Bastian Financial Services (Pty) Ltd v General Hendrik Schoeman Primary School (207/07) [2008] ZASCA 70; [2008] 4 All SA 117 (SCA); 2008 (5) SA 1 (SCA) (30 May 2008)

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[2008] ZASCA 70
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Bastian Financial Services (Pty) Ltd v General Hendrik Schoeman Primary School (207/07) [2008] ZASCA 70; [2008] 4 All SA 117 (SCA); 2008 (5) SA 1 (SCA) (30 May 2008)

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THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
CASE NO: 207/07
Reportable
In the matter between:
BASTIAN FINANCIAL SERVICES (Pty)
Ltd
... A
ppellant
and
GENERAL HENDRIK SCHOEMAN PRIMARY
SCHOOL
...
Respondent
Coram
:
Harms
ADP, Streicher, Heher &
Van
Heerden JJA et Hurt AJA
Heard:
9 May 2008
Delivered:
30 May 2008
Summary:
Contract – public school – liability of school for contractual
damages – whether s 60(1) of Schools Act 84 of 1996
renders the State
liable for claims for contractual damages against a public school
Neutral
citation:
Bastian
Financial Services v General Hendrik Schoeman Primary School
(207/2007)
[2008] ZSCA 70 (30 May
2008)
JUDGMENT
VAN HEERDEN JA
:
Introduction
A
public school leased photocopier equipment from a supplier for a
specified period. The school then failed to pay the instalments
due
under the written lease agreement. The supplier cancelled the
agreement and sued the school in the magistrate’s court, claiming
(inter alia) payment of the total rentals which would have been
payable had the agreement run its prescribed course. Provided that
the supplier can prove its case satisfactorily, is the public school
liable to the supplier in this regard? In the ordinary course,
one
would have thought so. The school, however, thought otherwise, and
the relevant magistrate’s court, as well as the Pretoria
High
Court, agreed with it. The issue which must be decided in the
present appeal is whether the magistrate’s court and the court
below were correct in that conclusion.
During 2002, the appellant, Bastian Financial Services (Pty) Ltd
(BFS), instituted action in the Brits
Magistrate
’s
Court against the respondent, the General Hendrik Schoeman Primary
School (the School), claiming relief arising from the cancellation
of a lease agreement. The School opposed the action, denying that it
was in breach of any of the terms of the agreement and pleading
repudiation of the agree­ment by BFS. The School also raised
certain special pleas to the claim. The special plea relevant
to
this appeal is based on the provisions of s 60(1) of the
Schools Act 84 of 1996 (the Act), which section imposes liability
on
the State for damage or loss caused ‘as a result of any act or
omission in connection with any educational activity conducted
by a
public school’, for which the school would otherwise have been
liable. The School pleaded that BFS had sued the wrong party.
It
claimed that the School was indemnified against the contractual
claim, which it contended had to be instituted against the Member
of
the Executive Council for Education of the North West Province (the
MEC) as the provincial representative of the State. This
special
plea was upheld by the
magistrate, whose decision
was confirmed on appeal by
the court a quo (per Preller J,
Engelbrecht AJ concurring). The present appeal comes before us
with leave granted by that
court.
Factual
background
The
written agreement, in terms of which BFS leased certain photocopier
equipment to the School for a period of five years, was
concluded
during September 1999. It is common cause that the equipment was
rented by the School in connection with ‘educational
activities’
conducted by it. As indicated above, BFS cancelled the agreement
and, relying on the express provisions thereof,
claimed the
following relief:
confirmation
of its cancellation of the agreement;
return
of the equipment to BFS;
payment
of the sum of R461 318,33 plus VAT, being the aggregate value
of the rentals which would have been payable had that
agreement
continued until the expiry of the rental period;
interest
on the latter amount at the agreed rate;
costs
on the attorney and client scale.
Before the
magistrate
, only the special
pleas were argued, with no viva voce evidence being presented by
either side.
Statutory
framework
With
regard to the School’s special plea based on s 60(1), BFS
presented a twofold argument: first, it contended that its
claim was
not one for ‘damage or loss’, as contemplated by s 60(1);
rather, it was one for specific performance in terms
of the
contract. Second, BFS contended that in any event, on a proper
interpretation of s 60(1), it applies only to claims arising
in
delict and not to claims for contractual damages.
I
shall first consider the argument based on the interpretation of
s 60(1). In this regard, the court a quo concluded that
the
ordinary grammatical meaning of the words ‘damage or loss caused
as a result of any act or omission in connection with any
educational activity’ includes claims for damages arising from
both contract and delict.
The
issues presently under discussion arose in
Technofin Leasing &
Finance (Pty) Limited v Framesby High School & Another
.
1
It appears that neither counsel nor the High Court was aware of that
decision prior to the date of judgment – the only reference
to the
decision that appears in the record is in the High Court’s
judgment granting leave to appeal to this court. In the
Framesby
matter – incidentally also involving the lease of photocopier
machines to a public school – the parties, by way of a stated
case, required the court to interpret s 60 of the Act so as to
determine which of the school or the relevant MEC was liable
to the
plaintiff for breach of contract, if such breach could be proved. In
his judgment, Pickering J considered similar arguments
to the
ones advanced before us and concluded ‘that there is no reason to
limit the State's liability in terms of s 60 so
as to exclude
damage or loss caused contractually’.
2
Before the most recent amendment to s 60 (in terms of the
Education
Laws Amendment Act 31 of 1997
, which came into operation on 31
December 2007 and thus does not apply to the present matter),
3
the section provided:
‘
(1)
The State is liable for any damage or loss caused as a result of any
act or omission in connection with any educational activity
conducted
by a public school and for which such public school would have been
liable but for the provisions of this section.
(2) The
provisions of the State Liability Act, 1957 (Act No. 20 of 1957),
apply to any claim under subsection (1).
(3) Any claim
for damage or loss contemplated in subsection (1) must be instituted
against the Member of the Executive Council concerned.
(4) Despite the
provisions of subsection (1), the State is not liable for any damage
or loss caused as a result of any act or omission
in connection with
any enterprise or business operated under the authority of a public
school for purposes of supplementing the resources
of the school as
contemplated in section 36, including the offering of practical
educational activities relating to that enterprise
or business.
(5) Any legal
proceedings against a public school for any damage or loss
contemplated in subsection (4), or in respect of any act
or omission
relating to its contractual responsibility as employer as
contemplated in section 20(10), may only be instituted after
written
notice of the intention to institute proceedings against the school
has been given to the Head of Department for his or her
information.’
Other
provisions of the Act which are relevant to this appeal are s
15, certain subsections of ss 16, 20, 21 and 34, s 36
(prior to
amendment of this section in 2001)
4
and s 58A(4):
Section
15,
under
the heading ‘Status of
public schools’, provides that
every public school is a
juristic person, with legal capacity to perform its functions in
terms of the Act.
Section
16
deals
with ‘Governance and
professional management of public schools’ and provides that the
governance of every public school is
vested in its governing body,
which ‘may perform only such functions and obligations and
exercise only such rights as prescribed
by the Act’ (subsec (1)).
A governing body stands in a position of trust towards the school
(subsec (2)), while the ‘professional
management’ of a public
school must be undertaken by the principal under the authority of
the Head of Department (subsec (3)).
Section 20
deals with
‘Functions of all governing bodies’ and provides, in sub-sec
(4), that, subject to the Act and certain other provisions,
‘a
public school may establish posts for educators and employ
educators additional to the establishment determined by the Member
of the Executive Council in terms of section 3(1) of the Educators’
Employment Act, 1994.’
Subsection
(5) permits a public school to ‘establish posts for non-educators
and employ non-educators additional to the establishment
determined
in terms of the Public Service Act, 1994 (Proclamation No. 103 of
1994).’
Subsection
(10) provides that, ‘(d)espite section 60, the State is not
liable for any act or omission by the public school relating
to its
contractual liability as the employer in respect of staff employed
in terms of subsections (4) and (5).’
Section
21
, dealing with ‘Allocated functions of
governing bodies’, provides (in subsec (1)) that a governing body
may apply to the
Head of Department in writing to be allocated
certain functions, including the purchasing of textbooks,
educational materials
and equipment for the school and the payment
for services to the school (paragraphs (c) and (d) of subsec (1)).
The
Head of Department may refuse an application made by the governing
body in terms of subsec (1) only if the governing body concerned
does not have the capacity to perform such function effectively
(subsec (2)); or may approve such application unconditionally or
subject to conditions (subsec (3)). The decision of the Head of
Department must be conveyed in writing to the governing body
concerned,
giving reasons (subsec (4)), whereupon any person
aggrieved by this decision may appeal to the Member of the Executive
Council
(subsec (5)).
In terms of s 21(6), ‘the Member of the
Executive Council may, by notice in the Provincial Gazette,
determine that some governing
bodies may exercise one or more
functions without making an application contemplated in subsection
(1), if –
(a) he or she is satisfied that the governing bodies
concerned have the capacity to perform such function effectively;
and
(b)
there is a reasonable and equitable basis for doing so.’
5
Section
34
places an obligation on the State to
‘
fund public schools from public revenue on an
equitable basis in order to ensure the proper exercise of the rights
of learners to
education and the redress of past inequalities in
education provision.’
In
terms of
s 36
,
the governing body of a public school ‘must take all reasonable
steps to supplement the resources supplied by the State in order
to
improve the quality of education provided by the school to all
learners at the school’.
Finally,
s 58A
regulates
‘
Alienation of assets of public school’ and
provides, in subsec (4) thereof, that ‘(t)he assets of a public
school may not be
attached as a result of any legal action taken
against the school.’
6
For the sake of completeness, mention should also be made of the
Preamble to the Act, the relevant portion of which provides that
–
‘
WHEREAS this country requires a
new national system for schools which will . . . promote their
7
acceptance of responsibility
for the organisation, governance and funding of schools in
partnership with the State . . . .’.
Interpretation
of section 60(1) of the Act
BFS
contended, inter alia, that the inclusion of the words ‘any act or
omission in connection with’ in s 60(1) indicated an
intention on
the part of the legislature to limit the circumstances under which
the State would be held liable for damage or loss,
to delictual
claims against a public school. Moreover, so counsel for BFS
submitted, the wording of s 60(1) (in particular, the
reference to
‘act or omission’) has a particular ‘delictual flavour’ in
that, although this term is not used
exclusively
in the
delictual sphere, this is the area of law where it is most often to
be found.
A
further argument advanced by counsel for BFS was to the effect that,
in terms of the Act, public schools have been given a high
degree of
autonomy in conducting their own affairs, through the medium of
their respective governing bodies in which the governance
of public
schools is vested. The corollary of the freedom to enter into
contracts conferred on the governing bodies of public schools
by the
Act (in particular ss 20 and 21 thereof), so it was contended, is
that such schools must be held accountable under contracts
entered
into on their behalf by their governing bodies. This accountability
would include liability to the other party to such
a contract for
both specific performance and damages for breach thereof.
Counsel for the school countered these submissions by pointing to
the broad wording of s 60(1) and the fact that the section does
not
make any express reference to delictual liability, the State’s
liability being expressed in the most general language. So
too, the
term ‘act or omission’ contained in s 60(1) is not defined or
expressly limited in any way. Thus, argued counsel,
when given their
ordinary grammatical meaning, these words include any step of any
nature or any obligation required to be fulfilled.
Interpreted in
this way, the words must include within their ambit any breach of
any term of a contract requiring the school to
take certain steps or
to fulfil certain obligations and, likewise, any failure on the part
of the school to take such a step or
to fulfil such an obligation in
terms of the contract.
In advancing these arguments, counsel for the school relied on the
following dictum of Van Zyl J in
Strauss v MEC for Education:
8
‘
In this regard, s 60(1) of the
Act has been described as an “umbrella provision” directed at
establishing State liability in
the circumstances referred to in
such section. See
Louw
en ’n Ander v LUR vir Onderwys en Kultuur, Vrystaat, en ’n Ander
2005 (6) SA 78
(O) ([2006]
4
All SA 282)
in para [13] at 85B-C (SA) (
per
Cillié J):
“
Artikel 60(1)
is
’
n sambreelbepaling wat
daarop gerig is om aanspreeklikheid by die Staat te vestig in die
omstandighede waarna in die artikel verwys
word. Opvoeding in ’n
openbare skool is in die eerste instansie ’n
Staatsverantwoordelikheid. Daarom maak dit sin dat die Wetgewer
die
Staat verantwoordelikheid wil laat aanvaar vir skade of verlies wat
veroorsaak word as gevolg van ’n daad of versuim wat
voortspruit
uit ’n opvoedkundige aktiwiteit by ’n openbare skool.”
See
also the
Technofin
case
[supra n 1] at 92I-93C (SA), where Pickering J observed that s 60
“is couched in the broadest of terms and the State’s
liability
is expressed in the most general language”. Indeed, in the “wide
language” of the section there was nothing to
indicate that it was
restricted to delictual liability.’
9
The court below concluded that the ordinary grammatical meaning of
the words ‘damage or loss caused as a result of any act or
omission’ in s 60(1) includes claims for damages arising from
both contract and delict. As I have already stated,
10
this was also the conclusion reached by Pickering J in
Framesby
:
11
‘
There
is, therefore, in my view, nothing in the wide language of s 60
itself which indicates that it was the intention of the Legislature
to limit the liability referred to therein to delictual liability
only.’
In
Manyasha v Minister of Law and Order
,
12
this Court reiterated the so-called ‘golden rule’ of statutory
interpretation
13
in the following terms:
‘
It
is trite that the primary rule in the construction of statutory
provisions is to ascertain the intention of the Legislature .
. .
One seeks to achieve this, in the first instance, by giving the
words of the provision under consideration the ordinary grammatical
meaning which their context dictates, unless to do so would lead to
an absurdity so glaring that the [Legislature] could not have
contemplated it’.
It is, however, also a well-established rule of construction that
words used in a statute must be interpreted in the light of their
context, and that, in this regard, the ‘context’ –
‘
[I]s
not limited to the language of the rest of the statute
regarded as throwing light of
a dictionary kind on the part to be interpreted. Often of more
importance is the matter of the statute,
its apparent scope and
purpose, and, within limits, its background . . . the legitimate
field of
interpretation
should not be restricted as a
result of an excessive peering at the language to be interpreted
without sufficient attention to the
contextual scene.’
14
This dictum from
Jaga’s
case has been quoted with approval
by the Constitutional Court in, inter alia,
Bato Star Fishing
(Pty) Ltd v Minister of Environmental Affairs & Others
,
15
that court remarking further –
with reference
to
Thoroughbred Breeders’ Association
v Price Waterhouse
16
– that ‘the emerging trend in statutory construction is to have
regard to the context in which the words occur, even where
the words
to be construed are clear and unambiguous.’
17
The relevant passage from the
Thoroughbred Breeders’
Association
case reads:
‘
The days are long past when
blinkered peering at an isolated provision in a statute was thought
to be the only legitimate technique
in interpreting it if it seemed
on the face of it to have a readily discernable meaning. As was said
in
University of
Cape Town v Cape Bar Council and Another
1986
(4) SA 903
(A) at 941D-E:
“
I
am of the
opinion
that the words of s 3(2)(d)
of the Act [the
Admission of Advocates Act 74 of 1964
], clear and
unambiguous as they may appear on the face thereof, should be read
in the light of the subject-matter with which they
are concerned,
and that it is only when that is done that one can arrive at the
true intention of the Legislature.” ’
It has also long been recognised in our case law that the aim of
statutory interpretation is to give effect to the object or purpose
of the legislation in question. Thus, in
Standard Bank Investment
Corporation Ltd v Competition Commission & Others; Liberty Life
Association of Africa Ltd v Competition
Commission & Others
,
18
Schutz JA, writing for the majority of this Court, stated that:–
‘
Our
Courts have, over many years, striven to give effect to the policy
or object or purpose of legislation. This is reflected in
a passage
from the judgment of Innes CJ in
Dadoo
Ltd and Others v Krugersdorp Municipal Council
1920
AD 530
at 543. But the passage also reflects that it is not the
function of a court to do violence to the language of a statute and
impose
its view of what the policy or object of a measure should
be.’
The learned judge referred
19
to
Public Carriers Association and Others v Toll Road
Concessionaries (Pty) Ltd and Others
20
as illustrative of the proposition that ‘our law is an
enthusiastic supporter of “purposive construction” in the sense
stated
by Smalberger JA’ in that case as follows:
21
‘
The primary rule in the
construction of statutory provisions is to ascertain the intention
of the Legislature. It is now well-established
that one seeks to
achieve this, in the first instance, by giving the words of the
enactment under consideration their ordinary
grammatical meaning,
unless to do so would lead to an absurdity so glaring that the
Legislature could not have contemplated it
. . . Subject to this
proviso, no problem would normally arise where the words in question
are only susceptible to one meaning:
effect must be given to such
meaning. In the present instance the words [which fell to be
interpreted by the court] are not linguistically
limited to a single
ordinary grammatical meaning. They are, in their context, on a
literal interpretation, capable of bearing the
different meanings
ascribed to them by the applicants, on the one hand, and the
respondents, on the other. Both interpretations
being linguistically
feasible, the question is how to resolve the resultant ambiguity. As
there would not seem to be any presumptions
or other recognised aids
to interpretation which can assist to resolve the ambiguity, it is
in my view appropriate to have regard
to the purpose of [the
statutory provision in question] in order to determine the
Legislature’s intention.
. . . .
. . . Mindful of the fact that the primary aim of
statutory interpretation is to arrive at the intention of the
Legislature, the
purpose of a statutory provision can provide a
reliable pointer to such intention where there is ambiguity . . . .
Be
that as it may, it must be accepted that the literal interpretation
principle is firmly entrenched in our law and I do not seek
to
challenge it. But where its application results in ambiguity and one
seeks to determine which of more than one meaning was intended
by
the Legislature, one may in my view properly have regard to the
purpose of the provision under consideration to achieve such
objective.’
22
At
first glance, the wording of
s 60(1)
is indeed sufficiently broad
and general to include within its ambit liability for both delictual
and contractual damages, as argued
by the School. On the other hand,
it is equally capable of being interpreted so as to apply only to
claims in delict against a
public school, rendering the State liable
for only such claims to the exclusion of the public school in
question, as argued by
BFS. Thus, in the words of Smalberger JA in
Public Carriers Association
,
23
‘the words . . . are not linguistically limited to a single
ordinary grammatical meaning.’ One therefore has to have regard
to
the context
24
in which these words are used in the Act, seen against the
background of the purpose of this legislation.
Counsel
for both parties accepted that s 60(1) does not exempt a public
school from liability to render specific performance of
contractual
obligations lawfully
25
undertaken by the school’s governing body on its behalf. Any claim
for specific performance by the other party to the contact
would
thus have to be instituted against the public school concerned, and
not against the MEC. Counsel also accepted that a claim
for the
return of goods at the instance of the supplier of such goods to a
public school, in terms of a contract entered into with
the school,
would have to be instituted against the school itself and not
against the MEC. In my view, both these propositions
are correct.
26
Even the broad and general wording of s 60(1) cannot legitimately be
interpreted to render the State liable for
specific performance
of contractual obligations lawfully undertaken by a public school
through the medium of its governing body.
The
public school itself, and not the State, is therefore liable for the
fulfilment
of a public school’s contractual obligations –
the other party to the contract cannot, as it were, rely on some
sort of ‘warranty’
by the State that the school will perform its
obligations under contracts which have been lawfully concluded. This
being so, it
is difficult to understand why the Legislature would
have intended s 60(1) of the Act to have the effect of imposing upon
the State
a ‘warranty’, vis à vis the other party to a contract
with a public school, to pay contractual damages to such other
contracting
party should the school breach its contractual
obligations.
As
pointed out by counsel for BFS, the Act envisages the creation of a
‘partnership’ between the State, on the one hand, and
the
‘learners, parents and educators’ of a public school, on the
other, all the ‘partners’ taking responsibility for the
organisation, governance and funding of the school.
27
The scheme of the Act is such that the ‘learners, parents and
educators’ of a public school are represented by its governing
body, the elected membership of which includes representatives of
all such categories.
28
In giving effect to the idea of a ‘partnership’, the Act confers
on public schools, through their governing bodies, a considerable
degree of autonomy in the governance of the school’s affairs.
29
Section 60(1) of the Act exempts the school from delictual liability
arising from ‘any educational activity conducted by it’,
30
and so protects both the school and the victims of any such delict
from the potentially dire consequences of a delictual claim.
To my
mind,
this
is the intended reach of s 60(1): it would be
contrary to the purpose and scheme of the Act as a whole to
interpret the section
in a manner so as to shift to the State
liability for contracts lawfully entered into by the school simply
because the school breaches
its contract and the other party seeks,
not specific performance of the contract, but rather damages for
such breach. It is perhaps
important to note that, with effect from
26 January 2006, the risk of essential school equipment such as
textbooks, classroom furniture,
teaching materials, sporting
equipment and the like being attached and sold in execution of the
school’s judgment debts no longer
exists.
31
One last aspect must be mentioned. Section 20(10)
32
of the Act exempts a public school from liability for ‘any act or
omission by the public school relating to its contractual liability
as the employer in respect of’ additional educators or
non-educators employed by the school governing body itself in terms
of
ss 20(4) and (5) of the Act. In
LUR vir Onderwys en Kultuur,
Vrystaat v Louw en ’n Ander
,
33
this court held that s  20(10) does not exclude the liability
of the State for delictual damage or loss caused by the negligent
act or omission of an educator or non-educator employed by the
governing body of a public school under ss 20(4) or (5). In this
regard, Streicher JA stated that:
‘
Die
aanspreeklikheid van die Staat word uitgesluit ten opsigte van
’
n
handeling of
’
n
late wat voortspruit uit die openbare skool se “kontraktuele
verantwoordelikheid as werkgewer teenoor die personeel aangestel
ingevolge subarts (4) en (5)”. In hierdie geval het die
personeellid
se handeling of late moontlik
voortgespruit uit haar kontraktuele verantwoordelikheid teenoor die
skool maar het duidelik nie voortgespruit
uit die kontraktuele
verantwoordelikheid van die skool teenoor haar soos vereis deur die
artikel nie.’
34
In the
Framesby
case,
35
Pickering J accepted the submission by counsel for the plaintiff to
the effect that, should s 60(1) exclude the State’s liability
for
contractual obligations of a public school, ‘it would have been
unnecessary for the Legislature to have promulgated s 20(10)
and, in
particular, to have referred therein to s 60 in the terms it did.’
36
Needless to say, counsel for the School in the present appeal relied
on this dictum.
It is indeed so that, if s 60(1) of the Act is interpreted – as in
my view it must be – to apply only to delictual claims,
s 20(10)
is, at least to a large extent, rendered superfluous. And this
would, of course, go against the common law ‘presumption’
that a
statute does not contain superfluous provisions and that a meaning
must be given to every word thereof.
37
As pointed out by this court, however:
38
‘
[T]he
rule is not an absolute one.
Tautology
is not uncommon in
legislation . . . And the rule must not be applied to create
differences of meaning where such differences were
not intended by
the lawgiver.’
It could well be that s 20(10) was enacted to make it quite clear
that the State is not liable for any labour-related claim,
contractual
or otherwise, brought against a public school by an
educator or non-educator employed by its governing body in terms of
ss 20(4)
and (5). This was in fact one of the submissions made by
counsel for BFS and appears to be a sound one. In any event, in the
context
of the Act as a whole, ‘its apparent scope and purpose’,
39
I do not think that the inclusion of s 20(10) in the Act detracts in
any way from my conclusion that s 60(1) covers only claims
in delict
against a public school and does not include within its ambit
contractual claims against the school. In the light of
this
conclusion, it is not necessary to engage with the submission by BFS
that its claim was for specific performance of the lease
agreement,
rather than for ‘damage or loss’, as contemplated in s 60(1).
It follows that the special plea raised by the School in this regard
should have been dismissed and that, accordingly, this appeal
must
succeed.
Order
In the result, the following
order is made:
1. The appeal is upheld with costs.
2. The order of the court below is set aside and replaced with the
following:
‘
2.1 The appeal is upheld with costs.
2.2 The order of the magistrate’s court dated 18 April 2005 is set
aside and replaced with the following:
“
The defendant’s special pleas are dismissed
with costs.” ’
B J VAN HEERDEN
Judge of Appeal
Concur:
Harms JA
Streicher JA
Heher JA
HURT
AJA
:
I have
read the judgment of Van Heerden JA, but find myself in respectful
disagreement with her interpretation of s 60(1) of the
South African
Schools Act 84 of 1996 ('the Act').
There
are two crisp questions which require to be considered in order to
decide this appeal. The first is whether the appellant's
claim
against the School is a claim for ‘damage or loss’ within the
meaning of that expression in s 60(1). The appellant's
contention is
that, since the claim is based directly on a contractual term, it
is, effectively, a claim for specific performance
of that term
(which takes effect on the fulfilment of a condition referred to in
the contract) and not a claim for 'damage or loss'.
The second is
whether s 60(1) is intended to cover claims for damage or loss
arising from contract or whether it is restricted
to claims in
delict.
Van Heerden JA has summarized the contents of the
lex commissoria
(clause 9) of the contract in her judgment.
40
I think it would be of assistance if I were to quote the pertinent
portions of the clause. They read as follows:
‘
9. If [the] User defaults in the
punctual payment of any monies as it (
sic
)
falls due in terms of this Agreement; or fails to comply with any of
the terms and conditions of or its
obligations
under this Agreement; . . . or abandons the equipment; . . . or
breaches any warranty given in terms of this Agreement; or does or
allows to be done, anything that might prejudice BFS's rights under
this Agreement; or the breach of any one of the agreements
41
as constituted shall be deemed, at BFS's election, to be a breach of
any or all agreements effected in terms of this Agreement, then
and
upon the occurrence of any of these events BFS may elect without
prejudice to any of its rights to:
9.1 claim immediate payment of all amounts which would
have been payable in terms of this Agreement until expiry of the
rental period
stated in the Equipment Schedule, whether such amounts
are then due for payment or not, or
9.2 immediately terminate this Agreement without prior
notice, take possession of the equipment, retain all amounts paid by
the User
and claim all outstanding Rentals, all legal costs on the
attorney and own client scale and, as
agreed, pre-estimated
liquidated damages
,
42
the aggregate value of the Rentals which would have been payable had
this Agreement continued until expiry of the Rental period stated
in
the Equipment Schedule.
9.3 In addition BFS shall be entitled to claim from the
User the amount of any Value Added Tax ("VAT") payable in
respect
of
such damages
.
9.4
If the goods are returned to or repossessed by BFS, BFS shall be
entitled to dispose of same in such manner and on such terms
and
conditions as it may in its sole discretion determine.’
There is a provision (clause 9.5) relating to interest in the
contract annexed to the particulars of claim which is not clear,
but
the reference to it in the particulars
43
reads as follows:
'The
Defendant would pay the Plaintiff arrear interest on any amount,
including liquidated damages, due by the Defendant to the Plaintiff
and such arrear interest would be calculated from due date of payment
or, in the case of damages from the date of accrual of Plaintiff's
right to claim, to date of receipt of payment by the [plaintiff].’
The
contract period was five years commencing 1 September 1999 and the
School defaulted after the first month. The claim is therefore
for
repossession of the rented equipment and 59 months' rental plus VAT.
There is no averment in the particulars of claim as to
a formal
notice of cancellation of the agreement to the School. It appears,
though, that the plaintiff relied on its right to terminate
the
agreement immediately and without notice in clause 9.2. This seems
to follow from the fact that there is no separate claim
for arrear
instalments of rental up to the date of cancellation and the prayer
for interest is on the full amount of R461 318.33
from the date
of the first default, 1 October 2000, calculated at the rate of
‘prime plus 4%’ to the date of payment.
There
can be no doubt that these contractual stipulations are 'penalty
stipulations' within the meaning of the Conventional Penalties
Act,
15 of 1962. Accordingly, a court asked to adjudicate the appellant's
claims in this case (other, of course, than the claims
for return of
the leased equipment), would be justified in requiring evidence to
satisfy itself that the penalty was not out of
proportion to the
prejudice suffered by the appellant as a result of the School's
default.
44
Such a procedure would not be possible in a simple claim for
specific performance of a contract. In these circumstances, I
consider
that the contention that the claim is purely for specific
performance is a semantic attempt to avoid an obvious conclusion. I
may
say that, if the claim had been framed on the basis that there
was a cancellation on a specified date and that, at that date, a
specified amount was owed by the School in the form of arrear
instalments, that portion of the claim may well have been properly
described as a claim for performance of a contractual obligation,
but the issue does not arise here and no more need be said in
that
connection. As it stands, the whole claim is one for 'damage or
loss' arising out of the School's omission to pay the instalments
when due.
Does s 60(1) of the Act include, within its scope, claims for
contractual damages? The relevant portion of the preamble to the
Act
states that:
‘
WHEREAS
this country requires a new national system for schools which will .
. . promote . . . acceptance of responsibility for the
organisation,
governance and funding of schools in partnership with the State . . .
.’
Pursuant to this stated intention, in s 16(1) of the Act the
Department of Education delegated the governance and management of
public schools to their governing bodies. Section 36(1) imposed a
duty on the governing body of each school to:
‘
.
. . take all
reasonable
measures within its means to supplement the resources supplied by the
State in order to improve the quality of education provided
by the
school to all learners at the school.’
Subsections 37(1) to (3) provide for the establishment of a school
fund into which the governing body is required to deposit all
money
received in the form, inter alia, of school fees, voluntary
contributions and donations. Subsection (6) provides that:
‘
The
school fund, all proceeds thereof and any other assets of the public
school must be used only for â€“
(a) educational
purposes, at or in connection with such school;
(b) educational
purposes, at or in connection with another public school, by
agreement with such other public school and with the
consent of the
Head of Department;
(c) the
performance of the functions of the governing body; or
(d)
another educational purpose agreed between the governing body and the
Head of Department.’
The
governing body is required to prepare a budget ahead of the
commencement of each school year and present it to the parent body
for approval.
45
This budget is used as the basis for setting the fees for the coming
year and the parent body is required, specifically and separately,
to approve the proposed fees.
46
It is against this procedural background that the governing body, in
consultation with the general parent body, computes the expenditure
for the coming year and fixes the fees which will have to be levied
to meet it.
Looked
at from this perspective, the purpose behind s 60(1) becomes plain.
It is highly unlikely (if it is conceivable at all) that
a school
budget would contain a contingency provision for loss or damage
arising out of an act or omission which had not, at the
time of
framing the budget, been foreseen. It can be predicted, therefore,
that a claim of this type, if successful, would give
rise to a
shortfall in the budgeted funds. Nor could such a claim be satisfied
by payment out of a school fund, since it could
hardly be described
as a payment 'for educational purposes' as prescribed in s 37(6)(a)
of the Act. In the light of these
considerations, it seems to me
that the purpose behind s 60(1) is that the MEC will step into the
shoes of a school in order to
accept liability for claims for loss
or damage arising from acts or omissions not budgeted for. Is there
any reason why the legislator
would have intended this to happen
only in cases where the 'act or omission' is negligent, giving rise
to delictual liability,
as opposed to a breach attracting liability
under a contract? There is none that I can think of. Nor, in my
view, does a consideration
of the Act as a whole give any indication
of such an intention.
The
argument presented on behalf of the appellant placed heavy emphasis
on what was referred to as the 'delictual flavour' of the
expression
'act or omission'. Although the expression is, understandably,
regularly encountered in relation to claims in delict,
it is by no
means uncommon in the contractual context. The legislator has used
it in this context in a number of statutes, such
as ss 1 and 2 of
the Conventional Penalties Act,
s 4(4)
of the
National Credit
Act 34 of 2005
,
s 12(5)
of the
Alienation of Land Act 68 of 1981
and
s 5(2) of the Property Time-Sharing Control Act 75 of 1983. The
expression is used in s 20(10) of the Act itself. In these
circumstances it seems to me that little weight can be attributed,
in construing s 60(1), to the fact that the legislature has
used an
expression which is regularly encountered in the delictual context,
since that expression is by no means exclusive to that
context.
The crucial provision which indicates that both delictual and
contractual liability are contemplated in s 60(1) is to be found
in
s 20(10), which reads:
‘
Despite section 60, the State is
not liable for any act or omission by the public school relating to
its contractual liability as
the employer in respect of staff
employed in terms of subsections (4) and (5).’
47
I
cannot accept that this is a simple case of legislative tautology.
The words ‘despite section 60’ cannot be ignored and, in
my
view, the only sensible import which can be given to them is that
the particular form of contractual liability arising from
a school's
capacity as an employer cannot be enforced against the State. The
inevitable corollary must be that the State is otherwise
liable in
terms of s 60(1), in appropriate circumstances, for loss or damage
arising from an act or omission relating to contractual
obligations
other than those provided for in s 20(10).
48
It
follows that I take the view that the appellant's claim should have
been brought against the MEC and not the School and that
the
magistrate in the court of first instance was correct in upholding
the special plea on this basis.
N V HURT
Acting Judge of Appeal
1
2005
(6) SA 87
(SE).
2
At
95E. Cf also
Strauss v MEC for Education, Western Cape Province
2007 (4) SA 127
(C) paras 25-28.
3
The
effect of the amendment is that the words ‘educational activity’
in s 60(1) have been replaced with the words ‘school
activity’,
this latter expression being defined in the Act to mean ‘any
official educational, cultural, recreational or social
activity of
the school within or outside the school premises’(see s 60(1)(a)
of the Act, as amended, read with the definition
of ‘school
activity’ inserted in s 1 of the Act by s 4(c) of Act 31 of
2007). A new para (b) has been inserted into s
60(1), providing
that, if the school activity in question is covered by an insurance
policy taken out by the school, the liability
of the State is
limited to the damage or loss not covered by the policy.
4
Section
36 was amended by
s 5
of the
Education Laws Amendment Act 57 of
2001
, in terms of which two new subsections (subsecs (2) and (3))
were added to
s 36.
The amending Act came into operation on 5
December 2001, ie after the lease agreement was entered into by BFS
and the School.
5
In
the
Framesby
case, the MEC concerned had allocated certain
functions to school’s governing body in terms of a notice
published in the Provincial
Gazette. The functions thus allocated to
the governing body included those listed in paras (c) and (d) of s
21(1), as set out above.
6
Section
58A was inserted into the Act by
s 6
of the
Education Laws Amendment
Act 24 of 2005
, which came into operation on 26 January 2006, ie
also after the date of conclusion of the lease agreement. Because
s
58A(4)
relates to execution proceedings against the school, however,
it would apply to any such proceedings instituted after the
commencement
of the amending Act on 26 January 2006.
7
This
would seem to refer to ‘all learners, parents and educators’, a
phrase which, with the insertion of the word ‘and’,
occurs
immediately before the quoted sentence in the Preamble commencing
with the word ‘promote’.
8
Supra
n 2 para 28.
9
See
also
Strauss
paras
24-25.
10
See
para 7 above.
11
Supra
n 1 at 93C.
12
[1998] ZASCA 112
;
1999
(2) SA 179
(SCA) at 185B-C.
13
See,
eg, LM du Plessis ‘Statute Law and Interpretation’ in 25(1)
Lawsa
(reissue,
2001) para 302 p 282-283, para 309 p 290-291 and the other
authorities there cited.
14
See
Jaga v Dönges NO & Another; Bhana
v Dönges NO & Another
1950 (4) SA
653
(A) at 662G-H and 664H (from the dissenting judgment of
Schreiner JA, described by Du Plessis op cit para 310 p 297-298 as
‘the
judge’s seminal exposition of an interpretive
modus
operandi
honouring the exigencies of
both language and context’, and as ‘probably one of the most
frequently relied on minority judgments
in the history of South
African case law’).
15
[2004] ZACC 15
;
2004
(4) SA 490
(CC) para 89.
16
2001
(4) SA 551
(SCA) para 12 of the concurring judgment by Marais JA,
Farlam AJA and Brand AJA (at 600 E-H).
17
Bato
Star Fishing
para 90. See further Du
Plessis op cit para 310 p 298.
18
[2000] ZASCA 20
;
2000
(2) SA 797
(SCA) para 16.
19
At
para 21.
See also paras 19, 20 and 22.
20
1990
(1) SA 925
(A).
21
At
942I-944A.
22
See
further on the purposive approach to statutory interpretation
(‘purposivism’), Du Plessis op cit para 304 p 285, para 311
p
300-301, para 349 p 388-389, para 353 p 393-395 and the other
authorities there cited.
23
Supra
n 20 at 943B, as quoted in the preceding paragraph.
24
The
‘context’ bearing the broad meaning ascribed to it by Schreiner
JA in
Jaga’s
case,
supra n 14 at 662 G-H, as quoted in para 17 above.
25
Viz,
with the written permission of the Head of Department given in terms
of s 21 of the Act, in circumstances in which such written
permission is required: see para 9 above.
26
See,
in this regard, the
Framesby
case,
supra n 1 at 94H-95C.
27
See
the Preamble to the Act, quoted in para 10 above.
28
See
s 23 of the Act, in particular s 23(2).
29
The
structure and reach of the Act in this regard is explained in some
detail by Bertelsman AJ in
Die
Ferdinand Postma Hoërskool v Die Stadsraad
van Potchefstroom and Others
[1999] 3
All SA 623
(T) at 629j-633d.
30
With
the exception of liability for loss or damage flowing from an
enterprise or business operated under the autonomy of the school
for
purposes of supplementing the resources of the school as
contemplated in s 36: see s 60(4). In terms of s 36, the governing
body of a public school is in fact
obliged
to take all reasonable steps to supplement the
school’s resources in order to improve the quality of education
provided by the
school to its learners.
31
See
s 58A of the Act, inserted by s 6 of the Education Laws Amendment
Act 24 of 2005 (date of operation 26 January 2006). The wording
of s
58A is quoted in para 9 above. Cf the
Framesby
case, supra n 1 at 93I-J.
32
The
wording of which appears in para 9 above.
33
2006
(1) SA 193
(SCA).
34
Para
13.
35
Supra
n 1 at 95D-E.
36
See
also the
Strauss
case, supra n 2 para 21 and the discussion
of the
Louw
case by P J Visser in
2006 (69)
THRHR
523.
37
See,
for example,
Commissioner for Inland
Revenue v Golden Dumps (Pty) Ltd
[1993] ZASCA 89
;
1993
(4) SA 110
(A) at 116 F-117A. See further, Du Plessis op cit para
330 and G E Devenish
Interpretation of
Statutes
(1992) p211 and the other
authorities cited by these authors.
38
In
Commissioner for Inland Revenue v Shell Southern Africa Pension
Fund
1984 (1) SA 672
(A) at 678D-F.
39
See
Jaga’s
case,
supra n 14 at 662G-H.
40
Para
3.
41
There
were six items leased to the school, with one 'master agreement'
covering all of them.
42
I
have italicized all of the references to 'damages' in this clause
for reasons which should become apparent shortly.
43
Para
4.9.
44
Smit
v Bester
1977 (4) SA 937(A)
at 942-943.
45
Section
38.
46
Section
39.
47
Staff
employed by the governing body in addition to the staff allocated by
the Department of Education.
48
This
was the specific finding of Pickering J in the case of
Technofin
Leasing & Finance (Pty) Ltd v Framesby High School
2005 (6)
SA 87
(SE). I agree with the reasoning reflected in that judgment.