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[2015] ZASCA 141
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The National Treasury v Kubukeli (20567/2014) [2015] ZASCA 141; [2016] 1 All SA 30 (SCA); 2016 (2) SA 507 (SCA) (30 September 2015)
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THE SUPREME
COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 20567/2014
In
the matter between:
THE
NATIONAL
TREASURY
FIRST APPELLANT
OR
TAMBO DISTRICT MUNICIPALITY
SECOND APPELLANT
and
PUMLANI
KUBUKELI
RESPONDENT
Neutral
citation:
The
National Treasury v Kubukeli
(20567/2014)
[2015] ZASCA 141 (30 September 2015).
Coram:
Mpati
P, Mhlantla, Majiedt and Saldulker JJA and
Van
der Merwe AJA
Heard:
4 September
2015
Delivered:
30
September 2015
Summary:
Constitutional
law ─ rational decision-making under the rule of law ─
investigation by the first appellant of the financial
management and
internal control of the second appellant and recommendations in
respect of improvements thereto without participation
of the
respondent ─ founded on reason and not arbitrary.
ORDER
On appeal from:
Eastern
Cape Local Division of the High Court, Mthatha
(Nhlangulela ADJP sitting as court of first instance):
1 The appeal is upheld.
2 There is no order as to costs of the appeal.
3 The order of the court a quo is set aside and replaced
with the following:
‘
The
application is dismissed.’
JUDGMENT
Van
der Merwe AJA (Mpati P, Mhlantla, Majiedt and Saldulker JJA
concurring):
[1]
On 18 January 2013 the
Daily
Dispatch
, an
Eastern Cape newspaper, carried an article containing allegations of
financial irregularities in respect of the hiring of motor
vehicles
by the executive mayor of the second appellant, the OR Tambo District
Municipality (the municipality). The material allegations
in the
newspaper article were that within a period of two months from
approximately 4 October 2012 to 5 December 2012, the office
of the
executive mayor hired luxury motor vehicles from Avis at an expense
of approximately R500 000 and that whilst so hired,
two of these
vehicles were involved in accidents, resulting in liability for the
municipality in the amount of R 224 827.70.
[2]
In the light hereof, the council of the municipality resolved on 30
April 2013 to
request the first appellant, the National Treasury, to
conduct an in-depth forensic investigation into these allegations
within
30 days. The municipal manager conveyed this request to the
National Treasury by letter dated 3 May 2013.
[3]
In response to the request, the National Treasury mandated a team of
investigators
(the Treasury team) to conduct the in-depth
investigation within the period 6 May 2013 to 7 June 2013. On 10 May
2013 the Treasury
team provided the municipal manager and the speaker
of the municipality with its investigation plan. In terms of the
investigation
plan it was envisaged that interviews would be
conducted on 15, 16 and 17 May 2013. It was agreed that the municipal
manager and
the speaker would write to the executive mayor and the
staff in his office to notify them of the investigation and to
request them
to make themselves available for interviews. The office
of the executive mayor is headed by a director, Mr A M Ncube.
[4]
The respondent, Mr Pumlani Kubukeli, is employed by the municipality
in the office
of the executive mayor, as the latter’s
bodyguard. The issue in this appeal is whether Mr Kubukeli was denied
a right to
make representations to the Treasury team. The issue arose
in the following manner.
[5]
On 14 May 2013 the municipal manager wrote to Mr Ncube informing him
of the investigation
by the National Treasury and requesting him to
ensure his availability and that of all key officials in the office
of the executive
mayor, including the political advisor of the
executive mayor and Mr Kubukeli, for interviews which were scheduled
for 16 May 2013.
Mr Ncube handed the letter to the political advisor
of the executive mayor on 15 May 2013. The speaker also had, on the
previous
day, given written notice of the investigation to the
executive mayor and had requested him to co-operate and avail himself
and
all the officials who were expected to attend, for the
interviews.
[6]
The political advisor responded on behalf of the executive mayor by
way of a memorandum
dated 15 May 2013. He complained that the office
of the executive mayor had not been informed of the council
resolution to request
the investigation which, he said, ‘. . .
may at times infringe, or border on infringing on basic rights’
of the executive
mayor and all individuals who work in his office. He
stated that the executive mayor had instructed him to initiate a
process to
gather information on the subject and that the process
would commence with a meeting of all staff of the office of the
executive
mayor on 27 May 2013. He also stated that the surprise
visit by the National Treasury was premature and interfered with this
process.
He concluded that the notice of the investigation by the
National Treasury was inadequate for the executive mayor and the
officials
sought to be interviewed to prepare their submissions. The
political advisor requested that the investigation be rescheduled to
1 July 2013. It was thus made clear in the memorandum that the
executive mayor and the officials in his office would not participate
in the investigation on 15 to 17 May 2013. This was conveyed verbally
to Mr Ncube by the political advisor on the morning of 16
May 2013.
It must be said, however, that Mr Ncube availed himself and was
interviewed by the Treasury team.
[7]
The Treasury team nevertheless continued with the investigation and
compiled a report
dated 31 May 2013. Only the executive summary
thereof formed part of the record before us. The report recorded that
the methodology
of the investigation was mainly to interview the
administrative officials of the municipality and the relevant service
providers.
It also stated that due to the stance taken by the
political advisor in his memorandum of 15 May 2013 and the resultant
unavailability
of the executive mayor as well as certain officials,
the Treasury team ‘. . . could not obtain information for
clarification
of certain findings’.
[8]
In respect of corporate governance issues, the Treasury team reported
that it viewed
the current situation in the municipality to be in
contravention of the fiduciary responsibilities of the accounting
officer, the
municipal manager, as there was no administrative
accountability by the office of the executive mayor to the office of
the municipal
manager. The Treasury team found that financial
management governance was not adhered to within the office of the
executive mayor.
It concluded that the municipality contravened
s 63(1) and (2) of the Local Government: Municipal Finance
Management Act 50
of 2003 (MFMA) in that vehicles were not properly
maintained, accounted for and safeguarded.
[9]
In respect of Mr Kubukeli, the report contained the following:
‘
7.14.2
We also observed that when the VIP Protector of the Executive Mayor,
Mr Kubukeli, was the driver of the hired vehicles the
cost for a
period of about 5 months was R573 073.34.
7.14.3
We observed that during the period under our investigation the hired
vehicle cost of 2 months, when Mr Kubukeli was
the registered driver
the cost amounted to R575 797,25.
7.14.4
It was established that the vehicle hiring costs of the Office of the
Executive Mayor escalated significantly since
Mr Kubukeli was
reflected as the driver of the hired vehicles, according to the Avis
reports as the overall hiring for 7 months
were over a million.
.
. .
7.15.1
It is our conclusion that the cost for the damage to all the rented
vehicles should be recovered from Mr Kubukeli as
he was found to have
been grossly negligent based on the Avis report.
.
. .
7.16.4
Mr Kubukeli failed to account for an amount of R8 000 paid to
him as cash advance payment for fuel usage during
the period under
investigation.’
[10]
The Treasury team made the following recommendations:
‘
9.1
The Municipal Manager should implement proper systems of control over
the financial resources,
and safeguarding of assets by the officials
within the Office of the Executive Mayor.
9.2
The Municipal Manager should institute a disciplinary process against
all officials that
have been found in breach of the Legislation
governing the Municipality, policies and processes.
9.3
All losses incurred due to the negligence of the officials should be
recovered from the
officials concerned by the Municipal Manager.
9.4
The Municipality needs to provide for the contingent liability
emanating from the damage
of the third party vehicle (Mrs Madiba)
involved in the accident with Mr Kubukeli on 7 October 2012.
9.5
The Municipality should comply with its own policy and procedures in
relation to the disposal
of the redundant assets.
9.6
The Council should investigate the conduct of the Executive Mayor and
should any breach
of the Code of Conduct be established then
discipline the Executive Mayor, failing which;
9.7
It is further recommended that, the Member of the Executive Council
(“MEC”)
for Local Government should invoke section 106 of
the Municipal Systems Act.’
This
section in essence provides that if there is reason to believe that
non-performance by or maladministration of a municipality
occurred or
is occurring, the MEC must request information in respect thereof
from the municipality or designate a person or persons
to investigate
the matter.
[11]
The report was presented to the council of the municipality at an ‘in
committee’
meeting on 7 June 2013. At this meeting the council
merely noted the report. At a special meeting held on 14 June 2013,
the council
adopted the report and its recommendations. It mandated
the municipal manager to implement the recommendations in respect of
the
disciplinary proceedings within 30 days. It also appointed a
special committee to investigate the conduct of the executive mayor
in terms of recommendation 9.6 of the National Treasury report.
[12]
Mr Kubukeli maintained that he received no notice whatsoever of the
request of the Treasury team
to avail himself for an interview. He
said that he only became aware of the investigation when the report
of the Treasury team
was presented to the council. There is a dispute
of fact on the question whether Mr Kubukeli attended any of the
relevant meetings
of the council. However, it is not necessary to
attempt to resolve this dispute, as counsel for both the National
Treasury and
the municipality were content to argue the appeal on the
basis that Mr Kubukeli did not receive notice of the request for an
interview.
[13]
On 12 June 2013 Mr Kubukeli launched an application in the Eastern
Cape Local Division of the
High Court, Mthatha. He did not challenge
any decision of the National Treasury or the municipality. He sought
an order; (a) that
the investigations conducted by the Treasury team
against him without his participation, ‘. . . be declared
unlawful, unprocedural
and unconstitutional’ and (b) that the
report of the Treasury team be declared unlawful and unconstitutional
and accordingly
set aside as a nullity. Despite opposition by the
National Treasury and the municipality, the court a quo (Nhlangulela
ADJP) granted
the relief claimed. The court a quo reasoned that the
investigation and the report of the National Treasury constituted
administrative
action within the meaning of the Promotion of
Administrative Justice Act 3 of 2000 (PAJA) and had to be set aside
on review on
the ground that Mr Kubukeli had been denied the right to
make representations in circumstances where the report had impacted
adversely
on Mr Kubukeli’s ‘right . . . to his reputation
and employment’. It granted leave to appeal to this court.
[14]
The founding affidavit of Mr Kubukeli was not a model of clarity. It
contained several passages
in which reliance was placed on an alleged
infringement of his right to just and fair administrative action. But
on a reading of
the founding affidavit, it must be accepted that he
also relied on an alleged breach of the rule of law. In the replying
affidavit
Mr Kubukeli specifically disavowed any reliance on PAJA and
stated that his application is founded on the provisions of s 1(
c
)
of the Constitution, which provide that the rule of law is a founding
value of our democracy. This was confirmed before us by
counsel for
Mr Kubukeli, who argued that the Treasury team could not have
complied with the notion of rationality without affording
Mr Kubukeli
an opportunity to be heard. In view hereof the court a quo
misconceived the nature of the enquiry and erred in finding
for Mr
Kubukeli on the basis of procedural unfairness in terms of PAJA. I
should add that it was in any event inappropriate to
set aside the
investigation that had been completed and resulted in the report.
[15]
In
Pharmaceutical Manufacturers Association of SA & another:
In Re Ex Parte President of the Republic of South Africa & others
[2000] ZACC 1
;
2000 (2) SA 674
(CC) para 85 Chaskalson P said the following:
‘
It
is a requirement of the rule of law that the exercise of public power
by the Executive and other functionaries should not be
arbitrary.
Decisions must be rationally related to the purpose for which the
power was given, otherwise they are in effect arbitrary
and
inconsistent with this requirement. It follows that in order to pass
constitutional scrutiny the exercise of public power by
the Executive
and other functionaries must, at least, comply with this requirement.
If it does not, it falls short of the standards
demanded by our
Constitution for such action.’ (Footnote omitted.)
See
also
Masetlha v
President of the Republic of South Africa & another
[2007] ZACC 20
;
2008 (1) SA 566
(CC) para 80-81.
[16]
There is no general duty on decision-makers to consult interested
parties for a decision to be
rational under the rule of law. See
Minister of Home
Affairs & others v Scalabrini Centre & others
2013 (6) SA 421
(SCA) para 67 and 72. But there are circumstances in
which rational decision-making requires consultation with interested
parties.
The cases of
Albutt
v Centre for the Study of Violence and Reconciliation & others
2010 (3) SA 293
(CC) and
Scalabrini
provide instances hereof.
[17]
In
Albutt
,
the President announced a special dispensation for applicants for
pardon who claimed that they were convicted of offences that
were
politically motivated. What was in issue there was whether the
decision to exclude the victims of these crimes from participating
in
the special dispensation process, was irrational. Ngcobo CJ confirmed
that under the rule of law the test to be applied was
whether the
President’s decision to undertake the process without affording
the victims the opportunity to be heard, was
rationally related to
the achievement of the objectives of the process. If not, the
decision could not pass constitutional muster.
The court held that
the objectives of the special dispensation process were
nation-building and national reconciliation.
It found that the
participation of victims was crucial and fundamental to these twin
objectives. The court therefore concluded
that it could not be said
that the exclusion of the victims from the special dispensation
process for pardon was rationally related
to the achievement of its
objectives. In addition, the court held that in his address
announcing the special dispensation, the
President recognised that
victim participation was the only rational means to contribute
towards national reconciliation and national
unity. Subsequent
disregard of victim participation without any explanation, so the
court held, was therefore irrational.
[18]
In
Scalabrini
, the director-general of the Department of Home
Affairs took a decision to close a refugee reception office in Cape
Town. The purpose
of the office was to receive, process and determine
applications for asylum. The decision was challenged on review as
irrational
for want of consultation with interested parties. After
quoting the aforesaid paragraph in
Pharmaceutical Manufacturers
,
Nugent JA described the nature of the enquiry in the following terms:
‘
But
an enquiry into rationality can be a slippery path that might easily
take one inadvertently into assessing whether the decision
was one
the court considers to be reasonable. As appears from the passage
above, rationality entails that the decision is founded
upon reason ─
in contradistinction to one that is arbitrary ─ which is
different to whether it was reasonably made.
All that is required is
a rational connection between the power being exercised and the
decision, and a finding of objective irrationality
will be rare.’
(Footnote omitted.)
[19]
The director-general was pertinently aware that there were a number
of organisations, including
the Scalabrini Centre, with experience
and special expertise in dealing with asylum seekers in Cape Town. A
representative of the
director-general had acknowledged the necessity
for consultation with these organisations and had specifically
undertaken to consult
with them on any proposal to close the Cape
Town office. Against this background, the court was driven to infer
that the director-general’s
failure to hear what those
organisations might have to say before deciding to close the Cape
Town office, was not founded on reason
and was arbitrary.
[20]
The judgment in
Du
Preez & another v Truth and Reconciliation Commission
[1997] ZASCA 2
;
1997 (3) SA 204
(A), to which we were referred by counsel for Mr
Kubukeli and upon which the court below relied, stands in contrast to
these decisions.
The Truth and Reconciliation Commission (TRC) and
its committees were established by the
Promotion of National Unity
and Reconciliation Act 34 of 1995
.
Section 30(2)
of this Act provided
that if during any investigation by or any hearing before the TRC or
any of its committees, any person is
implicated in a manner which may
be to his or her detriment or the TRC or the committee contemplates
making a decision which may
be to the detriment of a person who has
been so implicated, such person shall be afforded an opportunity to
submit representations
or to give evidence at the hearing before the
TRC or the committee. For present purposes it suffices to deal with
the case of the
first appellant in
Du
Preez
. The first
appellant in fact did receive written notification that he would be
implicated in evidence before the TRC’s committee
on human
rights violations. However, the first appellant received the notice
on Saturday, 13 April 1996, in respect of a hearing
that would
commence on Monday, 15 April 1996. The notice made reference to
extremely serious allegations against the first appellant,
but did so
in very scant and vague terms. The question was whether the notice to
the first appellant was reasonable and timeous
and contained
sufficient particulars to enable him to know what the case was all
about. Corbett CJ found the answer to the question
in the common law
principle of natural justice, encapsulated in the maxim
audi
alteram partem
. It
was not in dispute that this principle was applicable in the
circumstances of the case. The court found that in the circumstances
the notice was neither reasonable nor timeous nor contained
sufficient particularity.
Du
Preez
therefore
dealt with a fundamentally different issue, namely the content of an
established right to be heard.
[21]
The English case of
Re
Pergamon Press Ltd
[1970] 3 All ER 535
(CA), referred to in
Du
Preez
, is to the
same effect. There the inspectors appointed to conduct an
investigation into the affairs of a company recognised the
right of
the directors of the company to a fair opportunity to be heard, but
the directors wanted more. They sought access to transcripts
of
evidence and other documents and claimed the right to cross-examine
witnesses. There too, the issue was the content of the admitted
right
of the directors to be heard and on this issue the court found for
the inspectors.
[22]
Section 216 of the Constitution provides that national legislation
must establish a national
treasury. The National Treasury was
accordingly established by s 5 of the Public Finance Management
Act 1 of 1999. Section
2 of the MFMA provides that the object of the
MFMA is to secure sound and sustainable management of the fiscal and
financial affairs
of municipalities and municipal entities. It seeks
to achieve this object by establishing norms and standards and other
requirements
for, inter alia, ensuring transparency, accountability
and appropriate lines of responsibility in the fiscal and financial
affairs
of municipalities and municipal entities and the management
of their revenues, expenditures, assets and liabilities and the
handling
of their financial dealings.
[23]
In terms of s 5(1) of the MFMA the functions of the National
Treasury include the promotion
of the objects of the MFMA as stated
in s 2 thereof. Section 5(2)(
d
)
of the MFMA provides that in order to fulfil its functions, the
National Treasury has the power to investigate any system of
financial management and internal control in any municipality and to
recommend improvements thereto. This is the power that the
National
Treasury exercised through the Treasury team. Thus, the question is
whether on the particular facts of this case, the
conducting of the
investigation and the making of recommendations to the municipality
without the participation of Mr Kubukeli,
were rationally related to
the purpose for which the power in s 5(2)(
d
)
of the MFMA was given.
[24]
As I have said, the National Treasury exercised the public power to
investigate any system of
financial management and internal control
of the municipality and to recommend improvements, with the object of
securing sound
and sustainable management of the fiscal and financial
affairs of the municipality. The purpose for which the power was
given was
not to investigate the conduct of any particular person and
to make final findings in respect thereof. What a particular person
did or did not do, was incidental to the object of the power. It
follows that the request that Mr Kubukeli and others attend
interviews,
did not constitute recognition of a right to be heard,
but was intended to assist the National Treasury to achieve its
purpose.
The Treasury team was in no way to blame for the absence of
that assistance.
[25]
Viewed objectively, the purpose for which the power was given, was
achieved. The main import
of the investigation and the report was to
identify shortcomings in the financial management and internal
control of the municipality
and to recommend improvements thereto.
Unlike the decisions in
Albutt
and
Scalabrini
,
the National Treasury made no final or binding decision. The
municipality was under no obligation to accept any of the
recommendations.
[26]
Although some loose language may have been used in this regard, it is
clear in the context of
the report, that what was said in respect of
Mr Kubukeli (and other officials) was in the nature of prima facie
findings. These
findings are clearly not binding on Mr Kubukeli and
could be challenged in any subsequent proceedings. Paragraph 7.16.4
of the
report must be seen in this light, namely that in the absence
of an explanation by Mr Kubukeli the Treasury team found no record
of
account for the amount of R8 000 advanced to Mr Kubukeli. Most
importantly, objectively it was beyond doubt that if the
recommendations in respect of disciplinary proceedings or recovery of
losses were to be implemented, the implementation would take
place in
terms of processes that would afford Mr Kubukeli a full opportunity
to present his case.
[27]
I therefore conclude that the investigation, report and
recommendations of the National Treasury
without the participation of
Mr Kubukeli, were founded on reason and were not arbitrary or
irrational. It follows that the appeal
must succeed.
[28]
Mr Kubukeli sought to assert what he bona fide perceived to be a
constitutional right against
organs of State. His litigation was
neither frivolous nor vexatious. For the reasons set out in
Biowatch
Trust v Registrar, Genetic Resources & others
2009 (6) SA 232
para 23, the general rule in these circumstances is
that if the private party loses, each party should bear its own
costs. I can
find no reason to depart from the general rule in this
matter, both in respect of the costs of appeal and in the court
below.
[29]
In the result the following order is issued:
1 The appeal is upheld.
2 There is no order as to costs of the appeal.
3 The order of the court a quo is set aside and replaced
with the following:
‘
The
application is dismissed.’
_______________________
C
H G VAN DER MERWE
ACTING
JUDGE OF APPEAL
APPEARANCES:
For
1
st
Appellant:
B R Tokota SC
Instructed
by:
The State Attorney, Pretoria
The
State Attorney, Bloemfontein
For
2
nd
Appellant:
V Notshe SC (with him
L L Sambudla)
Instructed by:
Dayimani Sakhele Inc, Mthatha
Eugene Attorney, Bloemfontein
For
Respondent:
S Budlender
Instructed by:
Mvuzo Notyesi Inc, Mthatha
Bokwa Attorneys, Bloemfontein