Govt, creditors on collision course Zupco sued over $700 000 fuel debt

GOVERNMENT is battling to shield debt-ridden State institutions from creditors threatening to attach assets over mammoth debts.

This comes after Mutare businessman Mr Tendai Blessing Mangwiro approached the Constitutional Court seeking confirmation of the High Court order nullifying the State Liabilities Act.

The High Court recently abrogated the Act which prevented individuals and companies from attaching State assets.

Justice Edith Mushore nullified the law in March this year, saying it was being abused by the State to evade settlement of debts and complying with the court orders.

She struck out Section 5(2) of the State Liabilities Act (Chapter 8:14), saying it was unconstitutional.

The judgment was referred to the Constitutional Court for determination in terms of the law.

If it is confirmed, it will mean that all Government property will be amenable to attachment by the Sheriff to honour judgments given against the State.

Already, the landmark ruling has opened the floodgates for several creditors who obtained court orders against the State to attach its assets in a bid to recover their debts. ZIMBABWE United Passenger Company (Zupco) is being sued at the High Court for allegedly failing to pay a $729 393 fuel debt.

The transport utility drew substantial amounts of diesel for its fleet from Shashe Logistics’ reservoirs over the past few years, but failed to pay the debt in violation of an agreement between the parties.

Shashe Logistics, through its lawyers Matizanadzo and Warhurst Legal Practitioners, filed summons at the court last week claiming the principal debt with interest calculated at the prescribed rate of 5 percent per annum.

Government is strenuously opposing the confirmation of the High Court judgment and has hired Advocate Thabani Mpofu to defend its position on the law.

The high-profile case has been set for hearing today before the full bench of the Constitutional Court.

In his heads of argument filed at the Constitutional Court, Adv Mpofu is arguing that the relief being sought was

Interest, according to the draft order, should be calculated from the date of issuance of summons to the date of payment in full.

Shashe Logistics supplied fuel to Zupco’s northern and southern divisions during a long period of time.

In March last year, the bus company admitted its indebtedness to Shashe in the sum of $548 000 and undertook to settle the balance through weekly instalments of $1 500.

“Notwithstanding such undertaking, the defendant has since March 2016 only made part-payments of $11 123 in clear breach of its undertaking to settle the outstanding debt,” reads the declaration.

unjustified at law.

According to the law, Adv Mpofu said, Government assets could not be attached to settle debts.

Mr Mangwiro, he argued, could be paid from the Consolidated Revenue Fund.

Adv Mpofu argued that under the law there was an executory provision.

“The person who must ensure that payment

After the acknowledgement of debt in March last year, Zupco continued drawing diesel from Shashe reservoirs up to May this year on credit.

The debt now stands at $729 343,45, the declaration reads.

“Not withstanding demand, the defendant has failed and or refused to settle the debt properly due and owing to the plaintiff and is accordingly liable, to the plaintiff for the balance of the debt in the sum of $729 343,45 together with interest at the prescribed rate and costs of suit,” reads the declaration.

The bus company is yet to respond to the summons.

is made is identified and a clear obligation placed upon that person to cause payment,” he argued.

He further argued that Section 5(3) of the Act made provision for a garnishee order against the State.

“The court can garnish any vote to be received by a ministry in terms of a budget,” said Adv Mpofu. “This is a very effective method of execution.”

Adv Mpofu disagreed with the lower court ruling that the State enjoyed immunity, arguing the State was just like any other litigant.

“What is protected are the State’s properties,” he said. “Of course, one cannot wake up and find that Munhumutapa Building has been attached and the President is now working from his home.

“The position of the law is manifestly sensible and is in the public interest.”

Adv Mpofu further argued that as law of general application, the Act and in particular Section 5 (2) was empowered to limit some constitutional rights.

He emphasised the need to have a legislation protecting State property.

“The reason is that such property inures to the public benefit, belongs in usufruct to all citizens, cannot be realised by one citizen at the expense of the populace, but belongs instead to all future generations,” said Adv Mpofu.

“One has to imagine the mighty Victoria Falls being annexed and sold in execution or the whole of Zimra software being attached by a citizen over a debt. It just does not make sense. ”

Mr Mangwiro won several court applications for the police to release $78 900 and a further $1,5 million impounded from him when he was arrested, but has not received a single cent to date.

The impugned section made it impossible for him to attach Government property for purposes of execution.

Mr Mangwiro’s lawyer, Advocate Tawanda Zhuwarara, successfully argued in the High Court that the impugned section violated his rights and was inconsistent with Section 56(1) of the Constitution.

Justice Mushore agreed with Adv Zhuwarara that the State was hiding behind the Section 5(2) of the State Liabilities Act (Chapter 8:14) to frustrate Mr Mangwiro.

Mr Mangwiro was wrongly arrested on charges of theft in 2008 and subsequently acquitted in February 2013.

After his arrest, police seized two vehicles and cash amounting to $78 000 and ZWD46 135 000 000.

Police eventually released the vehicles to Mr Mangwiro, but failed to reimburse him his cash.

In November last year, High Court judge Justice Amy Tsanga ordered the jailing of Home Affairs Minister Chombo for 90 days, following his conviction for defying a court order demanding that he facilitates release of Mr Mangwiro’s money.

Minister Chombo appealed to the Supreme Court, arguing that he had since purged the contempt through a letter written to Treasury in March last year requesting that the money be released in terms of the State Liabilities Act.