The Constitutional Court (Concourt) ruled on Friday that domestic workers have the same rights as employees of Pinnacle Point Group, a business that is about to be sequestrated, namely that they need to be properly informed of the legal possession of the businesses assets in order to free them of their accumulated debt.
This overturning an earlier ruling by the Supreme Court of Appeal on interpretation of the Insolvency Act.
The court went even further, saying that should they not be given a copy of the provisional order, in a way that assures it is accessible to them, the final order must be set aside and replaced by a provisional order.
In the case before the court, the order was left on a table in the kitchen, with the assumption that the employers would inform the staff member.
Investec, the bank affected, was not told that there were two other employees.
The case under consideration involved three staff members of Ivor Stratford, chairman of the now liquidated Pinnacle Point Group, a luxury property company.
Lawyers for Stratford and the employees asked the court to set aside his sequestration order granted in the high court in the Western Cape on the grounds that his domestic staff had not been “properly furnished” with the petition to sequestrate him.
They said that had they been notified they would have objected to the sequestration.
They said failure to do so was unconstitutional and impeded their right to dignity. The three staff members were domestic worker Clean Ngoma, and gardener and handyman, Eric Dlokolo and Andries Adonis.
The court set aside the appeal but ruled that the interpretation of the Insolvency Act, which was that “employees” were only those working at the affected business, was incorrect.
Stratford and his wife Sheila, were sequestrated on August 14 2015, after the high court granted the order.
Investec Bank said the Stratfords owed the bank more than R240-million.
The couple said at the time that their estate was only worth R780 000. This was rejected by the high court as not being plausible considering his position.
Investec’s lawyers told the Concourt that they had to act fast because of concerns brought forward about transactions made by Stratford in the period leading up to his provisional sequestration.
According to their testimony in the high court, this included a R28-million payment on March 12 2009, that had “in all likelihood” been transferred to Stratford or an entity controlled by him.
On May 15 2009, there had been an R6-million payment from Pinnacle Point Investments to a company called Ivor C Stratford Investment – but the court found that there was no company registered with that name.
Justice Monica Leeuw in a unanimous judgment, dismissed the appeal and supported the high court’s decision to grant final sequestration.
She said, however, that going forward the affected creditor is required to furnish a petition to all employees, including domestic workers, in terms of the court’s reading of the Insolvency Act.
The petition also has to be made available in a manner likely to make it accessible to the employees.
Justice Leeuw added a provision, however that: “Failure to furnish employees with the petition may not be relied upon by the debtor for opposing sequestration when the question to be decided is whether sequestration is to the advantage of creditors.”
Leeuw said: “There may be instances were a provisional order should be granted to avoid the concealing of assets or for other urgent reasons in circumstances where a delay would substantially prejudice the creditors.”
The court said the ruling was not retrospective.