Judicial Matters Amendment Bill; Insolvency Second Amendment Bill; Promotion of Administrative Justice Amendment Bill; Promotion

Meeting report

JUSTICE AND CONSTITUTIONAL DEVELOPMENT PORTFOLIO COMMITTEE
18 September 2002
JUDICIAL MATTERS AMENDMENT BILL; INSOLVENCY SECOND AMENDMENT BILL; PROMOTION OF ADMINISTRATIVE JUSTICE AMENDMENT BILL; PROMOTION OF EQUALITY AND PREVENTION OF UNFAIR DISCRIMINATION AMENDMENT BILL

Chairperson: Adv J H De Lange (ANC)

Documents handed out:
Judicial Matters Amendment Bill
Submission by Attorneys' Fidelity Fund on Judicial Matters Bill (document will be available here shortly)
Insolvency Second Amendment Bill
Insolvency briefing notes
Promotion Of Administrative Justice Amendment Bill
Promotion Of Equality And Prevention Of Unfair Discrimination Amendment Bill

SUMMARY
The Committee discussed the four Bills which they hoped to pass by the following Wednesday. Amendments made were technical. A submission was heard from the Attorneys Fidelity Fund on the Judicial Matters Amendment Bill. The Fund intended to levy contributions directly from attorneys through a gradual phasing in process. The Fund provides group protection for the loss of money from trust accounts due to theft by attorneys.

An amendment to the Insolvency Second Amendment Bill will now provide that a person applying for sequestration give notice of the application to those employed in the company concerned, as well as their trade unions and other creditors.

An amendment to the Judicial Matters Bill now provides that candidate attorneys in the Transkei and Bophutatswana now enjoy the same benefits as their counterparts in the rest of South Africa.
The issue of intersexuality was raised and the suggestion was made to include it in the definition of "sex" or "gender" in the Equality legislation.

MINUTES
The Chair explained that the Committee would be dealing with four Bills and wanted all parties to be involved at all times as he wanted to pass the Bills by the following Wednesday at the latest. Mr Tienie Cronje was present to explain the Insolvency Amendment Bill, which was a very technical Bill - as all four of the Bills were - and had to do with notice periods. The Committee would also hear one submission from the Attorney's Fidelity Fund on the Judicial Matters Bill.

Judicial Matters Amendment Bill: Submission by the Attorneys Fidelity Fund
Mr Basset, of the Department of Justice, said that Clauses 16 to 19 of the Bill would be looked at.

The Chair asked if any amendments had been made to those Clauses.

Mr Basset replied that Clause 17 was different to that in the original Bill as the present Clause 17 sets out more clearly where the changes to the Attorney's Act are being made.

The Chair asked if the words were still the same for the remainder and Mr Basset said that they were.

Mr Moorhouse (Fidelity Fund) explained the background to the Amendment and said that the Fund's asset base of R33 million per annum was no longer sustainable. The amendment would now allow for premiums to be paid by practitioners whereas before the premiums had been paid by the Fund.

The Chair asked if previously the premiums had been wholly paid by the fund.

Mr Moorhouse answered that it had and added that this was a unique situation in world terms.

The Chair questioned from where the money had been received.

Mr Moorhouse said that it had principally come from the interest on trust accounts and in recent years had done well. The core function of the Fund was to reimburse the public for the theft of money from trust funds. There had been a sharp increase in claims in recent times and there was a need to protect the asset base of the fund.

The Chair asked if attorneys would now pay the premium for the group cover.

Mr Moorhouse answered that they would and it would be done through a gradual phasing in of premiums and was very much in the public interest.

The Chair felt that it really just meant that this law would gradually allow for premiums to be received from attorneys that cover them, and the fund to continue to cover theft from trust accounts. This was one of the big costs of attorneys around the world.

Ms Camerer (NNP) asked what the bottom line was regarding the phasing in, and how much it would cost.

Mr Moorhouse said that a full Board meeting had been held the previous Monday and the matter had been very topical. The Fund has established its own insurance company through which the scheme is run. The insurance brokers had been asked to work out the figures, based on the numbers that are actively practising. The indication was roughly that it was likely to be in the hundreds of rands per practitioner per annum. It would be difficult to the extent that there would be a phasing off, rather than suddenly stopping the current process and the profession had been kept aware of this change.

The Chair said that he was happy with that.

Mr Basset explained that subclauses (2), (3) and (4) of Clause 17 had been deleted.

Mr Moorhouse said that the levying was bound up with the contributions from practitioners. There was a provision in the Act that should the fund fall below R1 million, contributions could be levied from practitioners. It was proposed that the R1 million limit be scrapped and the fund be invested with the power to levy contributions.

Ms Chohan-Kota (ANC) asked if, with the new amendment, the Board would fix the amount or would it be derived from consultation.

Mr Moorhouse said that the Board would not be able to fix an amount not agreed to by the profession because the Board was made up of representatives of the profession.

Ms Chohan-Kota felt that it should not be left up to the practitioners themselves, as they were the very people that the public was being protected against.

Mr Moorhouse said that it was made up of representatives and not practitioners. Fixing an amount in legislation would be problematic as a particular amount would be pegged and an amendment would be needed to change the amount.

Ms Chohan-Kota felt that the answer lay somewhere in between and suggested that the Minister set the amount by notice in the Government Gazette.

Mr Moorhouse responded that the Minister has substantial input and determines the amount that the fund requires for fulfilling its core function.

The Chair said that he did not know if R1 million was a good figure at that time, but as it stood there was a legal obligation to levy. Ms Chohan-Kota thought that if that obligation were to be taken away it would depend on attorney's to decide whether they want to levy and there would be no legal obligation to do so. He questioned if that were not a bit dangerous and suggested that it would also help the fund to have an amount that would kick in for levies.

Mr Moorhouse said that the Board of Control was always accountable. He took the point of it being done through regulation but was not sure if an argument could be developed anymore than that. He was not sure if there were necessarily going to be problems with the fund if things were done as the amendments suggested.

The Chair asked how much was paid out by the fund each year.

Mr Moorhouse replied that last year the amount had been R40 million.

The Chair remarked that with the asset base of R30 million and the payout of R40 million, an asset base of R70 million at least would be needed. He inquired as to how much interest accrued from the trust accounts.

Mr Moorhouse answered that the figure was between R120 and R140 million.

The Chair remarked that he was trying to work out this figure in relation to the R1 million mark.

Mr Moorhouse felt that it did not reflect the realities of the current times.

The Chair felt that if there were to be a cut-off it would need to be a few tens of millions.

Dr Delport (DP) asked if there had been a decrease or increase in the theft of trust funds.

Mr Moorhouse replied that there's been an increase, which has been a cause of great concern for the profession. That there no indication that the trend was going to flatten out and the situation was being dealt with one year at a time. He had been notified of another R175 million worth of claims.

Ms Camerer asked if the attorney's profession would experience a difference in the kind of cover they have as the amendments given the Board the power to enter into different contracts.

Mr Moorhouse said that there would be no change to the cover. The Fund was vested inherently with the power to change but had been managing the Fund for twenty years without change. He would imagine thought that in time some elements of the scheme might change and become better or worse.

The Chair suggested that attorneys might decide to get private cover.

Mr Moorhouse added that would be the same as was done in the UK.

The Chair asked if prosecutions were being obtained for the R40 million claimed.

Mr Moorhouse said that they were not and this was also a cause for concern. There was a problem with capacity and he had spoken to the Minister about capacity building in order to prosecute.

The Chair suggested that he sit down with Mr Bulelani Nquka and Mr Willie Hofmeyer. The Committee would give their backing if it were needed at any stage. If half of these people could be removed he would be happy.

Mr Moorhouse added that he was trying to get an extradition process started to get back three of the people responsible for the R175 million figure. One of them was on the border between Greece and Bulgaria and the other two were in the US and UK.

The Chair reiterated that if Mr Moorhouse had a problem with the Department, the Portfolio Committee would intervene on the matter.
He suggested that the Judicial Matters Bill be left and returned to at a later stage.

Insolvency Second Amendment Bill
The Chair asked for a background and briefing on the exact amendments that had been made.

Mr Cronje replied that that the only new thing was that a notice was now required to be made to SARS. The provisions of the Bill were similar to the draft provisions. The reason is that employees should not be notified of the insolvency only when it happens. When COSATU had asked for these provisions to be made they had been told that the Act already makes provision, however they had wanted a more specific provision. The amendment now provides that when a debtor or creditor asked for sequestration, notice must be given to the employees and their trade unions, SARS and the creditors of the debtor. An offence was created if the notice was not given. Provision was made for the service of an order.

The Chair did not agree with the offence.

Mr Cronje did not think that it was helpful. The argument was that the person would not feel obliged to do it if an offence was not created but he did not think that that would be effective.

The Chair asked what international practice was.

Mr Cronje said that there was an international trend away from making offences. Creating an offence could not stop a practice.

The Chair noted that there was another offence in Clause 6 that amended subclause (d).

Mr Cronje explained that there were two offences, one for debtors and one for directors, as that was how it was dealt with in the Companies Act.

The Chair suggested making it a requirement for the order to be granted. This would give the responsibility to the applicant and there would be no worry about creating an offence. Great difficulties would be experienced in putting in offences for the failure to give notice for an application when clearly the debtor would not care as his company was going down. He endorsed the idea that the workers know as early as possible and he did not care who told them. The best mechanism was to make it a requirement before granting an order. The Committee would hear any submissions that opposed that idea.

Mr Cronje said that he had changed back the last clause, which had originally set a date on which it would come into operation. The Clause now read that it would come into operation on a date set by the President.

The Chair stated that parliament should take control as much as possible in the laws that it passes. Latitude would be given but problems had been experienced in the past.

Judicial Matters Amendment Bill
Ms T Ross of the Department of Justice was also present.

The Chair noted that the only submission had come from the Attorneys Fidelity Fund.

Mr Basset said that there had also been a submission from the Law Commission but that had only been received the previous day and related to Clause 2.

Clauses 1 & 2
Ms Ross stated that no changes had been made to those Clauses.

Clause 3
The Chair asked if there had been any changes made by the law advisors.

Mr Basset replied that he had only just received it but he did not think so.

The Chair noted that one comma and the word "judgement" had been inserted in the Clause.

Clause 4
Ms Ross said that there were no changes. Clause 4 was in line with the Manamela case.

Mr Basset added that there was one insertion and one deletion but the rest of the Clause was the same.

The Chair commented that this was the kind of evidentiary thing that Manamela allows.

Clause 5
The Chair asked if there was any change to the wording of the Clause.

Ms Ross explained that the only change was that the word "the sole" had been removed and "whether sole custody or not" had been inserted.

The Chair said that what they have done is to circumscribe it and say that it applies to sole custody or not and this was an improvement.

Ms Ross said that an input had been obtained from the Department of Social Development, which supports the amendment.

Clause 7
No change was made to the Clause.

Clause 8
Ms Ross stated that an "of" needed to be included in between "account" and "experience".

The Chair felt that Clauses 6 to 11 were all the same aside from technical changes. He did not have a principle problem with it.

Clause 12
Ms Ross said that the word "any" had been replaced with "no" at the beginning of the new Clause.

Mr Basset explained that the state law advisors seemed to have changed the formatting and used the old Clause as a basis, whereas the previous provision had been completely new.

Ms Ross said that she had been asked to check the provision against the TRC Act, which she had done, and a copy of the Act was available. The provision was in line with the TRC Act.

The Chair was not sure, as he thought that the TRC Act only applied to criminal acts and not civil. This excluded it in all proceedings. He had looked at the TRC Act and it was clear that it applied to criminal proceedings and is in line with US legislation. He thought the matter needed to be relooked.

Mr Basset added that the Committee had asked for comments from the Department of Health and he had tried unsuccessfully to get hold of them.

The Chair said that he would be hesitant to look at this without consulting the Department of Health. He asked Mr Basset to write to them, informing them that if they do not respond soon they would be subpoenaed to appear before the Committee..

Clause 20
The Chair remarked that the Clause was a simple one. The Clauses before it had been dealt with during Mr Moorhouse's submission.

Clause 21
Mr Basset wondered whether it would not be more practical to deal with Clause 21 after the Committee heard from Mr du Preez.

Clause 22
Ms Ross said that the Deputy Chief State Law Advisor in conjunction with role-players had drafted a new Clause. It had been referred to in a Cabinet Memo and approval had been gained.

Mr Basset continued that the Cabinet had been approached for approval of the principle. In essence, anomalies in the Transkei and Bophuthatswana resulted in candidate attorneys in those areas not having the same benefits as those within the rest of South Africa.

The Chair said that in principle he did not see a problem but he was trying to see how Clauses 2(b) and (3) worked together.

Mr Basset replied that he was seeing them for the first time and the Chair suggested that he speak with the Deputy Chief State Law Advisor about it.

Mr Magwanishe questioned what the situation was with regard to Venda and Ciskei.

Mr Basset said that he had been informed by the person who had drafted the provision that those two states had received independence right after the Attorneys Act had come into operation in 1979 and all the benefits of the Act had transferred to Venda and Ciskei.

The Chair said that he was happy with Clauses 1 to 17. Clauses 12 and 13 needed to be re-looked. Clauses 14 and 15 were awaiting a response from the Department of Health. He was happy with Clauses 16 to 20. Clause 21 would be dealt with when the other Bills were being looked at and Clause 22 still needed to be sort out.

Promotion of Equality Bill
Clause 1
Mr Henk du Preez, Department of Justice, went through his Department's amendments to the Bill.

The Chair asked how it would be possible to know what the "training course" in subclause (2) referred to.

Mr du Preez said that in practice, as he understood it, persons co-ordinating the training would compile a list of people who have been trained but no certificate would be issued.

The Chair said that his worry was the link between the two things - the training course and what to do with those who have done the course. He inquired where the link was between the training and being designated. There did not seem to be a pool from which people could be appointed.

Mr du Preez felt that that was something that needs correcting.

The Chair suggested that when a person receives training, he/she should be put on a list from which they could then be designated and a reference to the list must be included in the Clause to create the link.

Clause 2
Mr du Preez said that the Clause would stay as is, except for paragraph (b) where a subsection had been inserted so those who had formerly received training my form part of a pool or list from which appointments could be made.

Clause 3
Mr du Preez explained that sub(a) and (b) were the same. In subsection (4) he had been asked to delete the words "and implement" and provide rather for the content of courses and sensitivity training, and that had been inserted.

The Chair thought that the words "sensitivity training" were enough to capture what was wanted, although he thought "social context training was better". He thought that the Chief Justice, along with the JSC, the Magistrates Commission and the Minister, should be the person responsible for developing and implementing the training course. He asked that "social context" be inserted into subClause (5).

Dr Delport said that he did not see any problems of principle.

Ms Camerer agreed with Dr Delport.

The Chair said that firstly, subclauses (4) and (5) needed to be amended. Secondly, it would be interesting to see what training they would get. He wondered if he could put in a Clause to see that a report is tabled in Parliament on the content, and that the decision on the content must be included in the report and submitted to Parliament.

Ms Chohan-Kota raised a substantive issue. There was a problem that needed to be addressed. When one thinks of sex and gender, one thinks in dichotomous terms, i.e. male or female. The difficulty is that this is not always the case. The term "intersexuality" refers to people born with ambiguity as to sex. They do not have to be 100% male but could feature as 99% male and 1% female when born. There were different degrees of it. The legal problem is that the standard view of sex can spill over into legal interpretation. Equality between the sexes means equality between male and female. The spillover was what needed to be contained. It was not the equality section in the Constitution that was being targeted but the Equality Act. Thought had been given to asking the Department to look at this issue and some suggestions had been made to hand over to Mr Basset. The words "sex" and "gender" were used interchangeably in the Act, so the intention was to include this aspect in the definition.

Ms Camerer thought that this could not be done off the top of somebody's head in the Department. The issue had been drawn to her attention by a person who was interested in the Gender Commission. She did not think that the matter should be launched into without an expert opinion.

The Chair said that the Constitution was clear that there should be no discrimination. He asked that a resolution be drafted to draw attention to this matter. He was passing the information to the Department to look into and to draft and consult and asked that a report back be made to the Committee by the beginning of February of the following year.

Administrative Justice Bill
The Chair went through the new Clause in the Bill. He did not think that context training was necessary here. However, there was a need to have an implementation Clause.

Mr du Preez moved on to subClause (6).

The Chair said that the Chief Justice, in consultation, should do it. He asked that the amendment be made similar to that in the equality legislation so that a pool is created. In both cases it would be the Chief Justice, in consultation, who would develop the content and training of the courses. In principle he saw no problem with the Bill.

Mr Basset said that the principle in the Judicial Matters Bill was really the same.

The Chair asked Mr Basset to put it in a separate Bill.

Mr Basset remarked that this would improve the importance of the issue.

The Committee arranged to meet at 3pm when the amendments would be looked at.

Matters relating to the Public Prosecutor
The Chair said that he had received a letter from Mr Baqwa confirming the remuneration of the Public Protector which had been approved by an Ad Hoc Committee. As he was now leaving, he was entitled to a gratuity. Part of the remuneration that had been approved was that no tax would be paid on the gratuity, however SARS had said that no contract may exclude tax. Mr Baqwa was unhappy with this. A request had been made to change the formula so that he did not have to pay tax - the amount would be changed so that the taxable amount could be included in it. The Chair had asked for the formula because they had simply used the same formula as before and multiplied it by 40, when surely it was the 40% (tax) that needed to be added to it and not multiplied. He needed to engage with the Speaker on the issue but was briefing the Committee on this upcoming issue.

Afternoon session
Insolvency Amendment Bill
Mr Cronje: South African Law Commission, referred to the previous draft and explained that the text in brackets would be deleted if everybody was happy with the changes.

Everybody was happy with the changes made to Clause 1.

Ms Chohan-Kota (ANC) asked whether the wording in Clause 2 (4A)(a) should be changed from 'furnish a copy thereof' to 'service'.

Adv de Lange said that there might be worries that practically it would be costly to use 'service'. He would rather replace 'furnish a copy thereof' with 'attach to affidavit a copy from petitioner'. He then asked Mr Cronje to go and have a look at the specific rules and report back.

Adv de Lange proposed some changes to the third Clause. He proposed changing the numbering in section 11 (2A)(a) from '4(2)' and '9(4A)' to '4(2b)' and 9(4A)(a). He also proposed changing the numbering in (2A)(b) from '4(2)' to '4(2b).

Clause 5 is being deleted while in Clause 6 the same changes will be made to the wording as in Clause 2 S 9 (4A)(a).

Clause 8 is being deleted.

The Chairperson expressed his satisfaction that they now have a Bill that in Clause 2 puts the duty on the applicant and not the debtor. The only question mark remains on how to present it to the courts and Mr Cronje will look into it.

Adv de Lange added that the Bill should be ready for voting on Wednesday.

Promotion of Equality and Prevention of Unfair Discrimination Amendment Bill
Adv de Lange proposed a change to Clause 6 (3b). He asked that the words 'as contemplated in Section 31 (4)(5)' be added after 'training course'.

Mr Basset, legal drafter for the Department, wondered whether that would lead to losing sight of those already trained. He however changed his mind and was satisfied this would not happen.

Clause 2 still has to be changed.

Adv de Lange noted that the words 'sensitivity training' in 3 (6a) will be replaced with 'social context training'.

Ms Chohan-Kota proposed that in Clause 3 (7) the period of one year be shortened to six months and the rest of the Committee was happy with the suggestion.

Adv de Lange proposed adding 'as prescribed relating to the content and implementation referred to in the regulations' be added to Clause 3 (7) after 'Parliament'. It will be added to the next draft for Members to decide on. The reason for this is to prevent unnecessary detailing in the act. The details can rather be explained in the regulations.

The meeting was adjourned.