The SCA has found a racial quota policy implemented for the appointment of liquidators to be unlawful and invalid. It ruled on Friday that an appeal against a finding of its unconstitutionality be ‘dismissed with costs,’ upholding the High Court’s finding of the policy as ‘unconstitutional and irrational’ as well as ‘unlawful and invalid’, notes a News24 report.

The policy came into operation on 31 March 2014. However, an urgent interdict against its implementation was brought by various associations of insolvency practitioners, as well as other interested parties. The Western Cape High Court subsequently declared the policy inconsistent with the Constitution and thus invalid.

The SCA's judgment was based on an understanding that ‘affirmative action measures are designed to ensure that suitably qualified people, who were previously disadvantaged, have access to equal opportunities and are equitably represented in all occupation categories and levels’.

The court found that while ‘measures directed at affirmative action may in some instances embody preferential treatment and numeral goals,’ it ‘cannot amount to quotas’. The judgment suggested that in advancing transformation, ‘flexibility and inclusiveness is required’ as ‘measures must not, however, encroach, in an unjustifiable way, upon the human dignity of those affected by them,’ which would be unconstitutional. The court also suggested that the policy was prejudiced to young black men and women who had recently qualified.

Minister of Justice v The SA Restructuring & Insolvency Practitioners Association

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At issue was a policy determining the appointment of insolvency practitioners published in the Government Gazette in February 2014. According to the policy, 40% of appointments would go to African, coloured, Indian and Chinese women, 30% to African, coloured, Indian and Chinese men; 20% to white women; and 10% to white men, notes a Business Day report.

The multimillion-rand insolvency industry has been shrouded in controversy for years, and changes made to the appointment of liquidators have led to fronting and corruption. The SA Restructuring and Insolvency Practitioners Association, which represents more than 400 members, and which participated in the case, has warned the policy determining the appointment of insolvency practitioners might have similar unintended consequences.

According to Solidarity CE Dirk Hermann, the ruling is of ‘key directional importance for SA as far as transformation and equality are concerned’. ‘What we find surprising, though, is that government seems to believe that its obsession with race takes precedence over the Constitution. ‘The SCA found that government is guilty of unfair racial discrimination. This is a grave charge against a government that wants to use legislation to criminalise racism,’ he said.

Mthunzi Mhaga, Department of Justice spokesperson, said they would consider the judgment’s implications.

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