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MRL ASSIGNMENT 1
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TLI4801 OCT/NOV 2024 PORTFOLIO EXAM SEMESTER 2 OF 2024 -
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TLI4801 PORTFOLIO (DETAILED ANSWERS) Semester 2 2024 - DISTINCTION GUARANTEED
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TLI4801 PORTFOLIO (ANSWERS) Semester 2 2024 - DISTINCTION GUARANTEED
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Visule Najela Student Number: 57865434 ASSIGNMENT 01 Unique number: 619641QUESTION 1:
1.
➢ The Stratfords together with their domestic employees (Appellants) were joined by
the Minister of Justice and the Minister of labour (Respondents) in launching a
counter application in seeking for an order declaring section 9(4a) of the Insolvency
Act1 to be unconstitutional. They argued that, as interpreted in Gungudoo,2 s9(4a)
offended the right to equality as it indirectly discriminates against domestic
employees. They consequently contended that Gungudoo's interpretation of the
section was incorrect.
They also argued that the section does not make provision for the notification of
domestic employees of the debtors and that excluding domestic employees from
S9(4a) or failure to notify the employees about the sequestration proceedings was
unconstitutional as it amounted to a breach of their constitutional rights to equality,
dignity, fair labour practices and the right of access to the courts as provided in the
Constitution.3 They also required that the final sequestration order given in the
previous court must be set aside and should have never been granted as it was not
advantageous to the creditors of the estate.
➢ The Ministers were joined in the proceedings in terms of rule 5 of the Rules of the
Courts. The Minister of Justice was against the appeal and believed that the section
was not unconstitutional as it does not unjustifiably infringe any constitutional
rights. It was argued that although the section does differentiate between business
and domestic employees, the differentiation does not amount to unfair
discrimination. However, the Minister of Labour Relations was in favour of the
appeal as the section in question breaches the domestic employee’s rights to fair
labour practices.
2. The issues of the Constitutional Court were as follows:
• Whether S9(4a) includes the domestic employees
• If not, whether the differentiation rendered the provision inconsistent with the
Constitution
• Whether compliance with the section is peremptory or directory and
• Whether granting of a final sequestration order by the High Court was correct.
3. The Constitutional Court affirmed the findings of the High Court. This Court held that the
term 'advantage' in s 12(1)(c) was broad and should not be rigidified. Specifying cents in the
rand or a 'not negligible' benefit to creditors was unhelpful. It was for the court to assess
whether the sequestration would result in some form of payment to the body of creditors;
whether there was substantial estate from which creditors could not get payment, except
through sequestration; or whether some pecuniary benefit would result for the creditors. In
the present case it was evident, in the light of the potential impeachable transactions listed
by the Investec bank, totalling over R37 million that sequestration would be to the
advantage of the Stratfords' creditors if an appointed trustee investigates various assets and
1
Section 9(4A) of the Insolvency Act 24 of 1936 (2015)
2
Gungudoo and Another v Hannover Reinsurance Group Africa (Pty) Ltd and Another [2012] ZASCA 83.
2012 (6) SA 537 (SCA) (Gungudoo).
3
The Constitution of the Republic of South Africa, 1996.
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