LITIGATION: Editorials: Edition: March / May 2020

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Rare win for Mkhwebane

Punitive costs order against prominent curator of pension funds. Court indicates disapproval of Mostert’s behavior.

Public Protector Busisi Mkhwebane desperately needed a victory. In the North Gauteng High Court, she recently had one. Unfortunately for Mkhwebane, however, it had little to do with her legal brilliance. Instead, supported by the Economic Freedom Fighters, it had much to do with the litigious gamesmanship of attorney Tony Mostert.

For a series of court applications launched and later withdrawn by Mostert, to prevent publication of a Public Protector report scathing of him and the head of what was then the Financial Services Board, Acting Justice Wanless ordered that costs be paid by Mostert in his personal capacity on the punitive attorney-andclient scale.

Through the series of actions, where two counsel were engaged by the respective sides, the award against Mostert is to include their costs. This is so that neither the Public Protector nor the EFF, joined as respondent, should be left out of pocket. The EFF was the original complainant to the Public Protector. While the bill to be paid personally by Mostert should be substantial, it’s unlikely to dent significantly the hundreds of millions of rand that he and his law firm have made from curatorship of the numerous pension funds involving alleged “surplus stripping” by one Simon Nash. The criminal trial of Nash, the individual who features in each of these funds, was interspersed by several civil actions and is about to enter its second decade. In her report, to be taken on review by the Financial Sector Conduct Authority (successor to the FSB), Mkhwebane contended that by 2011 the fees earned by Mostert and his law firm had amounted to R240m over the previous six years. The amount of fees earned subsequent 2011, she said, is not known because both Mostert and (Dube) Tshidi “steadfastly refused to make any disclosure whatsoever” (TT July – Sept ’19). Tshidi, at all material times the FSB executive officer and still a member of the FSCA interim management committee, was accused by Mkhwebane of “improprieties and/or irregularities” in his nomination of curators. Further, he had failed to discharge his regulatory duty “to properly manage the possible or perceived conflict of interest between Mr Mostert’s role as curator and the appointment of his own law firm”.

How was it that the fees of Mostert and his law firm could have run into the mega-millions of rand? The answer is indicated in the judgment. In making the order against Mostert, the court had to consider whether the nature of his “voluminous” application in this instance was “spurious and/ or vexatious”. Not only did it have no prospect for success, the court held, but the urgency had been selfcreated by Mostert. Wanless noted that the latest application by Mostert, for an award of costs against the Public Protector and the EFF amongst others, was “just one more in a long line of litigation” which had ensued between Mostert and the pension funds involving Nash: “This litigation has been arduous, particularly mean-spirited and, most importantly, expensive. It has burdened not only this court but many other courts before it.” He wanted to make an order that reflected his disapproval of Mostert’s application both in nature and manner. And since Mostert had elected to join the EFF as respondent with the Public Protector, the EFF had incurred costs for which “it is thus entitled to be compensated”. Mostert had launched the application both in his personal capacity and in his capacity as curator or co-curator of Nash-related pension funds. The court found it “difficult to understand” why these funds were joined as applicants because they had “no real interest in it” and had not filed affidavits.

The notice that the Public Protector would be carrying out an inquiry, and publishing a report, applied to Mostert only. In taking a view on whether the other applicants should share in the award against Mostert, the court agreed with the Public Protector and EFF that “the pension funds and members thereof should not be mulcted in costs”. It was in January last year that Mostert first attempted to interdict the Public Protector from publishing her findings on Julius Malema’s EFF complaint. A few months later, Mkhwebane published her report anyway.