By Vhelaphi Peter Muthevhuli
In terms of s 1(1) of the Institution of Legal Proceedings Against Certain Organs of State Act 40 of 2002 (the Act) a ‘debt’ means ‘any debt arising from any cause of action –
(a) which arises from delictual, contractual or any other liability, including a cause of action which relates to or arises from any –
(b) for which an organ of state is liable for payment of damages, whether such debt became due before or after the fixed date’.
Subsections 3(1) and (2) require that a notice of intended legal proceedings must be given to the concerned organ of state by the creditor within six months from the date on which the debt became due. This is a peremptory step before legal proceedings can be instituted.
Before compliance with the requirement of s 3(1) is needed, it must be ascertained whether the claim at hand constitutes a debt in terms of s 1(1). This presupposes that there are claims against organs of state which are not debts as envisaged in s 1(1) of the Act.
In Thabani Zulu & Co (Pty) Ltd v Minister of Water Affairs and Another 2012 (4) SA 91 (KZD) at para 11, the court held that: ‘Paragraph (a) of the definition [of the Act] is widely worded and makes it clear that a debt is any liability whatsoever. It is, however, followed by para (b) and the question which arises is how the two paragraphs relate to each other. They can be read either disjunctively or conjunctively. The paragraphs are linked by “and” and not “or”. Ordinarily, paragraphs or phrases linked by “and” are read conjunctively and those by “or” disjunctively. Accordingly, although the courts have read “and” to mean “or” and vice versa in appropriate circumstances, there must be compelling reasons to change the words used by legislature’.
The court in para 12 held that: ‘Using the ordinary meaning of the words in the definition, therefore, the two paragraphs must be read conjunctively. When that is done, para (b) qualifies or limits the generality of para (a) in two ways. First, it restricts debts to those which constitute a liability to pay damages and, secondly, it restricts debts to those where an organ of state is the debtor. On an ordinary reading of the definition it boils down to this. A debt is the liability of an organ of state to pay damages, arising from any cause of action’.
In the Zulu matter, what was claimed against the organ of state was arrear rental in terms of a lease agreement. The court held that s 3(1) of the Act was not applicable as arrear rental was non-damages debt, but the claim for arrear rental was one for specific performance.
The Supreme Court of Appeal quoted paras 11 and 12 in the Zulu matter with approval in Vhembe District Municipality v Stewarts & Lloyds Trading (Booysens)(Pty) Ltd (SCA) (unreported case no 397/13, 26-6-2014)(Van Zyl AJA). This means that all the claims arising out of a contract with an organ of state, as long as they are for specific performance and not damages, are not covered by the word ‘debt’ under s 1(1) of the Act. Consequently, this means that the Act would not be applicable and creditors need not comply with its provisions.
I submit that, as soon as a claim for specific performance or non-damages is due, the creditor may immediately proceed with an application to enforce payment or issue summons, without wasting time and costs by complying with the Act, as such compliance would be legally unnecessary.
See also Nicor IT Consulting (Pty) Ltd v North West Housing Corporation 2010 (3) SA 90 (NWM) and Director-General, Department of Public Works v Kovacs Investment 289 (Pty) Ltd 2010 (6) SA 646 (GNP) for more.
Vhelaphi Peter Muthevhuli LLB (University of Venda) is an attorney at Kern & Dekker Inc in Louis Trichardt/Makhado.
This article was first published in De Rebus in 2014 (Oct) DR 25.
