Johannesburg Water (Soc) Ltd v Dark Fibre Africa (Pty) Ltd (A2023/081149) [2025] ZAGPJHC 459 (14 May 2025)

Case Note

Case Name: Johannesburg Water v Dark Fibre
Citation: [Not provided, refer to the judgment text]
Date: [Not provided in the judgment text]

Reportability

This case is reportable because it addresses the fundamental issue of whether an institution such as Johannesburg Water may be treated as an “organ of state” under the Legal Proceedings Act. The judgment outlines the significance of determining the correct characterization of an institution that performs a constitutional function, in this case, the provision of water as a basic municipal service. This determination is crucial for regulating the state’s liabilities and the prelitigation notice process, which has broader implications for state accountability and debt collection procedures.

The decision also highlights important considerations in interpreting statutory provisions that govern which entities fall within the ambit of the Legal Proceedings Act. The analysis of the function performed by Johannesburg Water in light of constitutional obligations underscores the importance of aligning statutory interpretation with constitutional values. In doing so, the court confirms that it is the function of the institution, and not merely its form or regulatory framework, that determines its status as an organ of state.

Finally, the judgment is of importance to future cases where the distinction between purely private entities and those performing constitutional functions is in question. The analysis helps clarify the boundaries of liability and state underwrite when institutions are set up to fulfill essential public services.

Cases Cited

Haigh v Transnet Ltd 2012 (1) SA 623 (NCK)
Nicor IT Consulting (Pty) Ltd v North West Housing Corporation 2010 (3) SA 90 (NW)

Legislation Cited

Institution of Legal Proceedings Against Certain Organs of State Act 40 of 2002
Constitution of the Republic of South Africa, 1996
Municipal Systems Act 32 of 2000
Companies Act 71 of 2008
Public Finance Management Act 1 of 1999

Rules of Court Cited

Magistrates’ Court Rules, specifically Rule 51

HEADNOTE

Summary

In this case, the court was required to determine whether Johannesburg Water qualifies as an “organ of state” within the meaning of the Legal Proceedings Act. The central issue involved whether the institution’s sole function of providing water as a basic municipal service constitutes performance of a constitutional function. The court held that the nature of the function performed is the key determining factor.

The judgment explains that although Johannesburg Water does not derive its powers directly from the Constitution, its exclusive and dominant purpose is to carry out a constitutional function. This role places it within the scope of the Legal Proceedings Act despite the fact that its regulatory framework comes from various statutes such as the Municipal Systems Act and the Companies Act. The court’s reasoning dismisses arguments based solely on the source of power or direct constitutional derivation.

Furthermore, the court articulated that the state has an interest in tracking liabilities incurred through constitutional functions. This reasoning supports the conclusion that Johannesburg Water is an organ of state, ensuring that the prelitigation notice procedure under section 3 of the Act is applicable. The decision clarifies how entities performing essential public services are to be treated under the law.

Key Issues

The key legal issues addressed in the judgment include:
- Whether the performance of a constitutional function must be derived directly from the Constitution in order to qualify an institution as an “organ of state”
- The significance of the function performed by Johannesburg Water in determining its status
- The implications for the prelitigation notice procedure required by the Legal Proceedings Act when dealing with state liabilities

Held

The court held that Johannesburg Water is indeed an organ of state under the Legal Proceedings Act. The decision was based on the recognition that the institution’s exclusive purpose is to perform a constitutional function—namely, the provision of water as a basic municipal service. As such, despite not deriving its powers directly from the Constitution, Johannesburg Water meets the criteria by performing a function in terms of the Constitution. The court remanded that Dark Fibre must now seek condonation for its failure to provide notice under section 3 of the Act.

THE FACTS

Johannesburg Water is a municipal entity set up under the Municipal Systems Act and wholly owned and controlled by the City of Johannesburg. Its explicit function is to provide water to the residents of Johannesburg, thereby performing an essential constitutional function under sections 27(1)(b) and 152(1)(b) of the Constitution. The respondent, Dark Fibre, which owns a network of underground fibreoptic cables, alleged that contractors working for Johannesburg Water negligently damaged one of its cables during work on an underground water pipe in Greenside, Johannesburg.

The claim by Dark Fibre sought recovery of the reasonable cost of repairs for the alleged damage, amounting to just over R320,000. In its defense, Johannesburg Water argued that Dark Fibre failed to comply with the notice requirement set out in section 3 of the Legal Proceedings Act, a prerequisite for any claim against an organ of state. Dark Fibre, in turn, contended that Johannesburg Water was not an organ of state, thus challenging the applicability of the notice requirement.

Ultimately, the lower court ruled in favor of Dark Fibre, accepting the special plea regarding the lack of proper notice. Johannesburg Water appealed this decision, leading to the analysis and findings detailed in the judgment under discussion.

THE ISSUES

The legal questions before the court revolved around the proper interpretation of what constitutes an “organ of state” under the Legal Proceedings Act. The court needed to decide whether the institution’s setting and regulatory framework should affect its status, or if the primary consideration should be the function it performs. Additionally, the court addressed whether the failure to serve notice, as stipulated under section 3 of the Act, could be excused or whether it should effectively bar Dark Fibre’s claim if Johannesburg Water were indeed regarded as an organ of state.

Furthermore, there was a debate regarding whether an institution must derive its powers directly from the Constitution in order to perform a constitutional function. The court was asked to reconcile the reasoning applied in previous cases such as Haigh and Nicor with the practical and constitutional considerations of municipal service provision. These issues aimed to clarify the extent of state liability and the mechanisms for debt collection when funds are claimed against state entities.

ANALYSIS

The court analyzed the statutory requirements of the Legal Proceedings Act alongside the underlying constitutional purpose of institutions performing public functions. The key point emphasized was that the exclusive or dominant aim of the institution is central. Johannesburg Water was established solely to perform the constitutional function of providing water to the residents of Johannesburg. The court reasoned that it is immaterial whether the institution derives its powers directly from the Constitution; rather, the focus should be on the nature and purpose of the functions it performs.

The reasoning involved a detailed discussion of precedents such as Nicor and Haigh. The court critically examined the proposition that an institution must explicitly derive its powers from the Constitution, finding this approach too narrow. Instead, it supported a broader interpretation where the performance of a constitutional function—despite regulation by other statutes such as the Companies Act or the Municipal Systems Act—is sufficient for classification as an organ of state. The judgment noted that such an interpretation is necessary to avoid absurd results, such as erroneously classifying non-governmental organisations with charitable objectives as organs of state simply because they perform functions that relate to constitutional entitlements.

The court also emphasized the practical need for the state to monitor liabilities incurred by bodies carrying out constitutional functions. By regarding Johannesburg Water as an organ of state, the law ensures that creditors like Dark Fibre provide early notice of their claims. This measure safeguards the financial interests of the state and reinforces the accountability mechanism set forth in the Legal Proceedings Act.

REMEDY

The remedy provided by the court was to overturn the Magistrate’s decision regarding the special plea. The court held that Johannesburg Water’s status as an organ of state meant that it was entitled to the statutory notice under section 3 of the Legal Proceedings Act. Consequently, Dark Fibre must now seek condonation from the lower court for its failure to serve the required notice. This remedy ensures that the proper procedural framework is applied to the claim, aligning with the Act’s objectives of adequately tracking state liabilities.

The decision does not end Dark Fibre’s claim. Instead, it remands the case to the lower court where the applicant must demonstrate good cause and establish that the claim has not prescribed. The emphasis on following proper notice procedures is critical to maintain the integrity of claims against organs of state. The remedy thus underscores a balanced approach between state accountability and procedural fairness.

LEGAL PRINCIPLES

The judgment establishes the key legal principle that an institution can be deemed an “organ of state” not solely on the basis of its source of power but predominantly on the nature of its functions. The dominant principle is that if an entity is organized to perform a constitutional function—even if regulated by external statutes—it falls within the ambit of the Legal Proceedings Act. This interpretation ensures that the state’s financial liabilities remain transparent and properly accounted for under established legislative processes.

Additionally, the decision clarifies that a rigid requirement for powers to be derived directly from the Constitution would yield impractical results and neglect the broader purpose of the entity. The court’s reasoning prioritizes the purpose and extent of the services rendered by the institution over its formal constitutional derivation. Lastly, the judgment reinforces the importance of adhering to statutory notice procedures when claims are made against bodies performing state functions, thereby promoting consistency and accountability in state financial matters.