Masetlha v The President of the Republic of South Africa and Another

Mr Billy Lesedi Masetlha was appointed Director-General and head of the National Intelligence Agency (NIA) on 14 December 2004 for a three-year term ending 31 December 2007. Following the "Macozoma affair" (an unauthorized surveillance operation), the Minister for Intelligence Services suspended Masetlha on 20 October 2005. On 15 November 2005, the President issued a Presidential Minute purporting to record his decision to suspend Masetlha retroactively to 20 October 2005. On 20 March 2006, before filing an answering affidavit to the second suspension application, the President unilaterally amended Masetlha's term of office to expire on 22 March 2006 (21 months earlier than originally agreed), citing irreparable breakdown of trust. The President purported to act under section 12(2) of the Public Service Act and offered to pay Masetlha his full salary and benefits for the unexpired period. Masetlha declined the payment and sought reinstatement. The Pretoria High Court dismissed both review applications, finding that the President had lawful power to dismiss and that the breakdown of trust provided a rational basis for dismissal.

• Whether the President has the power to suspend the head of the NIA
• Whether the President has the power to unilaterally alter the term of office of the head of the NIA so as to terminate the appointment earlier than agreed
• What is the source of the power to appoint and dismiss the head of the NIA - constitutional or statutory?
• Whether the exercise of the power to dismiss constitutes executive action or administrative action subject to PAJA
• Whether the principle of legality requires procedural fairness before the President terminates the head of the NIA
• What constitutional constraints apply to the exercise of presidential power to dismiss
• Whether there was an irreparable breakdown of trust justifying termination
• What is the appropriate remedy if the dismissal was unlawful

The majority dismissed the appeal. The order of the High Court dismissing the consolidated application was set aside and replaced with an order dismissing it with no order as to costs. No order as to costs was made in the Constitutional Court. The President was ordered to pay Masetlha remuneration, allowances, pension and other benefits under section 37(2)(d) of the PSA for the period from 22 March 2006 to 31 December 2007, placing him in the same financial position he would have been in but for the termination. Any dispute about the extent of the financial position may be referred to this Court or another court of competent jurisdiction. The suspension issue was found to be moot.

Majority (Moseneke DCJ): (1) The power to appoint the head of the NIA under section 209(2) of the Constitution read with section 3(3)(a) of the ISA necessarily implies the power to dismiss. This implied power is essential for the effective functioning of government and national security. (2) The exercise of the power to dismiss the head of the NIA constitutes executive action under section 85(2)(e) of the Constitution and is expressly excluded from the definition of administrative action in section 1 of PAJA. (3) Presidential executive powers are not subject to the requirement of procedural fairness applicable to administrative action, but are constrained by the principle of legality, which requires that the decision be lawful, rational, and not arbitrary. (4) The irreparable breakdown of trust between the President and the head of the NIA provides a rational basis for dismissal, as the President must subjectively trust the head of an intelligence service to fulfill his constitutional obligations regarding national security. (5) Where a fixed-term employment contract is terminated prematurely without breach by the employee, the residual remedy (where reinstatement is inappropriate due to breakdown of trust) is full payment of salary, allowances, and benefits for the remaining period of the contract.

Moseneke DCJ noted that even if procedural fairness were required, Masetlha had been afforded sufficient opportunity to respond to allegations through meetings with the Minister and President and through the Inspector-General investigation, though he was not specifically consulted on the proposed dismissal itself. Ngcobo J (dissenting on this point) observed that the rule of law has both substantive (rationality) and procedural (fairness) components, and that the Constitution does not immunize executive decisions from review based on procedurally unfair decision-making processes. He noted that fairness requires consultation before decisions adversely affecting individuals, though what fairness requires depends on the circumstances of each case, including urgency. He observed that section 12(4)(c) of the PSA contemplates agreement on grounds and procedures for termination, implying consultation. Sachs J emphasized the sui generis nature of appointments created by the Constitution where the appointee straddles government and public administration. He observed that civility in constitutional dealings involves more than courtesy - it includes tolerance, respect for dignity, and is linked to ubuntu-botho. He stressed that fairness required consultation on how termination would be publicly communicated to protect the incumbent's reputation, and that constitutional institutions require nurturing through civil conduct that maintains public confidence. He noted that the payment to Masetlha should not be characterized as compassion but as legal obligation, and that the judgment establishes the termination was based on breakdown of trust, not misconduct, which should protect Masetlha's reputation.

This landmark judgment addresses the scope of presidential power in relation to senior security appointments, the distinction between executive action and administrative action, and the reach of the doctrine of legality. It confirms that certain presidential powers derive directly from the Constitution rather than legislation. The case establishes that executive decisions under section 85(2)(e) are not subject to PAJA but are constrained by the principle of legality (requiring lawfulness, rationality, and not being arbitrary). The judgments reflect different views on whether legality includes a procedural fairness component in the exercise of executive power. The case demonstrates the special nature of the relationship between the President and heads of intelligence services, where mutual trust is essential. It also illustrates the Court's approach to constitutional remedies where reinstatement is inappropriate. The case is significant for its treatment of the relationship between constitutional power, statutory provisions regulating the manner of its exercise, and contractual elements of public employment.