ConCourt finds against Mkhwebane, says she must pay costs in her personal capacity

 

 

In a devastating defeat for Public Protector Busisiwe Mkhwebane, the Constitutional Court on Monday upheld a punitive and personal costs order against her, saying she had been dishonest and that her conduct “fell short of the high standards required of her office”.

“The High Court found that the Public Protector acted in bad faith. This court has no reason to interfere with this finding,” said the blistering majority judgment, penned by Justices Sisi Khampepe and Leona Theron.

The judgment is a major boost for Public Enterprises Minister Pravin Gordhan, who is litigating against Mkhwebane in two separate cases and has also accused her of acting in bad faith – an allegation to which she took great umbrage.

On Sunday, President Cyril Ramaphosa also announced that he would be turning urgently to the courts after Mkhwebane found against him in her Bosasa report. Though he is yet to file court papers, in announcing his court action on Sunday, Ramaphosa said: “In failing to provide me with an opportunity to comment on proposed remedial action, the Public Protector has violated provisions of the Public Protector Act, the Constitution and principles of common law.”

This complaint will find support in Monday’s judgment, which found that her “entire model of investigation was flawed …. [S]he failed to engage with the parties directly affected by her new remedial action before she published her final report.”


There is also another personal costs order potentially waiting in the wings: The Pretoria high court found against Mkhwebane on her report into the Gupta-linked Vrede dairy but held off from making a decision on whether to grant a personal costs order, saying it wanted to await the judgment of the Constitutional Court.

In its judgment on Monday, the highest court began by setting out an important principle: when it came to costs orders, a higher court did not easily interfere with how a lower court has awarded costs. “There must be a material misdirection on the part of the lower court in order for an appeal court to interfere,” said Khampepe and Theron.

They rejected at the outset the argument that awarding punitive and personal costs against Mkhwebane would inhibit her ability to act without fear favour or prejudice. “Personal costs orders are not granted against public officials who conduct themselves appropriately. They are granted when public officials fall egregiously short of what is required of them,” said the judgment.

The case concerned Mkhwebane’s first report as Public Protector, in which she directed the Special Investigating Unit to seek to recover R1.125 billion from Absa bank because of a series of bailouts that the reserve bank gave to Bankorp (later bought by Absa) in the 1980s. In her remedial action, she also directed that the Constitution be amended to broaden the mandate of the Reserve Bank and even set out what the amendment should say — in a clear breach of the separation of powers.

“The release of the final report caused severe harm to the South African economy. This included a significant depreciation of the Rand and a sell-off by non-resident investors of R1.3 billion worth of South African government bonds,” said the Constitutional Court.

The reserve bank went urgently to court. It then emerged in court papers that, in between the preliminary report and the release of her final report — which went much further than the interim one — Mkhwebane had consulted with the State Security Agency and the Presidency but did not go back to the banks. She also did not reveal the meetings with the presidency in her final report. When she was asked in litigation to explain why, she did not, said the court.

She also did not explain why she had held meetings with the presidency and with the SSA, but not with the parties most affected by her new remedial action and why these meetings were not recorded and transcribed like the other meetings in her investigation.

Her explanation of the SSA meeting made “no sense” said the Constitutional Court. Her explanations of the meetings with the presidency were “contradictory” and only “compounded the case against her,” said the justices.

“The Public Protector’s entire model of investigation was flawed. She was not honest about her engagements during the investigation. In addition, she failed to engage with the parties directly affected by her remedial action before she published her final report. This type of conduct falls far short of the high standards required of her office”.

The highest court also found that, in addition to a personal costs order, a punitive costs order was warranted. Mkhwebane must now pay 15% of the costs of the high court litigation on an “attorney and own client” scale, which is a significantly higher rate than the normal “party and party” scale set by the taxing master of the court.

Khampepe and Theron said this “additional punitive measure” exists to “counteract reprehensible behaviour on the part of a litigant”.

“Regard must be had to the higher standard of conduct expected from public officials, and the number of falsehoods that have been put forward by the Public Protector in the course of the litigation … the punitive aspect of the costs order therefore stands,” said the judgment.

Chief Justice Mogoeng Mogoeng dissented from the majority.

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Franny Rabkin
Franny Rabkin
Franny is the legal reporter at the Mail & Guardian

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