THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

JUDGMENT

Reportable

Case No: 20567/2014

In the matter between:

THE NATIONAL TREASURY

FIRST APPELLANT
OR TAMBO DISTRICT MUNICIPALITY

SECOND APPELLANT

and

PUMLANI KUBUKELI

RESPONDENT

Neutral citation: The National Treasury v Kubukeli (20567/2014) [2015]

ZASCA  141 (30 September 2015).

Coram:
Mpati P, Mhlantla, Majiedt and Saldulker JJA and

Van der Merwe AJA

Heard:
4 September 2015

Delivered:
30 September 2015

Summary:
Constitutional law ─ rational decision-making under the rule
of law ─ investigation by the first appellant of the financial management and
internal control of the second appellant and recommendations in respect of
improvements thereto without participation of the respondent ─ founded on
reason and not arbitrary.

______________________________________________________________

ORDER
______________________________________________________________

On appeal from: Eastern Cape Local Division of the High Court, Mthatha
(Nhlangulela ADJP sitting as court of first instance):
1 The appeal is upheld.
2 There is no order as to costs of the appeal.
3 The order of the court a quo is set aside and replaced with the following:
„The application is dismissed.‟
______________________________________________________________

JUDGMENT
______________________________________________________________

Van der Merwe AJA (Mpati P, Mhlantla, Majiedt and Saldulker JJA
concurring):

[1] On 18 January 2013 the Daily Dispatch, an Eastern Cape newspaper,
carried an article containing allegations of financial irregularities in respect of
the hiring of motor vehicles by the executive mayor of the second appellant,
the OR Tambo District Municipality (the municipality). The material allegations
in the newspaper article were that within a period of two months from
approximately 4 October 2012 to 5 December 2012, the office of the
executive mayor hired luxury motor vehicles from Avis at an expense of
approximately R500 000 and that whilst so hired, two of these vehicles were
involved in accidents, resulting in liability for the municipality in the amount of
R 224 827.70.

[2] In the light hereof, the council of the municipality resolved on 30 April
2013 to request the first appellant, the National Treasury, to conduct an in-
depth forensic investigation into these allegations within 30 days. The

municipal manager conveyed this request to the National Treasury by letter
dated 3 May 2013.

[3] In response to the request, the National Treasury mandated a team of
investigators (the Treasury team) to conduct the in-depth investigation within
the period 6 May 2013 to 7 June 2013. On 10 May 2013 the Treasury team
provided the municipal manager and the speaker of the municipality with its
investigation plan. In terms of the investigation plan it was envisaged that
interviews would be conducted on 15, 16 and 17 May 2013. It was agreed that
the municipal manager and the speaker would write to the executive mayor
and the staff in his office to notify them of the investigation and to request
them to make themselves available for interviews. The office of the executive
mayor is headed by a director, Mr A M Ncube.

[4] The respondent, Mr Pumlani Kubukeli, is employed by the municipality
in the office of the executive mayor, as the latter‟s bodyguard. The issue in
this appeal is whether Mr Kubukeli was denied a right to make
representations to the Treasury team. The issue arose in the following
manner.

[5] On 14 May 2013 the municipal manager wrote to Mr Ncube informing
him of the investigation by the National Treasury and requesting him to
ensure his availability and that of all key officials in the office of the executive
mayor, including the political advisor of the executive mayor and Mr Kubukeli,
for interviews which were scheduled for 16 May 2013. Mr Ncube handed the
letter to the political advisor of the executive mayor on 15 May 2013. The
speaker also had, on the previous day, given written notice of the
investigation to the executive mayor and had requested him to co-operate and
avail himself and all the officials who were expected to attend, for the
interviews.

[6] The political advisor responded on behalf of the executive mayor by
way of a memorandum dated 15 May 2013. He complained that the office of
the executive mayor had not been informed of the council resolution to

request the investigation which, he said, „. . . may at times infringe, or border
on infringing on basic rights‟ of the executive mayor and all individuals who
work in his office. He stated that the executive mayor had instructed him to
initiate a process to gather information on the subject and that the process
would commence with a meeting of all staff of the office of the executive
mayor on 27 May 2013. He also stated that the surprise visit by the National
Treasury was premature and interfered with this process. He concluded that
the notice of the investigation by the National Treasury was inadequate for the
executive mayor and the officials sought to be interviewed to prepare their
submissions. The political advisor requested that the investigation be
rescheduled to 1 July 2013. It was thus made clear in the memorandum that
the executive mayor and the officials in his office would not participate in the
investigation on 15 to 17 May 2013. This was conveyed verbally to Mr Ncube
by the political advisor on the morning of 16 May 2013. It must be said,
however, that Mr Ncube availed himself and was interviewed by the Treasury
team.

[7] The Treasury team nevertheless continued with the investigation and
compiled a report dated 31 May 2013. Only the executive summary thereof
formed part of the record before us. The report recorded that the methodology
of the investigation was mainly to interview the administrative officials of the
municipality and the relevant service providers. It also stated that due to the
stance taken by the political advisor in his memorandum of 15 May 2013 and
the resultant unavailability of the executive mayor as well as certain officials,
the Treasury team „. . . could not obtain information for clarification of certain
findings‟.

[8] In respect of corporate governance issues, the Treasury team reported
that it viewed the current situation in the municipality to be in contravention of
the fiduciary responsibilities of the accounting officer, the municipal manager,
as there was no administrative accountability by the office of the executive
mayor to the office of the municipal manager. The Treasury team found that
financial management governance was not adhered to within the office of the
executive mayor. It concluded that the municipality contravened s 63(1) and

(2) of the Local Government: Municipal Finance Management Act 50 of 2003
(MFMA) in that vehicles were not properly maintained, accounted for and
safeguarded.

[9] In respect of Mr Kubukeli, the report contained the following:
„7.14.2 We also observed that when the VIP Protector of the Executive Mayor, Mr
Kubukeli, was the driver of the hired vehicles the cost for a period of about 5 months
was R573 073.34.
7.14.3 We observed that during the period under our investigation the hired vehicle
cost of 2 months, when Mr Kubukeli was the registered driver the cost amounted to
R575 797,25.
7.14.4 It was established that the vehicle hiring costs of the Office of the Executive
Mayor escalated significantly since Mr Kubukeli was reflected as the driver of the
hired vehicles, according to the Avis reports as the overall hiring for 7 months were
over a million.
. . .
7.15.1 It is our conclusion that the cost for the damage to all the rented vehicles
should be recovered from Mr Kubukeli as he was found to have been grossly
negligent based on the Avis report.
. . .
7.16.4 Mr Kubukeli failed to account for an amount of R8 000 paid to him as cash
advance payment for fuel usage during the period under investigation.‟

[10] The Treasury team made the following recommendations:
„9.1
The Municipal Manager should implement proper systems of control over the
financial resources, and safeguarding of assets by the officials within the Office of the
Executive Mayor.
9.2
The Municipal Manager should institute a disciplinary process against all
officials that have been found in breach of the Legislation governing the Municipality,
policies and processes.
9.3
All losses incurred due to the negligence of the officials should be recovered
from the officials concerned by the Municipal Manager.
9.4
The Municipality needs to provide for the contingent liability emanating from
the damage of the third party vehicle (Mrs Madiba) involved in the accident with Mr
Kubukeli on 7 October 2012.

9.5
The Municipality should comply with its own policy and procedures in relation
to the disposal of the redundant assets.
9.6
The Council should investigate the conduct of the Executive Mayor and
should any breach of the Code of Conduct be established then discipline the
Executive Mayor, failing which;
9.7
It is further recommended that, the Member of the Executive Council (“MEC”)
for Local Government should invoke section 106 of the Municipal Systems Act.‟
This section in essence provides that if there is reason to believe that non-
performance by or maladministration of a municipality occurred or is
occurring, the MEC must request information in respect thereof from the
municipality or designate a person or persons to investigate the matter.

[11] The report was presented to the council of the municipality at an „in
committee‟ meeting on 7 June 2013. At this meeting the council merely noted
the report. At a special meeting held on 14 June 2013, the council adopted
the report and its recommendations. It mandated the municipal manager to
implement the recommendations in respect of the disciplinary proceedings
within 30 days. It also appointed a special committee to investigate the
conduct of the executive mayor in terms of recommendation 9.6 of the
National Treasury report.

[12] Mr Kubukeli maintained that he received no notice whatsoever of the
request of the Treasury team to avail himself for an interview. He said that he
only became aware of the investigation when the report of the Treasury team
was presented to the council. There is a dispute of fact on the question
whether Mr Kubukeli attended any of the relevant meetings of the council.
However, it is not necessary to attempt to resolve this dispute, as counsel for
both the National Treasury and the municipality were content to argue the
appeal on the basis that Mr Kubukeli did not receive notice of the request for
an interview.

[13] On 12 June 2013 Mr Kubukeli launched an application in the Eastern
Cape Local Division of the High Court, Mthatha. He did not challenge any
decision of the National Treasury or the municipality. He sought an order; (a)

that the investigations conducted by the Treasury team against him without
his participation, „. . . be declared unlawful, unprocedural and unconstitutional‟
and (b) that the report of the Treasury team be declared unlawful and
unconstitutional and accordingly set aside as a nullity. Despite opposition by
the National Treasury and the municipality, the court a quo (Nhlangulela
ADJP) granted the relief claimed. The court a quo reasoned that the
investigation and the report of the National Treasury constituted administrative
action within the meaning of the Promotion of Administrative Justice Act 3 of
2000 (PAJA) and had to be set aside on review on the ground that Mr
Kubukeli had been denied the right to make representations in circumstances
where the report had impacted adversely on Mr Kubukeli‟s „right . . . to his
reputation and employment‟. It granted leave to appeal to this court.

[14] The founding affidavit of Mr Kubukeli was not a model of clarity. It
contained several passages in which reliance was placed on an alleged
infringement of his right to just and fair administrative action. But on a reading
of the founding affidavit, it must be accepted that he also relied on an alleged
breach of the rule of law. In the replying affidavit Mr Kubukeli specifically
disavowed any reliance on PAJA and stated that his application is founded on
the provisions of s 1(c) of the Constitution, which provide that the rule of law is
a founding value of our democracy. This was confirmed before us by counsel
for Mr Kubukeli, who argued that the Treasury team could not have complied
with the notion of rationality without affording Mr Kubukeli an opportunity to be
heard. In view hereof the court a quo misconceived the nature of the enquiry
and erred in finding for Mr Kubukeli on the basis of procedural unfairness in
terms of PAJA. I should add that it was in any event inappropriate to set aside
the investigation that had been completed and resulted in the report.

[15] In Pharmaceutical Manufacturers Association of SA & another: In Re
Ex Parte President of the Republic of South Africa & others 2000 (2) SA 674
(CC) para 85 Chaskalson P said the following:
„It is a requirement of the rule of law that the exercise of public power by the
Executive and other functionaries should not be arbitrary. Decisions must be

rationally related to the purpose for which the power was given, otherwise they are in
effect arbitrary and inconsistent with this requirement. It follows that in order to pass
constitutional scrutiny the exercise of public power by the Executive and other
functionaries must, at least, comply with this requirement. If it does not, it falls short
of the standards demanded by our Constitution for such action.‟ (Footnote omitted.)
See also Masetlha v President of the Republic of South Africa & another 2008
(1) SA 566 (CC) para 80-81.

[16] There is no general duty on decision-makers to consult interested
parties for a decision to be rational under the rule of law. See Minister of
Home Affairs & others v Scalabrini Centre & others 2013 (6) SA 421 (SCA)
para 67 and 72. But there are circumstances in which rational decision-
making requires consultation with interested parties. The cases of Albutt v
Centre for the Study of Violence and Reconciliation & others 2010 (3) SA 293
(CC) and Scalabrini provide instances hereof.

[17] In Albutt, the President announced a special dispensation for
applicants for pardon who claimed that they were convicted of offences that
were politically motivated. What was in issue there was whether the decision
to exclude the victims of these crimes from participating in the special
dispensation process, was irrational. Ngcobo CJ confirmed that under the rule
of law the test to be applied was whether the President‟s decision to
undertake the process without affording the victims the opportunity to be
heard, was rationally related to the achievement of the objectives of the
process. If not, the decision could not pass constitutional muster. The court
held that the objectives of the special dispensation process were nation-
building and national reconciliation.  It found that the participation of victims
was crucial and fundamental to these twin objectives. The court therefore
concluded that it could not be said that the exclusion of the victims from the
special dispensation process for pardon was rationally related to the
achievement of its objectives. In addition, the court held that in his address
announcing the special dispensation, the President recognised that victim
participation was the only rational means to contribute towards national

reconciliation and national unity. Subsequent disregard of victim participation
without any explanation, so the court held, was therefore irrational.

[18] In Scalabrini, the director-general of the Department of Home Affairs
took a decision to close a refugee reception office in Cape Town. The purpose
of the office was to receive, process and determine applications for asylum.
The decision was challenged on review as irrational for want of consultation
with
interested
parties.
After
quoting
the
aforesaid
paragraph
in
Pharmaceutical Manufacturers, Nugent JA described the nature of the enquiry
in the following terms:
„But an enquiry into rationality can be a slippery path that might easily take one
inadvertently into assessing whether the decision was one the court considers to be
reasonable. As appears from the passage above, rationality entails that the decision
is founded upon reason ─ in contradistinction to one that is arbitrary ─ which is
different to whether it was reasonably made. All that is required is a rational
connection between the power being exercised and the decision, and a finding of
objective irrationality will be rare.‟ (Footnote omitted.)

[19] The director-general was pertinently aware that there were a number of
organisations, including the Scalabrini Centre, with experience and special
expertise in dealing with asylum seekers in Cape Town. A representative of
the director-general had acknowledged the necessity for consultation with
these organisations and had specifically undertaken to consult with them on
any proposal to close the Cape Town office. Against this background, the
court was driven to infer that the director-general‟s failure to hear what those
organisations might have to say before deciding to close the Cape Town
office, was not founded on reason and was arbitrary.

[20] The judgment in Du Preez & another v Truth and Reconciliation
Commission 1997 (3) SA 204 (A), to which we were referred by counsel for
Mr Kubukeli and upon which the court below relied, stands in contrast to these
decisions. The Truth and Reconciliation Commission (TRC) and its
committees were established by the Promotion of National Unity and
Reconciliation Act 34 of 1995. Section 30(2) of this Act provided that if during

any investigation by or any hearing before the TRC or any of its committees,
any person is implicated in a manner which may be to his or her detriment or
the TRC or the committee contemplates making a decision which may be to
the detriment of a person who has been so implicated, such person shall be
afforded an opportunity to submit representations or to give evidence at the
hearing before the TRC or the committee. For present purposes it suffices to
deal with the case of the first appellant in Du Preez. The first appellant in fact
did receive written notification that he would be implicated in evidence before
the TRC‟s committee on human rights violations. However, the first appellant
received the notice on Saturday, 13 April 1996, in respect of a hearing that
would commence on Monday, 15 April 1996. The notice made reference to
extremely serious allegations against the first appellant, but did so in very
scant and vague terms. The question was whether the notice to the first
appellant was reasonable and timeous and contained sufficient particulars to
enable him to know what the case was all about. Corbett CJ found the answer
to the question in the common law principle of natural justice, encapsulated in
the maxim audi alteram partem. It was not in dispute that this principle was
applicable in the circumstances of the case. The court found that in the
circumstances the notice was neither reasonable nor timeous nor contained
sufficient particularity. Du Preez therefore dealt with a fundamentally different
issue, namely the content of an established right to be heard.

[21] The English case of Re Pergamon Press Ltd [1970] 3 All ER 535 (CA),
referred to in Du Preez, is to the same effect. There the inspectors appointed
to conduct an investigation into the affairs of a company recognised the right
of the directors of the company to a fair opportunity to be heard, but the
directors wanted more. They sought access to transcripts of evidence and
other documents and claimed the right to cross-examine witnesses. There
too, the issue was the content of the admitted right of the directors to be heard
and on this issue the court found for the inspectors.

[22] Section 216 of the Constitution provides that national legislation must
establish a national treasury. The National Treasury was accordingly
established by s 5 of the Public Finance Management Act 1 of 1999. Section

2 of the MFMA provides that the object of the MFMA is to secure sound and
sustainable management of the fiscal and financial affairs of municipalities
and municipal entities. It seeks to achieve this object by establishing norms
and standards and other requirements for, inter alia, ensuring transparency,
accountability and appropriate lines of responsibility in the fiscal and financial
affairs of municipalities and municipal entities and the management of their
revenues, expenditures, assets and liabilities and the handling of their
financial dealings.

[23] In terms of s 5(1) of the MFMA the functions of the National Treasury
include the promotion of the objects of the MFMA as stated in s 2 thereof.
Section 5(2)(d) of the MFMA provides that in order to fulfil its functions, the
National Treasury has the power to investigate any system of financial
management and internal control in any municipality and to recommend
improvements thereto. This is the power that the National Treasury exercised
through the Treasury team. Thus, the question is whether on the particular
facts of this case, the conducting of the investigation and the making of
recommendations to the municipality without the participation of Mr Kubukeli,
were rationally related to the purpose for which the power in s 5(2)(d) of the
MFMA was given.

[24] As I have said, the National Treasury exercised the public power to
investigate any system of financial management and internal control of the
municipality and to recommend improvements, with the object of securing
sound and sustainable management of the fiscal and financial affairs of the
municipality. The purpose for which the power was given was not to
investigate the conduct of any particular person and to make final findings in
respect thereof. What a particular person did or did not do, was incidental to
the object of the power. It follows that the request that Mr Kubukeli and others
attend interviews, did not constitute recognition of a right to be heard, but was
intended to assist the National Treasury to achieve its purpose. The Treasury
team was in no way to blame for the absence of that assistance.

[25] Viewed objectively, the purpose for which the power was given, was
achieved. The main import of the investigation and the report was to identify
shortcomings in the financial management and internal control of the
municipality and to recommend improvements thereto. Unlike the decisions in
Albutt and Scalabrini, the National Treasury made no final or binding decision.
The municipality was under no obligation to accept any of the
recommendations.

[26] Although some loose language may have been used in this regard, it is
clear in the context of the report, that what was said in respect of Mr Kubukeli
(and other officials) was in the nature of prima facie findings. These findings
are clearly not binding on Mr Kubukeli and could be challenged in any
subsequent proceedings. Paragraph 7.16.4 of the report must be seen in this
light, namely that in the absence of an explanation by Mr Kubukeli the
Treasury team found no record of account for the amount of R8 000 advanced
to Mr Kubukeli. Most importantly, objectively it was beyond doubt that if the
recommendations in respect of disciplinary proceedings or recovery of losses
were to be implemented, the implementation would take place in terms of
processes that would afford Mr Kubukeli a full opportunity to present his case.

[27] I
therefore
conclude
that
the
investigation,
report
and
recommendations of the National Treasury without the participation of Mr
Kubukeli, were founded on reason and were not arbitrary or irrational. It
follows that the appeal must succeed.

[28] Mr Kubukeli sought to assert what he bona fide perceived to be a
constitutional right against organs of State. His litigation was neither frivolous
nor vexatious. For the reasons set out in Biowatch Trust v Registrar, Genetic
Resources & others 2009 (6) SA 232 para 23, the general rule in these
circumstances is that if the private party loses, each party should bear its own
costs. I can find no reason to depart from the general rule in this matter, both
in respect of the costs of appeal and in the court below.

[29] In the result the following order is issued:
1 The appeal is upheld.
2 There is no order as to costs of the appeal.
3 The order of the court a quo is set aside and replaced with the following:
„The application is dismissed.‟

_______________________
C H G VAN DER MERWE
ACTING JUDGE OF APPEAL

APPEARANCES:
For 1st Appellant:

B R Tokota SC
Instructed by:
The State Attorney, Pretoria
The State Attorney, Bloemfontein

For 2nd Appellant:

V Notshe SC (with him L L Sambudla)

Instructed by:

Dayimani Sakhele Inc, Mthatha

Eugene Attorney, Bloemfontein

For Respondent:

S Budlender
Instructed by:
Mvuzo Notyesi Inc, Mthatha
Bokwa Attorneys, Bloemfontein
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

From: The Registrar, Supreme Court of Appeal
Date: 30 September 2015
Status: Immediate
THE NATIONAL TREASURY v KUBUKELI
Please note that the media summary is intended for the benefit of the media and does not
form part of the judgment of the Supreme Court of Appeal

1.
On 18 January 2013 the Daily Despatch newspaper carried an article containing
allegations of financial irregularities in the office of the executive mayor of the second
appellant, the OR Tambo District Municipality (the municipality). In the light hereof, the
council of the municipality requested the first appellant, the National Treasury, to conduct a
forensic investigation into these allegations. The National Treasury mandated a team of
investigators (the Treasury team) to conduct the investigation. The executive mayor was
notified of the investigation and requested to make himself and the staff in his office
available for interviews by the Treasury team. The respondent, Mr Kubukeli, is employed by
the municipality in the office of the executive mayor, as the latter’s bodyguard. The political
advisor of the executive mayor responded to the request on his behalf. He made it clear that
the executive mayor and his staff would not participate in the investigation.

2.
The Treasury team nevertheless continued with the investigation. It compiled a report
containing recommendations to the municipality. The recommendations dealt mainly with
improvements to the financial management and internal control of the municipality. The
recommendations, however, included that disciplinary proceedings be instituted against Mr
Kubukeli and that losses suffered by the municipality be recovered from him.

3.
Mr Kubukeli maintained that he received no notice of the request for an interview.
The National Treasury and the municipality accepted this assertion for purposes of argument.
Mr Kubukeli launched an application in the Eastern Cape Local Division of the High Court,
Mthatha in which he sought an order that the investigation of the Treasury team and its report
be declared unlawful and unconstitutional and be set aside. The high court granted the order
sought, but granted leave to appeal to the Supreme Court of Appeal (SCA).

4.
Today the SCA upheld the appeal. The SCA held that the high court misconceived
the nature of the enquiry and erred in granting the relief claimed by Mr Kubukeli. The
enquiry was whether under the rule of law the conducting of the investigation and the making
of recommendations to the municipality without the participation of Mr Kubukeli, were
rationally related to the purpose for which these powers were given to the National Treasury.
The SCA held that the investigation, report and recommendations of the National Treasury
without the participation of Mr Kubukeli, were founded on reason and were not arbitrary or
irrational.

--ends--