De Lange v Smuts NO and Others

• Jurisdiction: South Africa
• Judge: Ackermann J
• Judgment Date: 28 May 1998
• Citation: 1998 (3) SA 785 (CC)
• Docket Number: CCT 26/97
• Hearing Date: 20 November 1997
• Counsel: B Hack for the applicant No appearance for the first respondent W H Trengrove SC (with him B J Manca) for the second, third and fourth respondents M Naidoo (with him T M Masipa) for the Minister of Justice
• Court: Constitutional Court

Ackermann J:

[1] This matter concerns the correctness of a declaration of constitutional invalidity of ss (3) of s 66 ('the E subsection' or 's 66(3)') of the Insolvency Act 24 of 1936 ('the Insolvency Act') made by Conradie J in the Cape of Good Hope High Court on 29 August 1997. [*] The subsection reads as follows:

'(3) If a person summoned as aforesaid, appears in answer to the summons but fails to produce any book or document F which he was summoned to produce, or if any person who may be interrogated at a meeting of creditors in terms of ss (1) of s 65 refuses to be sworn by the officer presiding at a meeting of creditors at which he is called upon to give evidence or refuses to answer any question lawfully put to him under the said section or does not answer the question fully and satisfactorily, the officer may issue a warrant committing the said person to prison, where he shall be detained G until he has undertaken to do what is required of him, but subject to the provisions of ss (5).'

[2] This declaration was made and referred to this Court for confirmation under s 172(2)(a) of the Constitution of the Republic of South Africa Act (108 of 1996, 'the 1996 Constitution'). [*1] At the request of the President, H the Minister of Justice was represented at the hearing by

Ackermann J

counsel who addressed written and oral argument as to why the declaration ought not to be confirmed. The A Association of Insolvency Practitioners of Southern Africa initially applied to be admitted as an amicus curiae in the proceedings but did not proceed with its application.

[3] The applicant was the only member of three close corporations ('the corporations') which were finally wound B up on 15 December 1994. The second, third and fourth respondents are the liquidators, respectively, of the corporations. Various provisions of the Insolvency Act, including ss 64, 65 and 66 thereof, are by s 416 of the Companies Act 61 of 1973 ('the Companies Act') made applicable, mutatis mutandis, in various ways to proceedings under ss 414 and 415 of the latter Act to the extent that they can be applied and are not inconsistent C with its provisions. [*2]

[4] By s 66(1) of the Close Corporations Act 69 of 1984 ('the Close Corporations Act') the provisions of the aforementioned s 416 (as well as ss 414, 415 and various other provisions) of the Companies Act are made D similarly applicable to the liquidation of a corporation in respect of any matter not specifically provided for in any other provision of the Close Corporations Act. [*3] Likewise the provisions of s 39(2) of the Insolvency Act, to which reference will be made presently, are to be applied to the liquidation of a corporation. [*4] Save for the order made at the conclusion of this judgment, any reference hereinafter to a provision of the Insolvency Act must be E understood, unless the contrary is stated, as a reference to such provision as incorporated into the Close Corporations Act in the above manner.

Ackermann J

[5] The applicant was summoned under s 64(2) of the Insolvency Act to attend the adjourned second meeting of A creditors of the corporations on 13 and 14 January 1997. He was also required under s 64(3) to produce, amongst other things, the books of account and other financial records of the corporations. The applicant's interrogation under s 65 commenced on 14 January 1997. On that date application was made on behalf of the B second, third and fourth respondents for the issue of a warrant committing the applicant to prison under s 66(3) on the grounds that he had, in breach of the injunctions of the subsection, failed to produce the books and documents he had been summoned to produce and that he had failed to answer questions lawfully put to him C under s 65(1) fully and satisfactorily. The application was postponed for argument and thereafter the presiding officer (first respondent) issued a warrant on 22 February 1997 committing the applicant to prison. The warrant was therefore issued after the commencement of the 1996 Constitution on 4 February 1997 and accordingly this Constitution is the applicable one. Save to observe that the warrant was subsequently conditionally suspended D and that the application which Conradie J ultimately heard was launched on 9 May 1997, it is unnecessary to deal with any of the intervening or other events.

[6] In the application before Conradie J various orders were sought but only two were relevant. The one was for an order reviewing and setting aside the first respondent's decision to commit the applicant to prison. The E grounds relied upon were not of a constitutional nature. The second was for an order declaring s 66(3) to be constitutionally invalid and on that ground to review and set aside the committal. The learned Judge found that there was no merit in the applicant's non-constitutional review attack and in those circumstances correctly held F that the issue of the constitutional invalidity of s 66(3) would, one way or the other, be dispositive of the case.

[7] In the result the learned Judge held that the subsection was invalid because of its inconsistency with s 12(1)(b) of the Constitution, which guarantees the right 'not to be detained without trial' and held further that the limitation G of this right by the subsection could not be justified under s 36(1). Although he did not express himself explicitly on this issue, the general tenor of his judgment, and in particular his reliance on the judgments of this Court in Bernstein and Others v Bester and Others NNO [*5] and Nel v Le Roux NO and Others, [*6] warrants the conclusion that Conradie J considered that, substantively, the 'process in aid' [*7] which the subsection provides H to compel examinees, who are under a legal duty to do so, to testify or produce documents was constitutionally unobjectionable. The thrust of the judgment went to determining whether the applicant had, for purposes of s 12(1)(b) of the Constitution, received a 'trial'; the learned Judge evidently assumed in favour of the I applicant that committal to prison under s 66(3) constituted 'detention'. Conradie J

Ackermann J

held, in effect, that the only 'trial' envisaged by s 12(1)(b) of the Constitution was a trial by a court of law. A

[8] Section 39(2) of the Insolvency Act provides that all meetings of creditors are to be presided over by the Master or by an officer in the public service designated by the Master; or by a magistrate or by an officer in the B public service designated by the magistrate. In a district wherein there is a Master's office a magistrate does not preside. [*8] In the present case the presiding officer (first respondent) was a magistrate. Conradie J held that a meeting of creditors presided over by any of these persons did not constitute a court of law and that consequently such meeting was not a trial for purposes of s 12(1)(b) of the Constitution. He considered that even C where the meeting is presided over by a magistrate this does not constitute a court of law because a magistrate, in so presiding, is merely fulfilling an administrative function.

[9] Mr Bryan Hack, on behalf of the applicant, sought confirmation of Conradie J's order and advanced D essentially two lines of argument in support thereof. The first was that the subsection unjustifiably infringes para (a) of s 12(1) of the Constitution, which guarantees to everyone the right 'not to be deprived of freedom arbitrarily or without just cause'. It did so, the argument went, because the objectives sought to be achieved by obtaining the oral and documentary information with which the meeting and interrogation under ss 64 and 65 of E the Insolvency Act are concerned do not constitute such 'just cause' for depriving examinees of their physical freedom by imprisonment under the impugned provisions of s 66(3).

[10] It was submitted that the only 'just cause' for which a person can be imprisoned is the prevention or F punishment of crime or possibly 'in the broader sense' where necessary for the maintenance of law and order, but not for any other non-punitive coercion. In developing this argument Mr Hack correctly pointed out that in South African criminal law, since the death penalty and certain forms of corporal punishment have been declared to be G unconstitutional, [*9] imprisonment is the most severe punishment that the State can impose on a criminal and that both the Legislature and the courts have sought to develop innovative alternative forms of punishment which are less harsh and invasive of a person's physical freedom than imprisonment. [*10]

Ackermann J

[11] He also correctly pointed out that our Courts emphasise that imprisonment should only be resorted to after A other appropriate forms of punishment have been considered and excluded. [*11] It is also correct that in the past there has been much unwarranted deprivation of physical freedom in order to achieve particular social and political goals. This all emphasises the great importance to be attached to physical freedom, but does not by itself B afford much assistance in considering the correctness of the submission that deprivation of physical freedom may only be used as punishment for a crime.

[12] The second line of argument was that the subsection infringes para (b) of s 12(1) because committal of an examinee constitutes 'detention' which has not been preceded by the 'trial' envisaged by para (b). Mr Hack C contended that in all cases the requisite trial had to be a trial before a duly constituted court of law following due and proper trial procedures and that the presiding officer at a meeting of creditors is not presiding over a court, regardless of whether such officer is a magistrate or not. I shall deal with these arguments presently. D

[13] Before doing so it...