Public Protector v South African Reserve Bank

• Jurisdiction: South Africa
• Judge: Mogoeng CJ, Basson AJ, Cameron J, Dlodlo AJ, Froneman J, Goliath AJ, Khampepe J, Mhlantla J, Petse AJ and Theron J
• Judgment Date: 22 July 2019
• Citation: 2019 (6) SA 253 (CC)
• Docket Number: CCT 107/18 [2019] ZACC 29
• Hearing Date: 22 July 2019
• Counsel: V Ngalwana SC (with F Karachi) for the applicant. K Hofmeyr (with C Tabata) for the respondent.
• Court: Constitutional Court

Mogoeng CJ (Goliath AJ concurring): A

Essential context

[1] Accountability, equality before the law and transparency are some of the values on which our constitutional democracy was founded. It ought B therefore never to matter who a person, natural or juristic, is whenever the need arises to breathe life into these values.

[2] In order to strengthen our constitutional democracy with the aid of these values, the state's undiluted capacity to investigate and expose unethical conduct or improprieties is essential. That critical obligation is C located in, among others, the Office of the Public Protector — one of the institutions that is indispensable for winning the fight against corruption and the realisation of good governance. A Public Protector, liked or disliked, must therefore not be lightly discomfited in the execution of her mandate. This would explain why this court went to great lengths to clarify and reinforce her role in holding all, including the high and D mighty, accountable for their alleged or perceived wrongdoing. [1]

[3] For centuries preceding our constitutional democracy, untouchability was so entrenched or virtually institutionalised that it was unthinkable for some to challenge the apparent or actual criminality, naked injustice E or corruption that reigned in our country. So normalised was impunity and injustice that some citizens were not only expected to accept their unjustly prescribed inferiority, but to also succumb to the 'preferred' impermissibility for them to be critical of the untouchables.

[4] Harsh consequences including smear or other writings bereft of intellectual integrity could flow from displaying the nerve to speak or act F out against injustice, corruption or sectional beneficial use or abuse of institutional power or public resources. It was potentially career-limiting and even life-threatening for those who were supposed to know their place to seek to have the right thing done by challenging the 'entitled' perpetrators of injustice or their allies.

[5] G It was during that era that the South African Reserve Bank (Reserve Bank), now a constitutional institution critical to our economic well-being, entered into a lifeboat agreement for over R3 billion with Bankorp Ltd (Bankorp), subsequently taken over by Absa Bank Ltd (Absa). Several investigations by reputable personalities and institutions H concluded that the lifeboat agreement by the Reserve Bank smacked of impropriety or illegality. Litigation relating to the Public Protector's investigation of this alleged impropriety or illegality, led to her being ordered to pay costs out of her own pocket on a very high scale, hence this application.

[6] I This matter highlights the need to vigilantly guard against making personal costs against state functionaries acting in their official capacities

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fashionable, which is likely to have a chilling effect on their willingness to A confront perceived or alleged wrongdoing especially by the rich, powerful or well-connected. [2] That obviously has to be contrasted with the need to guard against and eradicate abuse of state power, gross negligence and bad faith that should, where appropriate, attract an order for personal costs, even on a highly punitive scale. A proper appreciation of this judgment will be aided by highlighting certain principles, observations B and conclusions upfront, as I hereby do.

[7] The oath or affirmation of office demands of all our judicial officers to —

'uphold and protect the Constitution and the human rights entrenched C in it, administer justice to all persons alike without fear, favour or prejudice in accordance with the Constitution and the law'. [3]

And judicial Officers are required to take an oath or affirm in these terms before they 'begin to perform their functions'. [4] The Constitution that they undertake to 'uphold and protect' enjoins them to make only 'just D and equitable' orders. [5] This means that it would be a renegation on that oath to make any order that is irreconcilable with considerations of justice and equity, by reason only of some legal technicality.

[8] Ours are courts of substantive justice. No litigant ought to be left E exposed to undeserved ruination just because she did not expressly plead non-compliance with legal requirements that are very loud in their cry for the attention of lady justice. Costs on an attorney and client scale are to be awarded where there is fraudulent, dishonest, vexatious conduct and conduct that amounts to an abuse of court process. As correctly stated by the Labour Appeal Court —

'(t)he scale of attorney and client is an extraordinary one which should F be reserved for cases where it can be found that a litigant conducted itself in a clear and indubitably vexatious and reprehensible [manner]. Such an award is exceptional and is intended to be very punitive and indicative of extreme opprobrium.' [6]

[9] In all cases where this order was made, harm, actual or potential, was G apparent. And so should it be in this case. It should only be in relation to conduct that is clearly and extremely scandalous or objectionable that these exceptional costs are awarded. I hasten to say that such conduct has not been shown to exist here. More importantly, no attempt has been made to demonstrate how the stringent legal requirements for awarding H

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personal A costs on a punitive scale were met. Not only does that inestimably harsh punishment remain unexplained but so is the disinclination to interfere with an order that is in my view not just and equitable. That the need to meet the requirements for punitive costs may not have been separately raised by a litigant cannot justify keeping an inexplicably gross injustice and inequity alive. An unequivocal expression B of opposition to personal punitive costs ought to suffice.

[10] To mulct a litigant in punitive costs '[for opposing] all three applications to the end' requires a proper explanation grounded in our law. [7] A failure to provide an explanation for punishing the exercise of C one's constitutional right would be unjustifiable. It strikes one as a glaring consequence of being influenced by a wrong principle — a failure to act judicially — that would warrant interference with the order.

[11] Here, the High Court judgment is even more concerning because not only has no harm, as in Black Sash II, [8] been shown to exist, but the D personal costs definitional requirements of gross negligence and bad faith do not even seem to have been known nor have they been shown to have been met. Quite surprisingly, because when it handed down its judgment, this court had long laid down those requirements. But, the High Court finds it extremely reprehensible that the Public Protector does not know what it says she should have known. Additionally, factors E that were never relied on by the High Court as the bases for making both an out-of-own-pocket order and doing so on an attorney and client scale have now emerged for the first time in an appeal judgment. For example, that (a) the provisional report 'did not direct' but required the President 'to consider' whether to establish a judicial commission of enquiry; F (b) the Public Protector acted in a 'grossly unreasonable manner'; (c) there was a proposed amendment of the Constitution; (d) Mr Goodson is not an economic expert; (e) the Public Protector's affidavit was misleading because she did not delineate between when and how she relied on the views of Mr Goodson and Dr Mokoka; and (f) the Public Protector's failure to meet the rule 53 of the Uniform Rules of Court G derived standard of 'full and frank disclosure' expected of public officials in litigation.

[12] Central to the principles to be examined in this application is therefore the need to determine whether ordering costs on an attorney H and client scale against a representative litigant is in keeping with the dictates of justice. Or, whether it constitutes a misdirection or improper application of the law and facts that calls for corrective intervention. A proper and definitive determination of this issue would ensure that clarity is given and that the Public Protector's capacity to fearlessly hold everybody under her jurisdiction transparently and equally accountable, I is not unnecessarily weakened or threatened, while at the same time

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ensuring that abuse of state power or its use in pursuit of illegitimate A agendas is appropriately censured.

Background

[13] Between 1986 and 1995 the Reserve Bank lent an amount of B R3,2 billion to Bankorp. Indications seem to be that the money was never fully paid back in terms of the agreement for its advancement. Absa acquired Bankorp on 1 April 1992 for an amount of R1,23 billion. That acquisition was, on Absa's insistence, subject to the lifeboat agreement being kept alive.

[14] In 1997 CIEX, a UK based assets recovery entity, was asked by the C South African Government, represented by the Director-General of the National Intelligence Agency (now State Security Agency), to investigate and possibly recover public funds and assets misappropriated during the apartheid era. In its final report, CIEX concluded that corruption, fraud and maladministration characterised the financial assistance given by the Reserve Bank to Bankorp and by extension to D Absa.

[15] In 1998 the President appointed Heath J to look into the possible recovery of those reportedly ill-gotten gains by Bankorp/Absa. Heath J's findings seem to have been just as unfavourable. But, he apparently considered several factors and proposed to let bygones be bygones. E

[16] On 15 June 2000, the...