A 2005 decision by the Attorney General’s (AG) office to suspend Macra’s board has cost government billions in damages to Malawi Mobile Limited (MML), court documents show.
MML wants government to pay it $133.7 million (K42 billion) after the High Court’s Commercial Division on April 20 2012 awarded the firm $66.85 million (K21 billion) as compensation for loss of revenue.
This resulted from the decision by the then AG, Ralph Kasambara, to suspend the board and direct that all decisions it made, including the resolution to grant roll-out extension to MML, were null and void, when the extension agreement was already in place.
In a 2005 case, in which then Macra board chairperson Abdul Pillane challenged the AG’s decision to suspend the board, the Constitutional Court found that the AG had no legal authority to suspend the board unless delegated by the State President.
The court observed that while the AG claimed, in the letter suspending the board, that he had been directed by “authorities”, he did not offer evidence to back his assertions when the matter was brought before the court.
Reads part of the ruling by Justice Anaclet Chipeta on behalf of fellow panellists Justices Healey Potani and Maxon Mkandawire: “If the President had delegated the Attorney General to suspend Macra Board, his decision to do that could have been in writing to comply with Section 90 of the Constitution.
“My Lords, I, therefore, find that the respondent [the Attorney General] had no constitutional as well as statutory powers to suspend the applicant and the entire board of Macra.”
This prompted MML to file a case against Macra to challenge the revocation of the licence and to seek the K42 billion damages which the court, in its award decision, halved.
The company now argues that the awarded damages are inadequate; hence, the appeal for the full amount they asked for, which is roughly 10 percent of the current National Budget and within striking distance of the 2012/13 allocation to the health sector.
The K21 billion already awarded is equivalent to five percent of the current national budget and almost half of this year’s health allocation.
Background to the issue
In 2002, Macra issued MML with a mobile telephony licence to roll-out the network within 12 months. But after noting that three years down the line the company had not rolled-out, Macra issued a revocation notice, compelling the mobile firm to roll-out within 90 days or have its licence revoked.
Acting on the notice of revocation of licence, MML made an offer to Macra for the extension of the roll-out period to October 31 2005. The Macra Board approved the request on March 29 2005 as variation of the licence agreement.
But on April 4 2005, the then AG suspended Macra’s board of directors and invalidated all its resolutions as of March 24 2005, including the decision to extend MML’s roll-out period.
This prompted the company, in June 2005, to make an application against Macra and the AG to reinstate the resolution of the board on extension of roll out period.
However, Judge Jane Ansah dismissed the application and said the matter be referred to trial as there was dispute of facts and for claim of damages.
The Supreme Court also dismissed MML’s application for injunction against revocation on the ground that damages would be an adequate remedy.
Following the Supreme Court ruling, MML instituted an action in the High Court of Malawi claiming damages for breach of contract by Macra and unlawful interference by the AG in a contractual relationship between MML and Macra, by invalidating the resolution of the board of Macra in extending the MML roll out period.
Trial started in October 2011 with the company calling four witnesses who testified. Macra and the AG chose not to call their four witnesses who were present in the court room.
In his ruling, Judge Frank Kapanda found that the AG’s action of suspending the board induced Macra to breach an agreement with the mobile phone firm to extend the network roll out period for a further 10 months.
“It is seen that by letter of 15th April 2005, Macra stated that it was no longer prepared to take a decision on the matter since its board had been dissolved. Further, it is common sense that the Attorney General had purported to suspend the 1st defendant’s [Macra] board as well as any resolutions made on and after 24th March 2005 inclusive the resolution to extend the roll out period up to 31st October 2005.
“This court, therefore, finds and concludes that the 1st defendant [Macra] would have honoured the irrevocable agreement, but for the intervention of the Attorney General. It is well to add that the actions of the Attorney General were found unlawful by the Constitutional Court. Indeed, the said Constitutional Court found that the suspensions of the 1st defendant’s board amounted to an interference with the independence of Macra in its operations.”
Kapanda also declared: “It is indeed my finding that the Attorney General brought pressure to bear upon the 1st defendant, resulting in Macra’s refusal to deal with the plaintiff. Further, it must be remembered that Macra had granted the extension following a board resolution passed on 29th March 2005.
“The Attorney General then moved in to suspend the board resolutions. Thus, in effect the Attorney General suspended the resolution to extend the roll out period; hence, Macra’s breach.”
In awarding the damages to MML, Kapanda said: “Accordingly, and as I see, I find that in my estimation the damages should be assessed at one half of what the expert told this court is the loss of profits. Thus, this amounts to $66 850 000…I so order this sum as the quantum of loss profits payable to the claimant.”
But MML, in a statement to its investors signed by spokesperson Jay Naka, said the company has instructed its lawyers to appeal against the judgement in order to recover the full sum of $133 700 000.”
The hearing of the appeal is on February 18 2013 at the Supreme Court of Appeal in Blantyre.