Report of
the Portfolio Committee on Justice and Constitutional Development on the State
Liability Amendment Bill [B2 - 2011], dated 2 June 2011:
The
Portfolio Committee on Justice and Constitutional Development, having
considered the State Liability Amendment Bill [B2-2011], reports the Bill with
amendments [B2A-2011].
The Committee further reports as
follows:
1.
The State Liability Amendment Bill [B2 - 2011] was referred
to the Portfolio Committee on Justice and Constitutional Development on 4
February 2011.
2.
The Bill addresses a declaration of constitutional
invalidity, which has been suspended until 31 August 2011. Remedial legislation
must be finalised and implemented before then. Specifically:
2.1.
On 2 June 2008, the Constitutional Court, in Nyathi v Member of the Executive Council of
Department of Health, Gauteng and Another 2008 (5) SA 94 (CC), declared
section 3 of the State Liability Act 20 of 1957, as amended, unconstitutional
to the extent that the section, which prohibits attachment, execution or any
similar process against state property for judgment debts sounding in money,
did not allow for an express procedure for the satisfaction of judgment debts.
The Court, however, suspended the declaration of invalidity for 12 months to
allow Parliament to pass legislation providing for the effective enforcement of
court orders.
2.2.
On 1 June 2009, In
Minister for Justice and Constitutional Development v Nyathi and Others, In re
Nyathi v Member of the Executive Council for Health, Gauteng and Another
(Case CCT 53/09), the Constitutional
Court extended the period of suspension to 31 August 2009. Then, on 31 August
2009, the Court once again extended this period to 31 August 2011 to allow the
Minister to introduce a State Liability Amendment Bill in Parliament and for
Parliament to consider it.
2.3.
In the meantime, to provide judgment creditors with relief,
the
2.3.1.
If a final order against a 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 related executive authority.
2.3.2.
The relevant treasury has fourteen days after the court
order is served on it, to settle the debt or make suitable arrangements with
the judgment creditor to payoff the debt.
2.3.3.
If, however, the relevant treasury fails to settle the debt
or make acceptable arrangements within this time, the creditor can attach the
moveable property of the department concerned.
3.
The Committee established from the National Treasury that
this procedure has been working effectively. Departments have settled their
judgment debts and, to date, the National Treasury has not had to satisfy any
amounts on behalf of a responsible department. The Committee therefore
supported the continuation of this practice and supported amendments to the
Bill to this effect.
4.
The Committee, however, wishes to emphasise that Treasury’s
role is ‘administrative’ – departments should not see the Bill’s provisions as
removing their responsibilities towards judgment creditors. Regarding the
availability of funds to settle judgment debts, the Committee is of the view
that departments should foresee that they may incur such liabilities and budget
accordingly.
5.
The Bill applies to national and provincial departments, but
the Committee is aware that the concept of state is much broader. Furthermore,
over the years, other legislation has incorporated the State Liability Act to
prevent execution against the property of various state bodies that are not
departments. The Committee is of the view that the question of the application
of the State Liability Act is complex and requires consultation with
stakeholders and the public. The Committee, therefore, requests that the
Minister conducts further research on the question of the application of the
State Liability Act, consulting with the necessary stakeholders, and reports to
Parliament on his findings within 24 months of the adoption of this report by
the National Assembly. Although the Committee is aware that the State Liability
Act does not apply to local government, it believes that when conducting his
research, the Minister should also consider the position of this sphere of
government and report to Parliament accordingly.
6.
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.
7.
The Committee learnt of several cases where default judgment
had been taken as the relevant department was unaware that a summons or notice
had been served. The State Attorney then became involved to rescind the
judgment. To prevent this, the Committee has inserted an amendment providing
that where an executive authority of a department is cited as nominal
defendant, the summons or notice must be served on the State Attorney as well.
Minority
view of the Inkatha Freedom Party (IFP)
8.
The Inkatha Freedom Party (IFP) expressed its concern about:
8.1.1.
the constitutionality of sub-clauses 11(e), (f) and (g), as
they purport to require the relevant treasury to disregard the appropriation
law and the constitutional schema of which such law is a part; and
8.1.2.
limiting execution to moveable property only, as the IFP
believes that execution of immoveable property would be less disruptive on
public service delivery on account of its longer timeframes.
Report to
be considered