Brief Summary

Review — State Attorney Act — Payments for private legal costs — Application by the Democratic Alliance and Economic Freedom Fighters to review decisions made under section 3 of the State Attorney Act 56 of 1957 regarding the payment of state funds for Jacob Zuma's legal costs in corruption-related proceedings — Legal issue of whether the State is authorized to cover private legal costs — Court held that payments made lacked legal basis and ordered repayment of public funds, emphasizing the principle of legality and the need to vindicate the integrity of the court.

Comprehensive Summary

Summary of Judgment

1. Introduction

This matter concerned an application for leave to appeal, and—once leave was granted—the determination of the appeal in the Supreme Court of Appeal. The appeal arose from two successful review applications in the Gauteng Division of the High Court, Pretoria, in which decisions and payments made by state functionaries to fund Mr Jacob Gedleyihlekisa Zuma’s private legal costs were challenged on the basis of the constitutional principle of legality.

The appellant was Mr Jacob Gedleyihlekisa Zuma. The respondents were the Democratic Alliance (in one matter) and the Economic Freedom Fighters (in the other), each of whom had instituted review proceedings in the High Court to set aside the impugned decisions and to obtain consequential relief directed at recovery of public funds.

The procedural history was that both the Democratic Alliance and the Economic Freedom Fighters brought review applications in 2018 in the High Court seeking declarations of unlawfulness and orders setting aside the decisions to fund Mr Zuma’s legal costs, together with recovery-related relief. The High Court (Meyer J, with Ledwaba DJP and Kubushi J concurring) granted extensive relief, including declarations of invalidity, review-and-setting-aside orders, and directions to the State Attorney to account and to take steps to recover the payments, and made costs orders against Mr Zuma. Mr Zuma sought to appeal those outcomes to the Supreme Court of Appeal. The Supreme Court of Appeal considered leave to appeal, granted it (principally because the appeal raised a question of statutory interpretation that warranted appellate consideration), but ultimately dismissed the appeal on the merits with a punitive costs order.

The dispute, in general terms, concerned whether s 3(1) or s 3(3) of the State Attorney Act 56 of 1957 authorised the payment of state funds to a private firm of attorneys (Hulley Inc) to cover legal costs incurred by Mr Zuma in criminal proceedings and related litigation brought in his personal capacity, and whether it was just and equitable to require repayment of public monies paid without lawful authority.

2. Material Facts

Mr Zuma held various political offices and ultimately served as President of the Republic of South Africa from May 2009 until his resignation in February 2018. The litigation context arose from criminal proceedings and related litigation connected to corruption and associated charges.

Following the prosecution and conviction of Mr Shabir Shaik, Mr Zuma himself was indicted in 2005 on corruption charges. In August 2006, a private firm, Hulley Inc, acting for Mr Zuma, submitted a request to the State Attorney for “legal assistance at the State’s expense” in relation to Mr Zuma’s criminal case. The request included an undertaking by Mr Zuma to refund the State Attorney, on demand, for costs incurred should a court find he acted in his personal capacity and in his own interests in the commission of the alleged offences. The 2005 trial was later struck from the roll and not re-enrolled.

In December 2007, a further indictment was announced against Mr Zuma on multiple charges, and in September 2008 Hulley Inc made another request for state-funded legal assistance. This request similarly included an undertaking to refund costs on demand. During 2009 the then acting National Director of Public Prosecutions decided to discontinue the prosecution (the discontinuation decision). In April 2009, the Democratic Alliance launched review proceedings to set aside that discontinuation decision. After extended litigation, the High Court set aside the discontinuation decision in 2016, and the Supreme Court of Appeal dismissed an appeal in 2017, with the effect that the 2007 indictment was revived.

After the Supreme Court of Appeal’s 2017 decision, the Democratic Alliance sought clarity from the Presidency about the extent and basis of payments made by the State toward Mr Zuma’s legal costs. Those requests were initially ignored. In March 2018, the Economic Freedom Fighters questioned the newly elected President (Mr Cyril Ramaphosa) about the amount spent and the legal basis. The President replied that since 2006 the State had spent R15.3 million on Mr Zuma’s legal costs pursuant to a decision taken by the State Attorney under s 3(3) of the Act. Further correspondence from the State Attorney indicated that the approvals had been taken in terms of s 3(1) by the Presidency, and the State Attorney provided copies of Mr Zuma’s 2006 and 2008 requests and referred to undertakings to repay, while noting that a written agreement between the Presidency and Mr Zuma could not be located.

The Democratic Alliance instituted its High Court review application on 23 March 2018, seeking, among other relief, declarations that the State was not liable for Mr Zuma’s private legal costs and orders setting aside the decisions to fund them. The Economic Freedom Fighters brought a similar review application. With the exception of Mr Zuma, other cited respondents did not oppose the relief sought. The High Court granted relief substantially in favour of the applicants, including (among other orders) a declaration that the State is not liable for Mr Zuma’s personal legal costs, setting aside the decisions to fund those costs, directing the State Attorney to compile a full accounting and to take steps (including civil proceedings) to recover the amounts, and awarding costs against Mr Zuma.

On the delay issue, the court treated it as material that for a substantial period Mr Zuma occupied the highest office in the land and that the funding decisions and payments were not transparent. Until 2018 there had been no clear disclosure of the asserted legal basis for the funding and, importantly, the full scale and extent of the payments became apparent only after the rule 53 record was filed.

A further material factual feature that emerged from the record was that the State Attorney had paid not only Hulley Inc’s fees and disbursements (including counsel’s fees), but also adverse costs orders in related litigation, and that the State’s expenditure extended beyond what had been described in the 2006 and 2008 requests. The judgment records that costs of approximately R25 million were borne by the State across multiple matters, including litigation predating the 2006 request and including a watching brief in the Shaik trial, despite there being neither a request nor authorisation for some of those payments. The judgment also treated the funding as ongoing at the time of the litigation.

3. Legal Issues

The appeal required the court to determine three central questions.

The first question was whether the review applications were brought within a reasonable time, as required in legality review, and if not, whether any delay should be condoned. This was primarily a question involving the application of legal standards to fact, particularly concerning when knowledge of the impugned action could reasonably be attributed to the public and whether the alleged unlawfulness was continuing.

The second question was one of statutory interpretation and legality: whether s 3(1) or s 3(3) of the State Attorney Act 56 of 1957 authorised decisions and payments by the Presidency and/or the State Attorney for the State to cover the costs of private legal representation for Mr Zuma in litigation where he acted in his personal capacity.

The third question was remedial and evaluative: if the decisions and payments were unlawful, whether it was just and equitable to order repayment (and associated accounting and recovery steps), including whether an appellate court should interfere with the High Court’s exercise of discretion in crafting a remedy.

A further issue arose in relation to costs on appeal: whether the allegations made by Mr Zuma in his leave to appeal materials and persisted in on appeal warranted a punitive costs order.

4. Court’s Reasoning

On delay, the court approached the question as a two-stage enquiry: whether there was an unreasonable delay, and if so, whether the delay should nevertheless be condoned. It accepted that identifying when “the clock started ticking” was difficult because, while Mr Zuma was President, he was both a beneficiary of the funding and positioned at the apex of executive authority, and because the funding arrangements were substantially obscured from public view.

The court rejected an attempt to attribute earlier knowledge to the Economic Freedom Fighters through speculation about Mr Julius Malema’s prior proximity to political leadership. It held that imputing any alleged knowledge from an individual political figure to the party, without a proper factual foundation, was not justified on the papers advanced by Mr Zuma. It further accepted the Economic Freedom Fighters’ explanation that the application was launched promptly after the party became aware of the quantum of spending, the purported legal basis, and the lack of security taken for repayment notwithstanding the “on demand” undertakings.

In addressing the Democratic Alliance’s position, the court accepted that parliamentary questions had been asked in 2008, but emphasised that until March 2018 there had been no meaningful disclosure of the legal basis for the decisions. The responses were described as vague, and the High Court’s conclusion that the applicants “knew—and still know—very little about the decisions” was endorsed. The court also treated it as significant that the rule 53 record disclosed the extent of the funding only once litigation was underway.

The court relied on the approach in Opposition to Urban Tolling Alliance v The South African National Roads Agency Limited [2013] ZASCA 148; [2013] 4 All SA 639 (SCA) to reason that, where an administrative act affects the public at large, the enquiry into when knowledge could reasonably be expected must take a broad view, rather than producing anomalous results depending on the peculiar knowledge of individual challengers. In addition, the court treated the funding as continuing conduct that would persist into the future, making the notion of “delay” less apt because the review targeted not only a single past act but also ongoing expenditure affecting the public purse.

Given the combination of secrecy, the later revelation of the payments’ scale, the ongoing nature of the funding, and the absence of a defensible basis for some payments, the court concluded that the High Court correctly entered into the substantive merits of the review.

On the statutory interpretation of s 3(1) of the State Attorney Act, the court held that the provision authorises the State Attorney to perform attorney-type work on behalf of the Government of the Republic. It reasoned that Hulley Inc was not engaged to act on behalf of government but rather to act on behalf of Mr Zuma in his personal capacity. The court treated it as decisive that, in the litigation concerned, Mr Zuma was cited personally and any orders would operate against him personally rather than against a government department or office. His holding of high executive office did not transform personal-capacity litigation into litigation pursued on behalf of government. The court therefore concluded that reliance on s 3(1) involved an impermissible conflation between official-capacity representation and personal-capacity representation, rendering the decisions ultra vires s 3(1) and thus unlawful.

Turning to s 3(3), the court construed it as permitting the State Attorney to perform like functions in matters where government, though not a party, is nevertheless “interested or concerned”, or where it is “in the public interest” for those functions to be performed by the State Attorney. The court emphasised that s 3(3) still concerns the performance of functions by the State Attorney, and that its scope is not satisfied merely because the person seeking assistance is an incumbent or former holder of high office. The court reasoned that determining whether there is a government or public interest for purposes of s 3(3) must involve at least an assessment of the nature of the proceedings, the issues for determination, and whether there is a legitimate reason for government to support the position taken by a non-government litigant.

Applying these principles, the court held that the government and the public have an interest in the rule of law, accountability, and good governance, which are furthered by the prosecution of corruption and by criminal trials proceeding without undue delay. Against that background, it stated that government and the public could hardly have a legitimate interest in supporting the defence by a public office bearer against charges of dishonesty and corruption through the use of state resources. The court rejected reliance on the presumption of innocence as missing the point, because the core issue was whether the Act authorised the payments, not whether Mr Zuma was guilty or innocent.

The court also rejected the argument that a conflict of interest justified appointing private attorneys at state expense. It reasoned that the conflict concern only arose because of an initial (and incorrect) assumption that the State Attorney could properly act for Mr Zuma. In any event, any divergence between governmental/public interests and Mr Zuma’s personal interests would fortify the conclusion that the State Attorney could not act for him; and the potential for conflict could not alter or enlarge the statutory mandate of the State Attorney.

A further interpretive conclusion was central: the court held that neither s 3(1) nor s 3(3) authorises the State to pay for private legal costs. Those provisions, on their terms, permit the State Attorney to perform functions; they do not authorise outsourcing of those functions to a private attorney at state expense. The court therefore held that the impugned decisions and payments lacked lawful authority under the Act.

On the remedy, the court endorsed the High Court’s conclusion that it was just and equitable to order an accounting and to direct recovery steps. It noted that the Economic Freedom Fighters had sought repayment with interest and relied on the fact that Mr Zuma had undertaken in 2006 and 2008 to repay costs “on demand”. It reasoned that Mr Zuma was uniquely positioned to place evidence before the court to show why repayment would not be just and equitable, but he did not do so and offered no factual material to counter the contentions advanced. The court accepted that, given the finding that the payments should not have been made, repayment could arguably be the only just and equitable remedy, and that merely setting aside the decisions without accounting and recovery would not vindicate the rule of law or the constitutional values of accountability and transparency.

In considering appellate interference, the court treated the remedy as involving the exercise of discretion by the High Court and held that no basis had been shown to justify interference.

On costs, the court addressed allegations made by Mr Zuma in his leave to appeal application asserting bias and political motivation on the part of the High Court, including claims that the court acted unfairly, was “hell-bent” on finding against him, and had developed a trend of punishing him with costs. The court held that no factual foundation had been laid for these allegations, that Mr Zuma persisted with them even after being invited to retract them, and that the allegations scandalised the court and the judiciary. Relying on S v Le Grange and Others (040/2008) [2008] ZASCA 102; 2009 (1) SACR 125 (SCA); 2009 (2) SA 434 (SCA); [2010] 1 All SA 238 (SCA); 2010 (6) BCLR 547 (SCA), it emphasised the importance of judicial impartiality and the seriousness of unfounded allegations of bias. It accepted the submission that a punitive costs order was warranted to mark the court’s displeasure and to vindicate the integrity of the court and the judiciary.

5. Outcome and Relief

The Supreme Court of Appeal granted leave to appeal (given the importance of the statutory interpretation issue), but dismissed the appeal on the merits.

The court upheld the High Court’s conclusions that the review applications were brought within a reasonable time in the circumstances, that neither s 3(1) nor s 3(3) of the State Attorney Act 56 of 1957 authorised the State to cover Mr Zuma’s private legal costs incurred in personal-capacity litigation, and that the remedial orders directing accounting and recovery were just and equitable.

The final order was that the appeal was dismissed with costs, including the costs of two counsel, payable on the attorney and client scale.

Cases Cited

Body Corporate of Marine Sands v Extra Dimensions 121 (Pty) Ltd [2019] ZASCA 161; 2020 (2) SA 61 (SCA).

S v Shaik and Others [2006] ZASCA 105; [2007] 2 All SA 9 (SCA); 2007 (1) SA 240 (SCA).

S v Shaik and Others [2007] ZACC 19; 2008 (2) SA 208 (CC); 2007 (12) BCLR 1360 (CC); 2008 (1) SACR 1 (CC).

Zuma v Democratic Alliance and Others; Acting National Director of Public Prosecutions and Another v Democratic Alliance and Another (771/2016, 1170/2016) [2017] ZASCA 146; [2017] 4 All SA 726 (SCA); 2018 (1) SA 200 (SCA); 2018 (1) SACR 123 (SCA) (13 October 2017).

Opposition to Urban Tolling Alliance v The South African National Roads Agency Limited [2013] ZASCA 148; [2013] 4 All SA 639 (SCA).

Trencon Construction (Pty) Limited v Industrial Development Corporation of South Africa Limited and Another [2015] ZACC 22; 2015 (5) SA 245 (CC); 2015 (10) BCLR 1199 (CC).

S v Le Grange and Others (040/2008) [2008] ZASCA 102; 2009 (1) SACR 125 (SCA); 2009 (2) SA 434 (SCA); [2010] 1 All SA 238 (SCA); 2010 (6) BCLR 547 (SCA).

Legislation Cited

State Attorney Act 56 of 1957.

State Attorney Amendment Act 13 of 2014.

Superior Courts Act 10 of 2013 (s 17(2)(d)).

Promotion of Administrative Justice Act 3 of 2000 (as referenced in relation to s 7(1) and s 9(2)).

Public Finance Management Act 1 of 1999 (referenced as the PFMA).

Rules of Court Cited

Uniform Rules of Court, Rule 53.

Held

The Supreme Court of Appeal held that, despite the lapse of time since the earliest funding decisions, the review applications were properly entertained because the relevant information (including the legal basis and the scale of payments) was not adequately disclosed for many years, the conduct complained of was ongoing, and it would be untenable to allow unlawful expenditure to continue on the basis of alleged delay.

The court held that neither s 3(1) nor s 3(3) of the State Attorney Act 56 of 1957 authorised the State to pay the costs of private legal representation for Mr Zuma in litigation where he acted in his personal capacity, including litigation related or incidental to his prosecution. Those provisions authorise performance of functions by the State Attorney for government (and, in limited circumstances, where government/public interest justifies it), but do not authorise outsourcing to private attorneys at state expense to defend a private individual against criminal charges.

The court held further that it was just and equitable to grant consequential relief aimed at accounting and recovery of unlawfully paid public monies, particularly where Mr Zuma had given undertakings to repay “on demand” and had not placed evidence before the court to show why repayment would be inequitable.

Finally, the court held that unfounded allegations of bias and political motivation scandalised the courts and warranted a punitive costs order on the attorney and client scale.

LEGAL PRINCIPLES

The judgment applied the principle that legality review entails an enquiry into unreasonable delay and, where relevant, condonation, but that the assessment of when time begins to run may require a broad, public-facing approach where the impugned conduct affects the public at large and where the relevant information was obscured. Where the alleged unlawfulness is continuing, delay arguments may carry reduced force because the impugned harm to the public purse persists.

In interpreting s 3(1) and s 3(3) of the State Attorney Act 56 of 1957, the judgment applied the principle that the State Attorney’s statutory mandate concerns the performance of legal functions on behalf of government, and in limited circumstances where government is interested/concerned or where it is in the public interest for the State Attorney to perform those functions. The mere fact that a litigant is or was a senior government office bearer does not, without more, establish a government or public interest that justifies state legal services for personal litigation.

The judgment applied the principle that statutory provisions authorising the State Attorney to perform functions do not, without express authority, permit the State to fund private attorneys to act for an individual in a personal capacity, nor to outsource the State Attorney’s functions to private practitioners at state expense, especially in circumstances where doing so would undermine accountability and the proper use of public funds.

On remedies, the judgment applied the principle that, once unlawfulness is established, a court may craft just and equitable relief that goes beyond setting aside the unlawful decision and may include measures such as accounting and recovery steps to remedy the misuse of public resources and to vindicate constitutional values such as accountability and transparency. Appellate interference with such remedial choices is constrained where the remedy involves an exercise of discretion.

On costs, the judgment applied the principle that unfounded allegations that impute bias or improper motive to judicial officers may scandalise the courts and justify a punitive costs order to mark the court’s displeasure and to vindicate the integrity of the judiciary.

Zuma v Democratic Alliance and Another (1028/2019) [2021] ZASCA 39; [2021] 3 All SA 149 (SCA); 2021 (5) SA 189 (SCA) (13 April 2021)