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Mkhwebane could pay 'hundreds of thousands' after damning ConCourt judgment

Jul 22 2019 16:27
Tehillah Niselow, Fin24

Public Protector Busisiwe Mkhwebane could end up paying “hundreds of thousands of rands” in legal fees after the Constitutional Court on Monday agreed with the high court she personally pay 15% of the South African Reserve Bank’s legal fees in the Absa/Bankorp matter. 

It is difficult however to estimate the exact costs and the SA Reserve Bank’s application could have run into millions, according to Natasha Moni, an attorney and director at Moni Inc. 

Legal fees are kept confidential, under client, attorney agreements.

The ConCourt found that Mkhwebane had put forward a “number of falsehoods” during litigation by the SARB against her June 2017 report which recommended that Absa Bank pay back R1.2bn of an apartheid-era bailout and that the SARB scope be widened to include economic growth. 

The report was set aside in February 2018 and the Public Protector’s office was ordered to pay 85% of the SA Reserve Bank legal costs, while she was found personally responsible for 15% of the fees. 

Personal cost orders are a “constitutionally-infused mechanism to ensure that they [public officials] act in good faith and in accordance with the law and the constitution,” the majority judgment read. 

Moni said the SARB was awarded “own costs in the matter” plus three counsel - a higher scale than “attorney and client costs”. 

“Counsel usually charge on a full day rate of 10 hours when attending at court. For instance, R6 000 per hour X 10 hours is R60 000 + VAT. This is just an indication, senior counsel or ‘silks’ may charge more than this example, " Moni said. 

“Further, counsel is usually briefed by attorneys so the costs include the attorney to, among other things, draft letters and opinions, peruse documentation and hold consultations. Also, the example does not provide for the numerous hours of preparation it would take to come before a three judge bench to argue the matter,” Moni added. 

A minority judgment, penned by Chief Justice Mogoeng Mogoeng, disagreed that Mkhwebane should be held personally liable for the fees as this could “ruin her financially and possibly shipwreck her occupation".   

What will happen now?

The winning party, in this case, the Reserve Bank will request a taxing attorney to draft a bill of costs. The taxing attorney takes everything the legal team has done and adds the work done in terms of tariffs and charges. The final amount is then demanded from the losing party, in this case, Mkhwebane.

Should the losing party not pay, then the winner can attach and execute against the loser’s property or bank accounts. Mkhwebane could enter into an agreement to pay the fee, Moni explained. 

More cost orders? 

Mkhwebane faces further financial strain with her report into the Vrede Dairy farm which was also set aside, declared unlawful, unconstitutional and invalid by the North Gauteng High Court in May. 

Both the DA and Council for the Advancement of the South African Constitution (Casac) asked the court to declare Mkhwebane personally liable for the legal fees. Judge Ronel Tolmay ruled that the costs decision would be postponed, pending the ConCourt handing down judgment on the Absa/Bankorp report. 

Casac’s executive secretary Lawson Naidoo told Fin24 they were waiting to hear from Judge Tolmay about the case, based on Monday’s precedent. Minister of Public Enterprises Pravin Gordhan will challenge Mkhwebane’s report into the so-called SA Revenue Service (Sars) rogue unit on Tuesday, in the high court.

He is also requesting she fork out the legal costs from her own pocket. 

Financial Ruin 

Advocate Paul Hoffman, a director at not for profit organisation, Accountability Now said that Mkhwebane earns a civil servant salary and she could face financial ruin. 

“She’s on a slippery slope towards insolvency because of the accumulated orders of these kinds,” Hoffman told Fin24. 

According to the Office of the Public Protector’s annual report for 2017/2018, Mkhwebane earned a total of R3.25m, however, this includes a gratuity to be paid out as a lump sum at the end of her seven years in office and her basic pay is R1.57m.

This is equal to approximately R120 000 per month, before tax and a legal costs order running into the hundreds of thousands will be difficult to pay.

Mkhwebane commenting after the ConCourt decision on Monday said she was “encouraged” by the minority judgment that was in her favour. Hoffman said, however, that a minority ruling will not have legal consequences as all lower courts are bound to follow majority judgments.

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