Myeni v Organisation Undoing Tax Abuse and Another; Organisation Undoing Tax Abuse and Another v Myeni and Another (15996/2017) [2020] ZAGPPHC 779 (22 December 2020)

IN

THE HIGH COURT OF SOUTH AFRICA

(GAUTENG DIVISION, PRETORIA)

Case number: 15996/2017

Date:

In the matter between:

D

C

MYENI

Applicant

vs

ORGANISATION

UNDOING TAX ABUSE

First Respondent

SOUTH

AFRICAN AIRWAYS PILOTS

ASSOCIATION

Second Respondent

and

ORGANISATION

UNDOING TAX ABUSE

First Applicant

SOUTH

AFRICAN AIRWAYS PILOTS

Second Applicant

ASSOCIATION

D C MYENI Respondent

JUDGMENT

TOLMAY J:

INTRODUCTION

[1] The applicant (“Ms Myeni”) filed an application for leave to appeal the order handed down by this court on 27 May 2020. The respondents (OUTA and SAAPA, will for convenience sake, collectively be referred to as “OUTA”) on the other hand brought an application in terms of section 18(2) and 18(3) of the Superior Courts Act 10 of 2013 (the “Superior Courts Act”) for interim enforcement of the court order granted by this court. In the alternative OUTA launched a constitutional challenge to section 18 of the Superior Courts Act, to the extent that if this court should find itself precluded from being able to grant an interim enforcement order, in the light of the wording of section 18.

[2] These applications were heard on 19 November 2020. On 17 November 2020 an interlocutory application was launched on Ms Myeni’s behalf to seek leave to introduce newly acquired evidence, which according to her was extremely relevant to the issues to be adjudicated on by this court.

[3] I will first deal with the interlocutory application, then with the application for leave to appeal and lastly with the application in terms of section 18 of the Superior Courts Act.

[63] Ms Myeni argued that in the light of the fact that this Court made no finding that she misappropriated any funds, her continuing to act as a director of companies poses no threat to the public. One needs only to consider the harm done to SAA to realise the fallacy of this argument. This points towards a rather simplistic approach and disregards the importance of directors, and their obligation to fulfil their fiduciary duties, especially when serving at a SOE. It is not only the misappropriation of funds, but failure to comply with fiduciary duties that pose a threat to companies and in the case of a SOE to the public at large. Her failure to comply with those duties is recorded in the judgment and is supported by a perusal of the evidence as reflected in the transcript. This Court found, based on the evidence, that Ms Myeni was reckless in the execution of her duties and pointed out various instances of dishonesty in affidavits filed by her.[32] Dishonesty and recklessness in my view must also constitute exceptional circumstances, to enforce the court order in the meantime.

[64] I agree with OUTA that public interest demands that there be swift and effective remedies when maladministration and mismanagement is brought to light. In Ntlemeza[33] the importance of public interest was also emphasized and led to the court order being enforced.

[65] Ms Myeni at this stage remains a director of Centlec, a SOE, as such Centlec is subject to the same constitutional and statutory obligations as SAA. Ms Myeni has illustrated her inability to comply with these obligations and as a result irreparable harm to yet another SOE could result if she should be allowed to continue in her position as a director until all appeal procedures have been exhausted.

[66] Ms Myeni as a point in limine raised the point that Centlec should have been joined as a party to these proceedings. The principles pertaining to joinder were dealt with in this Court’s judgment on the joinder issue[34] and will not be repeated herein. The interim operation of the delinquency order will only indirectly effect Centlec and the other

companies she is a director of and as such does not meet the requirements of joinder. Interestingly enough she does not ask for

the joinder of all the other companies she still is a director of.

[67] Ms Myeni stated that there have not been any complaints about her actions at Centlec, this is however not the point, the fact is that she proved herself to be unfit to act as a director. When one considers section 162(5) of the Companies Act it is clear that a person having been declared delinquent may not serve as a director of a company, that includes any company, the fact that Centlec has thus far not suffered any harm is of no consequence.

[68] Her submission that Centlec has been performing well and has received unqualified audit reports for the last four years is thus irrelevant. OUTA in any event disputes her submissions and points out that the Auditor-General has found wasteful and irregular expenditure in the amount of R231,000,000.00. In my view however, the success or not of Centlec should not be the yardstick that is applied, but the suitability of Ms Myeni to act as a director, in the light of what was revealed during the evidence in this case as discussed in the judgment,[35] she was disqualified to act as a director, especially of a SOE. She also remains a director of four other companies, which broadens the scope of potential harm.

[69] As outlined in both the founding and replying papers, Ms Myeni previously did not reveal her role at Centlec and the remuneration

she received as a director. She claimed under oath, that she was “unemployed”, “do[es] not earn any income” and that she “do[es] not hold any position of directorship that is of interest to [the applicants]”

[70] I am of the view that the public will suffer irreparable harm if the court order is not implemented pending the completion of all the appeal processes. Mr Mpofu (SC) was clear in his argument that appeal procedures will continue and therefore there is no question that this will not be the end of litigation.

[71] The next test is whether OUTA proved that Ms Myeni will not suffer irreparable harm. She relies on the potential loss of income from Centlec as a ground for such potential harm. Ironically in the papers before this court she stated that this income was merely a “stipend very minimal”. In any event temporary loss of income from a public institution does not constitute irreparable harm as envisaged in the Act.[36] It must be noted that the loss of income from Centlec is the only income she states that she will be unable to earn. She expressly

stated in her affidavit that she has no intention of taking on any other directorships pending the finalisation of her appeal. It is preposterous that she attempts to rely on the income she initially did not reveal to the court to persuade the court that she will suffer irreparable harm if an enforcement order is granted.

[72] As a result OUTA did prove that she will suffer no irreparable harm if the court’s order is enforced pending the appeal process.

[73] A consideration of the judgment and the evidence enforces the conclusion that Ms Myeni’s prospects of success on appeal is weak[37] and this contributes to the conclusion that the order should not be suspended.

[74] In conclusion OUTA proved exceptional circumstances of irreparable harm to the public at large and that Ms Myeni will not suffer irreparable harm. As a result immediate enforcement of the court order, pending the finalisation of appeal processes should follow.

[75] OUTA argued that section 18(2) and 18(3) is unconstitutional as it removes judicial discretion, and as a result breaches the principle of separation of powers. This was raised only in the alternative, as a result anything this court states about this issue is obiter.

[76] As far as it may be relevant, despite the strict criteria that section 18 introduced for an order not to be suspended, the SCA in Ntlemeza,[38] illustrated convincingly that the courts will still be able to interpret the section in such a way that constitutional muster will be met and as such judicial discretion, will remain. I am accordingly of the view that section 18(2) and 18(3) will meet constitutional

muster.

[77] I must point out however that the wording of section 18(4) is, in my view, intemperate and shows a remarkable lack of insight in the judicial process by the legislature. When preparing and formulating legislation, restraint must be used in formulating legislation in such a manner that it ensures proper application and interpretation, with due deference to the separation of powers. The use of words like “immediately records its reasons” and “the court hearing such an appeal, must deal with it as a matter of extreme urgency” are undesirable and may result in interference with judicial discretion. In practice the urgency or not, falls within the domain of the presiding judge and will depend on the facts of the case. This may indeed result in a breach of separation of powers and a limitation of judicial discretion.

COSTS

[78] OUTA seeks a punitive costs order in relation to all the applications. I am of the view that such an order is not warranted as Ms Myeni merely exercised her right to apply for leave to appeal and should not be burdened with a punitive costs order, despite the granting of such an order in the judgment. In so far as she was found to be dishonest and reckless and did untold harm to SAA, the punitive costs order granted, already indicated the court’s displeasure with her actions and she should not be punished twice for the same actions.

[79] I make the following order:

1. The application in terms of rule 6(11) to allow further evidence is dismissed with costs, on a party and party scale;

2. The application for leave to appeal is dismissed with costs, on a party and party scale;

3. The application in terms of section 18 for interim enforcement of the court’s order as set out in the judgment of 27 May 2020 is granted; and the order granted will be immediately enforceable pending the finalisation of all appeal processes.

4. All costs to include the costs of three counsel, wherever and to the extent that they may have been employed.

R G TOLMAY

JUDGE OF THE HIGH COURT,

PRETORIA

DATE OF HEARING:

19 & 20 NOVEMBER 2020

DATE OF JUDGMENT: 22 DECEMBER 2020

ATTORNEYS FOR APPLICANT/RESPONDENT: MABUZA ATTORNEYS

ADVOCATE FOR APPLICANT/RESPONDENTS: ADV D MPOFU (SC)

ADV

N BUTHELEZI

ADV N KEKANA

ATTORNEYS FOR RESPONDENT/APPLICANT: JENNINGS INC

ADVOCATE FOR APPLICANT/RESPONDENT: ADV C STEINBERG

ADV McCONNACHIE

ADV

N KAKAZA

[1] [2004] ZACC 20; 2005 (2) SA 359 (CC). See also Colman v Dunbar 1933 AD 142, Shein v Excess Insurance Company Ltd 1912 AD 418, Jones v MBNA International Bank [2000] EWCA 514 , Prince v President of Cape Law Society 2001 (2) SA 388 (CC) at para 21, Road Accident Fund Appeal Tribunal v Malan and Others [2014] ZAGPPHC 33.

[2] [2014] ZAGPPHC 33

[3] Ibid.

[4][2004] ZACC 20; 2005 (2) SA 359 (CC) at paras 41 – 43. See also Allpay Consolidated Investment Holdings (Pty) Ltd and others v Chief Executive Officer, South African Social Security Agency and others 20 14 (1) SA 604 CC at para 94, Shein v Excess Insurance Company Ltd 1912 AD p 428 - 429

[5] Jones v MBNA International Bank [2000] EWCA 514.

[6] Ibid at para 52, Colman v Dunbar 1933 AD 142.

[7] Mothuloe Incorporated Attorneys v The Law Society of the Northern Provinces & another [2017] ZASCA 17 at para 18, Notshokovu v S [2016] ZASCA 112 at para 2: “[a]n appellant … faces a higher and stringent threshold, in terms of the Act compared to the provisions of the repealed Supreme Court Act 59 of 1959.”

[8] [2020] ZAGPPHC 311 at para 22.

[9] Organisation Undoing Tax Abuse NPC and Another v Myeni and Another [2019] ZAGPPHC 957.

[10] OUTA judgment delivered 28 January 2020

[11] Supra at fn 11.

[12] The Prudential Insurance Company Limited v Commissioner for Her Majesty’s Revenue and Customs [2016] EWC 376.

[13] Organisation Undoing Tax Abuse and Another v Myeni and Others (15996/2017) [2020] ZAGPPHC 169 at paras 115, 116, 117, 118, 121,

232 and 234.

[14] Ibid.

[15] Ibid at para 155.

[16] Ibid at para 176.

[17] Ibid paras 201 – 212.

[18] Mwelase v Director General for the Department of Rural Development and Land Reform [2019] ZACC 30 at para 68, Trencon Construction (Pty) Ltd v IDC 2015(5) SA 245 (CC) paras 88 – 90.

[19] President of the RSA v South African Rugby Football Union [1999] ZACC 9; 1999 (4) SA 147 (CC) at para 48.

[20] Bernert v ABSA Bank Ltd 2011 (3) SA 92 (CC) at para 33

[21] 2013 SCC 30, [2013] S.C.R 357 para 37.

[22] 2011(1) SA 267 (SCA).

[23] Ntlemeza v Helen Suzman Foundation and Another 2017 (5) SA 402 (SCA) at para 35.

[24] 2018(3) SA (SCA) at paras 14 – 18.

[25] Supra fn 25 at para 28 – 30.

[26] Supra fn 25, at para 33.

[27] Supra fn 25, at para 37.

[28] 2014(3) SA 189 para 16.

[29] 2002(6) SA 150 (C).

[30] Supra fn 25, at para 37.

[31] Supra fn 25, at para 39.

[32] Supra at fn 15.

[33] Supra at fn 25, at para 45.

[34] Supra at fn11.

[35] Supra at fn 15.

[36] Ngaka Modiri Molema District Municipality v Chairperson North West Province Executive Committee & Others [2014] ZACC 31, 2015 BCLR 72 (CC) at paras 8 – 10, Road Traffic Management Corporation v Tasima (Pty) Limited; Tasima (Pty) Limited v Road Traffic Management

Corporation [2020] ZACC 21at paras 130 -131.

[38] Supra at fn 25.