SA Restructuring and Insolvency Practitioners Association v Minister of Justice and Constitutional Development and Others, and Another Application

• Jurisdiction: South Africa
• Judgment Date: 13 January 2015
• Citation: 2015 (2) SA 430 (WCC)

SA Restructuring and Insolvency Practitioners Association v Minister of Justice and Constitutional Development and Others, and Another Application
2015 (2) SA 430 (WCC)

2015 (2) SA p430

Citation	2015 (2) SA 430 (WCC)
Case No	4314/2014
Court	Western Cape Division, Cape Town
Judge	Katz AJ
Heard	October 13, 2014
Judgment	January 13, 2015
Counsel	BJ Manca SC (with E van Huyssteen and M Adhikari) for the applicant (in the Saripa application).; M Brassey SC (with G Engelbrecht) for the first applicant (in the Cipa application).; MM Rip SC (with J Vorster) for the second applicant (in the Cipa application).; G Engelbrecht for the third applicant (in the Cipa application).; AL Platt for the first and second respondents (in both applications).

Flynote : Sleutelwoorde B

C Labour law — Employment equity — Affirmative action — Constitutionality — Appointment policy for insolvency practitioners — Inflexible race- and gender-based regime imposed — Master's discretion to appoint unlawfully fettered — Reduced to mere rubber stamp — Policy unconstitutional.

Insolvency — Trustee — Appointment — Appointment policy — Legality — Inflexible race- and gender-based regime imposed — Master's discretion to D appoint unlawfully fettered — Reduced to mere rubber stamp — Policy unconstitutional.

Headnote : Kopnota

In February 2014 the Minister of Justice and Constitutional Development (the first respondent) adopted a 'Policy on the Appointment of Insolvency E Practitioners'. [*] It regulated the appointment of insolvency practitioners (IPs) by the Master of the High Court (the second respondent) with the stated aim of transforming the industry.

For this it adopted a formula: clause 7 required the master to appoint IPs from a list in the ratio of 40% African, coloured, Indian and Chinese females (category A); 30 % African, coloured, Indian and Chinese males (category B); F 20 % white females (category C); and 10 % white males (category D). Appointments had to be made sequentially — the master had first to appoint four IPs from category A, then three from category B, then two from category C, and finally one from category D. IPs in the same category were arranged alphabetically according to their names and had to be appointed in that order.

G Various organisations [†] challenged the policy on constitutional grounds, both in the Western Cape and Gauteng Divisions of the High Court. Another organisation [‡] intervened on the side of the minister and the master. Interim interdicts were granted and it was agreed that the pending review applications would be heard together in the Western Cape Division.

The respondents argued that the policy applied to provisional appointments H only, so that most of the parties' argument focused on its effect on the appointment of provisional liquidators. The principal grounds for review put forward by the applicants were that the policy unlawfully fettered the

2015 (2) SA p431

master's discretion, infringed the constitutional right to equality, was A irrational, and was contrary to the Insolvency Act 24 of 1936. The respondents relied on a set of statistics to support the decision to adopt the policy.

The court concluded that the policy, though well intentioned, was unconstitutional and invalid because it unlawfully fettered the master's statutory B discretion to decide whom to appoint as IPs, by putting in place a rigid, inflexible regime under which the master was obliged to rubberstamp appointments on race and gender lines. In coming to this conclusion the court made the following points:

•

the master's discretion would be unlawfully fettered if the policy were so rigid that it predetermined outcomes in given circumstances (paras [108] and [116] at 462H – 463A and 464F – 465A); C

•

the formula employed in the policy was rigid and mechanical, and limited the master's ability to balance race, gender and years of experience with industry-specific knowledge and expertise (paras [125] – [126] at 467E – G);

•

if it were to achieve its aim of transforming the industry, the policy would have to ensure a match between the individual skills of its intended D beneficiaries and the requirements of the job instead of playing a numbers game (para [154] at 473E – 474A);

•

the policy's lack of an expiry date ran counter to the notion of empowerment and made it difficult to determine whether it was likely to achieve its aim (paras [158] – [159] at 475B – F);

•

there was no evidence that a mechanical system of appointments would change creditors' nomination behaviour (para [160] at 475G); E

•

the suggestion that the policy would worsen corruption, favouritism and fronting was not effectively countered by the respondents (para [162] at 475I – 476C);

•

the statistics relied on by the minister were of questionable reliability (paras [177] – [179] at 480F – 481C); F

•

the discrepancy between the policy and its aim showed that it was an arbitrary response to the available information (para [197] at 485C/D);

•

the practical effect of the policy was the arbitrary distribution of work among listed IPs (paras [195] – [197] at 484I – 485C);

•

the respondents were unable to show that the policy could be implemented in a manner that was not mechanical and rigid (para [212] at 487H); and G

•

whether or not it amounted to a quota, it was ultimately the rigidity of the system that made it unlawful (para [211] at 487G).

Cases Considered

Annotations

Case law H

Southern Africa

Absa Bank Ltd v Newcity Group (Pty) Ltd and Another Related Matter [2013] 3 All SA 146 (GSJ): dictum in para [31] applied

Affordable Medicines Trust and Others v Minister of Health and Others 2006 (3) SA 247 (CC) (2005 (6) BCLR 529; [2005] ZACC 3): referred to I

Akani Garden Route (Pty) Ltd v Pinnacle Point Casino (Pty) Ltd 2001 (4) SA 501 (SCA): referred to

Allpay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer, South African Social Security Agency, and Others 2014 (1) SA 604 (CC) (2014 (1) BCLR 1; [2013] ZACC 42): dictum in para [55] applied J

2015 (2) SA p432

Arun Property Development (Pty) Ltd v City of Cape Town [2014] ZACC 37: applied A

Azanian Peoples Organization (AZAPO) and Others v President of the Republic of South Africa and Others 1996 (4) SA 672 (CC) (1996 (8) BCLR 1015; [1996] ZACC 16): referred to

Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Others 2004 (4) SA 490 (CC) (2004 (7) BCLR 687; [2004] ZACC 15): referred to B

Beinash & Co v Nathan (Standard Bank of South Africa Ltd Intervening) 1998 (3) SA 540 (W): referred to

Biowatch Trust v Registrar, Genetic Resources, and Others 2009 (6) SA 232 (CC) (2009 (10) BCLR 1014; [2009] ZACC 14): referred to

Chinese Association of South Africa v Minister of Labour (TPD case No 59251/2007): referred to C

City of Cape Town v Premier, Western Cape, and Others 2008 (6) SA 345 (C): referred to

City of Johannesburg Metropolitan Municipality v Blue Moonlight Properties 39 (Pty) Ltd and Another 2012 (2) SA 104 (CC) (2012 (2) BCLR 150; [2011] ZACC 33): D referred to

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 2000 (3) SA 936 (CC) (2000 (8) BCLR 837; [2000] ZACC 8): dictum in paras [53] and [59] applied

De Lange v Smuts NO and Others 1998 (3) SA 785 (CC) (1998 (7) BCLR 779; [1998] ZACC 6): referred to E

Democratic Alliance v President of the Republic of South Africa and Others 2013 (1) SA 248 (CC) (2012 (12) BCLR 1297; [2012] ZACC 24): dicta in paras [66] and [108] applied

Dippenaar NO and Others v Business Venture Investments No 134 (Pty) Ltd and Another F [2014] 2 All SA 162 (WCC): referred to

Distributive Catering Hotels and Allied Workers' Union v The Master of the High Court and Others 2005 JDR 0694 (T) ([2006] JOL 17093): distinguished

Doctors for Life International v Speaker of the National Assembly and Others 2006 (6) SA 416 (CC) (2006 (12) BCLR 1399; [2006] ZACC 11): distinguished

Du Preez v Minister of Justice and Constitutional Development and Others 2006 (5) SA 592 (EqC): dictum in para [38] applied G

Ex parte Clifford Homes Construction (Pty) Ltd 1989 (4) SA 610 (W): referred to

Ex parte The Master of the High Court South Africa (North Gauteng) 2011 (5) SA 311 (GNP): distinguished

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 (4) SA 768 (CC) (2002 (7) BCLR 702; [2002] ZACC 5): referred to H

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) ([2005] 1 All SA 531): referred to

Gainsford and Others NNO v Tanzer Transport (Pty) Ltd 2014 (3) SA 468 (SCA): dictum in para [1] applied I

Gerhardt v State President and Others 1989 (2) SA 499 (T): referred to

Government of the Republic of South Africa and Others v Grootboom and Others 2001 (1) SA 46 (CC) (2000 (11) BCLR 1169; [2000] ZACC 19): J referred to

2015 (2) SA p433

Helen Suzman Foundation v President of the Republic of South Africa and Others; A Glenister v President of the Republic of South Africa and Others 2015 (2) SA 1 (CC) ([2014] ZACC 32): referred to

Investec Bank Ltd v Stratford and Another [2013] ZAWCHC 207: referred to

In re Greatrex Footwear (Pty) Ltd (2) 1936 NPD 536: referred to

Janse van Rensburg NO and Another v Minister of Trade and Industry and Another NNO 2001 (1) SA 29 (CC) (2000 (11) BCLR 1235): B referred to

Kemp NO and Others v Van Wyk and Others [2008] 1 All SA 17 (SCA): referred to

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