Commissioner
is obliged to register him.







Similarly, cancellation of registration is provided for
in s 38 of the Act. It provides:



“38 Cancellation of registration of insurance
brokers




  1. The Commissioner shall notify a registered broker in
    writing that he proposes to cancel his registration as an insurance
    broker
    and of his reasons for so doing if at any time he is
    satisfied that if the registered insurance broker were an applicant
    for
    registration in terms of section thirty-five he would not be
    qualified for being so registered.









  1. If a registered insurance broker who has been so
    notified of the Commissioner’s proposal to cancel his registration
    as an insurance
    broker fails to lodge with the Commissioner a
    request to submit his case for review by the Minister as is provided
    in subsection
    (1) of section seventy-one within the period mentioned
    in that subsection or, having lodged such request within that
    period,
    withdraws the request before the Minister gives his decision
    in the case, the Commissioner shall cancel his registration and

    notify the insurance broker in writing accordingly.








  1. The Commissioner may, at the request of a registered
    insurance broker or his liquidator, trustee or judicial manager,
    cancel his
    registration as an insurance broker:







Provided that before canceling such registration
the Commissioner shall satisfy himself that all the liabilities of
the insurance
broker in respect of his business have been met or
other provision has been made for them by means acceptable to the
Commissioner.”









Here also, Parliament prescribed the procedure for
cancellation of the registration of insurance brokers. The Minister
is given
the power to review the Commissioner’s decision at the
request of the broker who has been notified of the Commissioner’s
intention
to cancel his registration. The provisions of ss 35 and 38
clearly evince the intention of Parliament regarding registration and

de-registration of brokers.







Not only is there no express grant of power to alter
those requirements but, from a reading of s 89 together with ss 35
and 38 of
the Act set out above, I can find no indication of an
intention on the part of Parliament to grant to the Minister the
power to
amend the Act. It must, therefore, be taken that in
enacting s 89, Parliament was alive to the provisions of ss 35 and 38
and
did not intend to grant power to the Minister to alter the
requirements for registration or the procedure for de-registration of

insurance brokers. Clearly the power granted in s89 to the Minister
is to enact regulations necessary for the administration of
the Act
as it stands, not to amend the Act. By setting additional
qualifications for registration as well as requiring registered

brokers to re-register on pain of de-registration, the Minister
exceeded the power granted to him in s 89.







I therefore hold that s 14 of the Regulations is ultra
vires
s 89 of the Insurance Act [Cap 24:07]
and is accordingly void and of no force or effect.







We were not asked for a declaration of nullity in
respect of s 4 of the Regulations which prescribes the additional
requirements
set by the Minister for the registration of insurance
brokers. Suffice it to say that had this relief been requested we
would
no doubt, for the same reasons, have granted it.







Accordingly, the appeal is allowed with costs. The
order of the High Court is set aside and substituted as follows -







“The Provisional Order is confirmed.”











MALABA JA: I agree















GARWE JA: I agree











Calderwood, Bryce Hendrie & Partners,
appellant’s legal practitioners







1
1972 (2) RLR 472 (RA) at 496D-H




2
Seward v The Owner of the “Vera Cruz” [1884] 10 AC 59 at
68




3
Supra at p497A




4
Section 35 of the Insurance Act [Chapter 24:07]