Noge-Tungamirai v Minister of Communications and Digital Technologies and Others (107704/2023) [2025] ZAGPPHC 825 (18 August 2025)

Case Note

Letlhogonolo Noge-Tungamirai v Minister of Communications and Digital Technologies & Others
Case No 107704/2023, High Court of South Africa (Gauteng Division, Pretoria)
(2025-08-18) — unreported: anticipated neutral citation Noge-Tungamirai v Minister of Communications and Digital Technologies and Others (107704/2023) [2025] ZAGPPHC ___ (18 August 2025)

Reportability

The matter was expressly marked reportable because it deals with the intersection between section 15 of the Postbank Act 9 of 2010 and section 71 of the Companies Act 71 of 2008 in the context of a ministerial decision to remove a director of a state-owned company. The judgment clarifies when a shareholder-minister’s vote at a shareholders’ meeting remains subject to administrative-law or legality review. It is therefore significant for governance of state-owned enterprises, for the scope of judicial review of shareholder decisions, and for the proper application of section 5(4) of the Companies Act when potentially conflicting statutory schemes apply concurrently.

Cases Cited

Pharmaceutical Manufacturers Association of South Africa and Another: In re Ex parte President of the Republic of South Africa and Others 2000 (2) SA 674 (CC); 2000 (3) BCLR 241 (CC)
Minister of Defence and Military Veterans v Motau and Others 2014 (5) SA 69 (CC); 2014 (8) BCLR 930 (CC)
Trencon Construction (Pty) Ltd v Industrial Development Corporation of South Africa Ltd and Another 2015 (5) SA 245 (CC); 2015 (10) BCLR 1199 (CC)
Sasol Synthetic Fuels (Pty) Ltd and Others v Lambert and Others 2002 (2) SA 21 (SCA)

Legislation Cited

Postbank Act 9 of 2010
South African Postbank Limited Amendment Act 22 of 2022
Companies Act 71 of 2008
Public Finance Management Act 1 of 1999
Banks Act 94 of 1990
Constitution of the Republic of South Africa, 1996 — section 217
Promotion of Administrative Justice Act 3 of 2000

Rules of Court Cited

Uniform Rule 6
Uniform Rule 28
Uniform Rule 53

HEADNOTE

Summary

The applicant, a former non-executive director of Postbank SOC Ltd, sought judicial review and setting-aside of the ministerial decision that terminated her directorship on 14 September 2023. She contended that the Minister, while purporting to act under section 71 of the Companies Act as shareholder, failed to comply with the audi alteram partem requirements in that section and, in any event, acted irrationally and contrary to the Postbank Act, the shareholder-compact and constitutional procurement norms. The respondents argued that the Minister’s decision constituted a private shareholder act immune from review.

The Court held that the substantive power to remove a Postbank director derives from section 15 of the Postbank Act and not from the Companies Act. Section 71 merely prescribes the procedure once that power is exercised. Because section 15 constitutes public power, the decision is reviewable on legality grounds. The Minister failed procedurally by casting a vote before affording the applicant an opportunity to address the shareholders’ meeting as required by section 71(2)(b).

Notwithstanding that procedural defect, the Court found the removal substantively rational in light of chronic non-compliance by the board with procurement prescripts, irregular expenditure, and the looming threat to social-grant payments. It therefore issued a declaratory order of unlawfulness but declined to set the decision aside or to reinstate the applicant.

Key Issues

Whether a ministerial vote to remove a director at a shareholders’ meeting constitutes reviewable public power.
The concurrent application of section 15 of the Postbank Act and section 71 of the Companies Act and the test under section 5(4) of the Companies Act for statutory inconsistency.
Compliance with the audi alteram partem rule as codified in section 71(2)(b).
The distinction between procedural unlawfulness and substantive rationality.
Appropriate remedial discretion where the decision is procedurally invalid but substantively justified.

Held

1. The removal decision is an exercise of public power grounded in section 15 of the Postbank Act and is therefore reviewable under the principle of legality.
2. Section 71 of the Companies Act applied concurrently; the Minister’s failure to afford the applicant a presentation at the AGM rendered the process unlawful.
3. On the evidence the decision was objectively rational and reasonable; the board had persistently failed to regularise irregular expenditure and safeguard the grant-payment system.
4. Given the substantive justification and separation-of-powers concerns, the Court declined reinstatement and instead issued a declaratory order coupled with costs.

THE FACTS

Postbank, originally a division of SAPO, relied on an Integrated Grant Payment System (IGPS) licensed from FSS Technology. After SAPO’s cession of rights, Postbank inherited a relationship with Electronic Connect, to whom it continued paying without valid procurement authorisation, generating substantial irregular expenditure. The licensing agreement expired in March 2023, yet the board repeatedly sought ad-hoc extensions while an ambitious—but ultimately unworkable—migration to a new UBS core banking system stalled.

KPMG’s forensic report, delivered in August 2023, confirmed that both the payment-switch contract and a R46 million settlement with Electronic Connect were unlawful. The Minister, newly appointed in March 2023, demanded explanations and consequence-management plans from the board. After unsatisfactory responses, he notified directors on 22 August 2023 of his intention to remove them under section 15 of the Postbank Act.

All directors except the applicant resigned on 12 September 2023. At the AGM on 14 September 2023 the Minister, wearing his shareholder cap and holding 100% of voting rights, passed a resolution removing the applicant but did not allow her to address the meeting. An administrator was immediately appointed to prevent a governance vacuum.

THE ISSUES

First, the Court had to decide whether the Minister’s act fell outside judicial review because it was a shareholder decision or whether it remained public power susceptible to legality review. Second, the Court had to determine if the Minister complied with the procedural requirements of section 71(2), particularly the right of the director to be heard at the meeting. Third, even if the process was flawed, the Court had to evaluate whether the decision was substantively rational and, finally, what remedy would be just and equitable.

ANALYSIS

In a detailed comparative exercise, the Court applied the Constitutional Court’s reasoning in Minister of Defence v Motau. It held that section 15 of the Postbank Act confers the substantive removal power and expressly requires the Minister to afford the affected director “a reasonable opportunity to be heard”. Section 71 of the Companies Act does not confer power but regulates how shareholder voting must proceed, including a distinct audi requirement that the director be allowed to make a presentation at the meeting before the vote.

The Court examined section 5(4) of the Companies Act, emphasising that where two statutes can operate concurrently without contradiction, both must be complied with. Here, giving the applicant a further opportunity to present at the AGM would not have contravened section 15; rather, it complemented it. Consequently, the Minister’s failure to observe section 71(2)(b) rendered the procedure unlawful.

Turning to substantive rationality, the Court undertook an objective assessment of the link between the decision and its purpose. It recited the board’s long-running non-compliance, the risk to millions of grant beneficiaries, and the forensic findings of irregular expenditure. These facts, undisputed on the papers, justified decisive intervention. The Court accordingly distinguished between a procedurally defective but substantively defensible decision, referencing Pharmaceutical Manufacturers and Trencon on the limits of substitution and the primacy of separation of powers.

REMEDY

Invoking section 172(1)(b) of the Constitution and its wide remedial discretion, the Court declared the Minister’s conduct unlawful for want of procedural fairness but refrained from setting the decision aside. Remittal for a fresh hearing would serve no practical purpose because the applicant’s continued tenure lacked substantive merit and the board was already dissolved. Re-instatement would intrude on executive prerogatives and require concurrence of the Minister of Finance under section 10 of the Postbank Act, who was not before the Court. Costs followed the event, save that the applicant’s unauthorised supplementary affidavit attracted no costs award.

LEGAL PRINCIPLES

Public powers exercised in a shareholder capacity over state-owned companies remain subject to legality review when the empowering statute is a public-law enactment.
Section 5(4) of the Companies Act mandates concurrent compliance with overlapping statutory regimes unless actual conflict makes compliance impossible.
Section 71(2)(b) codifies the audi alteram partem rule in corporate removals: the director must be allowed to address the shareholders’ meeting before the vote.
A decision may be procedurally unlawful yet substantively rational; courts may issue declaratory relief without setting aside such a decision where the mischief is cured and substitution would offend separation of powers.
Remedial discretion under the Constitution requires a balancing of legality, effectiveness, and institutional competence, favouring declarations or remittals over reinstatement except in exceptional circumstances.