INTRODUCTION
1. These submissions are made on behalf of the fourth respondent, the Minister of Justice and Constitutional Development, to whom we shall refer as “the Minister”1.
Declaration of constitutional invalidity of section 30 of the Magistrates’ Court Act, 32 of 1944:
2. Applicant seeks the confirmation of paragraphs 1 and 2 of the order of his Lordship Mr Justice Hlophe, JP (Western Cape High Court, Cape Town) in the matter of Malachi v Cape Dance Academy Int (Pty) Ltd and five others – case number: 14830/09 (as yet unreported) that:
i) [Paragraph 1] – The words “arrest tanquam suspectus de fuga” as contained in section 30(1) of the Magistrates’ Court Act, 32 of 1944 are declared unconstitutional and invalid and must be deleted;
ii) [Paragraph 2] – The whole of section 30(3) of the Magistrates’ Court Act, 32 of 1944 is declared to be inconsistent with the Constitution and invalid.
3. The impugned provisions reads as follows:
Section 30(1) of the Magistrates’ Courts Act, 32 of 1944:
“ (1) Subject to the limits of jurisdiction prescribed by this Act, the court may grant against persons and things orders for arrest tanquam suspectus de fuga, attachments, interdicts and mandamenten van spolie.”
Section 30(3) of the Magistrates’ Courts Act, 32 of 1944
“ (3) No order of personal arrest tanquam suspectus de fuga shall be made unless –
(a) the cause of action appears to amount, exclusive of costs, to at least forty rand; and
(b) the applicant appears to have no security for the debt or only security falling short of the amount of the debt by at least forty rand; and
(c) it appears that the respondent is about to remove from the Republic.”
Fourth respondent’s position in relation to the declaration of constitutional invalidity:
4. Fourth respondent does not oppose the relief sought by applicant.
4.1 Fourth Respondent will rely on the submissions of T D Rudman (Deputy Director-General: Legislative Development of the Department of Justice and Constitutional Development), as flied in the court a quo, in support of its submissions of the constitutional invalidity of section 30
of the Magistrates’ Courts Act, 32 of 1944 (“the Act”) in respect of arrest tanquam suspectus de fuga.1
3.1 These submissions are filed, by the fourth respondent as the cabinet member responsible for the administration of the Act, for the purpose of assisting this Honourable Court.2
Structure of fourth respondent’s submissions:
5. We have adopted the following structure in these submissions:
i) Firstly, the main issues will be discussed;
ii) Secondly, fourth respondent’s main points will be discussed;
iii) Thirdly, fourth respondent’s submissions will be discussed;
iv) Fourthly, the justification of the impugned provisions will be discussed;
MAIN ISSUES
1 Record: Page 59 – 69, Affidavit of Rudamn.
2 Dawood, Shalabi and Thomas v Minister of Home Affairs 2000 (3) SA 936 at paragraph 15 of the judgment of O’Regan, J.
6. The facts of the application are not disputed by the fourth respondent.
7. Fourth respondent had the opportunity to consider the written submission of the applicant. The chronological sequencing of the facts is fully dealt with by the applicant and, in the interest of justice, this Honourable Court will not be burdened with a further repetition thereof by the fourth respondent.
8. Applicant describes the following infringements of her fundamental rights, in the Bill of Rights, in support of her argument for the constitutional invalidity of arrest suspectus tanquam de fuga in terms of section 30 of the Act:3
i) Equality , in terms of section 9(1) of the Constitution of the Republic of South Africa, 1996 (“the Constitution”).
ii) Dignity , in terms of section 10 of the Constitution;
iii) Freedom of security (liberty) , in terms of section 12 of the Constitution; and
iv) Freedom of movement , in terms of section 21 of the Constitution.
3 Founding affidavit of Gary Simon Eisenberg filed in this application, page 6.
FOURTH RESPONDENT’S MAIN POINTS
9. Fourth respondent will rely on the following main points, in these submissions, in support of its argument in respect of the constitutional invalidity of arrest suspectus tanqum de fuga:
i) There is no legal obligation on a foreign debtor to consent to jurisdiction or to provide a monetary basis to avoid arrest or its consequence (detention).
ii) The arrest of a debor provides no security for the claim or any prospect of successful execution.
iii) Security or payment will only be forthcoming if a debtor desires to avoid arrest. It is therefore not the arrest which will satisfy the claim of a creditor but rather the fear of incarceration of the debtor.
iv) No legal justification exists for incarcerating a debtor who has been found civilly liable. Therefore there cannot be any such justification for incarcerating a debtor whose liability has not been established.
v) The function of arrest is to enable a court to take cognisance of a suit and can be achieved through less invasive means.
vi) The focus of governmental objectives and legislation, in respect of commercial disputes on debt, has in recent years, shifted from the protection of creditors against defaulting debtors to that of assisting debtors to overcoming indebtedness. Likewise, existing legislation should be re-aligned to accommodate such objectives.
FOURTH RESPONDENT’S SUBMISSIONS
10. From the onset arrest suspectus tanquam de fuga should be distinguished from the then civil imprisonment that existed for defaulting judgment debtors.
Objectives of arrest suspectus tanquam de fuga
10.1 The objective of arrest suspectus tanguam de fugas, in short, is for the protection of the creditor in respect of a foreign debtor, present in the Republic, and about to flee.
10.2 Judgment debt is not a prerequisite for an application for arrest suspectus tanquam de fuga. A Creditor merely needs to satisfy the court of a cause of action against the debtor exceeding forty rand.
10.3 Such applications are moved on an ex parte basis.
Objectives of the then civil imprisonment
10.4 The object of the then civil imprisonment was for the confinement of a person in a public jail for not paying a judgment debt or any other sum of money he/she is ordered to pay.4
10.5 Judgment debt in favour of a creditor which was not being satisfied was a prerequisite before civil imprisonment could take effect.
I Historical background: Arrest suspectus tanquam de fuga
Purpose of arrest tanquam suspectus de fuga in terms of section 30 of the Act:
11. The purpose of an arrest of a debtor suspectus tanquam de fuga is for the protection of the creditor, by the apprehension and detention of the debtor who is about to flee in order to avoid paying a debt.
12. Once arrested such a debtor can secure release only through either of the following:
4 Dold and Stone v Wilson 1908 EDC 479 at 480 – 1, Van Zyl: The judicial practice of South Africa, 3rd edition.
i) Consenting to jurisdiction;
ii) Offering security; or
iii) Payment in whole or in part of the debt.
13. The aim of arrest suspectus tanquam de fuga is not to keep a debtor in prison as punishment for not satisfying a debt, but rather, to prevent such a debtor’s flight in order to avoid having to satisfy a judgment against him/her.5
Effect of arrest suspectus tanquam de fuga in terms of section 30 of the Act:
14. The arrest of a debtor would involve physical detention entailing a serious deprivation of his/her liberty.
15. Such a deprivation would only cease if there is a lawful reason for cessation thereof (consent to jurisdiction, offering of security or payment) and between those moments the arrestee’s liberty is restricted. The arrest of a debtor itself however cannot satisfy the claim of the creditor.
5 Elliott v Fourie 1992 (2) SA 817 at 822 B.
II Developments in respect of the law for imprisonment for civil indebtedness and arrest suspectus tanquam de fuga and related matters
16. In the past governmental objective in respect of commercial actions on debt was aimed at the protection of the creditor.
Creditors enjoyed legislative sanctioned procedures to enforce their rights and to satisfy judgment debts, even through the deprivation/restriction of the liberty of the debtor.
17. We will demonstrate below that these governmental objectives have radically changed over the last two decades and that these changes have a direct bearing on this Honourable Court’s adjudication in respect of the present application for constitutional invalidity of the principle of arrest suspectus tanquam de fuga as contained in section 30 of the Act.
IMPRISONMENT FOR CIVIL INDEBTEDNESS AND RELATED MATTERS:
Abolition of Civil Imprisonment Act, 1977
18. The Abolition of Civil Imprisonment Act, 2 of 1977, effectively put an end to imprisonment for failure to satisfy judgment debt.
Note that the Abolition of Civil Imprisonment Act, 1977 had no bearing on the principle of arrest suspectus tanquam de fuga, as such arrests, were not subjected to the provisions thereof as it was made in terms of the common- law jurisdiction of the High Court to order such arrests.6
Note further that the legislature did not intend to modify the common law by the enactment of section 30 of the Act. The intention rather seems to have been to endow the magistrate’s court by statute with all common law powers in regard to arrest tanquam suspetus de fuga.7
Coetzee v Government of the Republic of South Africa 1995 (4) SA 631 (CC)
19. In Coetzee this Honourable Court was requested to deal with the determination on the constitutional invalidity of section 65A – 65M of the Act.
20. This Honourable Court struck down the said provisions, as although the goal of these provisions had a legitimate and reasonable governmental objective, same were overbroad and unreasonable.8
6 Elliot v Fourie 1992 (2) SA 817 at 819 F and at 822 G
7 Jones and Buckel: The Civil Practice of the Magistrates’ Courts in South Africa, ninth edition, volume 1, the Act: Act 83.
8 Coetzee at paragraphs 16 – 17, pages 645 – 646.
21. It is therefore no longer possible to imprison any judgment debtor.
Note that the requirements for arrest suspectus tanquam de fuga do not require a judgment debt it merely requires a cause of action of more that forty rand, exclusive of costs.
The National Credit Act, 34 of 2005 (“the NCA”)
22. The purpose of the NCA is, inter alia, to regulate the granting of credit to consumers/debtors and to provide for remedies in the case where a consumer/debtor is over-indebted or where credit was recklessly granted to a consumer/debtor. The following provisions of the NCA needs mentioning.
i) Section 79: Sets out the requirements for a determination of indebtedness.
ii) Section 80: Sets out the requirements for a determination if a credit agreement is reckless or not.
iii) Section 83: Provides that any court may declare that a credit agreement is reckless.
iv) In terms of section 83(2) and (3) of the NCA, a court may declare a credit agreement to be reckless and may make an order –
(a) setting aside all or part of the consumer’s rights and obligations under the agreement; or
(b) if the consumer is over-indebted, suspending the force and effect of the credit agreement for a certain period of time or restructure the consumers obligations under any other credit agreement.
v) Section 85: Provides that any court considering a credit agreement may refer the credit agreement to a debt counsellor for a recommendation or may declare that the consumer is over-indebted.
vi) The court may, in terms of section 85 of the NCA, in court proceedings in which a credit agreement is considered and it is alleged that the consumer is over-indebted, refer the matter to a debt counsellor to make a recommendation to the court in terms of section 86(7) of the NCA or declare that the consumer is over-indebted and make an order contemplated in section 87.
vii) Section 86: Provides that a consumer may apply to a debt counsellor to be declared over-indebted in the prescribed manner.
viii) In terms of section 86(7)(c) and (8) of the NCA, if, as a result of an assessment conducted by a debt counselor, it is concluded that the consumer is over-indebted, the debt counsellor may issue a
“proposal” recommending that the magistrate's court make either or both of the following orders-
(a) that one or more of the consumer's credit agreements be declared to be reckless credit, if the debt counsellor has concluded that those agreements appear to be reckless; and
(b) that one or more of the consumer's obligations be re-arranged by-
(i) extending the period of the agreement and reducing the amount of each payment due accordingly;
(ii) postponing during a specified period the dates on which payments are due under the agreement;
(iii) extending the period of the agreement and postponing during a specified period the dates on which payments are due under the agreement; or
(iv) recalculating the consumer's obligations because of contraventions of Part A or B of Chapter 5, or Part A of Chapter 6.
ix) In terms of section 86(9) of the NCA, if a debt counsellor rejects an application as contemplated in subsection (7)(a), the consumer, with leave of the magistrate's court, may apply directly to the magistrate's court, in the prescribed manner and form, for an order contemplated in subsection (7)(c).
x) Section 87: Prescribes the manner in which a magistrate’s court may re-arrange a consumer’s obligations in relation to his/her application for over- indebtedness, be it, on proposal by a debt counsellor (on behalf of the consumer), or on application by the consumer or his/her legal representative.
xi) In terms of section 87 of the NCA, a magistrate's court may re-arrange a consumer's obligations. According to this section, if a debt
counsellor makes a proposal to the magistrate's court in terms of section 86(8)(b) or a consumer applies to the magistrate's court in terms of section 86 (9), the magistrate's court must conduct a hearing and, having regard to the proposal and information before it and the consumer's financial means, prospects and obligations, may-
(a) reject the recommendation of the debt counsellor or application of the consumer as the case may be; or
(b) make-
(i) an order declaring any credit agreement to be reckless, and an order contemplated in section 83(2) or (3), if the magistrate's court concludes that the agreement is reckless;
(ii) an order re-arranging the consumer's obligations in any manner contemplated in section 86 (7) (c) (ii); or
(iii) both orders contemplated in subparagraphs (i) and (ii).
xii) Section 87(7)(b) of the NCA provides that, if the consumer is not over-indebted, but is nevertheless experiencing, or likely to
experience, difficulty satisfying all his or her obligations under credit agreements in a timely manner, the debt counsellor may recommend that the consumer and the respective credit providers voluntarily consider and agree on a plan of debt re-arrangement. If a debt counsellor makes a recommendation in terms of section 87(7)(b) of the NCA and the consumer and each credit provider concerned accept that proposal, the debt counsellor must in terms of section 86(8)(a) record the proposal in the form of an order.
xiii) If that order is consented to by the consumer and each credit provider concerned, it must be filed as a consent order in terms of section 138 of the NCA. In terms of section 138 of the NCA, a court, without hearing any evidence, may confirm that resolution or agreement as a consent order.
ARREST SUSPECTUS TANQUAM DE FUGA AND RELATED MATTERS:
Bid Industrial Holdings (Pty) Ltd v Strang 2008 (3) SA 355 (SCA)
23. In Bid Industrial Holdings the Supreme Court of Appeal considered the constitutional validity of jurisdictional arrest. The SCA declared parts of section 19(1)(c) of the Supreme Court Act, 59 of 1959 and the common law
rule allowing arrest to found and confirm jurisdiction, that flows from section 19(1)(c), constitutional invalid.
24. The reasoning of the SCA, per his Lordship Mr Justice Howie, JP, writing for a unanimous coram, can be summarised as follows:
i) In South Africa it is required that either attachment of property or arrest take place to found or confirm jurisdiction where the defendant is a foreign national.9
ii) There is no legal obligation on a foreign debtor to consent to jurisdiction or to provide a monetary basis to avoid arrest or its consequence (detention), and the consequence can only be detention.
iii) The arrest of a debor provides no security for the claim or any prospect of successful execution.10
iv) Security or payment will only be forthcoming if a debtor desires to avoid arrest. It is therefore not the arrest which will
9 Bid Industrial Holdings, paragraph 29, page 363.
10 Bid Industrial Holdings, paragraph 35, page 364.
satisfy the claim of a creditor but rather the fear of incarceration of the debtor.11
v) No legal justification exists for incarcerating a debtor who has been found civilly liable. Therefore there cannot be any such justification for incarcerating a debtor whose liability has not been established.12
vi) The function of arrest to enable a court to take cognisance of a suit can be achieved through less invasive means.
Note that the court in Elliott13, as far back as 1992, stated obiter that a judgment debt can be enforced and satisfied by a creditor through other means than arrest suspectus tanquam de fuga. These arrests werer therefore no longer the only option available to dissatisfied creditors, however it appears to be the most convenient and cost effective option available to creditors.
11 Bid Industrial Holdings, paragraph 38, page 365.
12 Bid Industrial Holdings, paragraph 41, page 366.
13 Elliott, page 822 B – D.
vii) Noted : No other country, to the knowledge of the court, utilises arrest as a prerequisite to exercise jurisdiction.14
The dicta in Bid Industrial Holdings has since been applied, to the benefit of a foreign debtor, in Amrich 159 Property Holdings CC v Van Wesembeeck 2010 (1) SA 117 (GSJ).15
ANALYSIS ON THE JUSTIFICATION OF ARREST SUSPECTUS TANQUAM DE FUGA IN RELATION TO SECTION 30 OF THE ACT.
25. Applicant has established that arrest suspectus tanquam de fuga as contained in section 30 of the Act, violates certain of her fundamental rights in the Bill of Rights.
26. Once such a violation is established the onus shifts to the fourth respondent, as the cabinet member responsible for the administration of the impugned provisions, to justify such infringements in terms of section 36(1) of the Constitution.
27. In these submissions the fourth respondent is not opposing the constitutional invalidity of the impugned provisions and confirms the violation thereof on applicant’s fundamental rights.
14 Bid Industrial Holdings, paragraph 46, page 366.
15 Amrich at paragraphs 25, 30 and 33 at pages 122 B – D, 122 I – J and 123 D – E.
28. As stated above, fourth respondent had the opportunity to consider the written submissions filed on behalf of the applicant in this Honourbale Court. We align ourselves with the argument as put forwarded by the applicant in this regard and accordingly will not persists on a similar line of argument as this would merely be a repetition of the applicant’s submissions and will overburden the papers considerably.
CONCLUSION REMEDY IN RESPECT OF CONSTITUTIONAL INVALIDITY
29. Based on our submissions above it is concluded that:
29.1 Government objectives and stare decisis presently favour the constitutional protection of a debtor’s rights as far as it relates to the available legal remedies open to creditors for the enforcement of judgment debts and prima facie cause of action for commercial debt.
29.2 No justification exists for the imprisonment of a foreign debtor for the protection of a creditor, either in law or through statute, save as provided for in the impugned provisions which is discretionary in any event.
29.3 No justification exists for the imprisonment of a foreign debtor for the protection of a creditor in other countries.
29.4 A creditor can satisfy a judgment against a foreign debtor through less invasive means than arrest.
30. Accordingly we submit that:
30.1 The words “arrest tanquam suspectus de fuga” as contained in section 30(1) of the Magistrates’ Courts Act, 32 of 1944, be declared constitutionally invalid and deleted;
30.2 The whole of section 30(3) of the Magistrates’ Court Act, 32 of 1944 be declared constitutionally invalid.
SIGNED AT PRETORIA ON THIS 5th DAY OF MARCH 2010
______________________
Ismail Hussain SC
______________________
Pieter Bezuidenhout
Counsel for the fourth respondent
LIST OF AUTHORITIES
South African cases:
1. Bid Industrial Holdings (Pty) Ltd v Strang 2008 (3) SA 355 (SCA) .
2. Dold and Stone v Wilson 1908 EDC 479 .
3. Coetzee v Government of Republic of South Africa; Matiso and Others v Commanding Officer, Port Elizabeth Prison and Others 1995 (4) SA 663 (CC).
4. Dawood & Another v Minister of Home Affairs & Others 2000 (3) SA 936 (CC).
5. Elliot v Fourie 1992 (2) SA 817 (C) .
