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Legal Costs Orders - An Underused Tool For Accountability - Part II: The Present And Future

This brief - Part II in a two-part series - examines ongoing litigation where high-ranking public officials face the prospect of being ordered to pay legal costs in their personal capacities.
Legal Costs Orders - An Underused Tool For Accountability - Part II: The Present And Future

Part I of this brief series explored recently decided case law where orders were handed down holding public office-bearers personally liable for their impugned conduct in the context of litigation. The purpose of this Part II is to examine cases currently before the courts where such orders are contemplated.

And what cases they are - aimed squarely at high-ranking holders of political office, including a current member of Cabinet, Ms Bathabile Dlamini, and the former President of South Africa, Mr Jacob Zuma, both of whom are now fighting to avoid personal liability. Unsurprisingly so, given the potentially ominous financial and political consequences of such a court order.[i]

Mr Jacob Zuma

The genesis of Mr Zuma’s potential liability for legal costs in his personal capacity is the judgment in President of South Africa v The Office of the Public Protector and Others[ii]. This case was the former President’s attempt to fire a salvo at the remedial action proposed by Public Protector – the appointment of a Commission of Inquiry - in her report State of Capture.

After finding that Mr Zuma was not entitled to the relief that he sought in terms of the review, the High Court went on to consider costs. On this issue, the Court did not hold back in criticising Mr Zuma’s actions. It referred to the

“reckless misconception underpinning the [former] President’s application seeking to review and set aside the remedial action. The review application was a clear non-starter and the [former] President was seriously reckless in pursuing it as he has done. His conduct falls far short of the high standard expressed in section 195 of the Constitution”.

The word “reckless” appeared again a paragraph later along with the descriptor “ill-advised” when recounting the former President’s conduct in launching the review application against the Public Protector’s decision. In doing so, the Court found that Mr Zuma had failed to support the Public Protector, a constitutional institution, despite his being afforded an opportunity to confront and address the allegations against him. As such, he was found to have acted unreasonably in the circumstances. Therefore, the Court found, a personal costs order was justified and should be granted against him.

The Court’s order as to costs was sharply decisive. Without offering any further opportunity for representations, it ordered Mr Zuma to pay the costs of the application in his personal capacity on a punitive scale.

A week after the ruling, while Mr Zuma was still in office as President, he launched an appeal against the High Court’s cost order[iii]. In setting out grounds for appeal, Mr Zuma referred to Black SashTrust v Minister of Social Development and Others[iv] (“Black Sash”), emphasising how the Constitutional Court had stated that where costs orders are concerned “potentially affected parties should be joined in the proceedings in their personal capacities and given an opportunity to explain their conduct in relation to each of these issues”. He therefore argued that the Court had erred in law by not doing either of these before making its order.

Mr Zuma subsequently resigned his position on 14 February 2018, after which President Cyril Ramaphosa was inaugurated as President. On 6 April 2018, President Ramaphosa’s lawyers withdrew the appeal against the cost order against Mr Zuma, leaving him in a precarious position of having to fund his appeal out of his own pocket[v].

If Mr Zuma’s appeal fails, he will liable for approximately R10 million in legal costs[vi]. In deciding whether to continue with the appeal, something that must have weighed on his mind is the Democratic Alliance’s judicial review of a “deal” Mr Zuma concluded in 2006 to the effect that the State would pick up his legal costs[vii]. If the application succeeds, it could result in an order that he repay money the State paid on his behalf in defending cases that concerned him in his personal capacity. This is a daunting prospect, given Justice Minister Michael Masutha’s disclosure to Parliament that Mr Zuma’s legal fees during his time in office ran to approximately R24 million.[viii]

Mr Zuma’s situation is interesting. Considering the grounds raised on appeal against the personal costs order in light of recent case law as discussed in Part I of this brief series, there may well be a basis upon which the appeal can succeed: he was not afforded an opportunity to argue reasons as to why he should not be held liable in a personal capacity. This raises a question of whether a special, higher standard of conduct is expected of a person in the position of President which would override or reduce generally accepted requirements to be adequately heard – one which no doubt will be answered when the appeal is decided.

Ms Bathabile Dlamini

The Constitutional Court is in the process of considering whether a costs order should be made against Ms Bathabile Dlamini, the current Minister of Women in the Presidency, in her personal capacity. Dlamini’s potential liability comes about due to her former role as Minister of Social Development and her oversight over the social assistance debacle giving rise to the judgment in AllPay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer of the South African Social Security Agency and Others (“AllPay”)[ix] and a number of other related judgments.

In one such judgment, Black Sash, the Constitutional Court issued an order that called upon Ms Dlamini to show cause why she should not be joined to the proceedings in her personal capacity and why should not be made to pay the costs of application out of her own pocket. The Court highlighted that Ms Dlamini, as Minister, was ultimately responsible to ensure that SASSA fulfils its functions. Despite this, attempts made to elicit evidence as to what steps she took after the second AllPay judgment were fruitless. The Court went on to state that:

Given this chain of responsibility, there may thus be no grounds, in the end, for considering whether any individual officials of SASSA should be mulcted, personally, in costs. The office-holder ultimately responsible for the crisis and the events that led to it is the person who holds executive political office. It is the Minister who is required in terms of the Constitution to account to Parliament. That is the Minister, and the Minister alone.

With this foundation laid, the Court concluded that more scrutiny was required but only after the joining of affected officials in their personal capacities so that they may provide an account of their involvement to the Court. Eventually, the Court joined Ms Dlamini in her personal capacity. However, disputes of fact arose between the affidavits provided by Ms Dlamini and by two officials – the CEO of SASSA and the deputy director-general of the Department for Social Development (both of whom have since resigned their posts). In order to get to the bottom of these disputes of fact, the Court appointed retired judge Bernard Ngoepe to conduct an inquiry in terms of section 38 of the Superior Courts Act[x]. The Court honed in on a number of specific questions that Ngoepe J was required to inquire into and report on to the Court.

The inquiry was extensive – oral evidence was heard between 22 January and 19 March 2018 – during which Ms Dlamini and the two officials gave testimony. Ms Dlamini was given the opportunity to make written submissions as well, including one made after Ngoepe J filed his report[xi] setting out his findings on 7 May 2018. It appears that one ground that Ms Dlamini has advanced in her defence against a costs order is that the Constitution envisages that it is the National Assembly, and not the courts, who are responsible to hold members of Cabinet accountable for their conduct in office.[xii]

By ordering this inquiry, the Court had given Ms Dlamini more than ample opportunity to present her version of events and motivate to the Court why she should not be held liable in her personal capacity.

It is now for the Court to consider all the evidence before it along with the findings of Ngoepe J and come to a conclusion on this important question: whether Ms Dlamini should be made to pay what must by now be the mammoth costs bill racked up in the SASSA debacle, and if so, the extent of her liability.[xiii] A personal costs order on this scale is unprecedented, and would no doubt be a wakeup call for any official whose conduct could potentially leave them in a similar position.

Can liability be extended to legal advisors?

Thus far, the focus has been on personal liability of public officials. But is there scope to go even further by asking whether legal advisors can be penalised on the basis of counsel provided to their clients and upon which their clients subsequently acted. For instance, should lawyers be held liable for legal costs where they advise their clients to make use of the so-called “Stalingrad defence” style of litigation, where matters are endlessly frustrated and sometimes stalled in pursuit of various points of procedure (many of which are ultimately proven to be without merit and dismissed)?

This is a difficult question. Before imputing such liability, consideration should be afforded to the various obligations and ethical duties that lawyers owe. These include obligations to their client to represent them to the best of their ability within the confines of the law, as well as duties held as officers of the court to uphold and respect the law. Recourse for a failure to meet these standards generally lies with complaints to professional bodies such as the Law Society (in the case of attorneys) or the relevant Bar (in the case of advocates).

The conduct of a legal advisor came under scrutiny in a case discussed in Part I of this brief series, Westwood Insurance Brokers (Pty) Ltd v eThekwini Municipality and Others[xiv]. The Court called upon the Municipality’s lawyer to explain her conduct in opposing an interdict preventing the unlawful tender award from being implemented. She stated that her clients had instructed her that the tender award was urgent and the delay in awarding the tender had put the Municipality in a dangerous predicament. This caused her to oppose the urgent application without interrogating the merits of doing so. The Court considered that although she was under significant pressure to oppose, once better information came to light, she withdrew the application. While it did criticise the attorney’s dismissive attitude towards the non-compliance with a clause of the tender as flippant and irresponsible, it absolved her from any liability.

The door on lawyers’ personal liability for costs was by no means closed by this finding. However, this remedy would be most unusual – lawyers act on their clients’ instructions, and ultimately the client is responsible.

Conclusion

Balance needs to be struck when awarding costs orders in a personal capacity. It should be viewed as an extraordinary remedy, invoked where there is wilful malfeasance or an inexcusably high degree of negligence. Whether an official’s conduct meets these criteria should be established on evidence and after having given that person an opportunity to explain their conduct. But once the court is satisfied that grounds for such an order exist, there should be no compromise on meting out severe consequences.

This remedy could well be a way forward to prevent office-bearers from embarking on frivolous litigation or the defence of cases where there are no prospects of success – where the apparent (if not stated) aim is not only delaying the inevitable, but also of placing additional financial pressure on other parties who do not have access to state funding. It could force them – under pain of pecuniary cost - to be more considered about their decisions regarding litigation. If used properly, it can be an effective means to ensure officials act diligently in performing their duties – and in so doing, fortify the constitutional project.

Cherese Thakur
Legal Researcher

cherese@hsf.org.za


[i]Political consequences are no longer relevant to MrZuma, however, since he resigned his position as President, and no longer holds political office.

[ii] 2018 (2) SA 100 (GP), [2017] ZAGPPHC 747.

[iii] The appeal as filed with the court can be found at https://www.scribd.com/document/367755216/Zuma-application-leave-to-appeal#download&from_embed (accessed 17 April 2018).

[iv] 2017 (3) SA 335 (CC), [2017] ZACC 8.

[v] Maughan “Zuma instructs lawyers to challenge R10 million State Capture order against him” Business Day accessed at https://www.timeslive.co.za/politics/2018-04-18-zuma-instructs-lawyers-to-challenge-r10m-state-capture-costs-order-against-him/ on 24 April 2018.

[vi] Maughan “Jacob Zuma to fight attempt to cut his legal funding” Business Day accessed at https://www.businesslive.co.za/bd/national/2018-04-17-jacob-zuma-to-fight-attempt-to-cut-his-legal-funding/ on 17 April 2018.

[vii]Madia “State attorney had no authority to oblige taxpayers to pay Zuma's legal fees – DA argues in court papers” News24 accessed at https://www.news24.com/SouthAfrica/News/state-attorney-had-no-authority-to-oblige-taxpayers-to-pay-zumas-legal-fees-da-argues-in-court-papers-20180323 on 22 May 2018.

[viii] Gerber “Justice Dept paid R24m for Zuma’s legal costs - Masutha” News24 accessed at https://www.news24.com/SouthAfrica/News/justice-dept-paid-r24m-for-zumas-legal-costs-masutha-20180417 on 17 April 2018.

[ix] 2014 (1) SA 604 (CC), [2013] ZACC 42.

[x] 10 of 2013. Section 38(1) provides that:

(1) The Constitutional Court and, in any civil proceedings, any Division may, with the consent of the parties, refer—

(a) any matter which requires extensive examination of documents or a scientific, technical or local investigation which in the opinion of the court cannot be conveniently conducted by it; or

(b) any matter which relates wholly or in part to accounts; or

(c) any other matter arising in such proceedings,

for enquiry and report to a referee appointed by the parties, and the court may adopt the report of any such referee, either wholly or in part, and either with or without modifications, or may remit such report for further enquiry or report or consideration by such referee, or make such other order in regard thereto as may be necessary or desirable.

[xii]Thamm “BathabileDlamini says only Parliament can hold ministers accountable, not courts” Daily Maverick accessed at https://www.dailymaverick.co.za/article/2018-05-14-bathabile-dlamini-says-only-parliament-can-hold-ministers-accountable-not-courts/#.WvwZp4iFPIU on 16 May 2018.

[xiii] It bears noting that Ms Dlamini potentially faces yet another costs order in her personal capacity in relation to her service as Minister of Social Development: In an order granted on 23 March 2018 in response to an application by SASSA requesting an extension of the suspension of the declaration of invalidity, the Constitutional Court (after granting the extension) included an order calling upon Ms Dlamini and the current CEO of SASSA to show cause why they should not be liable in their personal capacities for the costs of that application.

[xiv] [2016] ZAKZDHC 46.