State Liability Amendment Bill [B2-2011]:consideration of public submissions

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Justice and Correctional Services

07 March 2011
Chairperson: Mr L Landers (ANC)
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Meeting Summary

The Portfolio Committee on Justice and Constitutional Development met with the Department of Justice and Constitutional Development to consider the public submissions received on the State Liability Amendment Bill [B2-2011]. One of the issues raised by the Cape Bar Council was that the restriction of the execution of State property to movables only undermined the values of the Constitution. Deneys Reitz was of the opinion that under clause 3(4) the words ‘apply for’ should be replaced with the word ‘issue’ which would be in line with the rules of the High Court and Magistrates Court. Standard Bank commented that there appeared to be no justifiable reason why there was such a restrictive provision especially since the amount gained from the execution of movable property might be insufficient to satisfy the judgment debt. If there was a shortfall from the sale of moveable assets then the judgment creditor should be allowed to attach immovable property. The Department of the Premier: Western Cape proposed that under clause 3(1) the word ‘may’ should be changed to ‘shall’. There should be consistency between clause 3(a) and the word ‘appeal’ in the definition for ‘final court order’. Under clause 3(4) the words ‘acceptable arrangements’ implied that it would be possible for the State to enter an agreement with the judgment creditor to liquidate the judgment debt. If this was the intent of the provision then it must be expressly provided for in the Bill. The whole of clause 3(6) was a deviation from the normal court procedures provided for in the rules. Clause 3(7) was supported but it was problematic because it introduced new concepts such as ‘direct material interest’, which was not trite with South African law.

Section 27 pointed out that clause 3(1) should be only as a matter of last resort and should be only permitted subject to certain safeguards in order to protect the public interest. Clause 3(7) should be interpreted in accordance with the Nyathi 2 judgment. Parliament should be aware that courts would be obliged to rely on the Constitutional Courts reasoning in the Nyathi 2 case. Idasa observed that ‘State’ was wider than the bodies that were proposed in the Bill. This inconsistency was confusing and could lead to situations where it was unclear whether bodies or entities that were departments but part of the State could have their assets attached even though they were not part of the initial litigation and court order. Such an affected body would then be obliged to apply in court for a stay of execution under clause 3(7). This situation would further frustrate a legitimate creditor who would be left without a quick and effective remedy envisaged in the Nyathi case. Part of Eskom’s submission was that the wording ‘severely disrupt service delivery, threaten life or put the security of the public at risk’ in the State Liability Amendment Bill was vague, as it did not spell out what type of property was considered to be such. The property exempted should be clearly spelt out. It was not clear what ‘in the interests of justice’ meant and this should be spelt out in the Bill.

The Committee requested clarity on the reasons why local government was excluded from the scope of application of the State Liability Amendment Bill and also requested the Department to consider more carefully the concerns raised by the Department of the Premier: Western Cape.


Meeting report

Opening Comments
The Chairperson informed the Members that the House Chairperson, Mr C Frolick had set a deadline of 20 June 2011 for the finalisation of the State Liability Amendment Bill. The Constitutional Court (CC) had set a deadline and the House Chairperson had kept that in mind whilst also accommodating the National Council of Provinces (NCOP) process as well in the deadline. The second issue from the House Chairperson was the remuneration and benefits package of the Deputy Public Protector. Members would recall that the Public Protector had a Chief Executive Officer who earned more than the Deputy Public Protector. This was an anomalous situation. This matter had been referred to the Committee on 26 July 2010. The Committee had not resolved it; it had to do so now. The Public Protector might have to come before the Committee to present a structure that the Public Protector would like to have. The Chairperson asked if the Members were confident that the State Liability Amendment Bill would be finalised by the deadline date.

The Committee agreed unanimously.

Presentation: Oral Summary of Submissions
Mr Johan Labuschagne, Principle State Law Advisor from the Department of Justice and Constitutional Development (DOJ&CD) informed Members that the presentation was a summary of the submissions and it did not contain the Department’s responses, which would come at a later stage.

Cape Bar Council
Mr Labuschagne said that the Cape Bar Council supported the Bill. There were two issues of concern. The first issue was that the restriction of the execution of State property to movables only undermined the values of the Constitution. The second issue was that such a restriction discriminated against citizens unless they could execute against immovable property that belonged to the State.

Deneys Reitz
Mr Labuschagne said that the changes were of a technical nature. Under clause 3(4) the words ‘apply for’ should be replaced with the word ‘issue’ which would be in line with the rules of the High Court and Magistrates Court. The words ‘… and the court may grant such stay on terms that promote such interest’ should be added under clause 3(7).

Standard Bank
Mr Labuschagne said that the Bill only provided for the attachment of movable assets; there appeared to be no justifiable reason why there was such a restrictive provision especially since the amount gained from the execution of movable property might be insufficient to satisfy the judgment debt. If there was a shortfall from the sale of moveable assets then the judgment creditor should be allowed to attach immovable property. Provinces were not separate legal entities and attached property belonged to the State thus a litigant must be enabled to attach the property of any other department. An important recommendation under clause 3(5) was that the clause should allow for the removal and sale of property with the proceeds kept in a trust due to the nature of the assets, which might materially diminish. 

Department of the Premier (Western Cape)
Mr Labuschagne said that under clause 3(1) the word ‘may’ should be changed to ‘shall’. A distinction was made between an appeal against a judgment and an appeal against an order whilst there was no such distinction in paragraph (b) of the definition of ‘final court order’.  There should be consistency between clause 3(a) and the word ‘appeal’ in the definition for ‘final court order’. The two terms should be given the same meaning. The 30-day period should commence from the time that the executive authority and accounting officer were notified of the final court order. It was not clear what the term ‘appropriation account’ meant, as it had not been defined.

Under clause 3(4) the words ‘acceptable arrangements’ implied that it would be possible for the State to enter an agreement with the judgment creditor to liquidate the judgment debt. If this was the intent of the provision then it must be expressly provided for in the Bill. The provision that specified that the judgment debt must be made within 30 days was unreasonable; this could be remedied if the arrangements provided that payment for the debt could be concluded beyond the 30 day period. The whole of clause 3(6) was a deviation from the normal court procedures provided for in the rules. Clause 3(7) was supported but it was problematic because it introduced new concepts such as ‘direct material interest’, which was not trite with South African law. The requirement of ‘interests of justice’ was not supported as this legal standard was not trite in civil jurisprudence and remained open to interpretation by the courts.

The word “State” should be defined to include local government as well. The definition of a ‘final court order’ did not make provision for instances where a matter was taken up for review after a judgment had been given. This meant that a litigant could execute a judgment order against the State even though it had applied for a review of the proceedings.

Section 27
Mr Labuschagne said that the institution pointed out that clause 3(1) should be only as a matter of last resort and should be only permitted subject to certain safeguards in order to protect the public interest. This might be undermined unless reference was made to clause 3(6) and (7) as well. Under clause 3(3)(a) the phrase ‘unless an appeal has been lodged against the judgment or that order’ was unnecessary as the proposed definition of ‘final court order’ made it clear that finality would not have been reached if an appeal had been lodged.  The words ‘in accordance with the time frames’ should be added to the clause. This was to ensure that reference to the proposed new clause 3(4) covered both the stipulated and agreed-upon timelines. Clause 3(4) was confusing as it only referred to the statutory timeline of 30 days. It did not make it clear if upon agreement the department and a judgment creditor could agree to extend the 30-day period. There was no good reason why the law should preclude this option. Clause 3(7) should be interpreted in accordance with the Nyathi 2 judgment. Parliament should be aware that courts would be obliged to rely on the Constitutional Court (CC) reasoning in the Nyathi 2 case.

Idasa
Mr Labuschagne said that ‘State’ was wider than the bodies that were proposed in the Bill. This inconsistency was confusing and could lead to situations where it was unclear whether bodies or entities that were departments but part of the State could have their assets attached even though they wee not part of the initial litigation and court order. Such an affected body would then be obliged to apply in court for a stay of execution under clause 3(7). This situation would further frustrate a legitimate creditor who would be left without a quick and effective remedy envisaged in the Nyathi case. This could be resolved with the adoption of a wider term, which would be in line with the CC’s order. There were broad and vague terms in the Bill that would likely be the subject of extensive and extended debate and litigation. Lawful creditors would be left without a quick and effective remedy.

The expression ‘not in the interests of justice’ was broad and subject to interpretation. This would undermine the CC’s intention to provide for a speedy resolution for plaintiffs. In the event that the identified property was no longer available, the Bill should explicitly provide for the Sheriff to identify a similar or equivalent property. It was not clear why the Bill only provided for the inclusion of provincial and national departments rather than all organs of state In terms of Section 239 of the Constitution. In the absence of a clear explanation, the Committee should require such scope of application.

Eskom
Mr Labuschagne said Eskom proposed that 3(3)(a) should state that the appeal should not only be noted but also prosecuted within a stipulated time failing which the party can proceed to execute. A time period for the prosecution of an appeal be inserted to ensure finality on the appeal process and thus avoid unnecessary delay. The appellant must take prudent steps to prosecute the appeal within the time period stipulated in the Bill. A judgment creditor should not be restricted to secure the assets of a particular department to satisfy the judgment. Clause 3(4) was clear in that the State owned the asset, which was used by the relevant department, and therefore a judgment creditor should be in a position to execute against any department or directly against National Treasury to recover the debt. There should be flexibility to execute against any department irrespective whether it was at national or provincial level. It was not clear who exercised the discretion to exclude the attachment and execution against a property, which would disrupt service delivery, threaten life or put the public at risk. An exemption against a property of the State, which was used by a department, should only ensue if the service delivery ceased to operate at all as a result of the attachment. The rules of the High Court and Magistrates Court should apply. The Bill should provide that if the attachment of movable property was insufficient then immovable property should be attached.

The wording ‘severely disrupt service delivery, threaten life or put the security of the public at risk’ was vague, as it did not spell out what type of property was considered to be such. The property exempted should be clearly spelt out. It was not clear what ‘in the interests of justice’ meant and this should be spelt out in the Bill. 

Law Society of South Africa
Mr Labuschagne said that he would further summarise the submissions of the Law Society and finalise them for the Committee to consider at a later stage.

FW De Klerk Foundation: Centre for Constitutional Rights
Mr Labuschagne said that the organisation supported the Bill and that it would pass constitutional muster.

Discussion
Mr J Jeffery (ANC) said that the Committee should rather await the Department’s written and considered responses to the submissions before the Committee continued dealing with the Bill. Could there be confirmation if the submission from Deneys Reitz was from them, as it appeared to be short?

Ms M Smuts (DA) agreed with the way forward proposal from Mr Jeffery. Why was local government excluded from the application of the Bill?

Ms D Schafer (DA) requested the Department to carefully consider the submission from the Department of the Premier: Western Cape as it seemed to say that as a province they would have to pass a separate piece of provincial legislation for every single incident.

Ms S Sithole (ANC) said that the Department should bear in mind that the Public Finance Management Act 1 of 1999 (PFMA) was meant to deal with national government. It was important that when there were Committee deliberations then the proper reference that should be used was Public Finance Management Act 1 of 1999 as Amended by Act 29 of 1999 in order to include the provinces.

Mr Labuschagne replied that the Deneys Reitz submission was sent to him directly and he had forwarded it to the Committee. In its initial judgment the CC had included local government. In its final order the CC limited the scope of application to national and provincial government after motivation from the Minister of Justice and Finance.

Adv Deon Rudman: Deputy Director General: Legislative Development, DOJ&CD, said that the original Bill had included local government but it was removed as there was a separate process that dealt with this level of government. On issue of the concerns raised by the Department of the Premier: Western Cape, the Department would have to discuss such things with Treasury. The point raised by the Honourable Sithole was also noted.

Mr Jeffery suggested that Treasury should send someone to all the meetings, as it was foreseeable that the Committee would need input from the National Treasury.

Adv Rudman said that, given the deadline, the Department would try to get back with responses as soon as possible. There would be an attempt to withdraw Mr Labuschagne from other commitments in order for him to work on the Bill.

Mr Jeffery said that the Bill would have to be processed by the NCOP as well by the deadline date. The NCOP never appreciated having to deal with Bills when only given a week to finalise them. With respect, he pointed out that the deadline set by the House Chairperson had not factored in the NCOP process.

Ms Smuts requested a more extensive Committee Programme.

The Chairperson said that he would consider the Committee Programme with the Secretary but one had to be mindful of the budgetary process and the Local Government Elections. There was also priority legislation that was before the Committee.

Mr Jeffery said that he was envisaging that the finalisation of the Protection of Personal Information Bill would be by the middle of the year and in plenary by the same period. The priorities for the Committee would be the State Liability Amendment Bill and the budget.

The Chairperson inquired about the Combating of Persons in Trafficking Bill.

Mr Jeffery replied that there was pressure from the public but he was not sure what was outstanding.

The Chairperson said that given the CC’s ruling, the State Liability Amendment Bill would take first precedence; for the reasons put forward by Mr Jeffery the Committee should target finalisation before the elections.

Mr Jeffery said that the Combating of Persons in Trafficking Bill would take third priority.

Ms Sithole said that, if there was more work for the Committee than days allocated, the Committee would have to work in the evenings and Fridays as well.

Mr Jeffery said he was in favour of the proposal from Ms Sithole especially since the Committee had worked in the evenings before.

Adv Rudman said that, by the end of the week, the Department would report to the Committee.

Ms Smuts asked about the status of the Public Protector’s (PP) report.

The Chairperson replied that all he knew was that it had already been tabled.

Mr Jeffery said that the Committee had never dealt with the PP’s report even though the PP fell under it and it dealt with the annual report. The report dealt with Public Works and the police so it was doubtful whether the Committee would deal with it.

Ms Smuts interjected and said that since the Committee was the primary Committee dealing with the PP it would be appropriate for it to request the report.

Ms Sithole agreed with Ms Smuts.

The Chairperson said the Committee would await the Department’s responses on the State Liability Amendment Bill.

Meeting Adjourned.










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