Mulli wins contracts ban case, awaits assessment

The High Court of Malawi has delivered a landmark judgment in favour of business mogul Leston Mulli and five of his companies, ruling that a 2012 government directive banning them from public contracts was unlawful, issued without legal authority, and in bad faith. Justice Allan Hans Muhome found that the then Attorney General and Minister of Justice and Constitutional Affairs, Ralph Kasambara SC, acted beyond his powers and violated the claimants' right to be heard. The court determined that the directive constituted misfeasance in public office, paving the way for a significant compensation assessment. This decision underscores the critical importance of due process and lawful administrative action, setting a precedent against executive overreach in public procurement and governance in Malawi.

In a significant ruling that reverberates through Malawi's legal and business landscapes, the High Court has declared a 2012 government directive, which blacklisted prominent businessman Leston Mulli and his associated companies from public contracts, as unlawful and an abuse of executive power. The judgment, delivered by Justice Allan Hans Muhome, marks a pivotal moment in the ongoing discourse surrounding administrative justice, governmental accountability, and the protection of business interests against arbitrary state action.

This decision not only vindicates the claimants after a protracted legal battle but also sends a stern warning to public officers regarding the limits of their authority and the imperative of adhering to due process. The court's findings of a lack of legal authority, bad faith, and a denial of the right to be heard highlight fundamental tenets of administrative law. The case now proceeds to an assessment of damages, with the potential for a substantial financial liability for the State, underscoring the tangible costs of executive overreach.

This article delves into the background of the government's ban, the legal framework governing administrative action in Malawi, the High Court's incisive analysis, and the broader implications for legal practitioners and the future of public procurement and governance in the country.

The genesis of this legal dispute dates back to September 5, 2012, when the then Attorney General and Minister of Justice and Constitutional Affairs, Ralph Kasambara SC, issued a directive instructing all government ministries, departments, and agencies to cease business dealings with Leston Mulli and five of his companies. The directive was reportedly premised on allegations of money laundering, corruption, and tax evasion against the entities. This sweeping ban effectively shut Mulli's businesses out of government procurement opportunities, leading to significant financial losses.

The offices of the Attorney General and Minister of Justice and Constitutional Affairs are established under Section 98 of the Constitution of Malawi, granting the incumbent significant public authority. However, the exercise of such authority is not unfettered, being subject to constitutional principles of administrative justice, including the right to lawful and procedurally fair administrative action. The Constitution of Malawi, particularly Section 41, guarantees the right to administrative justice, which encompasses the right to be heard and to receive reasons for administrative decisions. These principles form the bedrock of administrative law in Malawi, ensuring that public bodies act within their powers and in a just manner.

Despite the initial directive, the ban was subsequently lifted on August 6, 2014, by the succeeding Minister of Justice and Constitutional Affairs, Samuel Tembenu. However, the revocation did not extinguish the claimants' pursuit of legal redress for the losses incurred during the period the ban was in force. The claimants initiated legal proceedings, seeking damages for what they contended was an unlawful and malicious exercise of public power, framing their action around the tort of misfeasance in public office.

The High Court, presided over by Justice Allan Hans Muhome, meticulously examined the legality of the 2012 directive in the case of `LESTON TED MULLI t/a ZAO MARKETING AGENCIES AND 5 OTHERS v ATTORNEY GENERAL`, Civil Cause Number 270 of 2018. The core of the court's finding rested on two fundamental administrative law principles: the requirement for legal authority and the right to be heard (audi alteram partem). Justice Muhome unequivocally ruled that the then Attorney General, Ralph Kasambara SC, acted without legal authority and beyond his statutory powers when issuing the directive. This finding is crucial, as it reinforces the doctrine of ultra vires, asserting that public officials must operate strictly within the confines of powers conferred upon them by law.

Furthermore, the court found a clear breach of due process, noting that Mulli and his companies were never afforded an opportunity to be heard before the sweeping ban was imposed. This procedural unfairness was a significant factor in the court's determination that the directive was unlawful. The judgment highlighted that the allegations of money laundering, corruption, and tax evasion, which purportedly justified the ban, were never pursued through criminal prosecution, further undermining the State's position and suggesting a lack of substantive basis for the administrative action.

Crucially, Justice Muhome concluded that the directive was issued in bad faith, with targeted malice, and recklessly, demonstrating a specific intent to injure the claimants. The court observed that Mulli's companies were unfairly singled out while other government contractors faced no similar restrictions, indicating an improper purpose behind the action. This finding directly supports the tort of misfeasance in public office, which requires proof that a public officer acted maliciously or with reckless indifference to the consequences of their unlawful actions. The court's emphasis on the foreseeability of financial loss to the claimants further solidified this aspect of the ruling.

The High Court's decision to allow the claim for damages to proceed, despite the government's arguments, underscores the judiciary's role in holding the executive accountable for its actions. The court dismissed arguments that the matter was res judicata or that claimants were bound to exhaust regulatory appeal processes under the Public Procurement and Disposal of Assets Act, 2017, affirming the right to seek redress for constitutional and administrative law breaches. This approach ensures that individuals and businesses have effective remedies against unlawful state conduct, reinforcing the rule of law.

The ruling also implicitly critiques Malawi's governance systems, where political directives can sometimes override established procedures and accountability arrives years after the damage is done. The case serves as a stark reminder of the need for transparency and adherence to legal safeguards in public decision-making, particularly in matters affecting commercial enterprises and the broader economy. The potential K270 billion in damages sought by the claimants illustrates the severe financial repercussions that can arise from executive overreach.

The High Court of Malawi's judgment in favour of Leston Mulli and his companies is a resounding affirmation of constitutionalism and administrative justice. It serves as a critical reminder to all public officers that the exercise of power must always be within legal bounds, adhere to principles of natural justice, and be free from malice or improper purpose. The ruling sets a significant precedent, reinforcing the accountability of the State for unlawful administrative actions and the protection of private enterprises from arbitrary government interference.

For legal practitioners, this case highlights the robust avenues available for challenging executive decisions that lack legal basis or procedural fairness. It underscores the importance of meticulously documenting the impact of such directives, as the assessment of damages will now be a crucial phase. Attorneys advising clients on public procurement and administrative law matters should take note of the court's strong stance against ultra vires acts and the denial of the right to be heard. As the matter proceeds to the assessment of damages, all eyes will be on the quantum of compensation, which could set a new benchmark for state liability in Malawi and further shape the landscape of public sector governance and business rights.