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2021
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[2021] ZAGPPHC 386
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Khorommbi Mabuli Incorporated v Road Accident Fund and Others (24217/2021) [2021] ZAGPPHC 386 (11 June 2021)
IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG DIVISION,
PRETORIA
Case
No: 24217/2021
REPORTABLE: NO
OF INTEREST TO OTHERS
JUDGES: NO
REVISED
In
the matter between:
KHOROMMBI
MABULI INCORPORATED
APPLICANT
and
ROAD
ACCIDENT
FUND
FIRST RESPONDENT
COLLINS
PHUTJANE LETSOALO
SECOND RESPONDENT
ABSA
BANK
LIMITED
THIRD RESPONDENT
GAVIN
VILJOEN
FOURTH RESPONDENT
SHOKENG
EMILY DHLAMINI
FIFTH RESPONDENT
JUDGMENT
BASSON
J
THE PARTIES
[1]
The
applicant (Khorommbi Mabuli Incorporated) is a legal firm of
attorneys acting on behalf of its clients.
The
first respondent is the Road Accident Fund (the RAF), a Schedule 3A
public entity established in terms of section 2(1) of the
Road
Accident Fund Act
[1]
(the RAF
Act). The second respondent is Mr. Collins Letsoalo, the
Chief Executive Officer (the CEO) of the RAF. The
third
respondent is ABSA Bank Limited (ABSA Bank) and the fourth respondent
is Mr. Gavin Viljoen (Viljoen), a branch manager
of ABSA Bank’s
branch in Centurion. The fifth respondent, Ms. Shokeng
Dhlamini, is cited in her capacity as the Sheriff,
Centurion East.
The application before court is opposed by the 1
st
to 4
th
respondents.
[2]
There are two applications before this
court. The first is an application for contempt for an order
declaring the 1
st
,
2
nd
,
3
rd
and 4
th
respondents to be held in contempt of the order of the full bench
dated 9 April 2021; that the 2
nd
and 4
th
respondents be committed to a term of imprisonment for six months or
any other term which this court deems fit; or alternatively,
that the
1
st
,
2
nd
,
3
rd
and 4
th
respondents be “mulcted” with a fine deemed appropriate
by this court. Alternatively, and in the event that this
court
is not prepared to grant the order for imprisonment, the 2
nd
and 4
th
respondents are to receive a suspended sentence which shall be wholly
suspended on the basis that the 1
st
and 2
nd
respondents must, within 72 hours from the date of this order, make
payment to the applicant of all claims which are older than
180 days
and immediately reinstate the applicant on the Road Accident Fund
payment list and that the 5
th
respondent immediately complies with a warrant of execution which has
been served upon it. The applicant further asked for
a cost
order that the 2
nd
and 4
th
respondents jointly and personally be held liable on an attorney and
client scale alternatively, such costs to be borne by the
1st, 2
nd
,
3
rd
and 4
th
respondents jointly and severally, the one paying the other to be
absolved on an attorney and client scale or any other scale that
this
court deems fit.
COUNTER-APPLICATION
[3]
The
RAF has also filed a comprehensive counter-application in terms of
which it seeks the issuing of a
rule
nisi
calling upon the applicant (the 1
st
respondent in the counter-application) and any other interested party
to show cause on 6 July 2021 at 10H00, if any, why any writ
of
execution based on a court order that compels the RAF to make payment
to the applicant’s trust account, or any attachment
pursuant
thereto, should not be immediately suspended in terms of section 173
of the Constitution,
[2]
alternatively Rule 45A of the Uniform Rules of Court, pending the
finalisation of an application to be brought by the RAF within
45
days of the date of this court’s order in which application the
RAF will seek just and equitable relief including but
not limited to
requiring the Legal Practice Council to decide whether to investigate
and to appoint a
curator
bonis
to control and administer the applicant’s trust account,
alternatively, pending the finalisation of the RAF’s
investigation
to be finalised within six months from the date of this
order. The order sought is to operate as an interim order, with
immediate
effect, pending the confirmation or discharge of the
rule
nisi
.
THE
DECISION OF THE FULL BENCH
[4]
On 9
April 2021, the full bench handed down its judgment (
Road
Accident Fund v Legal Practice Council and Others
[3]
–“the judgment of the full bench”) in which it held
that all writs of execution and attachments against RAF assets
based
on court orders already granted or settlements already reached in
terms of the RAF Act which are older than 180 days, were
suspended
until 30 April 2021.
[4]
The
order was granted,
inter
alia,
to
allow the RAF time to implement systems to make payment equitably.
The following paragraphs of the order are relevant to
these
proceedings:
“
(a)…
(b) All
writs of execution and attachments against the applicant based on
court orders already granted or settlements
already reached in terms
of the Road Accident Fund Act, 56 of 1996 (the RAF Act) are suspended
until 30 April 2021.
(c) The
applicant is to pay all claims based on court orders already granted
or settlements already reached in
terms of the RAF Act, which are
older than 180 days as from the date of the court order or date of
the settlement reached, on or
before 30 April 2021, provided that the
applicant has been notified by any attorneys who represent claimants
that have such claims
that are older than 180 days of the existence
of such claims in accordance with paragraph 3 of this court's order
made on 16 March
2021.
(d) All
writs of execution and warrants of attachment against the applicant
based on court orders already granted
or settlements already reached
in terms of the RAF Act, which are not older than 180 days as from
the date of the court order or
date of the settlement reached, are
suspended from 1 May 2021 until 12 September 2021….”
[5]
The
remainder of the order provides for issues such as steps to be taken
to register and capture court orders or written settlement
agreements
on the RAF’s payment list and for the RAF to continue with its
process of making payment of the oldest claims
first by date of the
court order or date of the written settlement agreement
a
priore tempore
.
[5]
[6]
The consequence of this order therefore
is that all executions against the RAF’s assets were suspended
until 30 April 2021.
Beyond 30 April 2021, the RAF therefore
has no further protection against execution in respect of orders
older than 180 days.
It is this judgment that the applicant claims
the four respondents are in contempt of.
Locus
Standi
[7]
All the respondents before court challenged the
locus standi
of the applicant – an attorneys’ firm acting on behalf of
the claimants in their road accident matters – to bring
the
application for contempt in its own name.
[8]
The applicant disputed the challenge to its
locus standi
and
submitted that it was entitled to launch this application on behalf
of its clients who are unemployed indigent claimants who
cannot
afford to act on their own behalf.
[9]
This is not the first time that the applicant has brought an
application
to have the RAF and the CEO declared to be in contempt of
court. The first attempt served before Tlhapi J who dismissed
the
application on the basis that the applicant did not have the
required
locus standi
to bring the contempt of court
application. Notwithstanding what Tlhapi J held in that judgment, the
applicant again brought an
application for contempt in its own name.
[10]
This time the applicant argues that it had been authorised by the
claimants (the judgment
creditors) to bring the contempt application
on their behalf and referred the court to the confirmatory affidavits
by the judgment
creditors attached to the papers.
[11]
I am in agreement with what Tlhapi, J held in her judgment: The
applicant is a firm of
attorneys and not a judgment creditor. It
is the judgment creditor that has a direct and substantial interest
in the application.
A third party cannot bring an application for
contempt of court. In her judgment, Tlhapi J held as follows:
“
[26]
As I see it, on a strict interpretation of the Powers of Attorney
annexed to the papers, and without
analyzing the entire content of
the document, I find that the powers do not extend to authorizing the
applicant to launch contempt
proceedings against the first and second
respondents. The personal details of and amounts due to the
judgment creditors were
available to the applicant at all times.
It is the judgment creditors who have a direct and substantial
interest, especially
where it is alleged that the first respondent
has not complied with an order, which directs that court orders and
settlement agreements
in their favour as judgment creditors be
registered for payment, especially the long outstanding ones that are
180 days or older.
[27]
The importance of the judgment creditor’s substantial interest
is demonstrated in J Koekemoer
and 353 Others supra. The
applicants consisted of judgment creditors and the 354
th
applicant was their attorney of record, who probably had a similar
Power of Attorney referred to in this matter. In my view,
the
importance of the judgment creditors bringing the application against
RAF in their personal capacities, is their entitlement
or right to
prompt direct payment within the period prescribed in the
Road
Accident Fund Act 56 of 1996
. In the Koekemoer matter the RAF
was able to convince the court to allow for a period of investigation
to precede payment
to the claimants. Albeit in my view, as
probably is the case in this application this process of
investigation had the potential
of prejudice, to those claimants who
were not tainted by fraud or duplicate payments and further prejudice
in that a system of
payment which has no legality presently is being
foisted upon them.
[28]
Again, in the matter of RAF v ABSA Bank Limited and Another case
number 52865/2020, Fourie J
considered the issue of non-joinder of
the third parties in particular, the claimants. The court found
that the applicant
was aware of the joinder requirement but, had
conveniently opted not to comply with it. The court was not in
favour of granting
a rule nisi to have this lacuna fulfilled because
there was more at stake to the prejudice of the claimants.
Opportunity
was given to the RAF, to launch a fresh application and
to cite third parties who would be affected by the order.
[29]
According to Mr Lazarus the applicants had demonstrated that they had
a substantial interest
in the order, hence the launch of the
application on behalf of their clients. I do not find that such
direct and substantial
interest, in their capacity as attorneys for
the judgment creditors had been established or properly articulated.
Alternatively,
a further complication is that no confirmatory
affidavits from the judgment creditors have been obtained and annexed
to the papers.
In as much as I would have wanted to deal with
the entire application, however, having come to this conclusion I
find that it is
no longer necessary to deal with the issue of
contempt of the order of 14 December 2020, as doing so would render
the exercise
superfluous and of no consequence. I rely on what
was stated in Four Wheel Drive Accessory Distributors Cc v Leshni
Rattan
N.O 2019(3) SA 451 (SCA) where the following was stated at
paragraph 19:
‘
The
court a quo was thus correct in holding that the plaintiff did not
prove that it bore any risk in respect of the Discovery.
It did
not prove an interest in the litigation and consequently, failed to
establish locus standi. The court also rightly
found that no
contract came into being because there was no consensus regarding the
terms (and nature) of the agreement.
That should have been the
end of the matter. Indeed, the court held that the failure to
prove locus standi was dipositive
of the entire action.’”
[6]
[12]
None of the individual claimants, who are all judgment creditors
against the RAF, and who
have a direct and substantial interest in
the outcome of this application, have been joined in this contempt
application. In
this regard I am in agreement with the
submission that the applicant does not have the necessary
locus
standi
to bring the application on behalf of the judgment
creditors and the application for contempt against the 1
st
,
2
nd
, 3
rd
and 4
th
respondents should
be dismissed on this ground alone.
[13]
Even if I am wrong on this point, the applicant has not made out a
case for contempt of
court against any of the 1
st
to 4
th
respondents. I will, despite the fact that I am in agreement
with the submission that the applicant does not have the necessary
locus standi
, briefly deal with my reasons for concluding that
the applicant has, in any event, not proven that any of the
respondents are guilty
of contempt of a court order.
ABSA
BANK
[14]
Before I turn to the contempt application in more detail, it is
necessary to first deal
with the position of ABSA Bank and Viljoen in
respect of the contempt application against them. The applicant
seeks an order
declaring them to be in contempt of court of the order
granted by the full bench on 9 April 2021.
[15]
Apart from disputing the
locus standi
of the applicant to
bring the contempt proceedings, ABSA Bank and Viljoen submitted that
they ought not to have been joined as
respondents to these
proceedings and that the contempt proceedings brought against them
constituted an abuse of court procedure.
To this end they seek
an order that the application be dismissed with costs on the scale of
attorney and client as against
the 3rd and 4
th
respondents.
[16]
ABSA Bank explains at length in its papers the nature of the
relationship between it and
the RAF. It explains that it
provides banking services to the RAF which holds various cheque
accounts in ABSA Bank’s
books and that these cheque accounts
are conducted on a credited basis only. In other words, there
are no overdraft facilities
available on the cheque accounts of the
RAF in the books of ABSA Bank. This means that if there are no
monies that stand
to the credit of these accounts, then ABSA Bank can
make no payments therefrom. From 2017 up until October 2019,
writs were
frequently issued by judgment creditors against the RAF as
judgment debtor and served on ABSA as a garnishee. ABSA and the
RAF would then arrange payments and all writs were paid by ABSA to
the Sheriff according to the case number served on ABSA.
[17]
Since October/ November 2019 the RAF experienced severe cash
constraints and was unable
to pay the writs and since February 2020,
an agreement between ABSA and the RAF was implemented to block or
place an authority
hold on the accounts which were attached by the
Sheriffs of various bank accounts of the RAF and paid over to the
Sheriff within
30 days after the attachments per individual case
numbers.
[18]
The applicant refers in its papers to the various writs upon which it
relies in this application.
But, instead of attaching these
writs to the papers, the applicant only attaches a few returns of
service (but not the actual
writs).
[19]
ABSA Bank submits that this omission makes it impossible for it to
reply to the allegations
levelled against it by the applicant and
also makes it impossible to ascertain whether the writs relied upon
(but not attached)
are directed to all the relevant bank accounts or
only at certain of the bank accounts held by the RAF in ABSA Bank’s
books.
[20]
In a letter dated 13 May 2021 (addressed by the applicant’s
attorneys and addressed
to ABSA Bank), the applicant confirms that
numerous writs were issued against ABSA Bank during the last 12
months but only attaches
the returns of service from the Sheriff in
respect of these writs. The applicant then demands that
ABSA Bank freeze
the account of the RAF failing which it will
bring a contempt application against it and seek punitive costs
orders against both
ABSA Bank and the RAF.
[21]
I am in agreement with the submission that the served writs cannot
remain as a continuing
attachment on the bank account (in other words
by freezing the account). The process that must be followed is the
process of an
emoluments order but the RAF does not owe ABSA any
money on a continued basis to qualify for an emoluments order.
[22]
ABSA Bank further reiterates that it can only apply with a writ
served on it when there
are funds which stand to the credit of the
account of the RAF. Except for the amount of R 8 166.50,
which was available
and is due to the credit of the account of the
RAF on 18 September 2020, and which was paid over against the writ
under case number
990/2015, all the other writs were returned as a
“
no attachment
” return.
[23]
The joining of ABSA Bank to these proceedings is misplaced. Not
only did the order
of the full court granted on 9 April 2021 not
order ABSA Bank to do anything or to make any payments, ABSA Bank
only manages the
RAF’s accounts and can only pay out monies
over to the Sheriff with regard to judgment creditors’ writs if
there are
funds available in these accounts to the credit of the
RAF’s account in terms of the provisions of Rule 45(5) and
45(12)
of the Uniform Rules of Court dealing with garnishee orders.
[24]
Regarding Viljoen: He has no interest and/or responsibility
whatsoever in respect of this
process. Also, no court order,
this application, nor any of the writs relied upon by the applicant,
have ever been served
on Viljoen personally or at all. In fact,
it would appear that the order was served on a one “A
Swanepoel”. This
is fatal as it is well-known that a
contempt of court application must be served personally on a
respondent.
[25]
Viljoen therefore has no knowledge of any wrongfulness. The
applicant seems to rely
on two email addresses as service upon
Viljoen. The first email address is non-existent and he denies
having received the
second one. Also, Viljoen is the manager of
the Centurion Branch of ABSA Bank. He does not manage nor
oversee the account
of the RAF which falls under a Special Public
Sector Department. Moreover, the physical cheque accounts fall under
the
domicilium
branch of the Menlyn Branch which also do not
fall under his control.
[26]
The onus rests squarely on the applicant to prove that ABSA Bank and
Viljoen maliciously
and intentionally failed to adhere to a court
order that ordered them to perform a specific act or to refrain from
performing a
specific act. The applicant placed no such facts
before the court and as already pointed out, the order of the full
bench
is in any event not applicable to these two respondents. The
contempt application against both ABSA Bank and Viljoen is
accordingly
dismissed.
[27]
Regarding the issue of costs, this is clearly a matter where a costs
order on a punitive
scale is warranted. Neither ABSA Bank nor
Viljoen should have been joined as a respondent to this contempt of
court application:
They are not party to disputes between the RAF and
the claimants and they are also not interested parties.
[28]
ABSA Bank had afforded the applicant an opportunity to withdraw this
contempt of court
application against ABSA Bank and Viljoen with each
party to pay its own costs. This offer was rejected by the
applicant.
This application against these two respondents is
frivolous and vexatious and therefore warrants sanction from this
court.
[29]
In the event, the application for contempt brought against the 3
rd
and 4
th
respondents is dismissed with costs on an attorney
and client scale such costs to include the costs consequent upon the
employment
of senior counsel.
VARIOUS
POINTS RAISED
The
merits of the contempt application and the counter-application
[30]
The merits of the contempt of court application and the RAF’s
and the CEO’s
response to the contempt application are
intertwined and will be dealt with together.
[31]
More specific to the contempt application, it must be emphasised
that, in the present matter,
the primary order that the applicant
prays for in its Notice of Motion is for an order for the committal
of the CEO of the RAF
(I have already dismissed the application
against Viljoen and ABSA Bank.)
[32]
The
Constitutional Court
Matjhabeng
Local Municipality v Eskom Holdings Ltd and Others;
Mkhonto
and Others v Compensation Solutions (Pty) Limited
[7]
highlighted the far-reaching consequences of being found guilty of
contempt of a court order in that such a finding may constitute
a
criminal offence:
“
[50]
It is important to note that it 'is a crime unlawfully and
intentionally to disobey a court order'. The crime of contempt of
court is said to be a 'blunt instrument'.Because of this, '(w)ilful
disobedience of an order made in civil proceedings is both
contemptuous and a criminal offence'. Simply put, all contempt of
court, even civil contempt, may be punishable as a crime. The
clarification is important because it dispels any notion that the
distinction between civil and criminal contempt of court is that
the
latter is a crime, and the former is not.”
[33]
In respect of the standard of proof the Constitutional Court made
clear that it is the
criminal standard of proof namely beyond a
reasonable doubt:
“
[60]
In relation to the proper standard of proof applicable in contempt of
court proceedings, there are divergent views on which
further
reflection and clarity are necessary. One view is that the criminal
standard of proof –beyond reasonable doubt –applies always.
The other view is that the standard of proof is not always of a
criminal standard. The minority in Fakie hinted
that the
material difficulty in separating coercive/remedial orders of
imprisonment made in civil contempt proceedings from punitive
orders
is a challenge which recurs in judgments in many jurisdictions. It
opined, and this is endorsed in Pheko II, that
the extension of
the criminal standard in civil proceedings would have harmful
consequences. In the following discussion
I reference Fakie
more extensively because it is an instructive judgment in which
Cameron JA has ably outlined the law on
contempt and how courts have
dealt with it.”
[34]
Returning to the merits of this application,firstly: What are
the requirements for a finding of contempt of court and secondly, has
the criminal standard of proof – beyond reasonable doubt –
been satisfied in this matter? As already pointed
out, because
the primary relief sought is committal, the criminal standard of
proof applies. The Constitutional Court in
Matjhabeng
confirmed that the requirements are –
“
(a) the existence
of the order; (b) the order must be duly served on, or
brought to the notice of, the alleged
contemnor ; (c) there
must be non-compliance with the order; and (d) the
non-compliance must be wilful and
mala fide”.
[8]
[35]
At
issue in this application is whether the non-compliance of the order
was wilful and
mala
fide
.
The Supreme Court of Appeal in
Fakie
NO v CCII Systems (Pty) Ltd
[9]
explains what this means:
“
[9]
The test for when disobedience of a civil order constitutes contempt
has come to be stated as whether the breach was committed
'deliberately and mala fide'. A deliberate disregard is not enough,
since the non-complier may genuinely, albeit mistakenly, believe
him
or herself entitled to act in the way claimed to constitute the
contempt. In such a case, good faith avoids the infraction.
Even a
refusal to comply that is objectively unreasonable may be bona fide
(though unreasonableness could evidence lack of good
faith).
[10]
These requirements - that the refusal to obey should be both wilful
and mala fide, and that unreasonable non-compliance, provided
it is
bona fide, does not constitute contempt - accord with the broader
definition of the crime, of which non-compliance with civil
orders is
a manifestation. They show that the offence is committed not by mere
disregard of a court order, but by the deliberate
and intentional
violation of the court's dignity, repute or authority that this
evinces. Honest belief that non-compliance is justified
or proper is
incompatible with that intent.”
[36]
As already mentioned, the applicant relies on the decision of the
full bench and submits
that the refusal of the RAF to compensate
claimants displays a “
flagrant disregard and contentious
attitude to award the order
” of that court. The
applicant claims that the RAF is indebted to 42 of its clients in the
amount of R 11 732 000.82
which amount is now due and
payable to the claimants to be paid into the trust account of the
applicant. Furthermore, the said
amounts have been outstanding for a
period of more than 180 days from the date of the order of the full
bench. The applicant
states that it has written several letters
to the RAF requesting reasons as to why payments were not
forthcoming. The applicant
argues that if the relief of
payments is not granted, the judgment creditors will be left without
any remedy and will be subject
to the mercy of the RAF. This,
the applicant submits, is a “
recipe for big trouble
”.
[37]
In its answering affidavit (which also serves as the founding
affidavit in the counter-application),
the RAF states that, on 3
February 2021, the RAF informed the applicant (the respondent in the
counter-application) that it had
handed over the applicant to its
Forensic Investigations Department (FID). The applicant has
therefore known since February
2021 that payment to its trust account
was suspended pending the outcome of an investigation into a
suspicion of serious impropriety
which decision has not been
overturned. In this regard, the RAF submitted that it has a
constitutional obligation to suspend
payment to a trust account where
there is a suspicion of serious impropriety in order to safeguard the
RAF Fuel Levy. The
RAF points out that its FID has identified
various possible irregularities in respect of Bills of Costs
submitted by the applicant
and explains that this process could not
have been completed earlier because the FID is a small department
which is currently involved
in the re-investigation of over 350
matters that were litigated and settled to determine whether there
was a stratagem against
the RAF on a massive scale to defraud. Some
of the members of this department have also been infected with
Covid-19 which
resulted in the department having to quarantine.
[38]
Attached to the papers of the RAF is a confirmatory affidavit by a
member of the RAF’s
FID in which the following preliminary
findings are confirmed –
“
21.1
Bills of Costs taxed at Thohoyandou have identical items on the bills
despite the fact that it was drawn for different claimants
and
related different accidents;
21.2
On one of the Bills the court order states that the matter is removed
from the roll by agreement between the parties and no
order as to
costs was made. Despite the said court order bill was drawn and
taxed;
21.3
Another item of concern is where the attorney appears as counsel and
charges excessively high amounts for attending roll call,
postponements and removals. In some instances, the attorney charged a
full day fee for his appearance;
21.4
Where counsel is briefed the attorney charges a day fee as well as
travelling time and travelling disbursements, the attorney
would also
charge travelling time as well as travelling disbursements;
21.5
The team has further noted with concern that counsel charges and is
awarded the day fee for attending roll call;
21.6
Usually the role of the corresponding attorney appointed is to act as
a postbox and should only identify documents. This is
however not the
case with the correspondent attorneys appointed by the firm. On the
day of trial, the instructing attorney, corresponding
attorney as
well as counsel attend court and all of them charge day fees;
21.7
It was further noted that counsel that is briefed in some of this
matter is not at the seat of the court;
21.8
None of the Thohoyandou bills has a Rule 70 certificate attached
which is required in terms of the rules’
21.9
We have also noted on one of the bills that the trial date as per the
bill differs from counsel’s invoice;
21.10
The bills have been provisionally analysed, and the First
Respondent’s FID established trends and patterns on bills
receive for payment from other attorneys from the same area that were
already under investigation. The First Respondent’s
FID
established
possible
fraud based on the number
of line items claimed on the same day.”
[39]
The RAF points out that the investigation is still ongoing and
further information supporting
or disproving suspicions of
impropriety is being collected as soon as possible. Under these
circumstances, the RAF cannot
make payment to the applicant’s
trust account until completion of the investigations. Should
payment not be suspended,
the applicant will continue to receive
public funds into its trust account possibly leading to
misappropriation, misuse or irregular
spending. The RAF
acknowledges that it is an unfortunate, but unavoidable, consequence
of the RAF’s suspension of payment
to the applicant’s
trust account that third parties’ (such as the claimants)
rights will be impacted but submits that
this consequence should be
weighed up against its constitutional obligations to safeguard the
RAF Fuel Levy.
[40]
Returning
to the issue of contempt: In order to succeed with its application,
the applicant must show,
inter
alia
,
that the RAF, although it is in a position to make payment to the
applicant’s trust account, may do so without contravening
the
provisions of the Public Finance Management Act
[10]
(PFMA) and in circumstances where the RAF is constitutionally obliged
to put measures in place to safeguard its “
available
resources
”
against fruitless and wasteful expenditure.
[11]
The applicant must further prove that the RAF acted wilful and
mala
fide
in
suspending payment to the applicant’s trust account in
circumstances where the applicant is under investigation for
suspicion
of serious impropriety.
[41]
I am not persuaded that the applicant has been able to do so. The
court cannot ignore
the constitutional duties imposed upon the RAF as
well as the duties imposed on the RAF in terms of the provisions of
the PFMA
to guard against fruitless and wasteful expenditure
–particularly in respect of the administration of the RAF’s
Fuel
Levy. The RAF has also placed
prima facie
evidence of
possible impropriety identified by its FID systems. This cannot be
ignored and in light of this, I am not persuaded
that the RAF (or its
CEO) is in wilful and
mala fide
disregard of an order of this
court.
[42]
In the event, the application for contempt against the first and
second respondents is
dismissed. As in the case of the third and
fourth respondents, I am likewise exercising my discretion to dismiss
the application
with costs on an attorney and client scale including
the costs consequent upon the employment of three counsel.
THE
COUNTER-APPLICATION
[43]
The applicant submitted that the counter-application should be
dismissed in light of the judgment of the full bench that ordered
that
all writs of execution and attachments
against the RAF based on court orders already granted or settlements
already reached in terms
of the RAF Act were suspended until 30 April
2021. Beyond 30 April 2021 the RAF therefore has no further
protection against
execution in respect of orders older than 180
days.
[44]
The applicant submitted that the judgment of the full bench
left no room for any exceptions to its order. I do not read the
judgment of the full court as constituting an
obstacle against bringing the present counter-application to further
suspend writs
of execution and warrants of attachment after 30 April
2021. In my view, the door is left open by the full bench for the RAF
to,
on a case by case basis, approach the court if it has
valid
grounds
to seek an order for a
(further) suspension. The full bench held as follows:
“
[39] I
have referred to the objections raised by attorneys acting on behalf
clients who are successful claimants
against the RAF. I do not
believe that payments should be withheld from successful claimants
because of a dispute between the RAF
and the attorneys acting for
them, or pending the repayment of double payments by attorneys. Such
exceptions may cause undue hardship
on and be unfair to successful
claimants. In such instances, the RAF should approach the court, on a
case-by-case basis, if it
believes or is advised that it has valid
grounds to obtain an order suspending writs of execution and warrants
of attachment against
it. The order which we propose to make,
therefore, does not provide for any exceptions. The RAF, as it
undertook to do, must pay
all claims based on court orders already
granted or settlements already reached in terms of the RAF Act, which
are older than 180
days as from the date of the court order or date
of the settlement, on or before 30 April 2021, provided it has been
notified by
any attorneys who represent claimants that have such
claims that are older than 180 days of the existence of such claims
in accordance
with paragraph 3 of this court's order made on 16 March
2021.”
[12]
[45]
I am further in agreement with the RAF’s submission that this
court can urgently
intervene in terms of,
inter alia
, sections
39(2) and 173 of the Constitution to prevent a constitutional crisis
and to prevent potential contraventions of the PFMA.
If it were
to continue with payments into the applicant’s trust account in
circumstances where the applicant is under investigation
for possible
serious impropriety, such payments would be unlawful, invalid and
unconstitutional. I am further in agreement
that, in the
present circumstances, the RAF should be granted the order sought to
suspend further execution to ensure it safeguards
the RAF’s
Fuel Levy against suspicion of serious impropriety.
[46]
On 18 April 2021 a letter entitled “DUPLICATE
PAYMENTS AND CRIMINAL INVESTIGATIONS” was dispatched to all
current firms
of attorneys that are under investigation for suspicion
of serious impropriety. On 7 May 2021 the RAF’s attorneys
sent
a letter to the applicant in terms of which it is stated that –
“
Your client has
not been cleared for payment because of an ongoing investigation by
the Forensic Investigation Department, as referred
to in our client’s
answering affidavit in the urgent application proceedings your client
launch against the RAF a few months
ago. We will let you know as soon
as your client is cleared for payment.”
[47]
On 10 May 2021, the applicant’s attorneys sent a letter to the
RAF stating,
inter alia,
that they failed to understand on
what basis the RAF is refusing to pay their client on the basis of a
purported investigation.
The attorneys further stated that it
is common cause that their client (the applicant in this matter) has
already repaid
the duplicate payments it had received and accordingly
that payment must be resumed. Payments should accordingly not
be withheld
from successful claimants because of an ongoing dispute
between the RAF and the attorneys representing the claimants. The
RAF and the CEO of the RAF are further advised that the applicant
intends launching an urgent contempt of court application against
both the CEO and the RAF “
who are clearly persistent in
portraying a contentious attitude and flagrant disregard” of
court orders “and who are
hell bent on destroying our
Constitutional Democracy and the independence of the judiciary.
”.
[48]
The RAF submitted that it is clear from this letter, as well as from
further letters subsequently
sent to the RAF, that it has no
alternative but to approach the court urgently and suspend payment to
the trust account of the
applicant pending the outcome of the
investigation into the alleged irregularities. In as far as it
is necessary to pronounce
on the issue of urgency, I am persuaded
that the counter-application is urgent.
PRIMA
FACIE
RIGHT
[49]
I
am persuaded that the RAF has a
prima
facie
right to the order sought particularly in circumstances where there
is a suspicion of impropriety. Although the applicant
has
repaid duplicate payments, the firm is still under investigation. Any
attempt to further execute after 30 April 2021 against
the RAF’s
assets in such circumstances amounts to an attempt to circumvent the
RAF systems to safeguard the RAF’s Fuel
Levy against
unconstitutional conduct. In this regard I agree with the
sentiments expressed by Fisher J in
Taylor v Road Accident Fund
and a related matter
:
[13]
“
Conclusion
[131]
While De Broglio might believe that it has served the interests of
its clients and itself in achieving a settlement agreement
for a
grossly inflated amount in circumstances where it has avoided this
court's jurisdiction, in fact it has placed them in jeopardy.
To the
extent that the settlements are unconstitutional they are
unenforceable. And if payment is made pursuant thereto this would
constitute irregular expenditure by the RAF and potentially make
those approving such payments vulnerable to personal scrutiny
by the
courts. The RAF is a public entity, as contemplated in part A of sch
3 to the Public Finance Management Act (“PFMA”)
and is
therefore subject to the onerous prescripts relating to public
expenditure set out in the PFMA. Thus, without further
collusion by the RAF in relation to payment, the settlements are, in
effect, worthless.”
REASONABLE
APPREHENSION OF HARM
[50]
I am in agreement that should the order
not be granted, the RAF will lose the progress it has made since the
implementation of systems
to safeguard the RAF Fuel Levy against,
inter alia
,
wasteful expenses. Should the process of attachment be allowed
to continue in circumstances where there exists suspicion
of
impropriety especially in respect of a trust account, the
administration of the RAF in attending to and paying out claims to
claimants, will be severely hampered. I am thus persuaded that
the RAF will suffer irreparable harm should the interim order
not be
granted.
BALANCE
OF CONVENIENCE
[51]
I have considered the plight of the
applicant’s clients. It is indeed unfortunate that the
individual claimants again
have to bear the brunt of serious failings
not only on the part of the RAF but on the part of their attorneys.
This is indeed
unfortunate. On the other hand, this court
cannot lose sight of the importance of resolving existing disputes
regarding improper
conduct on the part of attorneys’ firms
whereafter the payment to claimants will be restored. As
already pointed out,
the court cannot lose sight of the fact that the
RAF has a constitutional obligation to safeguard the RAF Fuel Levy
and to ensure
proper administration and oversight of claims lodged
with the RAF.
[52]
To ameliorate the harm that a claimant
may suffer as a result of this court’s order, I have imposed a
stricter time limit
for the finalisation of the investigation
proposed by the RAF in the Notice of Motion in the
counter-application.
NO
ALTERNATIVE RELIEF
[53]
I am in agreement that the RAF has no
other alternative remedy but to seek urgent interim relief in
circumstances where the measure
of protection that was afforded by
the full court no longer exists.
COSTS
[54]
I have exercised my discretion to grant the counter-application with
costs on an attorney
and client scale. In exercising my discretion, I
have also taken into account the fact that the papers of the
applicant are replete
with serious and scandalous allegations against
the RAF and its CEO. The applicant,
inter alia
, states
that the RAF has a “
vendetta
” against it and that
it is the RAF’s “
modus operandi to silence those who
do not agree with it by posing threats of spurious and endless
investigations to delay an or
avoid payment or frustrate the
implementation of Court orders against it
”. The RAF
is also accused of being involved in “
dirty and selective
payment dealings
” and that the refusal to pay is
“
designated to frustrate the applicant to a point of
misery
”. The RAF denies these allegations and denies
in particular the allegation that the suspension of payment is for
“
malicious and illegitimate reasons
” and states
that it does not “
willy-nilly
” (as claimed by the
applicant) suspend payments to an attorney’s trust account but
does so when there is suspicion
of impropriety. Then, in reply, Mr.
Lazarus launched an astonishing personal attack on the CEO. He,
inter alia
, accused the CEO of having lied under oath. This
is conduct unbecoming of an officer of this court.
COURT
ORDER: CONTEMPT APPLICATION
[55]
In the event, the following order is made:
1.
The application for contempt brought against the first and second
respondents is dismissed with costs on an attorney and client scale
including the costs consequent upon the employment of three
counsel.
2.
The application for contempt brought against the third and fourth
respondents is dismissed with costs on an attorney and client scale
such costs to include the costs consequent upon the employment
of
senior counsel.
COURT
ORDER: COUNTER-APPLICATION
[56]
In the event, the following order is made:
i.
A
rule nisi
is issued calling upon the respondent (the applicant in the contempt
of court application) and any other interested parties to
show cause,
if any, to this court on 6 July 2021 at 10H00, why the following
order should not be made final:
1.1
Any writ of execution
based upon a court order that compels the
Applicant (the Road Accident Fund) to make payment to a trust account
of the respondent
or any attachment pursuant thereto is immediately
suspended in terms of Section 173 of the Constitution, alternatively
Rule 45A
of the Uniform Rules of Court and set aside pending:
1.1.1
The
finalization of an application to be brought by the Applicant within
30
[14]
days of the date of
this Court’s order in which application the Applicant will seek
just and equitable relief, alternatively,
1.1.2
Pending the finalisation of the Applicant’s
investigation to be finalized within 30 days from the date of this
Court’s
order.
2.
That the order sought under paragraphs 1 to
1.1.2 shall operate as an interim order, with immediate effect,
pending the confirmation
or discharge of the
rule
nisi
.
3.
That the Applicant be granted leave to
publish this order by publication in two national newspapers.
4.
That the Applicant’s costs of this
application are to be paid by the respondent, Khorommbi Mabuli
Incorporated, on an attorney
and client scale
including the
costs consequent upon the employment of three counsel.
AC
BASSON
JUDGE
OF THE HIGH COURT
GAUTENG
DIVISION OF THE HIGH COURT, PRETORIA
Electronically
generated and therefor unsigned
Delivered:
This judgment was prepared and authored by the Judge whose name is
reflected and is handed down electronically
by circulation to the
Parties/their legal representatives by email and by uploading it to
the electronic file of this matter on
CaseLines. The date for
hand-down is deemed to be 11 June 2021.
APPEARANCES
For
the Applicant:
MR. J LAZARUS (ATTORNEY)
Instructed
by:
SHAPIRO & LEDWABA INCORPORATED
For
the 1
st
& 2
nd
Respondent:
ADV.
C PUCKRIN SC
ADV. R SCHOEMAN
ADV. P NYAPHOLI-MOTSIE
Instructed
by:
MALATJI & CO INCORPORATED
For
the 3
rd
Respondent:
ADV. DJ JOUBERT SC
Instructed
by:
TIM DU TOIT & CO INCORPORATED
Date
of hearing:
3 June 2021 (Virtual hearing)
Date
of judgment:
11 June 2021
[1]
Act
56 of 1996 (as amended).
[2]
Constitution of the Republic of South Africa,
Act
108 of 1996.
[3]
[2021]
2 All SA 886 (GP).
[4]
Paragraph
45(b) of the order.
[5]
Paragraph
45(f) of the court order.
[6]
Khorommbi
Mabuli Incorporated v Road Accident Fund and Others
[2021] ZAGPPHC 162 (12 March 2021).
[7]
2018
(1) SA 1 (CC).
[8]
Ibid
at
para 73.
[9]
2006 (4) SA 326 (SCA).
[10]
1
of 1999.
[11]
See,
inter
alia,
section
50 of the PFMA which provides for the fiduciary duties of accounting
authorities: (1) The accounting authority for a public
entity must–
(a)
exercise the duty of utmost care to
ensure reasonable protection of the assets and records of the public
entity;
(b)
act with fidelity, honesty,
integrity and in the best interests of the public entity in managing
the financial affairs of the
public entity;”
See
also sections 51, 57, 81 and 83 of the PFMA where similar
obligations are placed on the accounting authority of a public
entity to guard against irregular, fruitless and wasteful
expenditure.
[12]
My
emphasis.
[13]
2021
(2) SA 618 (GJ).
[14]
I have also reduced the time period stipulated in the Notice of
Motion for the institution of a further application.