Public enterprises minister Pravin Gordhan has been ordered by the Pretoria high court to take a decision on an application by Mango’s business rescue practitioner for the sale of the airline within 30 days.
If he fails to do so, the business rescue practitioner can legitimately assume in terms of the law the sale has been approved.
Acting judge Moses Phooko found that Gordhan’s failure — lasting several months — to make a decision in terms of the Public Finance Management Act (PFMA) was “unlawful and constitutionally invalid”.
The status of the business rescue practitioner’s application “cannot eternally remain in limbo,” the judge said. “I do not see how a delay in taking a decision could be considered as rational.
“The failure to take a decision within a reasonable time is an infringement of the fundamental right to just administrative action,” Phooko said referring to the constitutional provision which enjoins functionaries within organs of state to “perform diligently and without delay all constitutional obligations”.
The application was brought in February by Mango’s business practice practitioner, Sipho Sono, supported by the National Union of Metalworkers of SA (Numsa). Gordhan, Godongwana and the Treasury, among others, opposed it.
Low-cost airline and SAA subsidiary Mango went into business rescue in July 2021 and an unnamed consortium has been selected to purchase it but Gordhan’s delay in reaching a decision on the sale threatens to subvert it.
The consortium has been waiting since November 2022 for approval of the deal. If the transaction fails, Mango will have to be wound down in terms of its business rescue plan.
Sono claims Gordhan wanted to see the business case of the chosen investor before making a decision. But he is concerned about sharing such information, as Mango is likely to compete with its parent company, state-owned SAA.
Phooko rejected Gordhan’s contention the 30 days provided for in the PFMA for the minister to take a decision does not apply until he is “satisfied” with the information provided to him. Gordhan’s counsel argued the 30 day requirement did not apply as Gordhan had requested more information on December 21 2022.
But Phooko ruled in the subsequent reply to this request by Sono on January 19 saying there would be no further information whatsoever forthcoming, kick-starting the statutory prescribed 30-day period, which ended on March 1.
Gordhan contended the information supplied to him was inadequate. The missing information concerned the fact the board of SAA should have considered other options for the disposal of Mango, a comprehensive due-diligence report on the bidder, and the potential loss to SAA if the disposal went through. Sono argued that this was not required and that there was no basis for Gordhan to demand further information.
Numsa submitted that all efforts should be explored to save Mango as its retrenched members would be re-employed if Mango resumed operations. It also argued that Gordhan’s delay in making a decision could result in the winding-up of Mango if the business rescue plan were to fail.
Gordhan and the department of public enterprises argued that a declaratory order compelling the minister to take a decision about an incomplete and unsatisfactory application was without merit. They also contended that the court should be slow to interfere with statutory powers that are exclusively in the domain of the executive and legislative branches of government unless such intrusion is sanctioned by the constitution.
Phooko rejected the argument that Sono did not have locus standi to bring the application because SAA is the accounting authority for the purposes of the PFMA.
“I do not think that this interpretation is entirely correct. The basis for this is that the business rescue practitioner, as someone who is tasked with the full management of the company to oversee its day-to-day affairs during the business rescue process, has the necessary standing to institute these proceedings,” the judge said.
“The business rescue practitioner has full management control of the company in substitution for its board and pre-existing management and has the power to implement the amended business-rescue plan.”
The judge ordered Gordhan, the department of public enterprises, finance minister Enoch Godongwana and the Treasury to pay the costs of the application, including the costs of two counsels, jointly and severally.
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