Bernstein and Others v Bester and Others NNO

• Jurisdiction: South Africa
• Judge: Chaskalson P, Mahomed DP, Ackermann J, Didcott J, Kriegler J, Langa J, Madala J, Mokgoro J, Ngoepe AJ, O'Regan J and Sachs J
• Judgment Date: 27 March 1996
• Citation: 1996 (2) SA 751 (CC)
• Docket Number: CCT 23/95
• Hearing Date: 19 September 1995
• Counsel: G J Marcus (with him O L Rogers) for the applicants. J J Gauntlett SC (with him G W Woodland) for the respondents.
• Court: Constitutional Court

Ackermann J: F

The issues

[1] The case before us is a referral pursuant to the provisions of s 102(1) of the Constitution of the Republic of South Africa Act 200 of 1993 ('the Constitution') and arose from a dispute between Mr Bernstein and other partners and employees G of Kessel Feinstein, a partnership of chartered accountants ('the applicants') and Mr Bester and other liquidators of Tollgate Holdings Ltd ('the respondents'). The essence of the dispute between the parties is whether the respondents are precluded by the Constitution from continuing with the examination of the applicants in terms H of ss 417 and 418 of the Companies Act 61 of 1973 (as amended) ('the Act'). The parties agreed before Fagan DJP in the Cape Provincial Division of the Supreme Court to have the issue whether these sections of the Act are inconsistent with the Constitution referred to this Court. On 28 April 1995 Fagan DJP granted a referral order 'by agreement' as follows:

'1.

I The issue whether ss 417 and 418 of the Companies Act 61 of 1973 (as amended) are inconsistent with the Constitution of the Republic of South Africa Act 200 of 1993, and are consequently invalid and of no force and effect, is referred to the Constitutional Court for determination, in terms of s 102(1) of the Constitution.

2.

The agreed material facts relevant to such determination are those set J out in annexure "X" hereto.

Ackermann J

3.

A The costs of such referral shall be costs in the proceedings in the Constitutional Court.

4.

Pending the determination of the above proceedings, the application and all other issues are to stand over.'

[2] Section 102(1) of the Constitution does not empower a Provincial or Local B Division of the Supreme Court to refer a matter by agreement to the Constitutional Court, but only when the requirements set forth in the subsection are met. I am not suggesting that in the present case Fagan DJP in fact referred the matter simply by agreement without applying his mind to these requirements. It is clear from the reasons furnished by the learned Deputy Judge President pursuant to the provisions C of Constitutional Court Rule 22(2) and (3)(a) that he did so apply his mind and, therefore, the presence of the words 'by agreement' in the referral order is perhaps unfortunate. The impression should be avoided that referrals can take place simply because parties have agreed thereto. In certain referrals to this Court, the D conclusion is difficult to avoid that this is in fact what has happened. Problems which had arisen in connection with such referrals were commented on in S v Vermaas; S v Du Plessis [1] and in Ferreira v Levin [2] this Court pointed out that the power and the duty to refer only arises when three conditions are fulfilled:

(a)

there is an issue in the matter before the Court in question which may be E decisive for the case;

(b)

such issue falls within the exclusive jurisdiction of the Constitutional Court; and

(c)

the Court in question considers it to be in the interests of justice to refer such issue to the Constitutional Court.

F This Court has further held that it is implicit in s 102(1) that there should be a reasonable prospect that the relevant law or provision will be held to be invalid and while this is a sine qua non of a referral it is not in itself a sufficient ground, because it is not always in the interests of justice to make a referral as soon as the relevant issue has been raised. [3] I hasten to point out that when Fagan DJP made G the referral in the present matter the judgments in the above cases had not yet been delivered. In the present referral these conditions are all fulfilled and the referral is a proper one in terms of s 102(1), despite purporting to be by agreement. While Provincial and Local Divisions might initially have been hesitant to grapple with the implications and application of the new Constitution and might have preferred to H refer constitutional issues to this Court, it must be stressed that, for the proper development of our law under the Constitution, it is essential that these Courts and indeed all other courts empowered to do so, play their full role in developing our post-constitutional law. It would greatly assist the task of the Provincial and I

Ackermann J

A Local Divisions of the Supreme Court, and in so doing ultimately the task of this Court, if counsel were called upon to justify rigorously why it was contended that the particular provision of the Constitution relied upon renders the law or provision in question invalid and why it is necessary or advisable to refer the issue in question to the Constitutional Court at that particular juncture. This would lead to B narrower and more closely focused referrals and enable the Provincial and Local Divisions to furnish more comprehensive reasons for any particular referral, which would in turn assist the task of this Court and the development of our constitutional jurisprudence. Such an approach would also decrease the risk of wrong referrals C and avoid the unsatisfactory expedient in such cases of having to try to invoke, at the last moment, in a forced manner and in unsatisfactory circumstances, the direct access procedure provided for in Constitutional Court Rule 17.

[3] Sections 417 and 418 of the Act provide as follows:

'417. Summoning and examination of persons as to affairs of company

D (1) In any winding-up of a company unable to pay its debts, the Master or the Court may, at any time after a winding-up order has been made, summon before him or it any director or officer of the company or person known or suspected to have in his possession any property of the company or believed to be indebted to the company, or any person whom the Master or the Court deems capable of giving information concerning the trade, dealings, affairs or E property of the company.

(1A) Any person summoned under ss (1) may be represented at his attendance before the Master or the Court by an attorney with or without counsel.

(2)(a) The Master or the Court may examine any person summoned under ss (1) on oath or affirmation concerning any matter referred to in that subsection, either orally or on written interrogatories, and may reduce his answers to F writing and require him to sign them.

(b) Any such person may be required to answer any question put to him at the examination, notwithstanding that the answer might tend to incriminate him, and any answer given to any such question may thereafter be used in evidence against him.

(3) The Master or the Court may require any such person to produce any G books or papers in his custody or under his control relating to the company but without prejudice to any lien claimed with regard to any such books or papers, and the Court shall have power to determine all questions relating to any such lien.

(4) If any person who has been duly summoned under ss (1) and to whom a reasonable sum for his expenses has been tendered, fails to attend before the H Master or the Court at the time appointed by the summons without lawful excuse made known to the Master or the Court at the time of the sitting and accepted by the Master or the Court, the Master or the Court may cause him to be apprehended and brought before him or it for examination.

(5) Any person summoned by the Master under ss (1) shall be entitled to such witness fees as he would have been entitled to if he were a witness in civil I proceedings in a magistrate's court.

(6) Any person who applies for an examination or enquiry in terms of this section or s 418 shall be liable for the payment of the costs and expenses incidental thereto, unless the Master or the Court directs that the whole or any part of such costs and expenses shall be paid out of the assets of the company concerned.

J (7) Any examination or enquiry under this section or s 418 and any application

Ackermann J

A therefor shall be private and confidential, unless the Master or the Court, either generally or in respect of any particular person, directs otherwise.

418. Examination by commissioners

(1)(a) Every magistrate and every other person appointed for the purpose by the Master or the Court shall be a commissioner for the purpose of taking evidence or holding any enquiry under this Act in connection with the winding-up of any company. B

(b) The Master or the Court may refer the whole or any part of the examination of any witness or of any enquiry under this Act to any such commissioner, whether or not he is within the jurisdiction of the Court which issued the winding-up order.

(c) The Master, if he has not himself been appointed under para (a), the C liquidator or any creditor, member or contributory of the company may be represented at such an examination or enquiry by an attorney, with or without counsel, who shall be entitled to interrogate any witness: provided that a commissioner shall disallow any question which is irrelevant or would in his opinion prolong the interrogation unnecessarily.

(d) The provisions of s 417(1A), (2)(b) and (5) shall apply mutatis mutandis in respect of such an examination or enquiry. D

(2) A commissioner shall in any matter referred to him have the same powers of summoning and examining witnesses and of requiring the production of documents, as the Master who or the Court which appointed him, and, if the commissioner is a magistrate, of punishing defaulting or recalcitrant witnesses, or causing defaulting witnesses to be apprehended, and of determining questions relating to any lien with regard to documents, as the Court referred E to in s 417.

(3) If a commissioner -

(a)

has been appointed by the Master, he shall, in such manner as the Master may...