Roering NO and Another v Mahlangu and Others

• Jurisdiction: South Africa
• Judge: Wallis JA, Willis JA, Saldulker JA, Zondi JA and Tsoka AJA
• Judgment Date: 30 May 2016
• Citation: 2016 (5) SA 455 (SCA)
• Docket Number: 581/2015 [2016] ZASCA 79
• Hearing Date: 20 May 2016
• Counsel: GD Wickins for the appellants. EM Masombuka (with MH Mhambi) for the first respondent.
• Court: Supreme Court of Appeal

Wallis JA (Willis JA, Saldulker JA, Zondi JA and Tsoka AJA concurring): F

Introduction

[1] In June 2007 the Department of Health, Gauteng (the Department), G concluded a service-level agreement with 3P Consulting (Pty) Ltd (3P Consulting) in terms of which 3P Consulting was obliged to establish a Project Management Unit for the Department. On 23 March 2009 the agreement was extended for a further three years. After the April 2009 general election the first respondent, Ms Qedani Mahlangu, was H appointed as the member of the executive council (MEC) for health in Gauteng. Shortly thereafter a review of projects occurred, and on 1 July 2009 the Department wrote a letter to 3P Consulting, stating that it would no longer perform in terms of the extended agreement. According to Ms Mahlangu's affidavit, this was —

I 'due to serious allegations of impropriety as well as irregularities in the award as well as the extension of the agreement'.

[2] After that there was extensive litigation between the parties. On 18 February 2010 the South Gauteng High Court (Lamont J) granted a declaration that the services agreement between 3P Consulting J and the Department was validly concluded and extended. However, he

Wallis JA (Willis JA, Saldulker JA, Zondi JA and Tsoka AJA concurring)

refused to grant judgment for payment of certain invoices that 3P A Consulting alleged were due, owing and payable and remained unpaid. He held that it was disputed that these amounts were in fact payable. However, he made it clear that this was no more than a finding of absolution from the instance, leaving 3P Consulting free to pursue the claim in other proceedings.

[3] The Department's appeal to this court against that decision failed, [1] B and on 7 February 2011 the Constitutional Court refused leave for a further appeal. On 13 October 2011 3P Consulting instituted application proceedings against the Department, claiming payment of some R99 million. It is not apparent from the notice of motion whether this related only to amounts allegedly due to it prior to 1 July 2009, or C whether it included amounts said to have become due thereafter. Counsel was not in a position to enlighten us in that regard. If they were the same claims as had been advanced before Lamont J, it was unclear on what basis proceedings were again pursued by way of application instead of action. Be that as it may, the Department defended the D application. According to Ms Mahlangu, its grounds for doing so were that —

'it received no value, the contract documents and other related documents are irregular and that the entire action is tainted by fraud'.

Not surprisingly in the circumstances the application was referred to E trial, but, before the trial could proceed, 3P Consulting was placed in provisional and then final liquidation. The present appellants are its duly appointed liquidators.

[4] The only significant asset of 3P Consulting was its claim against the F Department. The liquidators obviously had no personal knowledge of that claim or of the grounds for its defence. They accordingly sought and obtained leave from the Master of the South Gauteng High Court [2] for an enquiry to be convened pursuant to the provisions of ss 417 and 418 of the Companies Act 61 of 1973 (the Act). [3] Their purpose in doing so was to gather information and make an informed decision on whether or not G to continue the litigation. After hearing the evidence of a number of witnesses, the liquidators formed the view that Ms Mahlangu would be able to provide important information relating to 3P Consulting's dealings with the Department. They accordingly asked the commissioner [4] to authorise and issue a summons for Ms Mahlangu to appear before the commissioner and give evidence as part of the enquiry. H

Wallis JA (Willis JA, Saldulker JA, Zondi JA and Tsoka AJA concurring)

A [5] The present litigation arises from the commissioner's decision to accede to that request. I shall deal with Ms Mahlangu's response to the summons in greater detail later in this judgment. It suffices for present purposes to record that she applied to the Gauteng Local Division, Johannesburg, of the High Court for an order setting it aside as an abuse of process. That application was granted by Mosikatsana AJ. [*] B This appeal is with his leave.

Proceedings at the commission

[6] An odd feature of this case is that, when she was initially summoned to give evidence to the commission, Ms Mahlangu did not regard the C summons as an abuse and indicated that she wished to be as helpful as possible. She appeared on 29 July 2013, together with Mr Lekabe, the State Attorney, South Gauteng, and asked for a brief postponement in order to enable her to be properly prepared. She explained that she had moved on from the Department of Health and had filled two other D offices as a member of the executive council in the Gauteng administration since then, including her current position as the MEC for Infrastructure Development. Accordingly, she was not in possession of any files from her former department and wanted the opportunity to refresh her memory before testifying. Mr Lekabe explained that it —

E 'would make no sense for her to come here and sit here and keep on saying: I can't remember. I can't remember. It will defeat the purpose of the enquiry.'

[7] At one stage in the proceedings Ms Mahlangu herself intervened to plead for a postponement. She asked the commissioner to give her the benefit of the doubt that she came before him 'with good intentions'. F She explained her position as follows:

'So all I'm simply asking for is to let me just go through all the necessary things that will help me to remember what would have happened in the meetings that I would have presided over. As in all the management meetings I've had, and on the basis of that and any other thing that I would remember, so that I come here prepared and I will be able to G answer you diligently and honestly.'

She asked for a few days so that she could go back and prepare. Mr Lekabe chimed in and told the commissioner that:

'Ms Mahlangu wants to come here and assist this enquiry. That is what H she wants to do, but provided she is prepared to do so.'

[8] In response to these pleas the enquiry was adjourned to 27 August 2013. On that day Ms Mahlangu did not appear and a medical certificate was tendered on her behalf. But five people appeared to represent her. Two were officials, one a legal adviser in the Department I of Infrastructure Development and the other a legal adviser in the Department of Health. Two were from the firm of attorneys that represented her in this appeal and one was an advocate. Two other

Wallis JA (Willis JA, Saldulker JA, Zondi JA and Tsoka AJA concurring)

people were present from the anticorruption task team although their A role was obscure. On this occasion the enquiry was adjourned to 15 October 2013. Although the merits of the summons were not discussed, it was indicated that it was unnecessary to issue a fresh summons. There was no suggestion that summoning Ms Mahlangu was an abuse.

[9] In the circumstances, it must have come as something of a surprise B to the commissioner and the liquidators when, shortly before 15 October 2013, they were confronted with an urgent application for an order that Ms Mahlangu be excused from attending the enquiry pending an application to set aside the summons as an abuse, joined with an application for a penal costs order against anyone opposing the application. C An interim order was granted on 15 October 2013 and, as noted above, a final order setting aside the summons was made on 26 January 2015.

[10] There is nothing in the papers to indicate what caused this change D of heart on the part of Ms Mahlangu. Counsel endeavoured to explain it from the bar on the basis that between the first and the second sessions of the enquiry she changed legal advisers. There are two obstacles to accepting that contention. The first is that it nowhere appears in the affidavits where one would have expected to find an explanation. While there is reference to her changing legal advisers, she does not say E that the advice she obtained from her new advisers was different from that of her original legal team. The second is that the new legal team gave no indication to the commissioner and the liquidators that there was any problem with or objection to the summons. As matters stand it is unexplained. That does not mean that she cannot contend that the issue F of the summons was an abuse. But, in the light of her original co-operative attitude, it does indicate that her allegations of abuse must be scrutinised with care, as they may have been raised purely in an endeavour to avoid being examined and not because the allegations of abuse are genuine.

The claim of abuse G

[11] Ms Mahlangu claimed in her founding affidavit that the liquidators wished to use the enquiry proceedings 'to obtain information from me to bolster its case against the Gauteng Province'. She went on to contend that it was 'unfair, prejudicial and detrimental to fair play in any litigation H process' to permit one of the parties to use the mechanism of an enquiry under the Act 'to gather information from a representative of the other party (and against the wishes of the other party) to build or better its case in civil litigation'. This she characterised as an abuse.

[12] Although at points in the affidavits there are hints that I Ms Mahlangu did not possess any information relevant to the dealings between the Department and 3P Consulting, these hints were belied by statements from her own mouth. One cannot gather information from someone who does not possess information. Indeed, had that been the case, one cannot see why she would have been reluctant to testify. When asked she could...