Personal Cost Orders: Protecting the Public Purse
| Jurisdiction | South Africa |
| Author | Vos, W. |
| Pages | 138-157 |
| Date | 01 June 2020 |
| Citation | (2020) 31 Stell LR 138 |
| Published date | 01 June 2020 |
138
PERSONAL COST ORDERS: PROTECTING
THE PUBLIC PURSE*
Wesley Vos
BCom LLB cum laude
Candidate Attorney: Bowmans
1 Introduction
One of the main objects of constitut ionalism in South Afr ica is to diverge
from an era where abuse of stat e power and resources was effectively
institutionalised.1 To achieve the aforementioned goal, the country ado pted
the rule of law, accountability, and the suprema cy of the Constitution of the
Republic of South Africa, 1996 (“Constitution”) as te nets of our democracy.
This dogma “constit utes the sharp and mighty sword that st ands ready to chop
the ugly head of impunity off its s tiffened neck”.2
The question, however, arises whether the foregoing pr inciples amount to
mere ambitious symbolism when read ing the opening paragraph of the Helen
Suzman Foundation v President of the Republic of South Afr ica; Glenister v
President of the Republic of Sou th Africa judgment:
“All South Africans across the racial, religious, class and political divide are in broad agreement that
corruption is rife in this country and that stringent measures are required to contain this malady before
it graduates into something terminal.”3
Transparency Inter national’s 2018 global Corruption Perception Index
supports the Cons titutional Cour t’s outlook. It indicates that South Africa
dropped 50 places on the index sin ce 1996, from 23 to 73.4 It is impossible
to calculate an exact amou nt, but it is generally estimated t hat in the past
23 years, South Africa h as lost R700 billion due to corruption and wa steful
expendit ure.5 More speci cally, Transparency Inter national predicts that,
due to corrupt ion, South Africa’s public procurement contracts have cost the
country 20% of its Gros s Domestic Product.6 This translates to ap proximately
* Thank you to P rofessor Geo Quinot a nd the anonymous pe er reviewers for thei r guidance in wr iting this
article
1 H van Vuuren “7 T hings We Learned About Ap artheid Corr uption From Apartheid , Guns And Money”
(17-07-2017) Hu ffpost co za/ hennie-va n-vuure n/7-thin gs-we-lear ned-
about-apartheid-corruption-from-apart heid-g_a_23030055/> (accessed 29-03-2020)
2 Economic Free dom Fighters v Speak er of the National Ass embly 2016 3 SA 580 (CC) para 1
3 2015 2 SA 1 (CC) para 1
4 Anonymous “C orruptio n Perception In dex 2018” (29-01-2019) Transparency International
www transparency org/cpi2018> (accessed 29-03-2020)
5 S Chiumia “H as South Africa Lost R700 bill ion to Corruption since ’9 4?” (30-09-2015) Africa Check
is-wrong/ > (accessed 29-03-2020)
6 J Olaya “How to Reduce Co rruption i n Public Procu rement: The Fu ndamental s” in K Kostyo (ed)
Handbook for Cu rbing Corrupti on in Public Procurem ent, Part I (2006) 1
(2020) 31 Stell LR 138
© Juta and Company (Pty) Ltd
R734 238 million per year.7 These disturbing gures are suppor ted by the
Auditor-General’s report in terms of the P ublic Finance Management Act 1 of
1999 (“PFMA”) which states that public procurement contracts a re the main
contributor to ir regular expenditure.8
Considering the count ry’s high unemployment rate of 29%9 and the fact
that more than 50% of South Afr icans live in dire povert y,10 it is regrettable
that many public ofcials, who are sworn to create a better cou ntry for its
citizens, are more focusse d on lining their ow n pockets than acting et hically
and in terms of thei r constitutional mandate.11
To enforce accountability and the r ule of law, and ultimately cure the cancer of
corruption th at by all accounts per meates the countr y, South Africa has adopted
several legislative mechanisms, includi ng the Prevention and Combating of
Corruption Act 31 of 2008 (“Corruption Act ”) which criminal ises corruption
in public and pr ivate sectors and codi es specic offences; the PFM A
which addresses un authorised government expe nditure;12 the Promotion of
Access to Information Act 2 of 2000 wh ich provides access to information held
by the state, although only par tially implemented; and the Code of Conduct for
Assembly and Permanent Council Members which requi res public ofcials to
disclose gifts and int erests.13 Furthermore, South Africa has ratied the United
Nations Convention against Corr uption,14 the African Union Convention on
Preventing and Combating Cor ruption,15 and the Or ganisation for Economic
Co-operation and D evelopment Anti-Bribery Convention.16 Moreover, the
ofce of the P ublic Protector is mandat ed to investigate any conduct in state
affairs, or in the public a dministr ation, that is alleged or suspect ed to be
improper or to result in a ny impropriety or prejudice.17 Finally, the Auditor-
General audits and reports on accou nts, nancial state ments, and nancial
7 Anonymous “ South Afric a GDP-Gross Dome stic Product ” (31-03-2018) Country Economy ps://
countryeconomy com/gdp/south-africa> (accessed 29-03-2020)
8 K Makwetu “PF MA Consolidated Gene ral Report on National a nd Provincial Audit Outc omes” (2017)
Auditor General
2017%20Web%20SMALL pdf> (accessed 29-03-2020)
9 S Moya “South Afr ica Jobless Rate H ighest Since 20 03” (07-03-2019) Trading Economics
tradingeconomics com/ar ticles/07302019095420htm> (accessed 29-03-2020)
10 L Omarjee “ More than 50% of SA’s Population is Living i n Poverty” (22- 08-2017) Fin24
www fin24 com/ Economy/more-than-50-of-sas-population-is-living-in-poverty-20170822> (accessed
29-03-2020)
11 See section 195(1)(g) of the Con stitution
12 At local level, the sa me objective is ach ieved in terms of t he Local Gover nment: Munici pal Finance
Management Act 56 of 20 03 (“MFMA”)
13 Anonymous “ Code of Conduct for NA an d Permanent NCOP Me mbers” (undate d) Parliament of th e
Republic of Sou th Africa pa rliament gov za/code-conduct-for-na-ncop-members>
(accessed 29-03 -2020) See also The oath or affi rmation of off ice in respect of ministe rs and deputy
minister s as set out in schedule 2 t o the Constitut ion:
“I, A B , swear/solemnly af firm that I will b e faithful to the Repu blic of South Africa and wi ll obey,
respect and u phold the Constit ution and all other law of the Republ ic; and I undert ake to hold my
office as Mi nister / Deputy M inister with hono ur and dignity; t o be a true and faith ful counsellor ; not
to divulge di rectly or indire ctly any secret mat ter entrust ed to me; and to perfor m the functions of my
office consc ientiously and to the be st of my ability ”
14 Adopted 9 Dece mber 2003, entered i nto force 14 December 2005, 2349 U NTS 41
15 Adopted 1 July 20 03, entered into force 5 Aug ust 2006
16 Anonymou s “South Afr ica Corrup tion Report ” (30-05-2018) Business and anti-corruption portal
17 Section 182(1) of the Constit ution
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management in the public sector.18 Notwithst anding all these measures, South
Africa is still c rippled by corruption a nd wasteful expendit ure, especially in
public procurement.
The Constitutional Cou rt has also issued its warn ing against corruption a nd
the importa nce of accountability:
“Corruption and maladministration are inconsistent with the rule of law and the fundamental values of
our Constitution. They undermine the constitutional commitment to human dignity, the achievement
of equality and the advancement of human rights and freedoms. They are the antithesis of the open,
accountable, democratic government required by the Constitution. If allowed to go unchecked and
unpunished they will pose a serious threat to our democratic State.”19
Accordingly, it is an appropriate time in ou r young democracy to evaluate
the efcacy of the mechanisms d esigned to hold government account able.
This art icle investigates a novel instrument th at our judiciary is cur rently
experimenting with, namely piercing the shield of public ofce a nd ordering
personal cost orders against public ofcials. This innovative piece of the
judiciary’s artiller y was recently used by the Gauteng Division of the High
Court in Absa Bank Limited v Public Protector (“Absa Bank”)20 where the
Public Protector was ordered t o pay 15% of the costs of the South African
Reserve Bank (“SAR B”) on a punitive attorney a nd client scale, including
the costs of three coun sel. This order was pursu ant to a review application
that was brought by the SAR B to have the Public Protector’s recommended
remedial action set aside.
It is conceivable and hopeful that public ofcials will b e more inclined to
tread carefully when acting in their ofcial capacities as they could potentially
bear the legal costs of subsequent lit igation should they act outside the scope
of their duties and/or fail to per form their duties.
Against this backgr ound, this ar ticle will, r st, explore the theme of
accountability. Secondly, jurispr udence on personal cost order s will be
analysed. Third ly, eight uncertainties su rrounding per sonal cost orders will
be discussed. Fourt hly, an analogy will be draw n between personal cost
orders and piercing of the corp orate veil. Finally, this article will conclude by
evaluating whether a persona l cost order will be helpful in the g ht again st
corruption.
2 Accountability and liability
The notion of accountability is a c entral theme enforced t hroughout the
Constitution. It is outlined a s one of South Africa’s foundational values.21
Section 41 of the Constitution provides that “all spheres of govern ment and
all organs of state withi n each sphere must provide effective, tra nsparent,
accountable and coherent govern ment for the Republic as a whole”. The
National Assembly must provide for mechanisms to en sure that all executive
organs of state in the nat ional sphere of government are account able to
18 Section 188(1)
19 South Afri can Association o f Personal Injury Law yers v Heath 2001 1 SA 883 (CC) para 4
20 2018 JDR 0190 GP
21 Section 1 of the Co nstitution
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it.22 Further more, Members of Cabinet are accou ntable collectively and
individually to Parliame nt for the exercise of their powers and the performance
of their function s.23 In addition, Members of the Executive Cou ncil of each
province are account able collectively and individually to the legislature for the
exercise of their powers and the perfor mance of their funct ions.24 The object
of a local government must be to provide for an accou ntable government for
its commu nity.25 Lastly, chapter 10 of the Constitution, dealing w ith public
administ ration, states that “public adminis tration must be accountable”.26
Considering the impor tance that the Con stitution places on the nor m of
accountability, and the extent to wh ich corruption takes place in South A frica,
it is apposite for jurists to explore the effect iveness of current mechanism s
ensuring st ate accountability a nd to consider additional mecha nisms to
enhance the current str ucture.
The current regi me is arguably inade quate. Actions or inactions of
government organisation s can be challenged in cour t and be invalidated, yet,
the individuals behi nd the delinquency remain largely unaffecte d. A practical
example deserves mention: an un successful tendere r successfully applies for
judicial review to have the tender award set aside. The cou rt process is lengthy,
the applicant is personally liable for attor ney and own client costs and the
government body is most likely only ordere d to pay party and part y costs. The
government body then use s the taxpayers’ money to satisfy the debt, wh ile
the state ofcial(s) responsible for the ir regularity remain u ntouched. This
system holds government bodies acc ountable for wrongful act ions with no
impact on the wrongdoer and plac es the burden on the public. An addit ional
accountability measure is needed where public ofcials, who act outside the
scope of their mandate, ar e held personally liable and account able.
Alistair Pr ice argues that accou ntability has two cent ral elements: First,
holding ofcials accountable mea ns to dema nd from t hem reasons or
explanations to “account” for thei r actions or omissions. Thi s foundation of
accountability is exemplied when Members of the Executive Cou ncil of a
province need to account t o the legislature and ans wer questions. Secondly,
accountability i nvolves holding persons responsible and imposing liabil ity
for their actions.27 This nece ssarily involves retribution or the i mposition of
sanction s.
The crux of this article neatly complements the two-tiered denition of
accountability proposed by Price: First, an ofcial will be called to account for
his or her wrongdoing dur ing legal proceedings by mak ing representation s.
Secondly, if the al leged conduct was grossly irregular, such an ofcial could
potentially have to pay the legal costs of such proceed ings from their own
pocket in accordance wit h the liability element of accountability.
22 Section 55
23 Section 92
24 Secti on 133
25 Section 152(1)(a)
26 Section 195(1)(f)
27 A Price “Accountabi lity and Liabilit y” (2015) Acta Juridica 313 315
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3 Reinforcing accountability: Personal cost orders
An award for costs always lies in the dis cretion of the court.28 Th is has
become known as the “ basic rule” relating to the law of costs.29 Ge nerally,
courts have been reluctant to mu lct ofcials with personal cos t orders. The
unwillingne ss of courts star ted to wear thin , initially at a slow pace,30 but in
recent times with ala crity. In the seminal case of Coetze estroom Estate and GM
Co v Registrar of Deeds (“Coetzee stroom”),31 Innes J stated th at the court will
reserve itself the right to order costs against an ofcial personally if his actions
were mala de or grossly ir regular. In Deneys ville Estates Ltd v Surveyor-
General,32 the cour t conrmed it has the discretion to award costs against an
ofcial if the circumsta nces justify doing so. The court in Omnia Fertilizer
Ltd v The Competition Commission: In re The Competition Commission of
South Africa v Sasol Che mical Industries (Pt y) Ltd33 acknowledged the rule
in Coetzeestroom, but warned against cost orders against ofcials who carry
out their duty mista kenly, albeit in good faith.
Subsequently, the decision in Coetzeestroom has been judicially qualied
in certai n respects. The Appellate D ivision (as it then was) held that the
dictum in Coetzeestroom should not be elevated into a rigid rule of un iversal
application, as that would too nar rowly restrict the exercise of judicial
discretion in a matt er of costs.34 In Fleming v Fleming,35 Vivier JA held:
“Die algemene reël … is dat ’n kostebevel nie toegestaan word teen ’n openbare amptenaar wat
in die foutiewe maar bona de uitoefening van sy ampspligte opgetree het nie. Dit is egter nie ’n
onbuigsame reël wat in alle gevalle geld sodat die Hof se diskresie aan bande gelê word nie.”36
Although courts do not generally penalise an ofcial with a cost order,
courts have done so where ofcials opposed proceedings and thei r intention
was not to assist the cour t.37 Where a deputy sher iff received payments in
lieu of a judgment debt and failed to pay the mon ies to the creditor, he raised
the defence of prescription, but a person al cost order was awarded against
the sheriff due to the negl igence of his deputy.38 Courts have fur ther ordered
a personal cost order against an ofcial where his decision was based on
irregula r grounds and where he was found g uilty of procrast ination and
28 AC Cilliers (ed) Law of Cos ts 3 ed (2018) 2-6 - 2-7
29 See Kruger Bro s & Wasserman v Ruski n 1918 AD para 33 where I nnes CJ held that:
“[T]he rule of ou r law is that all costs - un less expressly enacte d - are in the discretion of t he Judge
His discret ion must be judiciall y exercised, but it can not be challenged , taken alone and apa rt from the
main order, wit hout his permis sion”
30 Texas Co (SA) Ltd v Cape Town Muni cipality 1926 AD 488
31 1902 TS 216
32 1951 2 SA 68 (C) 81
33 2008 JOL 22197 (CT) paras 11-13
34 Commissione r for Inland Revenue v Ropes and M attings SA Ltd 1945 AD 724paras 724 -731 See a lso
Estate Gouws v Re gistrar of De eds 1947 4 SA 403 (T); Fisher v P residing Off icers, Roset tenville
Constituency 1961 3 SA 651 (W) 658; Kruger v Die B alju, Transvaal 1962 1 SA 138 (T); Ormerod v
Deputy Sheriff, Durban 1965 4 SA 670 (D); Bon Esperance CC v Munic ipality of Stellen bosch 1998 4 All
SA 59 (C) 69A-B
36 262C-E
37 Fourie v Cilliers NO 1978 2 A ll SA 672 (O)
38 Kruger v Die Bal ju, Transvaal 1962 1 SA 138 (T) 143
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causing prejudice to the applicant.39 Ofcials have also been ordered to pay the
costs of the applicant where they had no mal ice but exceeded their authority
and committed “ irresponsible actions”.40 Courts have made p ersonal cost
orders again st ofcials who acted negligently41 or grossly negligent42 even if
the ofcial acted in a bona de manne r.43
In Mlatsheni v Road Accident Fund44 the cour t pronounced on what state
ofcials owe to the public:
“Organs of State are not free to litigate as they please. The Constitution has subordinated them to
what Cameron J, in Van Niekerk v Pretoria City Council, called ‘a new regimen of openness and fair
dealing with the public’. The very purpose of their existence is to further the public interest and their
decisions must be aimed at doing just that. The power they exercise has been entrusted to them and
they are accountable for how they full their trust. It is expected of organs of State that they behave
honourably – that they treat the members of the public with whom they deal with dignity, honestly,
openly and fairly.” 45
The court expres sed its disapproval of the conduct of the employees of the
Road Accident Fund by stating “if th is type of conduct continue s, the time
may have well arrived for orders of costs de bonis propr iis to be awarded
against employees …”.46 Then the Supreme Court of Appeal (“SCA”) issued
its warning i n Gauteng Gambling Board v MEC for Economic Development,
Gauteng Provincial Gover nment:
“It is time for courts to seriously consider holding ofcials who behaved in the high-handed manner
described above, personally liable for costs incurred. This might have a sobering effect on truant
public ofce bearers.”47
Previously our court s have shown strong resistance to order s de
boni propriis.48 However, in MEC for Health, Gauteng v Lushaba
(“Lushaba”),49 the Const itutional Court br oke through the resista nce and
conrmed Coetzeestroom. In Lushaba, the Court held that c ost orders are
permissible in principle, provided ofcials have sufcient opportu nity to
make representations.50 I n Democratic Alliance v African Broadcasting
Corporation Soc Ltd; Democratic Alliance v Motsoeneng (“SABC”),51 the
court al so justied imposing co sts de bonis propriis on directors a s they are
persons perfor ming functions in a duciary capacit y on behalf of the public.
39 Inkosinath i Property Devel opers (Pty) Ltd v Ministe r of Local Governmen t and Land Tenure 1991 4 SA
639 (Tk) 645G-H
40 City News Agenc y (Pty) Ltd v Minister of th e Interior, Transkei 1991 3 SA 391 (Tk) 394D-G
41 Moyakhe v Attorney-General, Transkei 1993 3 SA 197 (Tk) 203G- H
42 Die Meester v Jou bert 1981 4 SA 211 (A)
43 Smith v Van Heerden 20 02 4 All SA 461 (C) para 470
45 Paras 16-17
46 Para 18
47 Gauteng Gam bling Board v MEC for Econ omic Developmen t, Gauteng 2013 5 SA 24 (SCA) para 62 See
also Bam v Road Acciden t Fund 2015 JOL 33368 (GJ) where the court held th at:
“A time will come when c osts orders should be ma de against such off icials in their pers onal capacity
when they do not ca rry out thei r duties and defen d claims where th ere is no real defenc e to such claims ”
48 Westwood Insur ance Brokers (Pty) Ltd v eThe kwini Municipality K ZDHC 31-07-2017 case no 8221/16
para 12
49 2017 1 SA 106 (CC) paras 6-22
50 This proviso adh eres to the common la w principle of audi alte ram partem
51 2017 1 All SA 530 (WCC) para 222
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4 Personal cost orders: practical difficulties
A personal cost order is the pioneer ing feature of a proactive judicia ry.
However, before widespread implementation can be effected, a few conce rns
or uncertai nties bear consideration. Below follows a brief exposition of eight
such uncer tainties.
4 1 Basis of liability
There are thre e main causes of action when litigating agai nst organs of state:
delictual claims, cont ractual claims, a nd claims in term s of administr ative
law. However, courts do not measur e the disputed conduct again st standards
unique to these three elds of law when deciding whether to award a personal
cost order.52 For example, if the cause of action was a review in term s of
the Promotion of Administ rative Action Act 3 of 2000 (“PAJA”), courts do
not exclusively test the impugned conduct for purposes of cost orde rs against
the rationality sta ndard, but will look at a var iety of factors. These might
include factors sur rounding the init ial incident that gave rise to the cause of
action, or aspects of the lit igation. For example, in President of the Republic of
South Africa v Ofce of the Public Protector,53 the court ordered the p resident
to pay for the legal costs personally by only exa mining his conduct du ring
litigation as a justication for the order. In the jurisprudence discussed in pa rt
3 above, the courts used no speci c standard unique to the cause of ac tion.
Consequently, the basis for personal liability for cost s cannot be ascrib ed to
delictual, contra ctual, or adm inistrative-law sta ndards of liability. Further
support for this reas oning is found in Black Sash Trust v Minister of Social
Development (“Black Sash 3”).54 Black Sash 3 dea lt with the issue of costs
that was left open in Black Sash Trust v Minister of Social Development
(“Black Sash 1”).55 In t his case, the litigation arose out of gros s irregular
conduct by the Minister of Social Development and t he South Africa Social
Security Agency (“SASSA”) which led to the non-payment of social grants t o
thousands of beneciaries. Notably, in ordering the Minister to pay 20% of the
legal costs of the application in her person al capacity, the Constitutional Court
considered the Minist er’s conduct prior to and during the lit igation.56
Considering that the t est for liability for costs does not correspond with one
of the traditional grou nds of liability, the logical conclusion is that liability for
legal costs in a personal capa city is a sui generis form of liability.
52 For example, if the cla im is based on law of delict, cou rts do not measure t he conduct against a sp ecific
standard i n the law of delict
53 2018 1 All SA 576 (GP) para 56
54 2018 12 BCLR 1472 (CC)
55 2017 3 SA 335 (CC) In Bl ack Sash 1 costs we re reserved a nd the then Min ister of Social Develo pment was
ordered to show ca use on affidavit as t o why she should not be joined to t he proceedings in he r personal
capacity and w hy she should not pay the cost s of the application out of he r own pocket Pur suant to Black
Sash 1, affidav its were filed that r aised conflic ts of facts and the cou rt, in Black Sash 2, o rdered that the
Minister b e joined in her pers onal capacity a nd that the part ies report to th e court on whethe r they agreed
to a process in t erms of section 38 of the Su perior Courts Ac t 10 of 2013 to determine the issue s relating
to the Minis ter’s conduct The par ties agreed that r etired Judge Presi dent Ngoepe should be appo inted to
conduct the fac t-finding inqu iry
56 Para 10
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4 2 A uniform standard or test
It must be examined whether ou r courts can develop a un iform standard
against which the conduct of an ofcial can be mea sured when con sidering
personal liability for legal cost s. Alternatively, and/or additionally, guidelines
should be established to assist a cou rt when considering such persona l liability.
As discussed in pa rt 4 1 above, the basis of liability is not lin ked to the cause
of action giving rise to the l itigation. Therefore, the test for liability cannot be
negligence simply because the cause of action is a delict.
Until recently the cour ts have shown disagreement on the app ropriate test
for a personal cost order.57 In Swartbooi v Brink,58 the cour t considered the
common-law rules for gra nting a personal cost order ag ainst a person in a
representative capacity a nd stated that such an order would be approp riate
if the conduct of the person was motivated by m alice or amounted to
improper conduct. The appr oach adopted by Innes CJ in Vermaak’s Exec utor
v Vermaak’s Heirs59 has also been followed. In that case, the cour t held
that the representat ive’s conduct must have been “mala de, negligent or
unreasonable”.
In Black Sash Trust v Minister of Social Deve lopment (“Black Sash 2”), the
Constitutional Cou rt provided much-needed clarity by stati ng “the tests of bad
faith and gross negligence in con nection with the litigation, applied on a case
by case basis, remain well founded”. Further more, the court held th at these
tests are applicable when the conduct of t he ofcial in exercising her ofcial
duties or conduct duri ng the litigation gave rise to the cost order.60 In Black
Sash 3 the court a gain referred to the foregoing test a s being “buttresse d by
the Constitution”.61 A dishonest non-d isclosure of information by the Minister
of Social Development to the court provided grou nds for a personal cost order.
The court stat ed that
“[t]he Inquiry Report’s nding that the Minister’s failure to disclose this information was her fear of
being joined in her personal capacity and being mulcted personally in costs has not been, and cannot,
be faulted. The inference that she did not act in good faith in doing so is irresistible. At best for her, her
conduct was reckless and grossly negligent. All that is sufcient reason for a personal costs order.” 62
In Public Protector v South African Reser ve Bank,63 the Constit utional
Court delivered a comprehensive judg ment dealing with person al cost orders
on a punitive scale. This judgme nt was delivered pursuant to the P ublic
Protector’s appeal to the Constitut ional Court again st the order of the High
Court in Absa Bank where she was ordered to pay 15% of the legal costs on
an attorney and client scale. The Constitutional Court once again afr med the
57 See the text to pa rt 3 above where cour ts have referred to neglige nce or causing prejudic e as the test on
one side of the spect rum Conversel y, courts have held that th e standard should b e gross negligence
58 2006 1 SA 203 (CC) para 7
59 1909 TS 679 691
60 2017 9 BCLR 1089 (CC) para 9
61 2018 12 BCLR 1472 (CC) para 10
62 Para 12
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test for a personal cost order to be whet her a litigant has acted in bad faith and
with gross negligence.64
The test of gross negligence is used i n the context of contractua l exclusionary
clauses and in cert ain statutes, liability is li mited to gross negligence.65 In MV
Stella Tingas Transnet Ltd t/a Portnet v Owners of the M V Stella Tingas66 the
SCA exposited gross negligence as follows:
“To qualify as gross negligence the conduct in question, although falling short of dolus eventualis,
must involve a departure from the standard of the reasonable person to such an extent that it may
properly be categorized as extreme; it must demonstrate, where there is found to be conscious risk-
taking, a complete obtuseness of mind or, where there is no conscious risk-taking, a total failure to
take care. If something less were required, the distinction between ordinary and gross negligence
would lose its validity.”67
In Public Protector v South African Reser ve Bank, the mi nority68 also
grappled with the denition of gross negligence. Mogoeng CJ stated t hat “[a]
dictionary den ition of ‘gross negligence’ is ‘extreme carelessness that shows
wilful or reckle ss disregard for the consequences t o the safety or propert y of
another’”. The minority pointed out aws in the reasoning of the High Court
in Absa Bank. It consequently set aside the punitive person al cost order, with
Mogoeng CJ correctly stati ng that the High Cour t did not clearly indicate
the basis on which the punitive pe rsonal cost order is justied. The vague
reference to gross negligence and i mplied presence of bad faith on the par t
of the Public Protector is an insufcient justication for a personal cost order
as accurately pointed out by Mogoeng CJ. Moreover, the minorit y correctly
stated that not only must g ross negligence and bad faith be relied on as a
justication for a personal cost order, a court must apply this test and explain
how gross negligence and bad faith is proven.69 It is unfor tunate that, a fter
the court in Black Sash 2 afr med the test for a personal cost order, the High
Court in Absa Bank failed, rst, to clearly identif y the test for a personal cost
order, and secondly, to explain how the requirements of gr oss negligence and
bad faith were met.
The minority i n Public Protector v South African Reserve Bank also
pronounced on the approach to be a dopted to determi ne the existence of bad
faith when considering a per sonal cost order:
64 Para 147
65 J Neethling, J Potgie ter & P Visser Neethling – Po tgieter – Visser Law o f Delict 7 ed (2016) 140
66 MV Stella Tingas; Transn et Ltd t/a Portnet v O wners of the MV Stella Tingas 200 3 2 SA 473 (SCA)
480-481
67 The court r eferred to the foll owing examples: “no c onsideration wh atever to the conse quences of his ac ts”
(Central South Af rican Railways v Adling ton & Co 1906 TS paras 964-973); “a tot al disregard of duty”
(Rosenthal v Mark s 1944 TPD 172 para 180); “negligence of a ver y serious natu re” or “a particu larly high
degree of neglige nce” (S v Smith 1973 3 SA 217 (T) para 219); “ordinary ne gligence of an aggr avated form
which falls shor t of wilfulness” (Bi ckle v Joint Ministers of L aw and Order 1980 2 SA 764 (R) 770); “an
entire failu re to give consider ation to the conse quences of one’s actions” (S v Dhl amini 1988 3 SA 302 (A)
308)
68 The minorit y set aside the per sonal cost order by s tating that th e High Court rel ied on the wrong pr inciple
of law and an incor rect interp retation of some of the fac ts See 2019 6 SA 253 (CC) para 109 Conversely,
the majority fou nd that there was no m aterial misdi rection on the par t of the High Cour t and the punitive
personal co st order was upheld See pa ra 250
69 Para 55
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“[T]he correct approach to determining the existence of bad faith is therefore one that recognises
that bad faith exists only when the ofce-bearer acted with the specic intent to deceive, harm or
prejudice another person or by proof of serious or gross recklessness that reveals a breakdown of the
orderly exercise of authority so fundamental that absence of good faith can be reasonably inferred
and bad faith presumed. This is so because the mischief sought to be rooted out by rendering bad faith
so severely punishable, particularly within the public sector space, is to curb abuse of ofce which
invariably has prejudicial consequences for others. Abuse of ofce undermines the efcacy of State
machinery and denies justice and fairness to all people and institutions.”70
It can be deduced from the Black Sash 2 te st that when an ofcial acted
intentionally, he will also satisfy t he requisite fault element to be penalised
with costs.71
The negligence inquir y involves measuring t he conduct in question against
that of a ctitious “reasonable person” that represents societal expectations
of what constitutes adequ ate and reasonable conduct.72 When a defendant
possesses a higher degr ee of skill and competence due to t raining or
experience, a higher st andard of care is expected of him.73 For example, when
assessing the actions of a neu rosurgeon, the stand ard to be expected f rom a
specialist i n his relevant eld wil l be higher tha n the standard expected of a
general practitioner.74
In assessing whether t he ofcial acted grossly negligent, the cou rt in
Black Sash 2 did not pronounce on whether t he standard wil l be adapted if,
for example, t he ofcial is a n expert. Th is is a quest ion that will have to be
answered by the courts in the future. It is indeed equitable that an ofcial
who has been in a part icular ofce for 30 years should be exposed to a higher
level of scrutiny than an ofcial with little exp erience. We have to wait to
see how the judiciary will de al with this. That bei ng said, no depart ure from
the current negligence i nquiry is expec ted. In Westwood Insurance Brokers
(Pty) Ltd v eThekwini Municipalit y (“Westwood”),75 the cour t alluded to the
fact that the stand ard will have to be adapted (even though in t hat case the
court did not do a negligence inqu iry). The court stat ed that “the senior ity
of the members of the BAC and the fact that they preside at the apex of the
committee syst em is an aggravating fact or.”76 In Public Protector v South
African Reserve Ban k the majority also implied that a different standa rd may
be applied depending on the ident ity of the litigant. The cour t stated:
“[T]he Public Protector falls into the category of a public litigant. A higher duty is imposed on public
litigants, as the Constitution’s principal agents, to respect the law, to full procedural requirements
and to tread respectfully when dealing with rights. The need to hold government to the pain and duty
of proper court process is sourced in the Constitution itself.”77
70 Para 72
71 This is beca use the standard of g ross negligence is lower t han intention See M Lou bscher & R Midgley
The Law of Delic t in South Africa 2 ed (2017) 109
72 124
73 Van Wyk v Lewis 1924 AD 438
74 See 444 where t he court held t hat conduct must b e measured ag ainst the “gene ral level of skill an d
diligence pos sessed and exercised at th e time by members of the bran ch of the profession to which the
practition er belongs” This case rem ains the locus classicus when dealing with an ex pert
75 KZDHC 31-07-2017 case no 8221/16
76 Para 90
77 2019 6 SA 253 (CC) para 155
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Had the standard for t he imposition of a personal cost order been h igher
than the cur rent test, for example intent, it would be too high a nd personal
cost orders would seldom nd application. Conversely, had the standard been
lower, for example negligence, it would leave public administration crippled
as ofcials would live in fear of liability and conse quently not take a decision
when it is needed. Consequently, the standa rd of gross negligence linked to
mala des is a welcomed one. It neatly complements the factual mat rix of acts
of impropriety that a per sonal cost order seeks to penalise.
Finally, it should also be noted that the imposition of a personal cost ord er
will not open the ood gates for fur ther pe rsonal co st orders because the
decision to impose a personal cos t order will be deter mined “in light of the
particular ci rcumstances of each and every case.”78
4 3 Punitive personal cost orders
In Absa Bank, the High Court held the P ublic Protector liable for costs
in her personal capacit y on a punitive attorney a nd client scale. The court
reasoned th at punitive costs were justie d by virtue of the same r easons for
imposing a personal cost orde r.79 The Constitutional Cour t in Public Protector
v South African Reser ve Bank, however, commented on the reason ing of the
court a quo by stating th at a punitive cost order will not always b e justied
where a personal cost order is wa rranted as a per sonal cost order is in itself
inhere ntly punitive.80 A pun itive personal cost order should therefore be
considered judicially and with ci rcumspection as it could be v iewed as a
“double punishment.”81 The Const itutional Court caut ioned that, while the
tests for awarding a person al cost order and awarding a pun itive cost order
may overlap, “an independent, separate e nquiry should be car ried out by a
court in resp ect of each order.”82
The principle governing cost s on an attorney and client sca le, laid down
originally by In nes CJ, is that such an order is appropriate when a cour t wishes
to mark its disapproval of the conduct of the litiga nt.83 This principle has in
recent case law been endorsed a nd is still applicable.84
4 4 Joinder
Joinder refers to the joining of one or more par ties to the proceedi ngs.85
First, parties may be joine d to a matter based on convenience as it saves time
78 Para 160
79 2018 JDR 0190 GP See al so, Loubscher & Midgley T he Law of Delict 129
80 2019 6 SA 253 (CC) para 220
81 Para 220
82 Para 220
83 Orr v Solomon 1907 TS 2 81 The C onstitutional C ourt in Public Pro tector v South Afri can Reserve Bank
2019 6 SA 253 (CC) para 222 also state d that a cost order on a n attorney and cl ient scale must be an swered
with referenc e to what would be just and eq uitable in the circ umstances of a par ticular case
84 Moreover, there is am ple case law dealing with co sts on attorney and cl ient scale but a furthe r analysis
thereof exceed s the scope of this ar ticle
85 A Cilliers, C Lo ots & H Christoffel Her bstein & Van Winsen: The Civil P ractise of the High Cour ts and
the Supreme C ourt of Appeal of Sou th Africa 5 ed (2009) 208
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and costs.86 Secondly, parties ar e joined on the ground of necessity, which
takes place when a third pa rty has, or may have, a di rect and substantial
interest in any order t hat the court may make in t he proceedings.87 Joinder of
necessity also occur s when the court’s order cannot be sust ained or carr ied
into effect without prejudicing the relevant t hird part y.88 In those scenarios,
a third par ty is a necessar y party and should be joined t o the proceedings,
unless it is apparent to t he court that the th ird party h as waived his right to
be joined.89 A necessary t hird part y has a right to demand to be joined to the
proceedings and it is not f urther requ ired that such par ty fur nish grounds
why it is equitable or convenient that he should be joined as a par ty.90 Joinder
can be effected by an application in t erms of Rule 10 of the Uniform Rules
of Court. Alter natively, courts may exercise its inherent jur isdiction to join
parties.91 Indeed, if it appears from the fa cts that a part y’s rights may be
affected, a cour t must mero motu take steps t o join the party a nd ensure that
such party’s rights are protect ed.92
As an alternative to joinder, a cour t may order that judicial notice of the
proceedings be ser ved on a third par ty.93 If, in a response to the judicial
notice, it is clear that the third pa rty has unequivocally waived his right to be
joined, the court m ay proceed with the matte r.94 It is also required that the
third par ty undert akes to be bound by any decision the cour t reaches.95 The
court may make use of a rule nisi to give notice to a third pa rty.96 A rule nisi
is a judicial invitation to make re presentations, and a failu re to appear afte r
sufcient notice of it is regarded as an unequivocal waiver to be joined and a
submission to the order of the cour t.97
The question that ar ises in the present context is whethe r a third part y, for
example a minister who is not joined in p roceedings, should be joined before
a court can order a pe rsonal cost order against that thi rd party? In Westwood98
the recipients of the personal cost order were not joine d to the proceedings.
According to the court, the non-joinder was justied by the opportunity
that was given to the thi rd parties to make re presentations explaini ng their
dereliction. Pillay J stated f urther th at, “to insist that t his court should have
formally granted a r ule nisi joining the i nterested part ies would be to prefer
form to substance”.99 It is, however, arguable that the approach adopted by
Pillay J is too rigid. The cou rt should either have formally joined the t hird
86 BHT Water Treatment (Pt y) Ltd v Leslie 1993 1 SA 47 (W) 50G
87 Cilliers et al He rbstein & Van Winsen 215
88 208
89 Rosebank Mall (P ty) Ltd v Cradock Height s (Pty) Ltd 2004 2 SA 353 (W) par a 11
90 Licences & Gen eral Insurance Co Lt d v Van Zyl 1961 3 SA 105 (D) para 110
91 C Theophilo polous, C van Heerden & A Bo rraine Fundam ental Pinciples of Ci vil Procedure 3 ed (2015)
62
92 Selborne Fur niture Store (Pt y) Ltd v Steyn, NO 1970 3 SA 774 (A) 779D
93 Eden Village (Mead owbrook) (Pty) Ltd v Edw ards 1995 4 SA 31 (A) 46E
94 Toekies Butche ry (Edms) Bpk v Stass en 1974 4 SA 771 (T) 774H
95 1974 4 SA 771 (T) 774H
96 Cilliers et al Her bstein & Van Winsen 216
97 Ex Parte Sengol Inv estments (Pt y) Ltd 1982 3 SA 474 (T) 478E
98 KZDHC 31-07-2017 case no 8221/16 para 32 The court stated t hat “in no way did this cour t’s call for
represent ations deny the inte rested partie s all the rights avai lable to persons for mally joined”
99 Para 32
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parties or issued a r ule nisi in this regard. If the court order ed a rule nisi and
the parties ha d waived their rights to be joined, t here would not have been
a non-joinder ground of appeal, becaus e in terms of the rule nisi the parties
would have submitted themselves to the order of the cou rt.100 The reason why
the court should have exercised its power as a supre me court to join the parties
is to ensure that t he persons with an inte rest in the outcome of the matter and
whose rights may be affected a re before the court to make representations a nd
ultimat ely save costs.101 It can be a rgued that this objective was a chieved by
the cour t’s call for representations. The difculty with that argument is that
a mere invitation to make rep resentations does not raise enoug h concern in
the mind of the invitee. Th is is evidenced in the Westwood case a s none of
the parties exercised t heir rights to be heard i n open court – one employee
did not even make a written s ubmission. Leave to appeal to the fu ll bench
was granted in Westwood. O n appeal, the full cou rt of the KwaZulu-Natal
Divisio n (“Westwood Full Bench”) found that “joinder wa s vitally important,
and no mere formality, because it car ried with it the notions of a right to a fair
hearing and obser ved a fundament al principle of the rule of law that no one
be condemned without a hear ing or a reasonable opport unity to stat e their
case”.102
The act of formally joining a pa rty is much more dra matic than a mere
invitation to make repre sentations. When par ties are infor med that they are
going to be formally joined to legal procee dings, it will raise the d istress that
is needed, and such par ties will be more inclined to appear in cou rt and make
representations. It is also subm itted that the joinder of a thi rd party whose
rights may be affected doe s not cause any substantial prejudice to the plaintif f
(or applicant) or to the litigation in general. It follows that there is no apparent
negative concomitant to joining a pa rty and that it is in the interests of just ice
to join a party agai nst whom a personal cost order may be made.
A furthe r reason why persons should formally be joined, is found in se ction
34 of the Constitution which gu arantees the rig ht of all persons to be heard
in open court.103 Joinder of th ird parties w ill thus enforce the protect ion
provided by section 34 of the Constitution. I n De Beer NO v North-Central
Local Council and South-Central Local Council,104 Yacoob J gave context to
section 34 of the Constitution:
“[I]t is a crucial aspect of the rule of law that court orders should not be made without affording the
other side a reasonable opportunity to state their case. That reasonable opportunity can usually only
be given by ensuring that reasonable steps are taken to bring the hearing to the attention of the person
affected.”
This dictum sup ports the arg ument that part ies should formally be joined,
rather than merely invite d to make representation s as case law illustrate s
100 Ex Parte Sen gol Investments (P ty) Ltd 1982 3 SA 474 (T) 478E
101 Cilliers et a l Herbstein & Van Winsen 217
102 eThekw ini Municipalit y v Westwood Insura nce Brokers Prop rietary Limit ed ZAKZPHC 31-01-2020 case
no AR230/2018 para 43
103 Section 34 of th e Constitution
104 2002 1 SA 429 (CC) para 11
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that parties te nd to waive the right to appear in op en court (much to their
detriment).
The preferred approach is found i n Black Sash 2. In Black Sash 2, the court
again considered the appropr iateness and application of personal c ost orders
and joini ng state ofcials in their personal capacities before considering the
afdavits. In the context of joinder t he court rmly stated that
“[i]f the possibility of a personal cost order exists, it stands to good reason that she must be made
aware of the risk and should be given an opportunity to advance reasons why the order should not
be granted”.
The court fur ther stated that the easiest and safest way to make the ofcial
aware of the risk of a personal cost order is t o formally join the part y to the
proceedings.105
Further suppor t for the argument th at third part ies should be joined to
proceedings lies in t he requirements for an appe al. A party may only app eal
a matter if he has locu s standi and has been joined .106 Accordingly, it is in
the interests of justice for a th ird party to b e joined to the court proc eedings
before a court orders a per sonal cost order against that party.
Finally, it may be noted that joinder is not a requirement for the execution of
a judgment against a non-par ty.107 Accordingly, when an ofcial, who has not
been joined to proceedi ngs, fails to pay the legal costs, the sheriff will st ill be
authorised to att ach the goods of the ofcial and sell it in execution.
4 5 Audi alteram partem
In Motswai v Road Accident Fund (”Motswai”),108 the SCA overtur ned the
order of the court a quo by Satchwell J who found that the at torney for the
plaintiff (Mr Motswai) ha d, inter alia, fabricated the plai ntiff’s claim with
the aim to f raudulently enrich himself. I n nding that the plaintiff ’s attorney
had acted fraudu lently, the court a quo made a punitive cost orde r against
him. This happe ned after the par ties met in Satchwell J’s chambers to settle
the dispute and have their ag reement be made an order of cour t. During t he
discussion in chambers, Sat chwell J drew the inference that t he plaintiff’s
attorney comm itted fraud from a reading of the cour t le – without any other
evidence and without the matt er being heard in open court.
The SCA found that the judgment of Satchwell J had resulted i n a grave
injustice to the claimant’s attorney a nd that the proceedings in chambers were
irregula r and unfair. The cour t commented on the injust ice and prejudice
caused to the plaintiff ’s attorney by stating:
105 Black Sas h Trust v Ministe r of Social Development 2017 3 SA 335 (CC) para 76 In that case t he court
made an order i n terms of which the Minis ter had to provide reasons on a ffidavit why she should not
be formally joi ned to the proceedings an d be held personally liable for the leg al costs The court also
stated that a p ersonal cost order can onl y be made “after potential ly affected parties ar e joined to the
proceedi ngs in their perso nal capacities”
106 Westwood In surance Brokers (Pty) Lt d v eThekwin i Municipality KZDHC 31-07-2017 case no 8221/16
para 10
107 D Smith “T he Constitutional ity of the Lessor’s Hypothec: At tachment of a Third P arty’s Goods” (2011)
27 SAJHR 308 310
108 2014 6 SA 360 (SCA) para 60
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“Through the authority vested in the courts by s 165(1) of the Constitution, judges wield tremendous
power. Their ndings often have serious repercussions for the persons affected by them. They may
vindicate those who have been wronged but they may condemn others. Their judgments may destroy
the livelihoods and reputations of those against whom they are directed. It is therefore a power that
must be exercised judicially and within the parameters prescribed by law. In this case it required the
judge to hold a public hearing so that the interested parties were given an opportunity to deal with the
issues fully, including allowing them to make all the relevant facts available to the court before the
impugned ndings were made against them. The judge failed to do so …”109
This dictum by the SCA accords with the established pr inciple of audi
alteram partem and should guide c ourts when consider ing a personal or
punitive costs order. Litigants should never be deprived of the oppor tunity to
be heard in open cour t. This will afford litigants a reasonable opport unity to
respond to the allegations agai nst them.
4 6 Personal cost orders: jurisdiction of courts
A personal cost order is a dr astic and perhaps dr aconian remedy. The
question thus arises , from where does the cour t receive the power to order it
mero motu? Cilliers, Loots and Ch ristoffel depart from the approach adopted
in Westwood, where the court mero motu ordered a personal cost order.
These authors submit that c osts de boni propriis “should be specically asked
for, or an application for an order for the payment of costs de boni propriis
should be made at the heari ng”.110 However, these authors do not cite any
authority for their view. Their arg ument cannot be sust ained as our cour ts
have consistently emphasised an in herent discretion to award cost s111 and
in South African Social Security Agency v Minister of Social Development
(“SASSA”),112 the cour t stated that at “common law, courts may raise the issue
of a personal costs order of their own a ccord provided that they act fairly
against the affected p arty”.113
In Westwood,114 c ounsel on behalf of the respondents a rgued that a cour t
does not have jurisdiction to order a p ersonal cost order mero motu. It was
argued that it is not for a cour t to raise issues that are not t raversed in the
pleadings. In suppor t of that argument, reliance was placed on two cases. T he
rst is Fischer v Ramahlele115 where it was held that it is not open to the cour t
to decide mero motu not to hear oral evide nce and determi ne the application
on legal points not emerging from t he papers. The second case is Phillips v
National Director of Public Prosecutions116 where the cou rt held that it is
impermissible for a par ty to rely on a constitutional com plaint that was not
109 Para 59 The court als o stated that the cour t a quo overlooked the principle l aid down by the SCA that
judges must be as tute not to pontif icate or to be judgment al about persons who h ave been called upon to
defend themselve s See para 22 See also Nationa l Director of Publi c Prosecution s v Zuma 2009 2 SA 277
(SCA) para 19
110 Cilliers e t al Herbstein & Van Winsen 982
111 De Villiers v De Villi ers 2 1965 2 SA 884 (C) 890
112 2018 10 BCLR 1291 (CC)
113 Par a 39
114 KZDHC 31-07-2017 case no 8221/16 para 22
115 2014 4 SA 614 (SCA) para 14
116 2006 1 SA 505 (CC) par a 39
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pleaded. The court i n Westwood117 made short shi ft of that argument, s tating
that the cases that were relied on a re distinguishable on the facts.
This power of t he court is codie d in section 172(1)(b) of the Constitution
which empowers a court, i n constitutional mat ters, to make any order that i s
just and equ itable.118 Procure ment is a constitutional mat ter. Similarly is the
right to just admi nistrative action and t he values and principles governi ng
public administ ration in section 195 of the Constitution.119 It is conceivable
that any matter involving public ad ministrat ion will be a constitut ional
matter, as its outcome will af fect many citizens whom the Const itution seeks
to protect. In Westwood,120 Pillay J state d that
“[i]n deference to the separation of powers I conne the exercise of my discretion to my judicial
powers to determine an appropriate order for costs in execution of the role of the courts as guardians
of our Constitution”.
By not ordering a personal co st order in terms of sect ion 172 of the
Constitution where it is appropr iate to do so, the unsuspe cting public would
have to carry the costs of dishonourable public ofcials. The public are
unsuspecti ng victims of the illegalities t hat poison South Africa’s public
administ ration system. To expect the public to carr y the costs of delinquent
state ofcials is manifestly unjust, inequitable and contrary to the constitutional
vision of section 172(1)(b).
Further more, supreme courts ca n make personal cost order s, mero motu,
in terms of their i nherent jurisd iction. This common-law power vests in a
supreme court to ma ke any order or to take any procedu ral step as long as
the law does not prohibit it.121 For example, a court could gra nt procedural
relief when the court r ules do not provide for it.122 Accordingly, insofar as
the High Court Rules are decient, t he High Cour t may grant orders which
furthe r the adminis tration of justice.123 Indeed, it is in the a dministr ation of
justice tha t rogue ofcials carr y the cost of their corr upt activities and not th e
unsuspecti ng taxpayer.
A conclusion that a court does have the power to orde r a personal cost order
mero motu is certai nly sustainable. It accords with the s pirit of section 172(1)(b)
of the Constitution which is designed t o vindicate rights.
Notwithstandi ng the foregoing, in Westwood Full Bench, the cour t
disagreed with t he approach adopted by Pillay J. The ful l court held, inter
alia, that “it was imper missible for the court a quo to have tr aversed issues
that were not raised on the paper s before it, thereby making the adver se costs
orders” and ultimately upheld the appea l.12 4 The full cour t also held that it was
inappropriate for the cou rt below to regard itself as constit utionally obliged
117 KZDHC 31-07-2017 case no 8221/16 para 20
118 Para 20
119 Para 20
120 KZDHC 31-07-2017 case no 8221/16 para 27
121 Carmel Tradin g Co Ltd v Commissioner, S outh African Reve nue Service 20 08 2 SA 433 (SCA) para 18
122 Theophilo polous et al Civil Procedure 61
123 Osman v Jha vary 1939 AD 351; King v King 1971 2 SA 630 (O) para 1
124 ZAKZPHC 31-01-2020 case no A R230/2018 para 33
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to protect the citizen s of Durban by making t he adverse costs orders.125 It is
possible t hat another court may nd d ifferently, as t he views expressed by
the full cour t may be too rigid.
4 7 Separation of powers
In Westwood, it was argued on behalf of the municipalit y that a personal cost
order by the court would inf ringe on the separ ation of powers doctrine. The
court stated t hat its intention is not to usur p the disciplinar y or management
function of eThekwini Mun icipality.126 The court showed judicial deference
by ordering that a copy of the order be ser ved on the mayor of eThekwini
whose duties include to provide guidance over the scal a nd nancial affairs
of eThekwini and to take reasonable ste ps to ensure that the mu nicipality
performs in li ne with its constitut ional mandate. The cour t also reminded
the mayor to “monitor the management of the mun icipality’s administrat ion
in accordance with t he directions of the mun icipal council and oversee the
provision of services to commu nities in the municipalit y in a sustainable
ma nn er ”.127 Secondly, the order had t o be served on the municipal ma nager
as he is responsible and account able for all income and expenditur e, assets
and liabilities and proper a nd diligent compliance with the Municipal Finance
Management Act 56 of 2003.128 Lastly, the order also had to be served on
the Auditor-General to ta ke appropriate action “to se cure transp arency,
accountability, and sound ma nagement of the revenue, expenditure, assets and
liabilities of the institut ions”.129
By deferring these re sponsibilities to other state organs, the cou rt has made
a positive contribution towards shaping t he unestablished jur isprudence on
personal cost orders. T he separation of powers argume nt might be raised
again in the fut ure, wherefore it is imperative for cour ts to adopt pragmat ic
approaches, as seen in Westwood, i n a uniform effort t o establish resolute
precedent.
4 8 Ineffective public administration
A risk that is perhaps a nec essary concomit ant of a personal cost order
is that such a sanction could crip ple public administrat ion. For example,
ofcials who are responsible for procuring a tender contract might function in
fear of facing a personal cost order shou ld they fail to comply with prescribed
procedures or make an awa rd that is set aside in review proceed ings. In
Public Protector v South African Reserve Bank one of the grou nds of appeal
on which the Public Prosecutor relied was t hat her independence would be
compromised and that she wi ll always operate in fear of a personal a dverse
cost order with the effect that she w ill be hampered in t he performance of
125 Para 30
126 KZDHC 31-07-2017 case no 8221/16 para 64
127 Para 64; s 56 (3)(e) and (f) of the Local G overnment: Munic ipal Structu res Act 117 of 1998
128 Section 55(2) of the Local G overnment: Munic ipal Systems Act 32 of 2000
129 Section 2 of the PFM A
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her constitutional obligations. T he Constitutional Cou rt addressed t his fear
by stating:
“The fears that the Public Protector has about the impact of a personal costs order on the institution
of the Public Protector are unwarranted. Personal costs orders are not granted against public ofcials
who conduct themselves appropriately. They are granted when public ofcials fall egregiously short
of what is required of them. There can be no fear or danger of a personal costs award where a
public ofcial acts in accordance with the standard of conduct required of them by the law and the
Constitution.”130
The vast number of different d isciplinary ta ctics leaves one bewildered.
However, it is conceivable that the traditional assura nce regarding the
effectiveness of punishment should be exa mined more careful ly. There are
many dangerous side effects of discipline. I n the procurement context, t he
most dangerous side effect would be a decrease i n productivity. Masserma n
accurately art iculates this concern:
“[I]f the punishment is severe enough, the response can be completely repressed. When this happens,
such a strong conict is created between fear and the desire to continue the behaviour that the
individual becomes maladjusted …”131
A study by Arvey and Ivancev ich132 indicates the following side effects of
over-discipline on an employee: anxiety, aggression, hostilit y, hate, insecurity,
and passivity. Feelings such as anxiety, insecu rity, and passivity can lead
to a decrease in the pro ductivity of an organisat ion. Similarly, feelings of
aggression, hostilit y and hate could also subtra ct from the productivit y of
an organisation as the se emotions trigger an i nclination to “sabotage” the
workspace and its efciency.133 Con sequently, awarding personal cost orders
could have a devastating effect on public ad ministrat ion and the judiciary
needs to take cogn isance of this danger.
The crippling of government de partments ca n be prevented in two ways.
The rst is by awardi ng personal cost orders sparingly. A personal cost order
cannot be made in ever y case where a state institution was at fau lt. This would
paralyse the proper fu nctioning of stat e institutions. Ofcials need t o know
that it will only be used i n exceptional circumsta nces involving dishonesty
and that a bona de error will not suffer the wrath of a per sonal cost order.
Secondly, the test for when a personal cost order wil l be awarded needs to
become trite l aw. Ofcials need to know exactly what the sta ndard is against
which their conduct will be mea sured before a personal cost orde r will be
made against them.
In SASSA134 the Const itutional Court c onrmed the tes t laid down in Black
Sash 2 and held that the conduct of the Chief Executive Ofcer of SASSA did
not amount to gross negligence and t hat she did not act in bad faith. In t hat
case SASSA approached the Constitut ional Court, on an u rgent basis, for an
130 2019 6 SA 253 (CC) para 159
131 J Masser man Behavio r and Neurosis: An Ex perimental Ps ychoanalyt ic Approach to Ps ychobiologic
Principles (1946 ) 121
132 R Arvey & J Ivance vich “Puni shment in Orga nizations: A Re view, Propositions , and Research
Suggestions” (1980) 5 The Ac ademy of Management Re view 123 125
133 125
134 2018 10 BCLR 1291 (CC) para 47
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extension135 of the order of invalidity of the contract between Cash Paymast er
Services (Pt y) Ltd and SASSA. The court found that the explan ation given
by the Minister was neithe r candid nor complete. In addition, the court found
that there was a non-dis closure of information mater ial to the determi nation
of the matter, and that the so- called urgency relied on was self-cre ated.136
The fact that this level of impropriet y fails to meet the stand ard of gross
negligence and bad faith is an accu rate portrayal of how high the bar has been
set by the Constitutional Cou rt in Black Sash 2 for a pe rsonal cost order to
be imposed. It is therefore misgu iding to argue that p ersonal cost orders may
lead to a crippled system of public adm inistration as not ever y transgres sion
involving misfeasance will be met by a pe rsonal cost order.
It is submitted that the te st in Black Sash 2 is good law and should become
buttressed precedent.
5 Piercing the corporate veil: a possible analogy
In commercial law, an interested p arty can apply to cou rt for an order
holding the directors of a compa ny directly liable for its debts and ignore
its separate jur istic personality. This is refer red to as piercing the corp orate
veil of juristic personalit y.137 What has become known as the stand ard test
for piercing the corporate veil is found i n Shipping Corporation of India Ltd
v Evdomon Corporation.138 In this case, the cou rt held that separate ju ristic
personality can b e ignored if it has been misus ed or abused in a fraudu lent,
dishonest or improper way.139
An analogy can be d rawn between piercing the corpor ate veil and awarding
personal cost orders against state ofcials. The stakeholder (creditor and
shareholder) can be seen as the public who fund st ate entities. The dire ctor
can be seen as the of cial who is abusing the separate juristic entit y (state
institution) with the aim to enrich himself. The ofcial does so because if
impropriety is dete cted, the state instit ution will be sanctioned with an advers e
cost order, and not the ofcial in his or her personal cap acity. The of cia l can
thus hide behind the “sepa rate juristic personality” of the stat e institution.
It is submitted that piercing t he corporate veil in exceptional circumst ances
is good law. A similar approach should be adopted with st ate institutions
because the public as a stakeholder is more v ulnerable than the c reditors of a
company. Creditors are protected becau se directors often h ave shares in the
company. Thus, if the company is harme d, the directors a lso suffer harm.
Directors accordingly have an incentive to act in line with their duciary duty.
Conversely, stat e ofcials have no nancial interest in the economic well-
being of the institution for which they work and a ccordingly have no incentive
to a ct ethically and honourably. T hese ofcials are thus exposed to greater
135 This applic ation followed after t he order of invalidit y has previously be en suspended a nd extended by the
Constitutional Court
136 Paras 19, 26
137 R Cassim “Pie rcing the Veil under Section 20(9) of the Co mpanies Act 71 of 2008: A New Direction”
(2014) SA Merc LJ 307 308
138 1994 1 SA 550 (A) 556
139 566
156 STELL LR 2020 1
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temptation to abuse the res ources of their employment as there is no r isk that
they could suffer persona l nancial harm due to their conduct.
6 Conclusion
South A frica does not have a legislative or regulatory decit in the ght
against corruption.140 W hy then can this pandemic disease not be erad icated?
The legislative framework implemented to cu rb corrupt ion does not impose
any sanction on ofcials for contravention of anti-corruption measure s.141
Awarding personal cost orders, i n exceptional circumsta nces, will be
instru mental in stiffen ing the leash of accountabilit y, as envisaged by the
Constitution and ulti mately curtail corrupt ion .
This art icle has indicated that a persona l cost order is certai nly not an
uncomplicated legal phenomenon. When it was b orn into our law in Lushaba it
was certain t hat it would be a problem child. With the necessary love, nurture
and especially discipline, it ca n, however, play a useful role in legal life and
robustly enforce the norm of accou ntability. That would require cour ts to do
the following: (i) defer to the separation of powers; (ii) join the parties who
may be mulcted with a personal c ost order; and (iii) adhere to and build on the
precedent in Black Sash 2.
South Africa has se en corruption steadi ly grow malignant. The preser vation
of our current passive-ag gressive battle plan against public maladmin istration
and corrupt ion has proven to be meagre. In the absence of radical inter vention
such as personal costs orde rs, a perverse status quo is likely to be maintai ned.
SUMMA RY
South African cou rts are employing a novel i nstrument in the ght against cor ruption, such
instru ment being the imposit ion of a pe rsonal cost s order aga inst state ofcials. T his article briey
discusses co rruption a nd accountability in sta te institu tions and arg ues that order ing personal c ost
orders against state ofcials is a p romising prospect in the ght a gainst c orruption. Personal cost
orders are th en analysed by addr essing eight concer ns that arise whe n such orders are imp osed. These
concerns a re: what the legal basis i s for being held perso nally liable for cost s; whether there is a
uniform te st to be applied when consi dering a persona l cost order; whether s uch an order can be made
on a punitive scale; t he joinder of affect ed parties; whe ther it can be imp osed without the m atter
being heard i n open court; the power of cour ts to impose such an order ; whether it infringes o n the
separation of p owers doctri ne; and lastly, whether it c ould lead to an inef fective system of publ ic
admini stration. The a rticle concludes by nding that the re is no legislative de cit in the ght aga inst
corrupt ion and nds that until ofcials are held personally acc ountable for their misfeasance, they wil l
continue to exploit t heir position as they are prote cted by t heir public ofce. This “protection” and
inclination t o misappropriate publ ic funds might fall away if of cials are ordered to pay legal co sts in
their perso nal capacity.
140 See S Will iams & G Quinot “Publ ic Procurement and C orruption: Th e South African Res ponse” (2007)
SALJ 339 363
141 See, eg, the PFM A, the MFMA and t he Prevention and Co mbatting of Corr upt Activities Act 12 of 20 04
A furthe r analysis of the legisla tive framework agai nst corrupt ion would exceed the scope of t his article
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