Freed Technical Consultants (Private) Limited t/a Roce Consulting Engineers v National University of Science and Technology

Freed Technical Consultants (Private) Limited, a firm of engineers trading as Roce Consulting Engineers, issued summons against the National University of Science and Technology (NUST) seeking payment of US$120,249.81 for engineering consulting services allegedly rendered at the defendant's special instance and request. The plaintiff claimed it performed its contractual obligations but the defendant failed to pay. NUST is a state university incorporated under the National University of Science and Technology Act [Chapter 25:13] as a body corporate with perpetual succession and capacity to sue and be sued in its own corporate name. The defendant raised a special plea challenging the validity of the proceedings on two grounds: (1) that as a state institution, the plaintiff should have given 60 days' notice under section 6 of the State Liabilities Act [Chapter 8:14] before commencing the action; and (2) that the contract was invalid for non-compliance with the Procurement Act [Chapter 22:14].

• Whether a university incorporated as a body corporate under statute falls within the definition of 'the state' for purposes of the State Liabilities Act [Chapter 8:14]
• Whether 60 days' notice under section 6 of the State Liabilities Act is required before instituting proceedings against a state-owned entity incorporated as a body corporate with capacity to sue and be sued in its own name
• Whether alleged non-compliance with the Procurement Act [Chapter 22:14] is a proper ground for a special plea or a matter to be determined on the merits
• Whether issues of contract validity are appropriately raised by way of special plea

The special plea was dismissed with costs. The matter would proceed to trial on the merits.

A state-owned entity that has been incorporated as a body corporate with capacity to sue and be sued in its own corporate name pursuant to an Act of Parliament is not 'the state' for purposes of the State Liabilities Act [Chapter 8:14], and therefore the 60-day notice requirement under section 6 of that Act does not apply to legal proceedings instituted against such an entity. When the state incorporates an entity as a body corporate and grants it the usual capabilities of bodies corporate, including self-governance, that entity has its own separate legal rights and responsibilities distinct from those of the state. The contractual liabilities of such an autonomous body corporate are not state liabilities in the strict sense, even though the entity is state-owned.

The court observed that the mischief the legislature intended to address by enacting the State Liabilities Act was to protect the property of the state and to cater for the bureaucracy that normally prevails within government, given it is a huge organization, so that relevant authorities have adequate notice of pending litigation and adequate time to follow protocol in making decisions. The court also commented that arguments regarding non-compliance with procurement procedures and contract validity based on alleged lack of proper authorization are premature when raised by way of special plea and should properly be determined on the merits after evidence is led in open court about how the contract was entered into and awarded. The court referenced the Business English online Dictionary definition of a body corporate as 'an organization such as a company or government that is considered to have its own legal rights and responsibilities.'

This case establishes an important principle in Zimbabwean law regarding the legal status of state-owned entities incorporated as bodies corporate. It clarifies that the State Liabilities Act does not apply to autonomous state-owned institutions that have been incorporated as bodies corporate with capacity to sue and be sued in their own names. The judgment recognizes that when the state chooses to establish an entity as a body corporate, it confers upon that entity separate legal personality with its own rights and responsibilities distinct from those of the state itself. This has significant implications for litigation involving universities and other state-owned corporate entities, as it means creditors and other parties can proceed directly against such entities without complying with the 60-day notice requirement under the State Liabilities Act. The case reinforces the principle that corporate personality, even for state-owned entities, creates a genuine separation between the entity and the state. The judgment also provides guidance on the procedural distinction between special pleas and matters properly to be determined on the merits, particularly regarding procurement compliance and contract validity issues.