I have rendered services to the Local Municipality in the form of equipment leased to the Municipality. The Municipality has on various occasions promise to settle my account but have failed to do so. I want to sue them for payment in terms of our agreement. Is it necessary to give notice and comply with Act 40 of 2002?

Before we can answer the above question, it is important to look at what the Act classifies as debt.

 In terms of Section 1 (1) of the Institution of Legal Proceedings Against Certain Organs of State Act 40 of 2002, a debt means any debt arising form any cause of action 

1. Which arises from delictual, contractual or any other liability, including a cause of action which relates to or arises from any-
   1. Act performed under or in terms of any law;
   2. Omission to do anything which should have been done under or in terms of any law and
2. For which an organ of state is liable for payment of damages, whether such debt became due before or after the fixed date.

The Act in section 3 require that a notice of intended legal proceedings must be given to the organ of state by the creditor within 6 months from the date on which the debt became due. It is necessary to take this step prior to issuing of summons against the organ of state and if this notice is not complied with the organ of state may raise a special plea against your action.

So before compliance with Section 3 is needed it must be ascertained whether the claim at hand constitute a debt as defined in terms of section 1(1).

If you have regard to the abovementioned factual matrix, it is clear that the amount owning to you is not a debt as defined in the Act and the reason thereof was crystallise in the matter of Thabani Zule & Co (Pty) Ltd v Minister of Water Affairs and Another 2012 (4) SA 91 (KZD) as it was held that:

“Paragraph (a) of the definition is widely worded and makes it clear that a debt is any liability whatsoever. It is however, followed by paragraph (b) and the question which arises is how the two paragraphs relate to each other.

It was held that using the ordinary meaning of the words in the definition, therefore, the two paragraphs must be read conjunctively, which then firstly it restricts debts to those which constitute a liability to pay damages and secondly, it restricts debt to those where an organ of state is the debtor.”