Bernstein and Others v Bester and Others NNO

• Jurisdiction: South Africa

Bernstein and Others v Bester and Others NNO
1996 (2) SA 751 (CC)

1996 (2) SA p751

Citation	1996 (2) SA 751 (CC)
Case No	CCT 23/95
Court	Constitutional Court
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
Heard	September 19, 1995
Judgment	March 27, 1996
Counsel	G J Marcus (with him O L Rogers) for the applicants.; J J Gauntlett SC (with him G W Woodland) for the respondents.

Flynote : Sleutelwoorde G

H Company — Winding-up — Enquiry in terms of s 417 or s 418 of Companies Act 61 of 1973 — Constitutionality of — Apart from portion of s 417(2)(b) previously declared invalid, provisions of ss 417 and 418 not inconsistent with s 8, s 11(1), s 13 and s 24 of Constitution of the Republic of South Africa Act 200 of 1993, as amended.

Constitutional practice — Courts — Constitutional Court — Referral to I Constitutional Court in terms of s 102(1) of Constitution of the Republic of South Africa Act 200 of 1993 — Section 102(1) not empowering Provincial or Local Division of Supreme Court to refer matter by agreement to Constitutional Court — Requirements of s 102(1) have to be met — Impression to be avoided that J referrals can take place simply by agreement between parties.

1996 (2) SA p752

A Constitutional law — Human rights — Right to freedom and security of the person in terms of s 11(1) in chap 3 of Constitution of the Republic of South Africa Act 200 of 1993 — Whether ss 417 and 418 of Companies Act 61 of 1973 inconsistent with s 11(1) of Constitution — Provisions of s 11 of Constitution not impaired by B ss 417 and 418 of Companies Act — Sanctions of ss 417 and 418 necessary to enforce the legislation and comply with s 11(1), read with s 33, of Constitution — Provisions of ss 417 and 418 of Companies Act absolutely essential and necessary to achieve important public policy objectives — Supreme Court having C power to control examination under ss 417 and 418 and prevent it from being vexatious, oppressive or unfair — Sections 417 and 418 not inconsistent with s 11(1) of Constitution.

Constitutional law — Human rights — Right to personal privacy in terms of s 13 in chap 3 of Constitution of the Republic of South Africa Act 200 of 1993 — Whether D ss 417 and 418 of Companies Act 61 of 1973 inconsistent with s 13 of Constitution — Examinee at enquiry under s 417 or s 418 not compelled to answer question or produce books or papers resulting in unjustified infringement of any of examinee's rights under chap 3 of Constitution — If answer to any question would infringe or threaten to infringe any of examinee's chap 3 rights, it would E constitute 'sufficient cause' for purposes of s 418(5)(b)(iii)(aa) of Companies Act for refusing to answer question — Question would likewise not have been 'lawfully put' as intended in s 418(5)(b)(iii)(aa) — Likewise, if production of books or papers would infringe producer's right in terms of s 13 of Constitution not to F be subject to seizure of private possessions, it would be 'sufficient cause' for purposes of s 418(5)(b)(iii)(bb) of Companies Act for refusing to produce such books or papers — Sections 417 and 418 not inconsistent with s 13 of Constitution.

Constitutional law — Human rights — Right to administrative justice in terms of s 24 in chap 3 of Constitution of the Republic of South Africa Act 200 of 1993 — G Whether ss 417 and 418 of Companies Act 61 of 1973 inconsistent with right to procedural fairness in terms of s 24(b) of Constitution — Assuming examinee in enquiry under s 417 or s 418 entitled to procedural fairness in terms of s 24(b) of Constitution, his or her remedy, if not accorded such fairness, is to enforce such H right through ordinary courts — Nothing in s 417 or s 418 preventing enforcement of such remedy through ordinary courts — And nothing in ss 417 and 418 which was inconsistent with s 24(b) or (c) of Constitution.

Constitutional law — Human rights — Right to equality before the law in terms of s I 8 in chap 3 of Constitution of the Republic of South Africa Act 200 of 1993 — Whether ss 417 and 418 of Companies Act 61 of 1973 inconsistent with right to procedural fairness in terms of s 24(b) of Constitution — Purpose of ss 417 and 418 of Companies Act not to put company in better position than its debtors or creditors but to put company in liquidation (because of its disabilities) on J footing to enable it to litigate on equal terms with its debtors and creditors — Sections not resulting in examinee

1996 (2) SA p753

A being denied s 8(1) right to equality or equal protection of the law or s 8(2) right not to be unfairly discriminated against — Where summonsing or interrogation of examinee oppressive, vexatious or unfair, remedy is to approach Supreme Court for relief — Sections 417 and 418 not inconsistent with s 8 of Constitution. B

Headnote : Kopnota

Section 102(1) of the Constitution of the Republic of South Africa Act 200 of 1993 does not empower a Provincial or Local 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. (Paragraph [2] at 759B.) The impression should be avoided in judgments referring matters to the Constitutional Court in terms of s 102(1) that referrals can take place simply because parties have agreed thereto. C (Paragraph [2] at 759C-D.)

The Court held in the present case that the issues referred to it in terms of s 102(1) of the Constitution had been properly referred. The issue referred to the Court for determination was the constitutionality of ss 417 and 418 of the Companies Act 61 of 1973 (providing for the examination of persons and the disclosure of documents as to the affairs of a company). It was contended that ss 417 and 418 were unconstitutional on the following grounds: (1) That the whole mechanism created under ss 417 and 418 violated a cluster of inter-related and overlapping D constitutional rights, namely (a) the right to freedom and security of the person (s 11(1) of the Constitution); (b) the general right to personal privacy (s 13 of the Constitution); and (c) the particular aspect of the right to personal privacy not to be subject to seizure of private possessions or the violation of private communications. (2) The mechanism violated s 24 of the Constitution in that it permitted an administrative interrogation in violation of the provision of that E section. (3) Insofar as the mechanism permitted the liquidator and the creditors of the company in liquidation to gain an unfair advantage over their adversaries in civil litigation that they would not have enjoyed but for the liquidation of the company, it violated the guarantee of equality in terms of s 8 of the Constitution. (Paragraph [12] at 765C.)

As to (1)(a):

F (Per Ackermann J; Chaskalson P, Mahomed DP, Didcott J, Kriegler J, Langa J, Madala J, Mokgoro J, Ngoepe AJ and Sachs J concurring; O'Regan J concurring in the order of the Court but for different reasons insofar as the attack based on s 11(1) of the Constitution was concerned): The Courts in South Africa have developed a considerable body of case law the design of which is to prevent the mechanism of ss 417 and 418 of the Companies Act being used oppressively, vexatiously or unfairly towards the examinee. There is no doubt that the Supreme Court will continue to develop that body of law having due regard to the spirit, purport and G object of the Constitution's chapter on fundamental rights (chap 3). It is accordingly not open to argue that, because the provisions of ss 417 and 418 are general in terms and contain no express limitations as to their application, the constitutionality of these sections has to be adjudicated on the basis that they permit anything which is not expressly excluded. It is trite law that a statutory power may only be used for a valid statutory purpose. The constitutionality of ss 417 and 418 of the Companies Act has to be assessed in the light of the control which the H Supreme Court exercises over their implementation. There is nothing in these sections which mandates that such an examination be conducted in an oppressive, vexatious or unfair manner. In respect of complaints of the examination being conducted in this way, the examinee's correct remedy is to approach the Supreme Court for relief on the basis that the examination was being conducted in an oppressive, vexatious or unfair manner. The Supreme Court has jurisdiction to deal I iwith complaints of this nature. It is a jurisdiction which, on such complaints, should first be exhausted before any approach is made to the Constitutional Court. (Paragraphs [46] and [47] at 780E-781B/C.)

The sanction of imprisonment for ignoring, or failing without sufficient cause to give effect to, a subpoena issued under s 417 or s 418 of the Companies Act is a reasonable and necessary sanction. So too is the power to cause a person in breach of such a subpoena to be arrested and brought before the Master or other person appointed to conduct the enquiry. Imprisonment follows in accordance with the J normal

1996 (2) SA p754

A procedural safeguards: therefore neither s 11(1) nor s 25 of the Constitution is impaired; and it is not a sanction which is disproportionate to the offence; therefore s 11(1) and (2) are not impaired. The sanctions are necessary to enforce the legislation and, insofar as they have to comply with s 11(1) read with s 33 of the Constitution, they clearly do so. (Paragraph [55] at 784C/D-E.) The mechanism provided by ss 417 and 418 is absolutely essential, and therefore necessary, to achieve these important public policy objectives. They cannot be achieved in any B other way which would impinge less on an examinee's right of freedom, particularly...