Nicor IT Consulting (Pty) Ltd v North West Housing Corporation

• Jurisdiction: South Africa
• Judge: Lever AJ
• Judgment Date: 21 May 2009
• Citation: 2010 (3) SA 90 (NWM)
• Docket Number: 2538/07
• Hearing Date: 21 May 2009
• Counsel: JF Roos SC for the excipient (plaintiff). MG Hitge for the respondent (defendant).
• Court: North West High Court, Mafikeng

Lever AJ: B

[1] The plaintiff (present excipient) served a simple summons on the defendant (present respondent) and subsequently its declaration, claiming just over R2 million, being the balance allegedly due to the plaintiff in terms of certain written agreements entered into between plaintiff and C defendant. In response the defendant filed a special plea and plea. The plaintiff then filed an exception to the defendant's special plea on the basis that such special plea lacked the averments necessary to sustain a defence.

[2] The defendant set out its special plea in the following terms:

D '1.

SPECIAL PLEA

In terms of section 3(1) of the Institution of Legal Proceedings against certain Organs of State Act 40 of 2002, no legal proceedings for the E 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 F institution of the legal proceedings without such notice.

2.

A notice in terms of section 3(1) must within six months from the date on which the debt became due be served on the organ of State.

3.

G The Plaintiff's alleged cause of action is based on an alleged contractual debt due to it by the Defendant.

4.

The Defendant is an organ of State as contemplated in Act number 40 of 2002.

H 5.

The Plaintiff has failed to comply with section 3 of the aforestated Act.

6.

The Defendant has not consented to the institution of legal proceedings I without complying with section 3 of the said Act.

7.

The Plaintiff has neither applied to this Honourable Court for condonation for the abovestated failure, nor has this Honourable Court granted leave to institute the legal proceedings presently in question J prior to filing of the summons herein.'

Lever AJ

[3] The plaintiff's exception is set out in the following terms: A

'TAKE NOTICE that the Plaintiff excepts to the Defendant's special plea as lacking averments which are necessary to sustain a defence on one or more of the following grounds: -

1.

The special plea is based on the provisions of section 3(1) of the Institution of Legal Proceedings against certain B Organs of State Act 40 of 2002 (the Act) and is founded on the following allegations: -

1.1

A notice in terms of section 3(1) must within six months from the date on which the debt became due be served on the organ of State.

1.2

The Plaintiff's alleged cause of action is based on an alleged C contractual debt due to it by the Defendant.

1.3

The Defendant is an organ of State as contemplated in Act number 40 of 2002.

1.4

The Plaintiff has failed to comply with section 3 of the aforestated Act. D

1.5

The Defendant has not consented to the institution of legal proceedings without complying with section 3 of the said Act.

1.6

The Plaintiff has neither applied to this Honourable Court for condonation for the abovestated failure, nor has this Honourable E Court granted leave to institute the legal proceedings presently in question prior to filing of the summons herein.

2.

In terms of section 2(2) of the North West Housing Corporation Act, 24 of 1982 (the Housing Act) the Defendant is a corporation that is vested with locus standi and a separate legal personality. F

3.

"Organ of State" is defined in the Act as meaning: -

"'organs (sic) of State' means -

. . .

(c)

any functionary or institution exercising a power or performing a function in terms of the Constitution, or a provincial constitution referred to in section 142 of the Constitution. . . . " G

4.

The Defendant is a corporation established in terms of the Housing Act and is not an organ of State as defined in the Act.

5.

Debt as defined in the Act means any debt arising from any cause of action: -

"(a)

which arises from delictual, contractual or any other liability, H including a cause of action which relates or arises from any -

(i)

act performed under or in terms of any law; or

(ii)

omission to do anything which should have been done under or in terms of any law; and

(b)

for which an organ of State is liable for payment of damages, whether such debt became due before or after the fixed date." I [Emphasis inserted by the plaintiff.]

6.

The Plaintiff's claim against the Defendant is for specific performance due in terms of the contract upon which the Plaintiff's cause of action is founded. The Plaintiff is not claiming damages. Accordingly: -

6.1

the Plaintiff's claim is not for a debt as defined in the Act; J

Lever AJ

6.2

A the Plaintiff was not required to serve a notice in terms of section 3 of the Act before instituting action against the Defendant.

Wherefore the Plaintiff claims an order: -

1.

That the exception be upheld;

2.

B That the special plea be struck out;

3.

That the Defendant pay the costs hereof.'

[4] It is common cause that the plaintiff had not served the notice contemplated in s 3 of the Institution of Legal Proceedings against certain Organs of State Act 40 of 2002 (the Act). It is also common cause C that the defendant has not consented to the initiation of legal proceedings without the relevant notice. It is further common cause that the plaintiff has not as yet sought condonation for its failure to serve the said notice. In these circumstances it was argued on behalf of the defendant that, in the event of the exception being dismissed, I should uphold the special plea and dismiss the plaintiff's claim.

D [5] As has already been stated, the plaintiff's claim is for an outstanding balance due in terms of a written contract. Both plaintiff and defendant have characterised the plaintiff's claim as a claim for 'specific performance'. In the circumstances of the plaintiff's claim it may well be correct to describe it as a claim for specific performance. However, it is E not necessary for me to deal with or decide whether this terminology is correct. For present purposes it is only necessary for me to recognise and distinguish between a claim where a party alleges that it has performed all of its obligations in terms of a contract, and that it is now entitled to be paid the agreed amount, and a claim where a party claims that there F has been breach of the contract and as a result of such breach it claims damages. In short, it is only necessary to distinguish between a claim enforcing the reciprocal obligations due under a contract, and a claim for damages out of breach of contract.

[6] The plaintiff in its exception to defendant's special plea raises two G issues. Firstly, that defendant is not an 'organ of State' as defined in the Act. Secondly, the plaintiff's claim is not a 'debt' as defined in the Act. Accordingly, the plaintiff contends that the Act is not applicable and that plaintiff was not required to give the defendant the notice contemplated in s 3 of the Act before it instituted the present action against the H defendant.

[7] 'Organ of State' is defined in the Act and such definition has already been set out in the extract of the exception quoted above. For the purpose of evaluating the submissions made on behalf of both the plaintiff and the defendant, as to whether the defendant is an organ of State or not, it is useful and instructive to contrast the definition set out I in the Act with the definition set out in the Constitution. In the Constitution:

'"organ of State" means -

(a)

any department of State or administration in the national, provincial or local sphere of government; or

(b)

J any other functionary or institution -

Lever AJ

(i)

exercising a power or performing a function in terms of the A Constitution or a provincial constitution; or

(ii)

exercising a public power or performing a public function in terms of any legislation,

but does not include a court or judicial officer. . . . ' [1]

The definition of organ of State in the Act as contained in clauses (a), B (b) and (c) of such definition is essentially the same as that set out in s 239 of the Constitution. The material difference is that the definition in the Constitution includes a functionary or institution that exercises a public power or performs a public function in terms of any legislation. The definition in the Act does not go that far and does not include any functionary or institution performing a public power or performing a C public function in terms of any legislation.

[8] Counsel for the defendant, Mr Hitge, submitted that the defendant is an 'organ of State' as defined in the Act. In support of this submission he argued that the State has an obligation to provide housing in terms of the D Constitution, [2] that in terms of Schedule 4 of the Constitution housing is a concurrent national and provincial competence. Mr Hitge then referred the court to s 19 of the North West Housing Corporation Act, [3] which clothes the defendant with wide-ranging powers, functions and duties in relation to the provision of housing within the province. On behalf of the defendant it was further submitted that it is a public corporation wholly E owned by the North West Provincial Government, represented by the MEC for Local Government and Housing; that the defendant is a publicly funded entity, which is listed in part C of Schedule 3 of the Public Finance Management Act [4] (PFMA); that the defendant exercises public powers and functions as contemplated in the North West Housing F Corporation Act, read with the Constitution. Mr Hitge then concluded that, on the basis of the submissions set out above, the defendant fell within para (c) of the definition of 'organ of State' contained in the Act.

[9] Mr Roos, on behalf of the...