Pointless legal action? Then you pay, says tax ombud – and Zuma, Hlaudi could be next

Public servants and leaders at state-owned entities who pursue legal cases that have no merit or go against sound legal advice should be made to pay the costs from their own pocket.

This is according to tax ombud and former Gauteng judge president Bernard Ngoepe, who raised his personal concerns about the way “tax is being misused in the country” earlier this week.

Were this to become common practice, it could leave high profile office bearers, such as SABC chief Hlaudi Motsoeneng and President Jacob Zuma, on the hook for millions in legal fees.

“I have become concerned when people who are charged with the duty to run public institutions … choose to engage in unnecessary litigation, even where their cases are without merit and even where what they are pursuing is patently against the Constitution,” Ngoepe said.

“My view is that they do so because they know that, even if they lose, they don’t pay costs out of their own pocket,” he said, without specific reference to any individuals.

He called on litigants to ask the courts to make officials pay the costs personally when finding against them, rather than rely on the taxpayer to foot the bill.

But Ngoepe stressed that he sympathised with those officials who act in good faith or on the basis of sound legal advice.

The South African Communist Party echoed Ngoepe’s sentiments on Wednesday after the SABC agreed to a high court interdict, brought by the Helen Suzman Foundation, barring it from implementing a ban on covering violent protests. Officials should be “individually and severally” liable for unreasonable court actions, it said.

The SABC and Motsoeneng, its chief operating officer, also face legal action on several other fronts.

Eight journalists, seven of whom were fired this week over their stand against this censorship policy, have appealed to the Constitutional Court to have the SABC’s decisions and its censorship policy ruled unconstitutional.

In their amended notice of motion filed this week, the eight have asked the court that the costs of their application be paid by the SABC, any applicant that opposes their case and “personally by the SABC officials involved in the decision to dismiss the applicants”.

In a separate action, four of the eight journalists, through the trade union Solidarity, are fighting their dismissal in the Labour Court. In the case, postponed until today, they are asking that costs be awarded against individual officials.

“They knew that what they were doing was wrong. It was a male fide [in bad faith] action by individuals and that’s why we are asking for a cost order against those individuals who dismissed the journalists,” said Dirk Hermann from Solidarity.

Their lawyer, Johan Kruger, said that costs could escalate further, depending on the SABC’s response. “The costs are quite high because the application is urgent. So if we get an order that the SABC must pay our costs, it could range from R300 000 to R400 000 for this process alone.”

He added that Motsoeneng and SABC officials could end up paying close to R1‑million for Solidarity lawyers and their own.

Kruger said that their request to the court was in line with the law, especially in cases of frivolous and vexatious litigation.

“It is frivolous for them to oppose this application, especially in light of the order made against them in Pretoria in the Helen Suzman Foundation application. Therefore it’s not enough for them to say they are acting in their professional capacity, because here is a person who has a fiduciary duty towards the public to deal with public funds in a responsible manner and they fail to do so,” he said.

Motsoeneng and Communications Minister Faith Muthambi have also recently appealed to the Supreme Court of Appeal after the Cape Town high court ruled that Motsoeneng’s permanent appointment as chief operating officer was “irrational”. The Democratic Alliance is opposing the case. James Selfe, who chairs the DA’s federal executive, has called the matter “an abuse of the judicial system” and of “taxpayers’ money”.

What these matters are costing the SABC in legal fees is unclear.

SABC spokesperson Kaizer Kganyago did not respond to questions from the Mail & Guardian. But according to the SABC’s most recent annual report, it has made provision for legal claims amounting to more than R171‑million.

It has also recorded more than R500‑million in contingent liabilities relating to a number of pending lawsuits, but it says in its report that some of these may be reduced by counterclaims against insurance.

Other drawn-out legal matters the state is defending include cases involving Zuma, notably the “spy tapes” matter and the related high court ruling that in effect ordered that more than 700 corruption charges against Zuma be reinstated.

The presidency and the national director of public prosecutions, Shaun Abrahams, are appealing the ruling.

The National Prosecuting Authority defended its appeal to the Constitutional Court on this matter, saying that its application “raises serious constitutional issues and seeks final clarity as to the powers of the NPA and the [National Director of Public Prosecutions]”.

Another high-profile case fought at taxpayers’ expense was the Constitutional Court case against Zuma and other state office bearers over the public protector’s report into upgrades at his Nkandla home.

The court ruled that the public protector’s recommendations were binding and ordered the president, the police minister and the National Assembly to pay the costs of the application.

According to the police ministry, it spent more than R924 000 on legal fees for the Nkandla matter. Minister Nathi Nhleko said that he was not found to have breached the Constitution, and that losing the case did not make it “a waste to defend it”, as the court is the final arbiter.

The NPA said that the assertion that such cases were a burden on taxpayers, was “frivolous and without merit”, adding that when the Consitutional Court was approached to clarify the powers of the Public Protector, it raised no such concern.

As far back as 2008, it was revealed in a parliamentary question from the DA that the state had paid more than R9‑million in legal costs relating to Zuma’s corruption charges. Another set of parliamentary questions showed that between the 2009-2010 and 2012-2013 financial years, Zuma’s lawyer, Michael Hulley, had earned R8.8‑million in legal fees acting in cases for the president.

The DA’s Mmusi Maimane said in a speech in May that legal fees the state has amassed defending the president since 2009 amount to R45‑million.

The M&G could not verify the specific amounts spent on Zuma, but in the 2013-2014 annual report, legal costs and services for the presidency sat at R5.9‑million, while the following year they were R6.7‑million. This suggests that legal fees for the presidency have amounted to at least about R21.4‑million since the Zuma administration began.

Presidency spokesperson Bongani Ngqulunga did not respond to questions from the M&G but directed it to the presidency’s annual reports, noting that the 2015-2016 annual report would be released in September.

Advocate Paul Hoffman, director of the Institute for Accountability in Southern Africa, said that in many cases civil society starts litigation against the state that is “well founded [and] indefensible” and should be resolved speedily. Instead, too often the state defends cases on spurious grounds.

The courts have seen this as an abuse, as public money is being wasted on running up legal costs “to buy time”, he said.

Hoffman said applicants who are met with a defence that is frivolous or ill-informed can give notice that they will not only seek costs against the person in their personal capacity, but they can also ask the courts to award costs on a punitive scale. If these kinds of cost awards are made, then the taxpayer “will not be left out of pocket”, he said.

The courts have begun to do this, especially in Road Accident Fund matters and medical malpractice claims, said Hoffman.

Spokesperson for Parliament, Luzuko Jacobs said while the court did issue a cost order on the Nkandla matter, it was not yet finalized and, as yet, no money have been paid.

The National Assembly’s part in the Nkandla case was not waste of taxpayers money as the outcome of any Parliamentary process, is a product of the choices which members of parliament make in the exercise of their responsibilities.

The outcome could not be the sole responsibility of the presiding officers such as the Speaker National Assembly or Chairperson of the National Council of Provinces, nor could such an outcome be simplistically attributed to them he said.

“Dealing with this matter was a multi-party decision of the House which acted in terms of the Rules,” he said. “We believe that the processes followed were consistent with constitution and Parliament’s standing Rules.”

This story has been updated to include responses from the National Assembly and the National Prosecuting Authority, which could not be incorporated into the print version of this article.

— Additional reporting by Athandiwe Saba

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Lynley Donnelly
Lynley Donnelly
Lynley is a senior business reporter at the Mail & Guardian. But she has covered everything from social justice to general news to parliament - with the occasional segue into fashion and arts. She keeps coming to work because she loves stories, especially the kind that help people make sense of their world.

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