Constitutionality of Institutions of Legal Proceedings against Organs of State Bill in View of Judgment on Limitations Act: disc

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Justice and Correctional Services

11 September 2001
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JUSTICE AND CONSTITUTIONAL DEVELOPMENT PORTFOLIO COMMITTEE
12 September 2001
CONSTITUTIONALITY OF INSTITUTION OF LEGAL PROCEEDINGS AGAINST ORGANS OF STATE BILL IN VIEW OF JUDGMENT ON LIMITATIONS ACT: DISCUSSION

Chairperson:
Adv J H de Lange

Relevant Documents:
Constitutionality of Institution of Legal Proceedings against Organs of State Bill in view of the Decision in the Moise case (See Appendix)
Constitutional Court judgement at
http://www.concourt.gov.za for Sias Moise v Greater Germiston Transitional Local Council & Minister of Justice & Constitutional Development
Institution of Legal Proceedings against Organs of State Bill [65B - 1999]

SUMMARY
The Committee discussed the Moise case in which section 2(1)(a) of the Limitation of Legal Proceedings Act was held to be unconstitutional. The Committee identified that the ninety day period within which a complainant needed to initiate an action was too restrictive. This provision of the Act was discussed in the light of the Institution of Legal Proceedings Against Organs of State Bill, which provided for a much less restrictive position.

The Committee also identified the fact that the unconstitutional finding was very specific to this case and that the principle of prescription of actions against the state was not inherently unconstitutional. No evidence had been led by the State, the party charged with the duty of justifying the limitation of the relevant right. The Chairperson expressed his dissatisfaction that the State had presented no evidence to the Constitutional Court. He identified this as a problem as this had happened more than twice in the present year.

MINUTES
The Justice Committee met to consider the Moise case which concerned the constitutionality of section 2(1)(a) of the Limitations of Legal Proceedings Act 94 of 1970. The Constitutional Court confirmed the finding of the lower court that the section was indeed unconstitutional. Mr Labuschagne, a drafter for the Department of Justice, explained that the section provided that no legal proceedings could be initiated against an administration unless the creditor has within ninety days from the day on which the debt became due, served a written notice of such proceedings. The section also provides for other formalities that would need to be observed. The Constitutional Court however found that these provisions were unconstitutional as they seriously limited the individual's right to access to the courts.

Mr Labuschagne pointed out that in paragraph nineteen of the judgment, the court stated that once a right such as this was subject to limitation, the burden to prove that the limitation is necessary and justifiable in an open and democratic society lies with that individual who seeks to limit the right. Mr Labuschagne pointed out that no evidence was led on behalf of the State. To this the Constitutional Court said that it would have to assume the worse and rule that the section was unconstitutional.

Adv de Lange commented that for this reason the ruling on this matter was very specific to this case but it was still important to know that there were certain principles that could be gleaned from the judgment.

Mr Labuschagne continued and said that the most significant feature of the Act was that it provided for a period of ninety days within which action needed to be taken. However, the Institution of Legal Proceedings Against Organs of State Bill [B 65B - 1999] provided for a period of six months within which action needed to be initiated. The Constitutional Court alluded to this Bill in the judgment saying that they could not comment on the constitutionality of the Bill as it was not before the court at that time. Despite this, Mr Labuschagne said it was his view that the Court said this Bill was less restrictive. Mr Labuschagne told the Committee that the Bill contained provisions that were in principle similar to those in the Limitations of Legal Proceedings Act, and if this latter Act failed to meet the constitutional benchmark then the Bill could too. He added that it would be hard to speculate on what would happen if the Bill were passed into legislation. He suggested that one possible solution to their problem would be to pass the Bill and see if anyone challenged it.

Here Adv de Lange said that the Constitutional Court had not been averse to the principle of prescription of actions against the state, but decided as it did on the facts of that case. It was important to remember that evidence had not been led by the state.

Mr Labuschagne agreed but said that here the most important question would be whether the six month period provided for in the Bill would be felt to be enough by the Constitutional Court.

Adv de Lange agreed but said that the period was not the only matter which needed to be examined. Of importance would be the period of prescription and the grounds for condonation.

Mr Labuschagne said that the Bill actually improved the position around these matters: it extended the period to a more reasonable six months and relaxed the requirements relating to condonation.

Adv de Lange told Mr Labuschagne that he felt that this was good work and a welcome change to the old position.

Dr J Delport (DP) said that he was satisfied that the position of the individual had been catered for sufficiently but asked why the interests of the State were ignored or at least not sufficiently provided for. Why is the administration always placed in a worse position and subject to stricter requirements even when the State has better records of relevant information? He suggested that the same principles around prescription which apply to other institutions should apply to the State. Then there would be one body of law governing prescription in relation to the State, companies and private individuals.

Adv de Lange said that there were important additional considerations which existed in the context of the State. The State is an attractive target for potential litigants. The Constitutional Court is not averse to the principle but the question is where the line will be drawn, beyond which actions will not be allowed.

Mr Labuschagne told the Committee that there were additional problems as the Bill provided specifically for matters falling into the realms of contract law and delict. The Bill however failed to mention other matters that might fall outside these established bodies of law. Adv de Lange added that the position of these matters would thus be unsure. He said that the Committee would have to speak to the NCOP (where the Bill is currently) to solve this shortcoming. When consulting with the NCOP the Committee would also need to establish, whether in the opinion of the NCOP, the Bill is technically flawless.

Dr Delport said that he supported the Chairperson in has views on the Bill but added that the Bill would be back before the Committee before long. Adv de Lange said that this would be fine as the Bill needed to be challenged as did the limitation of the right in the case. He said that this was an important part of the democratic process.

The meeting was adjourned.

Appendix:
CONSTITUTIONALITY OF INSTITUTION OF LEGAL PROCEEDINGS AGAINST ORGANS OF STATE BILL IN VIEW OF THE DECISION IN THE MOISE CASE

1. In Moise V Transitional Local Council of Greater Germiston and Others Case CCT 54/00, decided on 4 July 2001, the Constitutional Court confirmed a decision of the
Witwatersrand High Court declaring constitutionally invalid section 2(1)(a) of the Limitation of
Legal Proceedings (Provincial and Local Authorities) Act 94 of 1970.

2. Section 2(1)(a) reads as follows:
(1) Subject to the provisions of this Act, no legal proceedings in respect of any debt shall be instituted against an administration, local authority or officer (hereinafter referred to as the debtor)-
(a) unless the creditor has within ninety days as from the day on which the debt became due, served a written notice of such proceedings, in which are set out the facts from which the debt arose and such particulars of such debt as are within the knowledge of the creditor, on the debtor by delivering it to him or by sending it to him by registered post;

3. Section 34 of the Constitution of the Republic of South Africa, Act 108 of 1996 reads as
follows:
Everyone has the right to have any dispute that can be resolved by the application of law decided in a fair public hearing before a court or, where appropriate, another independent and impartial tribunal or forum.

4. The court decided that viewing section 2(1)(a) in the composite scheme consisting of (i) specific notice, (ii) within a short period and (iii) with limited scope for condonation for non-compliance, it constitutes a material limitation of an individual's right of access to a court of law under section 34 of the Constitution. (Paragraph [16] of the Moise case. References to paragraph numbers in square brackets below are to paragraph numbers of this case.)

5. Once a limitation has been found to exist, the burden of justification under section 36(1) of the Constitution rests on the party asserting that the limitation is saved by the application of the provisions of the section. (Paragraph [19].) The absence of evidence or argument in support of the limitation has a profound bearing on the weighing up exercise, the more so as the parties who chose to remain silent have special knowledge of provincial and local government administration. (Paragraph [20].) Government does not seriously contend for the validity of section 2(1 )(a) and has in the Institution of Legal Proceedings Against Organs of State Bill 65B of 1999 (the "Bill") opted for a substantially different scheme than that in issue in the Moise case. This is an indication that government and the experts advising it believe that a limitation as to the time for giving notice and the criteria for condonation could be less restrictive. (Paragraph [22].)

6. The right of access to courts protected under section 34 is of cardinal importance for the adjudication of justiciable disputes and requires active protection. (Paragraph [23].) Applying the primary criteria enumerated in section 36 of the Constitution, the active protection of the right of this particular category of prospective litigants to approach a court for adjudication of their claims without the limitation contained in section 2(1)(a) outweighs the governmental interest concerned and the section is not reasonably justifiable. (Paragraph [24].) One of the criteria is that there are less restrictive means to achieve the purpose of the limitation. (Paragraph [17].)

7. The court did not express any view on the reasonableness or otherwise of the notice period of six months and the criteria for condonation for which the Bill provides. (Paragraph [22].) The most significant features of the Bill alluded to in argument before the court were that instead of a notice period of 90 days after the relevant occurrence, prospective claimants should be afforded a breathing space of six months to lodge notice of their claims. In addition the Bill expands the scope of and relaxes the requirements for condonation for non-compliance with the notice requirement and is uniformly applicable to all government institutions. (Paragraph [21].) The notice in section 2(1)(a) has to contain significant information regarding the occurrence and of the damages allegedly suffered. (Paragraph [13].)

8. For ease of comparison some of the corresponding provisions of the Limitation of Legal Proceedings (Provincial and Local Authorities) Act 94 of 1970 and the Bill are set out opposite each other in the table below (emphasis added by me):

Limitation of Legal Proceedings (Provincial and Local Authorities Act 94 of 1970
2.
(1) Subject to the provisions of this Act, no legal proceedings in respect of any debt shall be instituted against an administration, local authority or officer (hereinafter referred to as the debtor)-
(a) unless the creditor has within ninety days as from the day on which the debt became due, served a written notice of such proceedings, in which are set out the facts from which the debt arose and such particulars of such debt as are within the knowledge of the creditor, on the debtor by delivering it to him or by sending it to him by registered post;
(b) before the expiration of a period of ninety days as from the day on which the notice contemplated in paragraph (a) was served on the debtor, unless the debtor has in writing denied liability for the debt before the expiration of such period;
(c) after the lapse of a period of twenty-four months as from the day on which the debt became due.

4. If a creditor has failed to comply with the provisions of paragraph (a) of subsection (1) of section 2 in relation to legal proceedings which he desires to institute and the debtor has not, within fourteen days after having been requested by the creditor to do so, in writing waived his right to invoke those provisions, the court having jurisdiction in respect of such legal proceedings may, notwithstanding those provisions but subject to the provisions of paragraphs (b) and (c) of that subsection (quoted above), grant to the creditor on his application and on such conditions as the court may deem fit, leave to serve the notice contemplated in the said paragraph (a) on the debtor after the lapse of the period prescribed in that paragraph, if the court is satisfied-

(a) that the debtor is not prejudiced by the failure; or
(b) that by reason of special circumstances the creditor could not reasonably have been expected to serve the notice within that period.

Institution of Legal Proceedings against Organs of State Bill 65B of 1999
3.
(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 legal proceedings without such notice.
(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.

4.
(1) A notice must be served on an organ of state by delivering it by hand or by sending it by certified mail, or, subject to subsection (2), by sending it by electronic mail or by transmitting it by facsimile, in the case where the organ of state is-...
[followed by the official who should receive notice in each case]
5. (2) No process... may be served before the expiry of a period of 30 days after the notice, where applicable, has been served on the organ of state...
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.
(c) If an application is granted in terms of paragraph (b), the court may grant leave to institute the legal proceedings in question, on such conditions regarding notice to the organ of state as the court may deem appropriate.

9. The main difference between the provisions quoted in the table is the doubling of the "short" (paragraph [16]) or "very limited" (paragraph [13]) period of a "mere 90 days" (paragraph [14]) to six months. The waiting period of 90 days in section 2(1)(b) will be reduced to 30 days in terms of clause 5(2) of the Bill. The prescription period is 2 years in terms of section 2(1 )(c) of the Act, but the ordinary period, of at least three years, will apply in terms of clause 3(4)(b)(i) of the Bill. Where any prejudice for the debtor would exclude the ground for condonation in section 4(a), only unreasonable prejudice would suffice for clause 3(4)(b)(iii) of the Bill. "Good cause" for failure in clause 3(4)(b)(ii) of the Bill is probably wider than that "by reason of special circumstances the creditor could not reasonably have been expected" to comply in section 4)(b). However, all the requirements in clause 3(4)(b) must be satisfied to qualify for condonation under the Bill while proof of any of (a) or (b) in section 4 will suffice.

10. Mainly as a result of the absence in the Moise case of evidence or argument in support of the limitation in section 2(1)(a), the decision gives very little guidance on the constitutionality of the Bill. In view of the similarities between the Act and the Bill there is a possibility that it would be found that the Bill also constitutes a material limitation of an individual's right of access to a court of law under section 34 of the Constitution. In order to determine constitutionality a balancing of interests must take place. On the one hand there is the right infringed; its nature; its importance in an open and democratic society based on human dignity, equality and freedom; and the nature and extent of the limitation. On the other hand there is the importance of the purpose of the limitation. ([35] quoted in paragraph [18].)

11. Although the court did not express any view on the reasonableness or otherwise of the notice period of six months and the criteria for condonation for which the Bill provides, the decision of the court seems to imply that the provisions of the Bill are less restrictive than section 2(1)(a). (Paragraph [22].) On balance a conclusion that the Bill is less restrictive seems justified. It is difficult to predict what the court will decide on the constitutionality of provisions contained in the Bill, but it will undoubtedly make a substantial difference if constitutionality is argued vigorously before the court and no less restrictive means to achieve the purpose of the Bill are under consideration by government. The only way to ensure constitutionality would be to remove all the special requirements for the institution of legal proceedings against organs of state. However, this would only be an option if it is accepted that special requirements cannot be justified. During its considerations the Portfolio Committee was satisfied that special requirements are justified.

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