When wishing to institute claims against the state, the first step is to take note of the Institution of Legal Proceedings against Certain Organs of State Act 40 of 2002 (“the Act”). This Act provides that a creditor may not institute legal proceedings against an organ of state, unless the creditor has given prior written notice to the relevant organ of state of the intention to institute legal proceedings against the organ of state for the recovery of a debt.
The Act defines who may be regarded as an organ of state for the purposes of the Act which includes, amongst others, any national or provincial department, a municipality, and functionaries or institutions exercising a power or performing a function in terms of the Constitution or a provincial constitution.
The Act also requires that written notice be given by the creditor to the relevant organ of state, within a period of 6 months from the date on which the debt became due, and that the creditor must set out the facts giving rise to the debt and such particulars of the debt within the knowledge of the creditor.
If a creditor fails to give such written notice, the organ of state may raise the failure as a defence to the claim and the creditor will have to apply to the court for condonation of the failure, and show that the debt was not extinguished by prescription, that good reason(s) exist for the creditor’s failure to serve notice on the organ of state, and that the organ of state had not been unreasonably prejudiced by the failure of the creditor to serve notice on the organ of state.
Additionally, the provisions of the Prescription Act 68 of 1969 (“Prescription Act”) must be taken note of. In terms of the Prescription Act, a creditor must institute action against a debtor within 3 years, from the date on which a debt became due by a debtor to the creditor.
The danger here is that if a creditor fails to provide the required written notice to an organ of state (as required by the Act) and then has to apply for condonation of the failure and the 3-year prescription period runs out in the meantime, the creditor’s claim may prescribe according to the Prescription Act.
Let’s take an example. Mr A suffered an injury on 27 January 2020 due to the negligence of a provincial hospital. Mr A must (in terms of the Prescription Act) institute action against the relevant representatives of the provincial hospital on or before 26 January 2023 to avoid the claim prescribing (3 years). But Mr A must also remember (in terms of the Act) to give notice (6 months) to the representatives of the provincial hospital of his intention to institute action against the hospital (i.e. on or before 26 June 2020). Should Mr A institute action against the provincial hospital having failed to give the required notice on or before 26 January 2023 and the state relies on Mr A’s failure to give such notice, Mr A’s claim may be deemed to have prescribed due to the fact that at the time of Mr A’s application to the court to condone his failure to comply with the Act, his claim had prescribed.
It is therefore extremely important for a creditor to ensure that the organ of state is correctly identified when intending to institute an action against an organ of state and that it adheres to the time period for giving notice to the relevant organ of the Intention to institute action. Vital, is also the manner of service on the relevant organ of state is complied with as prescribed and that the service is effected timeously to avoid the claim becoming extinguished by prescription.
Should you feel that you have a claim against the state, it is essential that you consult your attorney as soon as possible regarding the merit of your claim and to ensure that the necessary notices are served correctly and timeously to avoid your claim prescribing.
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