Trustco wins court battle against Govt, Namfisa

GOVERNMENT and its financial institutions supervisory authority, Namfisa, have been left with egg on their faces for acting unilaterally and beyond their powers in stopping deductions from State employees salaries’ for loans from the Open Learning Group Namibia Finance.

Open Learning Group Finance (OLGN) falls under the Trustco Group, which last year was involved in another legal wrangle with Namfisa over its legal aid division, Legal Shield, and its television game show, ‘Winna Mariba’. This week, the High Court found in favour of OLGN and said the Ministry of Finance had acted unfairly in stopping the deductions because OLGN was not a micro-lender according to Namfisa.The Institute for Open Learning, a Trustco subsidiary, offers a number of distance-learning courses for which students can receive loans through OLGN to study.Delivering judgement on the matter on Tuesday, Judge President Petrus Damaseb said the Ministry of Finance and Namfisa had acted contrary to their statutory powers and failed to provide the OLGN an opportunity to be heard on their decision.The court said the Ministry of Finance and Namfisa had failed to “recognise and apply the applicant legitimate expectation to procedural fairness”.Damaseb was not satisfied by the decisions taken by Government and Namfisa in the matter and said he found them to be influenced by “an error of law”.Over and above this, the decision-makers were found to have ignored Article 18 of the Constitution, which prescribes that administrative bodies and officials must act fairly and reasonably.COLD FACTS In his judgement, Damaseb said he found that the parties involved had all opened themselves to “the accusation of exaggeration and elaborate ex post facto rationalisation in the effort to explain away facts which, in certain respects, are patently and objectively not in their favour”.”In significant respects cold facts are, I regret to say, smothered in tendentious interpretation whose only object is to fit the mould”, remarked Damaseb.In July 2000, OLGN was approved as a registered micro-lender by the Permanent Secretary of Finance, at the time in his capacity as the Registrar of Financial Institutions.According to affidavits placed before the court, OLGN’s Financial Manager said that in 2002, while already enjoying the deduction facility, it was made to re-apply for its use and enter into agreement with the Ministry of Finance to this end.Part of the agreement required that the applicant attach proof of Namfisa registration as a micro-lender.This was before Trustco took over the company.Before the agreement was entered into, Namfisa wrote to the OLGN saying it had not complied with its registration as a micro-lender and failed to pay levies as prescribed by law.OLGN replied, saying that it was not a micro-lender and that it had only been registered as such with the Ministry of Finance for the deduction purposes, because Government accounting systems did not have a code for OLGN’s type of business.OLGN maintains that it never received a response from Namfisa to this letter.OLGN said it continued to be treated as a micro-lender by Namfisa and was invited to all Namfisa meetings for micro-lenders and in 2004, a Namfisa investigation found that OLGN was still registered and listed in the 2004 annual report as such.COMMON LAW RIGHTS When Trustco took over the education facility in 2005, it requested registration as a micro-lender with Namfisa, saying since it was declared as a micro-lender by the Ministry of Finance, it was for the first time in the position to act as one.For its part, the Ministry of Finance alleged that OLGN had misrepresented itself in order to obtain the deduction facility.The Ministry of Finance said it never knew of OLGN’s letter to Namfisa in which it said it did not act as a micro-lender, else it would not have entered into an agreement with it for the deduction facility.The Ministry said it had acted on common-law rights by revoking the facility in March 2005 because OLGN had breached its contract with it.The Finance Ministry further maintained that granting the deduction facility was entirely discretionary and not something it was compelled to do by law.It argued that the deductions were not the only way OLGN could recover the loans from its debtors.Namfisa, on the other hand, cited teething problems at its inception in 2001 as the reason why OLGN was still registered as a micro-lender on its database despite it having cancelled this registration at OLGN’s request in 2002.According to Namfisa’s database, OLGN is also registered as a credit-agreement company.Namfisa denies ever having treated OLGN as a micro-lender and never expected it to pay the levies accordingly.In his judgement Damaseb found that the procedures for deregistering OLGN as a micro-lender were not followed and that in the eyes of the law OLGN was still a micro-lender and had enjoyed the benefits of this status, without facing the financial consequences.”To the extent he or his subordinates [the Registrar of Micro lending and credit agreements] took decisions to denude [the] applicant of that status, they acted ultra vires their powers,” Damaseb said.MUST ACT FAIRLY, REASONABLY Damaseb further found that in revoking the deduction code, the Ministry of Finance acted in breach of the most basic tenet of law i.e.that a person must be given an opportunity to be heard and to be informed of considerations adverse to them before any decision affecting them is taken.”It cannot be correct that just because a benefit or concession granted by a public authority is not prescribed by statute, a public authority can act capriciously and whimsically in respect of it,” Damaseb said in judgement.”The public authority must act fairly and reasonably”.Damaseb ordered that the letter written by the Ministry of Finance to OLGN last March, revoking their deduction code facility, be set aside as unlawful and unconstitutional.He further ordered that at least three letters written by Namfisa to OLGN purporting to cancel OLGN’s registration as a micro-lender be declared of no force and effect.The respondents were ordered to pay the costs of the court case.This week, the High Court found in favour of OLGN and said the Ministry of Finance had acted unfairly in stopping the deductions because OLGN was not a micro-lender according to Namfisa.The Institute for Open Learning, a Trustco subsidiary, offers a number of distance-learning courses for which students can receive loans through OLGN to study.Delivering judgement on the matter on Tuesday, Judge President Petrus Damaseb said the Ministry of Finance and Namfisa had acted contrary to their statutory powers and failed to provide the OLGN an opportunity to be heard on their decision.The court said the Ministry of Finance and Namfisa had failed to “recognise and apply the applicant legitimate expectation to procedural fairness”.Damaseb was not satisfied by the decisions taken by Government and Namfisa in the matter and said he found them to be influenced by “an error of law”.Over and above this, the decision-makers were found to have ignored Article 18 of the Constitution, which prescribes that administrative bodies and officials must act fairly and reasonably. COLD FACTS In his judgement, Damaseb said he found that the parties involved had all opened themselves to “the accusation of exaggeration and elaborate ex post facto rationalisation in the effort to explain away facts which, in certain respects, are patently and objectively not in their favour”.”In significant respects cold facts are, I regret to say, smothered in tendentious interpretation whose only object is to fit the mould”, remarked Damaseb.In July 2000, OLGN was approved as a registered micro-lender by the Permanent Secretary of Finance, at the time in his capacity as the Registrar of Financial Institutions.According to affidavits placed before the court, OLGN’s Financial Manager said that in 2002, while already enjoying the deduction facility, it was made to re-apply for its use and enter into agreement with the Ministry of Finance to this end.Part of the agreement required
that the applicant attach proof of Namfisa registration as a micro-lender.This was before Trustco took over the company.Before the agreement was entered into, Namfisa wrote to the OLGN saying it had not complied with its registration as a micro-lender and failed to pay levies as prescribed by law.OLGN replied, saying that it was not a micro-lender and that it had only been registered as such with the Ministry of Finance for the deduction purposes, because Government accounting systems did not have a code for OLGN’s type of business.OLGN maintains that it never received a response from Namfisa to this letter.OLGN said it continued to be treated as a micro-lender by Namfisa and was invited to all Namfisa meetings for micro-lenders and in 2004, a Namfisa investigation found that OLGN was still registered and listed in the 2004 annual report as such.COMMON LAW RIGHTS When Trustco took over the education facility in 2005, it requested registration as a micro-lender with Namfisa, saying since it was declared as a micro-lender by the Ministry of Finance, it was for the first time in the position to act as one.For its part, the Ministry of Finance alleged that OLGN had misrepresented itself in order to obtain the deduction facility.The Ministry of Finance said it never knew of OLGN’s letter to Namfisa in which it said it did not act as a micro-lender, else it would not have entered into an agreement with it for the deduction facility.The Ministry said it had acted on common-law rights by revoking the facility in March 2005 because OLGN had breached its contract with it.The Finance Ministry further maintained that granting the deduction facility was entirely discretionary and not something it was compelled to do by law.It argued that the deductions were not the only way OLGN could recover the loans from its debtors.Namfisa, on the other hand, cited teething problems at its inception in 2001 as the reason why OLGN was still registered as a micro-lender on its database despite it having cancelled this registration at OLGN’s request in 2002.According to Namfisa’s database, OLGN is also registered as a credit-agreement company.Namfisa denies ever having treated OLGN as a micro-lender and never expected it to pay the levies accordingly.In his judgement Damaseb found that the procedures for deregistering OLGN as a micro-lender were not followed and that in the eyes of the law OLGN was still a micro-lender and had enjoyed the benefits of this status, without facing the financial consequences.”To the extent he or his subordinates [the Registrar of Micro lending and credit agreements] took decisions to denude [the] applicant of that status, they acted ultra vires their powers,” Damaseb said.MUST ACT FAIRLY, REASONABLY Damaseb further found that in revoking the deduction code, the Ministry of Finance acted in breach of the most basic tenet of law i.e.that a person must be given an opportunity to be heard and to be informed of considerations adverse to them before any decision affecting them is taken.”It cannot be correct that just because a benefit or concession granted by a public authority is not prescribed by statute, a public authority can act capriciously and whimsically in respect of it,” Damaseb said in judgement.”The public authority must act fairly and reasonably”.Damaseb ordered that the letter written by the Ministry of Finance to OLGN last March, revoking their deduction code facility, be set aside as unlawful and unconstitutional.He further ordered that at least three letters written by Namfisa to OLGN purporting to cancel OLGN’s registration as a micro-lender be declared of no force and effect.The respondents were ordered to pay the costs of the court case.