Judicial Matters Second Amendment Bill: deliberations

Meeting report

JUSTICE AND CONSTITUTIONAL DEVELOPMENT PORTFOLIO COMMITTEE
13 October 2003
JUDICIAL MATTERS SECOND AMENDMENT BILL: DELIBERATIONS

Chairperson: Adv J H de Lange (ANC)

Relevant documents
Working Draft of Judicial Matters Second Amendment Bill -13 October 2003
Judicial Matters Second Amendment Bill: Contents of Document Bundle 1 (Appendix 1)
Judicial Matters Second Amendment Bill: Contents of Document Bundle 2 (Appendix 2)

SUMMARY
The South African Law Commission and the Banking Council were present to advise the Committee on the Bill. They looked at the amendment dealing with the termination and netting of obligation upon the sequestration of the estate of a party to an agreement. A clearer redraft of this amendment was requested. The other amendment looked at would deem certain appointments to have been made in terms of Section 9(3) of the Magistrates Courts Act, as amended. The desirability of this deeming provision was questioned.

MINUTES
Clause 3 : Substitution of section 35B of Act 24 of 1936, as amended by section 1 of Act 32 of 1995
"Agreements providing for termination and netting"
Mr T Cronje, South African Law Commission (SALC), proposed the substitution of section 35B of the Insolvency Act of 1936 with a new section. The proposed section deals with agreements providing for the termination and netting of obligations. He indicated that the previous section had been criticised as being too wide. The new section was drafted with input from stakeholders.

The Chair asked if there is a need to pass the amendment urgently. He said that the previous section has been in the Act for years and no problems have been raised with it. He wondered if anything would suddenly go wrong if the proposed amendment was not passed.

The Chair opined that the section seems to apply to any agreement that a person might enter into with a financial institution.

Mr Cronje said that the amendment seeks to limit the application of the section. He proposed that the section should apply at least where one of the parties is a financial institution. He agreed that the proposed section seems to apply to any agreement but added that some provisions would not apply to those agreements. If, however, one for instance opens an account with a bank, then the kind of agreement dealt with by the section would not apply.

Motivating the need for the section, Mr Kevin Daly, General Manager: Banking Council of South Africa, said that in terms of the law trustees have an election whether or not to enforce contracts. He said that if the trustees were of the opinion that it would be to the advantage of creditors to enforce the contracts, then they could continue with them. He stated that t would be good to give such powers to trustees. He indicated that in some countries a provision like this is not necessary. He also said that it is problematic and inequitable to allow trustee's discretion when one is dealing with financial institutions. He stated it is necessary to have this provision so as to protect financial institutions. He said that, for example, if one has a local solvent bank dealing with an insolvent foreign bank and this provision is absent, the insolvency of the other bank would cause serious problems for the local bank.

The Chair said that the problem is that the drafters of the section seem to presume that everybody knows the kind of agreements that they have in mind. He said that the agreements concerned have to be specified before the amendments could passed by the Committee.

Mr Daly conceded that the section is confusing and that the agreements concerned should be specified.

The Chair felt that the phrase "all such agreements" in the proposed subsection 3 seems to include performed obligations. He suggested that the section be redrafted to clarify the circumstances under which it applies.

Clause 2: Insertion of s10A in Act 9 0f 1929
The Chair asked if one could, through legislation, retrospectively correct an appointment which was made illegally. He indicated that everyone knows who appoints judicial officers, and asked whether Parliament has any right under the Separation of Powers Doctrine to appoint judicial officers. He requested the presenters to look at other ways of correcting the appointments.

Ms F Chohan-Kota (ANC) felt that the section seems not to deal exclusively with acting appointments.

Mr L Bassett, Legal Drafter: Department, said that Section 9(3) of the Magistrates Court deals with acting appointments only.

The meeting was adjourned.

Appendix 1 : Contents of Bundle 1

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JUDICIAL MATTERS SECOND AMENDMENT BILL, 2003 (B41-2003) CONTENTS OF BUNDLE (1)

1. Clause 3 [Extract of document headed Agreements providing for termination and netting]
2. Clauses 26 and 27 [Promotion of Equality and Prevention of Unfair Discrimination
Amendment Act, 2002 (Act 52 of 2002)]
3. Clause 28 [Cross Border Insolvency Act, 2000 (Act 42 of 2000)]
4. Clause 3 [Extract of Insolvency Act, 1936 (Act 24 of 1936) (Sections 35, 35A, 35B)]
5. Clause 4 [Prevention of Counterfeiting of Currency Act, 1965 (Act 26 of 1965)]
6. Clause 4 [S v Coetzee and Others 1997 (4) BCLR (CC)]
7. Clause 4 [S v Zuma 1995 (2) SA 642]
8. Clause 7 [Extract of Criminal Procedure Act, 1977 (Act 51 of 1977) (Chapter 28, Sentence)]
9. Clause 6 [Extract of Criminal Procedure Act, 1977 (Act 51 of 1977) (Section 276 and
276A)]
10. Clause 6 [S v R 1993 (1) SACR 209]
11. Clause 6 [S v Daniels 2000(1) SACR 256]
12. Clause 6 [S v Maritz 1996 (1) SASV]
13. Clause 6 [S v Siebert 1998(1) SACR 554]
14. Clause 6 [S v Labuschagne 1995 (2) SASV 200]
15. Clause 6 [S v Strydom 1994 (2) SASV 456]
16. Clause 3 [Extract of Criminal Procedure Act, 1977 (Act 51 of 1977) (Section 60)]
17. Clauses 9,10,11 [Extract of Attorneys Act, 1979 (Act 53 of 1979) (Sections 13A, 74, 81)]
18. Clause 12 [Divorce Act, 1979 (Act 70 of 1979)]
19. Clauses 13, 14,15 [Sheriff's Act, 1986 (Act 90 of 1986)]
20. Clause 20 [Domestic Violence Act, 1998 (Act 116 of 1998)]
21. Clause 16 [Mediation in Certain Divorce Matters Act, 1987 (Act 24 of 1987)]
22. Clauses 17 and 18 [Maintenance Act, 1998 (Act 99 of 1998)]
23. Clause 18 [S v Botha 2001(2) SACR 281]
24. Clauses 21, 22, 23, 24 [Extract of Promotion of Access to Information Act, 2000 (Act 2 of
2000) (Sections 10,12, 79, 90)]
25. Clause 25 [Promotion of Administrative Justice Act, 2000 (Act 3 of 2000)]
26. Clause 30 [Extract of Judges Remuneration and Conditions of Employment Act, 2001
(Act 47 of 2001) (Section 16)]
27. Clause 3 [Letter from Banking Council addressed to Chairperson: PC Committee]
28. Clause 3 [Motivation in support of an amendment to section 35B of the Insolvency Act
pursuant to the Judicial Matters Second Amendment Bill]
29. Clause 3 [ Annexure 1]
30. Clause 3[ Annexure 2]
32 Clause 3 [ Annexure 3]
33. Clause 3[ Annexure 4]
34. Clause 3[Annexure5]

Appendix 2 : Contents of Bundle 2

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JUDICIAL MATTERS SECOND AMENDMENT BILL, 2003 (B41-2003) CONTENTS OF BUNDLE (2)

1. Amended version of Judicial Matters Amendment Bill, 2003
2. Portfolio Committee Amendments to Judicial Matters Amendment Bill, 2003
3. Extract of Promotion of Access to Information Act, 2000 (Act 2 of 2000) (sections 10, 90)
4. Extract of Criminal Procedure Act, 1977 (Act 51 of 1977) (section 342A)
5. Administration Amendment Act, 1929 (Act 9 of 1929)
6. Extract of Judges' Remuneration and Conditions of Employment Act, 2001 (Act 47 of 2001)
(section 11)
7. Further Departmental submission: Agreements providing for termination and netting
(Section 35B of Insolvency Act, 1936 (Act 24 of 1936)
8. Extract of Financial Services Board Act, 1990 (Act 97 of 1990) (Definition of financial
institution")
9. Extract of Criminal Procedure Act, 1977 (Act 51 of 1977) (Sections 283, 285, 297)
10. Extract of Correctional Services Act, 1998 (Act 111 of 1998) (section 75)
11. Schedules 1 to 6 of Criminal Procedure Act, 1977
12. Schedule 2 of Correctional Services Act; 1959 (Act 8 of 1959)
13. Extract of Parole and Correctional Supervision Amendment Act, 1997 (Act 87 of 1997)
(Section 8)
14 Extract of Pensions Funds Act, 1956 (Act 24 of 1956) (Section 37A)
15. Extract of Government Employees Pension Law, 1996 (Act 21 of 1996) (Section 21)
16. Extract of Public Finance Management Act, 1999 (Act 1 of 1999) (Sections 38, 39,40, 50,
51, 55, 86)