Public Protector v South African Reserve Bank

• Jurisdiction: South Africa
• Citation: 2019 (6) SA 253 (CC)

Public Protector v South African Reserve Bank
2019 (6) SA 253 (CC)

2019 (6) SA p253

Citation	2019 (6) SA 253 (CC)
Case No	CCT 107/18; [2019] ZACC 29
Court	Constitutional Court
Judge	Mogoeng CJ, Basson AJ, Cameron J, Dlodlo AJ, Froneman J, Goliath AJ, Khampepe J, Mhlantla J, Petse AJ and Theron J
Heard	July 22, 2019
Judgment	July 22, 2019
Counsel	V Ngalwana SC (with F Karachi) for the applicant.; K Hofmeyr (with C Tabata) for the respondent.

Flynote : Sleutelwoorde

Costs — Against public official — Order that constitutional office holder pay costs personally and on attorney and client scale — Principles governing. C

Headnote : Kopnota

In the late 1980s, the South African Reserve Bank made a loan to an institution called Bankorp. An agency called CIEX later investigated the loan, and in its report concluded that there had been wrongdoing therein. The finding was later used by one Mr Hoffman to ground a complaint he made to the Public Protector (see [134]). D

Pursuant to the complaint, the then Public Protector, Ms Madonsela, initiated an investigation, and it culminated some time later in her successor in office, Ms Mkhwebane, issuing a final report (see [136] – [137] and [140]). It recommended a constitutional amendment, and reopening of an investigation into the Bankorp loan (see [141]).

In a first review the Bank obtained the setting aside of the first recommendation; E and in a second review, of the second (see [142] – [143]). In the second review it also obtained a costs order against the Public Protector in her personal capacity, on the attorney and client scale, but was denied a declarator that she had abused her office (see [143]).

Here the Public Protector applied for the Constitutional Court's leave to appeal the High Court's costs order, and the Bank asked for leave to cross-appeal the refusal of the declarator (see [250]). F

The Constitutional Court began by considering the nature of a court's costs discretion (see [144]); how an appellate court ought to approach a challenge to a court's exercise thereof (see [145]); when a personal costs order could be made against a public official (on the official conducting litigation grossly negligently or in bad faith) (see [147]); and whether a personal costs order would breach the separation of powers (see [148]). G

It then turned to the Public Protector's motivation for interfering with the personal aspect of the costs award. This was that —

(1)

it would undermine the Protector's independence and inhibit the exercise of her powers;

(2)

that the Public Protector Act 23 of 1994 immunised her against H the award;

(3)

that the Bank's failure to pray for the order in the notice of motion denied her sufficient opportunity to oppose it; and that

(4)

the High Court had erred in law; or

(5)

on the facts (see [149] and [163]).

It held, as to (1), that no exception should be made for the Public Protector from I public officials' potential liability to personal costs orders (see [157]).

Such orders were only possible when an official's conduct fell 'egregiously' short of what the Constitution and the law required of them — there could be no fear of such an award when an official acted appropriately (see [159]); and nor should such an order, in an appropriate case, open the floodgates to further such orders (see [160]). J

2019 (6) SA p254

As A to (2), the requisites for immunity under s 5(3) of the Public Protector Act were not met: the Protector had not acted in 'good faith', and it was doubtful her conduct fell within 'anything reflected in any report, finding, point of view or recommendation' (see [162]).

As to (3), the Protector had had sufficient opportunity to oppose the order (see [165]): the facts grounding it were raised in the founding and supplementary B founding affidavits (see [166]); she was notified in the replying papers that the order would be asked for (see [166]); and the issue was aired at the hearing (see [167]).

As to (4), the assertion was that the High Court had erred by grounding a finding of bias on a failure of audi alteram partem (the bias finding supporting the costs order) (see [168] – [169]).

Held C though, dismissing the contention, that in appropriate circumstances, a failure of procedural fairness could legitimately ground a conclusion of bias (see [170]).

As to (5), the contention was that the High Court had misdirected itself on facts which underlay findings, that in turn supported the order (see [171] – [173]).

The D findings were that the Public Protector had acted in bad faith, and had failed to be impartial, or to produce a full record, or to be candid with the court (see [172]).

The facts concerned meetings between the Public Protector and the Presidency and State Security Agency, and representations as to reliance on economic advice (see [173]).

The E Constitutional Court considered the facts presented before the High Court, and the Protector's further explanations before it, and concluded that they grounded the High Court's findings, and order (see [191] – [192], and, inter alia, [176] – [177] (impartiality), [185] – [186] (full record), [180], [190], [194] – [195], [208] and [216] (candour), and [205] (bad faith)).

Accordingly, given as contentions (1) – (5) were without merit, there was no basis on which to interfere with the High Court's exercise of its discretion to F award costs personally (see [218]).

The Constitutional Court turned next to the punitive aspect of the order — that the personal costs were to be paid on the attorney and client scale (see [219]).

It considered when costs should be ordered on the attorney and client scale G (when it was just and fair in the circumstances) (see [222]); such orders' purpose (as a mark of disapproval) (see [223]); and instances when this scale had been employed (see [223] – [224] and [226]).

It also noted there was precedent for personal costs being awarded on the attorney and client scale (see [221]) and advised that the personal costs and punitive scale enquiries should be approached separately (see [220]).

It H concluded there was no flaw in the exercise of the discretion (see [234] and [236]) and that attorney and client costs were justified (see [219] and [237]).

Lastly, the court addressed whether to grant the Bank leave to cross-appeal the refusal of the declarator that the Protector had abused her office (see [238] – [239]).

Militating I for leave was that the Protector had indubitably breached her constitutional obligations (see [245] and [247]); but countervailing, was that the Protector had had no chance to respond to the Bank's application (the declarator was sought in the Bank's replying affidavit), and that the High Court had not considered the merits of the matter (see [246] and [248]).

Leave J to cross-appeal accordingly refused (see [248]).

2019 (6) SA p255

Ordered, that the Protector's application for leave to appeal would be granted A but her appeal dismissed; and that the Bank's application for leave to cross appeal would be refused (see [250]).

The Chief Justice would have set aside the award of personal costs on the attorney and client scale, and have ordered the Office of the Public Protector to pay costs on the ordinary scale (see [118] – [119] and [130]). B

The Chief Justice started toward this conclusion by considering factors that ought to be considered when any costs order was made (see [41]), and suggested that in the case of representative litigants, a personal costs order was only warranted, given its severity, when it was a reflection of the seriousness of the wrongdoing concerned (see [43]).

He emphasised that personal costs against representative litigants were confined C to two instances — conduct in court proceedings and that relating to performance of constitutional obligations (see [45]); and that the test for the award was that the conduct ought to have been in bad faith or grossly negligent (see [50]).

Grossness of conduct was to be measured by examining the harm, actual or potential, that it had caused (see [56] and [59]); and similarly bad faith — its presence was to be gauged by the seriousness of the consequences caused D (see [71]).

In his view the facts revealed neither (see [70] (gross negligence) and [86] (bad faith)).

Equally, the award of attorney and client costs — reserved for frivolous, vexatious or manifestly inappropriate conduct — was unjustified (see [93] and [105] – [106]). E

As for the Bank's application, it should be dismissed on procedural grounds, and even were leave to cross appeal granted, insufficient basis had been laid for the declarator sought (see [121] – [122] and [126]).

Cases cited

Southern Africa F

AB and Another v Minister of Social Development 2017 (3) SA 570 (CC) (2017 (3) BCLR 267; [2016] ZACC 43): referred to

Abbott v Von Theleman 1997 (2) SA 848 (C): referred to G

Absa Bank Ltd v Public Protector [2018] 2 All SA 1 (GP) ([2018] ZAGPPHC 2): referred to

Affordable Medicines Trust and Others v Minister of Health and Others 2006 (3) SA 247 (CC) (2005 (6) BCLR 529; [2005] ZACC 3): referred to

African Dawn Property Transfer Finance 3 (Pty) Ltd v Tuscaloosa 37 (Pty) Limited [2014] ZAGPPHC 992: referred to

Alton Coach Africa CC v Datcentre Motors (Pty) Ltd t/a CMH Commercial 2007 (6) SA 154 (D): referred to H

Amod v Multilateral Motor Vehicle Accidents Fund 1998 (4) SA 753 (CC) (1998 (10) BCLR 1207; [1998] ZACC 11): referred to

Attorney-General, Free State v Ramokhosi 1999 (3) SA 588 (SCA): dictum in para [8] applied

Barkhuizen v Napier 2007 (5) SA 323 (CC) (2007 (7) BCLR 691; [2007] ZACC 5): referred to I

BEF (Pty) Ltd v Cape Town Municipality and Others 1990 (2) SA 337 (C): referred to

Bernert v Swanepoel [2009] 4 All SA 440 (GSJ): referred to

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