REPORTABLE

[Typographically and grammatical revised and corrected for reporting purposes]

IN THE HIGH COURT OF SOUTH AFRICA
(CAPE OF GOOD HOPE PROVINCIAL DIVISION)
				
						Case No: 1277/2009

In the matter between

and
THE MINISTER OF TRANSPORT 

THE MINISTER OF FINANCE 

THE GOVERNMENT OF 

JUDGMENT DELIVERED ON 30 JANUARY 2009

BINNS - WARD AJ:

Orders-
1.	Condoning the Applicant's non-compliance with the forms and time periods stipulated in the Uniform Rules of Court and directing that this matter be heard as one of urgency in terms of Rule 6(12).
2.	That the amount of R94 505 098,24 (being the total of the amounts set out in paragraph 2 of the Order of this Court issued under case number 21303/2008 on Thursday 15 January 2009 ("the Court Order"), together with interest calculated in terms of the provisions of the said paragraph until 20 January 2009), forthwith and in any event before 16h00 on Friday 30 January 2009 be paid to the Applicant by the First and/or Second and/or Third Respondent, jointly and severally, from the National Revenue Fund, in accordance with the provisions of section 3 of the State Liability Act, Act no.20 of 1957 ("the Act").
3.	Declaring that the Second Respondent and/or the department of which he is the nominal head pursuant to the provisions of section 2 of the Act is/are not entitled in law to frustrate, block or refuse to render the necessary assistance to implement and effect the said payments which the First and/or the Second and/or Third Respondents are liable to pay in terms of the previous paragraph.
4.	Directing the Second Respondent, insofar as he may be requested to do so by the First and/or Third Respondent, to forthwith and immediately pay, alternatively, to forthwith and immediately do what is necessary to effect payment, of the said amount referred to in paragraph 2 above from the National Revenue Fund in order to satisfy the Court Order.
5.	In the alternative to paragraphs 2, 3 and 4 above and only in the event of payment not occurring on or before 16h00 on Friday, 30 January 2009, that the First and Second Respondents are ordered to appear before this court in person on Monday, 2 February 2009 at 10h00 and to furnish the names of each and every individual in their respective departments who would in the ordinary course of business be responsible for remittance of the said amount in order to comply with the provisions of the Court Order and to furnish full reasons as to why these individuals have failed to make the said remittance.

6.	To the extent that the above honourable court may deem it necessary and appropriate, granting the Applicant condonation in terms of Section 3(4) of the Institution of Legal Proceedings against Certain Organs of State Act, 40 of 2002.
7.	Further and/or alternative relief.
8.	That the costs of this application, including the costs of two counsel, be paid by the First, Second and Third Respondents jointly and severally, the one to pay the others to be absolved, on the scale of attorney and client, save in the event of the Fourth Respondent opposing this application in which case the costs order is sought against all the Respondents jointly and severally on the same scale.
[2] The current proceedings, which were brought before this court on 28 January 2009, are a sequel to an application by applicant under case no. 21303/2008 in which certain declaratory relief was sought which is essentially reflected in the order made in the earlier matter by Motala J, by agreement between the parties on 15 January 2009, in the terms set out below.

'The following order is made by agreement between the Applicant and the First,
Second, Third and Fourth Respondents pursuant to and with due recognition of the provisions of the State Liability Act, No. 20 of 1957:
9.	
10.	The total amounts due and payable to the Applicant in terms of the contract as at the date hereof are -
2.1 R49 234 447,67 as from 1 December 2008 (in respect of which it recorded that the Applicant and the Fourth Respondent will co-operate to determine whether or not an additional amount of R512 946,00 is due and payable);
11.	75% of R53 596 991,30, i.e. R40 197 743,47, as from 17 December 2008; and
12.	R43 097 421,10 minus R40 197 743,47, i.e. R2 899 677,63, as from 1 January 2009,

13.	The Third Respondent, represented by the First Respondent, is in law liable to make funds available in the aforesaid amounts to the Fourth Respondent for payment to the Applicant, as well as for the amounts due in respect of January to March 2009 as and when those amounts become due, subject to compliance by the Applicant with its obligations in terms of the contract.
14.	The First Respondent has to pay the Applicant's costs of this application, including the costs of two counsel, as taxed or agreed.
15.	The question of costs between the Applicant and the Second Respondent is fully and finally settled on the basis that the Applicant pays the Second Respondent's party and party costs incurred up until close of business on Tuesday, 13 January 2009, including the costs of two counsel, as taxed or agreed.
[3] The aforementioned declaratory relief, obtained with the consent of the first and second respondents, understandably gave rise to an expectation by the applicant that payment of the admitted indebtedness would be forthcoming from government. That expectation has been disappointed. The second respondent's department has taken the position that there are insuperable legal obstacles standing in the way of its ability to lawfully satisfy the claim at this time.   It is that position that

precipitated the application brought before me on 28 January 2009. The fourth respondent did not participate in the proceedings; and there is no basis in law to ascribe a separate identity to the Government of the Republic of South Africa, which was cited as the third respondent, from that of the first and second respondents.

[4] Although the question of urgency was placed in issue on the papers, especially by the second respondent, I was advised at the commencement of the hearing that counsel had decided that the matter could indeed properly be entertained on an urgent basis. This decision was manifestly correct. The evidence is that if the money sum owed to the applicant is not paid before the end of this month there is every prospect that the applicant will be unable to continue with its operations. The calamitously adverse human and economic consequences of the cessation of the bus services to the commuting public of greater Cape Town are so obvious as not to require description. The prospect that such consequences might be visited on the community should, I would have thought, have been sufficient consideration for an urgent political or administrative solution to have been sought.

[5] The matter has instead been put before the court because the second respondent has taken the position that the existing statutory framework ties his hands and prevents him from making payment even if he wished to. The exigencies have necessitated the argument and determination of the issues in circumstances far from ideal having regard to the importance of the legal and practical matters involved. I have had to prepare this judgment amidst the other demands of dealing with yesterday's enlisted motion roll. The court's ability to assist the applicant in obtaining payment of the admitted liability is in any event limited because it is well-established that, as the law currently stands, any order of the court sounding in money against the government cannot be executed against the property of the State as would ordinarily be the case in equivalent litigation between private individuals or entities. This is an incidence of the provisions of s 3 of the State Liability Act 20 of 1957, which provides:

'Satisfaction of judgment
No execution, attachment or like process shall be issued against the defendant or respondent in any such action or proceedings or against any property of the State, but the amount, if any, which may be required to satisfy any judgment or order given or made against the nominal defendant or respondent in any such action or

proceedings may be paid out of the National Revenue Fund or a Provincial Revenue Fund, as the case may be.'

PFMA') provided a sufficiently effective framework for the satisfaction of judgment debts against the State to save s 3 of the State Liability Act from any suggestion of unconstitutionality on account of its prohibition against execution of such judgments against the State. Against that backdrop, the irony of the position adopted by the second respondent's department in the current matter cannot escape notice.

current application in a manner adverse to the applicant was misplaced.

deposed to the answering affidavit on behalf of the second respondent.

15      Withdrawals and investments from National Revenue Fund

16.	to refund money invested by a province in the National Revenue Fund; or
17.	to refund money incorrectly paid into, or which is not due to, the National Revenue Fund.

(b) When money in the National Revenue Fund is invested, the investment, including interest earned, is regarded as part of the National Revenue Fund.

Schedule 5
DIRECT CHARGES AGAINST NATIONAL REVENUE FUND Payments in terms of the following Acts:

18.	Remuneration of Public Office Bearers Act, 1998 (Act 20 of 1998) (Covering the President's salary and the salaries of members of Parliament sections 2 (7) and 3 (7));
19.	Remuneration and Allowances of Deputy Presidents, Ministers and Deputy Ministers Act, 1994 (Act 53 of 1994) (Covering the salary of the Deputy President section 4(a));
20.	Judges' Remuneration and Conditions of Employment Act, 1989 (Act 88 of 1989) (Covering salaries and allowances of Judges and Judges seconded to governments of other countries in terms of section 2).
21.	Magistrates Act, 1993 (Act 90 of 1993) (covering remuneration of magistrates in terms of section 12).

to refer to enactments dealing with 'direct charges' expressly identified as such in the Constitution. Whatever the reason, the existence of the proviso has the effect of materially narrowing the broader provisions of s 213 of the Constitution of which s 15(1)(a) of the PFMA is otherwise a direct reflection. Section 213(2) of the Constitution provides:

(2) Money may be withdrawn from the National Revenue Fund only-(a)      in terms of an appropriation by an Act of Parliament; or
(b)      as a direct charge against the National Revenue Fund, when it is provided for in the Constitution or an Act of Parliament.
No attack was made by the applicant, however, on the constitutionality of the proviso to s 15(1 )(a)(ii) of the PFMA.

the budgetary allocation or assignment of expenditure allowances for particular purposes from the NRF or the Provincial Revenue Fund. These dedicated statutory appropriations constitute the authorisation for the expenditure of State funds for the purposes identified and within the monetary limits therein determined. Section 3 of the State Liability Act identifies the NRF as a source from which the State's judgment debts may be paid, but it contains nothing having the effect of an appropriation of funds for that purpose. If anything, s 3 of the State Liability Act characterises judgment debts rather as a 'direct charge' on the NRF because it authorises that payments in satisfaction of money judgments may be made from the NRF.

[15] No submissions were made to the court by any of the parties on the meaning of the term 'direct charge'. In context, both with regard to the Constitution and the PFMA, the meaning is clear. It denotes a demand on the Fund in question (be it the NRF or a Provincial Revenue Fund) that arises directly from a generally authorising provision, as distinct from expenditure that is provided in terms of an act of appropriation in the sense explained in paragraph [13], above. It is the absence of the intervening requirement for an act of appropriation as authority for a withdrawal from the Fund that makes the charge direct. The expenditure from the Fund that is permissible when a direct charge is involved is lawful and authorised notwithstanding the absence of a budgetary allocation.

'(l) When interpreting the Bill of Rights, a court, tribunal or forum-
(a)      must promote the values that underlie an open and democratic society based on human dignity, equality and freedom;

22.	must consider international law; and
23.	may consider foreign law.
(2) When interpreting any legislation, and when developing the common law or customary law, every court, tribunal or forum must promote the spirit, purport and
objects of the Bill of Rights.'

'There is a National Revenue Fund into which all money received by the national government must be paid, except money reasonably excluded by an Act of Parliament.'

Section 213(1) of the Constitution has its equivalent in respect of Provincial Revenue Funds in s 226(1).

'An order or decision issued by a court binds all persons to whom and organs of state to which it applies.'

against the State were rendered subject to permissive authority by another arm of government, namely the legislature, by the adoption of appropriating legislation the separation of powers between the judicial, legislative and executive arms of government which is part of the basic Constitutional framework of government in South Africa would be contradicted.

attention was drawn, that suggests any intention to render the settlement of judgment debts - which arise from the institution of actions by persons outside the State and judgments given thereon by the courts, without any duty to have regard to the State's budgetary provisions - subject to parliamentary acts of appropriation.

which state 'In the event of any inconsistency between this Act and any other legislation, this Act prevails' served such a purpose. In the light of my principal findings it is unnecessary to dwell on this submission other than to remark that as an indication of special legislative intent it is about as opaque as any statutory provision could possibly contrive to be.

entitlement to relief substantially in accordance with paragraph 3 of the notice of motion.

against the first respondent in this application would appear to have been inappropriate and required him to appear represented by separate counsel from those representing the second respondent. In all the circumstances, I have determined that it would be fair to make no costs order either in favour or against the first respondent.

[32] The applicant made a contingent application for condonation in terms of s 3(4) of the Institution of Legal Proceedings against Certain Organs of State Act 40 of 2002. To the extent that such condonation might be necessary, as to which I express no opinion, no-one suggested it should not be granted.

[33]    In the circumstances the following orders are made:
24.	The Applicant's non-compliance with the forms and time periods provided in the Uniform Rules of Court is condoned in terms of Rule 6(12) to the extent necessary by reason of the urgency of the application.
25.	To the extent necessary the Applicant is granted condonation in terms of Section 3(4) of the Institution of Legal Proceedings against Certain Organs of State Act, 40 of 2002.

Judgment is granted in the Applicant's favour against the First Respondent in the amount of R94 505 098,24 (being the total of the amounts set out in paragraph 2 of the Order of this Court issued under case number 21303/2008 on Thursday 15 January 2009, together with interest calculated in terms of the provisions of the said paragraph.
It is declared that the Second Respondent is not prohibited by the provisions of s 213(2) of the Constitution or s 15(1)(a) of the Public Finance Management Act 1 of 1999 from effecting immediate payment of the judgment debt arising from paragraph 2 hereof from the National Revenue Fund upon the request of the applicant and/or the first respondent.
In the event of payment of the aforementioned judgment debt not being effected promptly upon request, the Applicant is granted leave to apply for such further relief as it might be advised to seek upon the same papers duly supplemented and upon appropriate notice to the affected parties.
The second respondent is ordered to pay the applicant's costs of suit, including the costs of two counsel.

A.G. BINNS-WARD
Acting Judge of the High Court

Instructed by	Mr C Hendricks of Marais Muller Yekiso

		

Date of hearing			28 January 2009

Judgment delivered on		30 January 2009