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[2001] ZASCA 117
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Special Investigating Unit v Nadasen (5/2001) [2001] ZASCA 117; [2002] 2 All SA 170 (A); 2002 (1) SA 605 (SCA); 2001 (2) SACR 720 (SCA) (28 September 2001)
REPORTABLE
Case No 5/2001
In the matter between:
THE SPECIAL INVESTIGATING UNIT Applicant
and
ANTHIMOOLAN NADASEN
Respondent
Coram: VIVIER ADCJ, HARMS, MARAIS, SCHUTZ and CAMERON
JJA
Heard: 17 SEPTEMBER 2001
Delivered: 28 SEPTEMBER 2001
Subject:
Special Investigating Units and Special Tribunals Act 74 of 1996
and
Proclamation R24 of 14 March 1997: interpretation; area of
jurisdiction.
JUDGMENT
HARMS JA/
HARMS JA:
[1] Corruption and fraud, for some years now, have been
matters of serious public concern. This is evidenced by a number of recent
enactments, the use of special task forces and the appointment of commissions of
inquiry. Statutes that spring to mind include the
Investigation of Serious
Economic Offences Act 117 of 1991, the Corruption Act 94 of 1992 and the
Special
Investigating Units and Special Tribunals Act 74 of 1996
. The latter is the
subject of this judgment and references hereinafter to “the Act” are
references to it.
[2] As appears from the long title, the object of the
Act is to provide for the establishment of (a) 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 as well as any conduct which may seriously harm the interests of
the public, and (b) special tribunals
to adjudicate upon civil matters emanating
from these investigations. One such unit was established together with its
related tribunal
by way of presidential Proclamation R24 of 14 March 1997.
Because the head of this Unit was a judge, the Proclamation was later
found to
be inconsistent with the provisions of the Constitution but the declaration of
its invalidity was suspended for one year
as from 28 November 2000 (
South
African Association of Personal Injury Lawyers v Heath and Others
[2000] ZACC 22
;
2001 (1)
SA 883
(CC)). This order of the Constitutional Court does not affect the
present judgment.
[3] Consequent upon the Unit’s investigation into
the affairs of the Durban Metropolitan Council (Durban North and Central
Council)
in relation to the misappropriation of funds and the irregular receipt
of payments in respect of the hiring of equipment, the Unit
instituted
proceedings in the Special Tribunal against the respondent
(“Nadasen”) and a co-defendant, claiming payment
of some R555
000,00. One claim amounting to R351 805,20 succeeded and judgment was entered
against the two defendants jointly and
severally. Nadasen appealed to the Full
Court of the Natal Provincial Division but the second defendant’s
executrix (he having
since died) did not take part in the
appeal.
[4] Shortly before the hearing of the appeal before the Full
Court, Nadasen filed a special plea based upon an unreported judgment
of Pickard
JP. The Unit did not object and was prepared to argue the appeal on that basis.
In another turn of events, the case was
eventually argued by agreement on yet
other bases: (a) did the Unit have jurisdiction to investigate the conduct of
the affairs of
a KwaZulu-Natal local authority and sue the defendants on its
behalf and (b) did the Tribunal have jurisdiction to entertain the
action? The
Court
a quo
(per Hugo J, Nicholson J and Msimang AJ concurring) upheld
the appeal on these new grounds and the present appeal is with the special
leave
of this Court.
[5] A unit such as the appellant is similar to a
commission of inquiry. It is as well to be reminded, in the words of Corbett
JA
in
S v Naudé
1975 (1) SA 681
(A) 704 B-E, of the invasive
nature of commissions, how they can easily make important inroads upon basic
rights of individuals and
that it is important that an exercise of powers by a
non-judicial tribunal should be strictly in accordance with the statutory or
other authority whereby they are created. The introductory part of s 4(1) of
the Act emphasises the point. This accords with the
approach of the
Constitutional Court (
South African Association of Personal Injury Lawyers v
Heath and Others supra
par 52). Appellant’s reliance upon a
“liberal” construction (meaning in the context of the argument
“executive-minded”)
is therefore misplaced. A tribunal under the
Act, like a commission, has to stay within the boundaries set by the Act and its
founding
proclamation; it has no inherent jurisdiction and, since it trespasses
on the field of the ordinary courts of the land, its jurisdiction
should be
interpreted strictly (cf
Fey NO and Whiteford NO v Serfontein and Another
1993 (2) SA 605
(A) 613F-J).
[6] Since the promulgation of Proclamation
R24, a series of proclamations have been issued extending the terms of reference
of the
Unit and Tribunal. It is common cause that these later proclamations are
not relevant in determining whether the Unit and the Tribunal
had jurisdiction
in the matter now before us, simply because they came after the institution of
the proceedings mentioned on 29 August
1997. Cf
Naude en Andere v Heatlie en
Andere; Naude en Andere v Worcester-Oos Hoofbesproeiingsraad en Andere
2001
(2) SA 815
(SCA) 820I – 821A. In order to place Proclamation R24 in
context, it is necessary to have regard to the scheme of the
Act.
[7] Section 2 empowers the President to establish special
investigating units and special tribunals. It reads:
“(1) The President may, whenever he or she deems it necessary on account
of any of the grounds mentioned in subsection (2)
by proclamation in the
Gazette-
(a) (i) establish a Special Investigating Unit in
order to investigate the matter concerned; or
(ii) refer the matter to an
existing Special Investigating Unit for investigation; and
(b) establish
one or more Special Tribunals to adjudicate upon justiciable civil disputes
emanating from any investigation of any
particular Special Investigating
Unit:
Provided that if any matter referred to in subsection (2) falls within
the exclusive competence of a province, the President shall
exercise such powers
only after consultation with or at the request of the Premier of the province
concerned.
(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;
(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) corruption 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.
(3) The proclamation referred to in subsection (1)
must set out the terms of reference of the Special Investigating Unit, and such
particulars regarding the establishment of the Special Investigating Unit or the
Special Tribunal as the President may deem necessary.
(4) The President may at any time amend a proclamation issued by him or her in
terms of subsection (1).”
The concept of “state
institution” as used in the Act is wide and is defined in s 1 as
follows:
“'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 93 of 1992).”
[8] It is convenient next
to quote s 14(1), which deals with the conversion of existing commissions of
inquiry into units and tribunals
under the Act:
“(1) The President may, in respect of any Commission of
Inquiry-
(a) appointed by him or her prior to the commencement
of this Act; or
(b) appointed by any other executive authority prior to the commencement of
this Act, upon the request of such executive authority,
and if the objects of such Commission can in his or her opinion better be
achieved by a Special Investigating Unit and a Special
Tribunal, by proclamation
in the Gazette dissolve such Commission and establish a Special Investigating
Unit and a Special Tribunal
in its place in terms of this Act: Provided that the
provisions of section 2 (3) and (4) shall apply with the necessary changes in
respect of the proclamation referred to in subsection (1): Provided further that
. . .. “
[9] Three points need to be made at this
juncture. First, although the President is entitled to establish a unit to
investigate not
only matters of national but also of local concern, the Act
respects the autonomy granted by the Constitution to provinces. To act
under s
14(1), where a commission was appointed by the executive of a province, the
President must have the request of such executive
as a condition precedent; if
any matter falls within the exclusive competence of a province, the President
may only exercise the
powers under s 2(1) “after consultation with or at
the request of the Premier of the province concerned.” Second, there
is
no antipathy between s 2(1) and s 14(1) as suggested by the Court
a quo
,
because a unit and tribunal established pursuant to s 14(1) are established
“in terms of this Act”, i. e., s 2(1).
Section 14(1) does not
contain its own establishment provision; it merely circumscribes when and how a
unit and its appended tribunal
can replace an existing commission. The terms of
reference of a unit appointed pursuant to s 14(1) need therefore not be
co-extensive
with that of the displaced commission. Finally, s 2(1) envisages
the appointment of any number of units but does not entitle the
President to
appoint a roving unit or substitute police force with an unbounded mandate to
investigate possible corruption wherever
it may exist. The President must deem
it necessary to appoint a unit “on account of any of the grounds”
mentioned in
s 2(2); moreover, he is required to identify the
“matter” falling within one or more of those grounds (cf
South
African Association of Personal Injury Lawyers v Heath and Others supra
par
61). The degree of particularity required does not arise in the present case.
[10] Reverting to the scheme of the Act, a unit must investigate the
matter referred to it, collect relevant evidence and may then
institute
proceedings in the tribunal against the parties concerned for the recovery of
what is due to the particular state institution
(ss 4(1)(a) and (b); 5(5) and
5(7)). The tribunal consists of a judge and has in general terms the powers of
a high court in relation
to matters falling within the terms of reference (ss
7,8 and 9). Appeals lie against a judgment of a tribunal to the Full Court
or
to this Court (s 8(7)).
[11] Proclamation R24 was issued pursuant to s
14(1). A commission had been appointed by the Premier of the Eastern Cape on 14
June
1995 under the chairmanship of a judge to investigate fraud and corruption
in the government of the Eastern Cape and its constituent
parts (my summation).
The Premier requested the transformation of the Commission into a unit, and the
President granted the request.
The claim against the defendant arose, as
mentioned, from matters affecting a local authority from KwaZulu-Natal. The
issue ultimate
in this appeal is whether, as a question of interpretation, the
Proclamation extends to matters within the exclusive competence of
that
province.
[12] It is unfortunately necessary to quote the Proclamation in
full:
Under section 14 (1) of the Special Investigating Units and Special Tribunals
Act, 1996 (Act No 74 of 1996), and upon the request
of the executive authority
of the Eastern Cape, and because I am of the opinion that the objects of the
Commission of Inquiry into
Matters relating to State Property in the Province of
the Eastern Cape established by Eastern Cape Provincial Notice No 10 of 1995,
can better be achieved by a Special Investigating Unit and a Special Tribunal, I
hereby dissolve the said Commission and establish
a Special Investigating Unit
and a Special Tribunal in its place.
Under section 3 (1) of the said Act, I hereby appoint Mr Justice Willem
Hendrik Heath as head of the Special Investigating Unit.
Under section 7 (2) of the said Act, I hereby, after consultation with the
Chief Justice, appoint Mr Justice Gerhardus Petrus Christiaan
Kotzé as
Tribunal President.
The terms of reference of the Special Investigating Unit are ─
to examine and report to me on
─
any acquisitive act, transaction, measure or practise, pending or concluded,
having a bearing on State or public property or public
money which belongs to or
vests in a State institution or which, at any time prior to 27 April 1994,
belonged to or vested in any
former State or territory that now forms part of
the Republic and which public property or public money, were it not for such
acquisitive
act, transaction, measure or practice, could have belonged to, or
vested in, or could have been liable to be allotted to a State
institution;
any interest in, or in respect of, any property contemplated in subparagraph
(a);
any person, establishment, institution or society in or by which public property
or public money contemplated in subparagraph (a)
may be accumulated or may have
been used; and
any real or personal right to property contemplated in subparagraph (a) or to
the fruits of such propery that have accrued or will
accrue to any person,
establishment, institution or society other than a State
institution;
to inquire into, consider and report to me on matters contemplated in
subparagraph (1) which have taken place between 26 October
1976 and the date on
which the Special Investigating Unit is dissolved; and
to inquire into, consider and report to me on any matter contemplated in section
2 (2) of the said Act, which is incidental to the
matters referred to in
subparagraphs (1) and (2) and which is revealed by any of the investigations of
the Special Investigating
Unit, and the generality of this subparagraph is not
limited by subparagraphs (1) and
(2).
5. The seat of the Special
Investigating Unit is King William’s Town.
6. Subject to section 9 (2) (b) of the said Act, the seat of the Special
Tribunal is King William’s Town or any other place
that the Tribunal
President may designate as such.
[13] Counsel for the
appellant relied heavily upon the wording of par 4(1)(a) and argued that it, in
terms, exhibits an intention
to appoint the Unit to examine any act, without any
territorial limitation, falling within the definition. He readily conceded that
there is nothing else in the Proclamation favouring this interpretation and
invited us to apply a purposive construction to the Act
and the Proclamation.
No doubt, the object or purpose of the Act is to investigate allegations of
corruption and fraud and to reclaim
ill-gotten gains speedily by the use of
specialist bodies. The Proclamation evinces the same underlying purpose. But
that does
not assist in answering the question whether its purpose was to form
one unit to tackle and solve the whole country’s problems
or whether its
purpose was to appoint a unit for the Eastern Cape only. One enters here the
area of “impermissible speculation
as to the purpose of legislation”
(per Marais JA in a somewhat different setting in
Nissan SA (Pty) Ltd v
Commissioner for Inland Revenue
[1998] ZASCA 59
;
1998 (4) SA 860
(SCA) 870C).
[14] Like any writing, par 4(1) must be read in context and, unlike an
Agatha Christie novel, it usually pays to commence at the beginning.
Paragraph
1 makes it clear that the President, at the behest of the Executive of the
Eastern Cape, intended to act under s 14(1).
The object of s 14(1) is to
dissolve an existing commission and to establish a unit and tribunal “in
its place”. The
reader is also informed that the President formed an
opinion, as both ss 14(1) and 2(1) require him to do. His opinion was that
the
Unit and the Tribunal could better achieve the objects of the Commission he was
about to dissolve. That Commission, I repeat,
was concerned with issues
relating to old and new second and third tier governmental structures within the
area of the Eastern Cape.
[15] Significant also is what the President
did not state. He did not state that he was acting after consultation with all
the provincial
premiers, a necessary jurisdictional requirement for the
countrywide extension of the Unit’s powers to matters falling within
the
exclusive competence of provinces (s 2(1) proviso). I accept that it may not be
a requirement for the validity of a proclamation
for the President to recite the
jurisdictional facts necessary for the exercise of his powers and that the maxim
omnia praesumuntur rite esse acta
might, in such a case, apply. However,
where he has chosen to recite some jurisdictional facts, as he also did in
relation to the
appointment of the President of the Tribunal in par 3, it has to
be concluded as a matter of interpretation that he was not randomly
selective in
doing so and that he did not arbitrarily omit others that did in fact exist.
(
Nigel Town Council v Ah Yat
1950 (2) SA 182
(T) 187;
Attorney-General, Transvaal v Manelis
1964 (3) SA 720
(T) 725H –
726H.)
Manelis
, relying also on
Cape Coast Exploration Ltd v Scholtz
and Another
1933 AD 56
84, pointed out that the presumption arises only
where the circumstances of the particular case add some element of probability,
something lacking in this instance. If the President did not consult all the
premiers, it could not have been his intention to issue
a proclamation which
would, countrywide, encompass matter falling within the exclusive jurisdiction
of the provinces.
[16] Turning then to par 4(1) of the Proclamation, it
differs materially in its description of territorial application from the
repealed
Eastern Cape proclamation. The latter was concerned with the affairs
of “the (present) government of the Province of the Eastern
Cape”
and, in relation to matters prior to 27 April 1994, “any of the now
defunct states or the provincial authority
which exercised control and
administration over the territory which now constitutes the Province of the
Eastern Cape”. Paragraph
4(1), on the other hand, omits any reference to
the Eastern Cape and, seen in isolation, encompasses also provincial matters of
the
country as a whole.
[17] Read in the light of the constitutional
recognition of the autonomy of provinces, the scheme of the Act, the genesis of
this
Proclamation, the use of the phrase “in its place” (in this
context, in the place of the provincial Commission) as well
as the recital of
jurisdictional facts in par 1 and the omission of any reference to the other
provincial premiers, I am satisfied
that the wider interpretation cannot be
justified. An overbroad proclamation may, in any event, be liable to attack on
that ground
alone. The President’s stated intention was to act under the
proviso of s 2(2) in relation to the provincial matters of the
Eastern Cape and
it appears to me to be wrong to give a more extensive interpretation to the
Proclamation to include the affairs
of the other provinces. It follows that the
Unit did not have the necessary standing to sue the defendants and that the
Tribunal
did not have jurisdiction to hear the case.
[18] The result
may appear to be unsatisfactory but we know that Proclamation R24 was amended
shortly after the proceedings against
the defendants had been instituted.
Proclamation R72 of 11 November 1997 substituted par 4 of R24, limited the
activities of the
Unit to the Eastern Cape and specified the matters to be
investigated. Only after the judgment of the Special Tribunal was a
presidential
proclamation (R70 of 15 July 1998) issued at the behest of the
Premier of KwaZulu-Natal, covering the subject matter of this case.
Neither
proclamation has an effect on the outcome of this appeal. The same applies to
an affidavit, filed after the hearing of
the appeal, by the former head of the
Unit in purported response to a question raised by a member of this Court. It
is, obviously,
inadmissible in relation to the sole issue before us, namely the
meaning of the Proclamation. However, its ostensible object was
to establish
the fulfilment of the condition precedent set by s 2(1), viz. the prior
consultation with or the request of all the
provincial premiers for the
establishment of a unit to investigate the matters listed in the Proclamation in
their respective provinces.
This it failed to do. Instead of coming to grips
with the issue, the affidavit consists of generalities and surmise based largely
upon hearsay. Also, it would be unfair to allow the introduction of a novel
factual issue at this late stage of the proceedings.
[19] The appeal is
dismissed with costs.
____________________
L T C HARMS
JUDGE OF APPEAL
AGREE:
VIVIER ADCJ
SCHUTZ JA
CAMERON JA
MARAIS JA:
[1] In the view I take of
this matter it would not be right to express any opinion on the merits of the
decision of the Court
a quo
that the Special Investigating Unit had no
locus standi
to institute the claims which it did and the Special
Tribunal no jurisdiction to entertain the claims. I regret that I am unable
to
reconcile myself to the extraordinary procedure in which the Court
a quo
acquiesced and which, if upheld, could result in injustice to the second
defendant whose executrix was entitled to be given an opportunity
of being
heard, but was neither heard nor given any notice of what was afoot.
[2] The
contentions permitted to be raised for the first time in the appeal to the Court
a
quo were not even foreshadowed in the belated Special Plea. There was
no allegation made in it that the matters investigated fell
within the exclusive
competence of the province of KwaZulu-Natal and that the Proclamation did not
extend to encompass such matters.
The grounds upon which the Special Plea
rested were that the notice instituting the proceedings was bad because the
President had
not in terms conferred authority to sue upon the Special
Investigative Unit and that, in the absence of a cession of rights to it,
the
Unit could not sue on behalf of the institution which had allegedly suffered
damage.
[3] However, those grounds were not even considered by the Court
a
quo
. Instead, the court noted in its judgment that “the appellant
started off by addressing us on the question of whether the
Special
Investigating Unit had the jurisdiction to investigate matters in
[KwaZulu-Natal] and whether the Tribunal in consequence
had jurisdiction to hear
such matters”. It then proceeded to decide the question. This despite
the fact that a decision upholding
the contention would render void the
judgments given in respect of second defendant.
[4] The second defendant had
a judgment against him on one claim and a judgment in his favour on another. He
acquiesced in those
judgments and did not appeal. Neither did appellant
cross-appeal. The outcome of his co-defendant’s appeal could not affect
the judgments given in respect of him as long as no question of the Special
Tribunal’s jurisdiction arose. Far from any such
question having arisen,
jurisdiction of the Tribunal had been expressly admitted in the pleadings at the
trial. If any such contention
was to be raised the second defendant’s
executrix would have a direct and substantial interest in the matter and would
require,
at the very least, to be notified (if not joined), and would be
entitled to be heard if she so desired. See
Amalgamated Engineering Union v
Minister of Labour
1949 (3) SA 637
(A) at 649 and 659.
[5] What happened
before the Court
a quo
was, however unintended, an affront to one of the
most fundamental tenets of natural justice.
Audi alteram partem
. After
the conclusion of the trial, and after the delivery of judgment, the trial was
in effect re-opened at the instance of a defendant
in the absence of, and
without notice to, a co-defendant who had a judgment in his favour, to enable
the very jurisdiction of the
tribunal to be challenged. It was a challenge
which, if successful, would render void both the judgment for and the judgment
against
the absent co-defendant. And even if it could be argued that the
decision would not bind his executrix if she were to be sued in
the civil courts
and she attempted to raise a plea of
res judicata,
she would have to
establish at least that the tribunal did have jurisdiction. She would be faced
with a decision to the contrary
by a full court by which any single judge in
KwaZulu-Natal would be bound - a decision given (and this would be the most
bitter
pill of all) in a case in which the deceased was actually one of the
parties and therefore entitled to be heard. Had the issue been
raised at the
trial as it should have been, he would have had such an opportunity but he was
given none simply because his co-defendant
belatedly raised the issue on appeal
and no one took account of his executrix’s obvious interest in the
matter.
[6] It is no answer to say that there could conceivably be other
persons in other cases who might also find themselves hit by a finding
that the
Special Tribunal had no jurisdiction and that they could not all be expected to
be notified or joined. That does not excuse
a failure to give notice to or to
join a co-defendant in the self-same case where it is clear that the
co-defendant has a direct
and substantial interest in the resolution of the
point raised on appeal for the first time.
[7] If the Court
a quo
was
minded to allow the issue to be ventilated on appeal the least it should have
done was to insist upon notice being given to second
defendant’s executrix
to enable her to decide whether she wished to be heard. It is idle to speculate
whether she would or
would not have made use of the opportunity. There is no
way of knowing. I consider the proceedings before the Court
a quo
to
have been irregular and productive of potential injustice. I do not see how its
decision can be allowed to stand while second
defendant’s
executrix’s interest continues to be ignored.
[8] Strict orthodoxy
would necessitate allowing the appeal, setting aside the judgment of the Court
a quo
, remitting the appeal for rehearing before a different panel of
judges and ordering that, if the proposed attack upon the tribunal’s
jurisdiction is to be persisted in, or any other ground of appeal raised which,
if successful, would or might vitiate the judgments
given in respect of the
second defendant, notice thereof be given to second defendant’s executrix,
and she be joined and heard
if she so desires.
[9] However, there have
already been substantial costs incurred and the matter is before this Court. It
has been argued and if the
executrix of the second defendant were to be joined,
but elected to take no part in the debate, much time and money will have been
wasted. I would therefore make an order along the lines of that made by this
Court in the
Amalgamated Engineering
case,
supra
, at 663. I would
also order that a copy of this judgment be served on second defendant’s
executrix.
________________________
R M MARAIS
JUDGE OF
APPEAL