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2024
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[2024] ZAFSHC 204
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Eskom Holdings SOC Ltd v Botha and Others (A97/2023) [2024] ZAFSHC 204 (3 July 2024)
IN THE HIGH COURT
OF SOUTH AFRICA,
FREE STATE
DIVISION, BLOEMFONTEIN
Reportable:
NO
Of Interest to other
Judges: NO
Circulate to
Magistrates: NO
Case No: A97/2023
In
the matter between:
ESKOM
HOLDINGS SOC LTD
Appellant
and
LOUIS
JOHANNES BOTHA
1
st
Respondent
HENDRIK
FRANCOIS NAUDE
2
nd
Respondent
WESDAN
BOERDERY (PTY) LTD
3
rd
Respondent
GOUVELD
BOERDERY (PTY) LTD
4
th
Respondent
CHRISTOFFEL
PETRUS SCHEEPERS
5
th
Respondent
JUDGMENT
BY
:
MHLAMBI, J
CORAM:
MHLAMBI, ADPJ
et
DAFFUE, J et MGUDLWA, AJ
HEARD
ON:
5 March 2024
DELIVERED
ON:
3 July 2024
[1]
This is an application against the decision of the court
a
quo
(Loubser,
J) in which the appellant’s special pleas were dismissed with
costs. The crisp question for determination was whether
the appellant
(Eskom) enjoyed the notice protection afforded by section 3 of the
Institution of Legal Proceedings Against Certain
Organs of State Act
(“the Act”).
[1]
Having considered certain legislation and authorities, the court
a
quo
was
not satisfied that the appellant qualified as an organ of state as
defined in section 1(1)(c) of the Act, and concluded that
the
respondents were not required to give notice in terms of section 3 of
that Act.
[2] The
court
a quo
also found that the appellant was an organ of
state in terms of the Constitution as it was clear that the
definition in the Constitution
was wider than the narrower definition
in the Act. Section 1(1) of the Act defines an organ of state as:
“
(1)
…
..
'organ of
state'
means-
(a) any
national or provincial department;
(b) a
municipality contemplated in section 151 of the Constitution;
(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;
(d) the
South African Maritime Safety Authority established by
section
2
of
the South African Maritime Safety Authority Act, 1998 (
Act
5 of 1998
);
. (e) The
South African National Roads Agency Limited contemplated in
section
3
of
The South African National Roads Agency Limited and National Roads
Act, 1998 (
Act
7 of 1998
);
(f) National
Ports Authority Limited, contemplated in
section 4
of the
National
Ports Act, 2005
, and any entity deemed to be the National Ports
Authority in terms of
section 3
of that Act;
(g) any
person for whose debt an organ of state contemplated in
paragraphs (a) to (f) is liable;”
[3]
Section 239 of the Constitution
[2]
defines an organ of state as:
“
(a)
any department of state or administration in the national, provincial
or local sphere of government; or
(b) any
other functionary or institution—
(i)
exercising a power or performing a function in terms of the
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 a judicial
officer;”
[4] The
appeal was noted against the whole of the judgment and orders granted
in favour of the respondents on
15 February 2023 and was directed
against the following findings of fact or law:
1. The
finding that the appellant did not fall under those entities that had
the benefit of a statutory notice provision
before the coming into
operation of the Act, leaving a strong impression that the Act was
not designed to include Eskom as one
of those certain organs of State
to which its provisions applied.
2.
Paragraph 1(1)(c) of the Act, which defines an organ of state, was
the only definition that could conceivably apply to
the appellant.
3. The
appellant was not exercising power or performing a function in terms
of the Constitution but did so in terms
of other legislation.
4. The
appellant did not qualify as an organ of state in terms of paragraph
1(1)(a) of the Act.
5.
The judgment of this Division in
Pegma
Thirteen Investments (Pty) Ltd v Free State Development
Corporation
[3]
was distinguishable from the present matter as there was
no
indication that Eskom was controlled by any National or Provincial
Department and that it was an extension of such a department.
It was
but an independent entity created by legislation.
6.
The further grounds of appeal were that the court
a quo
erred
in not finding that:
6.1 the appellant was an
organ of state in terms of paragraph 1(1)(g) of the Act as the
appellant’s entire share capital was
held by the State and the
National Department of Public Enterprises, alternatively, the
National Treasury;
6.2
that the cases of
Haigh
v Transnet Ltd
[4]
and
Nicor IT Consulting (Pty) Ltd v North West Housing Corporation
[5]
were distinguishable from the present matter.
[5] The appellant
contended that:
5.1
the clear intention of the legislature in section (1) of the Act, was
to give a far wider meaning to the
definition of an organ of state
and not limit its meaning to those entities referred to and mentioned
in the Schedule of Laws amended
and repealed by section 2(1) of the
Act. Consequently, paragraphs (a), (c) and (g) of the Act applied to
the appellant;
5.2
the
Eskom Conversion Act, 13 of 2001
only deals with converting the
appellant into a public company with a share capital and does not
define or set out the appellant's
functions, powers, or operations.
It follows that the appellant is a functionary or institution
exercising power or performing
a function in terms of the
Constitution of the Republic of South Africa, 1996. It derives
directly or indirectly, its powers from
the Constitution. The
appellant relied on
Eskom
Holdings SOC Ltd v Letsemeng Local Municipality and others
[6]
as
authority that Eskom was an organ of state in the National sphere of
government and was bound by the Constitution, which contemplates
the
generation and transmission of electricity as a national competence;
5.3
relying on
Eskom
[7]
and
Pegma
[8]
,
the
appellant contended that it was a National Department. Its reasoning
was based on the finding in
Pegma
that the Free State Development Corporation (FDC) was an extension of
the Provincial Department of Finance under whose control
it
effectively resorted and which brought it within the ambit of
paragraph (a) of the definition of an organ of state in section
1(1)
of the Act. Similarly, the appellant was exclusively and effectively
controlled by the Minister of Public Enterprises by the
provisions of
the Eskom Conversion Act,13 of 2011 and the
Companies Act, 71 of
2008
. The appellant should therefore be viewed as an organ of state
within the ambit of section 1(1)(a) of the Act.
[6]
The appellant contended in its heads of argument that
it, just like the Free State Development Corporation in
Pegma,
was
an organ of state within the meaning of section 1(1)(a) and (c) of
the Act as it had to fulfil a task or a purpose of the Constitution,
and such a task or function did not mean that it could only be
performed by an institution established in terms of the
Constitution.
[9]
The court
a
quo
was
bound by the doctrine of
stare
decisis
to
follow the decision in
Pegma
on the interpretation of an organ of state as contained in the Act.
[7]
It is clear from the notice of appeal and the
submissions made that the appellant seeks, in the main, a broader
interpretation of the definition of an organ of state as provided in
the Act. But this cannot be, as succinctly set out in the
judgment of
Loubser, J wherein it was stated that the appellant, Eskom, was
indeed an organ of state in terms of section 239(b)(ii)
of the
Constitution. It was exercising a public power and performing a
public function “in terms of any legislation.”
But it did
not exercise its power or perform its functions in terms of the
Constitution as stipulated in section 1(1)(c) of the
Act. The words
“in terms of any legislation” do not appear in the Act’s
narrower definition.
[10]
[8]
Pegma
failed to distinguish between the concept of an organ of state
generally, as defined in the Constitution, and an organ of state as
defined in the Act. The appellant, though obliged by the Constitution
to provide electricity for the economic and social well-being
of
people, did not perform these functions in terms of the Constitution
because the Constitution neither referred to it nor provided
for its
existence.
[9]
The court
a
quo
correctly pointed out that the starting point was that the Act did
not apply to all organs of state, but only to certain organs
of state
as aptly set out in the preamble of the Act. Citing
Madinda
v Minister of Safety and Security,
[11]
the court
a
quo
stated that the purpose and the ambit of the Act were to serve as an
omnibus statute that was intended to regulate the prescription
and
harmonise the period of prescription of debts for which certain
organs of state were liable. The Act brought together and
rationalised under one statutory umbrella provisions previously
scattered through many statutes.
[12]
None of the statutory provisions and Acts referred to in the Schedule
to the Act (of the laws amended and repealed) referred to
the
appellant. The appellant did not have the benefit of a statutory
notice provision before the coming into being of the Act.
[13]
[10] The Act, as stated
in its preamble, sought to harmonise and create uniformity in the
provisions of existing laws which provided
for different notice
periods for the institution of legal proceedings against certain
organs of state for the recovery of debt,
by substituting those
notice periods with a uniform notice period that would apply when
legal proceedings were instituted against
certain organs of state for
the recovery of a debt. It is crystal clear that the Act was intended
to apply only to those provisions
of the existing laws that provided
for different notice periods for litigation against certain organs of
state, and not against
all organs of state. A few specific entities
have been incorporated for notice protection in sections 1(1)(d), (e)
and (f). The
appellant is not one of them. The Act was not designed
to afford the appellant statutory notice protection which it never
had before.
[11]
In
N
atal
J
oint
Municipal
Pension Fund v Endumeni Municipality,
[14]
it was
stated that:
“
The present
state of the law can be expressed as follows: Interpretation is the
process of attributing meaning to the words used
in a document, be it
legislation, some other statutory instrument, or contract, having
regard to the context provided by reading
the particular provision or
provisions in the light of the document as a whole and the
circumstances attendant upon its coming
into existence. Whatever the
nature of the document, consideration must be given to the language
used in the light of the ordinary
rules of grammar and syntax;
the context in which the provision appears; the apparent purpose to
which it is directed and
the material known to those responsible for
its production…The process is objective, not subjective…
Judges must
be alert to, and guard against the temptation to
substitute what they regard as reasonable, sensible or businesslike
for the words
actually used. To do so in regard to a statute or
statutory instrument is to cross the divide between interpretation
and legislation;
in a contractual context it is to make a
contract for the parties other than the one they in fact made. The
'inevitable point of
departure is the language of the provision
itself', read in context and having regard to the purpose of the
provision and the background
to the preparation and production of the
document.”
[12]
The court in
Pegma,
influenced
by
Mittal
Steel South Africa LTD (Formerly Iscor LTD v Hlatshwayo
[15]
was
of the view that the FDC’s developmental activities crowned it
with the profile of an entity performing a public function
as it
sought to achieve some collective benefit for the general public.
Consequently, the court found that
:”
By virtue of the obviously public functions the corporation performs
for the general population of the province I am inclined
to find that
the defendant was indeed an institution as contemplated in the second
segment, in other words, paragraph (c) of the
definition.
”
[16]
Mittal
Steel,
[17]
however, was concerned with a body such as that described in
subsection
(b)
(ii)
of the definition of 'public body' in section 1 of PAIA, one
'exercising a public power or performing a public function in
terms
of any legislation', which had the attributes of a 'public body'. The
words are the same as those used in section 239(b)(ii)
of the
Constitution. The court in
Pegma
applied the standard in section 239(b)(ii) of the Constitution to
conclude that the FDC was an organ of state as defined in the
Act.
[13]
Pegma
appreciated that the constitutional definition of organ of state was
not the same as the statutory definition contained in the
Act as the
definition of the latter was more restrictive than the former.
However, the court concluded,
“
that
does not necessarily demonstrate that the lawmaker intended to
restrict the constitutional provision.”
Neither
the Court in
Pegma,
[18]
nor the appellant referred to the principle set out in
Madinda
.
[19]
[14]
In
Nicor
IT Consulting,
[20]
it
was made clear that the Act was not intended to apply to all organs
of state. The court held that the words “in terms of
the
Constitution” in section 1(1)(c) of the Act “connote that
both the identity of the functionary or institution and
the power or
function that he, she or it exercises are identified in the
Constitution itself.”
[21]
Such power or function should arise from the Constitution itself. The
defendant in that case derived its powers and functions from
its
enabling Act, the North-West Housing Corporation Act, and not in
terms of the Constitution. Consequently, the court held that
the
defendant was not an organ of State as defined in the Act.
[22]
This case is on all fours with the facts
in
casu.
[15]
Loubser J agreed with the views held in
Haigh
v Transnet
,
[23]
that the Legislature, in enacting the definition of organ of state in
the Act, clearly chose to limit the group of functionaries
and
institutions to which the Act would apply, by not including those
that performed their functions and exercised their powers
other than
in terms of the Constitution or a provincial constitution. The Act
came into being long after the proclamation and commencement
of the
Constitution. The legislature must be deemed aware of the wider
definition of the term “organ of state” in the
Constitution when it enacted the Act.
[16]
Both these decisions are in line with the decision in
Madinda
and are not distinguishable from the matter at hand. The appellant’s
reliance on
Eskom
Holdings
[24]
does
not assist the appellant’s case in any way whatsoever. It was
contended that the appellant is a national department based
on the
finding in
Eskom
Holdings
,
read with the finding in
Pegma
that the FDC was an organ of state within the ambit of Section
1(1)(a) of the Act because it was an extension of the provincial
Department of Finance under whose control it effectively resorted. It
is stated in the court
a
quo
's
judgment that it was common cause between the parties that Eskom is
an organ of state.
[25]
Eskom
Holdings
confirms
that the appellant is an organ of state bearing constitutional
duties, but does not serve as authority that the appellant
is
performing a function in terms of the Constitution. Rampai J stated
in
Pegma
that
what was required by section 1(1)(c) of the Act was that the function
performed must be a function specified in the Act.
[26]
The Constitution does not refer to the appellant by name or function.
[17]
The court
a
quo
found, and correctly so, that the present case was distinguishable
from
Pegma
as
there was no indication nor evidence at its disposal that the
appellant was in the full control of a national or provincial
department and was an extension of such department. The appellant
performs its functions in terms of the
Eskom Conversion Act
[27
]
and the Electricity Regulation Act.
[28]
Section 1(1)(g) does not apply as, contrary to the appellant’s
submissions, there is no indication that it does.
[18] In the premises, the
reasoning in
Pegma
was wrong in finding that the FDC was an
organ of state within the Act's meaning and should not be followed.
The appeal should therefore
fail.
[19] The costs should
follow the event.
[20] I therefore propose
the following order:
Order:
1. The
appeal is dismissed with costs, including the costs of the
appellant’s application for leave to
appeal and the costs of
the respondents’ employment of senior counsel.
MHLAMBI, J
I concur,
DAFFUE, J
I
concur
MGUDLWA, AJ
On
behalf of the appellant:
Adv.
C Snyman
Instructed
by:
Phatsoane
Henney Attorneys
35
Markgraaff Street
Westdene
Bloemfontein
On
behalf of the respondent:
Adv.
JF Mullins SC
Instructed
by:
Honey
Attorneys
Honey
Chambers
Kenneth
Kaunda Road
Bloemfontein
[1]
40 of 2002.
[2]
The
Constitution of the Republic of South Africa Act 108 of 1996.
[3]
FB
Case number 2681/2006 delivered on 18 September 2008.
[4]
2012 (1) SA 2623 (NCK)
[5]
2010
(3) SA 90 (NWM).
[6]
2022 JDR 0433 (SCA).
[7]
Supra.
[8]
Supra.
[9]
Para
20 of the appellant’s heads of argument.
[10]
Paras
14 & 15 of the judgment.
[11]
2008
(4) SA 312 (SCA).
[12]
Ibid
para 7, referred to in para 8
of
the court
a
quo
’s
judgment.
[13]
Para
9 of the court
a
quo’
s
judgment.
[14]
2012
(4) SA 593
(SCA) at para 18.
[15]
2007(1)
SA 66 (SCA).
[16]
Para
39 of the judgment.
[17]
Supra,
para 10.
[18]
Pegma
was
decided after
Madinda
.
[19]
Supra.
[20]
Supra.
[21]
Para
14 of the judgment.
[22]
Para
14 of the judgment.
[23]
Supra,
para 23.
[24]
Supra.
[25]
Para
3 of the judgment.
[26]
Para
28 of the judgment.
[27]
13
of 2001.
[28]
4
of 2006.