Finding common ground between attorneys and state legal advisers

August 1st, 2013
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By Justice Finger

As many attorneys will know, the institution of legal action against organs of state for recovery of a debt differs from suing any other person, mainly because of the requirement to issue a six-month notice in terms of the Institution of Legal Proceedings Against Certain Organs of State Act 40 of 2002 (the Act). The problem arises when the notice is not issued or is issued but does not comply with the requirements of the Act, in which case consent has to be sought from the organ of state.

Seeking consent has created a number of problems mainly due to a lack of understanding of the role that each party must play. The Act therefore makes it possible for notice disputes to be settled amicably before approaching a court of law. Often the two parties cannot find common ground and the matter ends up in court as an application for condonation. In many instances these applications to court can be avoided, if both parties understand the purpose of s 3 and its implications clearly.

Section 3 of the Act

Section 3 of the Act states:

‘Notice of intended legal proceedings to be given to organ of state. –

  1. (1)  No legal proceedings for the recovery of a debt may be instituted against an organ of state unless –

(a)     the creditor has given the organ of state in question notice in writing of his or her or its intention to institute the legal proceedings in question; or

(b)     the organ of state in question has consented in writing to the institution of that legal proceedings –

(i)      without such notice; or

(ii)      upon receipt of a notice which does not comply with all the requirements set out in subsection (2).

(2)     A notice must –

(a)     within six months from the date on which the debt became due, be served on the organ of state in accordance with section 4(1); and

(b)     briefly set out –

(i) the facts giving rise to the debt; and

(ii) such particulars of such debt as are within the knowledge of the creditor.

(3) …

(4)(a)      If an organ of state relies on a creditor’s failure to serve a notice in terms of subsection (2)(a), the creditor may apply to a court having jurisdiction for condonation of such failure.

(b)     The court may grant an application referred to in paragraph (a) if it is satisfied that –

(i)      the debt has not been extinguished by prescription;

(ii)      good cause exists for the failure by the creditor; and

(iii)     the organ of state was not unreasonably prejudiced by the failure.’

Each party’s requirements

It is a requirement of the Act that, before a claim for the recovery of debt is instituted in a court of law, a notice that complies with certain requirements must be sent to the organ of state within six months from the date on which the debt became due. If for one or other reason the notice does not comply with the Act or has not been issued, consent must be sought from the relevant organ of state.

For the state legal adviser confronted with the request to consent, the Act does not give guidance on how the request must be dealt with. I submit that the state legal adviser must rely on the requirements of s 3(4)(b), which courts are required to consider when adjudicating an application for condonation (this does not suggest that the state legal adviser must deal with the application in the same manner as the court does). The section must be used as a guide to deal with request for consent.

Attorney: It is clear from the provisions of the Act that reasons (ie, good cause) has to be advanced by an attorney or creditor when consent is sought. The extent of reasons depends on each case, for example, more reasons may be required in cases of extreme time delay or failure to serve a notice at all. What tends to happen in practice is that attorneys comply only with the requirements of s 3(2)(b) (facts giving rise to debt and particulars of debt).

In instances where there is knowledge that the notice is outside the required six-month period, there is a tendency to make bald statements such as ‘to the extent that the notice issued may be outside six months, the applicant requests consent for non-compliance with the requirements of section 3(2) as there is no prejudice to the state’. Attorneys cannot speculate that the notice is outside the six-month period, because time can be calculated very easily; therefore the issue as to whether the notice complies with the Act must be factually determined before a notice is issued to the organ of state.

This determination will make it possible for an attorney to know whether there is a need to request consent and to show that ‘good cause exists for failure by the creditor’. Speculation and bald statements will complicate the case for an attorney and will increase the chance of the request for consent being rejected.

It is therefore clear that an attorney cannot expect consent to be granted if reasons are not advanced (and good cause is not shown). I do not suggest that the letter of request/notice must contain all the details of an application to court, but it must contain enough facts to place the organ of state in a position to arrive at a just decision. Attorneys who are loath to do this and prefer to rather state the true facts in court through an application for condonation, must bear in mind the burden it places on their clients who will have to incur the costs of the court application.

State legal adviser: The request places a responsibility on the state legal adviser to carefully consider the request and to arrive at a fair decision. In practice what normally occurs is that summons is issued without notice (indicating that some attorneys are not aware of the Act); or the notice is issued but outside the required period and there is failure to request consent. In some instances the notice is sent to the wrong organ of state, that is, to the national minister instead of to the provincial member of the executive council (MEC).

In all instances the request for consent then comes only after a special plea or after the attorney is alerted by the state legal adviser about non-compliance with the Act. As stated above, and using s 3(4)(b) as a guide, the first requirement to be looked at by the state legal adviser is that of prescription. This requires consultation with the Prescription Act 68 of 1969 and, if the matter has prescribed, request for consent must fail.

If the application passes prescription, the second requirement will be whether there is good cause for delay. This can unfortunately only be established if the attorney provides reasons for delay or shows good cause. In this instance, good cause for delay must be interrogated together with the prospect of success (Madinda v Minister of Safety and Security 2008 (4) SA 312 (SCA) at paras 10 and 12).

The state legal adviser must, in the evaluation of good cause, also be mindful of the personal circumstances of the creditor, that is, illiteracy (MEC for Education, KwaZulu-Natal v Shange 2012 (5) 313 (SCA) at paras 11 and 18; Premier, Western Cape v Lakay 2012 (2) SA 1 (SCA) at para 19) and the nature of the debt (ie, damage suffered may be so severe that barring prescription and prejudice, it is only fair to grant consent). Great care must be taken not to become fixated with the amount claimed or the period of delay, all that must be considered is whether the creditor has (with all his or her shortcomings) shown the desire to prosecute his or her case and whether there is a prospect of success.

In cases where the creditor has delayed unreasonably, prejudice must also be investigated (MEC For Education, KwaZulu-Natal case at para 22, Premier Western Cape case at para 23 and Minister of Agriculture and Land Affairs v CJ Rance (Pty) Ltd 2010 (4) SA 109 (SCA) at paras 53 and 54). The attorney will not know whether prejudice will be suffered, except to make the allegation that there will be no prejudice suffered. It is important to note that the legislation uses the wording ‘unreasonable prejudice’ and therefore only prejudice that is unreasonable should be considered.

For the state legal adviser it is therefore crucial at this stage to establish that all critical witnesses and documentation that will assist with the case are available. All the factors explained above must be assessed to arrive at a fair decision, the principle must always be that the provisions of the legislation must not be used to unfairly burden a creditor who has a valid case against the organ of state with the unnecessary legal costs of an application for condonation. In most instances failure to give consent can mean the end of what was a legitimate case against an organ of state as most litigants are destitute.

Conclusion

There is a duty placed on an attorney in that, where consent is required, he or she must show good cause for non-compliance with the requirements of the Act in order to assist the organ of state to arrive at a fair decision when dealing with a request. At the same time, it is a fact that state legal advisers are employed to protect the interests of the state, however, the provisions of the Act cannot be used to frustrate litigants and unreasonably refuse a request for consent (ie, by merely being influenced by the amount claimed). I am of the opinion that if both role players understand their roles in terms of s 3 of the Act, there will be no reason not to settle disputes relating to the notice at departmental (organ of state) level, thereby saving creditors and the state unnecessary legal costs.

Justice Finger LLB (UFS) is a legal adviser in Bloemfontein.

This article was first published in De Rebus in 2013 (July) DR 46.

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