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[2015] ZAWCHC 1
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South African Restructuring And Insolvency Practitioners Association v Minister of Justice And Constitutional Development and Others; InRe: Concerned Insolvency Practitioners Association NPC and Others v Minister of Justice And Constitutional Development and Others (4314/2014, 17327/2014) [2015] ZAWCHC 1; [2015] 1 All SA 589 (WCC); 2015 (2) SA 430 (WCC); 2015 (4) BCLR 447 (WCC); [2015] 4 BLLR 329 (WCC) (13 January 2015)
REPUBLIC
OF SOUTH AFRICA
THE
HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE HIGH COURT, CAPE TOWN)
Case
Number: 4314/2014
DATE:
13 JANUARY 2015
REPORTABLE
“
SARIPA
Application”
In
the matter between
THE
SOUTH AFRICAN RESTRUCTURING AND
INSOLVENCY
PRACTITIONERS
ASSOCIATION
........................................................
Applicant
Vs
THE
MINISTER OF JUSTICE AND
CONSTITUTIONAL
DEVELOPMENT
...............................................................
First
Respondent
CHIEF
MASTER OF THE HIGH COURT OF SOUTH AFRICA
....................
Second
Respondent
THE
ASSOCIATION FOR BLACK BUSINESS RESCUE
AND
INSOLVENCY
PRACTITIONERS
...........................................................
Third
Respondent
AND
Gauteng
Case Number 17327/2014
“
CIPA
Application
THE
CONCERNED INSOLVENCY
PRACTITIONERS
ASSOCIATION
NPC
................................................................
First
Applicant
NATIONAL
ASSOCIATION OF MANAGING
AGENTS
....................................
Second
Applicant
SOLIDARITY
........................................................................................................
Third
Applicant
VERENIGING
VAN REGSLUI VIR
AFRIKAANS
..............................................
Fourth
Applicant
Vs
THE
MINISTER OF JUSTICE AND
CONSTITUTIONAL
DEVELOPMENT
...............................................................
First
Respondent
CHIEF
MASTER OF THE HIGH COURT OF SOUTH AFRICA
.....................
Second
Respondent
THE
ASSOCIATION FOR BLACK BUSINESS RESCUE AND
INSOLVENCY
PRACTITIONERS OF SOUTH AFRICA
...................................
Third
Respondent
Handed
Down: 13 January 2015
Matter
Argued: 13 October 2014
JUDGMENT
KATZ
AJ:
1.
This
judgement concerns two applications challenging the constitutionality
of an appointments policy determined by the Minister
of Justice and
Constitutional Development in accordance with insolvency
legislation. The Policy is impugned in terms of sections
9, 10,
22 and 33 of the Constitution
[1]
and on the basis of unlawful exercise of public power. The
context of the challenge raises complex issues concerning law,
policy, constitutionality and the interaction of human rights and
commercial interests.
2.
It
is now axiomatic that all human rights are interdependent.
[2]
The core right of dignity can only be respected, protected, promoted
and fulfilled if there is a move not only to ensure
freedom from
torture and the guarantee of other civil and political rights, but
also the advancement of socio-economic rights.
This has been
acknowledged repeatedly by the courts in the context of the right to
housing.
[3]
The long-term
reduction of poverty depends on economic development.
Consequently, without economic development there is little
prospect
of civil rights being realised. This gives rise to two
questions. First, how can the right to dignity be respected,
protected, promoted and fulfilled if there is little or no hope of
alleviation from poverty, especially in a society as unequal
as is
South Africa? Secondly, what does the right to equality mean in
South Africa 20 years after the birth of a constitutional
non-racial
non-sexist society?
3.
Equality
is an aspiration. More than three hundred years of inequality
and pernicious disadvantage (unfair discrimination)
at the instance
of the State cannot be thought away overnight by raising a new flag
and adopting a new supreme law.
[4]
More is required.
4.
The
Constitution recognises this and requires protection of all rights in
a transformative way. This approach informs constitutional
jurisprudence and defines the right to equality, which requires
remedial measures as a key element of that right.
[5]
Such measures seek to redress the disadvantage caused by past
practices. The Constitutional Court has recognised that
such
measures may adversely affect some, but that this is the necessary
price to pay to enjoy social cohesion and the vision of
the
Constitution.
[6]
5.
For this reason, whilst white males, for
example, may decry ‘affirmative action’ as it affects
them, carefully crafted
affirmative action plans and policies are
necessary to ensure that the divisions, bitterness and resentments
that have divided
South Africa society and the stark disparities
between those on the different sides of the colonial and apartheid
divide are overcome.
6.
Division
and bitterness could lead, and in many societies does lead, to
conflict and destruction. This is evident in many
parts of the
world, where violence and breakdown of social harmony is tearing
apart societies and families.
[7]
A
failure to appreciate and deal with historical faultlines on a
sustainable basis and unresolved resentments can and do lead to
civil
conflict and often war. South Africans, led by Nelson Mandela
in the early 1990s, sought a different route based on
healing past
divisions and consciously building an open society based on
democratic values, social justice and fundamental human
rights
.
[8]
7.
Key
amongst the divisions that remain, however, is the intersection of
race and class. South Africa remains a society with
high levels
of poverty and pockets of extreme wealth.
[9]
It is the reality that the lines between rich and poor continue to
track the white/black colour-line.
[10]
Many, but certainly not all, of those who are poor belong to
groups who were not classified as white under apartheid whilst
many
of the wealthy were classified as white. To this, one needs to
add the understanding that the impugned Policy is in
respect of
insolvency and companies’ legislation, which originates in the
1930s (and before). This is, notwithstanding
the enactment of a
new Companies’ Act in 2008, which specifically seeks to
‘promote compliance with the Bill of Rights’
and an
inclusive, multi-stakeholder approach whilst promoting economic
development and innovation; affirming the concept of a company
and
providing for a predictable, effective and efficient regulatory
environment for business.
[11]
8.
It is against this background of the
intersectionality of rights; the importance of economic development
and transformation of the
insolvency environment that these
applications are to be understood.
9.
What
is also important is the role of courts in such a challenge.
Courts have not been popularly elected, and are thus not
accountable
to the people. The Courts’ fidelity is to the
Constitution and the law.
[12]
The judicial branch may, and indeed must, scrutinize any executive or
administrative policy or legislation adopted or enacted
for
constitutional compliance.
[13]
10.
If
a court takes the view that an impugned policy or law may have been
more succinctly drafted or framed in a different and better
way, that
is irrelevant. The sole relevant consideration is whether the
policy or law is consistent with the enabling legislation
and the
Constitution. Consequently, this Court’s task is to
determine whether the Policy challenged is consistent with
the
Constitution. If I come to the conclusion that it is not, I am
obliged to declare it to be invalid.
[14]
THE
TWO APPLICATIONS
11.
Following
the adoption by the Minister of the Policy on the Appointment of
Insolvency Practitioners (‘the Policy’) on
7 February
2014,
[15]
two separate
applications were launched challenging its constitutional validity.
12.
In this Court, the South African
Restructuring and Insolvency Practitioners Association (SARIPA),
represented at the hearing by
Mr Manca SC, Ms van Huysteen and Ms
Adhikari, launched an application, which consisted of two parts.
In part A of the Notice
of Motion an order interdicting the coming
into operation of the Policy pending the finalisation of the review
of the Policy was
sought on an urgent basis. Part B constitutes
the review.
13.
SARIPA was formed in 1984 and currently has
445, members including insolvency and business rescue practitioners.
SARIPA, in
these proceedings, acts in the interests of its members,
as well as in the public interest.
14.
The Minister (at the time the Minister of
Justice and Constitutional Development) (‘the Minister’)
and the Chief Master
of the High Court of South Africa (‘the
Chief Master’) are cited as the Respondents. They opposed
the application
for the interim interdict and the review.
15.
The Association for Black Business Rescue
and Insolvency Practitioners of South Africa (‘ABRIPSA’)
applied for leave
to intervene in the application (in respect of both
parts A and B) as the Third Respondent. The intervention was granted
and ABRIPSA
took full part in the hearing in respect of part A.
ABRIPSA supported the opposition to the relief sought. It was
represented
by three counsel.
16.
Part A was heard on an opposed basis on 24
March 2014 and 27 March 2014. An order was granted by this
Court (per Gamble J)
on 28 March 2014 interdicting and restraining
the Minister and the Chief Master from implementing the Policy
pending the determination
of this review, which was to be determined
on an expedited basis.
17.
In the Gauteng Division, Pretoria, the
Concerned Insolvency Practitioners Association NPC (‘CIPA’)
launched an application
challenging the validity of the Policy on 28
February 2014. CIPA is a voluntary organisation established for
the purposes
of this litigation. Its members are practising
insolvency practitioners who have a common interest in this matter,
namely,
to obtain relief aimed at preventing the Respondents from
adopting and/or implementing the Policy. CIPA seeks a
declaratory
order to the effect that the Policy is unconstitutional.
CIPA was represented at the hearing in this Court by Mr Brassey SC
and Ms Engelbrecht.
18.
The National Association of Managing Agents
(‘NAMA’) applied for, and was granted leave, to intervene
as the Second
Applicant in the CIPA application. NAMA was
represented by Mr Rip SC and Mr Vorster.
19.
NAMA was established in the light of an
increase in sectional title ownership in South Africa together with
the advent of security-estate
living, which led to the need for the
establishment of a body to represent the common interests of the
market and managing agents
dealing with sectional title schemes and
homeowners’ associations. NAMA represents the interests
and rights of a group
of creditors involved management of insolvent
estates.
20.
Solidarity, a trade union, intervened in
its own interests as well as that of its members. Solidarity’s
members, in
their capacity as employees, have an interest in the
appointment of insolvency practitioners which, they submit, may be
prejudiced
by the implementation of the Policy. Solidarity was
represented by Ms Engelbrecht.
21.
The Minister and the Chief Master were also
cited as the Respondents and opposed the Gauteng application.
Written submissions
were made on their behalf by Mr Semenya SC and Ms
Platt, while Ms Platt appeared for the Respondents during the
hearing.
22.
For
the sake of convenience the Gauteng application was ordered by
agreement to be heard by this Court together with the SARIPA
application.
[16]
THE
CHANGING ROLE OF INSOLVENCY IN SOCIETY
23.
In Gainsford NO and Others v Tanzer
Transport (Pty) Ltd, Theron JA commented:
‘
The
purpose of insolvency legislation is to bring about a concursus
creditorum which, once in place, has the effect that:
“
(T)he
hand of the law is laid upon the estate, and at once the rights of
the general body of creditors have to be taken into consideration.
No transaction can thereafter be entered into with regard to
estate matters by a single creditor to the prejudice of the
general
body. The claim of each creditor must be dealt with as it
existed at the issue of the order.”’
[17]
24.
The
law of insolvency is generally concerned with protecting the rights
and interests of the creditors.
[18]
However, insolvency, necessarily and appropriately, is shifting from
being a creditor-driven regime to focusing on the interests
of other
stakeholders involved in and affected by the insolvency
proceedings.
[19]
Moreover, it is necessary that insolvency law and its implementation,
like all South African law, be constitutionally compliant.
[20]
The
Cork Report and Business Rescue
25.
The
report of the Review Committee on Insolvency Law and Practice
[21]
(‘Cork Report’) sets out recommendations for the
modernisation and reform of English
insolvency
law
.
The Cork Report states that a modern system of insolvency law must
consider the interests of three key parties: the debtor,
[22]
the creditor and society.
[23]
26.
When considering the effects of insolvency
on society, the Cork Report identifies the effect on the livelihoods
of all those reliant
on a particular enterprise as a legitimate legal
consideration. Consequently, ‘good modern insolvency law’
should recognise
the wider effect of insolvency beyond the narrow
interests of the insolvent and his/her creditors and, as far as
possible, provide
mechanisms for preserving commercial entities
‘capable of making a useful contribution to the economic life
of the country.’
This recognition provides the rationale
for business rescue – now introduced into the
Companies Act 71
of 2008
.
27.
Business
rescue “constitutes a major theme of the new Act, and is
amplified in
section 7(k)
thereof, which states that one of the
purposes of the Act ‘is to provide for the efficient rescue and
recovery of financially
distressed companies, in a manner that
balances the rights and interests of all relevant
stakeholders’.”
[24]
With the implementation of the 2008 Act and the business rescue
provisions, “[t]he rights of creditors no longer have
pride of
place and have been levelled with those of shareholders,
employees
[25]
, and with the
public interest too.”
[26]
28.
The foregoing suggests that it may be
correct, following a narrow approach, that the rights of creditors
are paramount in the insolvency
process. However, in my view,
insolvency proceedings effect much wider interests: society, as a
whole is engaged.
29.
In
summary, whilst it is necessary to have regard to the rights and
interests of creditors in insolvency matters, it is also appropriate
to consider, in the light of the Constitution, and in particular, the
Bill of Rights, the need to protect the rights and interests
of
employees and society more broadly as they may also be affected by
the insolvency proceedings. These, possibly competing,
interests need appropriate recognition and protection by those
appointed to control and administer insolvent estates and
businesses.
Whether appointed provisionally, or finally,
insolvency practitioners need to be keenly aware of these dynamics
and suitably equipped
to manage them.
[27]
THE
APPLICABLE INSOLVENCY LEGISLATION
[28]
The
Insolvency Act 24 of 1936
30.
Section 18 of the Insolvency Act states:
‘
(1)
As soon as an estate has been sequestrated (whether provisionally or
finally) or when a person appointed as trustee ceases to
be trustee
or to function as such, the Master
may
,
in accordance with Policy determined by the Minister,
appoint
a provisional trustee to the estate in question who shall give
security to the satisfaction of the Master for the proper performance
of his or her duties as provisional trustee and shall hold office
until the appointment of a trustee.
(2)
At any time before the meeting of the creditors of an insolvent
estate in terms of section forty, the Master
may,
subject to the provisions of subsection
(3)
of
this section, give such directions to the provisional trustee as
could be given to a trustee by the creditors at a meeting of
creditors.
(3)
A provisional trustee shall have the powers and the duties of a
trustee, as provided in this Act, except that without the authority
of the court or for the purpose of obtaining such authority he shall
not bring or defend any legal proceedings and that without
the
authority of the court or Master he shall not sell any property
belonging to the estate in question. Such sale shall furthermore
be
after such notices and subject to such conditions as the Master may
direct.
(4)
When a meeting of creditors for the election of a trustee has been
held in terms of section forty and no trustee
has been
elected, and the Master has appointed a provisional trustee in the
estate in question, the Master shall appoint him as
trustee on his
finding such additional security as the Master may have required.”
(Emphasis added).
31.
It
is the Master who has the power, and who appoints the trustees to
sequestrated estates. He or she enjoys discretion as
to who to
appoint as provisional trustees to insolvent estates. This is
to be done in accordance with the Policy determined
by the Minister
in terms of section 158(2) of the Act.
[29]
32.
The
functions of a provisional trustee ‘are essentially to take
physical control, and to superintend the administration, of
the
property and affairs of the estate pending the appointment of a
trustee; and it is not the provisional trustee’s function
to
wind-up the estate.’
[30]
33.
Simply
put, a provisional trustee controls and administers the estate until
a trustee is appointed at the first meeting of the creditors.
[31]
34.
A provisional trustee is therefore
appointed by the Master, in accordance with the policy determined by
the Minister, and once appointed,
the provisional trustee will then
administer and control the estate until such time as the creditors,
at their first meeting, elect
the trustee. A similar procedure
can be found in the
Companies Act.
The
Companies Acts 61 of 1973 and 71 of 2008
35.
Although
the 1973 Act has been repealed, Item 9 of Schedule 5 of the 2008 Act
determines that Chapter XIV of the 1973 Act continues
to apply until
a date to be determined by the Minister.
[32]
36.
Section 339 of the 1973 Act provides that
the law of insolvency applies mutatis mutandis to the winding-up of
companies.
37.
In terms of section 368, once a winding-up
order has been made, the Master may, in accordance with the policy
determined by the
Minister, appoint a provisional liquidator.
The provisional liquidator will hold the office until a liquidator is
appointed.
The practice of appointing a provisional liquidator
is not in any way different to the appointment of a provisional
trustee in
terms of the
Insolvency Act.
38.
The
functions of provisional liquidators are similar to those of
provisional trustees and ‘are essentially to take physical
control, and to superintend the administration, of its property and
affairs pending the appointment of the liquidator; it is not
the
provisional liquidator’s function to liquidate the
company.’
[33]
39.
Therefore, as with an insolvent estate, the
Master will, in accordance with the policy determined by the
Minister, appoint a provisional
liquidator who will control and
administer the business until such time as the liquidator is
appointed.
The
Close Corporations Act 69 of 1984
40.
Part
XI
of the
Close Corporations Act sets
out the provisions dealing with
the liquidation of a close corporation. These provisions are
similar to the provisions that
deal with the liquidation of companies
and the sequestration of estates. The duties and functions of
the Master with regards
to the liquidation of a close corporation do
not differ from those of the Master in respect of companies and
estates.
[34]
41.
However,
with regards to an appointment of a provisional liquidator, there is
no provision for the appointment by the Master of
a provisional
liquidator for a close corporation upon a provisional winding-up
order being made. Therefore, in terms of
section 74
, the
Master, as soon as is practicable after the provisional winding-up
order has been made, must appoint a liquidator
[35]
in accordance with the Policy determined by the Minister.
42.
Provisional trustees and liquidators, in
terms of the relevant insolvency legislation, have a significant role
to play in the sequestration
of an estate and the winding up of a
company or corporation. They are appointed by the Master, in
accordance with the policy
determined by the Minister, to control and
administer the estate or the property of the company until a trustee
or liquidator has
been appointed.
43.
Whilst it is accepted that the rights of
the creditors are protected at the first meeting of the creditors,
they are not involved
in the appointment of a provisional trustee or
liquidator. Once a provisional sequestration or winding-up
order has been
made, it is the Master who appoints a provisional
trustee or liquidator. And it is that provisional trustee or
liquidator
who will administer and control the estate or business
until such time as the trustee or liquidator is appointed.
THE
POLICY
44.
The
Policy was published in the Government Gazette on 7 February 2014.
Paragraphs 6 and 7 of the Policy were amended
[36]
and published in the Government Gazette on 17 October 2014.
[37]
The Policy, in its amended form, reads:
POLICY ON THE
APPOINTMENT OF INSOLVENCY PRACTITIONERS
The Minister of
Justice and Constitutional Development has under section 158(2) of
the Insolvency Act, 1936 (Act No. 24 of
1936), section 10(1A)(a)
of the Close Corporations Act, 1984 (Act No. 69 of 1984), and
section 158(2) of the said
Insolvency Act read
with section 339 of
the Companies Act, 1973 (Act No. 61 of 1973), determined the
Policy in the Schedule.
SCHEDULE
1.
Definitions
Unless the
context indicates otherwise—
"Chief
Master" means the person appointed as the Chief Master of the
High Courts in terms of section 2(1) of the
Administration of
Estates Act, 1965 (Act No. 66 of 1965);
"
Close
Corporations Act" means
the Close Corporations Act, 1984 (Act
No. 69 of 1984);
"Companies
Act" means the Companies Act, 1973 (Act No. 61 of 1973);
"
Insolvency
Act" means
the Insolvency Act, 1936 (Act No. 24 of 1936);
"insolvency
industry" means the industry which involves the
administration of insolvent estates and the winding
up of
companies or close corporations;
"insolvency
practitioner" means a natural person who is appointed by a
Master of a High Court as a curator bonis,
provisional trustee,
trustee, co-trustee, provisional liquidator, liquidator or
co-liquidator in the circumstances set out
in paragraph 3.2 of
this Policy;
"insolvent
estate" includes the assets of a company or close corporation
under winding up;
"Master"
means a Master, Deputy Master or Assistant Master of a High Court
as referred to in the definition of "Master"
in section
1 of the Administration of Estates Act, 1965 (Act No. 66 of 1965);
"Master's
List" means any Master's List of Insolvency Practitioners
referred to in paragraph 6 of this Policy.
2.
Objective
The
objective of the Policy is to promote consistency, fairness,
transparency and the achievement of equality for persons
previously disadvantaged by unfair discrimination.
3.
Scope and application of Policy
3.1 This Policy—
(a)
replaces all previous policies and
guidelines related to the appointment of insolvency practitioners
used in the Masters'
offices; and
(b)
is intended to form the basis of the
transformation of the insolvency industry.
3.2 This Policy
applies only in respect of appointments under the following
provisions of the
Insolvency Act, the
Companies Act and the
Close
Corporations Act:
3.2.1 Insolvency
Act:
(a)
Section 5(2) the appointment of a
curator bonis after a notice of voluntary surrender.
(b)
Section 18(1) the appointment of a
provisional trustee by the Master.
(c)
Section 54(5) the appointment of a
trustee where none is elected by the creditors and no provisional
trustee is in office.
(d)
Section 57(4) the Master declines to
appoint an elected trustee.
(e)
Section 57(5) the Master considers it
desirable to appoint a co-trustee.
(f)
Section 62(2) the appointment of a
provisional trustee pending the election of a trustee to fill a
vacancy.
(g)
Section 95(4) the appointment of a
trustee where there is no trustee to distribute proceeds due to a
secured creditor who
did not prove a claim previously.
3.2.2
Companies Act 61 of 1973:
(a)
Section 368 the appointment of
provisional liquidator by the Master.
(b)
Section 370(3)(b) the Master again
declines to appoint a person nominated at a further meeting.
(c)
Section 374 the Master considers it
desirable to appoint co-liquidator.
(d)
Section 377(3) the appointment of
provisional liquidator or liquidator for a vacancy or where a
vacancy is not filled.
3.2.3
Close
Corporations Act:
(a
)
Section 74(1)
the appointment of a
liquidator (similar to a provisional liquidator for a company).
(b)
Section 66(1)
read with section 374 of
the Companies Act the appointment of a co-liquidator.
(c)
Section 76(3)(b) the appointment of a
liquidator where the Master declines to appoint an elected
liquidator.
3.3
This Policy does not apply to the appointment of an insolvency
practitioner for a solvent company wound up voluntarily
in terms
of section 80 of the Companies Act, 2008 (Act No. 71 of 2008).
4.
Policy Statements
The Minister of
Justice and Constitutional Development is committed to—
(a) addressing
the imbalances of the past and transforming the insolvency
industry;
(b) Establishing
uniform procedures for the appointment of insolvency
practitioners;
(c) Making the
insolvency industry accessible to individuals from previously
disadvantaged communities;
(d) promoting the
objectives of the Broad-Based Black Economic Empowerment Act, 2003
(Act No. 53 of 2003), by empowering insolvency
practitioners who
are previously disadvantaged individuals;
(e) preventing
corruption and fronting; and
(f)
promoting transparency and accountability.
5.
Directives
The
Chief Master must issue directives to be used by all Masters in
order to implement and monitor the application of this
Policy.
6.
Different categories of insolvency
practitioners
6.1 Insolvency
practitioners on every Master's List must be divided into the
following categories:
Category A:
African, Coloured, Indian and Chinese females who became South
Africa citizens before 27 April 1994;
Category B:
African, Coloured, Indian and Chinese males who became South
Africa citizens before 27 April 1994;
Category C: White
females who became South Africa citizens before April 1994;
Category D:
African, Coloured, Indian and Chinese females and males, and White
females, who became South Africa citizens on
or after 27 April
1994 and White males who are South African citizens,
and within each
category be arranged in alphabetical order according to their
surnames and, in the event of similar surnames,
their first names.
Insolvency practitioners added to the list after the compilation
thereof must be added at the end of the
relevant category.
6.2
A Master's List must distinguish between "senior
practitioners", being insolvency practitioners who have been
appointed at least once every year within the last 5 years and
"junior practitioners", being insolvency practitioners
who have not been appointed as such at least once every year
within the last five years but who satisfy the Master that they
have sufficient infrastructure and experience to be appointed
alone. The senior and junior practitioners must be arranged
where they fit alphabetically in Category A to D on the same
Master’s List.
7.
Appointment of insolvency practitioners
by Masters of High Courts
7.1 Insolvency
practitioners must be appointed consecutively in the ratio A4: B3:
C2: D1, where—
‘
A’
represents African, Coloured, Indian and Chinese females who
became South African citizens before 27 April
1994;
‘
B’
represents African, Coloured, Indian and Chinese males who became
South African citizens before 27 April 1994;
‘
C’
represents White females who became South African citizens before
27 April 1994;
‘
D’
represents African, Coloured, Indian and Chinese females and
males, and White females, who have become South African
citizens
on or after 27 April 1994 and White males who are South African
citizens,
and the numbers
4: 3: 2: 1 represent the number of insolvency practitioners that
must be appointed in that sequence in respect
of each such
category.
7.2 Within the
different categories on a Master's List, insolvency practitioners
must, subject to paragraph 7.3, be appointed
in alphabetical
order.
7.3 The Master
may, having regard to the complexity of the matter and the
suitability of the nextinline insolvency
practitioner
but subject to any applicable law, appoint a senior practitioner
jointly with the junior or senior practitioner
appointed in
alphabetical order. If the Master makes such a joint appointment,
the Master must record the reason therefor
and, on request,
provide the other insolvency practitioner therewith.
7.4 If an
insolvency practitioner due for appointment in accordance with the
alphabetical list of names in a specific category
on the Master's
List—
(a)
fails to lodge a bond of security in
time, the next insolvency practitioner on the Master's List must
be appointed, and the
person determined previously is moved to the
back of that list; or
(b)
satisfies the Master that he or she has
a conflict of interest or a conflict of interest arises after the
appointment, the
nextinline insolvency practitioner must
be appointed, and the person determined previously is considered
for appointment
when the next appointment in that category is
made.
8.
Commencement
This
Policy commences on 31 March 2014.
[38]
45.
The Policy, inter alia, is intended to form
the basis of the transformation of the insolvency industry. The
objective of the Policy
is to “promote consistency, fairness,
transparency, and the achievement of equality for persons previously
disadvantaged
by unfair discrimination.”
46.
What
is also of significance is that uniform procedures for the
appointment of insolvency practitioners are intended to prevent
corruption and fronting.
[39]
It cannot be denied that corruption is rife in South Africa and
stringent measures are needed.
[40]
It can be assumed that the officials at the Masters’ Offices
may be tempted to accept bribes by insolvency practitioners
to obtain
appointments. Being appointed as a provisional trustee or
liquidator is often lucrative.
[41]
47.
The Policy regulates the appointment of
insolvency practitioners in instances where the Master has a
discretion in terms of the
Insolvency Act, the
Companies Act and the
Close Corporations Act.
48.
In
terms of the Policy only persons
included on the Master’s List of Insolvency Practitioners may
be appointed as trustees or
liquidators.
49.
The Policy sets out four self-contained
categories.
50.
The categories are divided by race and
gender. These race categories are not anywhere defined in the
Policy.
51.
When making an appointment, the Master is
required to follow the procedure as provided for in paragraphs 6 and
7.
52.
The terms ‘African’,
‘Coloured’, ‘Indian’, ‘Chinese’
or ‘White female’
used in Categories A, B and C are
limited to a person who became a South African citizen before 27
April 1994.
53.
In Category D, the terms ‘African’,
‘Coloured’, ‘Indian’, ‘Chinese’
females and
males, and ‘White females’ are limited to
persons who became South African citizens on or after 27 April 1994
and the
term “White males” is limited to persons who are
South African citizens.
54.
All practitioners in the same category are
arranged alphabetically according to their last (family) names and,
in the event of similar
last names, their first names. Insolvency
practitioners added to the list after the compilation thereof must be
added at
the end of the relevant category.
55.
Each Master’s List must distinguish
between senior practitioners, being insolvency practitioners who have
been appointed at
least once every year within the last five years,
and junior practitioners, being insolvency practitioners who have not
been appointed
at least once every year within the last five years
but who satisfy the Master that they have sufficient infrastructure
and experience
to be appointed alone.
56.
The Master must appoint insolvency
practitioners consecutively in the ratio A4: B3: C2: D1. The
letters represent the respective
racial and gender categories and the
numbers represent the number of practitioners in each category who
must be appointed in that
sequence.
57.
This means that the Master must first
appoint four practitioners from Category A, then three from Category
B, then two from Category
C and finally one from Category D before
returning to Category A to appoint the next four practitioners.
The Master must
make the appointments using the alphabetical list.
58.
The Master may, having regard to the
complexity of the matter and the suitability of the junior or senior
practitioner next-in-line
to be appointed, appoint a senior
practitioner jointly with that junior or senior practitioner and must
provide reasons for such
appointment.
59.
The Master may not have regard to any other
factors in making appointments.
The
coming into effect of the Policy
60.
In terms of
section 158(2)
of the
Insolvency Act, the
Minister has determined the Policy. The
Policy is intended to replace all previous policies and guidelines
relating to the
appointment of insolvency practitioners.
61.
In terms of the Policy, the Chief Master
must issue directives to be used by all the Masters of the High Court
in implementing and
monitoring the application of the Policy.
62.
The Policy provides that only persons
included on the Master’s List of insolvency practitioners may
be appointed as insolvency
practitioners. The Policy further
provides for the procedure that must be followed by the Master in
making the discretionary
appointment.
63.
The Policy does not make provision for the
wishes of creditors regarding the appointment of (provisional)
trustees/liquidators.
64.
The Master must apply the list on a
rotational basis in line with the categories in the Policy delineated
by race and gender rather
than taking into account, inter alia, the
preferences of the creditors.
THE
CHALLENGES TO THE POLICY AND APPROACH OF THE COURT
65.
The
Applicants
challenge
the
Policy on a number of overlapping grounds. These can be grouped
as four broad questions:
[42]
(1)
Does the Policy unlawfully fetter the
discretion of the Master?
(2)
Is the Policy rationally connected to its
purpose?
(3)
Does the Policy fall foul of the equality
clause of the Constitution? and
(4)
Does the Policy fail for absence of
procedural fairness – particularly lack of consultation with
relevant stakeholders?
66.
All the parties agreed that if the Policy
unlawfully fetters the Master’s discretion or is irrational or
does not comply with
the requirements of a remedial measure in terms
of s 9(2) of the Constitution, it is inconsistent with the
Constitution and must
be declared to be invalid.
67.
Not
all the parties have requested that I deal with all the challenges
and some have been argued in the alternative. However,
the
Respondents have requested that if I conclude that the Policy is
unlawful, unconstitutional and invalid on any one of the grounds,
I
nevertheless make findings in respect of the other challenges.
This approach conforms with Constitutional Court guidance
provided by
Ngcobo J (as he then was) in S v Jordan and Others.
[43]
I intend to follow it.
PRELIMINARY
MATTERS
68.
Whilst
this judgment refers to the ‘Respondents’, no
affidavits
[44]
were submitted
by the Minister: the Chief Master purported to speak on behalf of the
Minister. Strictly speaking, the failure
by the Minister to
file a confirmatory affidavit or any evidence at all, despite the
Policy being formulated, issued and tabled
by
him
,
is not only undesirable but constitutes inadmissible hearsay.
[45]
I have, nevertheless, been requested by all the parties to decide the
matter as if the Minister had filed an affidavit in
which the Chief
Master’s facts were confirmed. I will thus assess the
applications on the basis of the Chief Master’s
evidence even
though it is
not
his
policy under scrutiny.
69.
Because
the parties did not address onus in their written submissions, I
invited them to make
further
submissions
in this regard. Onus was not fully canvassed and I have
assumed that it is for the Applicants impugning
the lawfulness and
constitutionally of the Policy to make out a prima facie case which
the Respondents must then rebut. This
approach also applies to
the equality test developed in Minister of Finance and Others v Van
Heerden.
[46]
70.
The bulk of argument by all the parties
focused on the effect of the Policy on appointments of provisional
liquidators. This
is because, as I have indicated above, the
Respondents maintain that the Policy applies to provisional
appointments
only
.
However,
the text of the Policy suggests that it applies to all instances in
which
the
Master
appoints trustees and liquidators including final liquidators and
trustees. These include situations in which
co-trustees/liquidators
are appointed in terms of
s 57(5)
of the
Insolvency Act, s
374 of the Companies Act and
s 66(1)
of the
Close
Corporations Act as
well as where a Master declines to appoint a
trustee/liquidators elected at the creditors’ meeting and makes
his own appointment
in terms of
s 57(4)
of the
Insolvency Act, s
370(3)(b) of the Companies Act and
s 76(3)(b)
of the
Close
Corporations Act.
>
These
cases turn largely on the facts as they relate to the power of
provisional liquidators, consequences of provisional appointments
and
how, in this context, the Policy and its effects are to be
understood. Determination of the lawfulness of the Policy must be
done facially and on the facts adduced.
71.
Finally, the Respondents argue that the
purpose of the Policy is to effect transformation in the insolvency
industry
and
that
it constitutes an affirmative action ‘measure’ in terms
of s 9(2) of the Constitution to promote equality by advancing
persons disadvantaged by unfair discrimination. This is not
disputed by the parties.
What
is also not disputed by any of the parties is that the obiter
statements in South African Policy Service v Solidarity obo
Barnard
[47]
that race-based
quotas are not constitutionally permissible applies to all remedial
measures. This concession by the
Respondents has informed
my approach in applying the Van Heerden test in deciding the equality
question and dealing with the Applicants’
submissions
concerning quotas.
THE
LAW AND PRACTICE OF APPOINTING PROVISIONAL TRUSTEES AND LIQUIDATORS
72.
Section
18(1)
of
the
Insolvency Act and
s 368 of the Companies Act provide that a
Master may appoint a provisional trustee/liquidator as soon as:
(1)
a winding-up order has been made in
relation to a company;
(2)
a special resolution for a voluntary
winding-up of a company has been registered;
(3)
an estate has been finally or provisionally
sequestered; or
(4)
when an appointed trustee ceases to
be or function as such.
73.
There
is
some
dispute
over whether such appointments were intended to be extraordinary or
not.
[48]
However, it
appears that provisional appointments have been made as a matter of
course since 1977. This seems to be
partly a result of
s
20(1)(a)
of the
Insolvency Act and
s 361(1) of the Companies Act,
which require that the estate vests in the Master until the first
creditor’s meeting.
The increasing number of
sequestrations and winding-up orders, delays in calling of the first
creditors’ meeting and increasingly
complex estates have
challenged the Master’s Office’s ability to manage
estates effectively in the interim.
[49]
74.
In
order to ensure continuity from provisional to final liquidator, the
Master’s Offices introduced a ‘requisition system’.
This seems to have originated with the Pretoria Master’s Office
in 1977 but has been accepted as common practice, albeit
unauthorised
by legislation, by the courts and
commentators
alike.
[50]
The requisition system allows creditors to submit nominations as to
who the Master should appoint as provisional trustee
or liquidator of
an estate – usually within 48 hours of the winding
up/sequestration order being made by filing requisition
forms
with the Master’s Office.
[51]
Requisitions indicate the value of the claim against the estate
or property and the creditor’s choice of provisional
trustee or
liquidator, chosen from a list of insolvency practitioners.
75.
The Master’s Office reviews the
requisitions and, once satisfied, usually appoint a provisional
trustee or liquidator taking
into account guidelines similar to those
used in the election of final trustees (i.e. using a weighting of
number and value for
creditor ‘votes’). Once the
provisional order has been made, a
committee
of three persons, the ‘Master’s Panel’
scrutinises requisitions, assesses nominees’ suitability and
then
informs suitable candidates of their nominations. Nominees
are required to lodge bonds of security for the estimated value
of
the estate assets before a certificate of appointment as provisional
trustee/liquidator can be issued by the Master. Upon
appointment, the provisional trustee/liquidator takes charge of the
property until the first creditors’ meeting elects a
final
trustee.
76.
The
requisition system has not always resulted in the creditors’
choice being appointed, the Master utilising it as a guide
to his
otherwise ‘unfettered’ discretion.
[52]
At the same time, appointment of
creditors’
nominees
does appear to be the norm
[53]
and a practice seems to have developed in which provisional
liquidators/trustees are not only kept in place for significant
periods
of time,
[54]
but also
placed in a particularly sought after – and potentially
lucrative – position.
[55]
Moreover, there is some evidence that provisional liquidators became
de facto final appointments due, inter alia, to creditor
apathy.
[56]
77.
In
2001 a ‘policy’ document was circulated which has
effectively governed the practice of provisional appointments.
This was not a policy within the meaning of the post-2003 legislation
(see below), was not tabled before Parliament and was not
gazetted.
It was also not the first attempt to introduce employment equity-type
measures into the appointments’ process
– there
apparently being an earlier document produced in the late 1990s.
[57]
The 2001 policy sought to ensure previously disadvantaged persons
were appointed in insolvent estates as co-liquidators and
co-trustees
in terms of a ‘requisition system’. The 2001
document purported to ‘correct the imbalances
that exist in the
appointment of liquidators and trustees so as to actively
advance/empower previously disadvantaged people in
line with the
Government’s policy in this regard’. Policy
objectives were to:
(1)
address imbalances through a long- and
medium-term strategy;
(2)
create a uniform procedure in all Master’s
Offices for the appointment of liquidators and trustees;
(3)
make the industry accessible to previously
disadvantaged persons; and
(4)
promote the image and confidence of
insolvency practitioners and the Master’s Division.
78.
The
2001 policy expressly identified ‘touting’ as a
commonplace and ‘widely accepted’ practice, which was
unlawful. This practice was linked with ‘Black
liquidators [being] largely dependant [sic] on the exercise of the
Masters discretionary power to obtain appointments’. In
addition to recommending various measures to provide for uniformity,
transparency and training, the document outlines procedures to be
followed in respect of requisitions, composition of a ‘Masters
panel’ and the ‘Masters role in promoting affirmative
action appointments’.
[58]
79.
Whilst the Respondents claim that the
requisition system was manipulated to the exclusion of previously
disadvantaged persons, and
some of the Applicants (for example,
Solidarity) acknowledged problems with the system, others, such as
SARIPA contended that no
evidence has been adduced in support of this
claim. One of the problems identified by the Respondents was
that commercial
creditors ‘invariably’ nominated white
males, leading to a ‘skewed situation where major decisions
were taken
by these liquidators...to the detriment of ordinary and
vulnerable workers.’ On the Respondents’ account,
the
‘policy documents’ issued prior to 2004 were
directives designed to ‘alleviate the plight of the ordinary
workers
and to afford them some measure of security and protection’.
The result was lack of uniformity and accusations of favouritism
and
corruption. CIPA takes issue with this characterisation of the
requisition process. CIPA indicates that the ‘PDI’
(previously disadvantaged individual) system introduced by the 2001
policy has radically changed the position and that workers
are
neither disadvantaged by the requisition system, nor by the governing
legislation.
80.
This
first attempt to effect transformation in the industry, which
preceded the amendments to the Acts formally allowing such
intervention,
was met with similar criticisms of fettering to those
brought in this case.
[59]
In questioning the requisition system and current practice which has,
by placing increasing emphasis on provisional appointments,
shifted
focus away from creditor meetings, J C Calitz and D A Burdette,
[60]
writing in 2006, call for change in the thinking on appointments.
In doing so, they observe that:
“
considering
that the requisition system has been applied in various forms for
nearly 30 years, it is almost certain that the more
established
insolvency practitioners will vehemently oppose the abolition of this
system of making provisional appointments.
Let us hope then,
that the system will be modified in order to make it less susceptible
to manipulation, and that it will become
an open and transparent
method of making appointments on an urgent basis”.
THE
DEVELOPMENT AND COMING INTO EFFECT OF THE POLICY
81.
On 9 July 2004, the
Judicial Matters
Amendment Act 16 of 2003
came into force. It introduced the
office of the Chief Master as executive officer of all Masters’
Offices and inserted
s 158(2) of the Insolvency Act 69 of 1984;
s
10(1A)(a)
of the
Close Corporations Act 69 of 1984
and s 14(1A)(a) of
the Companies Act 61 of 1973 to empower the Minister to determine
policy, governing all discretionary appointments
made by the Master,
to ‘promote the consistency, fairness, transparency and the
achievement of equality for persons previously
disadvantaged by
unfair discrimination’.
82.
Section 14(1A)(a) of the Companies Act,
1973 was repealed by the
Companies Act 71 of 2008
. However,
paragraph 9, Schedule 5 of the 2008 Act provides that Chapter 14
(sections 337-426) of the 1973 Act continue to
apply to the
winding-up and liquidation of insolvent companies. Consequently
s 158(2) of the Insolvency
Act applies to
insolvent companies in terms of s 339 of the Companies Act, 1973.
83.
Between 2004 and 2009, ‘several draft
policies’ were produced. A third draft appears to have
appeared on 23 April 2007 and indicates ‘track
changes’ by Acting Chief Master, Ms Mbeki, dated 23, 28, 29 and
30 May
2007. Further ‘track changes’ by Acting
Chief Master, Mr Bassett, indicate revisions on 26 April, 2 May and 3
May 2009.
84.
A
meeting was held on 29 September 2010 with representatives from the
Association for the Advancement of Black Insolvency Practitioners,
the Association of Insolvency Practitioners of Southern Africa and
the South African Insolvency Practitioner
Society.
[61]
This meeting resolved that a team of two representatives from each
organisation would make written submissions to the Respondents.
85.
A further ‘workshop’ took place
on 8-10 December 2010 for insolvency practitioner representatives to
‘discuss
18 points tabled by the Department.’ This
workshop generated a number of recommendations which appear in a
February
2013 discussion paper. It includes a determination
that a team would ‘clean up’ the Masters’ lists;
that
a BEE approach should be followed based on BEE Codes of Good
Practice and the Preferential Procurement Policy Framework and its
Regulations; that representatives would obtain ‘buy-in’
from creditor organisations; that the requisition system should
be
done away with; that proposals regarding ‘issues relating to
the location of the business of practitioners and the rotation
system’ would be tabled by the Department; that appointment
criteria would be developed by the Master for inclusion in the
policy; that a draft model for traineeship would be considered; that,
pending a Master’s Ombud, a neutral monitoring body
of
role-players would be established to monitor appointments; that the
policy would provide for the Master issuing directives;
that the
Master should keep statistics of appointments which would be
publically available.
86.
The workshop appears to have accepted that
‘the interests of creditors [are] taken care of at the first
meeting of creditors.’
This particular resolution was not
specifically denied
by the Applicants.
87.
Two follow-up meetings are recorded as
being held on 17 February 2011 and 3 June 2011.
88.
A 2013 Discussion
Paper
situates any policy to be adopted in the context of ‘the Role
of insolvency in the economy’; the
Public Finance Management
Act 1 of 1999
; the
Consumer Protection Act 68 of 2008
; Black Economic
Empowerment and the need for improved turnaround in Masters’
offices.
89.
Insolvency is recognised
as
a means of ‘driving economic development’.
The
following paragraphs from the 2013 Discussion Paper elaborate:
‘
1.21
It is in the interest of the economy and society as a whole that
insolvency problems should be solved fairly and efficiently.
Insolvencies should be finalised quickly, thereby limiting the time
that funds are tied up in insolvent estates. Especially
in
difficult economic times it is important that money should be
available to generate growth and should not be entangled in tiresome
and time-consuming procedures.
1.22
Effective, speedy and fair procedures are important needs of
stakeholders and formed the basis for the review of the
law of
insolvency by the South African Law Reform Commission, which
recommended new insolvency legislation. This legislation
is
scheduled to be promoted in the near future.’
90.
What is also reflected
in
the 2013 Discussion Paper are matters with which the Policy does not
deal.
91.
There are some
important
‘guiding principles’ reflected in the 2013 Discussion
Paper. I highlight those of relevance to the issues
raised in
these applications:
3.2
(a) The authority to determine policy is
limited to the wording of the
legislation or matters included in the wording by clear or necessary
implication. The Policy
cannot change the law outside the
authority given to the Minister by the legislation.
(b)
The Policy is limited to the appointment of insolvency practitioners
in order to promote consistency, fairness, transparency
and the
achievement of equality for persons previously disadvantaged by
unfair discrimination.
The legality of the Policy may be
questioned or the focus of the Policy may be lost if it deals with
unrelated matters
.
(c)...The
Policy should not be arbitrary, haphazard or random.
(d)
The Policy is a
first step
to move away from rules based on
the advancement of previously disadvantaged individuals (PDI) towards
Black Economic Empowerment.
(e)
The Chief Master’s Directive relating to the Policy should not
deal with matters reserved for the Policy or duplicate
the Policy.
They should deal with practical matters and matters of form in order
to implement the Policy.
92.
The Discussion
Paper
lists the following consultation workshops:
(1)
Stakeholders’ Meeting – 7
December 2006
(2)
Masters’ Lekgotla – March 2007
(3)
Workshop with insolvency bodies - 8-10
December (and follow-up meetings)
(4)
Invitation to comment on draft Policy –
20 December 2011
(5)
Invitation to comment on draft Policy –
18 January 2012
(6)
Consultative meetings – 29 March 2012
(Cape Town); 30 March 2012 (Durban); 3 April 2012 (Pretoria).
93.
The Respondents
list
the following additional interactions leading up to the adoption of
the Policy:
(1)
Joint meeting with representatives bodies
of insolvency practitioners and attorneys and accounts’
representative bodies –
3 October 2012.
(2)
Discussion and tabling of draft policy at
Direct General Clusters for the Economic Sector and Employment
Cluster and Justice Crime
Prevention and Security Cluster – no
date provided.
(3)
Revised draft Policy sent to Chief State
Law Advisors for input and comment – no date provided.
(4)
Draft Policy tabled in Parliament.
94.
The Policy was intended to come into
effect on 31 March 2014.
THE
NATURE OF THE POLICY
95.
Given my findings, little turns on whether
the Minister’s formulation of the Policy is administrative or
executive action.
However, due to the framing of the
Applicants’ challenges, it is necessary to determine whether
the formulation of the Policy
is administrative action with the
meaning of the Promotion of Administrative Justice Act 3 of 2000
(‘PAJA’).
96.
SARIPA challenges the Policy as an
irrational and unlawful exercise of the Minister’s executive
power. In the alternative,
SARIPA argues that the formulation
of the Policy constitutes unlawful administrative decision.
97.
By
contrast, the Applicants in the Gauteng matter have brought their
challenge in terms of PAJA, arguing that the Policy is ultra
vires,
[62]
irrational,
[63]
unreasonable,
[64]
unlawful
[65]
and based on reasons other than those authorised by the
legislation.
[66]
98.
The
Respondents regard the Minister’s actions as an exercise of
executive power in terms of s 85(2)(b) of the Constitution.
As
such, they argue that his actions are excluded from administrative
review.
[67]
99.
I am inclined to agree with the submission
that the Minister’s formulation of the Policy constitutes an
exercise of executive
power.
100.
Distinguishing
administrative from executive or legislative action is not always
easy and is to be decided on a case-by-case basis.
[68]
Rather than establishing a strict test, the Constitutional Court has
described a continuum of action between legislative
or executive
powers at one extreme and administrative power at the other. In
Permanent Secretary, Department of Education
and Welfare, Eastern
Cape v Ed-U-College (PE) (Section 21) Inc,
[69]
on which NAMA relies, the issue was whether a policy governing the
funding, determination and allocation of subsidies was administrative
or legislative action. The Constitutional Court held that the
subsidy formula was determined within the limits of the Schools
Act
84 of 1996 and thus constituted administrative action.
[70]
The Court held that:
’
Policy
may be formulated by the Executive outside of a legislative
framework....The formulation of such policy involves a political
decision and will generally not constitute administrative action.
However, policy may also be formulated in a narrower sense
where a
member of the Executive is implementing legislation. The
formulation of policy in the exercise of such powers may
often
constitute administrative action.’
[71]
101.
It is this dictum on which
NAMA
relies. However a further dictum from that case comes nearer to
deciding the current matter:
“
The
determination of the precise criteria or formulae for the grant of
subsidies does contain an aspect of policy formulation but
it is
policy formulation in a narrow rather than a broad sense. The
decision apparently constitutes a broad policy decision
because it
purports to determine how the allocated budget is to be distributed
and not the amount to be given to each school.
However, on
closer scrutiny it is in fact not so broad because the MEC determines
not only the formula but also in effect the specific
allocations to
each school. This case may be close to the borderline.
However, I am persuaded that the source of the
power, being the
legislature, the constraints upon its exercise and its scope point to
the conclusion that the exercise of the
s 48(2) power constitutes
administrative action, not the formulation of policy in the broad
sense...”
[72]
(emphasis
added).
102.
In
the matter
before me, I have indeed been faced with a policy that purports to
prescribe both a broad formula, and a precise allocation.
However, in determining the source of the Minister’s power, it
is necessary to have regard not to the Policy itself (which
is being
impugned), but to the source of the power exercised by the Minister
and whether it concerns policy in the broad or narrow
sense.
The principle from Ed-U-College applies equally to the distinction
between executive and administrative power.
103.
The
case
of Minister of Defence and Military Veterans v Motau and Others
[73]
,
required just such a distinction. The Constitutional Court held
that:
‘
the
fact that a functionary performs a certain act in terms of an
empowering legislative provision does not, without more, mean
that
the functionary is implementing legislation’ ....
[74]
...administrative
powers usually entail the application of formulated policy to
particular factual circumstances. Put differently,
the exercise
of administrative powers is policy brought into effect, rather than
its creation.’
[75]
104.
A
decision more closely related to the
formulation
of policy is more likely to be executive, whilst that which is closer
to the
application
of policy is more likely to prove administrative.
[76]
Ancillary factors which should be utilised with caution and in
context include: the source of the power; constraints imposed
on the
power and whether the exacting scrutiny of administrative review is
appropriate to the particular exercise of the power.
[77]
105.
What
is required in each case is to examine the provision conferring the
power in question. I thus have regard to the amendments
made by
the
Judicial Matters Amendment Act in
respect of the Insolvency and
Close Corporations Acts.
[78]
The
Judicial Matters Amendment Act introduced
s 158(2)
into the
Insolvency Act. For convenience, I repeat section 158:
‘
158.
Regulations and policy
(1)
The Minister may from time to time make regulations not inconsistent
with the provisions of the Act, prescribing –
(a)
the procedure to be observed in any Master’s office in
connection with insolvent estates;
(b)
the form of, and manner of conducting proceedings under this Act;
(c)
the manner in which fees payable under this
Act shall be paid and brought to account.
(2)
The Minister may determine policy for the appointment of a curator
bonis, trustee, provisional trustee or co-trustee by the
Master in
order to promote consistency, fairness, transparency and the
achievement of equality for persons previously disadvantaged
by
unfair discrimination.
(3)
Any policy determined in accordance with the provisions of
subsection (2) must be tabled in Parliament before publication in
the
Gazette.’
106.
Prior to the amendments made by the
Judicial Matters Amendment Act, s
158 was titled only ‘Regulations’
and included only subsection (1). Subsection (1) clearly deals
with specific
administrative procedures and processes. By
contrast, subsection (2) concerns ‘policy’, which is
described in
broader terms than the permissible categories of
regulations listed in subsection (1). A similar scheme is found
in
s 10
of the
Close Corporations Act, which
provides for regulations
dealing with procedures and tariffs in
s 10(1)
and the relevant
policy determination in
s 10(1A).
It should be noted that the
legislature did not understand the power to formulate policy as
falling within
s 10(1)(n)
which provides for regulations made ‘as
to any other matter required or permitted by this Act’ or s
10(1)(o) which
provides for regulations ‘generally, as to any
matter which he or she considers it necessary or expedient to
prescribe in
order that the purposes of this Act may be achieved’.
The fact that the legislature did not merely add a category of
permissible regulations to the Minister’s powers under
subsection (1) of either Act but saw fit to grant the Minister powers
to determine policy suggests that what was envisaged was something
other than a power concerned with procedures for implementing
legislation. The schemes of the two Acts thus suggests that the
power granted by s 158(2) and s 10(1A) concerns the Minister’s
power to ‘develop and implement national policy’ in terms
of s 85(2)(b) of the Constitution. As such it does
not
constitute administrative action.
107.
This
does not, however, mean that the Minister’s exercise of power
is not subject to the requirements
of
legality and rationality.
[79]
This the Respondents, quite properly, accept.
DOES
THE POLICY UNLAWFULLY FETTER THE MASTER’S DISCRETION?
108.
It
is not in issue that an exercise of discretion, such as the making of
an appointment, by the Master is not lawfully made if it
is a result
of a rigid and inflexible policy.
[80]
109.
The Applicants argue that the Policy
unlawfully fetters the Master’s discretion in making
appointments of provisional liquidators
in terms of s 18(1) of the
Insolvency Act. CIPA, NAMA and Solidarity point specifically to
the
rigidity
of the policy and the failure of the Policy to take account of
creditors’ views in the appointments’ process. The
Respondents deny that the Policy unlawfully fetters the Master’s
discretion to appoint, relying on the discretionary space
provided
for by clause 7.3. They accept that if clause 7.3 does not
provide for the appropriate exercise of discretion, the
Policy falls
outside the purview of s 158(2) and the Constitution, and is invalid.
110.
The relevant clauses of the Policy read:
’
7.1
Insolvency practitioners
must
be appointed consecutively in the ration A4: B3: C2: D1....
7.2
Within the different categories on a Master’s List, insolvency
practitioners
must, subject to paragraph 7.3, be appointed in
alphabetical order
.
7.3
The Master
may
,
having regard to the complexity of the
matter and the suitability of the next-in-line insolvency
practitioner but subject to any
applicable law, appoint a senior
practitioner jointly with the junior or senior practitioner appointed
in alphabetical order
....
7.4
If an insolvency practitioner due for appointment in accordance with
the alphabetical list of names in a specific category on
the Master’s
List –
(a)
fails to lodge a bond of security in time, the next insolvency
practitioner on the Master’s List must be appointed, and
the
person determined previously is moved to the back of that list; or
(b)
satisfies the Master that he or she has a conflict of interest
or a conflict of interest arises after the appointment,
the
next-in-line insolvency practitioner must be appointed, and the
person determined previously is considered for appointment
when the
next appointment in that category is made”.
111.
The first dispute concerns how clause 7.3
should be understood. SARIPA contends that where the Master,
having had regard to
the ‘complexity of the matter and
suitability of the next-in-line insolvency practitioner’
determines that a joint-appointment
is necessary, the senior
practitioner appointed must be the next-in-line senior practitioner
as determined by the roster.
112.
As I understand their argument, the
Respondents adopt a wider and more flexible interpretation of clause
7.3, arguing that the senior
practitioner appointed need not be the
next-in-line on the roster. According to the Respondents, this
discretion to appoint
any senior practitioner jointly with the
next-in-line practitioner (be he or she junior or senior) having
regard to his or her
suitability and the matter’s complexity
‘saves’ the Policy from the charge of unlawfully
fettering the Master’s
discretion.
113.
This wider interpretation would lead to
application of the Policy in a manner that was neither rigid, nor
inflexible.
114.
I am of the view that the Respondents’
interpretation of the provision is to be preferred. Clause 7.2
does require the
Master to appoint insolvency practitioners in
alphabetical order. This is made ‘subject to’
clause 7.3.
On an ordinary, grammatical reading, this means
that clause 7.2 is subservient to clause 7.3. Clause 7.3 allows
the Master,
subject to ‘any applicable law’, to have
regard to the matter’s complexity and the next-in-line
practitioner’s
suitability. The latter, read in context,
no doubt refers to ‘suitability for the particular matter’.
The Master then may determine that a ‘joint appointment’
is necessary and appoint ‘a’ senior practitioner
with the
‘junior or senior practitioner appointed in alphabetical order’
(as per clause 7.2). Such joint-appointee
need not be selected
alphabetically.
115.
This interpretation, however, does not
resolve the question as to whether the band of discretion left to the
Master is sufficiently
unfettered to prove lawful.
Unlawful
Fettering
116.
The
need for certainty and sufficient guidelines for decision-makers must
not result in policy that enters
the
realm of regulation by pre-determining outcomes in particular
circumstances and micro-managing implementation.
[81]
As noted by O’Regan J in Dawood and another v Minister of Home
Affairs and others; Shalabi and another v Minister of Home
Affairs
and others; Thomas and another v Minister of Home Affairs and
others:
[82]
’
Discretion
plays a crucial role in any legal system. It permits abstract
and general rules to be applied to specific and particular
circumstances in a fair manner. The scope of discretionary
powers may vary.’ At times they will be broad, particularly
where the factors relevant to a decision are so numerous and varied
that it is inappropriate or impossible for the Legislature
to
identify them in advance. Discretionary powers may also be broadly
formulated where the factors relevant to the exercise of
the
discretionary power are indisputably clear. A further situation may
arise where the decision-maker is possessed of expertise
relevant to
the decisions to be made. There is nothing to suggest that any of
these circumstances is present here.’
[83]
117.
Courts
have recognized that the discretion must be recognized and that the
guidance given must not constitute a constraint to be
applied rigidly
and inflexibly in any case.
[84]
118.
The
Constitutional
Court in Arun Property Development (Pty) Ltd v City of Cape Town
[85]
endorsed the view that policy ‘serves as a guide to
decision-making and may not bind the decision-maker inflexibly’,
[86]
holding that ‘Policy is not legislation but a general and
future guideline for the exercise of public power by executive
government. Often, but not always, its formulation is required
by legislation. The primary objects of a policy are
to achieve
reasonable and consistent decision-making; to provide a guide and a
measure of certainty to the public and to avoid
case-by-case and
fresh enquiry into every identical request or need for the exercise
of public power’.
[87]
119.
The
Respondents
state that the Policy was promulgated to provide
the necessary Dawood guidelines to the Master and to prevent the
situation of almost
completely unfettered discretion that has existed
in the Masters’ Offices in respect of appointments of
provisional liquidators.
This is in accordance with the
governing legislation and is thus permissible. The Applicants
argue that the Policy unlawfully
fetters the discretion of the
Master.
The
Master’s exercise of discretion
120.
Whilst
the
Master’s discretion has been described as ‘unfettered’,
[88]
this is not entirely accurate. As a ‘creature of
statute’
[89]
the Master
may only exercise discretion within the limits of the legislation
governing the appointments of provisional liquidators.
[90]
Further, any decision made by the Master is subject to the
requirements of PAJA.
[91]
Such limits are not disputed by the Applicants. However, they argue
that the Master has, and must be allowed to exercise,
wide discretion
in respect of which individuals he appoints for particular matters.
As part of this determination, the Master
must be able to take note
of individual qualities other than race and gender as well as the
wishes of creditors in making particular
appointments.
121.
It
is so
that
the
courts have endorsed the suggested wide discretion of the Master.
The Gauteng Division, Pretoria, has ruled that ‘no
judge of the
High Court of South Africa has authority or jurisdiction to effect
any appointment of any person to [the positions
of provisional and
final liquidators]…nor to make any recommendations to the
master in respect of any appointment to any
of these positions’.
[92]
This ruling, however, cannot be applied automatically to the
relationship between the Minister’s Policy and the Master’s
appointments. The legislation explicitly subjects the Master’s
decision-making concerning appointments to Ministerial
policy.
No equivalent provision authorizes court interference in
appointments.
122.
Section
368
of the Companies Act and s 18(1) of the Insolvency Act provide that
the Master ‘may’ appoint a provisional liquidator/trustee
– this contrasts with the peremptory requirement that the
Master ‘shall’ appoint nominated persons as final
liquidators (Companies Act s 369). The Master may decline
to appoint nominated persons as liquidators on grounds specified
in s
370(1), including ‘if in the opinion of the Master the person
nominated as liquidator should not be appointed as a liquidator
of
the company concerned’. This, according to Meskin et
al
[93]
suggests a wide
discretion. In the last instance, the Master ‘shall’
appoint someone of his own selection.
[94]
The Master has discretion ‘whenever [he/she] considers it
desirable…[to] appoint ‘any person not disqualified
from
holding the office…as co-liquidator’.
[95]
Where vacancies arise, the Master has discretion not to fill the
vacancy if he or she is ‘of the opinion that the remaining
liquidator or liquidators will be able to complete the
winding-up’.
[96]
The Master exercises further control over liquidators/trustees by
being empowered to grant permission to be absent from the
Republic
for more than 60 days and to impose conditions on such permission and
can permit a liquidator to resign or direct him/her
to do so.
[97]
Masters may remove liquidators/trustees from office;
[98]
resolve disputes between co-liquidators
[99]
and increase or decrease remuneration of liquidators.
[100]
All of this indicates that the relevant legislation provides the
Master with wide powers in managing liquidators/trustees
and the
winding-up process. This is certainly an indicator of the
granting of wide discretion.
123.
Significantly
,
the remedy for aggrieved persons in respect of appointments of
trustees/liquidators includes reconsideration by the Minister as
final arbitrator
[101]
– however, this applies only to trustees elected by the
creditors and thus does not apply to provisional trustees.
[102]
124.
This
regime
strongly
supports the notion that the scheme of the Act requires appointment
decisions to be taken first and foremost by the Master
– and
not by the Minister. The consequence of this is that the Policy
envisaged by the legislation may not pre-determine
the Master’s
appointments’ decisions.
[103]
125.
Moreover
,
if regard is had to the objectives of the policy provided for by s
158(2), the language used suggests a wider and more general
policy
determination than one which prescribes specific appointment
formulae. Even on a generous interpretation
[104]
given to Clause 7.3 of the Policy, the Policy appears to go beyond
the setting of guidelines and to intrude impermissibly into
the
Master’s ability to apply his mind to the making of each
appointment.
126.
Critically
,
clause 7.3 on any interpretation does not ‘cure’ the
Policy of overly restricting the Master’s ability to make
‘suitable’ appointments. This is a specific
requirement of s 368 of the Companies Act and, whilst absent from
s
18(1) of the Insolvency Act, it is clear from the evidence, in
addition to the overall scheme of the legislation, that ‘suitability’
must at a minimum, be evaluated in relation to the function of
winding-up an estate in order to realize maximum value for creditors,
and in society’s best interests.
127.
The
formula
provided for by the Policy allows insufficient
scope for the Master to balance practitioners’ race, gender and
years of experience
on the one hand, with their industry-specific
knowledge and expertise on the other. To disallow such
considerations in appointment
of provisional liquidators is
inconsistent with the Master’s oversight role in respect of
final liquidators. Whilst
the parties have specifically
contested the Policy in relation to provisional trustees and
liquidators, the Policy comparably applies
also to final
liquidators. A system which makes use of a strict roster is out
of keeping with the discretion required by
the Master in s 370 of the
Companies Act and s 57 of the Insolvency Act.
128.
In
light
of the above, I thus find that the rote
alphabetical system set up by the Policy unlawfully fetters the
Master’s discretion.
LEGALITY
AND RATIONALITY
129.
The
exercise of all public power, such as determining the Policy, must be
in conformity with the Constitution and the doctrine of
legality.
The Constitution requires that public officials are accountable,
responsive and transparent and thus must both
act within the ambit of
the powers conferred on them and make justifiable and rational
decisions.
[105]
130.
Rationality
is a requirement of the exercise of all public power, including the
adoption of measures under s 9(2) of the Constitution.
This
means that the measure must relate to the purpose for which the power
is given as well as the information available to the
functionary
exercising the power.
[106]
131.
The Applicants contend that the Policy does
not bear a rational relationship to the objective of transforming the
insolvency industry.
CIPA challenges the feasibility of
implementation due to existing delays in the Gauteng Masters’
offices and disorganisation
of the lists. In addition, the
Applicants question the rationality of the decision-making behind the
Policy’s design,
given the data apparently relied upon by the
Minister. Of further concern to the Applicants is the Master’s
insistence
that the Policy only affects provisional appointments,
when it deals with all discretionary appointments – including
those
made after the first creditors’ meeting.
132.
The
Respondents rely on Democratic Alliance v President of the Republic
of South Africa and Others
[107]
to argue that the rationality of the steps taken in making the
decision must be examined. They list a series of consultation
meetings and workshops between 2006 and 2013 in addition to
invitations for comment to establish the needs of the insolvency
industry.
Interested parties were invited and a task team
established to assist in formulation of the policy. The
Respondents say that
the Policy was circulated in draft form to
insolvency practitioners, banks, professional bodies, creditor
organisations, NEDLAC,
the Director General Cluster, the Chief State
Law Advisors and, ultimately, approved by Cabinet. Further, the
draft policy
was tabled in Parliament and gazetted on 7 February
2014. On this basis, they contend that the process followed was
rationally
related to the purpose of the power and that the impugned
Policy is thus rational. The Respondents, moreover, indicate
that
directives issued by the Masters Offices have set in motion
mechanisms which will ensure that the Policy can be smoothly and
efficiently
implemented. This includes a process to ‘clean
up the list’ of insolvency practitioners. They further
submit
that gradual implementation is not necessary and does not
prove the irrationality of the measure.
133.
In
assessing the rationality of the Minister’s actions, an
objective standard must be adopted and courts must be careful not
to
‘substitute their opinions as to what is appropriate for the
opinions of those in whom the power has been vested’.
[108]
At the same time, the courts have held that a rational decision
requires a minimum regard to ‘relevant factors’
brought
to the knowledge of the decision-maker.
[109]
Rationality relates to both the procedure and substance of the
decision. Rationality is also implicated in the equality
enquiry. I address these arguments together.
DOES
THE POLICY FALL FOUL OF THE EQUALITY CLAUSE?
134.
It is not
in
issue that the Policy is designed to be a
‘remedial measure’ within the meaning of s 9(2) of the
Constitution and implicates
the right of every citizen to pursue
their career of choice, trade or profession subject to the operation
of law in terms of s
22 of the Constitution.
135.
The
Applicants
contend
that the Policy does not meet the requirements of a remedial measure
in terms of the three-part test laid down in Van Heerden.
[110]
This requires that a measure:
(1)
targets a particular class of persons who
were subject to unfair discrimination;
(2)
is designed to protect or advance those
classes of persons; and
(3)
promotes the achievement of equality.
136.
If the
Policy
passes this test, it is neither presumed to be
fair, nor presumed to be unfair. It can however be challenged
in terms of lawful
implementation which requires, at a minimum, that
it be rationally implemented.
137.
Whilst
the
Applicants have impugned the Policy itself and not its
implementation, extensive submissions were made to demonstrate that
the Policy could not be rationally implemented. This, it was
submitted, adds force to the challenge that the Policy does not
meet
the required constitutional standard of a remedial measure.
Further support for the unlawfulness of the Policy was offered
in the
submission that the Policy impermissibly makes use of a quota
system. I consider the issue of quotas insofar as it
relates to
the rationality requirement inherent in the second leg of the Van
Heerden test.
138.
There
appears to
be no real dispute over the need to transform the insolvency
industry, nor over the Policy’s objective in targeting
classes
of persons who have been subject to unfair discrimination.
139.
What is
disputed
is whether the Policy adopts a rational
formulation which is capable of meeting this objective and promoting
the achievement of
equality.
140.
Accordingly, I
focus
on the second leg of the Van Heerden test.
It is forward-looking. Whilst the second leg focuses on the
effect of the
Policy on disadvantaged groups, the third necessarily
adopts a wider view which requires consideration of the implications
of the
Policy for both those it seeks to advance and those groups
which will not be so protected or advanced.
The
Respondents conceded that if the Policy did not meet the test
applicable to s 9(2) measures then it is to be regarded as
unconstitutional
and invalid.
141.
The
Respondents
further conceded that if the Policy made use of
quotas, it could not be a valid remedial measure.
Does
the policy target a class of people who have been unfairly
discriminated against?
142.
This
is
not
disputed. The objective of the policy is to ‘promote
consistency, fairness, transparency and the achievement of
equality
for persons previously disadvantaged by unfair discrimination’.
[111]
This objective repeats the wording of the
Judicial Matters Amendment
Act and
s 158(2) of the Insolvency Act,
s 10(1A)(a)
of the
Close
Corporations Act and
s 339 of the Companies Act. The Policy is
‘intended to form the basis of the transformation of the
insolvency industry’
[112]
and expresses the Minister’s commitments to, amongst others
‘addressing the imbalances of the past and transforming
the
insolvency industry’; ‘making the insolvency industry
accessible to individuals from previously disadvantaged communities’
and ‘promoting the objectives of the Broad-Based Black Economic
Empowerment Act, 2003 (Act No. 53 of 2003) (BBBEE Act), by
empowering
insolvency practitioners who are previously disadvantaged
individuals’.
[113]
The categories used in the Policy derive from the BBBEE Act s 1 but
also include Chinese persons. The latter is a response
to the
ruling in Chinese Association of South Africa v Minister of
Labour
[114]
that
Chinese persons fall within the definition of ‘black people’
in the Employment Equity Act 55 of 1998 (EEA).
Whether the
Policy in fact is capable of achieving this object is the subject of
the second inquiry.
Is
the Policy designed to protect or advance these disadvantaged groups?
143.
In
Van Heerden,
the Constitutional Court elaborated on the proper enquiry as follows:
’
In
essence, the remedial measures are directed at an envisaged future
outcome….[T]hey must be reasonably capable of attaining
the
desired outcome. If the remedial measures are arbitrary,
capricious or display naked preference, they could hardly be
said to
be designed to achieve the constitutionally authorized end.
Moreover, if it is clear that they are not reasonably
likely to
achieve the end of advancing or benefiting the interests of those who
have been disadvantaged by unfair discrimination
they would not
constitute measures contemplated by s 9(2).’
[115]
144.
Argument
was
directed at both the Policy’s rationality and whether it was
likely to improve the position of previously disadvantaged
persons.
Submissions concerning the latter focused on the effects of shifting
from the requisition system to the system under
the Policy.
This case is not concerned with the merits or otherwise of the
requisition system which was accepted by all the
parties as
unauthorized by the legislation and not a policy within the meaning
of the legislation. However, in assessing
whether the Policy is
likely to benefit those it targets, logic requires that I have regard
to the status quo.
Co-appointees
or only provisional appointments?
145.
SARIPA
submitted
that under the requisition system, previously disadvantaged persons
are assigned to every matter. This was not accepted
by the
Respondents. It was, however, common cause that previously
disadvantaged persons are appointed as co-trustees in all
matters
over R5 million.
[116]
Because the Policy is applicable to co-appointments and replaces all
previous policies and guidelines, there is no longer
any guarantee of
persons from targeted groups benefiting from appointments to large
estates. It may well occur, for example,
that the ‘next
in line’ on the roster is not a previously disadvantaged
person.
146.
The
Respondents
deny that this is an effect of the Policy,
maintaining that the Master retains his/her discretion in making
co-appointments and
that the Policy applies to provisional
appointments only.
147.
I am
inclined
to agree with the Applicants that this is a
worrying interpretation of the Policy and a possible indicator that
it is not rationally
related to its purpose. The text of the
Policy clearly refers to sections 54(5), 57(4) and 57(5) of the
Insolvency Act; sections
370(3)(b) and 374 of the Companies Act and
sections 66(1)
and
76
(3)(b) of the
Close Corporations Act.
These
provisions clearly concern discretionary appointments which are
not provisional and include co-appointments.
148.
Assuming for the sake of argument, that the
Policy does affect only provisional appointments, the question
remains whether it is
capable of advancing the interests of
previously disadvantaged persons and of remedying the mischief
identified by the Respondents.
149.
The
Respondents
claim that, by intervening in appointments at the
provisional stage, the Policy will provide previously disadvantaged
persons with
exposure enabling their development of the skill,
knowledge and reputation necessary to build successful insolvency
practices.
The Respondents reason that if individuals are given
the opportunity to demonstrate their ability at the provisional
stage, creditors
will ultimately nominate these persons as ‘final’
trustees. This, in turn, will gradually transform the
distribution
of work so that practitioners of all races and genders
receive equitable numbers of creditor nominations.
150.
There
are a
number of difficulties with this argument on the facts adduced, both
as a matter of logic and as a matter of law. I
expressly do not
comment on whether this is the best possible plan that could be
adopted as that is not for the court to decide.
151.
For the
Policy
to pass muster as a lawful remedial measure, the
Minister’s reasoning and evidence is critical to identifying
whether the
system adopted is rationally related to its purpose and
reasonably capable of achieving the envisaged outcome. This is
a
requirement that extends beyond the ‘remedial measure’
test to the exercise of all public power.
Can
intervention in provisional appointments achieve the Policy’s
stated objective?
152.
A number of assumptions underpin the
Respondents’ reasoning.
153.
The
first
is that because all persons on the Masters’
list are qualified as insolvency practitioners, all are equally
suitable for all
appointments. The second is that a provisional
appointment and the exposure it facilitates will provide scope for
previously
disadvantaged persons to acquire the skill necessary to
develop successful practices and generate creditor confidence.
A
third assumption is that creditor behaviour will change as a result
of more previously disadvantaged persons being appointed as
provisional liquidators/trustees. This in turn will lead to
creditors electing increasing numbers of persons from targeted
groups. The final relevant assumption is that the sole cause of
corrupt practices in the appointments process is the discretion
afforded the Master. Consequently, a non-discretionary roster
will ensure transparency, consistency and fairness.
154.
The
Applicants
contend
that, because the strict roster system explicitly prevents the Master
from having regard to the skills, knowledge, expertise
and industry
knowledge of appointees, ‘unsuitable’ provisional
liquidators may be assigned to particular estates.
Rather than
improving creditor confidence, this is likely to achieve the opposite
and merely entrench current nomination patterns.
The
Respondents deny this flaw, pointing out that all insolvency
practitioners who will be included in the roster are ‘qualified’.
It is clear, however, from the evidence that there is a distinction
between ‘qualification’ and ‘suitability’.
[117]
155.
Section
368 of the
Companies
Act
makes specific reference to appointment of ‘any suitable person
as provisional liquidator’. This wording is
not repeated
in the Insolvency Act. However s 60, which deals with ‘Removal
of trustee by Master’ distinguishes
between ‘qualification’
in s 60(a) and being ‘no longer suitable to be the trustee of
the estate concerned’
in s 60(b).
[118]
These provisions are repeated in s 379 of the Companies Act.
Suitability is also required by
s 74
of the
Close Corporations Act
which
, it is common cause, applies to the appointments discussed
here. Whilst ‘qualification’ is defined
in
s 55
and
s 372
of the Insolvency and Companies Acts,
[119]
suitability is not defined. Calitz and Burdette maintain that
‘suitable’ means ‘an independent person who
is able
to discharge the responsibilities of such office competently,
honestly and impartially’.
[120]
The Applicants contend, however, that suitability relates to a proper
match between the sector-specific expertise of an individual
practitioner and the estate he or she is required to administer.
Section 60
provides textual support for this view, which is in line
with the World Bank Principles and Guidelines for effective
insolvency
and creditor rights systems (2001)
.
[121]
Amongst the considerations listed in the World Bank Guidelines is
that insolvency practitioners should ‘be competent
to undertake
the
particular insolvency case
and be knowledgeable about the
nature
and scope of their duties
’.
156.
The Policy
cannot
,
in forming the basis for ‘transformation of the insolvency
industry’, change a feature of the industry’s regulatory
framework which requires a proper match between liquidator/trustee
and a particular estate.
Failing
to account for suitability in this sense is to overlook the fiduciary
position of a trustee/liquidator and the consequent
need to ensure
that more than minimum criteria apply when entrusting insolvency
practitioners with the duties of winding up an
insolvent estate.
Insofar
as the Policy aims to make the insolvency industry accessible to
previously disadvantaged individuals, it needs to do more
than
increase numbers, but ensure that there can be a match between
individual skill and the requirements of the role within the
system
provided for by legislation. Playing a ‘numbers game’
goes no further than formal equality which is not
lawful affirmative
action as contemplated by the Constitution, and which is not the
purpose behind the constitutional recognition
of valid remedial or
advancement measures.
[122]
157.
Illustrative
of
this problem is the Applicants’ concern that the roster system
is likely to have a negative effect on those previously
disadvantaged
persons who have managed to establish themselves in the industry.
They contend that a Policy that aims to promote
the interests of
previously disadvantaged persons should reward skill and excellence.
It is also evident that a system that
randomly assigns appointments
is unlikely to assist people in building up sector-specific
expertise.
158.
The
notion of rewarding
excellence
is
certainly in keeping with the tenure of broad-based black economic
empowerment and integral to the notion of ‘empowerment’.
The Constitutional Court has noted explicitly, that the
Employment
Equity Act ‘...sets
itself against the hurtful insinuation that
affirmative action measures are a refuge for the mediocre or
incompetent. Plainly,
a core object of equity at the workplace
is to employ and retain people who not only enhance diversity but who
are also competent
and effective in delivering goods and services to
the public’.
[123]
What is required for a remedial measure to be constitutionally
compliant is thus not identical treatment but whether it ‘serves
to advance or retard the equal enjoyment in practice of the rights
and freedoms that are promised by the Constitution’ and
its
effect on the ‘sense of self-worth of those affected by
it’.
[124]
159.
In the context of the right to practice
one’s profession, this approach suggests that a remedial
measure needs to operate
in a progressive manner, assisting those
who, in the past were deprived of the opportunities to access the
relevant social goods
necessary to enter the insolvency profession to
do so now. In the 2013 Discussion Paper which preceded
formulation of the
Policy, the need for a more comprehensive
programme, including training and skills-development was
acknowledged. Without
any, let alone a proper, explanation
offered to the Court, it is difficult to understand how the
implementation of a roster which
appears to favour formal equality,
is a rational response to such preparatory materials and identified
needs.
160.
It
is also
perhaps
worth
noting that the Policy has no ‘expiry date’ beyond which
those persons who have built up their practices are able
to compete
equitably in the field. First, this directly counters the
notion of empowerment as increasing skill and expertise.
Secondly, at a theoretical level, this mitigates against an increase
in management, ownership and control of processes by ‘black
persons’ as well as equity in the context of market competition
as it does not provide for any transition from mechanical
appointments to a system of equitable competition. Thirdly,
this counters provisions in the empowerment legislation which
appear
to envisage time limits on remedial measures. The BBBEE Act
provides that Codes of good practice ‘may specify
(a) targets
consistent with the objectives of this Act; and (b) the period within
which those targets must be achieved’.
[125]
Section 20
of the
Employment Equity Act which
provides for employment
equity plans is clear that such plans should include a timetable.
The relationship between targets
and timetables is clearly an
important means of determining whether the objectives of a remedial
measure are likely to be achieved.
161.
Insofar as all the parties accept that the
Policy is a remedial measure and have drawn analogies with employment
equity plans, the
failure to provide clear timelines or targets makes
it difficult to determine whether it is likely to achieve its
intended outcome.
The Respondents contend that the Policy is
designed to achieve its objectives within ‘an estimated period
of ten years’.
This point, however, was neither pursued
in argument, nor elaborated in any way. What is clear from the
evidence is that
there is insufficient evidence to support the notion
that the Policy is likely to achieve the objective of
transforming
the
industry
,
within a specific period, or at all.
162.
The Respondents have not adduced any
evidence to demonstrate the basis for their assumption that
mechanical appointments can, in
fact, change nomination behaviour by
creditors. Such behaviour is noted in the 2013 Discussion Paper
as the reason for the
pattern of appointments and identified as an
area of practice which needs to change. As it stands, the
Policy does not address
this and it appears that the expectation that
mechanical appointments will lead to transformation of nomination
behaviour and patterns
of final appointments is a hope rather than a
reasonable likelihood.
163.
A further
problem
addressed by SARIPA is that there are too few
available insolvency practitioners who are previously disadvantaged
persons to populate
the lists in each Master’s Office as
required by the Policy. This will, according to SARIPA,
inevitably lead to fronting
which is a practice the Policy,
appropriately, explicitly seeks to avoid (as does the BBBEE Act).
164.
This
point becomes particularly important given the clear objective of the
Policy to combat corruption and the assertion by the
Respondents that
the removal of the Master’s discretion is to avoid practices of
favouritism. Academic comment on the
requisition system has
documented corruption, including fronting, as a feature of the lack
of regulation attending the requisition
system
.
[126]
There is, moreover, a constitutional imperative to root out
corruption in the public service.
[127]
There is no reason to believe that a system of quotas will change
such practices and the Respondents did not counter the
allegation
that the quota system would exacerbate practices of fronting and file
shuffling. At a minimum, the evidence suggests
that it is as
likely that fronting and/or file-shuffling is as likely to take place
under the Policy regime as without it.
Fronting undermines,
rather than advances previously disadvantaged persons and allows
retention of the status quo.
[128]
This fortifies the inference that the Policy is unlikely to achieve
its objectives.
Is
the policy rational?
165.
As part of the
Constitutional
Court’s discussion (Van Heerden) of the
second leg of the s 9(2) test, Moseneke J (as he then was), indicated
that an irrational
measure could never be acceptable. On the
one hand, a measure must be rationally related to the information
available to
its designer/formulator at the time of making his/her
decisions. On the other hand, a measure must bear a rational
relationship
to its objectives. Below I consider first
whether there is a rational relationship between the formulation of
the alphabetical
mechanical system and the statistical support cited
by the Respondents. Next, I consider whether a system that does
not account
for creditors’ views at the provisional stage is
irrational in light of the objective of the Policy. Finally, I
consider
whether the roster system makes use of quotas and if so,
whether this renders it unconstitutional.
Information
available to the decision-makers
166.
The Respondents
use
a series of statistics to support the decision to adopt the Policy.
What has not been made entirely clear at any stage
of these
proceedings is whether these statistics are being used to justify
adoption of the particular 4:3:2:1 ratio used or whether
they are
being cited in support of a roster system per se. This could be
significant as whereas SARIPA takes issue with the
particular ratio
used, CIPA impugns the use of the roster and quota in its own right
(and here I distinguish between the attack
on the use of
ratios/quotas/targets and the rigidity of the system).
167.
The Respondents
illustrate
the ‘imbalance’ in distribution of matters with reference
to statistics of 31 July 2013 from Safire, the
second-largest
security bond provider in South Africa:
TABLE
1: SECURITY BONDS ISSUED – 31 JULY 2013 – SAFIRE
[129]
Males
Females
Unknown
% value issued
% number
issued
% value issued
% number
issued
% value issued
% number
issued
White males
43%
40%
10%
14%
African, Chinese,
Indian, Coloured
30%
31%
4%
4%
Unknown
13%
11%
168.
These statistics are disputed by SARIPA
which questions the accuracy of the information provided. They
point out the following:
(5)
At least one instance where an individual
is listed as a ‘white male’ notwithstanding his being
‘regularly appointed
as a previously disadvantaged
practitioner’.
(6)
At least one instance in which an
individual is reflected as a ‘white female’ whilst, on
the provisional National Master’s
list, last updated online on
10 April 2014, the same individual is reflected as a ‘coloured
male’.
(7)
The list does not reflect a date making it
difficult to assess its accuracy.
(8)
It is denied as being ‘illustrative
of the country-wide picture’.
(9)
The figures reflected in this list are
misleading as a single bond is registered in respect of an insolvent
state, notwithstanding
there being multiple insolvency practitioners
appointed for an estate. Where previously disadvantaged
individuals are appointed
as joint provisional trustees, they receive
100% of the value of security bonds issued.
169.
To this can be added the question of
whether these statistics apply to provisional or final appointments –
or both.
170.
Further statistics are provided by the
Respondents which are based on a survey conducted by the Master’s
office on 8 September
2011:
(1)
The biggest provider of security bonds in
the year from 1 November 2009 to 31 October 2010 indicated that of 1
415 insolvency practitioners
reflected on the list of active
insolvency practitioners, 500 persons were issued bonds. Of
these persons 281 received fewer
than 6 bonds and ten received more
than 100 bonds. A discrepancy lies between the two replying
affidavits. Whereas
Mr Basson’s reply to CIPA reflects 1
415 insolvency practitioners on the list, his reply to SARIPA
reflects 700 persons.
(2)
‘
Another provider’ for the
period 1 November 2009- 31 October indicated that security bonds
issued to 117 individuals were
issued as follows:
TABLE 2: NUMBER
OF PERSONS RECEIVING BONDS – 1 November 2009-31 October 2010
– Issuer unknown
Number of persons
receiving bond
Value of bond
2
> R8 million
5
> R5 million
52
R1 million
58
<R1 million
171.
These figures are used as evidence to show
that the workload is not evenly spread. The Applicants
challenge the utility and
accuracy of these figures. These
challenges were elaborated most clearly by CIPA in its replying
affidavit and I summarise
their challenges as follows: First, they
allege that no particulars regarding the survey is provided.
Secondly, they indicate
that there is no necessary correlation
between these statistics concerning active practitioners and gender
or race distribution.
Thirdly, the accuracy of the bond list
may not be an accurate reflection of how many people are involved.
This is on the
same basis as SARIPA’s criticism of the 2013
statistics:
for large estates, where, under
the requisition system ‘PDIs’ are co-appointees, these
persons appear on the list together
with the trustee for the same
security bond. This means that if there are 500 security bonds
issued, there are in fact 1
000 appointments. 500 of these
appointments are of previously disadvantaged persons.
172.
CIPA points out that whilst security bond
holders are not required to keep records of practitioners’ race
and gender this
is common practice and could have been obtained by
the Respondents. CIPA concludes that the statistics demonstrate
inefficient
administration in the Master’s Office and that
incorrect data was used in making decisions about the content of the
Policy.
In trying to demonstrate that a more accurate picture
can be obtained, CIPA has entered statistics into evidence that it
collected
from
lists provided by the South
Gauteng’s Master’s office for appointments made by the
Master in 2010 and 2013:
TABLE 3:
CIPA-COMPILED STATISTICS – South Gauteng Master’s
Office for 2010 and 2013
2010
2013
Total number of
matters
1312
1203
Approximate total
bond value
R2.5 billion
R977 million
Number of white
practitioners appointed
1103
926
Number of
‘non-white’ practitioners appointed
1531
1384
‘
Non-white’
practitioners appointed as percentage of total appointees
58,13%
59,91%
173.
In summarising the current situation in his
office, the Chief Master indicates that the current number of
insolvency practitioners
on the Masters List, ‘which is
currently in the process of being cleaned up’ is 1236. He
breaks this figure down as
follows:
TABLE 4: NUMBER
OF INSOLVENCY PRACTITIONERS ON CHIEF MASTER’S LIST 2014
Race
Males
Females
Unknown
Totals
African
55
11
6
72
Coloured
15
6
-
21
Indian
35
17
-
52
Chinese
-
1
-
1
White
179
51
7
237
Unknown
47
14
792
853
Totals
331
100
805
1236
174.
CIPA challenges this ‘picture’
as inaccurate and skewed. Given that 70% of the list is
unknown, the Master cannot
have reached a rational decision about how
to formulate the Policy.
175.
In argument, I asked Ms Platt to make
submissions as to how I should treat these, possibly contradictory,
statistics. Ms Platt
submitted that no exception was taken to
the figures provided by CIPA. Rather, she submitted that whereas the
statistics provided
by CIPA are regional, those obtained from Safire
are reflective of the national picture.
176.
The Respondents, however, were unable to
provide any information as to the market share held by Safire.
They maintained the
position that the various statistics provided
showed a ‘skew’ in the industry in favour of white males
which justified
the adoption of the Policy and seemed to argue that
national demographic statistics were applied when deciding upon the
particular
ratio of white to African, Coloured, Indian and Chinese
persons utilised in the Policy.
177.
It
is
not
for
a court to interfere with the Minister’s decision to adopt a
particular ratio against any other. That lies firmly
within the
executive power.
[130]
However, there must be at least some evidence that whatever scheme he
adopts is done so on a rational basis. It is
difficult to
understand how a proper determination of an appropriate policy could
be made with significant gaps in the information
considered by the
Minister. In the 2013 Discussion Paper preceding the adoption
of the Policy, the following conclusion is
drawn:
‘
There
is an obvious need to keep accurate statistics and to institute
measures to ensure an equitable distribution of work in accordance
with the transformation agenda of the Government. The proposed
abolition of requisitions, appointments in strict rotation
based on
BEE categories and provision for keeping accurate statistics will go
a long way towards achieving an equitable distribution
of work.’
178.
The
rationale
for the system includes the promotion of the
interests of disadvantaged groups. This was explained in the
2013 Discussion
Paper, and before this Court as shifting from the
requisition system which favoured white males, to a system in which
Black, Coloured,
Indian or Chinese males and females would receive
70% of provisional appointments and white females receive 20% of
these appointments.
Such appointments would ‘as a rule
not be joint appointments with persons who enjoy requisition
support. The appointed
persons will earn more fees and gain
more experience.’ The proportions allocated in the policy
are contrasted with
mid-year 2011 population estimates obtained from
Statistics South Africa: Black/Coloured/Indian/Asian females: 47%;
Black/Coloured/Indian/Asian
males: 44.1%; white females: 4.6%; white
males: 4.4%. The discussion document notes that the comparison
with work allocation
is ‘favourable’ in respect of white
persons. These figures are provided in lieu of the lists as
these are ‘not
accurate’.
179.
Despite
these
facts, these figures seem to have formed the basis
for the Minister’s decision-making regarding the particular
formula used
in the Policy.
180.
The
Respondents
readily agree that the list is in need of
‘cleaning up’ and the process of doing so has begun.
This is commendable
and also necessary in order that the Masters’
Office complies with constitutionally required public service
standards.
However, this does not change the situation that a
Policy has been adopted on the basis of inaccurate information,
including critical,
material gaps and that lists simply are not in
place in every Master’s office which are capable of being
categorized as required
by the Policy. A number of consequences
follow.
181.
First
, it is
impossible to assess whether there are sufficient insolvency
practitioners in each category in each office to populate the
list.
The Respondents argue that where there are insufficient practitioners
in a particular area, previously disadvantaged
persons will ‘move
in’ to such areas. No evidence has been led to support
this proposition. They also argue
that, until such time as
separate lists can be compiled by the 15 Masters’ Offices, a
single, national list will be used,
requiring if necessary, that
practitioners fly around the country to accept appointments.
Leaving aside the feasibility of
this, an expectation of this kind
runs counter to the notion of opening the industry to new entrants
and thus appears contrary
to the Policy’s objectives.
Secondly, the Court’s attention was drawn to discrepancies on
the lists which in
some cases list the same person according to
different race or gender categories in different place. If
these lists are used
as the basis for the creation of the roster, it
seems possible, indeed likely, that arbitrary classifications will
result.
This is also a consequence of the large numbers of
‘unknowns’ that remain on the lists.
182.
It might be argued that these problems
relate to the lists, rather than the Policy and that these are
questions of implementation
rather than the design of the ‘measure’.
To a certain extent this may be true. It would certainly be
easier
to accept that there is a rational basis for the Policy if
accurate lists could be placed before the court with statistics to
support
the reasoning of the Minister. This would be
clear evidence that he had applied his mind to the problem and that
his
choice of the particular system and formula was made
deliberately, consciously and in full knowledge of the consequences
of the
Policy for all those affected by it. It would,
similarly, assist in determining whether, on the numbers, advantage
would
be the likely result for the Policy’s designated groups.
However, given the centrality of accurate lists to the proposed
roster system, the discrepancies and problems with the lists as they
stand does diminish the likelihood of the Policy achieving
its stated
objectives in the near future. This is not determinative, but
is a factor to be considered.
Does
the failure to account for creditor’s views in the roster
system render the Policy irrational?
183.
The
Applicants contend that the interests of creditors are paramount in
the insolvency process.
[131]
Sequestration of a debtor’s estate establishes a concursus
creditorum. The Insolvency Act aims to ‘ensure a due
distribution
of assets among creditors in the order of their
preference’.
[132]
The presumption is that the interests of creditors, as a group, are
more important than those of individual creditors
and other
stakeholders.
[133]
Nothing may be done to reduce the assets in the estate and no action
may be taken which prejudices creditors’ rights.
[134]
Insolvency practitioners thus stand in a position of trust vis-a-vis
creditors.
[135]
184.
Whilst all the Applicants challenge the
exclusion of creditors’ interests from provisional
appointments, the argument is most
powerfully made by NAMA and, on
behalf of employees, by Solidarity. I thus focus on their
submissions in this regard.
185.
NAMA
contends that by excluding creditors from the decision about who to
appoint as provisional liquidator, creditors are (potentially)
prejudiced. A key issue is the delays in convening the first
meeting of creditors which leads to provisional liquidators
not only
being appointed as a matter of course, but also to their remaining in
place for long periods of time. NAMA makes
particular reference
to mining insolvencies where the granting of a final liquidation
order results in lapse of the mining license
thus leading to a
situation in which it is in the interests of creditors to postpone
the final order.
[136]
In such a situation, it is critical to have an insolvency
practitioner in place who is competent (suitable) to manage this
particular type of business. The Respondents point out that
delays of this kind are a consequence of the actions of creditors
and
not the Master’s Office. Further, they contend that
problems arising in relation to mining companies are an exception
to
the norm. I am inclined to agree with the Respondents on
the latter point. There is no authority in the governing
insolvency or companies’ legislation that requires creditors to
have a ‘say’ in the appointment of provisional
liquidators. The practice that has emerged in response to what
appears to be an overburdened and unworkable system cannot
justify
ignoring legislation and requiring that a Policy includes creditors’
views in order that practices which evade, rather
than comply, with
legislation can continue unaffected. Apart from anything else,
this kind of reasoning would undermine the
purpose of the Policy, as
provided for by legislation, which is to ensure transparency and
accountability.
186.
Solidarity’s argument, however,
requires a slightly different approach. It is evident that
under the requisition system
employees and trade unions have been
able to influence the appointment of provisional insolvency
practitioners. Attempts
by the Master’s Office to
influence practice through internal policy directives have clearly
tried to protect employee interests
by ensuring that they have input
into these processes. Moreover, a key motivation behind the
Policy appears to ensure that
employees are protected although the
correlation between creditor input to the provisional process and
consequent lack of employee
protection runs counter to prior attempts
by the Master’s Office to protect employee interests by
facilitating trade union
involvement in the requisition process.
I do, however, find the more general argument about the need to have
regard for all
stakeholders affected by affirmative action measures
somewhat persuasive.
187.
However, as Moseneke ACJ writing for the
majority in Barnard has cautioned:
’
[R]estitution
measures, important as they are, cannot do all the work to advance
social equity. A socially inclusive society
idealised by the
Constitution is a function of a good democratic state, for the one
part, and the individual and collective agency
of its citizenry, for
the other. Our state must direct reasonable public resources to
achieve substantive equality ‘for
full and equal enjoyment of
all rights and freedoms’. It must take reasonable prompt
and effective measures to realise
the socioeconomic needs of all,
especially the vulnerable. In the words of our Preamble the
state must help ‘improve
the quality of life of all citizens
and free the potential of each person’. That ideal would
be within a grasp only
through governance that is effective,
transparent, accountable and responsive.’
[137]
188.
The increasing importance of provisional
liquidators/trustees appears to have been a result of problems with
implementing the insolvency
process and delays in calling the
creditors’ meeting. Specific provision is made for
employees in sections 4(2)(b);
9(4A); 11(2A); 38 and 98A of the
Insolvency Act read with
s 197B(1)
of the
Labour Relations Act 66 of
1995
. Additional provision is made in the
Basic Conditions of
Employment Act 75 of 1997
s 41(2).
It is within this context
that the legislative scheme envisages protection of employees.
189.
It
is true that the Policy envisages ‘transformation of the
industry’ and also true that such transformation should
be
viewed in the context of innovations such as business rescue
proceedings in the Companies Act of 2008 (which makes specific
provision for employees in sections 136, 144, 148, 149, 150, 151(2),
152(1)(c) and 153(1)(b) of the Act 71 of 2008) and international
good
practice such The World Bank Principles for Effective Insolvency and
Creditor/Debtor Regimes (Revised 2011).
[138]
When considering transformation of English Insolvency Law, the Cork
Report listed ‘society’ as one of the key
three
interests, together with those of the debtor and creditor, which must
be considered. The society which the Constitution
envisages is
one which does recognise employee interests and this is reflected in
the legislation which protects them.
190.
However, the manner in which such interests
are to be protected is a policy decision that lies with the
legislature and, where authorised,
by the executive. Such
interests can be protected in different ways and it seems to me that
the legislature has chosen to
protect the interests of employees not
by giving them a say in the appointment of trustees/liquidators (be
they final or provisional)
but in the processes of notification and
consultation and provision for remuneration in the Acts. Given
this framework, the
exclusion from employee voice from the Policy
does not render the Policy without rational connection to its
objective.
Does
the Policy make use of quotas, and if so, does this render the Policy
arbitrary or unconstitutional?
191.
In Van Heerden, the Constitutional Court
stated that a measure that was ‘arbitrary, capricious or
displayed naked preference’
would not pass constitutional
muster. In the present matter, the Applicants contend that the
proposed system is fundamentally
arbitrary and irrational due to its
reliance on
rigid
race- and gender-based categories.
192.
The
Applicants
argue that there is no explanation as to how the
racial categories used in the Policy are to be determined, what the
criteria for
such classification are and under what authority such
determination is to be made.
193.
Further
argument
was offered by CIPA and Solidarity as to the
fundamentally arbitrary nature of such racial categories and ‘racial
norming’
where racial categories are used in a decontextualized
manner, rather than as flexible proxies for disadvantage.
In
essence, these arguments constitute a challenge to the continued
use of apartheid-era classifiers under the affirmative action
regime.
194.
I accept that
racial
classification, divorced from other contextual
factors, is an arbitrary threat to the dignity and autonomy of
individuals.
However, arguments of this kind do not assist the
Applicants in attacking the Policy which explicitly references
categories that
are utilised throughout what can loosely be termed
South Africa’s ‘affirmative action’ legislation.
195.
The
BBBEE
Act s 1 states:
‘“
black
people” is a generic term which means Africans, Coloureds and
Indians
(a)
who are citizens of the Republic of South Africa by birth or descent;
or
(b)
who became citizens of the Republic of South Africa by
naturalisation-
(i)
before 27 April 1994; or
(ii)
on or after 27 April 1994 and who would have been entitled to acquire
citizenship by naturalisation prior to that date.’
196.
The
Employment
Equity Act s
1 states that:
‘“
black
people” is a generic term which means Africans, Coloureds and
Indians.’
‘“
designated
groups” means black people, women and people with disabilities
who-
(a)
are citizens of the Republic of South Africa by birth or descent; or
(b)
became citizens of the Republic of South Africa by naturalisation-
(i)
before 27 April 1994; or
(ii)
after 26 April 1994 and who would have been entitled to acquire
citizenship by naturalisation prior to that date but who were
precluded by apartheid policies.”
197.
These definitions form the basis of the
categories used in the Policy (although modified to exclude disabled
persons and include
‘Chinese’ persons). They form
part of a wider policy context in which determinations have been made
by the Legislature.
Given
the
fact that the Respondents have firmly situated the Policy within the
broader context of this legislation – and thus within
this
broader policy-context – it is not open to this Court to
determine that the categories used are themselves arbitrary
and
irrational.
198.
However,
what
may be accepted is that in using these divisions
as the basis for an inflexible and rigid roster system, the effect is
the arbitrary
distribution of work amongst insolvency professionals
on the list. This is in fact the express intention of the
Respondents
and regarded by them as a means of avoiding the
favouritism and corruption they have identified under the requisition
system.
199.
It
seems to me, that there is tension between arbitrary and mechanical
allocations and the objective of ‘achieving equality’.
As a matter of logic, all practitioners operating in the insolvency
environment should ultimately be able to obtain work on an
equitable
basis
(which
must, in the long term be related to the requirements of the work and
the nomination practices of creditors). For a
measure to
effectively assist all practitioners in equitably competing for
appointment requires something more than inflexible
allocations.
[139]
This
has been recognized by the Respondents in discussion documents and
previous, informal, approaches to appointments.
There is little
explanation beyond a desire to remove discretion from the appointment
process to justify the decision not to include
measures such as these
in the Policy.
200.
The
discrepancy
between the identified need, identified solution
and ultimate Policy is suggestive of irrationality. It also
supports the
inference that the Policy is, in fact, arbitrary as a
response to available information. This is in addition to what
appears
to be a mechanism that will only ever perpetuate a system of
arbitrary allocation of work, using BBBEE categories. Without
more, this seems unlikely to achieve empowerment or transformation
objectives.
201.
Key to
these
arguments is the perceived rigidity of the system
and its use of quotas. Relying on Barnard, the Applicants
submit that the
fact that the Policy uses quotas, rather than
targets, is itself sufficient to render it an illegitimate remedial
measure.
202.
Critically
, in
argument, the Respondents accept that if the Policy sets up quotas
rather than targets, it would be invalid. Also, where
SARIPA
impugned the particular ratios used in the Policy, CIPA and
Solidarity impugned the Policy on the basis that it was a quota
per
se. It is for this reason that I need to determine whether the
obiter remarks of the majority in Barnard made with reference
to the
prohibition on quotas in
s 15(3)
of the
Employment Equity Act find
wider application. If this is the case, and without more, I
must find in favour of the Applicants on the matter of the Policy’s
suitability as a remedial measure.
Are
quotas generally prohibited?
203.
The
relevant
passage in Barnard reads:
‘
Section
15(3)
[EEA] contains a vital proviso that the measures directed at
affirmative action may include preferential treatment and numerical
goals but must exclude ‘quotas’. Curiously, the
statute does not furnish a definition of ‘quotas’.
This not being an appropriate case, it would be unwise to give
meaning to the term. Let it suffice to observe that
s 15(4)
sets the tone for the flexibility and inclusiveness required to
advance employment equity. It makes it quite clear that a
designated employer may not adopt an employment equity policy or
practice that would establish an absolute barrier to the future
or
continued employment or promotion of people who are not from
designated groups.’
[140]
204.
Later in the judgment Moseneke ACJ
observes:
‘
Let
it suffice to observe that the primary distinction between numerical
targets and quotas lies in the flexibility of the standard.
Quotas amount to job reservation and are properly prohibited by s
15(3) of the Act. The same section endorses numerical goals
in
pursuit of workplace representivity and equity. They serve as a
flexible employment guideline to a designated employer.’
[141]
205.
What
emerges from these statements is that at least some flexibility of
approach is required. This is expressly articulated
by Cameron
J, Froneman J and Majiedt AJ in stating that ‘over-rigidity…risks
disadvantaging not only those who are
not selected for a job, but
also those who are’.
[142]
This is because it can create the impression that appointments are
due only to race and exclusive of merit. Further,
when
considering implementation of a measure ‘a decision-maker
cannot simply apply the numerical targets by rote’.
[143]
206.
In
a different context, when assessing unfair discrimination under
PEPUDA, the Equality Court has held that ‘There is patent
disproportionality in a selection policy based on race and gender to
the absolute exclusion of all the other qualities required
for a
position as responsible and important as that of regional magistrate.
Such a policy is irrational within its own terms and
objectives’.
[144]
207.
In that case, as in the present matter, the
Employment Equity Act did
not apply. The court nevertheless
drew on
Employment Equity Act jurisprudence
to come to this
conclusion, noting that the Employment Equity and Equality Acts
worked together to give effect to s 9 of the Constitution.
To
this, I would add the BBBEE Act which uses the language of ‘targets’,
rather than quotas.
208.
It seems to me that a rigid formulation
cannot be sufficiently sensitive to the achievement of substantive
equality whether it is
strictly within the employment context or in a
broader setting. On this understanding, the dicta of the
Barnard court reach
beyond the confines of the
Employment Equity Act
and
find application in the current context.
Is
the Policy a target or a quota?
209.
CIPA contends that whereas quotas rely on
absolute exclusions, targets promote inclusion. This
distinction was accepted by
the Respondents.
210.
However, the Respondents submit that the
4:3:2:1 allocation ratio is not an impermissible quota, but rather ‘a
flexible guideline
to the Masters in order to pursue representivity
and equity in the appointment of provisional insolvency practitioners
after due
consideration of all the relevant factors.’
211.
Some
guidance as to the distinction between targets and quotas can be
obtained from American jurisprudence.
[145]
In Local 28, Sheet Metal Workers’ International Association v
EEOC,
[146]
quotas and
targets were distinguished as follows:
‘
A
quota would impose a fixed number or percentage which must be
attained, or which cannot be exceeded, and would do so regardless
of
the number of potential applicants who meet necessary
qualifications.... By contrast, a goal is a numerical
objective,
fixed realistically in terms of the number of vacancies
expected, and the number of qualified applicants available in the
relevant
job.’
212.
In the South African context, Klinck &
Nwena state:
‘“
Quotas”
refer to all preferential techniques that have the effect of
reserving all or a fixed percentage of job opportunities
for
designated groups. This may be achieved through the setting
aside of a specific number of positions for designated groups
or by
making designated group status the only or dominant criterion for
eligibility for employment opportunities.’
[147]
213.
According
to Andre M Louw, quotas in the employment equity context are
‘mandatory and represent a fixed number to be achieved,
apparently at any cost’, whilst targets are non-mandatory
guidelines to achieve representation from designated groups in
the
workforce. Further, he argues that application of quotas is
‘generally divorced from reality and the circumstances
of the
specific situation in which they are applied’.
[148]
Louw argues that a target or numerical goal established in an
Employment Equity Plan will only be legitimate if regard is
had to
the factors listed in
s 42
of the
Employment Equity Act.
[149
]
An element of such goal-setting is that it must be realistic in
context.
[150]
214.
What is clear, is that what is
impermissible is
rigidity
– however it is named.
215.
The
Respondents have not persuaded me that the Policy can be implemented
in a manner which is not mechanical and rigid. There
is
explicitly no scope for considering the skills, knowledge, expertise
and experience of practitioners when being appointed by
the Master.
Indeed, one of the goals of the formula contained in the Policy seems
to be to remove all such considerations.
A scheme of this kind
cannot possibly give effect to the dignity of either those advantaged
or disadvantaged by the Policy.
On this reasoning, it becomes
unnecessary to determine the extent of the ‘harm’
suffered by white males. It is
sufficient to state that perhaps
in becoming a nearly absolute barrier to employment the Policy
implicates the right to work and
inherent dignity of white males.
Such harm to the core value and right of dignity is the product of a
measure which elevates
race
and
gender
as
absolute
categories without any regard to individual characteristics or the
context in which appointments must take place. A scheme
of this
nature does violence to the notion of transformation from a racist,
racialised, sexist and gendered past to a non-racial
and non-sexist
future.
[151]
216.
I agree with the Applicants that the manner
in which the race and gender categories are employed in the roster
formula creates silos
which overly privileges race and sex at the
expense of all other relevant characteristics.
217.
This
is at odds with the objectives of the Policy on its own terms as well
as with the requirement of the Van Heerden test that
a remedial
measure must be reasonably capable of achieving equality in the
long-term. As such, the Policy cannot be regarded
as a lawful
affirmative action
(s 9(2))
measure.
[152]
DOES
THE POLICY FAIL FOR ABSENCE OF PROCEDURAL FAIRNESS –
PARTICULARLY LACK OF CONSULTATION WITH RELEVANT STAKEHOLDERS?
218.
NAMA
has argued that the Policy was adopted in a procedurally unfair
manner due to failure to consult with creditors. SARIPA
makes
this argument in the
alternative
.
They complain, further, that meetings with NEDLAC did not satisfy
procedural fairness requirements to consult as NAMA is
not a member
of NEDLAC. They further question why this meeting was held at
all if, as the Respondents contend, creditors
have no rights prior to
the first meeting of creditors. NAMA’s contention is
coupled with the submission that the Minister
did not consider
important information when formulating the Policy. Their
reliance on procedural fairness is based on Janse
van Rensburg No v
Minister of Trade and Industry NO
[153]
and De Lange v Smuts NO.
[154]
NAMA, moreover, makes reference to the practice of consulting
creditors in the process of appointing provisional insolvency
practitioners since the 1970s. This, they submit, gives rise to
the doctrine of legitimate expectation.
219.
SARIPA
submits that s 158(2) of the Insolvency Act requires that the Policy
be tabled in Parliament. They submit that neither
the Policy,
nor the amended Policy have been discussed in the Portfolio Committee
on Justice and the National Assembly. Relying
on Doctors for
Life International v Speaker of the National Assembly and
others,
[155]
they submit
that this falls foul of the s 59 requirement that the National
Assembly facilitate public involvement in legislative
and other
processes in the Assembly and its committees. Further, they
submit that this requirement is linked to the National
Assembly’s
oversight functions over executive action. The Respondents
counter this by pointing out that this process
applies to law-making,
not policy-making. Given the consultative process that the
Respondents followed over a seven-year
period, they submit that there
was opportunity to comment and that, moreover, the correct procedure
was followed before Parliament.
SARIPA, however, contends
that the current form of the Policy has not been circulated to SARIPA
in order to canvass for submissions
prior to tabling in Parliament.
220.
It should be noted that CIPA’s
account of the consultative process notes the inclusion of SARIPA and
rather than presenting
the problem as an absence of consultation,
provides evidence of dissatisfaction with the proposed Policy from a
wide range of creditor
representatives. CIPA does, however,
contest the notion of the Policy being ‘tabled’ or voted
on at a NEDLAC
meeting.
221.
I
find SARIPA’s reliance on Doctors for Life misplaced.
That case, as well as Merafong Demarcation Forum and others
v
President of the Republic of South Africa and others,
[156]
dealt with legislative processes. In Ed-U-College,
[157]
the Constitutional Court referred to Premier, Mpumalanga and another
v Executive Committee, Association of State-Aided Schools,
Eastern
Transvaal
[158]
for the
proposition that ‘there [is] no general duty upon the MEC to
afford some opportunity to be heard to all those affected
by the
exercise of his statutory power. The obligation only arose
because, on the facts of that case, a legitimate expectation
had
arisen which meant that the bursaries could not be cancelled
retroactively without an opportunity to be heard being given to
those
affected by the cancellation. It is important to note that in
that case the Constitutional Court was concerned with
a
retroactive
termination of bursaries already granted
.
222.
The legal principle that can be extracted
from this dictum is that where a decision operates prospectively,
there is no necessary
duty to consult in respect of action taken in
accordance with a statutory power. Whether or not such a duty
exists, must
depend on the particular circumstances of the case. This
was made explicit where the it was stated:
‘
Procedural
fairness will not require that a right to a hearing be given to all
affected persons simply because a decision is to
be taken which has
the effect of reducing the amount of the annual subsidy to be
paid.’
[159]
223.
Whilst
a line of cases, including, Arun Property
[160]
has noted the value of a process of public participation and expert
assistance in the process of formulating policy and it is true
that
the Minister, like all members of the executive, is accountable to
Parliament in the exercise of his powers,
[161]
I find no reason to conclude that the Minister was required to go
further than he did in respect of consultation. By contrast
SA
Predator Breeders Association v Minister of Environmental
Affairs
[162]
suggests that
the Minister has authority to determine which stakeholders were
consulted in the process. Selection of particular
interests and
exclusion of others cannot itself deprive process of its
rationality.
[163]
There is no merit in the procedural unfairness taken by NAMA.
REMEDY
AND COSTS
224.
CIPA,
Solidarity, the Minister and Master requested me to make no order as
to costs whatever I may decide on the validity of the
Policy.
[164]
On the other hand SARIPA and NAMA submitted that costs should follow
the result, subject to the Biowatch
[165]
rule. SARIPA also argued that ABRIPSA should pay the costs
occasioned by its intervention in the Cape case.
225.
After the hearing, I invited ABRIPSA to
make submissions on what factors I should take
into
account in respect of costs vis-à-vis it.
ABRIPSA ignored the invitation.
226.
I intend to order ABRIPSA to pay the
relevant costs, including those occasioned by the employment of two
counsel, and to accept
CIPA, Solidarity and the Respondents’
submissions. In doing so, and exercising my discretion in
respect of costs, I
am not unmindful of the useful contention by NAMA
that, were I to uphold the challenge but not award costs to the
Applicants, this
could be regarded as a potential disincentive to
challenge unconstitutional conduct. I do not believe that in
this unique
instance, such a chilling effect will result.
CONCLUSION
227.
These applications raise issues concerning
the nature of the society South Africans have chosen as their model.
228.
In this regard, the role of the judiciary
in relation to executive Policy-making is implicated. The place
of relevant insolvency
laws needs to be assessed in the context of a
radically unequal society striving for economic development.
Given South Africa’s
history of state-sponsored racism and
sexism, race and gender will always be significant factors when
considering the right to
equality. Similarly, given the
commitment to a democratic and open society based on the rule of law,
effective measures for
combating corrupt practices such as fronting
are key.
229.
The Minister and the Chief Master have
clearly noted these issues and the Minister has attempted to adopt a
policy to deal with
the difficult process of appointments of
insolvency practitioners to sequestrated estates and liquidated
companies. The objectives
and goals are admirable and are
supported. There is certainly an attempt at remediation and an
acknowledgement that practice
needs to change within the Masters’
Offices to influence continuing inequities, quite apart from the
prevention and combating
of corrupt practices and fronting.
230.
However, a Policy cannot pass
constitutional muster on good intentions alone. It must, in
fact comply with constitutional
precepts. Given the evidence
put before me, I have come to the conclusion that the Policy adopted
is inconsistent with the
Constitution, and I am thus obliged to
declare it invalid.
231.
It is important to appreciate that my
conclusion is based on two interlinked factors. In this regard,
I make no judgment on
the merits or demerits of the actual Policy
adopted. That is not something within the sphere of the
judiciary. The
two bases are: first, it is ultimately the
Master who the legislature has decided is responsible for the
appointment of insolvency
practitioners. It is the Master who
must apply his/her discretion when making an appointment. The
Policy puts in place
a rigid, inflexible regime in which the Master
effectively becomes a rubber stamp which must appoint a designated
person by rote
from fixed lists arranged alphabetically and on race
and gender lines. This is an unlawful fettering of his/her
discretion.
The Master, according to the legislative scheme,
must retain the discretion as to who to appoint. Secondly, the
measure adopted
is too rigid. The Policy introduces an
inflexible race and sex-based appointments process. The
Constitutional Court
has emphasized that while the Constitution is a
transformative one and that remedial action to address past
injustices is a required
and indeed lawful imperative, such measures
need to be nuanced. Underpinning and in addition to the Policy
unlawfully fettering
the Master’s discretion, the facts firmly
suggest that the actual Policy will not cure the mischief it aims to
address.
There is no reasonable likelihood of the Policy
solving problems of corruption or fronting, nor of advancing the
transformative
agenda required by the Constitution.
232.
In the circumstances, I have no option, but
to make a declaration as contemplated by section 172(1)(a) of the
Constitution.
I make the following orders:
1.
It is declared that the Policy on the
Appointment of Insolvency Practitioners, contained in Government
Notice No. 798, published
in Government Gazette No. 38088 (17 October
2014) read with Government Notice No. 77 of 7 February 2014 published
in Government
Gazette No. 27287 (7 February 2014) is inconsistent
with the Constitution and invalid.
2.
In the Western Cape Division Case No
4314/2014 the Third Respondent is to pay the Applicant’s costs,
including the costs occasioned
by the employment of two counsel in
respect of the proceedings in part A of the application.
KATZ,
AJ
[1]
Constitution
of the Republic of South Africa, 1996.
[2]
Minister
of Finance and Another v Van Heerden
[2004] ZACC 3
;
2004
(6) SA 121
(CC) at
[136]
-
[148]
;
Government
of the Republic of South Africa v Grootboom
2001
(1) SA 46 (CC)
at
[23]
;
Mazibuko and others v City of Johannesburg and others
2010
(4) SA 1
(CC) at [2];
City
of Johannesburg Metropolitan Municipality v Blue Moonlight
Properties 39 (Pty) Ltd and another
2012
(2) SA 104
(CC) fn 88;
Khosa
and others v Minister of Social Development and others; Mahlaule and
others v Minister of Social Development and others
[2004] ZACC 11
;
2004
(6) SA 505
(CC) at
[40]
.
[3]
Cf.
Government
of the Republic of South Africa and Others v Grootboom and others
2001
(1) SA 46
(CC) at [2] and [83];
Port
Elizabeth Municipality v Various Occupiers
[2004] ZACC 7
;
2005
(1) SA 217
(CC) at
[41]
-42];
Residents
of Joe Slovo Community, Western Cape v Thubelisha Homes and others
(Centre on Housing Rights and Evictions and another,
Amici Curiae)
2010
(3) SA 454
(CC) at [75], [191]; [197] and [201]
.
[4]
Cf.
Bato
Star Fishing (Pty) Ltd v Minister of Environmental Affairs and
others
[2004] ZACC 15
;
2004
(4) SA 490
(CC) at
[10]
and [74]-[76];
South
African Police Service v Solidarity obo Barnard
2014
(6) SA 123
(CC) at [29];
Singh
v Minister of Justice and Constitutional Development and others
2013
(3) SA 66
(Equ) at [47]-[48]
.
[5]
Cf.
in particular, section 9(2) of the Constitution.
[6]
Minister
of Finance and another v Van Heerden
[2004] ZACC 3
;
2004
(6) SA 121
(CC) at
[44]
.;
Bato
Star Fishing (Pty) Ltd v Minister of Environmental Affairs and
others
2004
(40 SA 490
(CC) at [76;
South
African Police Service v Solidarity obo Barnard
2014
(6) SA 123
(CC) at [30]-[33]; See also
Affordable
Medicines Trust and Others v Minister of Health and Others
[2005] ZACC 3
;
2006 (3) SA 247
(CC) at
[60]
.
[7]
The
preamble to the Constitution reflects that recognition of the
injustices of the past require the divisions of the past to
be
healed.
[8]
Cf.
Azanian
Peoples Organization (AZAPO) and Others v President of The Republic
of South Africa and Others
1996 (4) SA 672
(CC) at [17].
[9]
On
the World Bank’s Gini Index of 2013, South Africa scored 62
(where 0 represents perfect equality between household income
and
100 represents perfect inequality).
[10]
See
the statistics published in the South African Institute of Race
Relations
South
Africa Survey Online 2014/2015
– updated 8 January 2015 [available at www.irr.org.za] (
Accessed 10 January 2015).
[11]
Companies
Act 71 of 2008
s 7.
[12]
Section
165(1) and (2) of the Constitution.
[13]
Minister
of Health and Others v Treatment Action Campaign and Others
(No 2)
[2002] ZACC 15
;
2002 (5) SA 721
(CC) at
[99]
.
[14]
Section
172(1)(a) of the Constitution.
Dawood
and Another v Minister of Home Affairs and Others; Shalabi and
Another v Minister of Home Affairs and Other; Thomas and
Another v
Minister of Home Affairs and Others
[2000] ZACC 8
;
2000
(3) SA 936
(CC) at
[59]
;
Mazibuko
NO v Sisulu NNO and Others NNO
2013
(6) SA 249
(CC) at [70].
[15]
Notice
No. 77
Government
Gazette
No.
37287 of 7 February 2014.
[16]
The two applications were not consolidated in terms of the Uniform
Rules of Court. It was submitted by all the parties,
that I
should write one judgment and that I should have regard to the
conspectus of facts adduced in both cases on the usual
basis of the
Plascon-Evans
rule,
as the applicants seek final relief on motion. I accept the
submission.
[17]
2014
(3) SA 468
(SCA) at [1].
[18]
Ex
Parte The Master of the High Court South Africa (North Gauteng)
2011 (5) SA 311
(GNP) at [28].
[19]
So,
for example, an amendment to the Insolvency Act 24 of 1936 (‘the
Insolvency Act&rsquo
;) now requires that a copy of a sequestration
application must be furnished to employees of the insolvent debtor.
See
Stratford
and Others v Investec Bank Limited and Others
[2014]
ZACC 38 (19 December 2014) with reference to
s 9(4A).
Similarly, the
Companies Act 71 of 2008
has introduced business
rescue proceedings
.
[20]
Cf.
First
National Bank of SA Ltd t/a Wesbank v Commissioner, South African
Revenue Service and Another; First National Bank of SA
Ltd t/a
Wesbank v Minister Of Finance
[2002] ZACC 5
;
2002
(4) SA 768
(CC) at
[31]
. Cf. also
De
Lange v Smuts and others
[1998] ZACC 6
;
1998
(3) SA 785
where the
Insolvency Act was
subjected to constitutional
scrutiny.
[21]
Report
of the Review Committee Insolvency Law and Practice
Cmnd 8558 (1981). (‘Cork Report’).
[22]
In
the United States, for example, bankruptcy laws exist to, in
principal, protect the debtor.
[23]
The
Cork Report at [192].
[24]
Southern
Palace Investments 265 (Pty) Ltd v Midnight Storm Investments 386
(Pty) Ltd
2012 (2) SA 423
(WCC) at [1].
[25]
See,
for example,
Investec
Bank Limited v Stratford and Another
[2013]
ZAWCHC 207
at
[15]
. In terms of
s 9(4A)
of the
Insolvency Act
24 of 1936
,
employees
of a debtor facing sequestration or winding-up must be notified of
the proceedings.
[26]
Absa
Bank Limited v Newcity Group (Pty) Ltd and Another Related Matter
[2013] 3 All SA 146
(GSJ) at [31]. See also
Dippenaar
NO and Others v Business Venture Investments No 134 (Pty) Ltd and
Another
[2014] 2 All SA 162
(WCC) at [45].
[27]
Trustees
are appointed to sequestrated estates and trusts, while liquidators
are appointed to liquidated companies and close corporations.
The
Insolvency Act refers
to ‘trustees’ (defined to
include provisional trustees), whilst the
Companies Act refers
to
‘liquidators’ (again, defined to include provisional
liquidators). The distinction between trustees and
liquidators
is of no import in this case, thus the terms are used
interchangeably.
[28]
In
setting out the insolvency legislation it is noted that the
Applicants argue that the Policy is applicable to
both
provisional and final appointments, whereas the Respondents say it
is only applicable to provisional appointments. Because
of the
conclusions I have come to nothing turn on this difference in
understanding, although there is much to be said (technically)
for
the Applicants’ views.
[29]
Section
158(2) of the Act empowers the Minister to determine a Policy for
the appointment of provisional trustees, liquidators,
co-trustees
and co-liquidators as well as
curatores
bonis
to insolvent estates.
[30]
Meskin
Insolvency
Law
[Service Issue 35] at 4 – 25.
[31]
Section
40 states:
‘
(1)
On the receipt of an order of the court sequestrating an estate
finally,
the Master shall immediately convene by notice in
the Gazette, a first meeting of the creditors of the estate for
the proof
of their claims against the estate and for the election of
a trustee.
(2)
The Master shall publish such notice on a date not less than ten
days
before the date upon which the meeting is to be held and shall
in such notice state the time and place at which the meeting is
to
be held.
(3)
(a) After the first meeting of
creditors
and the appointment of a trustee,
the
Master shall appoint a second meeting of creditors for the proof of
claims against the estate, and for the purpose of receiving
the
report of the trustee on the affairs and condition of the estate and
giving the trustee directions in connection with the
administration
of the estate.
(b)
The trustee shall convene the second meeting of creditors by notice
in the Gazette and
in one or more newspapers circulating
in the district in which the insolvent resides or his principal
place of business is situate.
(c)
Whenever the notice referred to in paragraph
(b)
is
published in any
newspaper,
the publication shall take place simultaneously in the Afrikaans
language and in the English language and in the case
of each such
language in a newspaper circulating in the district referred to in
the said paragraph which appears mainly in that
language and the
publication in each such language shall as far as practicable occupy
the same amount of space: Provided that
where in the district in
question any newspaper appears substantially in both such languages
publication in both such languages
may take place in that
newspaper.”
[32]
Item
9 of Schedule 5 of the 2008 Act provides:
“
(1)
Despite the repeal of the previous Act, until the date determined in
terms of subitem
(4), Chapter 14 of that Act continues to apply with
respect to the winding-up and liquidation of companies under this
Act, as
if that Act had not been repealed subject to subitems (2)
and (3).
(2)
Despite subitem (1), sections 343, 344, 346, and 348 to 353 do not
apply to the
winding-up of a solvent company, except to the extent
necessary to give full effect to the provisions of Part G of Chapter
2.
(3)
If there is a conflict between a provision of the previous Act that
continues to
apply in terms of subitem (1), and a provision of Part
G of Chapter 2 of this Act with respect to a solvent
company,
the provision of this Act prevails.
(4)
The Minister, by notice in the Gazette, may—
(a)
determine a date on which this item ceases to have effect, but no
such notice may
be given until the Minister is satisfied that
alternative legislation has been brought into force adequately
providing for the
winding-up and liquidation of insolvent companies;
and
(b)
prescribe ancillary rules as may be necessary to provide for the
efficient transition
from the provisions of the repealed Act, to the
provisions of the alternative legislation contemplated in paragraph
(a).”
[33]
Meskin
above n 25 at 4 – 54.
[34]
See
ss 74 and 76.
[35]
S
74 provides:
“
S
(1) For the purposes of conducting the proceedings
in a winding-up of a corporation, the Master shall, in
accordance
with Policy determined by the Minister, appoint a suitable natural
person as liquidator.
(2)
The Master shall make an appointment as soon as is practicable after
a provisional
winding-up order has been made, or a copy of a
resolution for a voluntary winding-up has been registered in terms
of section
67 (2).
(3)
When the Master in the case of a voluntary winding-up by members
makes an appointment,
he or she shall take into consideration any
further resolution at a meeting of members nominating a person as
liquidator.
(4)
In the case of a creditors’ voluntary winding-up and a
winding-up by the Court,
the Master shall, subject to the provisions
of section 76, if a person is nominated as co-liquidator at the
first meeting
of creditors, appoint such person as co-liquidator as
soon as he or she has given security to the satisfaction of the
Master
for the proper performance of his or her duties.”
[36]
The
amendments were designed so as to not exclude black persons who
became South African citizens after 27 April 1994. They
had
been wholly excluded from being appointed as insolvency
practitioners. SARIPA argue the amendments introduce “further
mechanisms” of unfair discrimination on four grounds. I
find it unnecessary for the reasons contained herein to deal
with
the arguments.
[37]
Notice
No. 798
Government
Gazette
No.
38088 of 17 October 2014 read with Notice No. 77
Government
Gazette
No. 37287 of 7 February 2014.
[38]
The
Policy, as mentioned above, has not commenced because of the
interdict granted by Gamble J. The Minister and the Master
have, quite appropriately, given an assurance that the Policy will
not come into operation at least until this judgment has been
handed
down.
[39]
See
paragraph 4 of the Policy.
[40]
Helen
Suzman Foundation v President of the Republic of South Africa and
Others; Glenister v President of the Republic of South
Africa and
Others
[2014] ZACC 32
(27 November 2014) at [1].
[41]
Juanitta
Calitz above n 32
at
742-743, Tariff B of the Second Schedule of the
Insolvency Act sets
out remuneration a trustee may receive. Tariff B states:
TARIFF B
[Tariff B
amended by
s. 36
of Act 16 of 1943 and by Proclamation 229 of
1956, substituted by Proclamation R159 of 1961 and by
Proclamation R87 of
1973 and amended by Proclamation R41 of 1985,
by Government Notice R1685 of 1987, by Government Notice R1842 of
1992 and
by Government Notice 323 of 1995.]
REMUNERATION
OF TRUSTEE (SECTION 63)
1.
On
the gross proceeds of movable property (other than shares or
similar securities) sold, or on the gross amount collected
under
promissory notes or book debts, or as rent, interest or other
income.
10 per cent.
2.
On
the gross proceeds of immovable property, shares or similar
securities sold, life insurance policies and mortgage bonds
recovered and the balance recovered in respect of immovable
property sold prior to sequestration.
3 per cent.
3.
On
–
(i)
Money found in the estate;
(ii)
The gross proceeds of cheques and
postal orders payable to the insolvent, found in the estate; and
(iii)
The gross proceeds of amounts standing
to the credit of the insolvent in current, savings and other
accounts and or fixed
deposits and other deposits at banking
institutions, building societies or other financial institutions.
1 per cent.
4.
On
sales by the trustee in carrying on the business of the
insolvent, or any part thereof, in terms of section 80.
6 per cent.
5.
On
the amount distributed in terms of a composition, excluding any
amount on which remuneration is payable under any other
item of
this tariff.
2 per cent.
6.
On
the value at which movable property in respect of which a
creditor has a preferent right, has been taken over by such
creditor provided that the total remuneration of a trustee in
terms of this tariff shall not be less than two thousand
five
hundred rand.
5 per cent.
REMUNERATION OF
CURATOR BONIS
AND PROVISIONAL TRUSTEE
A reasonable
remuneration to be determined by the Master, not to exceed the
rate of remuneration of a trustee under this
tariff.’
[42]
These
four questions emerge from the arguments and facts that have placed
before the Court. They do not necessarily reflect
the manner
in which the parties have brought their applications and there are
differences between the Gauteng and Cape applications.
The
most significant of these is that where SARIPA brings its challenge
as a challenge to the exercise of executive power, arguing
administrative review in the alternative, CIPA, NAMA and Solidarity
have argued the equivalent issues only within the ambit of
administrative law. In both cases, the applicants have brought
an equality challenge. SARIPA brought its case in
terms of a
challenge to the Minister’s exercise of executive power
unlawfully fettering the Master’s discretion and
a challenge
under s 9(2) of the Constitution. Their challenge also
implicated s 9(3) of the Constitution, read with s 7
of Promotion of
Equality and Prevention of Unfair Discrimination Act 4 of 2000
(‘PEPUDA’). A third challenge
was made to the
rationality of the Minister’s exercise of power, in the first
instance as an exercise of executive power
and, in the alternative
in light of s 6 of PAJA. An
ultra
vires
challenge was also brought but not pursued vigorously in argument.
CIPA distinguished between an ‘administrative’
and
‘constitutional’ challenge. In its heads of
argument, they state that the issue is confined to an issue
of law
and that there are no disputes of facts. The administrative
challenge is brought in terms of s 33(1) of the
Constitution
and impugns the policy on the basis of (1) unlawful fettering; (2)
an unsanctioned and ultra vires use of an inflexible
roster system;
(3) failure to acknowledge creditors’ rights by foreclosing on
the Master’s exercise of discretion;
(4) failure to provide
for stakeholder ’say’ in the process of provisional
appointments; (5) irrationality due to
‘sudden death
implementation’. CIPA’s constitutional challenge
is brought in terms of sections 9, 10
and 22 of the Constitution but
emphasises the dictum in
Barnard
which
found quotas to be unlawful in the employment equity plans and also
asserts that the Policy will have discriminatory effects
of those it
excludes – i.e. causing ‘undue harm’ to
white males in particular. NAMA and Solidarity essentially
support
CIPA’s arguments; however, NAMA contended both factual and
procedural grounds for review. The latter are
framed in terms
of an administrative law challenge and include the inference that
due to a failure to consult, the Policy has
failed to meet the
legitimate expectation of NAMA’s constituent members.
Solidarity makes specific reference
to PAJA but has focused its
arguments on the equality argument. The Respondents offered
essentially the same response to
both cases.
[43]
[2002] ZACC 22
;
2002
(6) SA 642
(CC) at
[21]
; See also
City
of Cape Town v Premier of the Western Cape and Others
2008 (6) SA 345
(C) at [167].
[44]
At
the hearing, Ms
Platt
handed to the Court, without objection from the other parties, a
document in which the Minister “
authorizes”
the Chief Master to depose to “
any
affidavit on his behalf”
.
This is clearly insufficient.
[45]
Gerhardt
v State President and Others
1989
(2) SA 499
(T) at 504G;
Tantoush
v Refugee Appeal Board and Others
[2007] ZAGPHC 191
;
2008 (1) SA 232
(T) at
[70]
;
Von
Abo v Government of the Republic Of South Africa and Others
2009 (2) SA 526
(T) at [46]-[48];
President
of the Republic of South Africa and Others v South African Rugby
Football Union and Others
2000
(1) SA 1
(CC) at [105].
[46]
2004
(6) SA 121 (CC).
[47]
2014
(6) SA 123
(CC) (hereinafter ‘
Barnard’
)
.
[48]
J
C Calitz and D A Burdette ‘The appointment of insolvency
practitioners in South Africa: time for change?
(2006) 4
TSAR
721
at 731.
[49]
J
C Calitz and D A Burdette ‘The appointment of insolvency
practitioners in South Africa: time for change?
(2006) 4
TSAR
721
at 733; Juanitta Calitz and Andrew Boraine ‘The role of
the master of the high court as regulator in a changing liquidation
environment: a South Africa perspective’
(2005) 4
TSAR
728
at 732.
[50]
See,
for example Meskin 4.1;
Tshishonga
v Minister of Justice and Constitutional Development and Another
[2007]
JOL 18875
(T);
Distributive
Catering Hotels & Allied Workers' Union v Master of the High
Court & others
[2006] JOL 17093 (T).
[51]
J
C Calitz and D A Burdette ‘The appointment of insolvency
practitioners in South Africa: time for change?
(2006) 4
TSAR
721
at 733.
[52]
J
C Calitz and D A Burdette ‘The appointment of insolvency
practitioners in South Africa: time for change?
(2006) 4
TSAR
721
at 733.
[53]
Meskin
4.1.
[54]
This
appears to vary in different regions. Applicants referred to
220 days on average between winding-up/sequestration orders
and
calling the first creditors’ meeting in Gauteng and
approximately 3 months in Cape Town.
[55]
Juanitta
Calitz and Andrew Boraine ‘The role of the master of the high
court as regulator in a changing liquidation environment:
a South
African perspective’
(2005) 4
TSAR
728
at 732.
[56]
Juanitta
Calitz and Andrew Boraine ‘The role of the master of the high
court as regulator in a changing liquidation environment:
a South
African perspective’
(2005) 4
TSAR
728
at 732.
[57]
J
C Calitz and D A Burdette ‘The appointment of insolvency
practitioners in South Africa: time for change? (2006) 4
TSAR
721 at 735.
[58]
‘
Workers
or employees’ are explicitly identified as creditors; the
Master is enjoined to exercise his/her discretion when
appointing
more than two provisional trustees/liquidators to do so in favour in
previously disadvantaged persons; the Master
is required to appoint
at least one provisional trustee/liquidator from a previously
disadvantaged community in all matters concerning
estates worth more
than R5 million; eligibility to be considered as a previously
disadvantaged appointee depends on the individual
having equity in
the legal entity in which he/she is involved and on at least 30% of
equity in that entity being held by previously
disadvantaged person;
qualifications and experience are to be taken into account in making
preferential appointments and a roster
system must be used when
making discretionary appointments; where not requisitions are made
in respect of provisional appointments,
the Master is required to
favour previously disadvantaged persons and the Master is to ‘urge
all appointed provisional
trustees and liquidators to make use of
the services of people from previously disadvantaged communities
e.g. lawyers, auditors,
auctioneers etc.’
[59]
J
C Calitz and D A Burdette ‘The appointment of insolvency
practitioners in South Africa: time for change?
(2006) 4
TSAR
721
at 734.
[60]
J
C Calitz and D A Burdette ‘The appointment of insolvency
practitioners in South Africa: time for change?
(2006) 4
TSAR
721
at 750.
[61]
This
is now SARIPA.
[62]
PAJA
s 6(2)(a)(i)-(ii) and 6(2)(f).
[63]
PAJA
s 6(2)(f)(ii).
[64]
PAJA
s 6(2)(h).
[65]
PAJA
s 6(2)(i).
[66]
PAJA
s 6(2)(e)(i)-(iv).
[67]
PAJA
s 1(i)(b)(aa).
[68]
cf.
President
of the Republic of South Africa v South African Rugby Football Union
2000
(1) SA 1
(CC) at [143] (hereinafter ‘
SARFU’)
;
Minister
of Defence and Military Veterans v Motau and Others
2014
(8) BCLR 930
(CC) at [36] (hereinafter ‘
Motau
’).
[69]
2001
(2) SA 1(CC).
[70]
Ibid
at [16].
[71]
Ibid
at [18].
[72]
Ibid
at [21].
[73]
2014
(8) BCLR 930 (CC).
[74]
Ibid
at [31]-[32].
[75]
Ibid
at [37].
[76]
Ibid
at [38].
[77]
Ibid
at [39]-[44]; cf.
Pharmaceutical
Manufacturers Association of SA and another: in re ex parte
President of the Republic of South Africa and Others
[2000] ZACC 1
;
2000 (2) SA 674
(CC) (hereinafter ‘
Pharmaceutical
Manufacturers’)
at [76] and [79] for an example of the same factors being used in
distinguishing administrative from legislative
power.
[78]
The
relevant provisions of the
Insolvency Act apply
also to the
Companies Act.
[79
]
P
harmaceutical
Manufacturers
at [89].
[80]
The
Master may not simply act as a rubber stamp;
National
Lotteries Board v South African Education and Environment Project
2012
(4) SA 504
(SCA) at [9].
[81]
cf.
Minister
of Education v Harris
2001 (4) SA 1297
(CC) at [11]-[12];
Kemp
and Others v Van Wyk and Others
[2008] 1 All SA 17
(SCA) at [1], [10];
MEC
for Environmental Affairs & Development Planning v Clairison’s
CC
2013
(6) SA 235
(SCA) at [32].
[82]
2000
(3) SA 936 (CC).
[83]
at
[53].
[84]
National
Lotteries Board v South African Education and Environment Project
2012
(4) SA 504
(SCA) at [9]
[85]
CCt
78/14)
[2014] ZACC 37
(15 December 2014) at [45].
[86]
para
46. See also
Foodcorp
(Pty) Ltd v Deputy Director-General, Department of Environmental
Affairs and Tourism: Branch Marine and Coastal Management
and others
2006
(2) SA 191
(SCA) at [9].
[87]
at
[47]. See also
MEC
of Agriculture, Conservation, Environment and Land Affairs v Sasol
Oil (Pty) Ltd and Another
2006
(5) SA 483
(SCA) at [9] which recognises that policy
guidelines can be adopted to ‘assist decision-makers in
the exercise
of their discretionary powers...particularly...where
the decision is a complex one requiring the balancing of a range of
competing
interests or considerations, as well as specific expertise
on the part of the decision-maker’ and
Akani
Garden Route (Pty) Ltd v Pinnacle Point Casino (Pty) Ltd
2001
(4) SA 501
(SCA) at [7].
[88]
Lipschitz
v Wattrus
1980
1 SA 662
(T) at 671G.
[89]
The
Master v Talmud
1969
1 SA 236
(T);
De
Lange v Smuts NO
[1998] ZACC 6
;
1998
(3) SA 785
(CC) at 853.
[90]
Lipchitz
v Wattrus
1980
1 SA 662
(T) at 672C. Further,
S 2(1)(b)(ii)
of the
Administration of Estates Act 66 of 1965
provides that the
Chief
Master
is
‘subject to the control, direction and supervision of the
Minister.’
[91]
Ex
Parte the Master of the High Court of South Africa (North Gauteng)
2011
(5) SA 311
(GNP) at [32].
[92]
Ex
Parte the Master of the High Court of South Africa (North Gauteng)
2011
(5) SA 311
(GNP) endorsed by
The
Master of the High Court (North Gauteng High Court, Pretoria) v
Motala NO and others
2012
(3) SA 325 (SCA).
[93]
P
M Meskin, B Galgut, PAM Magid, JA Kunst, A Boraine, DA Burdette
‘Chapter 4: Trustees and liquidators’ Insolvency
Law
SI-42 June 2014 at [4.24].
[94]
Companies
Act s
370(3).
[95]
Companies
Act s
374;
Insolvency Act s
57(5.)
[96]
Companies
Act s
377(1).
[97]
Companies
Act s
378;
Insolvency Act s
61.
[98]
Companies
Act s
379;
Insolvency Act s
60.
[99]
Companies
Act s
383;
Insolvency Act s
15(7).
[100]
Companies
Act s
384(2);
Insolvency Act s
63.
[101]
Companies
Act s
371;
Insolvency Act s
57(7)-(9)
[102]
P
M Meskin, B Galgut, PAM Magid, JA Kunst, A Boraine, DA Burdette
‘Chapter 4: Trustees and liquidators’ Insolvency
Law
SI-42 June 2014 at [4.1] and [4.2] with reference to
Minister
of Justice v Firstrand Bank Limited and Others
[2004] 1 All SA 268
(SCA) at 272–274
.
[103]
At
the same time, it is important to note two cases in which the
Gauteng High Court held the Master liable for failing to comply
with
what are described as ‘policy directives’ (cf.
Distributive
Catering Hotels & Allied Workers’ Union v The Master of
the High Court and Others
[2006]
JOL 17093
(T);
SACCAWU
v Master of the Supreme Court
[2007]
4 All SA 1034
(T).) As Meskin et al point out, the ‘policy’
referred to in these cases was not a Policy within the meaning
of
s
158(2).
I note these judgments in order to illustrate the
extensive inroads Ministerial Policy may make into the Master’s
exercise of discretion (P M Meskin, B Galgut, PAM Magid, JA Kunst, A
Boraine, DA Burdette ‘Chapter 4: Trustees and liquidators’
Insolvency Law SI-42 June 2014 at [4.1] fn 9A).
[104]
In
interpreting the Policy, I have attempted to find a valid one if I
could following the constitutional injunction to adopt any
reasonable interpretation that protects rather than sets aside
governmental action.
[105]
Democratic
Alliance v President of the Republic of South Africa and Others
2013 (1) SA 248
(CC) at [66].
[106]
Merafong
para
62;
SA
Predator Breeders Association v Minister of Environmental Affairs
and Tourism
[2011] 2 All SA 529
(SCA) at [28].
[107]
2013
(1) SA 248
(CC) at [36]-[37].
[108]
SA
Breeders
para
90; see also
Merafong
Demarcation Forum and others v President of the Republic of South
Africa and others
[2008] ZACC 10
;
2008
(5) SA 171
(CC) at
[63]
.
[109]
Democratic
Alliance
at
[108].
[110]
at
[1]; cf.
Barnard
at
[36].
[111]
Policy
cl 2.
[112]
Policy
cl 3(b).
[113]
Policy
cl 4(a), (c) and (d).
[114]
Case
No 59251/2007) (TPD).
[115]
at
[41].
[116]
cf.
J C Calitz and D A Burdette ‘The appointment of insolvency
practitioners in South Africa: time for change?’
(2006) 4 TSAR
721.
At 736 ‘…the master continues to apply what seems
to be a revised policy document making provision for the appointment
of PDIs in all estates (not only those in excess of R5 million), and
which does not recognize white women as previously disadvantaged
individuals.’
[117]
It
is not hard to imagine the difference. A liquidator
experienced in companies dealing with perishable goods, such as
butchenes or vegetable markets, may not be suitable for the
liquidation of a car-sales company, which has a high stock value at
any one time.
[118]
Other
grounds for removal include failure to deliver satisfactory
performance or comply with Master’s demands; mental or
physical incapacity and request by the majority of creditors for
removal.
[119]
Respectively
read with
s 59
of the
Insolvency Act and
s 373
of the
Companies Act.
[120
]
J
C Calitz and D A Burdette ‘The appointment of insolvency
practitioners in South Africa: time for change?’
(2006) 4 TSAR
721
with reference to
Murray
v Edendale Estates Ltd
1908
TS 17
22;
In
re Greatrex Footwear (Pty) Ltd (II)
1936
NPD 536
537-539;
Wolstenholme
v Hartley Farmers Agricultural Co-operative Co Ltd
1965
4 SA 73
(SR);
Exparte
Clifford Homes Construction (Pty) Ltd
1989
4 SA 610
(W) 614;
Krumm
v The Master
1989
3 SA 944
(D).
[121]
cited
in
Juanitta
Calitz and Andre Boraine ‘The role of the master of the high
court as regulator in a changing liquidation environment:
a South
African perspective’
(2005) 4
TSAR
728
at
734.
[122]
Allpay
Consolidated Investment Holdings (Pty) Ltd And Others v Chief
Executive Officer, South African Social Security Agency,
And
Others
2014
(1) SA 604
(CC) at [55]
[123]
Barnard
at [41]; cf. also the judgment of Cameron J; Froneman J; Majiedt AJ
para 110: ‘If the widely used term “affirmative
action”
means anything, it recognizes that we may have to make an extra
effort to find and support those capable persons,
who may not
brandish the traditional signs of successful candidates. But
if decision-makers continually disregard talented
candidates while
searching for capable individuals from disadvantaged backgrounds, it
creates the false impression that the candidates
who are eventually
chosen are not as capable as those who are rejected. This
impression injures the dignity not only of
the candidates who are
rejected, but also of the candidates who are appointed’.
[124]
Sachs
J in
Van
Heerden
at [142] and [146].
[125]
s
9(3).
[126]
cf.
Anneli Loubser ‘An International Perspective on the Regulation
of Insolvency Practitioners’ (2007) 19
South
African Mercantile Law Journal
123 at 125; J C Calitz and D A Burdette ‘The appointment of
insolvency practitioners in South Africa: time for change?’
(2006) 4 TSAR 721
at 735; Anneli Loubser ‘An
International Perspective on the Regulation of Insolvency
Practitioners’ (2007)
19
South
African Mercantile Law Journal
123 at 125 and 126; see also
Beinash
& Co v Nathan (Standard Bank of SA Ltd Intervening)
1983
(3) SA 540 (W).
[127]
Glenister
at
[83].
[128]
Fronting
is, moreover an offence in terms of 130(1)(d) of the
Broad-Based
Black Economic Empowerment Act 53 of 2003
, as amended.
[129]
The
tables do not appear in the papers. The information is
reproduced in this form to make it easier to read.
[130]
There
is some indication from case-law in the Labour Courts that a
mechanical application of population demographics to a particular
sector may not be an acceptable approach to the design of a remedial
measure. Cf.
Naidoo
v Minister of Safety and Security and Others
2013 (3) SA 486
(LC) at [133]-[135]. Cf.
President
of the Republic of South Africa v Hugo
1997
(4) SA 1
(CC) at [41] where the Court’s understanding of
contextually variable discrimination/non-discrimination mitigates
against
the use of rigid formulae based on national demographics
without good reason.
[131]
cf.
Ex
parte Master of the High Court (North Gauteng)
2011
(5) SA 311
GNP at [28].
[132]
Walker
v Syfret NO
1911
AD 141
at 166.
[133]
Richter
NO v Riverside Estates (Pty) Ltd
1946
OPD 209
at 223.
[134]
Ward
v Barrett NO
1963
(2) SA 546 (A) 552.
[135]
Standard
Bank v The Master of the High Court
2010
(4) SA 405
(SCA) at [1].
[136]
Cf.
Mineral and Petroleum Resources Development Act 28 of 2002
s
56(d).
[137]
at
[33].
[138]
Para
C12.4 reads ‘Workers are a vital part of an enterprise, and
careful consideration should be given to balancing the
rights of
employees with those of other creditors.’ Available online:
http://siteresources.worldbank.org/EXTGILD/Resources/5807554-1357753926066/ICRPrinciples-Jan2011[FINAL].pdf
(accessed 4 January 2014).
[139]
Cf.
Affordable
Medicines Trust and Others v Minister of Health And Others
[2005] ZACC 3
;
2006 (3) SA 247
(CC) at
[63]
which understands the right to choose
one’s profession to be inclusive of the ability to be able to
practice. Such
ability, in this context, must include the
ability to enter the competitive environment which characterises
this industry.
[140]
at
[42].
[141]
at
[54].
[142]
at
[80].
[143]
at
[96].
[144]
Du
Preez v Minister of Justice and Constitutional Development and
Others
2006 (5) SA 592
(EqC) at [38].
[145]
Such
guidance is taken with due caution as to the specificity of the
South African Equality Clause – cf.
Van
Heerden
at [29]
[146]
478
US 421
(1986) at 495.
[147]
JL
Pretorius, ME Klinck & CG Ngwena
Employment
Equity Law
(looseleaf, service issue 4, 2000 at Ch 9-50.
[148]
Andre
M Louw ‘Extrapolating “equality” from the Letter
of the Law: some thoughts on the limits of affirmative
action under
the Employment Equity Act 55 of 1998’ (2006) 18
SA
Mercantile Law Journal
336 at 338.
[149]
Louw
at 341-2.
[150]
at
346.
[151]
Cf.
as an example of the need for more sensitive analysis, Henk Botha
‘Equality, Plurality and Structural Power’
(2009) 25
SAJHR
1
and the effect of cross-cutting categories of disadvantage in
Kimberle Crenshaw ‘Mapping the Margins: Intersectionality,
identity politics, and violence against women of color’
(1991)
43
Stanford
Law Review
1241
.
[152]
Given
that I have come to the conclusion that the second leg of the
Van
Heerden
three-fold test has not been satisfied for the reasons articulated,
it is not, in the circumstances, appropriate or desirable
that the
third leg is considered.
[153]
2001
(1) SA 29
(CC) at [24].
[154]
1998
(2) SA 785
(CC) at [131].
[155]
2006
(6) SA 416 (CC).
[156]
2008
(5) SA 171 (CC).
[157]
at
[20].
[158]
1999
(2) SA 91 (CC).
[159]
at
[22].
[160]
at
[46]
[161]
Pharmaceutical
Manufacturers
at
[19].
[162]
(72/10)
[2010] ZASCA 151
(29 November 2010).
[163]
at
[49].
[164]
Oriani-Ambrosini,
MP v Sisulu, MP Speaker of the National Assembly
2012
(6) SA 588
(CC) at [95].
[165]
Biowatch
Trust v Registrar, Genetic Resources and others
2009
(6) SA 232
(CC).