The Minister of Finance v Golden Arrow Bus Services (Pty) Ltd

Golden Arrow Bus Services (respondent) operated a commuter bus service in the Cape Metropolitan area. The State, represented by the Minister of Transport, agreed to provide a passenger subsidy to the respondent under an agreement concluded in March 1997. By January 2009, R94,505,098.24 was owed to the respondent. On 15 January 2009, the respondent obtained a court order by agreement declaring the State liable to pay this amount. Due to lack of funds in the Department of Transport, the amount was not paid. On 23 January 2009, the respondent instituted further proceedings seeking payment directly from the National Revenue Fund under section 3 of the State Liability Act 20 of 1957. The Cape High Court granted judgment in favour of the respondent and declared that the Minister of Finance was not prohibited from effecting immediate payment from the National Revenue Fund. The Minister of Finance appealed against paragraphs 4, 5 and 6 of that order. By the time of the appeal, the judgment debt had been settled in full.

• Whether section 3 of the State Liability Act 20 of 1957 constitutes an appropriation by an Act of Parliament in terms of which money may be withdrawn from the National Revenue Fund as contemplated by section 213(2)(a) of the Constitution
• Whether section 3 of the State Liability Act provides for a direct charge against the National Revenue Fund as contemplated by section 213(2)(b) of the Constitution for purposes of satisfying court orders against the State sounding in money
• Whether section 165(5) of the Constitution creates a direct charge against the National Revenue Fund for court orders sounding in money
• Whether the Public Finance Management Act 1 of 1999 permits immediate payment of judgment debts from the National Revenue Fund in the absence of specific procedures

1. The appeal succeeds. Paragraphs 4 and 5 of the order of the court a quo are set aside. 2. Paragraph 6 of the order of the court a quo is amended to the extent that the words 'second respondent' are replaced with the words 'first respondent' (meaning the Minister of Transport rather than the Minister of Finance is ordered to pay the respondent's costs in the court below).

Section 3 of the State Liability Act 20 of 1957, while identifying the National Revenue Fund as a source from which the State's judgment debts may be paid, does not constitute an appropriation by an Act of Parliament as envisaged in section 213(2)(a) of the Constitution, nor does it provide for a direct charge against the National Revenue Fund as contemplated by section 213(2)(b) of the Constitution. In the absence of specific procedures established by the legislature for the processing and satisfaction of judgment debts against the State from the National Revenue Fund, courts cannot order immediate payment from the Fund. Money may only be withdrawn from the National Revenue Fund in terms of an appropriation by an Act of Parliament or as a direct charge when provided for in the Constitution or an Act of Parliament (and in the case of other Acts, when listed in Schedule 5 to the Public Finance Management Act).

The court expressed reluctance to definitively determine whether section 165(5) of the Constitution creates a direct charge against the National Revenue Fund for court orders sounding in money, having heard argument from only one side. However, Mpati P expressed doubt about this proposition, noting that it would be 'quite strange' if the drafters of the Constitution had intended under section 165(5) for court orders sounding in money to be paid as a direct charge against the Fund without expressly saying so, given that the Constitution expressly provides for direct charges in numerous other sections (sections 58(3), 71(3), 77(1)(d), 117(3), 120(1)(d), 120(2)(d), 213(3), 226(3) and 226(4)(a)). The court noted that the respondent, facing insolvency due to the State's failure to pay what was admittedly owed, was merely seeking to enforce its rights, and it would not be fair to burden it with the appellant's costs even though the appeal succeeded.

This case is significant in South African public finance law as it clarifies that section 3 of the State Liability Act does not constitute either an appropriation by Parliament or a direct charge against the National Revenue Fund under section 213(2) of the Constitution. The judgment emphasizes that while court orders bind the State under section 165(5) of the Constitution, this does not automatically create a mechanism for immediate payment from the National Revenue Fund. The case underscores the need for the legislature to establish proper procedures for judgment creditors to claim satisfaction of debts from the Fund, as indicated in the Constitutional Court's Nyathi 1 decision. It reinforces the separation of powers and the proper administration of the National Revenue Fund through the Public Finance Management Act. The judgment protects against unregulated direct charges against the National Revenue Fund and maintains fiscal discipline and parliamentary control over public finances.