Member of the Executive Council, Department of Education, Eastern Cape v Komani School & Office Supplies CC, t/a Komani Stationers (1417/2018) [2022] ZASCA 13; [2022] 2 All SA 44 (SCA); 2022 (3) SA 361 (SCA) (26 January 2022)

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

Judgment

Reportable Case no: 1417/2018 In the matter between: MEMBER OF THE EXECUTIVE COUNCIL, DEPARTMENT OF EDUCATION, EASTERN CAPE APPELLANT and

Komani School & Office

SUPPLIERS CC, t/a KOMANI STATIONERS RESPONDENT

Neutral citation: Member of the Executive Council, Department of Education, Eastern Cape v Komani School & Office Supplies CC, t/a Komani Stationers (Case no 1417/2018) [2022] ZASCA 13 (26 January 2022)

Coram

PETSE AP and MOCUMIE, MBATHA and GORVEN JJA and

Weiner Aja

Heard: 08 November 2021

Delivered: This judgment was handed down electronically by circulation to the parties' legal representatives by email, publication on the Supreme Court of Appeal website and published. The date and time for hand -down is deemed to be 09h 45 on 26 January 2021. Summary: Public school and school governing body – South African Schools Act 84 of 1996 as amended (the Schools Act) – interpretation of s 60(1) – liability of State for delictual or contractual damage or loss arising from act or omission in connection with school activity for which such a public school would have been liable but for the Schools Act.

Order

On appeal from: Eastern Cape Division of the High Court of South Africa , Grahamstown (Malusi J, sitting as court of first instance):

1 The appeal is upheld with costs, including the costs of two counsel. 2 The order of the high court is set aside and in its place is substituted the following: 'The application is dismissed with costs, including the costs of two counsel where so employed.'

Petse AP (Gorven JA and Weiner AJA concurring):

[1] During January 2017 the respondent, Komani School & Office Suppliers CC trading as Komani Stationers (Komani Stationers) , instituted motion proceedings in the Eastern Cape Division of the High Court, Grahamstown (the high court) against the appellant, the Member of the Executive Council for the Department of Education, Eastern Cape (the MEC) , seeking payment of R151 954.81, representing the purchase price of goods sold and delivered to Mpendulo Public Primary School, (Mpendulo School) which is a public school under the political stewardship of the MEC. In addition, Komani Stationers also sought payment of the sum of R959. 59 in respect of legal costs it had incurred

in the Queenstown Magistrates' Court (the magistrates ' court) in its abortive attempt to recover the principal debt from Mpendulo School together with mora interest at the prescribed legal rate.

[2] The facts are uncomplicated and are briefly as follows. During January 2013, Komani Stationers supplied school stationery to the Mpendulo School at the instance of the School Governing Body (SGB) and the school's Principal. The purchase price of the goods was R151 954 -81. The SGB and the Principal failed to pay the purchase price. As a resul t, Komani Stationers instituted an action against the SGB and the Principal in the magistrates' court. The action was not defended. Komani Stationers proceeded to obtain default judgment against the SGB and Mpendulo School as represented by its Principal i n the amount claimed in its summons together with interest and costs of suit in the sum of R959 -69. Subsequently, Komani Stationers issued a warrant of execution, and pursuant thereto various goods 1 were placed under judicial attachment in order to satisfy the judgment debt, interest and costs of suit.

[3] The attachment of the property prompted the District Director, Mr N H Godlo, to institute interpleader summons in the magistrates' court on behalf of the MEC. The interpleader summons sought an order re leasing the goods concerned from attachment. The foundation for the interpleader summons was that such goods were owned by the Eastern Cape Department of Education (the Department) or alternatively John Noah High School , neither of whom were indebted to Komani Stationers nor were they the defendants in the magistrates' court proceedings. In any event, the MEC contended that assets of a public

1 The goods attached belonged to the Department and John Noah High School both of which were not parties to the proceedings.

school are immune from judicial attachment in order to satisfy a judgment by virtue of the prohibition provided for in s 58A(4) of the South African Schools Act 84 of 1996 as amended (the Schools Act). The interpleader proceedings were not opposed.

[4] Once the goods were released from attachment, Komani Stationers turned its focus to the MEC. By letter dated 4 November 2016 and addressed to the MEC on behalf of Komani Stationers, the latter gave notice to the MEC in terms of s 3 of the Institution of Legal Proceedings against Certain Organs of State Act 40 of 2002.2 In this letter, Komani Stationers advised the MEC that it would institute legal proceedings against the MEC seeking recovery of the amounts owed to it by Mpendulo School. In order to assist the MEC to assess the merits of the claim, the letter included a draft notice of motion accompanied by an

2 Section 3 which is headed 'Notice of intended legal proceedings to be given to organ of state' provides: '(1) No legal proceedings for the 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 (b) the organ of state in question has consented in writing to the institution of that her or its intention to institute the legal proceedings in question; or legal proceedings– (i) without such notice; or (ii) upon receipt of a notice which does not comply with all the requirements set out in subsection (2).

(2) A notice must– (a) within six months from the date on which the debt became due, be served on (b) briefly set out the organ of state in accordance with section 4(1); and (i) the facts giving rise to the debt; and (ii) such particulars of such debt as are within the knowledge of the creditor.

(3) For purposes of subsection (2)(u)– (a) a debt may not be regarded as being due until the creditor has knowledge of the identity of the organ of state and of the facts giving rise to the debt, but a creditor must be regarded as having acquired such knowledge as soon as he or she or it could have acquired it by exercising reasonable care, unless the organ of state wilfully prevented him or her or it from acquiring such knowledge; and (b) a debt referred to in section 2(2)(a), must be regarded as having become due on the fixed date. (4) (a) If an organ of state relies on a creditor’s failure to serve a notice in terms of subsection (2)(a), the creditor may apply to a court having jurisdiction for condonation of such failure. (b) The court may grant an application referred to in paragraph (a) if it is satisfied that– (i) the debt has not been extinguished by prescription; (ii) good cause exists for the failure by the creditor; and (iii) the organ of state was not unreasonably prejudiced by the failure. (c) If an application is granted in terms of paragraph (b), the court may grant leave to institute the legal proceedings in question, on such conditions regarding notice to the organ of state as the court may deem appropriate.'

unsigned 'founding affidavit' explaining the history of the matter. The letter did not elicit a response from the MEC.

[5] Undeterred by the MEC's indifference, Komani Stationers, as already indicated, instituted legal proceedings against the MEC. The MEC opposed the application.

[6] The opposing affidavit filed on behalf of the MEC was deposed to by Mr E W Scheun, the Director of Legal Services employed by the Department . After making reference to s 60 of the Schools Act, Mr Scheun stated the following: 'The provisions and liability of the [MEC] in terms of the provisions of section 60 (1) of the Act only applies to liability in relation to delictual claims and does not include any contractual claims against the [SGB] and [Mpendulo Public Primary School] . The Applicant' s claim against the [SGB] and [Mpendulo Public Primary School] is a contractual claim and accordingly the [MEC] is not liable in terms of sections 60 (1) and 60 (3) of the Act. [Komani Stationers'] claim and the relief sought against the [MEC] is defective and should accordingly be dismissed, with costs, on this ground alone.'

[7] He then continued: '[Komani Stationers] bases its claim against the [MEC] on the judgment which was grante d on 10 September 2015, which judgment was granted against the [SGB] and [Mpendulo Public Primary School] . If [Komani Stationers] does have a claim against the [MEC], which is denied, such claim must be instituted against the [MEC]in terms of section 60 (3) of the Act.'

[8] Thereafter Mr Scheun went on to assert that it was not correct that the MEC became 'liable in terms of s 60(1) of the [ Schools Act]' as a consequence

of a school's 3 inability to satisfy a judgment against it. He then concluded by contending that even if it were accepted that Komani Stationers had a claim against the MEC by virtue of s 60 of the Schools Act, such a claim had prescribed.

[9] To counter Mr Scheun's assertion that the claim had prescribed, the deponent to Komani Stationers' replying affidavit averred that: '7.2. The claim, which essentially is a claim against a public school, is a claim for specific performance. 7.3. The claim against the [MEC] pursuant to the provisions of Section 60(1)(a) of the Act is only triggered once it is apparent that the school is not in a position to comply with its contractual obligations and in the present instance only once Judgment has been obtained against the school (through the medium of the governing body). 7.4. Accordingly, [Komani Stationers'] claim pursuant to Section 60(l)(a) only arose subsequent to the granting of the Judgment and when it became apparent that only subsequent to the granting of the Judgment. 7.5. It is only after Judgment has been obtained and it appears that the school is unable to pay the amount outstanding as specific performance, that [Komani Stationers] has suffered damages for which it can hold the State, through the Member of the Executive Council for the Department of Education Eastern Cape, liable in terms of Section 60(l)(a).'

[10] Accordingly, it was asserted that 'prescription did not arise until [Komani Stationers] had knowledge of the identity of the debtor and the facts from which the debt arose.' And that Komani Stationers became aware of these facts only when the MEC filed the interpleader summons seeking the release of the goods

3 This was in reference to Mpendulo Public Primary School.

placed under attachment in satisfaction of the judgment obtained in the magistrates' court.

[11] On 14 December 2017 the m atter came before Malusi J who, in his judgment, found in favour of Komani Stationers. In the result, the learned Judge ordered the MEC to pay the amounts claimed representing the judgment debt, costs of suit in the magistrates' court, mora interest calculated from 11 September 2015 to the date of payment and costs attendant upon the high court proceedings. The present appeal is directed against that order and is with the leave of the high court.

[12] This appeal concerns the q uestion whether, on its proper construction, s 60(1) of the Schools Act, as it now reads after its amendment by s 14 of the Basic Education Laws Amendment Act 15 of 2011 (the Amendment Act) , encompasses claims for specific performance in respect of payment of money owed to a creditor by a public school because of the prohibition contained in s 58A(4)4 of the Schools Act. Section 58 A(4) precludes the attachment , in satisfaction of a judgment debt, of the assets of a public school. The high court answered that question in the affirmative. Whether the high court was correct in reaching that conclusion or not is the cardinal issue that confronts us in this appeal.

[13] If the conclusion reached by t he high court prevails, then a subsidiary issue will arise, namely whether or not the claim asserted by Komani Stationers against the MEC has prescribed.

4 Section 58A(4) reads: 'The assets of a public school may not be attached as a result of any legal action taken against the school.'

[14] In arriving at its decision the high court, in essence, held that Mpendulo School was empowered in terms of ss 20 and 215 of the Schools Act to perform certain functions6 such as entering into agreements of the kind that ultimately gave rise to the claim instituted against the school by Komani Stationers in the magistrates' court.7 Furthermore, the high court held that the loss that Komani Stationers had suffered, and thus sought to recoup from the MEC , arose as a direct consequence of the school's failure 'to render specific performance' coupled with the fact that Komani Stationers was, in terms of s 58A(4) of the Schools Act, precluded from levying execution against the assets of the school in order to satisfy the judgment it had obtained by default against the school.8

5 Section 21 which is titled 'Allocated functions of governing bodies' reads: '(1) Subject to this Act, a governing body may apply to the Head of Department in writing to be allocated any of the following functions: (a) To maintain and improve the school's property, and buildings and grounds occupied by the school, including school hostels, if applicable; (b) to determine the extra -mural curriculum of the school and the choice of subject options in terms of provincial curriculum policy; (c) to purchase textbooks, educational materials or equipment for the school; (d) to pay for services to the school; (dA) to provide an adult basic education and training class or centre subject to any applicable law; or (e) other functions consistent with this Act and any applicable provincial law.

(2) The Head of Department may refuse an application contemplated in subsection (1) only if the governing body concerned does not have the capacity to perform such function effectively.

(3) The Head of Department may approve such application unconditionally or subject to conditions.

(4) The decision of the Head of Department on such application must be conveyed in writing to the governing body concerned, giving reasons.

(5) Any person aggr ieved by a decision of the Head of Department in terms of this section may appeal to the Member of the Executive Council.

(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.' 6 Section 15 essentially provides that a public school is a juristic person endowed with legal capacity to perform its function in terms of the Schools Act. 7 Para 17 of the high court judgment. 8 Para 18 of the high court judgment.

[15] Insofar as prescription was concerned, the high court found that the claim had not prescribed because 'prescription [could] only begin to run on 8 June 2016 which is the date on which the district director deposed to an affidavit initiating the interpleader summons.’9 Thus, the upshot of this statement is that prescription could not have commenced to run vis-à-vis the MEC before 8 June 2016 presumably because the MEC's identity as a debtor was unknown to Komani Stationers until the MEC entered the fray on 8 June 2016 i n order to avert the attachment of the assets of the school.10

[16] It is timely at this stage to make reference to s 58A(4) of the Schools Act. The section provides: 'The assets of a public school may not be attached as a result of any legal action taken against the school.' In this case, s 58A(4) does not present any controversy. Komani Stationers accepts without question that the school's assets were immune from attachment, hence it readily conceded the MEC's interpleade r claim and, instead, invoked s 60(1) of the Schools Act to seek recompense against the MEC.

[17] Section 60 of the Schools Act which is headed 'Liability of State' reads: '(1)(a) Subject to paragraph (b), the State is liable for any delictual or contractual damage or loss caused as a res ult of any act or omission in connection with any school activity conducted by a public school and for which such public school would have been liable but for the provisions of this section.

9 Para 24 of the high court judgment. 10 Section 12(3) of the Prescription Act 68 of 1969 which is headed 'When prescription begins to run' provides: 'A debt shall not be deemed to be due until the creditor has knowledge of the identity of the debtor and of the facts from which the debt arises: Provided that a creditor shall be deemed to have such knowledge if he could have acquired it by exercising reasonable care.'