Deputy Speaker, the Bill before this House and the report on the Bill will tell you that it is a very technical Bill. Essentially, section 3 of the State Liability Act, Act 20 of 1957, provides that any civil claim made against the state may only be paid in money.
In June 2008, in the matter of Nyathi v the Member of the Executive Council for the Department of Health in Gauteng and Another, 2008 (5) SA 94 (CC), commonly referred to as Nyathi 1, the Constitutional Court declared section 3 of the State Liability Act to be inconsistent with our Constitution -
... to the extent that it does not allow for execution or attachment against the state, and that it does not provide for an express procedure for the satisfaction of judgement debts.
In order to afford the executive and Parliament the time and the opportunity to pass the necessary amendments to the State Liability Act, the Constitutional Court's declaration of invalidity was suspended for 12 months. On 1 June 2009 the Constitutional Court extended the period of suspension of invalidity to 31 August 2009. On 31 August 2009 this was further extended to 31 August 2011.
In the meantime, to provide judgment creditors with relief, the Constitutional Court also provided an interim solution to apply, where there are final orders against national and provincial departments, for the payment of money.
The Constitutional Court ordered that where a final order against the national or provincial department is not satisfied within 30 days, then a judgment creditor can serve the court order on the relevant national or provincial treasury, the accounting officer of the relevant department and on the relevant executive authority, which is the Minister or the MEC.
Fourteen days after the court order is served on it, the relevant treasury must settle the debt or make suitable arrangements with the judgment creditor to pay off the debt. If, however, the relevant treasury fails to settle the debt or make acceptable arrangements within this time, the judgment creditor can attach the movable property of the department concerned.
National Treasury, when it appeared before the committee, confirmed that this procedure has been working effectively. Departments have settled their judgment debts, and to date National Treasury has not had to satisfy any amounts on behalf of their responsible departments.
The committee supported the continuation of this practice and proposed amendments to the Bill to this effect. A procedure for the attachment and identification of movable assets that may be sold in execution is provided for in the Bill. This procedure allows for the exclusion of certain assets from the execution process.
Therefore, if the selling of those assets will lead to a situation where service delivery will be severely disrupted, where life will be threatened, or where the security of the public will be placed at risk, treasuries are given obligations to issue appropriate regulations, instructions, circulars, guidelines, etc, such that organs of state do not find themselves in embarrassing situations.
A classic example of this is a municipality in the North West province that came in one morning and found that all of its movable property had been removed by the Sheriff of the Court.
The amendments set out in this Bill therefore create a legislative procedure that ensures departments effect timeous payment in the event where a court has made a final court order, sounding in money against the state. The judgment creditor is also afforded certainty that payment will be made in the event where a court has granted a final court order sounding in money against the state.
However, the committee wishes to sound a warning. Treasury's role in such matter is administrative. Departments should not see the new Act's provisions as removing their responsibilities towards judgment creditors.
The committee is of the strong view that departments should foresee that they may incur such liabilities and budget accordingly. In other words, the days of hiding behind section 3 of the State Liability Act of 1957 are now a thing of the past.
The committee acknowledges that managing litigation against the state has many challenges, but wishes to highlight that the consequences to judgment creditors who are not paid what they are owed can be devastating. The Nyathi case starkly illustrates this. Dingaan Nyathi died before the Constitutional Court ruled in his favour.
The portfolio committee also learnt of several cases where default judgment had been taken whilst the relevant department was unaware that a summons had been served. The State Attorney's office then became involved in order to rescind such judgment. To prevent this, the committee has inserted an amendment providing that where the executive authority of a department is cited as nominal defendant, summons must be served on the State Attorney's office as well.
The committee is satisfied that the amendments in this Bill are in line with the Constitutional Court judgment on this matter. The committee commends this Bill to the House and seeks its approval thereof. I thank you. [Applause.]
There was no debate.
Deputy Speaker, I move:
That the Report be adopted.
Are there any objections?
Yes, Deputy Speaker!
Hon Van der Merwe? Oh, it is an objection!
It is an objection, yes.
Motion agreed to.
Report accordingly adopted (Inkatha Freedom Party dissenting.)