Tembani v Republic of Zimbabwe

• Jurisdiction: South Africa
• Judge: AG Pillay JP, IJ Mtambo SC J, Dr LA Mondlane J, Dr R Kambovo J, Dr OB Tshosa J
• Judgment Date: 14 August 2009
• Docket Number: (T) 07/2008
• Court: Southern African Development Community Tribunal
• Hearing Date: 17 July 2009
• Citation: 2014 JDR 0332 (SADC)

Delivered by H. E. Justice Ariranga G. Pillay

1. BACKGROUND

This application involves the consideration of the issue as to whether section 38 of the Agricultural Finance Corporation Act (cap. 18:02) [the Act] of the Laws of Zimbabwe conforms with Articles 4(c) and 6(1) of the Treaty of the Southern African Development Community (the Treaty), which provide as follows:

ARTICLE 4:

"SADC and its Member States shall act in accordance with the following principles:

(c)

human rights, democracy and the rule of law."

ARTICLE 6:

"(1) Member States undertake to adopt adequate measures to promote the achievement of the objectives of SADC, and shall refrain from taking any measure likely to jeopardize the sustenance of its principles, objectives and the implementation of the provisions of this Treaty."

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We will also bear in mind sub-articles (4) and (5) of Article 6 which read as follows:

"(4) Member States shall take all steps necessary to ensure the uniform application of this Treaty.

(5) Member States shall take all necessary steps to accord this Treaty the force of national law".

The Applicant is a registered owner of a farm of 1265 hectares known as the Remainder of Minverwag of Clare Estate Ranch in Nyazura District in the Republic of Zimbabwe. He and his family have resided on the farm since 1983.

To finance his farming activities, the Applicant borrowed various sums of money from a parastatal bank called the Agricultural Bank of Zimbabwe (ABZ) on the security of the farm. Each of the loan agreements included a standard clause 6 authorizing ABZ, if at any time any sum of money due in respect of an advance is unpaid, to enter upon and take possession of the whole or any part of the security. The clause read as follows:

"Should the borrower commit or be in breach of any of the terms or conditions of this agreement the Corporation specifically stipulates as provided in section 40 of the Act, that it shall have the right in terms of that section of the Act, after demand by registered letter addressed to the borrower at his last known address or to the address given by him in his application for this loan, and without recourse to a court of law, to enter upon the property hypothecated and to take possession

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thereof and sell and dispose of the same in whole or in part as the Corporation may determine, always in terms of and subject to the provisions of the Act" (the underlining is ours).

Clause 6 is based on the former section 40 of the Act which is now section 38 and which, in the relevant part, provides as follows:

"38 (2) The Corporation may, in the case of an advance in respect of which security is given, including any security by way of a notarial bond or note of hand, stipulate that it shall be a condition of the advance that if any advance in respect of which security has been given becomes repayable . . . the Corporation, in addition to the powers conferred . . . , shall be entitled, . . . after a period of ten days have elapsed since the posting of a registered letter of demand addressed to the borrower at his last known address or at the address given by him in his application for the advance, to enter upon and take possession of the whole or any part of the security concerned and to dispose of such security . . .".

The section is itself anchored to section 16(7) (d) of the Constitution of the Respondent which reads as follows:

"(7) Nothing contained or done under the authority of any law shall be held to be in contravention of sub-section (1) to the extent that the law in question makes provision for the acquisition of any property or any interest or right therein in any

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of the following cases . . . :

(d)

As an incident of a contract, including a lease or mortgage, which has been agreed upon between the parties to the contract, or of a title deed to land fixed at the time of the grant or transfer thereof or at any other time with the consent of the owner of the land."

Subsection (1) of section 16 of the Constitution of the Respondent prohibits compulsory acquisition of property, except under the authority of the law in certain specified circumstances.

The Applicant was unable to liquidate his indebtedness to ABZ, whose exact amount from the record is unclear, and, therefore, his farm was attached in terms of section 38 of the Act. The farm was then sold. The Applicant sought to set aside the sale and so he applied to the High Court (Luke Manyandu Thembani vs Eagle Estate Agents (Pty) Ltd and Others), contending that the farm was sold at an unreasonably low price and that this was due to inadequate advertisement of the sale. He also questioned the constitutionality of the Act. It was submitted on his behalf, in paragraph 14 of the Heads of Arguments that the point about the constitutionality of the Act was "decisive of this case and there is no need or discretion for the court to look any further", and then it was argued further in paragraph 15 as follows:

"However, if this court is not persuaded on that, it is respectfully submitted that the applicant has bona fide and legitimate grounds to dispute that:

(a)

the Act; and

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(b)

the way in which it was administered in regard to himself and his property,

are consistent with all the requirements of the Constitution, and to request that if necessary this should be referred to the Supreme Court".

It was further contended on behalf of the Applicant in paragraphs 16 and 17 as follows:

"16 The Supreme Court is not the sole court that must have regard to the Constitution, but if any party requests that a question concerning the Bill of Rights be referred there by a lower court, the lower court must refer it unless the request is frivolous and vexatious.

17 Section 3 of the Constitution is totally explicit. It states that any law inconsistent with any provision of the Constitution is void, and not merely voidable, and that prevents any court from enforcing it".

After considering the issues before it, the learned Judge of the High Court granted the application, but concerning the constitutionality of section 38, it had this to say:

"What one has to consider as I said earlier on is the issue of whether or not the property was adequately advertised. If the property was adequately advertised, then in my view no issue would arise as the Supreme Court of this country has already decided on the issues touching the AFC sales".

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What the High Court was saying here is that there would be no point in referring the question of the constitutionality of section 38 of the Act to the Supreme Court because that Court has already resolved the issue in its earlier decisions. One such case in which the Supreme Court made the position very clear is that of Augustine Runesu Chizikani v Agricultural Finance Corporation Civil Appeal No. 567/94, in which it stated, per Gubbay, C.J., as he then was, as follows:

"The Appellant has overlooked the recent judgment of this court in the case of Nyamukusa v Agricultural Finance Corporation SC 174/94 which conclusively affirms the correctness of the decision of the court a quo. In that case the Court, after citing section 4(1), section 40(2) and section 40(2a) of the Act, went on to hold as follows:

It is noted that he (the Appellant) was signatory to the agreement which gave powers to the Respondent to act in the manner it did. My reading of section 40(2) and (2a) is that provided there is a stipulation in the loan agreement, to the effect that the Respondent can take possession of the property hypothecated without recourse to law, the Respondent is perfectly entitled to proceed either under section 40(1) or (2) and (2a) of the Act. For obvious advantageous reasons it chose to proceed in terms of the latter subsection in which it is supported by clause 6 of the loan agreement."

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This position has been maintained in all subsequent cases which include the cases of Agricultural Bank of Zimbabwe v (1) Luke Manyandu Thembani and Others (SC 39/07).

Such is the background of the present case.

2. EXHAUSTION OF LOCAL REMEDIES

On April 23, 2009, when the hearing of the application was called on, the Respondent sought leave to file its defence to the claim. The Tribunal allowed it to do so, albeit reluctantly, within 7 days from that date and directed the parties to ensure that the pleadings were settled well before June 04, 2009, the date to which the hearing of the case was postponed. The Respondent did not file the defence within the period allowed. But on May 29, 2009, the Respondent brought an application to file a supplementary affidavit by which it sought to adduce further evidence and to contend...