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2022
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[2022] ZALMPPHC 16
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Mphaphuli Consulting (PTY) Limited v Special Investigating Unit and Others (5232/2021) [2022] ZALMPPHC 16 (3 March 2022)
REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
(LIMPOPO DIVISION,
POLOKWANE)
CASE NO:5232/2021
REPORTABLE: YES
OF INTEREST TO THE
JUDGES:NO
REVISED.
DATE:3 March 2022
In the matter
between:
MPHAPHULI CONSULTING
(PTY) LIMITED APPLICANT
And
SPECIAL INVESTIGATING
UNIT FIRST
RESPONDENT
ADVOCATE JAN LEKHOA
MOTHIBI
SECOND
RESPONDENT
FETAKGOMO-GREATER TUBATSE
MUNICIPAILTY THIRD
RESPONDENT
PRESIDENT OF THE REPUBLIC
OF SOUTH AFRICA FOURTH
RESPONDENT
MINISTER OF JUSTICE AND
CORRECTIONAL SERVICES FIFTH RESPONDENT
MINISTER OF FINANCE
SIXTH
RESPONDENT
MINISTER OF MINERAL
RESOURCES AND ENERGY SEVENTH RESPONDENT
ESKOM HOLDINGS
EIGHTH
RESPONDENT
MEC: DEPARTMENT OF
COOPERATIVE GOVERNANCE
HUMAN SETTLEMET AND
TRADITIONAL AFFAIRS LIMPOPO
PROVINCIAL GOVERNMENT
NINTH
RESPONDENT
JUDGMENT
MULLER J:
[1]
The applicant applied to review and set aside a report of the first
respondent, the
Special Investigating Unit.
[1]
In addition, the applicant claimed a declaratory order that the
investigation by the SIU was unlawful and that it was not included
in
the terms of reference of proclamation No R52 of 2014.
[2]
It also claimed a declaration that all steps taken by all the
respondents following on the report are unlawful and be set aside.
And an order that the respondents to stop all the steps taken against
the applicant which resulted from the report.
[2]
It also bears mentioning at this early stage that counsel for the
applicant abandoned
the relief claimed in prayers 3 and 4 of the
notice of motion.
The
SIU is a juristic person which is established in terms of section
13(1) of the Special Investigating Units and Special Tribunals
Act,
Act 74 of 1996.
[3]
[3]
The applicant is a company who describes itself as a company whose
business it is
to provide hope to rural communities through
accelerated delivery of electricity services to rural communities by
utilizing the
Integrated National Electrification Programme which is
a grant funded by the Department of Mineral Resources and Energy (7
th
respondent).
[4]
The applicant stated that it was appointed by the GTM as a consultant
on 28 February
2012 to render services for accelerating delivery of
electricity to communities in its area of jurisdiction. A
professional services
contract was entered into on 29 August 2015
between the applicant and GTM for the provision of professional
engineering procurement
construction services and management services
for the delivery of accelerated electrical services. It was called
“Operation
Mabone.”
[5]
From the deponents narration of the events leading up to the
appointment
of the applicant no mention is made that a proper tender
process had been followed.
[6]
The contract price initially was for the electrification of 19 500
households
at a price of R168 856 689.07. An addendum was
entered into on 22 January 2014 in terms whereof the households were
increased
to 13 325 households for increased contract price of R
231 912 217.61. A second addendum was signed on 15 December
2014 which increased the households to 19 178 for an amount of
R326 496 722.00.
[7]
Trouble started in August 2016 when GTM refused to pay for services
rendered. The
parties resorted to mediation, which failed. The
applicant instituted proceedings in this court for recovery of the
amounts owing.
On 18 November 2016 GTM was ordered in terms of a
judgment issued by this court to pay the applicant;
(1)
R3 549 892.89
(2)
R21 129 421.29
(3)
R1 810 184.48
(4)
R14 692 073.42
[8]
Application for leave to appeal was refused on 6 March 2017 by the
SCA. Subsequently
GTM terminated the contract. That order stands
until set aside.
[4]
[9]
The GTM is still indebted to the applicant in the amount of
R9 765 850.89.
The applicant instituted action under case
number 6949/2019 for the recovery of the said amount. The action is
still pending. The
applicant says that the SIU is stalling the
action.
The
applicant has all the remedies in terms of the rules at its disposal
to bring the case to conclusion and cannot be heard to
complain if it
is supine in the conduct of the litigation instituted by it. There is
no need to say anything on the merits of the
action save to make it
clear that since this court in due course will dispose of the action
any comment at this stage will be unwise.
[10]
The first issue which the court is called upon to decide is whether
the proclamation
is sufficiently wide to include an investigation
into the propriety of the contract entered into with the applicant.
[11]
The second issue is whether the Promotion of Administrative Justice
Act 3 of 2006
[5]
is applicable.
Counsel on behalf of the applicant has emphasised during argument
that reliance is squarely placed upon PAJA as
the basis for the
review and setting aside of the report of the SIU. Counsel
specifically disavowed any reliance on legality as
the basis for the
review application.
APPLICABILITY
OF THE PROCLAMATION
[12]
The SIU Act provides for the establishment of Special Investigating
Units for the purpose of investigating
serious malpractices or
maladministration in connection with the administration of State
institutions, State assets and public
money and also any conduct
which may seriously harm the interests of the public. The SIU may
institute and conduct civil proceedings
in any court of law or a
Special Tribunal in its own name or on behalf of State
institutions.
[6]
The President,
in terms of section 2, may establish a SIU whenever he deems it
necessary, on the grounds referred to in section
2(2):
“
The
President may exercise the powers under subsection (1) on the grounds
of any alleged-
(a)
serious
maladministration in connection with the affairs of any State
institution;
[7]
(b)
improper or unlawful conduct by employees of any State
institution;
(c)
unlawful appropriation or expenditure of public
money or property;
(d)
unlawful, irregular or unapproved acquisitive act, transaction,
measure or practice having a bearing upon State property;
(e)
intentional or negligent loss of public money or damage
to public
property;
(f)
offence referred to in Part 1 to 4, or section
17, 20, or 21 (in so
far as it relates to the aforementioned offences) of Chapter 2 of the
Prevention and Combatting of Corrupt
Activities Act, 2004, and which
offences was [sic] committed in connection with the affairs of any
State institution; or
(g)
unlawful or improper conduct by any person which has
caused or may
cause serious harm to the interests of the public or any category
thereof.”
[13]
When the President is satisfied that the establishment of an SIU is
justified, he issues a proclamation
which must set the terms of
reference of the SIU and the particulars regarding the establishment
of the SIU.
[8]
The
functions of the SIU are listed in section 4(1), which states:
“
The
functions of a Special Investigating Unit are, within the framework
of its terms of reference as set out in the proclamation
referred to
in section 2 (1)-
(a)
to investigate all allegations regarding the matter concerned;
(b)
to collect evidence regarding acts or omissions which
are relevant to
its investigation;
(c)
to institute and conduct civil proceedings in a
Special Tribunal or
any court of law for-
(i)
any relief to which the State institution concerned is entitled,
including the recovery of any damages or losses and the prevention of
potential damages or losses which may by suffered by such
State
institution;
(ii)
any relief relevant to any investigation; or
(iii)
any relief relevant to the interests of a Special Investigating Unit;
(d)
to refer evidence regarding or which points to the commission
of an
offence to the relevant prosecuting authority;
(e)
to perform such functions which are not in conflict with
the
provisions of this Act, as the President may from time to time,
request.
(f)
From time to time as directed by the President
to report on the
progress made in the investigation and matters brought before the
Special Tribunal concerned or any court of law;
(g)
upon conclusion of the investigation, to submit a final
report to the
President; and
(h)
to at least twice a year submit a report to Parliament
on the
investigations by and the activities, compositions and expenditure of
such Unit.”
[14]
The source of the power of the President (the 4
th
respondent) to issue proclamation, is the SIU Act. The President
exercised that power when he issued proclamation R52/2014 dated
1August 2014 in terms whereof he granted the SIU the right and
authority to investigate the affairs of the Greater Tubatse Local
Municipality.
[9]
The terms of
reference are set out in the proclamation and allowed for a wide
variety of matters to be investigated by the SIU
which took place
between 11 March 2004 and the date of the publication of the
proclamation on 1 August 2014 or which took place
prior to 11 March
2004 or even after the date of the proclamation, which are relevant
to, connected with, incidental to or ancillary
to the matters
referred to in the schedule to the proclamation or which involve the
same persons, entities or contracts investigated
under authority of
the proclamation and which include recovery of any losses suffered by
the GTM in relation to the matters mentioned
in the schedule. The
relevant provisions of the schedule are:
“
The
procurement of and contracting for goods, works or services by or on
behalf of the Municipality and payments made in respect
thereof in a
manner that was-
(a)
not fair, competitive, transparent, equitable or costs-effective;
or
(b)
contrary to-
(i)
applicable legislation;
(ii)
applicable manuals, guidelines, practice notes or instructions issued
by the National Treasury; or
(iii)
manuals, policies, procedures, prescripts, instructions or practices
of or applicable to the Municipality, and related irregular,
fruitless or wasteful expenditure incurred by the Municipality.
(2)
….
(3)….
(4)….”
[15]
The clear purpose of the proclamation is to cast the net extremely
wide for purposes of investigation.
It stands to reason that the SIU
may follow up all leads in the process of the investigation of the
affairs of the GTM in connection
with all procurement of and
contracting for goods, works or services on behalf of the GTM and in
respect of payments made by the
GTM in respect of those contracts.
[16]
The SIU must perform a fact finding exercise and is authorised to
perform all the functions and powers
assigned to it by the SIU Act
including taking the necessary steps to recover any losses suffered
by the GTM by instituting proceedings
in a Special Tribunal or a
court of law for a determination.
[17]
The SIU is obliged to report to the President upon conclusion of its
investigation. Such a report dated
9 September 2019 was submitted to
the President.
[18]
Section 4(1)(g) does not require that a recommendation be made to the
President. A recommendation,
if made by the SIU in its report, is not
binding on the President, nor anyone else. A recommendation made to
the President is superfluous
since it is an obligation of the SIU to
institute and conduct civil proceedings for relief, if necessary
under the circumstances.
[10]
[19]
It is important to recall that civil proceedings have been instituted
in 2017 to recover the amount
of R3 175 041.39 and R73 287 766.50
under case number 7226/2017 from the applicant.
[20]
The argument of counsel for the applicant, as I understand it, is
that the contractual relationship
between the applicant and the GTM
was not covered by the terms of reference contained in the
proclamation.
[21]
The powers to investigate in terms of the proclamation are very wide
in its terms which may include a wide variety of contracts
for the
procurement of goods works and services concluded in the periods
stated in the proclamation.
[22]
It is understandable. The whole purpose of the investigation is not
to leave any proverbial stone
unturned to uncover widespread acts of
fraud, maladministration, corruption and malfeasance. And to achieve
the intended purpose
wide powers were accorded to the SIU to enable
it to achieve the intended purpose. The investigation conducted with
reference to
the applicant fell well within the ambit of the schedule
and the terms of reference. The investigation was directed at the
procurement
of and contracting with the applicant for goods, works or
services by or on behalf of the Municipality and payments made in
respect
thereof in a manner that was not fair, competitive,
transparent, equitable or costs-effective.
[23]
I am of the considered view that there is no substance in the first
point raised by the applicant.
The report, as far as it concerns the
applicant, and on a proper reading thereof, is nothing more than a
report on the facts and
a brief description of the steps that were
taken by the SIU to recover losses. Civil proceedings were instituted
well before the
date on which the report saw the light of day. This
court will in due course determine if there is any substance in the
claim by
the SIU after consideration of all the relevant facts.
[24]
The first point is dismissed. I turn to consider the second issue
whether PAJA, on the facts, is applicable.
APPLICABILITY
OF PAJA
[25]
The SIU is similar to a commission of inquiry.
[11]
A commission of inquiry, as was observed in
President
of the Republic of South Africa and Others v South African Rugby
Football Union and Others
[12]
is primarily an investigative body whose responsibility is to report
to the President.
[13]
It was
held that:
“
The
Commissions Act provides that, once a commission has been appointed,
the President may confer upon that commission the power
to summon and
examine witnesses, to administer oaths and affirmations and to call
for the production of books, documents and objects.
Failure to comply
with a subpoena issued by a commission is a punishable offence. If
these powers are not conferred, the commission
will have no powers
beyond those enjoyed by any individual or State agency conducting an
investigation. The Commission Act may
only be made applicable to a
commission of inquiry if it is investigating a matter of public
concern.”
[26]
The SIU enjoys no powers to summon and examine witness, to administer
oaths or affirmations and to
call for the production of objects,
books and documents as provided by section 3(1) of Commissions Act
and it cannot stray beyond
the boundaries set by the SIU Act and the
proclamation. Although a commission of inquiry, is generally not
entitled or empowered
to take any action as a result of its findings,
the SIU is specifically empowered
[14]
to institute proceedings in its name in a Special Tribunal or a court
of law against the parties concerned for the recovery of
what is due
as a result of its investigation and the evidence obtained.
[15]
[27]
There is no doubt that the SIU is an organ of state for purposes of
PAJA. This court is called upon
consider the entire report in the
context of the proclamation and relevant surrounding circumstances to
determine if the report
constitutes administrative action as
contemplated by PAJA. It is defined as follows:
“
Administrative
action means any decision taken, or any failure to take a decision,
by-
(a)
an organ of state, when-
(j)
exercising a power in terms of the Constitution or a provincial
constitution; or
(ii)
exercising a public power or performing a public function in terms of
any legislation; or
(b)
a natural or juristic person, other than an organ of state, when
exercising a public power or
performing a public function in terms of
an empowering provision which adversely affects the rights of any
person and which has
a direct, external legal effect, but does not
include…”
The
requirements were explained in
Sokhela
and Others v MEC for Agriculture and Environmental Affairs
(Kwazulu-Natal)
[16]
as:
‘’
That
requires a consideration of the action in question, against the
requirements of the definition of administrative action in
PAJA.
There are even requirements , namely that there must be (i) a
decision, (ii) by an organ of State, (iii) exercising a public
power
or performing a public function, (iv) in terms of any legislation,
(v) that adversely affects someone’s rights, (vi)
which has a
direct, external legal effect, and (vii) that does not fall under any
of the exclusions listed in s 1 of PAJA’’
[28]
A decision in terms of PAJA
[17]
is:
“
Any
decision of an administrative nature made, proposed to be made, or
required to be made, as the case may be, under an empowering
provision, including a decision relating to-
(a)
making, suspending, revoking or refusing to giving, suspending,
revoking or refusing to make an order, award or determination;
(b)
giving, suspending, revoking or refusing give a certificate,
direction,
approval consent or permission;
(c)
issuing, suspending, revoking or refusing to issue a licence,
authority
or other instrument;
(d)
imposing a condition or restriction;
(e)
making a declaration, demand or requirement;
(f)
retaining, or refusing to deliver up, an article; or
(g)
doing or refusing to do any other act or thing of an administrative
nature, and a reference to a failure to take a decision must be
construed accordingly.”
[29]
In
Gamevest
Pty Ltd v Regional Land Claims Commissioner, Northern Province and
Mpumulanga, an Others
[18]
it was stated:
“
What
is an
administrative
act
for
the purpose of justiciability? There is no neat, ready-made
definition in our case law, but in
Hira
and Another v Booysen and Another
1992 (4) SA 69
(A) Corbett CJ at 93A-B required, for common-law
review, the non-performance or wrong performance of a statutory duty
or power;
where the duty/power is essentially a decision-making one
and the person or body concerned has taken a decision, a review is
available.”
[19]
[30]
Section 4(1)(c) of the SIU Act is an empowering provision obligating
the SIU to recover all monies
due to GTM by instituting and
conducting civil proceedings for relevant relief and to choose the
forum
in which to institute such proceedings. It bears notice
that it is not institution of civil proceedings in this court that
the
applicant seeks to review and set aside, but rather the report
which makes reference to that decision to do so, taken two years
earlier by the SIU.
[31]
Counsel on behalf of the first and second respondent, has pointed out
that the relief claimed is too
wide and vague and encompasses the
entire report whilst the report also deals with other entities and
other issues, over and above
the issues which relate to the
applicant. Other entities, apart from the applicant, who were also
under investigating are also
referred to in the report. These
entities are not parties before court. When confronted with this
difficulty counsel on behalf
of the applicant suggested that the
court should have regard to the report insofar as it relates to the
applicant.
[32]
It seems upon reflection to be prudent to rather have regard to the
section of the report devoted to
the applicant, instead of
non-suiting the applicant on the basis of the non-joinder of the
other entities who were under investigation
and mentioned in the
report.
[33]
Section 4.1.6 of the report (with sub-headings) contains the report
relevant to the applicant. The
purpose of the report if read as a
whole is to inform the president of the reason for the investigation;
a summary of the background
facts leading to the contractual
relationship between the applicant and the GTM as well as subsequent
developments. The findings,
recommendations as well as the outcomes
are set out under separate subheadings. The recommendations are not
recommendations at
all, but is the conclusion reached, with regard to
the evidence gathered, as a result of the investigation. It reads as
follows:
“
Recommendations:
This therefore rendered the entire appointment of Mphaphuli
irregular. In respect of this aspect, the SIU is of the view that the
difference of
R5 000.02
per household between the
Municipality and VDM contracts must be recovered from Mphaphuli. The
value of this amount is R73 287 766.50.”
[34]
It will be recalled that the SIU instituted proceedings in this court
to recover the amount mentioned
above prior to the report being
signed and forwarded to the President. Under the sub-heading
“Outcomes” it is reported
that action has been instituted
on 24 October 2017 to recover the amount mentioned above.
[35]
It was held in
Smit
v Kwanonqubela Town Council
[20]
that:
“
The
launching of legal proceedings is not an administrative act but a
procedural act open to any member of the public.”
[36]
It is to be noted that the SIU is obligated in terms of the
empowering provision to institute legal
proceedings to obtain relief
that the State institution concerned is entitled to including
claiming to recover losses or damages
or the prevention thereof. The
SIU is a statutory created entity who has no powers except those
given to it by the SIU Act.
[37]
In
Eastern
Metropolitan Substructure v Peter Klein Investments (Pty) Ltd
[21]
the court followed Smit v
Kwanonqubela
Town Council
and
held that the decision to institute action to collect payment for
arrear services is not administrative action on the basis
that it:
“
..lacks
the requisite finality to attract administrative justice rights. The
decision to recover payment is a preliminary or interlocutory
step
having no determinative effect on the parties rights. The issue of
summons, as I have already held, is not administrative
act..”
[22]
[38]
I find that the report does not constitute administrative action with
the result that PAJA finds no
application on the facts. The
contention is also that the applicant overstated its claims for
services rendered, which is defamatory
in nature. The observations or
opinions set out in the report formed the basis of or rationale for
the decision to institute proceedings.
It should nevertheless be
accepted that the report negatively affects current business and
future business dealings of the applicant.
The right to human dignity
is inherent to any person. Every person has the right to have his
dignity respected and protected.
[39]
The constitutional obligation to foster public administration that is
accountable, effective, efficient
and free of corruption must be
weighed up against the prejudice suffered. It is the overarching aim
and purpose of the SIU Act
is to achieve this obligation by
investigation of corrupt practices and maladministration and report
to the President. The SIU
is obliged, if it believed to have
uncovered the commission of a crime to report and to refer the
evidence of the crime to the
relevant National Prosecuting
Authority.
[23]
It follows from
these observations that the opinions and views held by the SIU are
not final or determinative.
[24]
A final determination will be made in due course by this court. The
report thus do not have a direct external effect for the same
reason.
[40]
Finally, even if I am wrong in my view that PAJA is not applicable;
the common cause facts are that
the applicant has instituted action
for recovery of the amount outstanding in respect of the services
rendered to GTM and the SIU,
likewise, has instituted proceedings for
the recovery of amounts allegedly not due to the applicant. When
counsel was confronted
with the proposition that the order will have
no practical effect counsel pointed out that the deponent to the
founding affidavit
is a businessman and that he as well as the
business of the applicant inclusive of other business activities
suffer as a result
of the recommendation and contents of the report
which is defamatory. The applicant averred that in its investigation
the SIU failed
to consider the facts and also failed to interview
certain officials from National treasury, ESCOM and certain officials
from the
municipality. The failure to do so was the cause for a
biased report.
But
as previously stated civil proceedings were instituted by the
applicant and the SIU long before the report came into being.
The
decision to institute legal proceedings was only an initial step in a
multi-staged process that followed the decision. Setting
aside a
section of the report which is applicable to the applicant will, in
my view, not have any effect on the pending litigation.
[41]
The application falls to be dismissed. The costs should follow the
result. There is no reason why the
rule that the successful party is
entitled its costs should not be followed. Both parties employed two
counsel.
ORDER
The
application is dismissed with costs, which costs shall include the
costs of two counsel.
GC
MULLER
JUDGE
OF THE HIG COURT
LIMPOPO
DIVISION: POLOKWANE
[1]
Hereinafter “the SIU”.
[2]
Government Gazette 37884 dated 1 August 2014.
[3]
Hereinafter the “SIU Act”.
[4]
Municipal
Manager OR Tambo District Municipality and Another v Ndabeni
[2022] ZACC 3
(14 February 2022) par 23-24.
[5]
Hereinafter “PAJA”.
[6]
Preamble to the SIU Act.
[7]
“
State
institution
means any national or provincial department, any local government,
any institution in which the State is the majority or controlling
shareholder or in which the State has a material financial interest,
or any public entity as defined in section 1 of the Reporting
by
Public Entities Act, 1992 (Act No 93 of 1992).”
[8]
Section 2(3) of the SIU Act.
[9]
Hereinafter “the GTM”.
[10]
Section 4(1)( c)(i), (ii) and (iii) of the AIU Act.
[11]
Special
Investigating Unit v Nadasen
2002 (1) SA 605
(SCA) par 5.
[12]
2000 (1) SA 1
(CC) par 162-163.
[13]
Bell v
Van Rensburg NO
1971 (3) SA 693
(C) 705F;
S
v Mulder
1980
(1) SA 113
(T) 120E.
[14]
Section 4(1)(c) of the SIU Act.
[15]
Section 4(1)(a) and (b); 5(5) and 5(7) of the SIU Act.
[16]
2010 (5) SA 574
(KZP) par 60.
[17]
Section 1.
[18]
2003 (1) SA 373
(SCA) par 12.
[19]
Grey’s
Marine Hout Bay (Pty) Ltd and Others v Minister of Public Works and
Others
[2005] ZASCA 43
;
2005 (6) SA 313
(SCA) par 22.
[20]
1999 (4) SA 947
(SCA) par 10.
[21]
2001 (4) SA 661
(W).
[22]
Par 14.
[23]
Section 4(1)(d) of the SIU Act.
[24]
Masuku
v Special Investigating Unit and Others
(unreported) Case no P55372/2020 dated 12 April 2021 (GP) par 17.