Order! I wish to inform this House in accordance with Standing Order No. 14 that I shall be unavoidably absent from the sitting of the House tomorrow in order to attend the funeral of Mr. Gaffie Maree, former MP for Namakwaland.

Mr. Maree was a good friend of mine, as he was of many hon. members, and for a long time, too, we were bench fellows in this House.

Mr. Speaker, I move—

In terms of section 3 of the State Attorney Act, 1957, (Act 56 of 1957), the functions of the State Attorney consist of providing attorney’s services to the Government of the Republic, and similar services can also be provided to the administration of a province, the administration of the territory of South West Africa and the S.A. Railways and Harbours Administration. However, no provision is made for such services to be provided to the Government of an independent State.

During 1979, after its independence on 13 September 1979, the Government of Venda requested that the State Attorney of the Republic of South Africa initially continue to provide attorney’s services to that Government until such time as its own State Attorney would be in a position to take over in all respects. The Government law advisers indicated that an agreement to that effect between the Government of the Republic of South Africa and the Government of Venda would be in order if the necessary modification be made to the State Attorney Act, 1957, retroactive from the date of the independence of Venda. A motion to this effect is contained in the Bill. Since there is a possibility of similar requests being received from other independent territories, the modification is not limited to Venda, but clause 1 refers to the Governments of foreign States in general.

Mr. Speaker, the hon. the Minister has just explained that it is necessary to introduce the legislation so that the State Attorney may provide services beyond the borders of South Africa too. The aim in this specific case is to rectify the position with regard to Venda. We in these benches have no objection to this whatsoever. Out of sheer curiosity, more than anything else, we should nevertheless like to know why the hon. the Minister first withdrew the Bill and later on presented it to the House once again.

It is a pleasure for me to support the Second Reading of this Bill.

Now that was a very good speech!

Mr. Speaker, we on this side of the House are also pleased to support the provisions of the Bill.

Section 3 of the State Attorney Act, 1957, makes provision for three things. In the first place it provides the nature of the work which the State Attorney may perform. Secondly, it provides for whom that work must be performed and thirdly, where he may perform that work.

As far as the nature of the work is concerned, it encompasses the broad spectrum of legal services provided to the general public by private legal practitioners in the private sector. Secondly, the Act lays down emphatically who the clients of the State Attorney’s office may be. These are firstly, the Government of the Republic of South Africa in all its branches; secondly the provincial administrations and thirdly, the Administration of South West Africa. Last but not least there is also the administration of the S.A. Railways and Harbours.

As far as the latter three administrations are concerned, the State Attorney does their work according to agreements concluded with them as governing bodies in their own right. When Black national States became independent, it became apparent that there was a defect in the Act. The position prior to independence does not cause any problems, because in those cases the State Attorney’s client remains the Government of the Republic, and usually the State Attorney can provide legal services to the Governments of such independent states within the limitations of the Act. The territories of those States also remain part of the Republic. In accepting independence, however, such a Black State receives its own sovereign Government as well as its own territory. Therefore, if the State Attorney were requested to provide further legal services to such a State, he is prevented from doing so in two ways, in terms of the provisions of the State Attorney Act.

In the first place, the Government of such an independent State is not a body for which the State Attorney may perform work. In the second place, his work may not be carried out beyond the territory of the Republic. This defect is being rectified in the measure that we have before us today. The amendment therefore aims at making it possible for the State Attorney to provide legal services for the Government of another such State. This will be done by agreement, in the same way as in the case of the S.A. Railways, the Administration of South West Africa and the provincial administrations.

Clause 2 of the Bill makes the measure retroactive from 13 September 1979. The hon. the Minister has shown that this is necessary in order to cover certain services that have already been provided to the Government of Venda by the State Attorney in the interim.

It is perhaps fitting at this stage to draw attention to the excellent work which the office of the State Attorney has done in the past and is still doing today. Their work brings them into practically every legal sphere imaginable. State Attorneys act on behalf of guilty parties in criminal cases on charges which vary from traffic offences to murder. They register deeds and recover debts, and in this respect it is interesting to note that the State Attorney recovered a record amount of almost R5 million from State debtors during the 1978 financial year. They also draw up contracts, act in civil cases, etc. However, the State Attorney is also regularly entering new spheres in our administration of justice, as our modern society becomes more complicated. It is interesting to take a note of just a few recent legal spheres. For instance, there is the handling of cases with regard to air and sea pollution and the containerization of freight. The qualified attorneys attached to the office of the State Attorney deserve the appreciation of this House for their dedicated work, their dedication to their task and the professional way in which they perform it. As a further incentive for these competent officials, I should like to quote the words of the then Minister of Justice, adv. Tielman Roos, when he piloted the first State Attorney Act through this House in 1925. Amongst other things, he held up the following picture of the office of the State Attorney to the House (Hansard, 1925, Vol. 3, col. 90)—

I think that the picture that the then Minister held out in prospect has in fact been verified in all respects by the loyal officials of the office of the State Attorney since 1925.

Mr. Speaker, the NRP will also support this measure. I am surprised that the hon. member who has just spoken did not raise the point that I wish to raise, a point flowing from this amendment and what has gone before. There is a growing feeling that more and more work that was formerly given to private attorneys, by the State, is being channeled into the department and is being handled departmentally. I am thinking, in particular, of country attorneys who used to do a great deal of work, including conveyancing and other legal work. They are now finding this work being taken from them and being done by the department through the State Attorney. I should like an assurance from the hon. the Minister that this measure is not simply adding to that tendency because, where other countries might have made use of private attorneys for legal advice, they now get it by agreement with the Government of the Republic. This closes the door to a considerable amount of work or potential work that might have been done by country attorneys. This is a matter of growing concern, because particularly in country towns, country attorneys are having an ever more difficult time, and the tendency is for this to be getting worse. So I should like to plead with the hon. the Minister not to take over the whole field. Where people in private practice can play a part, he should rather enable them to play that part for the Government in the same way as the Governments of foreign countries can now become clients of the State Attorney. We shall support the measure.

Mr. Speaker, I am sure that the hon. the Minister will comment on the question of the hon. member for Johannesburg North as to why this legislation was originally withdrawn. However, the point that the hon. member for Durban Point touched on, is not a new one. It is an aspect which has already been argued in this House before. The function of the State Attorney is a function which has had world-wide recognition for some time already. In England, the position was regulated formally for the first time in 1843. In the old Natal there was also a crown attorney and in the South African Republic, a State Attorney. So this is by no means a new principle. To begin with, there was a great deal of opposition to the introduction of the post of a State Attorney between the years 1912 and 1925, when the legislation was ultimately introduced successfully. I wonder whether the hon. member for Durban Point would have wanted to associate himself with the point that was raised by the then hon. member for Bloemfontein North, Maj. G. E. van Zyl, who raised an objection at the time. I quote him (Hansard, 25 August 1924, col. 801)—

I want to suggest respectfully that the State and the State Attorney performed this task responsibly in the past. I should like to associate myself with what the hon. member for Ermelo has already said in this regard. For the record, I should like to refer once again to column 801 of 25 August 1924. At the time Maj. G. E. van Zyl attacked the legislation concerned on more or less the same basis as the hon. member for Durban Point did and said—

I suggest respectfully that capable people put themselves at the disposal of this sphere of the Public Service and that the fears of the hon. member for Durban Point are unfounded. I am pleased to support the legislation.

Mr. Speaker, the hon. member for Roodepoort said that the point raised by the hon. member for Durban Point was an old one. It may well be an old point, but the point raised by the hon. member for Durban Point is evidently a very good one. [Interjections.]

†To the best of my knowledge, the hon. member for Durban Point did not reflect in any way whatsoever on the State Attorney or any other official. He merely asked a question of the hon. the Minister and I think the hon. member for Durban Point has canvassed that particular matter fully with the hon. the Minister. I shall therefore not raise it again, except to ask the hon. the Minister whether he can let us have a reply and an assurance in that regard that this legislation will in no way further affect the position, more especially that of country attorneys.

The fact that the other Government may want to make use of South Africa’s State Attorney’s office, or any branch thereof, reaffirms the strength of our legal system. It is also highly complimentary of the officials, past and present, that they have manned the offices of the State Attorney in the manner they have. The Government, by making these facilities available to other Governments, is obviously building up enormous goodwill between ourselves and the other States concerned, and we commend the Government for that. In the circumstances we shall support this Bill.

Mr. Speaker, I thank hon. members on all sides for their friendly support of the Bill before the House.

In reply to the hon. member for Johannesburg North, I can just tell him that there was a Bill which made provision amongst other things for certain measures to reorganize the office of the State Attorney. It had nothing whatsoever to do with the provisions that are before the House at the moment. Since we have not yet reached the stage where we could carry through that reorganization, we withdrew the Bill concerned. It had absolutely nothing to do with the Bill before us, or the merits thereof.

In reply to the hon. members for Durban Point and Walmer, I can assure them that no work is being taken away from private practitioners as a result of this measure. Work is simply being carried on with as before. Furthermore, it is also an interim measure which will hold good until the authorities of Venda can make their own arrangements. Furthermore I want to point out that naturally the State Attorney uses country attorneys on a large scale. If this is not enough for the hon. members for Durban Point and Walmer, I want to assure them that I myself was a humble country attorney in my professional life and that in the nature of things, due to my own professional past, I will always keep a sympathetic eye on the interests of the country attorneys amongst others. Indeed, it is always a question of there being direct discussion between the law societies and myself as the Minister concerned, if they are of the opinion that their interests are being affected. Such matters are always given a sympathetic hearing and their interests are also being cared for, as are the interests of all those involved in the judicature. With these few words I also want to thank the hon. members for Ermelo and Roodepoort for their contributions.

Question agreed to.

Bill read a Second Time.

Bill not committed.

Bill read a Third Time.

Mr. Speaker, I move—

The Commission of Inquiry into the Structure and Functioning of the Courts was appointed by the State President on 30 November 1979. The commission brought out an interim report dealing with the backlog in the disposal of appeals in the Appellate Division of the Supreme Court. The commission recommended certain interim measures with a view to decreasing the backlog. A draft Bill to give effect to the commission’s recommendations forms part of the report. The report was tabled in both Houses early in March 1980, and it is therefore unnecessary for me to deal with it in detail at this stage. The Government accepts that appropriate steps should be taken to wipe out the backlog as soon as possible and to prevent a similar situation arising again.

The backlog can only be wiped out by the hearing of more appeals simultaneously. Additional judges of appeal will, therefore, have to be appointed on a temporary basis. The problem was, however, that only three court-rooms are available in the Appeal Court building in Bloemfontein, while with the proposed decrease of the quorum for civil matters and the appointment of additional acting judges of appeal, it would be possible for more than three hearings to take place simultaneously during sessions of the Appellate Division. That, I assume, is why the commission recommended that the provisions in terms of which appeals may be heard elsewhere than in Bloemfontein, should be extended. In the meantime, however, I have received certain offers about accommodation. These offers were investigated and it was found that it would be possible to provide two suitable court-rooms and sufficient office accommodation in a building close to the Appeal Court building. This will solve the accommodation problem, and it will consequently no longer be necessary to implement this particular recommendation of the commission. I shall move at the Committee Stage that clause 1 of the Bill be deleted. I may add that the Chief Justice and the chairman of the commission agree with this.

*The Commission’s recommendation concerning the decrease of the quorum of the Appeal Court for the hearing of civil cases, is accepted. In terms of section 12(1) of the Supreme Court Act, 1959, the quorum of the Appeal Court is, subject to certain exceptions, three judges for hearing criminal matters and five judges for hearing civil matters. In addition the section authorizes the Chief Justice, or in his absence, the senior available judge of the Appellate Division, to increase the quorum of the court if it appears that an appeal pending before the Appeal Court should in view of its importance be heard before a court consisting of a larger number of judges. In that case the hearing of the appeal has to be discontinued and commenced anew before a court consisting of so many judges as the Chief Justice or the senior available judge of appeal determine.

Experience has taught that there are some civil appeals which do not actually involve questions of law and in which the facts are less complicated than in the case of certain criminal appeals. In such cases there are no grounds on which a larger quorum than that of criminal appeals can be justified. If the quorum for the hearing of civil appeals is decreased to three judges, more judges will be available for the simultaneous hearing of appeals. Consequently it is being proposed in clause 2 of the Bill that the quorum of the Appeal Court be decreased from five judges to three judges for the hearing of civil matters. The provision in terms of which the Chief Justice may increase the quorum in certain cases, is being retained and extended further so that he may have this power not only in respect of an appeal which is already being heard, but also in respect of an appeal which is to be heard. Consequently the Chief Justice will be able, with the information at his disposal, to determine in advance how the court for the hearing of a specific appeal is to be composed. We may take it that the Chief Justice will exercise his discretionary powers in terms of the measure in such a manner as not to detract from the authority which the decisions of the Appeal Court have.

For obvious reasons the arrangement that the Appeal Court may sit in a building other than the usual Appeal Court building, is not a satisfactory one in every respect. As is evident from the terms of reference of the commission, however, the intention is to have the entire structure of the courts reviewed and this will entail finding a long-term solution to the problem concerning the Appeal Court as well. Consequently the arrangement to which I have referred is, it is hoped, merely of a temporary nature.

Mr. Speaker, it is a pleasure for me to welcome this Bill on behalf of the official Opposition in so far as it may enable the judicial authority to dispose of appeals that appear before the Appeal Court in Bloemfontein, more rapidly and more efficiently. As the hon. the Minister has just explained, the Hoexter Commission, if I may call it that, which investigated the reconstruction of the courts in South Africa, have issued an interim report in which, firstly, it is recommended that the quorum of the Appeal Court for civil cases also be reduced from five to three judges, as is already the case with criminal cases. This is a new principle, but it is a principle against which we can lodge no serious objection in reality. It is in fact true that appeals coming from three provincial judges will be heard, but this is not sufficient reason to say that three appeal judges will not be in a position to deal with the ordinary, or should I say not extraordinarily complicated questions, at the civil level, just as they do at the level of criminal law, because in all cases the Chief Justice, or one of the judges acting on his behalf, has the discretionary power to determine whether it should not be heard by five judges in certain cases. To my mind, this is a sufficiently safe guarantee that there is not going to be any decline in the authority carried by the verdicts of our Appeal Court, as the hon. the Minister said too.

The second proposal that was made by the Hoexter Commission, is that sessions of the Appeal Court should be able to take place elsewhere than Bloemfontein, and the reason given by the commission, is that judges from the relevant provincial division from which the case for appeal originated, can be appointed as acting appeal judges to hear the appeal on the spot, as members of a court at which an appeal judge presides. Apart from what the hon. the Minister said, there are two problems in regard to the recommendation. The first is that the provincial departments are just as burdened by work as the Appeal Court, and therefore to seek extra service at a provincial Supreme Court to assist the Appeal Court in dealing with its work, seems to me to be the wrong way of going about things.

There is a second reason why we consider the decision of the hon. the Minister to have clause 1 deleted as a good one, and this is that in the nature of things, Bloemfontein has traditionally been the seat of the Appeal Court in South Africa since 1910, and if I were involved in any respect whatsoever, I should be inclined to be very strongly opposed to anything that is done, unless it is absolutely essential, to diminish the status of Bloemfontein as the judicial capital of South Africa. It is true that there was a treaty in 1910 by which Cape Town would be the legislative capital, Pretoria the administrative capital and Bloemfontein the judicial capital. It is not for us to say which one of the three is the most important. All that we must see to, is that Bloemfontein does not come off second best. That is why I say that this is the second reason why I am pleased that the hon. the Minister has decided rather to delete clause 1.

Otherwise, it seems to me, there is nothing in the Bill that is being adversely affected in principle, and with the guarantee and exception which is indicated in clause 2, it is a pleasure for me to tell the hon. the Minister that we support this measure.

Mr. Speaker, I should also like to support the Bill on behalf of this side of the House, and I particularly want to express our support for the fact that the hon. the Minister has decided to withdraw clause 1. We are aware of the problems in Supreme Courts, particularly the appellate division, with regard to the accumulation of work. The interim report of the Commission of Inquiry into the Structure and Functioning of the Courts makes specific mention of the fact that the number of cases increased from 85 to 193 over the period 1968 to 1979. Clause 1 was one possible way in which to get through the accumulated work, and this would definitely have helped, but Bloemfontein is the seat of the appellate division of the Supreme Court of South Africa, and as long as it remains so by statute, I believe that we should not deviate from this. In the language of advocates, the appellate division and Bloemfontein are synonymous, and when an advocate says that he is going to Bloemfontein, it in fact means that he is going to the appellate division. That is unless it is clear from the context that he may be going to watch a rugby match between Northern Transvaal and the OFS, or a test match in Bloemfontein. [Interjections.]

An advocate’s first visit to the appellate division is something which he remembers for the rest of his life, and which I believe, even in the case of the most self-assured advocate, is accompanied by fear and trembling. Even on successive visits, it is not much different for the most experienced of advocates. There are all sorts of formalities which he must bear in mind and which he is expected to carry out to the letter when he enters the peaceful, stately, eminent and dominating atmosphere of that imposing sandstone building in Bloemfontein. That is why I am pleased that the hon. the Minister has found another solution for the accommodation problem.

The appellate division of the Supreme Court of South Africa is the highest of South Africa’s courts, but it is the place where the case of the lowliest of South Africa’s people, whether they be White, Black or Coloured, is heard with the same degree of seriousness and penetration as the case of the most important or the most powerful. As before all the courts of South Africa, everyone is equal here, and whoever is dissatisfied with the verdict of a court a quo can turn to this forum for a final verdict.

The hon. the Minister and his department were obliged to devise plans for increasing the turn over of the work of the appellate division. We agree that an increase in the volume of work cannot always be combated by appointing more judges. Apart from the fact that an increase in work may be seasonal, the source which provides judges is not an inexhaustible one. I believe that the amendment which is now being brought about by clause 2, will do a great deal towards solving the problem of the accumulation of work, if it does not solve it completely. The effect of the amendment will be that 40% of the judges, i.e. two out of every five, per civil case will now be released for other matters. On 31 October 1979 there were 19 appeals outstanding in the appellate division. Ninety-three of them were civil cases. Whereas five judges were required for each of those civil cases, the same volume of work will now be able to be dealt with in half the time by six judges. At the moment eleven judges as well as the Chief Justice are attached to the appellate division. Therefore, if two civil appeals should be on the roll for the same day, it means that no other case, not even a criminal appeal, will receive attention. The effect of this amendment is also in fact that nine judges will now do the work, for civil appeals, for which 15 judges have been required thus far. Consequently, the largest quantity of work is found in this sphere.

Provision is also being made for the exceptional cases, as has already been mentioned in this debate. For instance, at the hearing of an appeal, whether it is a case in criminal or civil law, in which the legal validity of an Act of this Parliament is at issue, 11 judges of the appellate division form a quorum. Provision is also being made for the Chief Justice or his replacement to direct that a case must be heard by a court with more judges, when in his opinion it is so important, and he can also determine how many judges then form a quorum. I believe that practice has taught us that we do not have to be at all concerned about decreasing the number of judges, and I believe that this measure is not only a necessary one, but also a practical and useful one which will contribute towards the better functioning of a very important legal institution in South Africa, and therefore I support it.

Mr. Speaker, I shall not prolong the discussion. The hon. the Minister put his case clearly and I see no reason why I should repeat the obvious.

However, I just want to point out one aspect. The hon. the Minister pointed out that now that other sites are available, it will not be necessary to retain clause 1. Can he give us the assurance that the new sites will be adequate for eliminating the backlog? I am asking this because it is a matter of general concern that there has to be such a long delay before a case can be heard in the Appeal Court. I hope that, apart from simply saying that other sites are available, he can also say to which extent the availability of the additional sites will make it possible to eliminate the backlog. We support this Bill in view of the fact that clause 1 will be withdrawn as moved.

Mr. Speaker, it is absolutely essential and vital that the backlog of appeals be eliminated as a matter of extreme urgency as the persons who are affected are sometimes affected to the extent that they suffer extreme hardships. From the hon. the Minister’s motivation I could hear that he fully grasps this problem. That is why the legislation is now being amended in such a way as to permit the backlog being eliminated. We all hope that the backlog will indeed be eliminated as a matter of extreme urgency.

As we have heard from the hon. the Minister, the Bill has been introduced as a result of recommendations by a commission that sat on this matter, and without delaying the proceedings any further, I should like to support the Second Reading of this Bill.

Mr. Speaker, concerning the statement which the hon. member for Johannesburg North made with regard to the status of Bloemfontein as the judicial capital, I want to put it very clearly that when this recommendation was referred to me in the first instance, I agreed to clause 1 only on condition that it would be an interim arrangement, until 31 December 1983. I want to state very clearly that, due to my origin and for understandable reasons, I would never have agreed that the status of Bloemfontein as the judicial capital could be jeopardized at all in the future.

Furthermore I want to assure the hon. members for Waterkloof, Durban Point and Walmer that I am very grateful to them for their support.

In connection with the question of the hon. members for Durban Point and Walmer as to whether I can give the assurance that the new arrangement will be able to eliminate the backlog, I want to say that of course we shall do our best to eliminate the backlog. If we cannot do so and if the Hoexter Commission does not make a recommendation in good time in regard to the restructuring of our courts in order to be able to solve our problems finally, we shall of course have to take another look at the matter when it becomes clear to us that we are not able to solve the matter completely. However, today I just want to give the assurance that this is a matter about which I myself am very sensitive and that I shall give my attention to it at all times. If there is any indication whatsoever that the work will not be cleared and that additional measures will have to be taken, I shall take those measures.

Question agreed to.

Bill read a Second Time.

Committee Stage

Clause 1:

Mr. Chairman, I move—

Title:

Mr. Chairman, I move the amendment printed in my name on the Order Paper, as follows—

Amendment agreed to.

Title, as amended, agreed to.

House Resumed;

Bill reported with amendments.

Bill read a Third Time.

Mr. Speaker, I move—

On 11 January 1980 a draft liquor amending Bill was published for information and for comment in the Gazette. The provisions now contained in the Bill before the House, appeared in it, but as hon. members may know, provision was also made in it for a prohibition on the marketing of wine by wine farmers in certain types of containers generally known as “swart varkies”. As the result of representations made to me I have decided, as indicated in a Press statement recently, not to proceed with that legislation during this session. The matter will be further investigated during the recess by the Department of Justice in consultation with all other interested parties. As I also indicated in my Press statement, I am of the opinion that the marketing of wine in 20 litre plastic containers is undesirable and I trust that the marketers will take note of that at this early juncture.

The Bill before you is probably the shortest of its kind to be introduced in the past 20 years.

Firstly there is a provision dealing with the remuneration which private and co-opted members of the Liquor Board receive for their services to the State. It has transpired that in terms of existing provision in the Liquor Act such members cannot be remunerated for their services but can only be refunded the reasonable expenses which they incur in connection with the affairs of the board. The duties performed by the private members are comparable with the duties of assessors in criminal cases. They are frequently expected to carry out certain duties other than the normal board duties such as visiting licensed liquor premises for example and reporting on them. Quite often private members are farmers or businessmen and professional people who hardly have the time to devote to matters other than their own private interests. It is unfair to expect them to give up their energies and time to the interests of the State without any remuneration. This deficiency is now being rectified. As they have also been paid a daily fee of R20 in addition to travelling and accommodation expenses since 1975, this arrangement is now being placed on the Statute Book with retrospective effect from 1 January 1975. The particular amendment is contained in clause 1.

†Section 72 of the Liquor Act makes provision for the grant of an application for what has come to be known as international status. Applications of this nature must be made de novo every year during March as no provision exists for a renewal procedure. Since 1978 liquor licences are no longer renewable annually on application, and it has been decided to introduce a somewhat similar procedure in respect of international status authorities. The authorizations, once granted, will remain in force on a permanent basis as is the case with ordinary liquor licences, subject of course to payment of an annual fee. Provision already exists in the Act for the withdrawal of the authority should such a step become necessary. Whereas all applications for international status must at present be made during March of every year, it has been decided also to change this procedure. In future such applications will be made during the months in which applications for new liquor licences in respect of the various provinces are to be submitted. The relevant provisions will be found in clauses 2, 4 and 10.

Section 40 of the Act provides for the fees which are payable in respect of the various classes of applications. So, for example, an applicant applying for the holding of a special meeting of the Liquor Board must pay an application fee of R200. In the event of the application for the special meeting being refused, the Act provides that 75% of the fees paid in respect thereof must be refunded. Many frivolous applications for special meetings are made and this gives rise to a lot of really unnecessary administrative work. The reason for this can probably be attributed to the small fee which is payable. In terms of the proposed new section 40(1)(b) it is proposed to delete the provision dealing with the refund of 75% of the application fee for a special meeting.

*In clause 5 the repeal of the proviso to subsection 167(1) of the Act is being proposed. This section enables lessors and lessees of licensed premises to turn to the Liquor Board for legal assistance under certain circumstances. After reflecting at length on the deletion of the proviso again, I believe the proviso should rather be retained. Therefore, I shall move that that clause be deleted during the Committee Stage. Certain provisional clauses, which contain consequential amendments, for example 3 and 8 will then be deleted as well.

Clause 6 provides that any person acting on the authority of the Minister of Police, may from now on appoint designated Police officers to perform certain duties which arise from the Act. This amendment is being effected at the request of the Commissioner of the S.A. Police, for under the present dispensation an application has to be submitted to the Minister of Police every time a designated police officer is transferred or has to perform temporary border duty and a substitute has to be appointed in his place. The power of delegation for which provision is being made will enable the procedure for designations to function more smoothly because the Minister will not continually have to be encumbered with a purely administrative duty.

Section 190 deals with the forfeiture of liquor, vehicles, etc., seized by the Police. As a result of recent police action applications for the return of such articles have increased significantly and the consideration of such applications takes up a great deal of the Minister’s time. I believe it is unnecessary that a Minister, whose time is already fully occupied, has to consider an application for the return of a few bottles of beer or a few jars of wine, for example. Clause 7 makes provision for a power of delegation in this regard so that any person acting on the authority of the Minister may be empowered to direct how the liquor and goods seized should be dealt with. The delegated persons will be senior officials and a restriction to certain classes of goods is being contemplated. Section 210 of the Act provides for the exemption of certain organizations, for example the Defence Force, the Police Force, the SABC, the National Parks Board etc., from the obligation of holding a liquor licence. Representations have been made by the department involved that provision be made in the Act for liquor to be sold in the College of Forestry at Saasveld in the George district. The appropriate action for any departments with a need in this regard would perhaps be for their officials to form clubs and then obtain liquor licences. However, it is often impossible for the staff of Government departments, because of their small numbers and the remoteness of their posts, to form a club.

Clause 9 proposes to provide for the liquor requirements of officials. Because of the large number of Government departments it is not practical to enumerate every deserving department in the measure. Such an arrangement would in turn lead to further ad hoc requests for statutory amendments. Comprehensive provision is being made so that all departments can be included and the granting of authorization will depend on the needs that a department is able to identify.

I want to point out that the provision of liquor facilities for public servants is nothing new. We are all acquainted with the restaurant in the Hendrik Verwoerd building. The Civitas building in Pretoria and the Transvaal Provincial Administration building have similar facilities. The Police, the Prisons and the Defence Force have for many years had canteens and lounges where liquor is served. The control exercised over all these places is excellent and presents no problems of any kind.

Mr. Speaker, the hon. the Minister referred to the shocking conditions that have arisen as a result of the sale of liquor in 20-litre containers, particularly to persons who, owing to their socioeconomic background and other reasons, are incapable of controlling their liquor consumption—which leads to abuse. After representations had been made to the hon. the Minister, he very seriously considered the prohibition of the sale of liquor in such containers. One can accept that the trade, as a result of the representations made to it, gave the hon. the Minister the undertaking that in future liquor would no longer be sold in this way. Of course we hope that this will in fact be the case, and we shall be watching with interest to see whether that injustice, which has been done to that particular community by making liquor available to those people in that quantity, will be eliminated. If not, I should then like to appeal to the hon. the Minister to take steps as quickly as possible to prohibit that type of container if this may appear to be necessary.

The Liquor Amendment Bill, which we are dealing with today, is really of a technical nature, and according to my study of it the amendments contain no new principles. The legislation is concerned in particular with the regulation of the procedure which is to be adopted when application is made for the consumption of liquor by persons who are not White, on premises where liquor is already being provided to Whites. As party we are, of course, in favour of facilities being thrown open, and consequently we should like to support this Bill.

Clause 1 provides that members of the Liquor Board who are appointed, as well as members who may be co-opted by the board, may receive allowances as well as remuneration. We agree with the hon. the Minister that if persons are appointed to perform an exacting task, such persons must be remunerated for their services. This is correct and we have no objection to it. If one wants to get good people who are going to dedicate themselves to the cause in connection with which they have been asked to render service, the State must be prepared to remunerate them. The provision, according to the amendment, is thus that the Minister shall determine the scale of remuneration in consultation with the Minister of Finance. Although we support this, it would be interesting if the hon. the Minister could give us an indication of the scale in accordance with which these persons will in future be remunerated.

Clause 2 stipulates that the drafting of the agenda of the Liquor Board is to include applications by licence holders of White on-consumption units in order to allow persons who are non-White to consume liquor there as well. We approve of this amendment as well. Meetings of the Liquor Board are the appropriate occasions on which an application of this nature may be investigated and recommendations made.

The clause that has been deleted, i.e. clause 5, is in fact the clause which posed certain problems for us. We found it difficult to understand how the lessor of premises could get rid of a lessee who was misusing the premises or was not paying his rent. I really wondered how the legislation would make provision for getting rid of such a lessee. However, by the deletion of that clause, and with the other subsequent deletions, the hon. the Minister eliminated that problem for us. Thus we accept it as such.

A change contained in clause 3 provides that whereas the applicant for a special meeting of the Liquor Board at present receives a refund of three-quarters of his R200 if the meeting is not convened, this amount will not be refunded to him in future. I wanted to ask the hon. the Minister whether it was not rather drastic simply to decide that an applicant is not to be refunded if the meeting is not convened, but the hon. the Minister has already satisfied me in his explanation in this regard. That R200 is not a large sum of money. If it were the case that people were applying for a special meeting to be convened for trivial reasons, one must accept that they would in that case simply have to forfeit that small sum of money. For the sake of interest it would be worthwhile if the hon. the Minister could give us a few examples of the kind of trivial application that has been made to the Liquor Board. One should just like to know against what background a decision of this nature was taken.

As far as clause 4 is concerned, the legislation provides that all applications for the on-consumption of liquor by persons who are not White, should be lodged at least three months prior to 30 June. In terms of the proposed amendment the applications in the various provinces must now be lodged at different times. The period has also been reduced from three months to two months before the board is due to sit. We regard this as an improvement and it meets with our approval. Arising from this, and since authorization to serve non-Whites elapsed at the end of December, fees for the authorization must of course, be paid pro rata. One therefore assumes for example that in the Cape Province where the board meets earlier and where the authorization will thus apply for a longer period before the end of December, the fees in question will have to be more pro rata.

We have no problem with clause 6. It is generally accepted that senior officials of the various departments as well as senior police officers from time to time have to act on the authority of the Minister. We experience no problem with this and agree with it.

Clause 7 provides that in the case where the Police or another authority have seized a vehicle, container or whatever, under the suspicion that it was used in connection with an offence in terms of the provisions of the Liquor Act, the owner may apply to the Minister in terms of section 190(1)(b) for exemption from those contingencies. In this case the hon. the Minister may now also transfer that authority to a senior policeman and we accept that this is quite in order. This is the same principle to which I referred previously.

With regard to clause 9, a whole series of public bodies and persons are at present being exempted in terms of the provisions of section 210 from the licencing provisions of the Liquor Act. This exemption is now, as I read it, being extended to all Government departments. I should like to know from the hon. the Minister whether the freer availability of liquor to all the departments has been cleared with the liquor trade, because I must accept that this could eventually mean that many more clubs consisting of Public Servants in particular will come into existence than is at present the case. In other words liquor will now be made available to Public Servants without the departments in question having to comply with the restrictions laid down by the Liquor Act. As we are well aware, the Public Servants in South Africa are not merely a handful of people, and I should like to know from the hon. the Minister whether or not this point has been cleared with the liquor trade.

Clause 10 provides that a licence holder who serves liquor to Whites as well as non-Whites will in future have to have two licences in fact. Thus the licence holder will have to pay for two liquor licences, if I understand the legislation correctly. I am not referring to a large sum of money, but the question that comes to mind and which I want to put to the hon. the Minister, is whether it is really necessary that, after the hotel, restaurant or whatever it may be has met the requirements, has received the necessary permission, its premises have undergone the necessary inspection, etc., it will subsequently have to continue to pay for a liquor licence for both Whites as well as Blacks every year.

Mr. Speaker, it is to be welcomed that attention is still being devoted to the improvement of the Liquor Act. On behalf of hon. members on this side of the House I am grateful that the official Opposition, through the hon. member for Wynberg, has pledged its support to this legislation.

The hon. member referred to the problem which arose with regard to the so-called “swart varkie”. I am pleased that the hon. the Minister agreed to allow this aspect of the legislation to stand over, because it is undesirable to overgovern and for local enterprise to be curbed in various ways. Furthermore it is also important and a good thing as well that manufacturers producing these containers should be afforded the opportunity of getting rid of their stocks, so that this situation may now be phased out.

It is of course understandable that certain snags will arise in the practical implementation of the Liquor Act, which was drastically amended and consolidated in 1977, and that amendments will have to be effected. As explained by the hon. the Minister, all that the amendments really amount to are several rectifications, not only of possible differences in interpretation, but also of procedures which could give rise to abuse. A good case has for instance been made out in this regard for decreasing or terminating completely the unnecessary applications for special meetings of the Liquor Board. I am pleased that the hon. member for Wynberg is also convinced that this is a sound argument.

It is logical too that applications for international status should take place on a non-recurrent basis, something which is also in accordance with most other applications for licences under the provisions of this Act.

Important provisions appear in clauses 6 and 7 of the amending Bill. As far as clause 6 is concerned, this is simply a case of more effective administration and a smoother functioning of those matters in the Department of Police.

As far as clause 7 is concerned, this delegation could mean that important discretionary functions of the hon. the Minister may be transferred to others. Consequently I am pleased that the hon. the Minister has given the assurance that these powers will be used with care and that the persons exercising these powers will be responsible persons.

However, to the licence and the practitioner, the Liquor Act remains in many respects a measure which gives rise to unnecessary red tape and which is a waste of time and money. I am thinking, for example, of interim applications, even in the case of a move from one building to another on the same premises. The administrative requirements which are laid down here are matters that do not really belong here and could be discussed further on another occasion, but I believe it is as well if the hon. the Minister were aware that problems are still being experienced in respect of applications for licences, the granting of licences, the granting of authorities, etc.

With regard to clause 9 the hon. member for Wynberg envisaged the possibility of problems with regard to Government departments because there are so many Public Servants, and of this possibly being detrimental to the retailer. I think that once one has accepted the principle of a non-recurrent application, a Government department has obtained certain powers in terms of this legislation. In such a case it would be unfair to withhold such a concession from other parts of the Public Service. Moreover there is still the safeguard that all applications in this regard must be made to the hon. the Minister. I think this Bill deserves the support of all hon. members.

Mr. Speaker, the hon. the Minister had a good try at slipping past clause 1 of the Bill, but I am afraid that he did not get away with it. Fact is that clause 1 shows that the Government has made a mistake. I think it is always better simply to admit it when one has made a mistake. What has been happening, is that members of the Liquor Board have been paid a remuneration which was not permissible in terms of the legislation, and unless this legislation was now amended, they would have to refund that remuneration. I have no objection to members of the board being remunerated. I believe that that is absolutely fair, but I merely want to make it clear that the hon. the Minister did not get away with it as simply being a nice, generous gesture and that he was now going to pay remuneration as well as reimburse expenses. I must say that I am sorry that the hon. the Minister of National Education is not here. He could have learnt a lesson, because when certain teachers were overpaid they had to refund what they were overpaid. The hon. the Minister of National Education did not introduce a retrospective clause, going back in this case to 1 January 1975, to protect them. Therefore I think the members of the Liquor Board can be grateful to the hon. the Minister that he has taken account of the fact that by making it retrospective he saves them R20 a day—I think this was the figure the hon. the Minister mentioned, which was queried by the hon. member for Wynberg— for each day that they had sat since 1975.

There is one other aspect to which I wish to refer and that is that now part of what were known as allowances becomes remuneration. I should like to know what the tax position is in relation to this, because an allowance is tax free whereas remuneration is taxable. What is the position with regard to the remuneration section of the allowances that have been paid for the last five years in regard to their liability to tax? As I read it now, this is a remuneration plus an allowance.

Nevertheless we are not going to oppose this clause. Merely let it be clear that we have not missed the fact that this was a slip-up on the part of the department.

The other provisions, which I do not intend to detail clause by clause, are details which we support. I have no worry about the delegation of authority nor to Government departments, licences because it is clear that this can only be a licence for a place where food is served in the form of a restaurant canteen or buffet. Therefore this can only apply to places where it will be justified and required, and we support that provision.

The withdrawal of the proposed deletion of the proviso dealing with lessor/lessees is one on which we agree, but the hon. the Minister has not motivated it. He has merely said he has reconsidered it, and merely to place it on record, I should be grateful if the hon. the Minister would motivate why he first introduced the deletion of the proviso protecting a lessor against abuse of his premises by a lessee and has now withdrawn the withdrawal or cancelled the cancellation! I should be interested to know what the motivation was behind that.

I now come to two other clauses, and I want to say at once in respect of clause 10 that the NRP will oppose it. It will oppose clause 10 and to a lesser extent clause 2, although clause 2 is tied to an improvement, which is the removal of the need to renew annually and instead automatically renew international status for hotels. That we obviously support, and therefore we shall not object to the clause, nor to the fact that a fee will have to be paid in the first instance. But when we come to clause 10, this reflects an attitude of mind in Government, an attitude of mind that as soon as one serves a non-White, a person of another colour, in a hotel, it becomes something that has to be penalized by paying a double licence. We believe it should be the right of the owner of an hotel to determine whom he will serve or not serve and, if there are to be any restrictions on that, they should be applied only by the local authority. We object in principle to the fact that a Minister, a Minister earning over R40 000 a year, has to sit there as a Minister of State and determine whether a hotel should be allowed to serve a Black man or not. I do not think that is what Ministers of the Cabinet are appointed to do. I believe Parliament should establish principles and leave those principles for application, not by ministerial decree, but by machinery provided by law. So, firstly, I think the practice is wrong that the hon. the Minister has to determine year after year whether the Town House Hotel should be refused its application for international status while another hotel should be granted permission. So, in the first place, I think that is wrong, the more so because this particular clause reflects the thinking that because one lets a hotel serve a Black man one must double the licence fee the hotel must pay.

In other words, one imposes a penalty for serving South African citizens of another colour. One is turning citizens of another colour into a reason for penalizing a person’s supplying them with a normal hotel service. We will therefore oppose clause 10 when it comes to the Committee Stage—though we will support the Second Reading—because, to our minds, this clause is part of a mental approach which is in toto wrong. It reflects a thinking in Government ranks and administration which we believe is wrong. It is not the question of whether R200 is going to break a hotel or not. It will not break them. However, many of them do it as a public service, not because they are going to make all that profit out of it. They do it as a public service to the travelling public, to foreign visitors of colour to this country and to sporting teams in terms of the Government’s sports policy. The hon. the Minister of Tourism is here. His Government agrees to mix sporting teams travelling and staying in hotels in order to play in sporting competitions. Now the hon. the Minister’s colleague places a 100% penalty on hotels which accommodate those teams which his own Government allows and which we agree should be allowed to take part in sporting competitions. The hon. the Minister of Tourism is now smiling because he has found an ally who is making it more difficult to serve the exception from the rule in which he believes. We should be making it easier, not harder, to provide services for all our people. So, while the NRP will support the Second Reading, unlike the official Opposition we shall oppose clause 10 because of the principle and attitude which it reflects on the part of the Government and its handling of the question of people of colour in the country.

Mr. Speaker, I want to thank all hon. members most sincerely for their support of the Second Reading of this Bill. In the first instance I want to reply to the questions put by the hon. member for Wynberg and I want to confine myself to the question of the 20-litre containers.

I made it very clear in my Press statement that I agreed with the KWV that the 20-litre containers were undesirable for many reasons, inter alia, because of the liquor abuse associated with them. The reason why I am not proceeding with this particular legislation at this stage is simply, in the first instance, that it has been brought to my attention that the measure has not been discussed with all sectors of the trade. After all, they must at least be consulted in the matter. But even if I had had to proceed with the legislation this year, it would in my opinion have been fair, to have waited for more or less a year before the legislation came into operation, for the simple reason that there are a considerable number of producers with a large supply of the containers in which their capital has been invested. My Press statement was simply a notice to them to phase out the containers. It is most definitely the intention, after further consultations, to proceed with this legislation which prohibits 20-litre containers next year.

As far as the question of the R200 licence fee for special meetings is concerned, I am afraid that I cannot now, on such short notice, furnish specific examples. Nor would it be fair if I furnished specific examples for had I done so it would only have been effective if I had mentioned names. However, the Liquor Board has assured me that as far as these special applications are concerned, there are people who take a chance and who, because the application fees are low, apply in the hope that their applications may be successful. I think it is as well that the provision that the whole amount may be forfeited is being inserted here.

I think the hon. member made a mistake. Perhaps it was merely a slip of the tongue. The delegation in respect of the return of liquor, vehicles, etc. will not be one which will be made to the police, but one which the Minister of Justice, or the Minister who will control liquor affairs in future, will make to senior officials in his own department. Perhaps the hon. member referred mistakenly to the police.

Furthermore I also want to make it very clear that this will be a limited delegation. Articles of a value above a certain amount, for example vehicles, will continue to be the subject of direct appeal to the Minister and not to a delegate.

As far as clause 10 is concerned, it has already been indicated that this matter will be debated further during the Committee Stage. I think we may safely allow it to stand over until then.

As regards the question of remuneration, to which the hon. member referred and about which he asked questions, I want to say that at present this amounts to R20 per day. However, it is being envisaged, if the necessary permission can be obtained from the Treasury, to increase this amount. However, at this stage I cannot say what the amount is to which it will be increased.

With reference to the question asked by the hon. member for Durban Point on the same matter, I want to say that it is not, of course, for me to give finality on this matter. The member of the Liquor Board who receives remuneration and the Department of Inland Revenue have to determine the amount on which a person must be taxed. I do not want to give finality on that. The principle which is relevant here is probably that if an allowance is remunerative, a person should not be taxed on it, but that, if it is an additional income, he must in fact be taxed on it.

As far as section 167 …

What about the recovery of money if we do not pilot this Bill through Parliament?

But surely this Bill will be passed. After all, all hon. members who spoke said that they supported it. It is thus a very hypothetical question which the hon. member has now put. As far as section 167(1) is concerned, there was, after the Bill had been drafted, doubt in my mind as to whether this matter had been given careful consideration. We are concerned here with a question of statutory protection which runs parallel to civil judicial protection. I am withdrawing it at this stage merely to be able to re-examine the whole affair in depth. If it is necessary in future we shall introduce this legislation again. A recent decision was also made by the Supreme Court in this regard, but it came to my attention at a late stage. I shall first have to consider all the implications of this decision. Under these circumstances I have decided to withdraw the subsection in question.

Question agreed to.

Bill read a Second Time.

Committee Stage

Clause 3:

Mr. Chairman, I move the amendment printed in my name on the Order Paper, as follows—

Amendment agreed to.

Clause, as amended, agreed to.

Clause 5:

Mr. Chairman, I move—

Agreed to.

Clause negatived.

Clause 8:

Mr. Chairman, I move—

Agreed to.

Clause negatived.

Clause 10:

Mr. Chairman, I am not going to repeat our arguments advanced during the Second Reading debate. We object to this clause because it introduces a penalty licence fee by doubling the amount payable for a licence for a hotel which has international status. Having had no reply from the hon. the Minister and no explanation of this and having stated our point of view very clearly during the Second Reading debate, we shall vote against this clause. I should, however, be interested to hear whether the hon. the Minister has anything to say about it.

Mr. Chairman, in the course of the Second Reading debate I also asked the hon. the Minister some questions about this clause. Among other things, I asked him whether, in terms of the present wording of the legislation, a liquor dealer will have to pay for two licences, i.e. for a licence for Whites and for a licence for people who are Black as far as the restaurant or hotel is concerned. The hon. the Minister did not reply in detail, or perhaps not at all, to the questions I asked. I must admit that the points raised by the hon. member for Durban Point are valid ones. He made out a good case. Unless the hon. the Minister gives satisfactory replies to the questions, we shall also vote against the clause.

Mr. Chairman, I understand that the position has for some time been that hotels which obtain licences of international status have always had to pay a double licensing fee. I understand that this has been the practice. The point now comes to mind whether this has been done legitimately or not. If it has suddenly become necessary to amend the Liquor Act to bring in a double licensing fee of this nature—a practice which, to my knowledge, has been followed in the past—I want to know from the hon. the Minister whether the Liquor Board has been exceeding the fees which it has been entitled to charge in the past. I notice with interest that this clause does not appear to be a retrospective clause as is clause 1, and I should therefore like to know whether all the institutions which have been paying double licensing fees in the past, will be entitled to have a refund of their money.

Mr. Chairman, I think the hon. member for Durban Point has reacted to this whole question with unnecessary heat. The point is that there is no double payment. The man concerned is not being penalized.

But he is paying double for his licence now.

Mr. Chairman, the department assures me that the man is not being penalized at all.

He is paying a double fee anyway.

Mr. Chairman, the Act does not provide for a licence fee for international status. There is no such provision in the principal Act. There is a provision for an application to be made, but there is no provision for a fee, not even for the application. It is only now being introduced in clause 2 of this Bill. That is a fee for applying for international status. Prior to this an application was made and that was granted. If a charge was made it was not being made in terms of the Act. In clause 10 we are now introducing provision for the licence, and I quote—

This only applies to an on-consumption licence—

Loud and clear! It doubles the licence fee. If he was paying some other fee, some other amount under some other provision which is not in the Act, it was either illegal or he is still going to be paying that amount. Therefore this is an additional amount over and above any amount he was illegally being made to pay. There is no provision that I can find in the Act for a licence or a fee of any sort in respect of the granting of international status.

If the hon. the Minister will tell us under what provision any licensee was paying the same amount of R200 which is now being added to this normal hotel licence fee, I should be very interested to hear that. I cannot see it, and if there is another provision which I have not found, even in some back street of the Act, that must still apply. This then still becomes an additional amount over and above what he was paying before.

Mr. Chairman, I repeat that my information is that this Bill does not place any additional financial burden on the man concerned. In this connection I want to refer the hon. member for Durban Point—he asked for a reference—to section 72(3)(e) of the Act concerned. If the hon. member does not have time to study it now, he is welcome, as far as I am concerned, to raise it during the Third Reading.

No, I have studied it. It is what clause 2 is about. Now it comes under the application for a licence. I am referring to section 72(3) of the principal Act. It is now being introduced into the Bill with regard to applications for licences. I have read it, and it does not involve any payment.

My information is that the legislation concerned does not impose any additional burden on the people concerned.

Mr. Chairman, I do not wish to complicate the hon. the Minister’s position any further, but in terms of clause 4(2), this House has already approved the principle of payment for the authority. Clause 10 only provides for insertion into the schedule to the Act. The main provision has already been approved under clause 4(2). So I do not know what the present argument is all about.

Mr. Chairman, I am sorry, but we seem to be talking at cross-purposes. The basic point is—and now we are not discussing ideological matters which the hon. member for Durban Point wishes to introduce—that according to my information, this proposed provision will not impose any additional burden on the persons concerned. Therefore I cannot help hon. members any further in this respect.

Mr. Chairman, could the hon. the Minister perhaps reply to the query I put to him earlier. If we are now proposing to introduce the provision contained in clause 10, it is obvious that that provision did not exist in the past. We are therefore adding to schedule 1 of the principal Act. The practice has been, however, as I am informed, that licensees of this nature have been paying double licensing fees in the past, and it would therefore appear to me that if we are having to include this particular provision in schedule 1 of the principal Act, the charging of the fees in the past, if such fees have been charged, has been done in an irregular manner and has not been justified. I should like to know how it has been justified in terms of the existing Act, and I should like to know in terms of what schedule those persons were charged a double fee. I cannot understand why we are inserting this particular provision if the practice—and it was a regular practice—had been carried out in the past. If double licensing fees were charged in the past, and this was done with full authorization, there is no need for clause 10 of this amending Bill. So one cannot have it both ways. Either one inserts this provision to regularize the position of charging a double licence fee, which in any event is not a particularly desirable practice, or else the fact that one is inserting it must mean that it is a new provision, which in turn means that the double licence fees charged in the past were surely irregular. Further, if this is the case— and I can only assume that it must be—what is going to happen to what I assume are large sums of money paid irregularly to the board in the past in irregularly charged double licence fees?

Mr. Chairman, the reply to what the hon. member said, is that these fees were not charged illegally. They were charged in terms of the section I have just mentioned to the hon. member for Durban Point. I repeat that I cannot help hon. members any further. I can only say that no additional financial obligations are being imposed on the persons concerned by means of this clause.

Mr. Chairman, if this was done regularly in the past, what is the need for this clause in the Bill now?

The hon. member should look at clause 4(1)(e).

Mr. Chairman, I shall not go into the question of which provision this is replacing. All I should like to know from the hon. the Minister is why the increase is necessary. Let us forget about the question of whether it was done illegally in the past. I want to know why, when an international licence is granted, this has to be accompanied by an increase in the annual licence. I can understand it when it comes to the application. The hon. the Minister referred to cases where people might apply for mischievous reasons. Here we are concerned, however, with an enterprise which already has a licence and approval. These are bona fide cases, therefore, and not people taking a chance. Why should there be an increase in this case at all? I should be glad if the hon. the Minister could provide some further information about this. I cannot see that this has anything to do with additional expenditure to the State, administrative or otherwise, where the person concerned has already obtained an international licence in 1979 or 1980. According to the new system, therefore, it should actually be a formality. Why should this increase be necessary in such a case? That is what is bothering us.

Mr. Chairman, I should like to take my point further. The hon. the Minister has replied to me that this was necessary to replace section 4(1)(e). I would be grateful if the hon. the Minister could tell me where section 4(1)(e) was deleted. Perhaps I am misreading the Bill, but I do not see where in this particular amending Bill section 4(1)(e) is deleted.

The hon. the Minister amended his comment. [Interjections.]

Sir, the hon. members of the NRP are trying to make it easier for me, but I should like the hon. the Minister to reply to this because I understood him to say that this provision replaces section 4(1)(e). I would like to know what the need is for replacing it if in fact section 4(1)(e) has not been deleted.

Mr. Chairman, I intended saying that section 4(1)(c) deletes paragraph (e).

I do not have another speaking turn, but I am more confused than ever.

I am sorry, but I did not quite understand what the hon. member for Durban Central was referring to. However, the point is that there are many kinds of authority for which additional fees are charged. It is a recognized principle, if that is what he was referring to.

Mr. Chairman, for what practical reason would it be necessary to charge an increased licence fee?

An increased licence fee for what?

For an international liquor licence. I can understand that there may be administrative reasons and that the State may require an increased licence fee because it does not want people who are taking chances. But after inquiries have been made and the licence has been granted, the only question is whether liquor may be sold on the premises or not. This being the case, what is the reason, and I am not even trying now to regard this from the ideological point of view, for the department to say that because a person has a licence of this kind, an increased licence fee must be charged year after year? This is the problem that we are opposed to in principle. We are not talking now about discrimination and about wanting to discourage international liquor licences in this way or to penalize the licensee. We are talking now about the differentiation, where this is merely concerned with the privilege. The licensee enjoys a privilege, but he has deserved it because he has complied with all the requirements for obtaining an international licence. But now the licensee suddenly has to pay an increased licence fee in order to retain this privilege. That is what it is all about. I could have understood it if the hon. the Minister had told me that it involved the State in extra administrative expenditure, or something of this nature, but I simply cannot see why the hon. the Minister should now try to apply this differentiation. At whose recommendation is this being done? Did the hon. the Minister and his department not consider that people who wanted to be malicious could perhaps misinterpret this? It is for this reason that we are opposed to this aspect of the legislation. Whether it was applied legally or illegally in the past is not relevant now, because we are looking at the road ahead. It is in this spirit that I am asking the hon. the Minister to give us an explanation of this aspect.

Mr. Chairman, I repeat that the amendment does not impose any extra burden on the applicant concerned. The principle of having to pay extra for additional authorities is as old as the legislation itself. People have to pay extra for an off-sales licence, for example, and this surely applies to all other authorities as well. It is a recognized principle. I cannot furnish any better reply than that.

Mr. Chairman, through the interchanges here I concede that it is possible that the hon. the Minister is correct in saying that an additional amount was paid, but it was not in schedule 1 and it was not specifically deleted here. However, there is a provision which makes this possible. But that does not remove the objection raised by the hon. member for Durban Central that the principle is wrong. This is not an additional licence. If one has an off-sales, it is a separate business. An on-consumption licence provides for liquor to be served in the bar or the lounge of the hotel. If one has an off-sales licence it is a completely different business and is conducted on other premises. It entails selling the product by the bottle. An on-consumption licence provides the right to serve liquor in an hotel or in a restaurant where one is serving guests. It is not even as if one is going to have a separate bar, or a lounge. Liquor is going to be served in the same lounge from the same bar to the customers of the hotel.

The only difference is that some of those customers can be Black. But it is not an additional licence. It is not as though it is a new or additional business, and this is the principle to which we object. Liquor is being served from the same business, from the same hatch, by the same waiter to a group of customers sitting around a table or standing at a bar, but the hotelier is charged twice the licence if one of those customers is Black. The principle is wrong. Even though, technically I can see, by cross-referencing, that an additional fee was payable, that does not now make it right now that we are amending the legislation. We should rather be correcting things which are wrong.

Mr. Chairman, I can only tell the hon. member for Durban Point and the hon. member for Durban Central once again that we are not changing any principle here. This is an existing principle and I am not prepared at this stage to tamper with that principle.

Clause put and the Committee divided:

Ayes—102: Aronson, T.; Badenhorst, P. J.; Ballot, G. C.; Barnard, S. P.; Blanché, J. P. I.; Botha, C. J. van R.; Botha, L. J.; Botha, S. P.; Clase, P. J.; Coetzer, H. S.; Conradie, F. D.; Cronje, P.; Cuyler, W. J.; De Beer, S. J.; Delport, W. H.; De Villiers, J. D.; Du Plessis, G. C.; Durr, K. D.; Durrant, R. B.; Geldenhuys, A.; Geldenhuys, B. L.; Geldenhuys, G. T.; Greeff, J. W.; Grobler, J. P.; Hartzenberg, F.; Hayward, S. A. S.; Hefer, W. J.; Heine, W. J.; Heyns, J. H.; Horn, J. W. L.; Hugo, P. B. B.; Janson, J.; Janson, T. N. H.; Jordaan, J. H.; Koornhof, P. G. J.; Kotzé, S. F.; Langley, T.; Le Grange, L.; Le Roux, F. J. (Brakpan); Ligthelm, C. J.; Ligthelm, N. W.; Louw, E. van der M.; Malan, G. F.; Malan, W. C. (Paarl); Malan, W. C. (Randburg); Marais, J. S.; Marais, P. S.; Mentz, J. H. W.; Meyer, R. P.; Munnik, L. A. P. A.; Myburgh, G. B.; Niemann, J. J.; Olckers, R. de V.; Poggenpoel, D. J.; Potgieter, S. P.; Pretorius, N. J.; Rabie, J.; Rencken, C. R. E.; Rossouw, D. H.; Rossouw, W. J. C.; Schlebusch, A. L.; Scholtz, E. M.; Schutte, D. P. A.; Scott, D. B.; Simkin, C. H. W.; Smit, H. H.; Snyman, W. J.; Steyn, D. W.; Steyn, S. J. M.; Swanepoel, K. D.; Swiegers, J. G.; Tempel, H. J.; Theunissen, L. M.; Treurnicht, A. P.; Treurnicht, N. F.; Ungerer, J. H. B.; Uys, C.; Van Breda, A.; Van den Berg, J. C.; Van der Merwe, S. W.; Van der Merwe, W. L.; Van der Spuy, S. J. H.; Van der Walt, A. T.; Van der Westhuyzen, J. J. N.; Van Eeden, D. S.; Van Rensburg, H. M. J. (Mossel Bay); Van Rensburg, H. M. J. (Rosettenville); Van Vuuren, J. J. M. J.; Van Wyk, A. C.; Van Zyl, J. G.; Van Zyl, J. J. B.; Veldman, M. H.; Venter, A. A.; Volker, V. A.; Wentzel, J. J. G.; Wilkens, B. H.

Tellers: J. T. Albertyn, J. H. Hoon, F. J. le Roux (Hercules), H. D. K. van der Merwe, P. J. van B. Viljoen and A. J. Vlok.

Noes—18: Bamford, B. R.; Bartlett, G. S.; Basson, J. D. du P.; Eglin, C. W.; Malcomess, D. J. N.; Marais, J. F.; Miller, R. B.; Myburgh, P. A.; Oldfield, G. N.; Pyper, P. A.; Raw, W. V.; Slabbert, F. van Z.; Suzman, H.; Swart, R. A. F.; Widman, A. B.; Wood, N. B.

Tellers: B. W. B. Page and W. M. Sutton.

Clause agreed to.

Title:

Mr. Chairman, I move the amendments printed in my name on the Order Paper, as follows—

Amendments agreed to.

Title, as amended, agreed to.

House Resumed:

Bill reported with amendments.

Mr. Speaker, I move—

As a result of the rise in the cost of living, provision has been made for the increase of the salaries of officials in the public sector with effect from 1 April 1980. It is appropriate that the remuneration of judges which has to be determined by Parliament, should also be adjusted.

We are all aware of the fact that the judiciary plays an important role in the maintenance of a peaceful and well-organized society. We live in times when high demands are made upon the judiciary, and there is no reason to expect that the strain will abate in the near future. South Africa is indeed fortunate in that she has judges of whom we can justly be proud. Our judges are held in high esteem and their integrity and exceptional ability are accepted as matters of fact here as well as overseas. The Government has great appreciation for the excellent work they do and for the lustre they bring to our administration of justice. As regards their remuneration the Government approach is that judges ought to receive a remuneration that is in keeping with their status and that it will as far as possible free them from financial worries. The Bill now before the House is based on this premise.

In clause 1 of the Bill provision is made for the increase of the non-taxable allowance payable to judges from R2 700 per annum to R3 000 per annum. Clause 2 of the Bill provides for the increase of the salaries of the different categories of judges. The total increase constitutes approximately 24% of the remuneration of a judge of a provincial division. The percentage increase is considerably higher in the case of a Judge-President, a Judge of Appeal and the Chief Justice.

The increases provided for in the Bill will of course also have the effect of increasing the pensions and gratuities payable to judges who retire after 1 April 1980, since the salary received by a judge upon his retirement is one of the factors determining the amount of his pension and gratuity. The same applies to the pension of the widow of a judge who retires or dies after 1 April 1980.

*Judges receive a very good pension and a gratuity from the State Revenue Fund. They make no contribution in this regard, consequently this benefit may be regarded as a cash addition to their incomes. The non-taxable allowance also represents a considerably larger amount of real income than it appears to be at first glance. Judges belong to a fine medical scheme to which the State makes a substantial contribution. Taking all these things into account, I am of the opinion that on the basis of the adjustments provided for in this Bill, we are coming as close as possible to the ideal that the remuneration of judges should be such that they ought to have no financial worries.

There is one aspect of the proposals contained in this Bill which I should like to elucidate to some extent and that is the non-taxable allowance. This allowance was originally granted purely as a means of increasing the remuneration of the judges. Today it is accepted as a principle that a non-taxable allowance is justifiable only in cases when it is intended as compensation in respect of expenses which have to be incurred by the recipient in the interests of the office he holds. Such an allowance may not be utilized purely as an addition to the remuneration of the recipient. Initially the idea was to do away in this Bill with the existing non-taxable allowance payable to judges and to adjust their salaries with, in the case of ordinary judges, approximately 23% of the amount of their existing salary and an amount equal to the non-taxable allowance converted to the real benefit derived therefrom. That would have meant that the salaries of ordinary judges would have had to be fixed at just under R40 000 per annum. However, there were very strong representations from judges for the retention of the non-taxable allowance, and because one does not like to interfere with existing rights, it was decided to round off the allowance to R3 000 and to adjust the salary itself in such a way that an ordinary judge would in real terms earn approximately R40 000. This was done. At the same time, however, it is the intention not to recommend an increase in the non-taxable allowance in future, but to adjust the salaries themselves instead to the extent which is necessary and possible. This will be in line with the above-mentioned principle, but I also believe that it may be in the interests of the judges themselves. For example, the real value of the non-taxable allowance has decreased as a result of the tax concessions which were announced.

Mr. Speaker, I humbly associate myself with the words of support the hon. the Minister has expressed on the essential and, in the case of South Africa, the extraordinarily distinguished way in which Judges play their part in all the courts in South Africa.

With regard to the special allowance it is not clear to me why, in the speech he has just made, the hon. the Minister referred to a special allowance paid to the ordinary judges. After all, according to my information, this is a payment that has been made to all judges ever since the introduction of the Bill, because clause 1 makes it abundantly clear that the Chief Justice, the Judge of Appeal, the Judge-President and the ordinary provincial judges are involved. I think in this case no distinction should be drawn between the position regarding the remuneration of the Chief Justice and that of subordinate judges.

That brings me to the point that causes me and my party a measure of concern. The increases granted in the case of the Chief Justice and Judges of Appeal in terms of the Bill, are ample and certainly sufficient to achieve the ideal that the holders of these offices should have no financial worries, but it is not clear to me at all why there should be such a great difference between the percentage increase in respect of the Appellate Division and those in respect of Provincial Divisions. According to my calculation—and I am not the greatest arithmetician in the country—the Chief Justice would obtain a salary increase of 61% if the Bill were to be passed by the House; the Judges of Appeal, 52%; and then the ordinary provincial judges, only 25%. Of course, I can appreciate that there are many more provincial judges than holders of office in the Appellate Division. There are probably ten times more, but this alone surely could not explain why there should be such a vast difference between the percentage increase in the Provincial Divisions and that in the Appellate Division.

That does not mean that I am implying here that the salaries that are going to be paid to provincial judges from now on, would inevitably be too low. I am not considering the merits of the matter. I am merely pointing out the difference between the increase percentages and in this regard I should be pleased if the hon. the Minister could tell us what holders of office in the various courts, in the Provincial Divisions and in the Appellate Division, were consulted about the amounts and the desirability and the extent of the increase proposed by the hon. the Minister. During the past few years I have always gained the impression that to a great extent it was the Department and the Minister that managed these affairs and reached decisions concerning them, and that perhaps there was not the necessary close consultation with the Chief Justice and the Judges-President so that these matters could be discussed and the parties involved could reach a compromise of sorts. It would be very useful if the hon. the Minister could enlighten us on these points: In the first place the question of the great difference between the percentages, and in the second place in what respect there is complete consultation and deliberation between the Ministry and the various Divisions of the Supreme Court. Apart from that, we welcome this Bill and we feel this is something that can only add lustre to our judiciary in South Africa.

Mr. Speaker, I am supporting this Bill on behalf of this side of the House. It is a Bill that entails a change in the salary structure of judges. At the same time, I wish to thank the hon. member for Johannesburg North for the support that he has pledged for this Bill on behalf of his party.

With regard to the allowance referred to, I believe the hon. the Minister will reply in due course. The salary increases themselves are reflected in the schedule to the Bill. To this must be added, as has already correctly been pointed out, the increased tax-free allowance provided for clause 1 of the Bill, and which, in real terms, is considerably more than the amount of R3 000 referred to. As the hon. member for Johannesburg North has stated, the increase in salaries varies in extent between approximately 24% and 61% in the case of ordinary judges on the one hand and the Chief Justice on the other.

Sometimes there is reference to the fact that judges’ salaries are laid down by law. Of course, this practice had its origin in the fact that constitutionally, only Parliament could terminate the services of a judge. By this, the independence of the judiciary is reaffirmed time and again. In view of the new increases which are regarded as having come into effect on 1 April 1980, it is my personal wish that more of my senior colleagues in the Bar should see their way clear to accepting an appointment on the Bench if requested to do so.

Obviously the proposed increases also have the effect that, solely from the point of view of salary, there is now a realistic ratio between the protocol position and remuneration of judges on the one hand and that of members of the Cabinet on the other. I think this fact could possibly be a direct answer to the question by the hon. member for Johannesburg North when he stated his problem with regard to the immense difference between the lowest and the highest scale in the whole hierarchy of our judiciary.

What is also gratifying in my view, is the fact that ample provision is now also being made for, inter alia, our Chief Justice and Judges of Appeal. The sacrifices that judges have to make when they accept appointments in the Appellate Division and then, at their particular age, have to move to Bloemfontein, is not always appreciated. In countless cases they have to dispose of their existing homes in their Provincial Divisions, take leave of family and friends, and make a new start in another community. To this could of course also be added the additional responsibility expected of this particular division of the judiciary in the process of the administration of justice in our country.

I should like to bring to the notice of the hon. the Minister, if I may, that apart from any other aspects that could be investigated in future when considerations of salary are raised, there should also be the possibility of a housing allowance so that in future even this aspect should not be an element of restraint when members of the Bar are requested to serve on the Bench.

Mr. Speaker, I shall not delay the House. The NRP supports this measure. In fact, last year we pleaded for an improvement in the remuneration of judges, and we then asked that it be made a significant one in order to bring them into line with the high office which they hold.

I too would like to have seen the increase in respect of provincial judges being further increased. There has, however, been attention given to this matter, and therefore we support this measure.

Mr. Speaker, the South African judiciary is world-renowned for its integrity, its humanitariarism and its fair-mindedness, and takes second place to no other judiciary. Senior advocates appointed as judges make substantial sacrifices to serve on the Bench. The earnings of a senior advocate amount to two or three times the salary paid to a judge. So, there are financial sacrifices which a judge has to make.

This loss of earnings which a judge suffers, is proof of the quality of the people serving on our judiciary. We are proud of the judges of South Africa. The judge often has to make decisions which, in criminal cases, could mean life or death, and also decisions which, financially speaking, could mean life or death in civil cases. The responsibility associated with such a decision cannot be compensated for in monetary terms. There is another point I wish to raise, however. I think we should take another look at the salaries of provincial judges, but I am not going to raise this as an issue here. In all respects it gives us very great pleasure to give this Bill our wholehearted support.

Mr. Speaker, I wish to thank hon. members on both sides of the House very sincerely for their support for this Bill.

In the first place I wish to reply to the point raised by the hon. member for Johannesburg North. He referred to the high percentage increase which certain judges received. In the first place, this relates to a problem we experience in the Public Service as well, and that is that the salary structure of the top echelons should be improved. For reasons I do not wish to discuss now—and I do not wish to blame anyone for it—this was not done in the past, in most cases, perhaps in all cases, for sound reasons. Since I have been associated with the Public Service Commission during the past two years, I have been a strong proponent of this and hon. members will notice that we are improving the salary structures of the higher echelons much more rapidly, because if one does not do so, it has a damping effect from the top downwards, and other structures suffer as a result.

Last year the Chief Justice received a total salary of R28 368 plus an allowance of R2 700. In order to improve his position properly and to create a proper structure for the judges serving under him, his salary structure has to be improved dramatically, more, percentage-wise, than other judges, even more than judges-president and others. The special protocol position of the Chief Justice also had to be taken into account. It gave me great pleasure to be able to recommend to the Cabinet—and to have it approved by the Cabinet—that the salary structure of the Chief Justice should be improved to such an extent, which, in my view, befits his high office.

The hon. member went further, however, and implied that judges of appeal were receiving increases out of proportion to those received by provincial judges. I think the hon. member, as a former judge, would himself concede that when judges are offered an appointment as judge of appeal, it is a difficult decision for most of them because as early middle-aged, middle-aged or late middle-aged people, they are already established in their respective environments. Their homes are there, their families are there, their friends are there, and perhaps their interests are there, too. I am myself aware of quite a few instances of judges-president and other judges who, for the reasons I have quoted, were not prepared to accept the high office of judge of appeal. The increase which the hon. member queries, in the sense that according to him it creates too great a gap, is thanks or due— depending upon how one regards it—to two factors. In the first place, it is there to serve as an inducement to the acceptance of this high office. In the second place, the office of judge of appeal is an important one and it is an office in which people work particularly hard. I do not wish to imply that the judges of provincial divisions do not work hard. In actual fact they, too, work very hard, but I can give hon. members the assurance that a judge of appeal works particularly hard. Owing to the factors I have pointed out, the Cabinet was therefore of the opinion that this gap was justifiable.

The question has been put to me whether there was consultation with the judges. I do not know what happened during the terms of office of my predecessors, but I can candidly state that I make it a rule in the first place—and I also stated this to the judges-president—that I confer with them at least twice a year. Accordingly, I conferred with the judges-president about salaries well in advance. Let me state very clearly, however that it is not a matter of agreement, but a question of patiently and sympathetically listening to representations and arguments. In the final analysis, the provisions contained in the draft Bill are, of course, the responsibility of the Cabinet.

I also listened to representations by individual judges. What is more, before the draft Bill appeared in print, I made the details available to the senior judge-president, the Judge-President of Natal, on a confidential basis and through him this information was made known to all the divisions. I assume that the various judges-president informed their respective judges accordingly. Although I am by no means trying to do so, I should be misleading the House if I were to state that there was 100% satisfaction on the part of the provincial judges. However, at this stage I can do nothing further about that. I have intimated to the provincial judges that I am prepared to discuss the matter with them again but that we should start a new round of discussions for the new financial year. I am afraid nothing further can be done about this right now.

I find myself in a difficult position. I could enlarge further on the real income of provincial judges. Since preparing my Second Reading speech, I have calculated that their real income is actually more than I had stated in my Second Reading speech. However, I do not think the judges themselves would be pleased if we were to discuss the matter further here. Nor do I think it would be desirable, particularly if one takes into account the spirit in which the debate has been conducted here. All I can say—and I say this to the hon. member for Walmer and the hon. member for East London City—is that in the new round of discussions in the year that lies ahead, I shall again listen patiently to what provincial judges, too, have to say. If, with the knowledge and concurrence of their judges-president, they wish to come and see me directly, they are also welcome, provided they comply with the requirements I have stated. We shall then take another sympathetic look at the matters and conditions of service relating to judges. I do not think there are outstanding questions I have to reply to. Accordingly I just wish to thank members for their support for the legislation.

Question agreed to.

Bill read a Second Time.

Bill not committed.

Bill read a Third Time.

Mr. Speaker, on behalf of this side of the House I want to thank the official Opposition for their support of the legislation. The Bill is aimed at improving the existing Act and eliminating certain sources of friction in the Bill.

I wish to refer briefly to the pension matters as incorporated in clause 6 of the Bill. It is heartening that the Bill improves the regulation and definition of pension arrangements. The fact that a teacher appointed in a permanent capacity can now exercise the choice of belonging to the Government pension fund or continuing with the present scheme, namely the pension fund for temporary employees, affords the Black teacher an opportunity to achieve pension parity with the White teacher. Of course, not everyone will be able to exercise a choice in favour of the Government pension fund, purely due to the cost involved, particularly for those who are close to retirement age. However, if the choice is in favour of the Government pension fund, it will entail increased pension benefits for the teacher, but will also involve increased financial contributions from the teacher.

I should like to make an appeal to the hon. the Minister to furnish the teachers with full information, including comparable tables to enable them to realize the full implications, particularly the financial implications, and so that it will be easier for them to exercise the choice that they have to exercise before 31 March 1981.

Clause 7 regulates the period of probation determined by the Minister which will apply to every teacher who enters the service. I take it that teachers from Black States who accept employment with the department will subject to a shorter period of probation or, as far as I am concerned, no period of probation, if such a teacher has already proved himself.

I should like to let this suffice. Another hon. member on this side of the House will deal with the other clauses of this amending Bill. We take pleasure in supporting the Bill.

Mr. Speaker, this amending Bill will be supported by the NRP. Several of the hon. members of this House were members of a Select Committee that investigated the Education and Training Act last year, and to some extent, when one considers the extremely bulky Bill that was introduced here, this in fact only underlines the problem one has when one has to try to carry out such important work at very short notice and tremendous speed. That is what we tried to do last year. We were given very limited time to try and dispose of this very important legislation.

However, the amendments proposed herein are amendments for which sound reasons do in fact exist. In some cases they are amendments put forward last year by members of the committee, particularly those relating to the issue of pension benefits and other benefits, in so far as they affect persons who perhaps occupied certain posts in a temporary capacity only. It is gratifying, too, that a change could have become about so quickly. Therefore, while one’s initial summing up of the matter could be that we did not pass good legislation, I believe that it did help that we came forward with new legislation last year because we are now in a position to place a far more effective piece of legislation on the Statute Book.

In some cases there may be dissatisfaction about a change that is being effected which, I think, is contained in clause 10. It relates to the reasons for the discharge of a person. It is now merely stated that if a person has committed an offence, that will be sufficient reason to investigate his conduct, and this could lead to his discharge. In the past the situation was this could only happen if a person was sentenced to imprisonment without the option of a fine. I think that one might just mention in this regard that this is exactly the same position as finds in other education departments. One finds exactly the same position in the Department of National Education and in the ordinances of the various provinces. The same goes for the education legislation relating to other groups in South Africa. Therefore this is not a discriminatory factor which is being introduced here but in fact a uniform factor.

This is not the occasion to discuss other problems relating to education and training, and I just want to say that we cannot but support this amending Bill with the additional benefits that will flow from it.

Mr. Speaker, I should very much like to thank the hon. member for Durban Central and the hon. member for Pinelands for the way in which they support this legislation. I hope that the words of the hon. member for Durban Central do not create the impression that last year when we dealt with this legislation we were working under such tremendous pressure that we did poor work. I think the hon. member for Durban Central will concede that there was ample opportunity to raise objections and misgivings and discuss this legislation in depth. I want to say here and now that this was done with the effective co-operation of the members of that commission.

The fact that there are ten clauses in this amending Bill makes it sound like a lot. However, in point of fact the amending Bill does not affect any principle. Amendments are only being effected because after the Education and Training Act had been implemented, it was found that in practice, certain amendments were necessary here and there to promote Black education in general and for the benefit of the teachers in particular. This is why these amendments are being discussed here today. I think that that is also the reason why the official Opposition and the other opposition parties are unable to complain about the amendment being effected here.

It is true that these amendments will contribute further towards improving and stabilizing the image and the status of Black education. It is also true that these amendments could result in great satisfaction among Black teachers. For example, provision is being made in clauses two and three of the amending Bill for allowances to be paid to the committees of the Council for Education and Training, as was in fact the case in terms of regulations under the Black Education Act of 1953. It is also provided that such allowances to members of councils, committees, management boards or other bodies introduced for State and community schools may be determined administratively by the hon. the Minister. This is a major improvement on the existing legislation, under which this had to be done by way of regulation in the Gazette. This was time-consuming and resulted in unnecessary administrative work and delays.

In terms of clauses 4, 5 and 6, provision is being made for the regulation of affairs relating to retirement ages and pensions. That, as the hon. member for Messina indicated, also represents a very major advantage for the teachers.

Clause 7, to which the hon. member for Pinelands also referred, is an important clause and provides that teachers at State-aided schools also be appointed on probation, but only with the approval of the hon. the Minister. I consider that this is important, because it surely goes without saying that if a specific teacher has already given good service for a number of years and is now appointed to a new post, it is surely unnecessary that he should in all cases be appointed on probation if he already has sound teaching experience and his abilities are already proven. I believe that on those grounds it is important that this amendment of the existing Act be effected as proposed in clause 7. In any event, there is a similar provision in the Public Service Act.

In clause 9(a) the procedure to be followed when the health of a teacher deteriorates to such an extent that he is no longer able to carry out his normal duties, is indicated. The Department of Health, which must make a recommendation in this regard, normally requires a report from a medical board. In view of that I believe it is essential that section 21 of the Principal Act should now be amended to provide that a teacher may be requested to appear before a board appointed by the Secretary for Health, instead of merely consulting a district surgeon.

Clause 10 is the clause to which the hon. member for Pinelands referred and about which he may have certain reservations. The hon. member for Durban Central also referred to that, and I agree entirely with what he said about it.

Section 22 of the principal Act deals with misconduct. It provides, inter alia, that a teacher is guilty of misconduct when, on being convicted of an offence, he is sentenced to imprisonment without the option of a fine. In practice it is surely evident that a person may be guilty of an offence and can be sentenced to a heavy fine without being sentenced to imprisonment, while the offence in question may be so serious that it could indeed make a teacher guilty of misconduct. For that reason this amendment has to be introduced.

I want to give an example. It could occur—only Black teachers are being discussed here—that a teacher commits fraud, is guilty of theft, perhaps of school funds, or is found guilty of being under the influence of liquor or of driving under the influence of liquor and is sentenced, and a fine of only R100, R200 or R300, or whatever the case may be, is imposed, whereas the result is that he is certainly not able or competent to continue with his teaching career. As the Act reads at present, he is not guilty of misconduct unless he is sentenced to imprisonment. For that reason I think it is obvious that the Act should be amended as it stands in clause 10 of the Bill. It is the same principle that is incorporated in all other education acts and in the Public Service Act. It is therefore a great pleasure for me to support this Bill fully on behalf of this side of the House.

Mr. Speaker, I should like to thank hon. members on both sides of the House sincerely for their support of the Second Reading of this Bill and also for the constructive contributions that have been made.

The hon. member for Pinelands expressed misgivings about clause 10, but on Friday the House adjourned before he could state his misgivings. However, I think that one can anticipate the hon. member’s problems and I think, too, that he has been furnished with the correct answer by the hon. members for Durban Central and Virginia. They pointed out that in future a person will also be guilty of misconduct if he is fined and not only when he is sentenced to imprisonment. This does not mean that he is automatically guilty. The proposed section 22 must first be set in operation. In other words, the person must be charged and given a reasonable opportunity to defend himself. He is only guilty of misconduct if he is found guilty of an offence by a court. It is therefore important that the provision be amended to that effect. The proposed section 22 is fully in accordance with the education Act of the Department of National Education, with section 28 thereof, while section 23 corresponds to section 29 of their Act. However, as the hon. member for Virginia mentioned yesterday, a person can commit a serious offense and only be fined, with the result that no action can be taken against him, and that is why it is important that the Act be amended in this way.

In my opinion, the most important provision contained in this Bill is clause 6, which provides that Black teachers may now become members of the Government’s pension fund. This is a most important step forward, and one which involves greater benefits but also heavier obligations for them, as the hon. member for Gezina mentioned. I therefore want to say to the hon. member that his request that the tables and information be made available to teachers so that they can make a sound decision when they have to exercise their choice, will be acceded to, in that the Department intends publishing this information in the Education Journal so that it will be possible to make a considered choice. The period of probation to which hon. members referred was touched on by the hon. member for Pinelands, while the hon. member for Gezina also referred to it. The aim is to create the situation that people who already have experienced at another department need not necessarily be appointed for another probationary period of 12 months. A shorter period may now be prescribed.

Question agreed to.

Bill read a Second Time.

Committee Stage

Clause 10:

Mr. Chairman, I am still not satisfied with the explanation the hon. the Minister has given in regard to the intention behind the amendment in clause 10. The hon. member for Pinelands indicated the other day during his Second Reading speech that we were unhappy about this proposed amendment, the reason being that it considerably widens the scope of the existing Act, which in dealing with the question of misdemeanours refers to a person who “is on conviction of any offence sentenced to imprisonment without the option of a fine”. It is completely definitive; it tells one what the offence is. Simply to take that out and to put in the words “commits an offence” one must ask what sort of offence. I am aware, as the hon. the Minister explained, that in terms of section 23 of the Act certain procedures will have to be followed and that the person concerned will have a chance to defend himself, but I think from the point of view of making legislation it is wrong simply to put into a provision like this reference to committing an offence without indicating the type of offence, e.g. a minor or a major offence. It may be a traffic offence or any one of these comparatively minor offences in the eyes of the law. So this puts the teacher in a very difficult position indeed. I do not believe the same provision applies to White teachers.

It does.

I do not think it does, but the hon. member says it does. However, whether it does or not, I think it is far too vague and I do not think we are improving the legislation which was passed by the House last year. I think the provision, as it stands in the existing legislation, is far better than that which the hon. the Minister proposes as a result of the amendment. We shall vote against this unless the hon. the Minister can satisfy us on this.

Mr. Chairman, I am sorry that the hon. member is adopting such a negative attitude towards this aspect. The hon. member for Virginia, as well as other hon. members, have made it quite clear here that it is actually a completely anomalous situation that a teacher whose conduct is at issue may commit an offence and may only be charged with misconduct when he has been sentenced to imprisonment without the option of a fine. Surely it has been made quite clear that such an offence has to be a serious one. There are in fact many serious offences for which a person cannot be sentenced to imprisonment.

I believe it to be a very important task of the Department of Education and Training to keep a close watch on the conduct of teachers. In appointing teachers, too, the Act provides that one of the most important requirements is that a teacher has to be a person of good conduct, of good character. Now the department is anxious to ensure that every kind of misconduct is evaluated in the light of the codes of conduct we should like to establish in the Department. I do not think there can really be any objection to this. When one takes the phrase “to commit an offence”, it also appears from the Legal Dictionary of Hiemstra and Gonin that the term “offence” carries four clear connotations. One of these is the normal connotation, i.e. a completely neutral one. It merely amounts to committing an offence. Then there is also the more serious connotation, i.e. that of a crime.

Of course, it is true that many of the crimes that are committed do not necessarily result in a sentence of imprisonment. As the hon. member for Virginia said, however, such a crime may be of such a serious nature— although there is no question of imprisonment—that it may certainly fall within the scope of the definition of “misconduct”. Therefore I believe it is correct that we should make it quite clear here that when a teacher commits an offence, it is deemed to constitute misconduct. Then, as has already been said, such a teacher has sufficient opportunity, in terms of the provisions of section 23 of the Act, to put his case in full before the one who is appointed to take a decision about it.

I do not believe that such a teacher is being prejudiced in any way. He is not being done any injustice. When we look at the code of conduct for teachers, it is indeed important, in this profession as well, that every form of misconduct should be handled in such a way as not to prejudice the profession as a whole. Personally I believe, therefore, that the word “offence” has been very well chosen. As I have already said, it is perfectly in accordance with other similar legislation if it also serves the purpose of introducing uniformity, something which we also advocate here.

Mr. Chairman, the hon. member for Musgrave has alleged that this measure is not an improvement on the existing legislation. My submission is that it is indeed an improvement.

*It is an improvement for the simple reason that in terms of the existing legislation, a teacher could be convicted and even sent to prison if he were to drive a car at 130 km per hour, for example. We are not interested in convicting such a man of an offence or of misconduct as far as his school activities are concerned. On the other hand, however, a teacher may be guilty of irregularities with school funds. He may be convicted in a court of law and may only be sentenced to a fine. This would actually constitute misconduct as far as the school and his teaching activities are concerned. In terms of the existing legislation, we cannot act against such a teacher. A teacher may even seriously assault a child and only be fined for it, in which case he cannot be found guilty of misconduct.

For that reason, the new measure is an improvement on the existing legislation. In fact, we do not intend—nor is it customary— to find a teacher guilty of misconduct because of a parking offence or some other offence he may have committed. It is only when it is truly misconduct from the viewpoint of the school and of education that the procedure in section 23 has to be followed, even before the person has actually been found guilty. If the person is found guilty, he also has the right to appeal to the Minister as a last resort. I also want to point out that there are various kinds of penalties if the person is actually found guilty. He may only be reprimanded, or he may be required to pay a fine, or his salary may be reduced or he may even be dismissed, depending on the degree of the misconduct. If it is only an ordinary parking offence, we are certainly not interested in accusing a teacher of misconduct and charging him accordingly. Therefore it only relates to his function as a teacher and the way in which he performs his educational task. Only when it constitutes misconduct in that sense are the provisions of section 23 applied. For that reason, the present definition is an improvement on the existing legislation. I repeat that the legislation governing all the other education departments has a clause which corresponds exactly with the amendment we want to introduce here. This legislation is now being brought fully into line with that of other education departments.

Clause agreed to (Official Opposition dissenting).

House Resumed:

Bill reported without amendment.

Bill read a Third Time.

Mr. Speaker, I move—

Mr. Speaker, now that we have come to the Third Reading, we have in effect given powers to the hon. the Minister in regard to the laying down of medical fees which he did not have before. At this stage, I think, we therefore have to say quite clearly that we want to differentiate between the person who has that power and the implications of those powers, as they can be applied. We want to make it quite clear that we do not for a moment think that the hon. the Minister has anything but the best interests of the profession at heart, and we do not believe that he would act to the obvious detriment of anyone if he could help it. Having said that, however, let me add that we must look at the implication that he now has the power to be the final arbiter in determining the fees for these health professions. The implications of this could be one of two things. One could end up with this hon. Minister or another, benign hon. Minister who is able to satisfy all those concerned. The hon. the Minister put it clearly when, speaking in the previous stages of this debate, he said it was his intention and that it was important to him to protect three sectors, viz. the public, the doctors themselves and the Government. Let me say at once that I think it is an extremely difficult task for any Minister in any circumstances to be able to fulfill those three criteria simultaneously. It is very difficult to satisfy the public, the doctors and the Government. As I see it, there are two possible implications of this Bill—and let me say that I believe that it is our responsibility to look not only at the possible favourable consequences of the Bill, but also to look at the way in which things could go wrong in the way the legislation is enforced. As I have said, I see two possible fields in which, under unfavourable circumstances, things could work in exactly the opposite way to the way in which the hon. the Minister intended they should work. The hon. the Minister has made it clear that he does not wish to see a situation arising where our medical services become more socialized. That in itself is a subject that could be debated at great length, but I do not intend to debate that particular aspect. I want to say that under certain circumstances what the hon. the Minister fears could be precisely what happens given the powers he now has.

Let me give an example in this connection. As I have said, the Minister must now be the final arbiter. Let us assume that the medical people have put in a well-motivated request for a certain level of professional fees, that it has gone through the associations and the Medical Council and has finally ended up, in the words of the Minister, at his desk; and that he then for various reasons, which in his opinion are important, cannot see his way clear to passing those fees. There is a mechanism through which the fees can be referred back to the council and there is a period in which they can be further discussed, but that is really unimportant. The main thing is that the hon. the Minister will have the final say. If he has to turn down that request, it could well result in his alienating a substantial portion of the members of the medical profession, who, as I have said before, have always acted responsibly. If under the circumstances they should feel they are not getting a square deal—and perhaps it could have been agreed to by their associations and their council—there is a possibility that certain members of the medical profession could decide that they do not find it within their power to do as much work as they are able to in a day. There are many ways in which they can proceed without actually working to rule. They could say they are not going to take on any new patients and they could take off an extra day per week. The net effect of this would be that they would see less patients, that less patients would have access to doctors.

The inevitable consequence of that is that more people would find it necessary to resort to provincial hospitals. This is precisely the situation the hon. the Minister is trying to prevent. As I have said, one could find that one was forcing more people to go for treatment to provincial hospitals. We know that they are understaffed and under extremely high pressure.

[Inaudible.]

I am quite sure that I am correct when I say that our provincial hospitals are operating under high pressure. Members of the NRP have recently been to some hospitals and I have personal knowledge of hospitals in Natal and I say that particularly the doctors are operating under extremely high pressure.

But your party is in control in Natal.

Yes, but that is beside the point. I know we are in control in Natal, but it does not really matter which party is in control: Whoever is in control, the system is such that the doctors there are working under extreme pressure. I may add that they are not working for the NRP, but in the interests of the health system in South Africa. That is the point. They are working in the interests of health and under great pressure.

If one puts more pressure on them, we are going to find for a start that older members of the profession will probably take an early retirement and that it will have the effect of becoming a vicious circle. The more work there is, the less doctors there are. The result is that one will end up with a vicious circle, and in the end none of the three sectors that the hon. the Minister mentioned will really benefit. The public do not benefit, because the medical services available to them become less; the doctors do not benefit, because their goodwill has been alienated, and the Government certainly does not benefit, because there will be further pressure on the services which the Government has to supply, whether directly or through the provincial administrations.

There is another very important consequence which we have not discussed at any other stage of the Bill, because we had hoped that the hon. the Minister would see his way clear to accepting some amendments to the Bill, but he has not. I want to put it to him that he has now created a situation whereby he can determine the fees in respect only of members of medical aid schemes and their dependents. He has made the point that those are the only fees of which he will finally be the arbiter. That might sound well and good, but what, in fact, is the case? I would say that 80%, at the very least, of White South Africans are covered by medical benefits. So, in effect, the hon. the Minister is setting the fees payable by 80% of the most economically active group, namely the Whites in this country. Let us take that a stage further, let us take it to the White doctor who is in private practice today. I think no one would disagree with me if I say that the White doctor is the backbone of the private medical services available in the country today. That is so for many historical reasons. We know that more Indian doctors are becoming available, but that there are still very few Black doctors. We also know that there is a fair sprinkling of Coloured doctors. But it is no exaggeration to say that the White doctors is the backbone of private practice in South Africa today. If four out of the five patients that he sees daily, or eight out of ten, or 16 out of 20, are subject to the fees as determined by the hon. the Minister and the doctor is forced to accept those fees, there is an implication which goes far beyond this. A lot of White doctors in this country run two practices side by side. They have their White practice and they have a Black practice, where I believe they perform a very valuable service. It is a source of income to them, but they are performing at the same time a very valuable service to those members of the Black, Indian and Coloured community who prefer to go to a private doctor rather to a provincial hospital. What is going to happen if the doctor finds that his fees in respect of White patients are controlled to the extent of 80% by the hon. the Minister and he is unhappy with those fees? It means that he is going to charge more in the Black practice that he runs and that is going to have the effect that the very race groups who can least afford that increase may well, in fact, be subsidizing the earning capacity of that doctor. So, whichever way one looks at the implications of this Bill and the fact that the hon. the Minister is taking powers which he did not have before, I think it is inevitable that we are going to get to a stage of increasing socialization in our medical services.

We have fought all the stages of this Bill. I have made it clear to the hon. the Minister that it is nothing personal. If there were a new Minister of Health tomorrow we would still object because in principle we feel that it is wrong that the hon. the Minister should take these powers, powers which he has not had before and without which the medical profession have operated largely satisfactorily over a long period of time. It is definitely going to lead to increasing socialization in medicine and the stage may be reached where we would have a very high degree of socialization in the medical services in this country. Because of that, and the principles involved, we have made our position clear and will be voting against the Third Reading of this Bill as well.

Mr. Speaker, I want to state briefly that we, as the official Opposition, will support the Third Reading of the Bill as we have supported the other stages of the Bill. I think it is clear that there are really three areas where medical relief can be obtained. The first is obviously the provincial hospital system, and I do not think that this is the time to enter into dissertations about provincial hospitals, although one can say an awful lot about it.

It is nevertheless an area which covers and supplies medical services to the vast majority of the population, particularly of the Black population. Basically hospitals are well staffed, well equipped and do provide a very good medical service. Secondly, there are the private doctors to whom a number of people go, and they pay the fees which the private doctors prescribe. The third category, the one with which we are really concerned, is those who acquire and obtain services through the medical and schemes to which they belong. All this Bill is doing—and this is the crux of the entire argument—is that it is giving the power to the Minister to say that the fees prescribed by the Medical Association will in effect not be of force until such time as he approves. There was a tremendous outcry at the time when the Medical Association announced a 52% increase in their fees. I myself, and I think also the ordinary members of the public, felt a little shocked because the figure was very high. However, one can argue semantically about the figures, remembering the cost of equipment to them, etc., and in the long run find that the increase was in fact not a large amount. But basically I would have preferred—as I think some of the doctors to whom I have spoken as well as private people—to have seen the increase spread over, say, two years. Nevertheless this was not done. There was an outcry at that time and the hon. the Minister was obliged to take action. I think the action the hon. the Minister wanted to take at that stage would not have been supported by this side of the House. Had he taken that action on his own and not consulted with the Medical Association in coming to the agreement which now forms the subject-matter of the Bill before us, he would not have received the support of this side of the House. The Medical Association made out a case for the increase and they have been receiving the increased fees since 1 November last year. We are all paying according to that tariff through our medical aid schemes at the moment. That being the case and having come to that agreement, the hon. the Minister then compromised and the Medical Association accepted that compromise, which forms the subject of the amendment which we passed in the Committee Stage. That amendment was accepted by them on the basis that this is now an ad hoc or temporary arrangement—one can use either expression—in the sense that a commission of inquiry has been appointed by the hon. the Minister. That commission will hear evidence with regard to fees, any future increase of fees and other matters affecting the medical profession. I am sure that out of that will come a finding which the hon. the Minister will report to this House. I hope that he will table that report so that we can debate as to how the scheme is to operate thereafter. The goals have now been achieved, the tariff is now in working order and we are faced with the position. Quite frankly I do not think that the medical profession will increase its fees to such an extent that they will be beyond the means of the public.

We also have a duty and that is to protect the interests of the public. It is that measure of protection which forms the subject of this compromise to which we have given support. I think the medical profession themselves are responsible enough to be able to judge and, if they do come with a further increase, to be fully able to justify it. If they can then make out a case for the necessity for such an increase, the hon. the Minister can then use his prerogative and powers. But by and large, since this is a temporary arrangement, a compromise, an agreement reached by all concerned, we support the Third Reading of the Bill.

Mr. Speaker, I should like to reply briefly. I wish to thank hon. members who have participated. A special word of thanks to the hon. member for Hillbrow. I think he and his party have adopted a very reasonable attitude on this whole matter. I would not say that is always the case. To say the truth this is one of the first times since I have been back in this House. I think that when one deals with matters such as these one does not want to keep on dragging the doctors and the public backwards and forwards across the floor of this House. I think that where the situation was such that some sort of legislation had to be introduced this was the best way of doing it.

I want to assure the hon. member for Hillbrow that, in all the discussions I have had—and I have brought just one or two files along with me, files of notes of the discussions I have had with the various people—we spent a lot of time, up to three hours at a time, until we got down to a compromise that was accepted by everyone. One of the points the hon. member for Berea is missing completely is that this whole exercise is in relation to the statutory tariff. It has nothing to do with the private tariff. That is why I accepted the medical people’s idea. I honoured their feelings that I should only legislate for the statutory tariff, which has a bearing on the members or their dependants who belong to a medical aid. People who can fully afford it, are not even included, not even those who do not belong to a medical aid scheme. However, that hon. member’s hair-raising story now is that if they do not accept my reducing the tariff when they put new tariffs to me, they will do less work and go on a go-slow strike. What they are going to eat I do not know. He says that they are complaining that they are not getting enough now. They only work half days and do not work on certain days. But, he says, they may raise the tariffs for the Black people. This is like a story from Alice in Wonderland, only with a medical connotation, when he says that if they cannot obtain their fees from the Whites—because I am keeping the fees down—they will raise the fees for the Black people, who do not belong to medical aid schemes. This is a completely haywire suggestion. It is completely hypothetical.

Is it possible?

Of course it is possible. Anything is possible. They can all stop work and go on strike and not earn anything at all. Anything is possible. But medical people do not only have a duty towards the hon. the Minister. Their first duty is towards their patients. Many of us who have practised for years have in certain cases never received any fees at all and we never said that because they did not pay, they should try to see someone else, that the hon. the Minister has not given us a big enough hike in our fees and that therefore we are not going to work and take it out on the Blacks by charging them more. That is the silliest argument I have heard in this whole discussion.

I cannot understand the point of view of the NRP. I cannot understand their change of mind and change of heart. I come back to the hon. member for Umhlanga. On Friday I said to him across the floor of the House that he had said at a certain stage that he was in agreement with what I was doing. He then became very annoyed. [Interjections.] That hon. member, who usually deals with educational matters, had better keep out of this, because he is going to land himself in even greater difficulties than the hon. member for Umhlanga.

Do not get excited.

That hon. member asked whether I would make a personal apology across the floor of the House. I promised him the cutting, and I did not keep him in suspense. I brought the cutting along to the House, because I thought that what he had stated in the newspaper, should be placed on record. He should not regard it as a personal “onderonsie”. I said I would let him have the cutting, because it is on record that that hon. member became very annoyed and jumped up a few times. I shall just refer back to it. He said—

That is correct.

That is correct. I did say that. It was stated in the newspaper article that it had been said by Mr. Page, who, they stated, was a Whip and the spokesman on medical affairs of the NRP. I shall, however, come back to that in a moment. The only mistake I made was that I thought it had been reported in The Star. It was actually reported in the Rand Daily Mail of 18 October 1979. I think I should read to the hon. member for Umhlanga what he said to the Rand Daily Mail. The article was written by Gerald Riley of the Pretoria office of that newspaper. The hon. member looks aghast, but he is going to look even more aghast when I have finished with him. He said to me when I said that I would let him have the cutting that he was not finished with me yet. The hon. member did not believe me. I expected him to jump up during the Third Reading and attack me on this matter. When he remained silent, however, I thought that he had perhaps seen it himself. This reporter said—

This was on 18 October. It was in October when they took a final decision. Then the reporter talked about the meeting and reported what Prof. Shapiro and Dr. De Beer, the Director-General for Health, who sits on the council, had said. I now want to quote a very interesting paragraph. The hon. member will find out that I have an extremely good memory. Months after I have read something, I still remember it, especially when it is something that reads like this—

Surely the hon. member regards himself as one of the members of the public. He did not say that it had the backing of the public but not of the NRP. I quote further—

I shall let the hon. member have this report. Yesterday he denied talking to the paper when I had objected to the stance that one hon. member of the party was taking. [Interjections.] The hon. member has had his chance to speak.

*The hon. member has had a chance to speak and he must now allow me to have my say. I should like to conclude this matter, because I want it on record. Two hon. members of the NRP launched a sustained and vehement attack on me about a matter concerning which one of the other hon. members of their party had already conceded on an earlier occasion that I was right. I mentioned this as a part of a contribution I want to make, but when the hon. member attacked me and said that he had not finished with me, I thought it better to produce my cutting, because I do not want him to feel bad about it. [Interjections.]

He must apologize.

There were one or two other points that were made. [Interjections.] I think the hon. member owes me an apology. It is not the other way around. However, we can leave at that. I wanted to put on record what the hon. member actually said. If he did not say it, it is between him and Mr. Gerald Riley, the Rand Daily Mail, the Pretoria Bureau and anybody else with whom he would like to take up the matter.

I want to have a look at one or two of the aspects the hon. member for Berea mentioned. If everybody concerned approves of these particular tariffs and the Minister says that he is not going to accept these tariffs, surely that will be the work of a completely unreasonable Minister. I have built legislation into the legislation. I have provided for ways in which I can meet these people and talk to the dentists and the doctors in the profession. If they can convince me that they are correct and I have the backing of our financial advisers in the department and of the hon. the Prime Minister’s financial advisers, and if such tariff rises are reasonable and will not affect our economy, it will surely be a very silly Minister who will say that he will not allow a rise in tariffs just because he has the power to do so.

I think the story about the socialization of medicine is wearing thin at the moment. There is not the least intention of socializing medicine in this country. If anybody socializes medicine, it will be the medical profession itself through, as the hon. member for Berea said, doing less work, sitting back, not being fully productive, pricing themselves out of the market and leaving it to the provincial administrations and the Department of Health to provide more and more services for people who cannot afford private services.

That is why a commission has been appointed. I want to try to rationalize the complete spectrum of medical services. The Government, including the provinces, is spending over 1 billion rand per year on curative services. Of that we are spending about 1% on preventive services. It is my intention, with the department’s aid, in the next few years to step up spending on preventive medicine. We cannot keep on spending only on curative medicine and highly sophisticated techniques. We must give our few training schools a chance to produce doctors who can in future also be on a par with those in the rest of the world, but we cannot give everybody in the country these highly sophisticated services. We have got to go for preventive medicine and we have got to see that we spend more on preventive medicine. Even if we only spend 1% more on preventive medicine in this coming year, it would equal an amount of R15 million, but we cannot ask the hon. the Minister of Finance for additional money. This must come out of the amount of money there is for health services, and we must shift our vision to preventive medicine and reduce our spending on curative medicine. Then we will make more progress.

To complete my reply to the points made by the hon. members, I do not often quote leading articles from newspapers, but I now want to quote from an article which the hon. member for Umhlanga, can also remember, in regard to his having said that he joins the public in thinking that I should go to legislation. I quote from the leading article entitled “Medical fee fodder” in The Cape Times of 17 October 1979—

The article continues, and this is the point I want to make—

I am only quoting this to show that this was a matter which had to be dealt with very definitely and seriously. I hope that after the commission has reported, and after the experience we have had now, there will be a more reasonable attitude from everybody concerned in this matter. When we end up with the commission’s report and put it into practice, we will find that the patient will again be first, we will have got rid of the fight between the medical aid schemes and doctors and we will also have got rid of the fight amongst the medical schemes, doctors, patients and the Minister. I hope that in the time that lies ahead we will, with this legislation in hand, be able to bring calm and quiet to this aspect of the medical profession.

Question agreed to (New Republic Party dissenting).

Bill read a Third Time.

Mr. Speaker, I move—

Consumer credit plays an important and indispensable part in our modern society. The credit granted to a large proportion of our population enables it to acquire goods and services which it would find unobtainable in the absence of credit facilities. Credit consequently enables this section of our society to maintain standards of living which it would not be able to maintain in the absence of credit granting.

The total demand for goods and services is therefore expanded by credit granting. The increased demand for goods and services has in its turn a salutary effect on the level of economic activity and employment in the country.

On the other hand there are grave latent dangers in the injudicious granting of consumer credit. If more credit should be granted to a person than he is able to repay, it could have extremely tragic consequences for the credit receiver and his family if the purchased goods or a portion of the income of the credit receiver should be seized in settlement of his debts. The large number of civil convictions for debt pronounced annually by the courts is a good indication that credit in this country is not always granted judiciously.

Although credit granting is consequently indispensable for sounder economic growth in the country, its effective control is essential for the protection of all the parties involved in credit transactions. It is fairly generally known that the Government received a considerable number of complaints during the past few years from individual consumers and from consumer organizations about numerous practices of alleged exploitation of purchasers by irresponsible dealers in respect of hire purchase and other credit transactions.

The Department of Commerce and Consumer Affairs instituted an inquiry into these complaints and it became apparent that the existing Hire-Purchase Act, which was placed on the Statute Book in 1942, contained specific deficiencies which did not afford consumers adequate protection under the present circumstances.

A sphere which has produced exceptional problems in regard to credit sales during the past few years is that in respect of the regulation of sales transacted outside the normal business premises of dealers. Now, I must emphasize at once that a large proportion of the dealers who specialize in sales of this kind act in a responsible manner. But unfortunately it is also true that there are less responsible dealers who, through the application of high-pressure sales methods, persuade uninformed purchasers, particularly in the lower-income groups of the community, to conclude credit transactions which, to their detriment, are completely out of proportion to their ability to pay and which eventually, upon the termination of such transactions, lead to financial losses and deprivation for the purchasers concerned.

Consequently numerous complaints have risen in practice in regard to irregularities concerning the repossession of goods, in cases where purchasers are no longer able to meet their obligations in terms of a contract. In this sphere as well the present conditions necessitate a revision of the existing statutory provisions. Furthermore it may also be mentioned that the practice of leasing has increased considerably in scope in recent years, although there is at present no adequate legislation to regulate properly the transactions between the lessor and the lessee of movable goods.

An additional problem being experienced with the existing Hire-Purchase Act is that the scope and ambit of the legislation has in the course of time become too circumscribed, in the sense that the maximum amount of transactions covered in terms of the legislation is limited to R4 000 per transaction. Obviously this amount has not kept pace with the increase in the prices of movable consumer goods which has occurred during the past few decades.

A further important deficiency in the existing Hire-Purchase Act is that no provision is made for inspection services—something which definitely inhibits the effective application of the Act. The basic object of the Credit Agreements Bill is therefore to overcome the deficiencies in the existing legislation and in that way afford credit purchasers the necessary protection, but in a way which does not lose sight of the interests of the seller. In this way an attempt has been made to strike a healthy balance between the interests of the two parties involved.

Originally, of course, this Bill was read a First Time under the title “Credit Sales Bill” during the 1977 session of Parliament, and was, after its Second Reading, referred to a Select Committee of Parliament which was converted into a commission of inquiry after that session of Parliament. However this commission was unable to complete its postulated task and was consequently dissolved owing to practical problems which are experienced after the general election of 1977.

Since then, during the finalizing of the Bill, the Department of Commerce and Consumer Affairs has consulted extensively with interest groups in order, as far as possible, to strike a satisfactory balance in this Bill between the interests of the purchaser on the one hand and the interests of the seller on the other.

This Bill is also closely associated with the Limitation and Disclosure of Finance Charges Amendment Bill, 1980, which will be submitted for consideration during the present session of Parliament by the hon. the Minister of Finance, since it is being envisaged, with the Credit Agreements Bill, to regulate the purely contractual aspects of a credit agreement, while the financial aspects of such agreements will be regulated extensively by the provisions contained in the Limitation and Disclosure of Finance Charges Amendment Bill, 1980. With this object in mind, and in order to prevent any duplication, all provisions in connection with finance charges are consequently being omitted from the Credit Agreements Bill, 1980.

Next I should like to discuss the most important provisions of the Bill, and their effect. Because credit transactions are at present regulated only by the Hire-Purchase Act, 1942 (Act No. 36 of 1942), as well as by regulatory measures promulgated in terms of the Price Control Act, 1964 (Act No. 25 of 1964), the ambit of the provisions of the existing legislation is rather limited. As I have already mentioned, the Hire-Purchase Act, 1942, only affects hire purchase transactions in respect of which the monetary value does not exceed R4 000.

Owing to changing circumstances this amount has become unrealistically low, with the result that in the present economic dispensation in South Africa a large portion of the consumer credit transactions fall outside the scope of the Hire-Purchase Act, 1942.

Since the commencement of the Hire-Purchase Act, 1942, and primarily in order to circumvent the provisions of that Act, the phenomenon of lend-lease has arisen in practice, a phenomenon against which, as has already been mentioned, there are at present no effective regulatory measures. By means of the proposed provisions contained in clause 2 and 3 of the Credit Agreements Bill the provisions of the proposed legislation may by way of regulation be made applicable to any credit agreement or goods or category of goods, as and when this is deemed necessary and appropriate. The powers of the Minister in respect of the promulgation of such regulations are set out in clause 3, the provisions of which seek to empower the Minister of Commerce and Consumer Affairs to make any kind of credit agreement, of whatever nature and regardless of the amount involved, subject to the provisions of the proposed legislation.

The result of this approach in the Bill is that not all credit agreements will per se be subject to the legislation, but that it will be made applicable on a selective basis in that only those specific credit agreements for which provision is made by way of regulation will be drawn into the ambit of the provisions of the proposed legislation.

It is not the intention to extend the provisions of the proposed legislation to a wide series of goods or to many kinds of credit agreements. In fact, it is the intention to make the Act applicable only to those durable and semi-durable consumer goods such as motor vehicles, furniture and other household appliances which are at this stage already subject to the conditions of sale promulgated under the Price Control Act, 1964.

In accordance with the Government’s declared policy of consultation with all sectors which may be affected by Government measures, the principle of prior consultation with the sectors concerned, as far as this is in any way possible, will continue to be applied in future if the Government should consider it necessary, in exceptional circumstances, to apply the provisions of the proposed legislation on a broader basis than the series of goods to which I have just referred.

Clause 6 contains particulars of invalid provisions in credit agreements of which quite a number have been taken over from the existing Hire-Purchase Act, 1942, but which have been adjusted and expanded in order to cover all kinds of credit agreements. Consequently most of the prohibitions are self-explanatory, but I should like to draw the attention of hon. members to a few of them.

An essential addition is incorporated in clause 6(4) of the Bill, in terms of which a credit grantor is prohibited from provisionally entering into a credit agreement for a lesser amount than the amount for which the prospective credit receiver would like to effect a purchase because the prospective credit receiver does not have sufficient money to pay a deposit on a larger transaction, on the understanding that that agreement would then subsequently be cancelled and the original deposit, together with the instalments which the credit receiver has paid in the interim, will then be utilized as a deposit on a larger transaction.

In terms of the existing conditions of sale under the Price Control Act, 1964, no credit grantor may directly or indirectly make money available to a credit receiver in order to effect payment from such money in respect of a credit agreement to a credit grantor. In clause 6(7) of the Bill, this arrangement is being retained, with the exception that if a credit receiver, on his own initiative, makes arrangements with a bank or financial institution to obtain funds in order to pay the full balance due to a credit grantor in terms of a credit agreement, but which is not yet claimable at that juncture, such arrangement is not unlawful.

The concession which is being made to banks and financial institutions in this connection is to enable these organizations, whose normal function it is to lend money, to advance money on a loan agreement to credit receivers who have credit agreements with them in order to defray amounts owing in terms of such credit agreements. However, in order to combat possible abuses in this respect, this concession is expressly being made subject to the condition that the initiative must emanate from the credit receiver and not from the credit grantor.

†I should also like to draw your attention to the provisions of clause 10 which prohibits the acceptance by a credit grantor of any post-dated negotiable instrument in respect of an initial payment or initial rental in regard to a credit agreement. In terms of the existing conditions of sale under the Price Control Act, 1964, this prohibition not only applies to the deposit, but also to any other payment in respect of a credit agreement.

One of the most important provisions of the Bill is contained in clause 13 which provides that in the event of a credit agreement in respect of which the initiative emanated from a credit grantor, his manager, agent or employee, and which is being signed at a place other than the business premises where the credit grantor or his manager, agent or employee ordinarily carries on business, the credit receiver shall have the option to terminate that credit agreement within five days after the date of that agreement, by written notice delivered or sent by prepaid registered post to the credit grantor if he tenders the return of the relevant goods at the same time. The intention with this so-called “cooling-off” period is to afford credit receivers, who are subject to high pressure sales methods as a result of which they are lured into purchasing commodities which they, in fact, do not want or cannot afford, an opportunity to withdraw from such a contract. Clause 16 of the Bill provides that a competent unbiased person should determine the value of goods for any purpose of the Bill, as the current value of those goods on the date the credit grantor takes possession of such goods. However, should the goods subsequently be sold or leased at a higher price than the said valuation, such price will be regarded as the true value of those goods. This clause is subject to the proviso that the credit grantor may take into account any costs actually incurred by him in connection with any essential repairs to those goods prior to the lease or sale thereof and that the credit grantor shall pay to the credit receiver the difference between the amount of the said valuation and the amount for which the goods are subsequently actually sold or leased or, alternatively, that the credit grantor may set off such amount against any amount owing to the credit grantor in terms of the terminated credit agreement.

At the present moment any proceedings in terms of section 65 of the Magistrates’ Courts Act, 1944, by way of which a credit grantor may obtain an order for the periodical repayment of a debt are totally prohibited in the event of the said legal proceedings between a credit grantor and a credit receiver being based on the existence of a hire purchase contract. The effect of the present situation is that a hire purchase seller has no recourse to a court of law in order to obtain an order against a debtor for monthly repayments in those cases where no attachable assets exist which could have been sold in execution in order to satisfy the credit grantor’s claim.

The position of credit grantors in regard to instalment sale transactions is now alleviated as the provisions of clause 19 make it possible for such credit grantors, in certain circumstances, to obtain an order for committal for contempt of court, an emoluments attachment order, a garnishee order or an order referred to in section 65A(1) of the Magistrate’s Courts Act, 1944. In order to obtain the relief, a credit grantor has to satisfy the court in the following respects—

Another important aspect in regard to the proposed legislation is the question of jurisdiction. In terms of the provisions of the Hire Purchase Act, 1942, no legal action may be taken against a hire purchase buyer by a hire purchase seller in a court within whose area of jurisdiction the hire purchase contract was entered into, unless such buyer also resides or is employed in such area.

In clause 21 of the Bill this principle is adhered to, but it is made subject to the provision that should the credit receiver not reside or be employed within the Republic of South Africa, legal action may be instituted in a court in whose area of jurisdiction the credit agreement was entered into.

The reason for the insertion of this provision is that the practical application of the existing provision in the Hire Purchase Act, 1942, has shown that it is often extremely difficult for credit grantors to succeed in collecting debts owed by credit receivers, not residing or working in this country, by way of legal action through courts of law situated outside the Republic of South Africa.

Clause 24(1) sets out the liability of a credit grantor, subject to certain provisions, for the actions of his manager, agent or employee in the event of a contravention of the provisions of the Bill. This provision is necessary to establish the liability of a credit grantor in this regard beyond any doubt.

Clause 24(2) provides that the manager, agent or employee, as well as the credit grantor, can, subject to the provisions of subsection (1), be found guilty and be convicted for contraventions of the provisions of this Bill.

In order to allow for the proper administration and the effective application of the provisions of the proposed legislation, clause 26 provides for the appointment of inspectors and also sets out the powers vested in such inspectors. These powers are basically the same as those of inspectors appointed in terms of the provisions of the Trade Practices Act, 1976.

It very often happens that credit receivers overpay on their accounts with credit grantors, but that these amounts are not refunded to credit receivers. Clause 27 compels credit grantors to refund all credit balances on accounts within 10 days after they have been requested to do so by credit receivers.

I trust that this Bill which, as I have explained, will regulate consumer credit to the benefit of credit grantors and receivers, will enjoy the support of both sides of this House.

Mr. Speaker, the Bill in front of us, I believe, has to be looked at against the background of the free-enterprise system and the desirability for a Bill to regulate predominantly instalment purchases in South Africa.

The first reason, as we in these benches see it, is that it allows people a means of acquiring goods on a basis which will enable them to do it now as opposed to a basis which means that it might be a number of years before they can enjoy the benefits of the usage of such goods. Obviously this Bill is predominantly aimed at items which can materially benefit the consumer, e.g. a motor vehicle which will enable him to get to work, etc. Legislation of this nature, enabling consumers to obtain the usage of these goods which they could not afford under other circumstances, acts as a very good method of imposing disciplined saving methods on consumers. The person who would perhaps blow the money from his monthly pay cheque in a variety of other ways will now save because he is disciplined by the grantor of the credit to pay a certain amount every month towards the purchase of the article which he has bought. Thus he builds up wealth and thus he does acquire the benefits of the free-enterprise system.

The second reason is that the trader himself, the grantor of credit, is allowing out of his control articles which can cost large sums of money. The hon. the Minister has mentioned the R4 000 qualification which has now fallen away. Fairly obviously, prices are escalating to such an extent that this was very necessary and large sums of money are now expended on hire purchase transactions. Neither the trader nor the grantor of that credit would allow these large sums of money out of his control unless he was assured that there was some method by which he could legally regain possession of them. In other words, the credit grantor needs protection as well and he will be afforded this protection in this Bill, because he will have some assurance of being able to repossess the goods concerned.

The third item of background is to my mind perhaps even the most important one, and that is that one must seek to protect those people who are less commercially aware members of our society from the folly of their own actions. One cannot in all circumstances legislate for the stupidity of the actions of certain members of the public, who are prepared to sign away their rights willy-nilly. However, at the same time those members of the public do need protection from the slick salesman, the sharp operators and those very salesmen whom the hon. the Minister of Agriculture brought into the debate the other night when he spoke about the man who sold a milking machine to someone in Arabia who owned one cow and took the cow as a deposit. This is the type of situation, put to ludicrous extremes, of course, that one is referring to in a matter of this nature. These super salesmen and slick operators do exist and, unfortunately, in any society they create the very opposite of what is intended by this Bill. They create poverty, instead of helping to create wealth. Not only the South African population, but every population in the world needs protection from these traders within their own society. On the other hand, one must accept that these sharp-practice operators are a very small minority of the commercial population. In seeking to protect those that are commercially unaware from the depredations of these people, one must be careful not to go too far to the other extreme. One must be careful not to place the majority, who give good value for money, under regulations which make their trading operations considerably more onerous. One must be very careful not to unduly penalize the genuine trader. When it is looked at in the light of all the background to this Bill, we in these benches believe that predominantly this Bill does meet the objectives set out. Therefore we in these benches will support the Second Reading of this Bill. However, I must unfortunately qualify this a little by saying that we of course do not totally agree with all the clauses that are contained in this Bill. We regard this Bill as predominantly a Committee Stage Bill and we have a number of reservations in terms of various clauses. It might perhaps be helpful to the hon. the Minister if I were to spell out some of the objections we see at this stage. Not all of them will be discussed by me, as an hon. colleague of mine will take up this matter further.

The first clause I want to refer to deals with the powers conferred on the hon. the Minister. There can be no question that in terms of this Bill, tremendous powers are being conferred on the hon. the Minister and his successors in office. As an example of this one can look at clause 3(1)(d). It reads—

I think that everybody in this House must realize that this gives the hon. the Minister the power to do just about anything in terms of hire-purchase as he sees fit. We believe that these powers must be exercised with very great caution and consultation. I believe that the hon. the Minister has in fact hit the right note in his Second Reading speech by undertaking to consult with commerce, and I would commend this particular thought and hope that his successors will carry it out.

Clauses 2 and 3 really represent the crux of the Bill. We believe that clause 2, particularly subsection (1)(a), has to an extent been clumsily drafted. It reads as follows—

I realize that this clause must have given those who drafted it, a tremendous amount of difficulty. However, we do not really believe that this difficulty in the wording has been completely overcome. In the Committee Stage we shall speak further to this clause of the Bill.

Clause 5(1)(b) is also an interesting one. It provides that subject to the provisions of the Limitation and Disclosure of Finance Charges Act every agreement shall—

I think it is clause 6(2) which also refers to something happening in the Republic.

In looking at this proposed legislation, one must realize that this can create quite a large problem. The problem relates to the fact that three portions of territory which have formerly been part of the Republic of South Africa are no longer part of it. Obviously I am referring to Transkei, Bophuthatswana and Venda. In terms of this clause the credit grantor will not be able to enter into a valid credit agreement or hire-purchase sale with anybody who resides in Transkei. I believe this clause can create a tremendous amount of difficulty to those major towns on the borders of independent homelands. I think that again we need to look further into this particular situation and jointly attempt to overcome it.

Clause 13 introduces a completely new principle in the hire purchase system in South Africa. We in these benches tend to believe that it is a necessary clause. However, it is a clause which can be very onerous for the honest trader, the credit grantor who runs a reasonable business and who gives value for money. We believe this particular clause can be very onerous for that trader. As I have said, I know it is very difficult to try to draw up legislation of this nature which protects on the one hand without creating more difficulties for other people on the other hand. The effect of this clause really is that if any credit grantor signs that credit agreement outside of his normal business, it can be terminated. What it is really going to mean, is that the trader will not be able to sign any credit agreements outside his own business premises. This is going to create a difficulty. For instance, when a customer comes to a motor trader and wishes to purchase a motor-car, the trader offers him hire purchase facilities in order to enable him to buy that motor-car. The grantor of credit has therefore taken the initiative by offering credit. After that the deal is struck, the order is signed, the car is in due course prepared and very naturally, in a great number of cases, the customer asks the motor trader to deliver the new motor-car to either his business or residential premises. The trader then goes ahead and on delivery of the motor-car he asks the purchaser to sign all the relevant documentation, including the hire purchase agreement. This is a normal transaction which is carried out certainly every day of the week in the motor trade and, I am sure, by other traders as well. The effect of this clause is that he is not going to be able to do this any longer. I do not think any motor trader could accept that the customer should be able to have the free use of a vehicle for a period of five days and then at the end of those five days give it back to the trader saying that he is cancelling the whole deal without incurring any penalties. It is a very difficult situation which we believe the hon. the Minister must particularly be careful not to impose on too many people in terms of the regulations. It is desirable to protect the customer from, for example, the salesman who goes from door to door and convinces a housewife to sign an agreement to buy, shall we say, a set of books at an enormous price. It is desirable that this clause should be contained in this Bill, but it must be exercised and supervised with extreme care by the hon. the Minister and his department and, I should hope, by the courts of law.

I believe clause 16 to be a very poor clause. In terms of this clause, the motor trader again—a trade with which I am personally very familiar—can find himself in great difficulty. One repossesses a vehicle, then one has to advertise it, provide space for it to be displayed and pay salesman’s commission on the sale of the vehicle. One has in fact to incur a great deal of expense, apart from the reconditioning expense, in order to resell the vehicle and, in terms of this clause, having done so, anything one receives in excess of the valuation has to be given back to the customer. One is not at all entitled to recover any of the expenses other than reconditioning expenses which one has been put to in terms of a repossession. I do not believe this to be equitable and we will be seeking to amend this provision in a more reasonable way during the Committee Stage of the Bill.

Is this on new and used vehicles?

Yes. Clause 19 deals with the garnishee order or section 65 situation, which the hon. the Minister mentioned in his Second Reading speech. We believe this to be a good extension of the present situation but we believe that it has not gone far enough. One must realize that in a lot of instances goods are not destroyed by the credit receiver but they come back in such poor condition that they are worth very, very little; and the amount of money that the trader can recover from the repossession of those goods is far less than would be the case if someone had exercised a reasonable amount of care in looking after of those goods. So, while we approve of this, we do believe that it should go further.

I think, at this stage, as we are getting fairly near to the end of this particular session of debate, let me say again to the hon. the Minister that we believe a very reasonable job has been done in the drafting of this Bill. We believe that in a number of cases amendments should be made in order to clarify issues or perhaps even to create slightly different situations, but on the whole this party will support the Bill.

Mr. Speaker, the hon. member for East London North has indicated that the official Opposition will be supporting the Second Reading of this Bill and I wish to thank him for their support. However, the hon. member has also indicated that they have certain reservations in respect of certain clauses, and I propose dealing with the reservations mentioned by the hon. member at a later stage in the course of my speech.

*Mr. Speaker, the present Hire Purchase Act was placed on the Statute Book in 1942, i.e. 38 years ago, and since then the Act has been amended six times. It has become an inconveniently arranged piece of legislation which is difficult to interpret and apply. Consequently it is to be welcomed that a consolidatory measure is at present being proposed and considered. In addition, the Hire Purchase Act of 1942 was passed at a time when business life was still relatively unsophisticated. These days, however, high pressure salesmanship is rife and the Hire-Purchase Act, as amended, is just not effective enough anymore to make provision for all cases of credit agreements.

Business suspended at 18h30 and resumed at 20h00.

Evening Sitting

Mr. Speaker, before business was suspended I was explaining how great progress had been since 1942 in the science, technology and various other spheres. However, I make so bold as to say that the greatest development has occurred in the sphere of circumvention and evasion of the law. The so-called art of villainy has been developed to a high level—if one may call it that—particularly in recent years. More effective legislation to combat abuses is consequently to be welcomed.

Clause 2 of the Bill under discussion provides that the Minister may from time to time determine the scope of the legislation by way of notice in the Gazette. I take it that at first primarily those transactions which are at present subject to the Hire Purchase Act, 1942, and to section 9 of the Price Control Act will be involved. However the Minister will have the necessary authority under clause 2—and this is what is important—to expand the scope of the legislation by way of notice to other credit agreements, as and when abuses arise, in order to protect the buying public from exploitation as a result of high pressure sales techniques.

It is true that the Minister is being granted wide powers in terms of this clause. The hon. member for East London North, who unfortunately is not at present in the House at the moment, objected to such wide powers being granted to the Minister. However, it may be expected that the hon. the Minister will apply these powers selectively in order to achieve the aforesaid object of protecting the buying public against exploitation. It should be noted that the Minister, every time he exercises this power, will have to do so by way of notice in the Gazette.

The hon. member for East London North was also opposed to the wording of clause 2(1)(a) of the Bill. He did not elaborate on what his complaint actually entails, but I would suppose that the hon. member feels aggrieved at the fact that the power to expand the scope of the legislation from time to time, as the need arises, are being granted to the hon. the Minister in this form. However, I wish to point out to the hon. member that the only alternative would have been to involve all possible credit agreements in this Bill, with the power being granted to the Minister to exclude specific credit agreements by way of notice. But this procedure would have been unpractical because a long list of transactions would then have had to be excluded.

The requirements and the contents of credit agreements, as specified in clause 5, agree to a great extent with the requirements in terms of the present Hire Purchase Act, and credit agreements will have to comply materially with these requirements. Clause 6 is aimed at preventing the entering into of spurious agreements. It happens all too frequently that spurious agreements are entered into in order to circumvent the provisions of the Hire Purchase Act. In this way spurious agreements are entered into, as the hon. the Minister has already mentioned in his Second Reading speech, to circumvent the deposit requirements of the Hire Purchase Act. Spurious agreements are also entered into to conceal representations in respect of the quality of the goods concerned, or to imply that the purchaser inspected the goods in question.

Next I should like to make a few recommendations in regard to possible amendments for the consideration of the hon. the Minister. I suggest that in clause 8(3) it should be required that the notification which a credit receiver shall give a credit grantor shall not only be written notice, but that the written notice shall in addition be sent to him by registered mail. It has happened all too frequently in the past that arguments arose over the receipt or non-receipt of written notices. I suggest further that in clause 12, apart from the recovery of storage costs and insurance, provision should also be made for the recovery of interim interest and the costs of conveyance of the goods concerned.

I come now to clause 13 to which the hon. member for East London North also objected. In my opinion this would place too great a burden on the bona fide dealer. However, I wish to emphasize that this clause is specifically aimed at protecting credit receivers against the high-pressure sales techniques of door-to-door salesmen by making provision for a so-called “cooling-off” period. The hon. member for East London North said he accepted the desirability of the clause, but then added that the clause should be applied with the greatest circumspection. I make so bold as to say that it should undoubtedly be applied in this way, because the intention is certainly not to place a burden on the bona fide dealer, but in fact to protect the purchaser against the high-pressure sales techniques of door-to-door salesmen, techniques which all of us are acquainted with. At some time or another, all of us have experienced techniques of this kind. The hon. member alleged further that the effect of the clause would be that it would not be possible to enter into any binding agreements in places other than the business premises of the seller. But that is not correct because the clause actually has nothing to do with how binding the agreement is. All that it entails is that the purchaser is granted a period of five days in which to withdraw from an agreement. But if he does not do so the agreement remains valid and binding. It is not a question of the agreement only becoming valid after five days. It is solely a right of withdrawal which the purchaser acquires in terms of this clause. The period of five days may also be questioned, but this period is the result of a compromise between the standpoint of organized commerce on the one hand which does not wish to allow any “cooling-off” period, and the standpoint of the consumer organization on the other, which in turn wants a longer “cooling-off” period.

I think I have already replied to most of the points raised by the hon. member for East London North. Finally there is just his reference to clause 16, which he maintains is a “poor clause”, and connected with it clause 19 to which his objection is that it does not go far enough. The hon. member’s objection to clause 19 consisted in his saying that a purchaser sometimes returned the goods concerned in a damaged state and clause 19, according to him, merely provided for the case where the goods had become lost or had been destroyed. I must point out that clause 16, which according to him is a “poor clause”, is in fact the clause in which provision is being made which enables the seller to cause the damaged goods to be repaired and may set off the costs of repair against the proceeds of the goods. What, according to him, is missing in clause 19, is in fact contained in clause 16, a clause which according to him is a “poor clause”. I do not understand this kind of argumentation by the hon. member. Perhaps the hon. member, in the process straying to the PFP, also became just a little confused about these clauses.

The hon. member also levelled criticism at clause 5(1)(b), in terms of which the address of the parties in the Republic should be furnished. This need not necessarily be the residential address of a party; it may also be his business address. It is very clear to me that this requirement merely entails that a domicilium citandi shall be stated. This is accepted practice, and it does not in any way have the effect that a valid agreement cannot be concluded with a citizen of another State, if he were to state a business address within the Republic of South Africa.

Consequently the reservations of the hon. member for East London North appear to have no merit. Since the PFP support the legislation in principle, I do not think there is any further argument on which to reply. I content myself with saying that I gladly support this Bill.

Mr. Speaker, I should like to start by saying to the hon. the Minister that we of the NRP will be supporting this Bill. We have one or two minor reservations about it to which I will refer. One such reservation is one to which the hon. member for East London North referred earlier on and to which the hon. member for Mossel Bay has also just referred, namely the rather unusual powers the Minister is now asking for in terms of clauses 2 and 3, and particularly clause 3(1)(d), which states that the Minister may—

I should like to say at the outset that we believe that this Bill is going to serve a very useful purpose in the commercial world of South Africa and that there has been a great need for it in South Africa for some time. As I said earlier, we welcome it. These are, however, rather unusual powers the Minister has asked for. Looking at this Bill, I believe that the control of consumer credit can be used for two specific reasons, among a number of others. The one to which every speaker so far has referred is the one of controlling unscrupulous people lending money or selling goods to people through some form of credit scheme. We have no argument with the objective to control that unscrupulous person, but on the other hand consumer credit and the control thereof can be used to manage the economy of a country. The hon. the Minister may, in collaboration with the hon. the Minister of Finance, decide to put the squeeze on credit, so to speak, when the hon. the Minister of Finance may feel the economy is running a bit wild, and also to take some of the heat out of it by tightening up credit. This in itself is not such a bad thing. As a matter of fact I would go so far as to say that in the world of today this could be a very good thing, especially when one sees what is happening in the USA and Britain. Consumer spending in the USA, mainly on borrowed money or through deficit budgeting on the part of Government, has run the country as a whole into such debt that in order to try and control it the current bank rate in the USA is as high as 20%, which is an unheard of level. This is an indication of just how consumer spending can run wild, and this in itself has contributed considerably to the extremely high inflation rate in the USA and elsewhere. So I do think we need some sort of legislation to enable the Ministers directly concerned with managing the economy and also controlling the unscrupulous dealer and lender to deal with this. However, does the hon. the Minister fully understand the wide powers which he is asking for, the power to prescribe any conditions he may deem fit in regard to any credit agreement? This places a tremendous responsibility on the shoulders of the hon. the Minister because, as I have said, these are extremely wide powers. They certainly go well beyond the provisions of the existing Hire Purchase Act. I think I am correct in saying that the powers are arbitrary powers and could be rather alarming in their effect if they were not used with a great deal of circumspection and caution. There are a lot of practical problems which could arise if the hon. the Minister should decide to change the rules, if I may call them that, of the credit business in South Africa. The result of this could have rather a disastrous effect on a lot of businesses, specially on those firms that operate their entire business on, let us say, revolving credit accounts. This applies especially to the clothing field, where one finds firms that allow people a revolving credit to the amount of, say, R200 or R300. They pay this amount off in monthly instalments, and as they pay off a portion of it they can again buy something else on credit. Decisions taken by the hon. the Minister in controlling consumer spending on clothing, for instance, could have a serious effect on a number of chain stores that deal in this kind of business. This applies especially to clothing because the clothing business is a long-term venture. I have just heard that clothing firms are already placing orders with the manufacturers for next winter’s fashions. Let us assume that these orders are placed now, that production gets under way in about January next year and that just before the winter fashions are ready for the market, the Minister uses the great powers which he has and suddenly put a clamp on consumer spending on clothing. That will have quite an effect on that section of the economy. I realize that the hon. the Minister is a very responsible Minister, but I would nevertheless like to ask him for his thoughts on this particular matter.

As I have said, we will be supporting the Bill, but we are rather concerned that unless there is a great deal of co-ordination and consultation with commerce and industry, we could be causing some people a lot of problems.

I know that people in commerce and industry are concerned about this, and no doubt they have spoken to the hon. the Minister about it. So perhaps he could tell us whether this is the case and what his thoughts are in that particular regard.

To get to the Bill itself, let me say that we believe that the Bill is a great improvement on the existing Hire Purchase Act because we certainly urgently need greater powers and legislation to control, as has been said, the unscrupulous operator. The two clauses which I think have really contributed towards protecting the public in this regard are clauses 4 and 13, to which both previous speakers and the hon. the Minister have referred. They are designed to give the purchaser, the person entering into a credit agreement, a cooling-off period of at least five working days. I wonder how many people have been caught by a travelling salesman who comes to their door in the evening with his high-pressure methods. They then suddenly find themselves tied down to a credit agreement or a hire-purchase agreement which binds them to the tune of hundreds of rand and over a long period of time.

They are as bad as Nat and Prog canvassers.

I am not going to make a political debate out of this. All I know is that a number of people can get sucked in, if I may use that term, by these unscrupulous people. I do believe that the five-day cooling-off period is very, very essential. Therefore we are very pleased to see these clauses in the Bill.

The hon. member for East London North said that this was going to have quite an effect on certain forms of business where the deal is finally signed in the purchaser’s office or home. I sometimes feel that maybe there is too much pandering to the consumer in this regard. I think that if a person is going to enter into a credit agreement running into several thousands of rand, as in the case of the purchase of a motor-car, he should at least go to the office or the business premises of the firm that is selling it to conclude that deal. I know that the hon. member said that a lot of professional men are very busy and that in order to clinch the deal the salesman often has to go to the purchaser’s office. I wonder whether this is really necessary, especially when I think that it is even more necessary for an ordinary citizen to be protected against the type of malpractice that one finds in certain instances.

There are many clauses in the Bill which protect the consumer. For instance, clause 24 now provides that the grantor of credit will be liable for an act or omission by his managers, agents or employees, which act or omission shall constitute an offence under the Act. I think this is another very good clause. How many times in the past has the boss of the show, if I may say that, absolved himself of his responsibilities by saying that it was not he or his firm that did this but the chap who used to work for him and who has now left his employment. In fact, not so long ago I had to do with a case where a man in desperation telephoned me to say that he suddenly found himself in for R2 000 or R3 000 with a particular firm instead of a few hundred rand as he thought, and then when he went to the manager of the firm he was told that the man who had drawn and altered the agreement had left their employment and that they were hunting for him. The firm would not accept liability in this particular case. This clause will now protect the consumer and the public if this type of thing happens.

Clause 7 states that a credit grantor cannot, as an inducement to clinch the sale, “offer, give or promise any benefit” which is not included in the conditions of the agreement. How often do we find this happening, especially in certain fields of business which I shall not name here? We find that a person says that if one buys certain goods they will throw in something else as a prize or gift. According to this clause they will now not be able to do that. It will all have to be written into the agreement, which I think is a good thing. Clause 5 goes into some detail as to what should be included in the agreement, the essentials to ensure that it is an honourable agreement. Clause 6 clearly states what cannot be included in the agreement, and I think that is very good indeed. Whereas in the past the credit grantor could include a clause in the agreement which exempted him from liability for any act, omission or representation by any person acting on his behalf, subclause 6(1)(c) now makes such a clause invalid. This again serves to prevent unscrupulous people for writing into their agreements in the fine print clauses enabling them to have no liability at all. So I believe that these clauses are necessary and that the hon. the Minister should be thanked and congratulated for bringing them to the House.

Clause 8 places obligations on the credit receiver—this is a two-way thing. This Bill does not only place obligations upon the grantor of credit, but it also places obligations and responsibilities upon the receiver of credit. These are listed in clause 8 and I shall not go into them in any detail.

I am very pleased to see in clauses 11 and 12 that the receiver of credit is protected in the event of him having financial difficulties and being unable to meet his payment for a particular month. There are now clearly laid-down provisions which protect the public and which determine exactly what has to be done if goods have to be repossessed and then sold, as we heard earlier on from the hon. member for East London North when he talked about the selling of goods as is laid down in clauses 15 and 16. I think that the hon. member for East London North may be a little concerned about clauses 15 and 16 in regard to the sale of repossessed goods in view of the business he is in. I can understand the problems which may arise as a result of this, but I think that the clause gives all the necessary protection for the grantor of credit, because he himself can designate the evaluator who is going to value the goods that are to be repossessed. I do not think that the hon. member for East London North really has a case. It may complicate his business slightly, but I think that he will be protected as far as those provisions are concerned.

Then there are also the powers of inspectors. I think it is always necessary in legislation such as this that the authorities should have the power to enter premises if they have suspicions of malpractice, and demand to see the books, and seize the books and documents, etc. in the event that the grantors of credit are exceeding the terms or provisions of this legislation.

I should just like to conclude by saying that yet again we see that the provisions which the former hon. member for Berea, who incidentally was in the Gallery of this House today but is not there now, called for repeatedly in his time, has now been introduced by this hon. the Minister. If one recalls, the former hon. member for Berea was his party’s chief spokesman on health when this hon. the Minister was the Minister of Health, so he possibly had a lot of sympathy for that former hon. member. I see from the Bill that he now requires that when an inspector enters premises to examine documents and is requested to do so, he must produce an authorizing document. Here again, for the second time this session, we have a provision included which this party and its predecessor have called for for many years. We thank the hon. the Minister for this. In conclusion I once again say that we will support this measure.

Mr. Speaker, the hon. member for Amanzimtoti and I are on the same wave-length to a very large extent and, that being the case, I do not have to deal with his contribution at very great length. The hon. member spoke about the tightening up of credit. I want to tell him that in our view credit in South Africa is generally very well controlled. In fact, we need to encourage responsible consumer spending. The hon. the Minister of Finance has, by means of his budget, put more money into the hands of the consumers specifically to stimulate and encourage consumer spending. Therefore I think that credit is generally well controlled in South Africa. The hon. member was also worried about the hon. the Minister putting a clamp on consumer credit spending on clothing. That the hon. the Minister cannot and, in my view, would not do without taking the free-market system into account.

You would be surprised.

The hon. member for Durban North says that I would be surprised. I served on the commission that fell under the hon. the Minister’s department. We shall, in fact, be dealing with it in the debate on the Share Blocks Control Bill, the next item on the Order Paper. I was surprised to see the number of organizations with which the hon. the Minister’s department consults. The commission which sat received representations from so many bodies that if the hon. the Minister wanted to take a decision in regard to the curbing of credit sales he would, in my view, only do so if there were gross abuses or after he had consulted with the Federated Chamber of Industries, the Association of Chambers of Commerce, the Handelsinstituut and many other bodies. The hon. the Minister’s department is known for the fact that it actually consults with numerous bodies. We who have served in the commission have had to sit and listen to the evidence by all those numerous bodies who contribute, give evidence and guide the hon. the Minister’s department in many directions.

This is a most important Bill in a growing economy. The granting of credit facilities to the consumer public is essential for commercial and industrial development in South Africa. Credit ensures that many necessities, and perhaps luxuries, are within the buying power of many people who would not normally be able to afford transactions if they were cash transactions.

The development, the extension and the creation of new industries are dependent on a certain turnover in order that operations can be viable. For example, credit sales from the retailer to the public play a most important part in the turnover of industry. The stimulation of credit sales is important in a dynamic industry which has to provide employment to the enormous number of job-seekers who enter the market every year. This Bill and the regulations have to ensure that the consumer public is not over-exploited by sophisticated credit grantors. In many cases credit receivers need safeguards and protection as credit grantors are, by the very nature of things, in a better position than the credit receivers to protect themselves.

Under clause 3 the hon. the Minister may, by regulation, prescribe the maximum period within which the full purchase price shall be paid, and further prescribe the cash portion or any other consideration which shall be paid or delivered.

Under this clause I should like the hon. the Minister to consider a very urgent investigation to further stimulate sales in the motor industry. I know that motor industry sales have improved, but now is the time to see if it is not feasible to go for longer runs by increased production and possibly by producing more cheaply. This would, in turn, create more employment situations and would also assist in increasing our motor exports. The increased production, employment opportunities and exports are tied into increased sales. It is in relation to this aspect of increased sales that I should like the hon. the Minister to authorize an urgent investigation. Sales would be vastly increased by reducing the deposit by 50% and by increasing the instalment period to something like 60 months. This would enable many more credit receivers to purchase motor vehicles, as for many the initial deposit and the monthly instalments are too high. Most of the leading institutions are involved in extending credit facilities to the motor industry. This granting of credit is therefore reasonably well controlled, and the motor industry, the institutions and the free-market mechanisms will ensure that the bad debt ratio is kept under proper control. At this stage I am only asking the hon. the Minister to investigate the matter and to consult with the motor industry as a matter of urgency. This is an ideal opportunity to build the motor vehicle industry into a massive export industry. This Bill has far-reaching effects. It is obviously the sort of Bill which, in practice, will highlight problems and difficulties. So in future years we shall obviously have to make amendments to it In the Committee Stage we can, as other hon. members have pointed out, look at the various snags in the Bill and come up with suggestions to perhaps improve the Bill.

With these words I should like to urge the hon. the Minister to look after the motor industry. I should like to tell him, however, that in general we support the contents of this Bill.

Mr. Speaker, we are pleased that the NRP and the SAP also support the legislation, but I think I could make so bold as to say that it would be a very stupid and wilful person who did not support the legislation, because it is obviously very good legislation.

The hon. member for Amanzimtoti pointed out that in terms of the Bill the Minister is taking a great responsibility upon himself. Fortunately we are in the position that we can bestow such responsibility on the hon. the Minister in question with the utmost confidence and be satisfied that he has all the qualities which will be necessary to enable him to bear the responsibility. This is important and highly essential legislation. In the first place the Bill sounds a little strange to the ear and seems a little strange to the eye precisely because new concepts are being used which are not very generally known, but if one goes into them, one finds that what we have is basically the pattern of the old well-known Hire-Purchase Act which reoccurs in this Bill. New legislation and concepts have become essential, mainly for three reasons. The first is, as the hon. member for Mossel Bay has already pointed out, that since the Hire-Purchase Act is already an old Act dating from 1942 which has been amended six times, its consolidation is very necessary. Then, too new commercial practices have arisen in the course of time which require new protective measures, and these now emerge in this legislation.

To my mind, however, the most important aspect is that provision had been made which would also bring lend-lease contracts under the discipline of some Act or other. To my mind this in particular is of great importance, and I consider it to be the most obvious improvement which has been brought about by the legislation.

It is generally known that hire transactions have increased tremendously in number and many salesmen have abused the position to circumvent the sound, protective provisions of the Hire-Purchase Act by, instead of entering into a hire-purchase contract, entering into a contract of hire with a prospective purchaser. It happened that many prospective buyers who were unable to obtain the necessary finance found their way to a salesman who took them to a financial institution. The result was that the financial institution in fact purchased the article from the dealer or manufacturer.

The effect of this was that many important common law obligations which rest in such a case on a dealer, particularly one who has a particular proficiency in the manufactured product, or which rest on the manufacturer, fell away. Further common law obligations were, as far as the lessee was concerned, specifically excluded in the contract. Then, as I have said, the bank no longer has the ordinary common law obligation of a dealer, seller or manufacturer. Then they went even further and wrote all the obligations which they possibly could have had in terms of the contract of hire, out of the contract so that the person who purchased, or who thought he was purchasing, now became a lessee, without his even knowing it, and was left without recourse. That is why I welcome clause 6(1)(d) in particular, which deals with the guarantees and warranties to which I have referred.

However, I have a vague feeling that the clause might not go far enough, and does not prevent the abuse in the example which I mentioned. Therefore I wish to suggest humbly that as the legislation develops the department should perhaps give further attention to this matter in future and consider whether what ought to be retained should not in fact be the guarantee or warranty which will be a tacit condition in an agreement between a dealer or manufacturer on the one hand and the ordinary purchaser on the other, for because the financial institution which is not normally a dealer in the specific product or a manufacturer thereof, becomes the lessor, many common law guarantees fall away, even if they are not excluded in the contract.

Then, too, I wish to associate myself with what the hon. member for Mossel Bay said. I think the general principle which should be found throughout the Act, is that any notice which is given, whether it is by the credit grantor or the credit receiver, should for safety’s sake be given by way of registered post, if it is not delivered personally.

Naturally the Bill is not a simple one, but if the reader does not content himself with first impressions after reading through it, but does a little research and thinks about the provisions, he will find that a commendable balance is struck between the rights and duties of the credit grantor on the one hand and the credit receiver on the other, while the credit receiver who is more frequently in the weaker position and has to be protected against exploitation, is not being overprotected now.

The hon. member for East London City also referred to the examples to which the hon. the Minister of Agriculture and Fisheries referred in connection with high-pressure salesmanship, and I believe that although the hon. the Minister is not present now, he will not take it amiss of me if I inform the hon. members that there is a third chapter in that tale told by the hon. the Minister. I heard on good authority that the salesman to whom the hon. the Minister was referring succeeded in selling the hon. the Minister himself a case of margarine, and I think that shows what an exceptionally good salesman he was.

Fortunately I have now no doubt that I must support the legislation, and we on this side of the House do so gladly.

Mr. Speaker, I should like to convey my thanks to hon. members for their positive approach to this Bill.

†In the first instance I should like to thank the hon. member for East London North in his absence—he apologized for his not being able to attend this evening’s sitting—for his positive approach and for his support of the Bill on behalf of the PFP. The hon. member expressed certain reservations in connection with some of the clauses of the Bill. I do not think I shall belabour all those points in any way at this stage, particularly since the hon. member is not present here at the moment. The hon. member agrees, however, that as far as the substance and the aims of the Bill are concerned he is completely ad idem with us on this side of the House. The hon. member is, of course, free to raise his points of objection or his reservations during the Committee Stage. I should like to point out, however, that consultation, especially in legislation of this nature, lies at the root of the success of its execution. As it has always been in the past it is still part and parcel of the approach of this department to conduct consultations. The department will also continue to do so in the future.

*With reference to what the hon. member for Mossel Bay said, I should like to point out that it was gratifying to receive criticism on a Bill of this nature from the members on both sides of the House. The object of legislation of this nature is to bring about good legislation.

Hear, hear!

We should therefore help one another, and when I receive, from whichever party in this House, a suggestion or a contribution which could possibly be of assistance, I do not try to shoot it down merely because it comes from an Opposition Party. That I cannot do.

In other words, you give credit where credit is due. [Interjections.]

Hon. members must kindly not interrupt me now. I am now speaking in a positive vein, and I think all hon. members ought to realize it. We are now dealing here with legislation concerning commerce. We are dealing with the interests of every member of the public, every member of the population of this country. We are now dealing with nothing less than efficiency and means of achieving that effectiveness.

Consequently I appreciate the fact that hon. members on both sides of the House expressed constructive criticism in their contributions and pointed out how, with regard to some of the provisions of this Bill, we could make certain improvements. I think hon. members will find that, as far as I am concerned—and in this stage I cannot be an expert in respect of this matter—and also as far as the experts who have to advise me are concerned, as well as hon. members, I am open to good suggestions. That was why I listened to the comments by the hon. member for Mossel Bay on the legislation under discussion. The hon. member pointed out that we should keep the aspect of registered post in mind, and that there should not merely be a written notice. We take note of that and we shall react to it. This legislation does have a very wide scope, it is true. But the point of departure is not to start with a tremendously wide scope and then to seek out tiny problems under that blanket. On the contrary, we start out with nothing, with no control, but as the problems arise, there is gradual control on the part of the Minister. Naturally control does not always mean total restriction in the sense that businessmen are restricted to such an extent that free enterprise is curbed. Control in this case means what we have already said, and that is that in the present circumstances, with the present stages of development attained by business practices, we should see whether, with better methods of control and vigilance, we cannot be better able to protect the interests of the consumer or buyer, as well as the seller. For this reason we have aspects such as this cooling-off period of five days which we tie in with a person’s business premises. We have certain aspects here which are of extreme importance, but one should be careful when one argues about aspects such as the evaluation of repossessed goods, not to fall into a trap as the hon. member for East London North did. In my opinion he did fall into a trap, because, quite anomalously, he set clause 16 off against clause 19, while clause 16 very definitely makes provision for the evaluation of goods even though they have decreased in value. We have the ordinary checks and balances at work here. If a person places too high a value on the goods he has to give the money back and if too low, he gets that money back to his benefit. That is the way it is.

†The hon. member for Amanzimtoti had, I must agree, a very positive approach to this legislation, but what other approach is there to good legislation in any case? He was also concerned, to a certain extent, about the unusual powers the Minister wants to take unto himself in terms of clause 3, but I think I have already explained that. The Minister would be silly if it were his intention to be so restrictive as to adopt autocratic measures, without any real consultation with the affected people or with the people representing them, e.g. Assocom, the Afrikaanse Handelsinstituut, the FCI and others. There is one thing hon. members on that side of the House cannot reproach the Government with when it comes to trade legislation or industrial legislation and that is that the Government does not consult. We do disagree from time to time, but we do consult. In fact, tomorrow I have consultations with Assocom on this very legislation.

Why are we debating it now then?

We can debate it until the Third Reading stage in the Other Place. Why not? We can debate the legislation all the same. It is never too late to change anything in the process of passing legislation through Parliament, at least until one has finally let the curtain down on the Third Reading in the Other Place. Is that not so?

Quite right.

Then there is the hon. member for Walmer. I should like to reply to him in the other language because he is a member of the old United Party. Therefore I shall reply to him in the other language. He made a request to me in regard to the motor-car industry. He admits that at this stage that industry is developing exceptionally well under the influence of the growth of our economy, which has since last April suddenly started to get momentum. He wants us to take into account that we are dealing with an industry that affords us particularly good export opportunities. He asked us to consider extending the hire-purchase period, decreasing of the initial payment, etc. I should like to tell him that we have already thought of these things. We know that this is a very sensitive industry and a very important one as well. Last year we extended the hire-purchase period with regard to commercial vehicles from 30 months to 42 months’. So we are constantly mindful of possibilities for assistance to that part of our industry.

Will you investigate the matter further?

I will most definitely have another look at it, but I cannot promise the hon. member anything definite. Nevertheless, as I have already indicated, this is one of the matters we are applying our minds to.

*I was struck by the insight into the necessity for this legislation of the hon. member for Albany. The fact that he studied it well and made a few practical suggestions, has not escaped me, and we shall definitely take them into consideration during the Committee Stage. Although I do not entirely agree with all the suggestions which were made, I shall try to explain as well as I can why we are not able to accept some of them. At the same time I should like to explain, too, why there are others which I am able to accept. I do not think that I have left out any speaker or failed to deal with any idea.

Question agreed to.

Bill read a Second Time.

Mr. Speaker, I move—

During 1977, my predecessor introduced a Development Schemes Bill in this House. This Bill was referred to a Select Committee after its First Reading, but because the Select Committee could not complete its activities during the parliamentary session of 1977, it recommended that it be relieved of its task and that a commission of inquiry consisting of the members of the Select Committee be appointed to inquire into and report on the subject of the Development Schemes Bill.

The Commission of Inquiry into the Development Schemes Bill was appointed by Proclamation 1964 of 23 September 1977, and although the activities of the commission were interrupted by the general election at the end of 1977, it published an interim report on 16 March 1978 in which it recommended certain amendments to the Sale of Land on Instalments Act, 1971. This legislation to give effect to the recommendations of the commission was contained in the Sale of Land on Instalments Amendment Act, 1978.

The commission has now published a fourth interim report, and I understand that that report will be followed by a fifth and final one. In its fourth interim report, which was tabled in this House on 8 February 1980, the commission made certain recommendations in respect of rights of use conferred by virtue of a shareholding with regard to a portion of a building, and the report also contains a Bill to give effect to the recommendations of the commission.

According to the commission, the system in terms of which rights of use in respect of flats are conferred by the shares of a company has given rise to abuses and malpractices, and it is to be expected that the system concerned will continue to be exploited unless steps are taken to rectify it. I want to say that the schemes in terms of which rights of use in respect of flats are conferred by shares are commonly known as share block schemes.

It is estimated that approximately 30 000 families in Durban alone have obtained accommodation in terms of share block schemes. The commission emphasizes that although the Sectional Titles Act, 1971, provides for the conversion of certain rights of use into rights of ownership according to the provisions of that Act, in the case of many share block schemes, and especially in Durban, insurmountable problems exist which make the conversion of rights of use into rights of ownership impossible under the present circumstances.

I do not intend to elaborate on those problems, but it is clear that in the foreseeable future, share block schemes will continue to exist alongside sectional title schemes. Therefore measures are desirable to prevent, as far as is practicable, the abuses and malpractices referred to by the commission of inquiry. I now want to deal with the most important principles contained in the Bill which is before the House.

As I have already mentioned, certain rights of use are conferred by the shares of a company. As far as I know, all the companies involved in share block schemes are companies that are incorporated and registered in terms of the provisions of the Companies Act, 1973, or are deemed to be thus incorporated and registered. The companies concerned have to comply with the provisions of that Act, but in order to avoid abuses and malpractices in respect of share block schemes, the proposed legislation contains provisions that are in conflict with those of the Companies Act. In order to remove any doubt which may arise from such a conflict, it is provided in the Bill that in such a case, the provisions of the proposed legislation shall prevail.

A problem which has arisen in respect of share block schemes is that the management of share block companies use money received by them from the members of the companies for purposes which have nothing to do with the main object of the companies. In terms of the proposed legislation, the main object and business of a share block company will be limited to the operation of a share block scheme with regard to specific immovable property.

I want to emphasize that in terms of existing rules of law, a company firstly has the capacity determined by its main object, and that its main object includes objects ancillary to that main object, unless a particular object is expressly excluded from its memorandum; secondly, that every company has unlimited powers to enable it to realize its main and ancillary objects, unless specific powers are expressly excluded or qualified in its memorandum; and thirdly, that an act of a company shall not be void merely because the company did not have the capacity or power to perform that act.

These rules of law have the effect that any contract entered into by a company is binding upon that company and its counterpart, although both the company and that counterpart knew that the contract was not intended to realize the objects of the company. The proposed legislation provides that the capacity of a share block company shall be determined by its main object and shall include objects ancillary to that main object, but stipulates, firstly, that it shall only have such powers as may be necessary to enable it to realize its main object and ancillary objects, and secondly, that any act of the company in excess of its capacity or powers shall be void.

Before the commencement of the Companies Act, 1973, acts of a company which were void because such acts were in excess of the capacity or powers of the company resulted in abuses. The question could therefore be asked what provisions the proposed legislation contains to safeguard the position of persons who do business with a share block company. Firstly, the proposed legislation provides that when a void act has been performed on behalf of a company, the person who performed or is purported to have performed that act on behalf of the company, shall be personally liable to any third party who was prejudiced by reason of the fact that no obligation resulted for the company from that act, provided that that third party acted in good faith and reasonably in relation to the performance of that act. Secondly, the person who performed or is purported to have performed the void act on behalf of the company will be able, in terms of the provisions of section 248 of the Companies Act, to apply to the court for legal aid in the event of any judicial proceedings or claim being instituted against him as a result of the act. Thirdly, the proposed legislation contains specific provisions as to the name of a share block company, which will ensure that every third party doing business with a share block company will be warned by its name that the capacity and powers of the company are limited.

†The Commission of Inquiry into the Development Schemes Bill states in its second interim report that it had received evidence to the effect that it is quite an expensive exercise for any person who wishes to dispose of shares to prepare and issue a prospectus or statements in terms of section 141 of the Companies Act, and that such prospectus or statement did not in fact contain all the information which would interest a person who intends buying a flat and not making an investment. Judging from the commission’s fourth interim report, the commission was persuaded that offers of shares of share block companies for sale to the public should be exempted from the provisions of the Companies Act relating to such offers.

In the proposed legislation provision is made that the offers in question shall be exempted from the provisions of the Companies Act on condition that any such offer shall be accompanied by a statement in which it is specified firstly that a contract for the acquisition of a share, as contemplated in the proposed legislation, shall be entered into in respect of the share; and, secondly, that a copy of the contract to be entered into is available for inspection, free of charge, at an address indicated in the statement. Furthermore, in the case of an advertisement, the prescribed statement will, for purposes of exemption, have to be included in the advertisement. It follows that the contract, prescribed by the proposed legislation, for the acquisition of a share of a share block company would serve both as a prospectus and a deed of sale. The information required to be embodied in the contract in question is comprehensive enough to serve both those purposes.

Anybody who has been involved in a share block scheme will know that the participants in such a scheme are required to contribute to the levy fund of the share block company. The proposed legislation contains provisions which should place the levy funds of share block companies on a sound footing.

I have already mentioned that certain mischief and abuse in respect of a share block scheme may result from the fact that the management of a share block scheme may apply money received from the participants in the share block scheme for purposes completely unrelated to the main business of the company concerned. In recent litigation relating to an alleged misappropriation of such money, it was stated among other things that the money concerned, in common parlance, is referred to as bond fractions.

In view of the problem under consideration, the proposed legislation specifically provides that any participant in a share block scheme shall be liable to pay to the share block company concerned an amount equal to the portion on the loan obligation of that company allocated to such participant. No share block company would have the right to increase its loan obligation without proper authority from the participants in the share block scheme other than the share block developer, and the company would also be obliged to apply any money received from its members in respect of the said liability in redemption of its loan obligation.

Furthermore, provision has been made that all such money should either be entrusted to a legal practitioner or an estate agent in his capacity as such, or be deposited to a separate trust account, opened and kept by the company with a bank or building society and that, if the money is not immediately applied by the company in redemption of its loan obligation, it shall be invested in an interest-bearing account. Moreover, it is clearly provided that no creditor of the company has any claim to its trust moneys, and that proper books of account in respect of such moneys shall be kept and audited by an auditor who shall report to the Registrar of Companies on the matter.

An important feature of the proposed legislation is the so-called conversion of share blocks into sectional titles. In its second interim report the Commission of Inquiry into the Development Schemes Bill stated that evidence it had received conclusively indicated that at present section 23 of the Sectional Titles Act, which purports to make provision for the conversion of a share block scheme into a development scheme as contemplated by that Act, is not working in practice. I have thus been informed that the commission was persuaded to accept proposals for a workable procedure pertaining to such conversions put forward by certain organizations and that those proposals have been embodied in the legislation suggested by the commission.

I shall outline briefly the procedure which is prescribed in the proposed legislation for the opening of a sectional title register in relation to property of a share block company. Firstly, certain preparatory work in connection with a proposed development scheme for consideration by its members and any mortgagee would be done by the company and then a meeting would be called at which not less than 50% in number of the members of the company, provided they hold not less than 30% of the issued shares of the company, could resolve that the company would effect the opening of a sectional title register in relation to its property. The resolution in question, if passed, would be registered in the Companies Registration Office, and all interested parties could then, if they wish, object to the opening of the sectional title register or any aspect of the proposed development scheme. Unless the company should be able to iron out all the difficulties raised by an objector, the objector could take the matter for adjudication to a court of law.

The company would furthermore be required to furnish proof to the Registrar of Companies that all such objections have been removed and that the company has obtained the necessary consent of any mortgagee concerned or has made arrangements to his satisfaction. Should any mortgagee refuse to grant his consent for the opening of a sectional title register, the company would have the right to repay the loan secured by the mortgage bond to such mortgagee. The rights and obligations of any person who is to become an owner of a unit would, as regards the use of the property concerned, voting rights as well as contributions to the running expenses of the property under the development scheme, as far as practicable be the same as those under the share block scheme.

The Sectional Titles Act provides that, when a share block company has effected the opening of a sectional title register in relation to its property and has transferred any unit to one of its members, the company and the body corporate contemplated in that Act, shall exist parallel to one another while the company remains the owner of any unit not so transferred. The management and control of the property concerned would vest in the body corporate and it would be liable for expenses relating to the property. While the company remains the owner of any unit, it would be obliged to contribute to the funds of the body corporate which, in turn, would be liable for certain expenses incurred by the company. Should any member obtain transfer of any unit, his rights and obligations as against the company would cease. In any conflict between the rules governing the body corporate and the articles of the company, the rules governing the body corporate would prevail. Should a sectional title register be opened in relation to property of a share block company, any member of the company who should fulfil all his obligations to the company could, if he so desires, obtain transfer of a unit. The share of any such member would be held by the trustees of the body corporate as the nominees of the person who is the owner of the unit concerned and, if all the units should be transferred by the company, the majority in number of the owners of the units, could decide on the dissolution or continued existence of the company.

As far as may be expedient, vested rights have been preserved in the proposed legislation. However, it has been stressed by interested organizations that were consulted about the proposed legislation that it is not possible to foresee whether the legislation could create hardship in practice. Those organizations have agreed that the Registrar of Companies should be responsible for the implementation of the proposed legislation, and have requested that, in view of the questionable practices of a large number of share block companies, he should be empowered on application by such companies to grant, for reasons advanced in the application and considered by the Registrar to be adequate, to these companies exemption from any provisions of the legislation for the period and on the conditions he deems fit.

*Finally, I do not wish to allow this opportunity to pass without thanking the people who were involved in preparing the proposed legislation. I have already pointed out that certain organizations addressed representations to the commission with regard to the legislation. I understand that the organizations concerned made a considerable contribution to the legislation. I want to assure them that I greatly appreciate the trouble they took.

As time went by, several members of the commission resigned, including the Hon. J. A. van Tonder, the chairman of the commission, because of his appointment as Commissioner-General of the South Ndebele National Unit, and the Hon. E. Louw, because of his appointment as Administrator of the Cape of Good Hope. I wish to thank the commission and its professional advisors for the work they did, and in particular I wish to express my appreciation for their contributions to the activities of the commission to these two gentlemen, as well as all members of the commission, some of whom were prepared to continue serving as members of the commission, in spite of the fact that they are no longer sitting in this House.

Mr. Speaker, perhaps I could start where the hon. the Minister has left off by referring to the commission of inquiry. I want to say that it has indeed been a privilege and a pleasure to serve on the hon. the Minister’s commission. As a member of this commission I have learnt a great deal. One of the first things I have learnt, is that it is not easy to draw up a new law.

I should also like to compliment the hon. member for Klerksdorp who has taken over the chairmanship of this commission at a crucial stage when Mr. Tonie van Tonder was appointed Commissioner-General of the South Ndebele tribe. Since 1977 there have been, as the hon. the Minister has said, substantial changes in the membership as a result of members who have left, including the Administrator of the Cape Province. Nevertheless, I should like to say that without the assistance of the many organizations involved, particularly the Association of Law Societies, the Law Societies of Natal, Transvaal and the Cape of Good Hope that made submissions, the Association of Building Societies, corporations, mortgagees, estate agents, Sopoa and numerous other organizations, including the Department of Commerce and Consumer Affairs and the Registrar of Deeds, etc., it would not have been possible to come up with this piece of legislation. I would be failing in my duty if I did not pay particular tribute to advocate Bräsler, whom I am pleased to see here tonight, who was the guiding light, the inspiration and the mentor in respect of this Bill, to Professor Van Rensburg, who gave us much valuable legal assistance on the pros and cons of the law that were involved, and to Dr. Cowen, an expert in South Africa on Sectional Titles law and an author of several works who, together with Mr. Michael Katz, an attorney, who represented the Transvaal Law Society, gave us sterling and yeoman assistance.

This Bill is the end product of several drafts—I am not sure whether this is the first, the fifth or the sixth draft-which have been published, redrafted and amended. Perhaps this is not a perfect piece of legislation. I think amendments will be moved, which may or may not be accepted. I am certainly safe in predicting that it will not be too long before there will have to be other amendments, because this is a brand new law and perhaps the final recommendations of the commission, implemented in this particular way, may not be the best solution from a legal practitioner’s point of view in the sense that what we have done is that on the one hand we have amended the Companie’s Act and on the other hand the Sectional Titles Act. The Law societies actually advised that maybe we should have considered just amending the Companies and Sectional Titles Acts to create the situation we now have with this Bill, but I shall go along with the Bill which we have before us, with warts and all, if I may say so, because I think it covers a particular need in South Africa where there was a gap, i.e. where people own accommodation, particularly as far as flats and apartments are concerned, through share-block schemes and not by sectional title which is the ultimate in ownership, and which as hon. members know, from a legal point of view is good against third parties. There are certain risks in share-block schemes, so one tries to come up with a law that will protect people as regards something that is very, very real, close and meaningful to them, namely the question of accommodation. The roof under which they live, the four walls that surround them, etc. provide security against the world. Particularly when one has paid out money, one wants to know that one has the best possible title, and surely share-block schemes, as they exist today, without this law certainly do not give that protection. Since there is that gap, a law is therefore required which will provide that protection. For that reason we support the Second Reading of the Bill. I do however have certain amendments to propose. I and my colleagues have had time to give further consideration to this matter since the commission sat. We have rethought certain matters and come up with ideas which we may not have thought of at the time of the commission, which was under great pressure because, as hon. members know, it not only drafted this Bill but also the Sale of Land on Instalments Bill. In that respect I take it that a new law will be coming out as soon as it is ready and we will have to consider that as well. So that also occupied the time of the commission. Whereas we accept that a man cannot be saved from his own folly, we have taken the step of trying to provide a law that will protect him as much as possible.

I, together with the hon. member for Green Point, in respect of the fourth and final report—there were two main reports, the second interim report and the fourth report— found myself in a position of having difficulty with criminal sanctions being applied to what is really a commercial transaction. Though we realized that the Companies Act has certain sanctions, we nevertheless felt strongly enough about the matter to bring out a minority report which referred only to the question of sanctions, which I will deal with in greater detail at a later stage. Possibly the Committee Stage may be a better time to deal with it.

I want to raise certain points regarding some of the clauses. I will not deal too much with the definitions, which did create enormous difficulties by departing from the normal definition of a share in terms of the Companies Act. This is particularly so when one has to deal with shares that have not got share capital at all and when one has to deal with shares where one does not issue preference shares and where normally one is entitled to float the company with different classes of shares. One now has to have a company which is confined to a particular type of share, which gives one the right of occupation, but this agreement is confined. Also, immovable property is something we can deal with at a later stage, whether it concerns only land or also the building that goes with it.

However, the second clause is the one which is important in the sense that it provides for an exemption. I want to say immediately to the hon. the Minister that, if the powers granted to him in terms of clause 2 are going to be exercised by him without very, very careful scrutiny, which I know he will give it, we can make a farce of all the work that has gone into the commission by simply granting exemptions to the host of share block companies that have applied for it merely to get out of the difficulties, trouble and sanctions that will apply once this law becomes operative. Obviously the commission, to make this effective, could not only provide a law covering share block companies formed after this Bill comes into effect; existing share block companies must also be made subject to the legislation. That is something with which we can go along completely.

On the question of exemptions, however, I do feel the hon. the Minister should be careful. I shall have more to say about that in a moment, when I come to the question of the actual conversions of sectional titles, because obviously the reports of the commission that investigated this matter state that, as soon as possible and wherever possible the share-block company should convert share blocks into sectional titles when the ultimate protection can be obtained. We have to live with the situation, however, knowing that there will be thousands of blocks of flats that will never be converted to resort under the sectional titles scheme. That is for possibly two reasons. The first is because they are illegal; they do not comply with the town planning schemes. They exceed the stipulated bulk or are in conflict with the existing by-laws. This can, however, be obviated should the hon. the Minister take the correct action in this regard. The second one, I believe, we will never be able to eliminate. We shall simply have to live with it. That is namely that in some cases blocks of flats are erected—for example in the Durban area—on leasehold property. In terms of the existing legislation sectional titles cannot be registered on leasehold property. That is a difficulty with which we will have to contend.

It must be accepted that certain buildings are erected contrary to the by-laws, for example those that exceed the stipulated bulk. What happens in cases like these is that in order to get out of the difficulty of not being able to obtain sectional titles the owners of such blocks of flats actually sell them as share blocks knowing, of course, that they will never be able to legalize it. They then leave the purchaser to contend with that particular problem for the rest of his life in the hope that the local authority concerned will never clamp down on them. I actually came across a specific example on the Sea Point beachfront. There I happen to know of a block of flats presently under share block control, which exists contrary to the town planning scheme. It exceeds the stipulated bulk. I understand that the Cape Town local authority penalized the owner of that building by imposing a penalty of R8 000 a year for 16 years. Only recently did they discover that they were charging too much and consequently made a refund. At this stage, I believe, they have solved the whole problem and have also squared their books. It goes to show, however, the sort of situation that can arise. That is why I should like to make some sort of appeal to the hon. the Minister. I shall come to that in a moment. In this respect, I wish to point out that the commission also made certain recommendations …

Mr. Speaker, can the hon. member tell the House whether the scheme he has just referred to, the one in Sea Point, is a scheme in preparation or has it already been finalized?

The building was erected 16 years ago, and it has existed ever since, contrary to the by-laws. It exceeds the stipulated bulk. Some years after the building was erected the local authority clamped down on the owners. They were then left with the choice of either demolishing part of the building in order to comply with the stipulated bulk or to pay a heavy penalty. As a result the said fine of R8 000 a year for 16 years was imposed by the local authority. That is the situation.

We should also try to avoid a possible situation of what is generally referred to as hybrid schemes, a situation such as arises when one specific block of flats consists partly of share block units and partly of sectional title units, with the result that there is a constant conflict of interests between those who are share blocks holders and those who are sectional title holders, because sectional titles, as we know, are controlled by rules and regulations quite separate from those applicable to share blocks. Therefore the two groups are often found to conflict with regard to each other’s interests.

I think that in a way we have created— although we did not want to—a hybrid scheme. It would, however, be more desirable to have a scheme that covers one aspect, and not hybrid aspects, because then there would be no conflict of interests between the various parties concerned.

It was also intended that the proposed legislation should, amongst other things, eliminate certain consequences involved in share block schemes, and here I am regarding the matter from the income tax point of view. This is one problem that we did not, unfortunately, solve. It was suggested to us, at one time, that we should perhaps consult accountants and get their advice on this matter. Let me put the question very pertinently. It must be provided that the transfer of a unit in a share block company, having a value in excess of the share capital and/or loan account against which it will be transferred, will constitute a dividend in the hands of the recipient. I do not know whether the Receiver of Revenue will assess each case individually, but I do not think this is a problem that the commission has managed to solve. I think it is one we shall have to live with, but I should like the hon. the Minister to consult his colleagues about this, or at least to get the Receiver of Revenue’s opinion about this question of taxable income.

The commission could not establish exactly how many share block owners there were. I think I have said today that evidence was led to indicate that there are something like 30 000 in the Durban area alone. How many there are in South Africa as a whole has never yet been established. I now come to the exemption in terms of clause 2, a matter I referred to a moment ago. I want to ask the hon. the Minister whether he would not consider coming to the assistance of certain buildings. Things are fine as far as new buildings are concerned. In that regard the situation is perfectly in order. They will be covered. New buildings cannot be incorporated as a share block company unless they comply with the provisions of town planning schemes. So one can have no more illegal buildings. One cannot form a share block company if the buildings are illegal, e.g. over-bulk etc. So we are fine as far as the future is concerned. I have, however, given one example of a building in Sea Point, and there must be many more. I cannot say how many, but I do know of others. I am sure there are many individuals who are operating share block companies which are illegal in terms of the provisions of town planning schemes.

I want to refer the hon. the Minister to page 7 of the second interim report of the commission, and I quote—

Here we shall, I think, have to weigh up Parliament’s power, i.e. the Minister’s power, against that of the local authority and see what the position is. I think we should try to bring about a situation such that, if one does have to use those powers, they are legalized. This is a “oncer”. So let us do a “oncer” and get all these illegal blocks registered, or available for sectional title, so that the people who have bought, and paid good money for their purchases, I take it, can receive a measure of protection.

This brings me to clause 3 which involves the provisions of the Companies Act as applicable to a share block company. It makes provision for the fact that a share block company shall not be wound up merely by reason of the fact that the number of its members has fallen below a specific number. I think this is a very necessary provision. Clause 3(1)(c) is necessary in view of the controversy involved in the judgment in Rosslare (Pty.) Limited v. The Registrar of Companies, as quoted in Volume 2 (1972), page 524(D), which I shall refer to again in a moment. Compulsory loans by shareholders to a company are not objectionable on the score that their liability is extended beyond the payment made for their share and therefore contrary to the concept of limited liability. The shareholders, however, agree to make compulsory loans to the company, and it is felt that it would be preferable, in the circumstances, if certain documentation relating to these loans was by way of separate agreement, particularly where the documents may be, as in this case, contrary to the powers given in the memorandum and the articles of association of the company. Where an existing company has not made this provision however, in its memorandum or article of association, it should be allowed to do so. We should invoke the same provisions as those contained in clause 9(2), so that they do not have to pay any fee. The matter can then go to the Registrar of Companies and be ratified and accepted by him.

The presumption provided in clause 4 will assist in making this legislation applicable to a company that tries to disguise its main object. We know there can be an agreement of sale and so on and that it is not just a matter of the title. However, when a company’s business is that of a share block company there must be this presumption in law that it is in fact operating as a share block company. The fact that it disguises that through its name or otherwise should not provide it with a method of getting out of its difficulties and escaping the provisions of this Bill when it becomes law.

One of the benefits of sectional title is that when application is made to the local authority in terms of section 4, the building is checked to ensure compliance with the local authority’s requirements. Evidence was submitted that portions of buildings which were completely unsuitable for sectional title because of illegalities, have been offered to the public and sold. Therefore I think the hon. the Minister must now act and take responsibility for this.

Although plans, architects’ sketches, agreements, etc., may well be better suited to the activities of the Registrar of Deeds, in actual fact provision is made for this to fall under company administration. We are very happy that in the circumstances the Registrar of Companies now accepts responsibility for the filing of the documents mentioned in the Bill to keep adequate control over the companies. Basically I think we must accept that, where we are dealing with share blocks, this concerns companies and the people concerned should fall under the Registrar of Companies. Because the policing and the staff required to scrutinize building plans are not available, a certificate by an architect is sufficient to cover the necessary requirements for the Registrar of Companies.

The philosophy behind clause 7 stems mainly from the case of Rosslare and another versus the Registrar of Companies, a case to which I referred a moment ago. In that case the Registrar refused to register the amended articles of association in terms of a special resolution as the articles were in conflict with a fundamental assumption of the Act. The amended articles of association could be registered if they were not in conflict with the general law or expressed the implied provision of an underlying assumption of the Companies Act. Where this was therefore against the law, this Bill will now enable people to amend the memorandum and articles of association. There was a case in point, viz. the company that sold shares in a share block company and whose amended articles provided for the directors to impose levies on and obtain loans from the shareholders. There was some doubt as to the legality of this, but documentation now makes the position clear. I refer to paragraph 30 on page 21 of the commission’s second interim report. I do however submit that the provision should be amended and brought in line with that contained in clause 9(2) in terms of which no fees are payable.

Clause 8 is important in view of its underlying principles. One has but to consider the evidence of the downfall of Glen Anil. It was found that a company developing a township obtained large loans and used them to buy another township. It then obtained loans on that townships and used them to buy yet another township. This is extended itself to the point where it collapsed and everyone who owned stands lost his money. Thus one can have a provision whereby a share block company can hypothecate its immovable property and then go in for other ventures. Eventually a situation parallel to that of Glen Anil would be faced by the share block holders themselves. Therefore it is necessary for protection to be given in this respect. The provisions here go further than normal. By special resolution of a general meeting of the share block company the company cannot dispose of or alienate any of its immovable property. This is necessary protection. I know the hon. member for Klerksdorp intends introducing a slight amendment to that and I have no difficulty with it. In addition, the company cannot hypothecate its property without a 75% majority in favour of that. This goes further than section 288 of the Companies Act, 1973, in terms of which a company may, by a single majority votes, decide to sell the property in respect of which it operates a share block scheme. It would then mean that holders of shares have to find other accommodation. This is now prevented because there must be a special resolution in terms of section 199 of the Companies Act, or there must be a 75% majority of shareholders to do so. As far as the conversion to sectional title is concerned, the original procedure for conversion to sectional title was contained in a separate chapter, and after further consideration it was decided—and I think it is a better way of doing it—that the whole procedure for conversion to sectional title should be contained in schedule 1. Schedule 1 sets out the procedure step by step—and the hon. the Minister referred to it. 50% of the shareholders must be present and their votes must constitute not less than 30% of the total votes held by all the shareholders of the company. I have a further comment on that particular aspect which I will deal with when I come to the Schedule.

Clause 9 deals with the expression “share block” which must appear in the name of a company which operates a share block scheme, otherwise people could be misled. Of course the company must have equal voting rights. This is necessary so that everybody is adequately protected.

I now want to refer to the sale of shares to the public. Section 143(1) of the Companies Act provides that no person shall offer any share to the public otherwise than in accordance with the provisions of the Companies Act. The hon. the Minister has explained that it was necessary to have this statement in lieu of a prospectus, and the commission did not want to do away with the statement in lieu of a prospectus, but he did make certain provision for advertisements to cover the use and occupation agreement and to advise purchasers in a share block company of what they would be letting themselves in for. Since many memoranda provide for the appointment of directors to ensure the majority, this will now be void, and consequently in a share block a developer will not be able to rule the roost without representation of the facts. This is contained in clause 12 which provides that where the board of directors does not exceed ten in number, at least one shall be appointed and where there are more than ten directors, at least two have to be appointed. The appointed director or directors cannot be ousted in terms of section 220 of the Companies Act. Subsection (4) makes provision for the fact that the meeting of directors can proceed if a director or directors decide to boycott the meetings and subsequently hold up the business of the company.

The question of the levy fund is contained in clause 13. Evidence was received by the commission to the effect that receipt of monies by way of levies on the participants, and the disbursements made, was very often a bone of contention. In this regard I want to draw the hon. the Minister’s attention to the case of Barcelona Ltd. v. Coinland (Pty.) Ltd., 1977, Vol. IV, p. 751(D). This is important in the sense that Coinland (Pty.) Ltd. collected moneys from Barcelona tenants in order to liquidate the bond. There was no law, however, which said that they had to use that specific money to pay off the bond, and there was also no law which said that they could not use that money for other purposes. They therefore collected the money, and problems were created when, in due course, they were unable to meet the mortage’s claims. So in these circumstances it is provided that the money can be paid to a company, and then the company must deposit it in a special fund, either with an attorney or with an estate agent who both have fidelity funds. This does not only apply to the levy fund but also to the trust fund which is referred to in another clause. I think that in view of what happened in the Barcelona case we will be obliged to move an amendment to the effect that the money paid to the levy fund should in fact be paid directly to an estate agent or to an attorney so that there is no room in the middle for someone with long fingers to lay their hands on that money before it reaches its destination, i.e. the fidelity fund of the attorney or the actual agent.

As far as clause 14 is concerned, one of the problems evident in the evidence submitted to the commission was that directors could take a loan on the building, and then go off with the money and use it for other purposes. I am aware of a case in Durban—and hon. members of the NRP may know about it—where the owner of a block of flats on the beach front took a very substantial loan on this block of flats and used it for purposes other than paying the bond, thus causing serious problems for the shareholders. Therefore, the provision in clause 14 that 75% of the shareholders of a company must approve of any extension of its loan obligations, or applications for new ones, is a very necessary provision to protect the people.

With regard to the trust money referred to in clause 15, I want to refer the hon. the Minister to my remarks on the Barcelona case again, and ask him to consider that the money be paid directly. With regard to clause 15(8) I am a little unhappy about the fact that the Registrar can, on the application of one person in writing, hold up the trust account from operating without giving the company an opportunity to reply. This means that one person who has the needle in for the board or management can write to the Registrar asking him to hold up the trust account, and the Registrar is then obliged to do so. What I do think is necessary—and I hope the hon. the Minister will consider an amendment on this basis—is to at least give the company an opportunity to reply to those allegations before the Registrar invokes his powers to hold up the trust account, because an urgent payment may be required to be made out of that trust account, a payment which, if not made, may seriously prejudice the interests of the shareholders and the interests of the company itself.

In regard to the attachment of the moneys, which are then paid over to a building society, the clause states that it cannot be attached under warrant of execution, but what I think is really meant here is that it is at the instance of a company and not at the instance of an individual. If I am an individual director and owe money to Mr. X, the fact that my money in a trust account is paid to a building society does not prevent a creditor from attaching my money. One can only prevent him from attaching the money of the company itself. As far as the agreements as to the cession are concerned, I think that when a session is given the use and occupation agreement should be attached to that cession and made part of the deal itself.

Turning to clause 17 one sees that all the details of the share and use agreement are in the draft Bill itself. This is again in accordance with a decision made by the commission that it should be contained in Schedule II, and I think that hon. members will find that that is very comprehensive in what it contains, I think it covers most of it. There is the case of Justice Nestadt’s judgment in the case of Botes and Others v. Toti Development Co. (Pty.) Ltd., 1978 (1). The commission believes that it is necessary to regulate the consequences of non-compliance with the requirement agreements of purchase and sale relating to share block companies, and therefore that is necessary.

Clause 18 deals with the fact that agreements should substantially comply with requirements. This causes us no problem.

However, when we come to clause 19, which deals with the question of insurance, the hon. member for Klerksdorp has an amendment which I think is acceptable. This clause dealing with insurance follows a similar section in the Sectional Titles Act Hon. members will know that one tries to get the provisions in regard to share-block schemes to approximate as closely as possible to the provisions of the Sectional Titles Act itself. This is the same provision that exists under sectional title itself. What we have asked is that adequate insurance be provided. I am a little afraid, however, that there may be difficulty in defining what “adequate insurance” really means. The amendment of the hon. member for Klerksdorp covers it to a certain extent, but I think that if the shareholders state what specific insurance they require on the building, that should be sufficient. I think we should delete the word “adequate” altogether so as to remove any doubt as to its meaning which is subject to different types of interpretation.

Clause 20 entitles the Minister to make regulations.

Clause 21 is the clause which caused me the greatest difficulty, the one dealing with penalties. All I want to say at this stage—I shall deal with this more fully in the Committee Stage—is that personal liability is attached to the directors and shareholders to begin with. There is the Companies Act, and if one falls foul of that there are severe penalties in terms of that Act. There are also the criminal law statutes. If there is fraud, theft or fraudulent misrepresentation, these are criminal offences which apply in any event, and as far as common law is concerned, if there is a breach of contract, relief may be obtained in the Supreme Court in regard to damages in relation to specific performance. Let me leave it on that basis for the moment.

I agree that persons should not be able to waive the rights granted to them in terms of clause 22 of the Bill. Unscrupulous dealers can make them waive their rights, and then the whole purpose envisaged would be thwarted.

Finally I wish to turn to Schedule I which deals with the conversion of sectional title. I only want to make one observation with regard to the schedule itself. This schedule deals with a matter of principle. Having gone through the procedure of obtaining sectional title, and having opened a sectional title register, provision is made in terms of this schedule for a person to have to wait for the application of the shareholder himself before sectional title can be registered. That means that the share-block holder, if he wants to, need never ever apply for sectional title. One organization, however, did submit evidence to the effect that the share-block holder should perhaps be forced to do so within a period of 12 months. I have difficulty with it, and I think that we shall have to give consideration to it because on the one hand one does not want to force a share-block holder to take chances if he does not want to, while on the other hand I feel that it is undesirable to have a hybrid scheme in terms of which we would have two separate agreements operating in the same block with a conflict of interests between them.

I conclude by saying that I believe that we have something substantial here and that this does meet a need in so far as commerce and the law of South Africa are concerned. We therefore have pleasure in supporting the Second Reading of the Bill.

Mr. Speaker, the hon. member for Hillbrow has spoken exhaustively and at great length. I want to thank this hon. member for the kind words he addressed to me. I want to assure him that I appreciate them.

The hon. member spoke at great length but he did not actually substantiate anything with regard to the minority report submitted by him and the hon. member for Green Point. I really expected the hon. member to give us some information about the minority report this evening. I just want to point out politely to the hon. member, with regard to clause 2 and the exemption to which he referred, that in terms of clause 2 it is the Registrar of Companies, and not the hon. the Minister, who grants exemptions. The hon. member would do well to examine paragraphs 11 and 12 of the fourth report. The hon. member quoted from the second report, which is an interim report, but in the final report the question of exemptions is dealt with somewhat differently from the way it is dealt with in the second report. The hon. member might have a look at this with a view to his amendments.

A spirit of goodwill prevailed in the commission at all times and every member of the commission made a contribution to the legislation which is before the House this evening. I should like to thank every member on this side of the House for his contribution and support. I refer to the hon. members for Vryburg, Klip River, Langlaagte and Algoa. I particularly appreciate their contributions. On behalf of the commission I should also like to thank the former hon. member for Germiston, Commissioner-General J. A. van Tonder, who led the commission in a very capable manner until his departure. On behalf of the commission I also thank the former hon. member for Durbanville, the Hon. E. Louw, who is now the Administrator of the Cape Province, for his excellent contribution to the activities of the commission. The hon. members for Hillbrow and Green Point did not serve on the commission from the outset, but they too made very good contributions after their appointment and soon acquired a thorough knowledge of the activities of the commission, as the hon. member for Hillbrow has just shown in the long speech he made here. I just want to tell him in a lighter vein that I believe it was a stupid minority report which he and the hon. member for Green Point submitted with regard to the penalty provisions in clause 21. But we shall discuss this again at a later stage.

Order! I think it is very discourteous of hon. members, when a colleague of theirs is speaking, to converse with one another in such a way as to disturb him and the whole House. I think hon. members can at least whisper if they wish to converse with one another. The hon. member may proceed.

Mr. Speaker, I also thank the hon. member for Walmer for his positive contribution and conduct. Furthermore, I want to refer in particular to the faithful work done by the former hon. members for Green Point, Mr. Lionel Murray, and for Wynberg, Mr. Jack de Villiers. Even after their retirement from the House of Assembly, they regularly attended the sessions of the commission and did their share. I must add that the commission had available to it the able services of Mr. J. H. Groenewald, who has already retired, as its secretary, as well as those of Mr. P. J. Badenhorst, who is still acting as secretary. I thank these two gentlemen, too, for their contributions. On behalf of the commission I should also like to thank the professional advisers, Dr. D. V. Cowen, Messrs. N. R. Pistorius, M. N. Katz and Advocate D. J. Bräsler. These people were of great assistance to the commission. I thank Advocate Bräsler in particular.

The commission also had the privilege of hearing an impressive number of witnesses, of studying memoranda and consulting with individuals and bodies. A complete list in this connection appears on page 11 of the fourth interim report.

It is my humble opinion that the maximum amount of consultation took place. In the opinion of the commission, its terms of reference included an inquiry into the financial prejudice suffered by people as a result of payments made in terms of agreements with regard to rights of occupation. Therefore the commission did not only examine the specific question of the sale of land or immovable property on instalments or otherwise—a fifth and final report is to be submitted on this subject—because it very soon became clear that there was a need for legislation of this nature.

In its second interim report the commission recommended a draft Bill for publication and comment. This draft Bill was published in the Government Gazette, No. 6262 of 5 January 1979. The representations received in response to this, as well as the verbal evidence that was heard subsequently, very strongly emphasized the need for this kind of legislation.

A particular need which came to light, inter alia, was the need for the creation of an obligatory procedure in terms of which rights of occupation under a share block system could be converted into rights of ownership. Hence the comprehensive provisions in schedule 1 of this Bill.

There are certain factors which impede the conversion of share blocks into rights of ownership. In Durban there are several companies which lease land on a long-term basis from the Durban City Council. The leases are registered in the Deeds Office. I believe it is essential that an inquiry be conducted to ascertain whether the rights of share-block holders cannot be registered subject to the rights of the other parties. A sort of lease-hold/sectional title may be possible.

The second impediment to conversion is the question of financing. Most of the land of share-block companies is heavily mortgaged and the mortgagee is not prepared to fritter away his security. In the case of participation bonds, there is the restriction that the bond must amount to more than R20 000. Another matter that will have to be examined in the future is the question if shareholders who place unnecessary obstacles in the way of share-block companies wishing to redeem mortgage bonds. At the moment, the position is that a building society cannot lend money against the security of a share. I believe it is desirable to ascertain whether the shares of a share-block company are safe enough to allow the building societies to advance money against such security. The problem is that a person wishing to sell a share block usually has to finance the transaction himself. I think it should also be kept in mind at all times—and this was also the standpoint of the commission throughout—that sectional titles providing rights of ownership should in any event be preferred to shareblocks.

Another need that has appeared is that there must be certainty and full particulars concerning the agreement with regard to occupation. So there has to be a so-called full disclosure. Hence the comprehensive provisions of schedule 2.

It is thoroughly realized that there is no similar legislation in existence and that a trial period consequently lies ahead in practice. However, the commission is satisfied that the proposed legislation will stand the test of time, even though it may be necessary to make minor amendments in the future. I should like to appeal to all who operate in this industry and who participate in schemes to make a definite and purposeful attempt to co-operate in order to make a success of the proposed legislation. The commission has tried throughout to maintain a balance between the free economy markets mechanism and control measures, and would not like to deviate from this. At the same time, however, we must realize that we cannot allow a person who has bought a dwelling-place, such as a flat, in which he wants to live for the rest of his life, and on which he may have spent all his savings, to lose that money and his accommodation through the cunning of a fly-by-night developer.

The Bill relies heavily on the Companies Act. From reports I have received it is clear that the Standing Advisory Committee on the Companies Act does not foresee any fundamental problems.

I also want to refer briefly to the minority report of the hon. members for Hillbrow and Green Point. It is clear from the commission’s report that they did not express themselves in favour of penal sanctions such as those contained in clause 21. If this standpoint of the hon. members were to be accepted, this legislation would be rendered powerless. In fact, the legislation would be rendered less efficient than the Companies Act. The minority report refers to the Sectional Titles Act as an authority for the report, but in my opinion, there is a major difference. Under the Sectional Titles Act, the proceedings are for the most part supervised by the Registrar of Deeds. In the case of the share blocks, in terms of this legislation, there is very little supervision by the authorities. Furthermore, the Companies Act contains several penal sanctions, even in respect of acts performed under the supervision of the Registrar.

The Standing Advisory Committee on the Companies Act did not have any objection to clause 21 either, nor did it have any alternative to offer. The chairman of the Standing Committee on the Companies Act is Mr. Justice Margo. After the signing of the report at the January meeting, I gave the hon. member another opportunity to propose alternatives to the question of penal sanctions, and for that reason I was actually keen to receive a motivation from the hon. member this evening. What is important is that there has to be a penal sanction if a person in a position of confidence is guilty of misconduct and/or of making misrepresentations. Nor did the commission simply make a general recommendation that penal sanctions be imposed. Clause 21 differentiates very clearly between the gravity of offences and the penalties applicable. I believe that the hon. members for Hillbrow and Green Point will also concede that we could not do it any differently.

I gladly support the legislation.

Mr. Speaker, I rise to tell the hon. the Minister that we will also be supporting this Bill. But in looking at the commission’s report and listening to the speakers who have taken part in this debate so far, and also looking around to see who is likely to follow me, it appears that I am probably the only member of the House who is going to take part in the debate who is not a member of the commission. So I would like to take advantage of this opportunity by saying to the chairman of the commission, the hon. member for Klerksdorp, and also to those other hon. members who have taken part in the debate and are members of the commission, that we thank them for the tremendous work that they have done. They worked for nearly 2½ years, I believe, and something like four reports were submitted, and now we have this Bill before us. We thank them because the Bill has tremendous and far-reaching implications as far as the property world is concerned, and we sincerely hope that it is going to prevent some of the disastrous occurrences which have happened in the past where people have lost, in some cases their life savings, by investing in share-block schemes in which the owners or the managers or the operators, if I may call them that, have used the funds to their own advantage, so that these investors have found themselves left high and dry with nothing.

The right word is “manipulators”.

The hon. member for Durban Point calls them “manipulators” and I think that is a very good term for these people. I think the country should be pleased that this Bill is now before the House. As has been said by a number of speakers so far, there are something like 30 000 people who are involved in the share-block scheme in Durban alone, the city where I come from, and therefore we from Natal are pleased to see this legislation before the House. We sincerely hope that it will enable the hon. the Minister, the authorities, to stamp out the manipulators, as they have been termed, from the property market in South Africa. There is nothing worse than for the ordinary member of the public, who works hard for his money, being taken for a ride by “manipulators”, if I may use the term. This is one reason for saying that we welcome the Bill. [Interjections.]

I believe that the commission at first attempted to prohibit any share-block scheme from being organized in the future, and also to create a situation where existing share-block schemes could be converted to sectional title. As has been said by the hon. member for Hillbrow—I think the hon. the Minister also referred to it—this is entirely impossible in the case of Durban where so much of the beach-front is leasehold property. In that specific area huge blocks of flats are built on leasehold property, and it is therefore simply impossible to convert those into sectional titles. On the other hand I believe it can be said that this share-block schemes system is a convenient method of administering smaller scale developments. Therefore, on condition the adequate safeguards for the public in general are provided, there is no reason at all why such schemes should be prohibited, providing of course they are in compliance with town planning schemes and are capable of being converted into sectional titles if people so desire at some future date.

I should like to point out that two members of my party—both formerly hon. members of this House—were members of the commission. They are Mr. Lionel Murray and Mr. Jack de Villiers. I am pleased to say that we did have two members of this party on that commission. They have both assured me that this Bill now before the House meets with their approval.

If members of the public, however, do want to buy into a share-block scheme, I believe it is incumbent upon them to make sure that the particular scheme is being operated within the limits of the law. I think it was the hon. member for Hillbrow who said we could not legislate to protect the public against their own follies. This, I believe, is quite true. This would be the case if members of the public would contract with such developments in operation outside the law. I do hope that organizations such as the South African Property Owners Association will see fit to produce some sort of a memorandum for real estate agents and other interested parties, a memorandum which will be a brief résumé of some of the provisions included in this Bill so that members of the public, when they are contemplating the purchase of a flat or property under a share-block scheme, will know what they should look for. In this way they will be able to make sure that they are not becoming involved in any scheme operating outside the limits of the law.

In conclusion I should just like to point out that I cannot understand the stand of the hon. member for Hillbrow and his party on clause 21 of the Bill. So far everybody has admitted that the provisions of this Bill are required in order to ensure proper control and to prevent so-called property manipulators and property sharks—if I may use that term—from defrauding the public of their money. Fraud is a criminal offence, as is theft. Therefore I believe that the provisions of clause 21 have to be included in this Bill in order to make sure that people who become involved in the type of occurrences such as we have seen in the past are brought to justice.

My party and I will, however, support the Second Reading of the Bill.

Mr. Speaker, I know there are other hon. members who are still waiting for a chance to speak before the House adjourns. Therefore I shall try to be as brief as possible. The hon. member for Hillbrow does not want this Bill to contain criminal sanctions. He is only in favour of civil remedies. Clearly, this is a fine sentiment. Let us just have a look, however, at what happens in practice. The seller is usually financially far stronger than the buyer. The seller is also far more experienced and can afford the costs of litigation far more easily than the buyer. The poor buyer very often cannot afford the litigation. He may have invested his life savings in a particular share-block scheme. If the buyer is able to lay a criminal charge and the seller is subsequently found guilty of an offence, we find that one of several things can happen. The seller may want to remedy whatever defect, if he is found guilty, and alternatively the buyer knows that if the seller is found guilty, he would be able to revert to civil litigation, with the comfort of at least having the criminal record before him and being able to make use of it. He would also know that his chances would be far better as far as the said civil litigation is concerned.

It looks as if you are turning into a socialist.

The commission has heard evidence from various experts in the field. I do not think that there is any doubt, in anybody’s mind, that sectional title is by far preferable to share-block schemes. The purchasers under sectional title can have the title deeds registered in the Deeds Office in their own name. Share-block schemes come a poor second, but there is, as we have heard, a need for share-block schemes, and therefore this legislation is a necessity. The legislation regulates the position between all the parties concerned with the share-block scheme. The commission went into the matter in depth, with the advice of experts, and we had the benefit of the advice of departmental officials who have experienced the problems and complaints of affected parties over very many years. This Bill opens a new chapter in this field of property development. I have no doubt that when this legislation is implemented the property industry and other bodies will, as time goes along, have constructive proposals to make to us. This blueprint which has been translated into legislation came as a result of very hard work on the part of many people. I should like to join the chairman, the hon. member for Klerksdorp, the hon. member for Hillbrow and others, in paying tribute to all the people concerned. The hon. member for Klerksdorp and the previous chairman, Mr. Van Tonder, played their part to the full, and I should like to express appreciation for the manner in which they dealt with the matters that came before the commission. I should like to support this Bill.

Mr. Speaker, this evening it feels as though I am the only one who could possibly be in opposition. It is heartrending to listen to a person who has provided 30 000 dwelling units and who simply refers to “rogues”, “thieves”, “skelms” and so on. This legislation was definitely necessary. However, let us examine the origin of block schemes. Why was it necessary to begin with block schemes? It was necessary because Natal has never been prepared to finalize its proposed schemes. It has never been prepared to tell an owner that a scheme has been completed and that a building of 15 stories, for example, could be constructed. It hides behind the term “proposed scheme” and keeps everyone on a string. The “sharks” are in the province of Natal.

But they came from Johannesburg.

I have always agreed that the leaders come from Johannesburg. The leaders definitely come from Johannesburg. Have hon. member ever noticed how many of those block schemes are situated on land belonging to Durban municipality? What building society is going to finance such a block of flats? No building society will do so, since it is a leasehold unit. In addition, it is afraid that if the scheme has not reached finality it could be saddled with an extra loading for a storey or two which may be higher than the provisions of the proposed scheme. The hon. member for Hillbrow furnished an example of this. Where does this end? One has a piece of land, and one divides up one’s own problems by getting a number of shareholders. Then one tells them: “This is leasehold property. We can build there. No exorbitant costs are attached to the land, but there may be problems ahead.” One then creates a syndicate. One person will take ten shares, another a greater number. Usually then one knows when one is to be faced by a problematic situation.

Unfortunately it is true that in 1968, 1969 and 1970 a number of people who entered this country, as well as others in this country, initiated certain practices that normally never occur in the South African situation. For example, there was the idea at that stage of converting certain share-block schemes in such a way that people lost money. However, one cannot only refer to the crooks in town development. Think of the crooks in the banks. I know people, pensioners, who had R100 000 in a bank …

Which banks?

Two of them. I do not want to mention names. I want to say that history will prove that as regards some of these matters, between 1968 and 1970 the banks in South Africa were the greatest crooks, “skelms”, ever known. Hon. members will see this in the final reports of certain companies which are still to be published.

This legislation was essential. In the course of time the Minister and everyone berated this legislation. There must be sanctions against people who exploit others and steal their money. I do not want to discuss each of these provisions, but this evening I want to ask the hon. the Minister and the hon. members from Natal please to examine the proposed schemes which are the cause of the very grave problems that are cropping up. I just want to refer to a court case which commenced in Natal in 1971. I quote—

The man in question had thus purchased land for flats. This was the proposed scheme. However, this was changed and what happened then? The man lost all the money he had put into it and may now build only one house on the property. These are things which must be looked into. This is the reason why block schemes came into being. This is also the reason why one cannot obtain financing for many of these places. Hon. members are also aware of the present severe shortage of housing. That is why I should like to see that the schemes of municipalities do not simply continue to be proposed schemes, but instead that finality is reached in respect of their township development schemes. The argument will be advanced that once finality in respect of the proposed scheme has been reached, the persons involved must be paid out in terms of their rights. This is true, but one cannot then deprive another of his rights. Let me quote as an example Anglo American’s large scheme in Durban, i.e. Cabana Beach.

That is in Umhlanga.

Yes, in Umhlanga. What, for example, would one pay in respect of a person’s right there if it were a completed scheme? Municipalities are always complaining that they do not have money. Why then do the municipalities not use those betterment schemes to pay for certain things?

However, who is the man who loses money in the end? It is the smaller businessman, the man who, for example, has a certain right under title which he can be deprived of without his receiving a cent for it. When we come to these schemes we realize that the Government has a special task to protect the lessee of occupation rights, as in these cases. A person’s dwelling unit must be protected. This legislation demanded careful consideration, and the hon. member for Klerksdorp and all the members of the commission will confirm that we had to travel a long and arduous road from one group of companies to the next, and we even had to approach the legal profession. The commission heard a great deal of evidence and hon. members will see, if they examine this legislation, that exemptions must be granted in certain cases because the share block schemes still go hand in hand with sectional titles. As the hon. member for Klerksdorp requested, it may be desirable that one should give serious consideration to whether the municipalities that have the leasehold rights may convert them into sectional titles. The only problem is perhaps in respect of the articles of association of such companies.

However, there is another problem with share block schemes. I think that at present one may transfer overseas a share in one’s possession. I am not quite sure whether this is also the case in a normal land transaction, but it could be a problem if it may in fact be done. I feel that this is a matter which should be investigated.

In general, if we review the legislation before this House, we shall see that it is in fact good legislation. It is legislation which will in fact still have to feel its way in a very difficult situation and it will probably be amended in the course of time and as experience is gained. However, there are a few matters that are still a matter of some concern. Any act of a share-block company in excess of its capacity or powers, becomes void. This is a worthwhile exemption. It is also a good thing that a claim may be instituted by a third person against a person who has acted in this way. If one examines the Glen Anil case, one sees that at one time the company had an amount of R47 million to its credit. Six months later this credit had been converted into a deficit of R51 million. In such a situation there is something wrong with either the auditors or the directors of the company. We want to avoid similar cases. We know what problems events of this nature can cause many people. The one thing which all people probably seek is to obtain a dwelling place. That is why we gladly support this legislation and we want to express the hope that the Registrar, in his wisdom, will also grant the exemption which may be necessary.

Mr. Speaker, this piece of legislation is of course an interference by the Government in the free market mechanism. There is little doubt that when there is an inequality in the market place, there is every reason for the State to intervene. But I find it rather surprising and I find it a welcome change in this House that there is no objection to interference by the State in this case in order to see to it that there is equality in the market place. There is no doubt that the situation which has existed until now is that the small man who has acquired an interest in this type of venture has been at a disadvantage by reason of his inability to compete adequately in the market place. Therefore I want to say to the hon. the Minister that I welcome this piece of social democratic legislation and that I am very pleased that he has introduced it in this House. I am even more pleased that staunch capitalists like the hon. member for Mooi River have come out in support of this piece of legislation. I must say that I am rather pleased that this approach has been adopted.

I should now like to deal for a moment with the hon. member for Langlaagte. With respect, I think that he has missed the point in regard to why share schemes were originally introduced in South Africa. The reason was that we did not have a sectional title system until relatively recently. Therefore the only way in which one could buy an interest of this nature was through the share block scheme. The reason why it did not take off, why it did not take off to the extent to which a sectional title scheme can take off, is that no protection was afforded of the kind this legislation is now seeking to bring about. That is why the share block scheme was introduced. It is not a question that something was wrong with Natal and I think this provincialism is utterly out of place in this particular type of legislation. I think that when it comes to the question of whether one is able or unable to exploit one’s province of origin, that has no bearing on that particular subject whatsoever. When the hon. member made the point that transferring to nonresidents in this type of case might create a problem, I assume that he was talking about the restriction on borrowing powers of foreign-controlled companies, because there can be no other such impediment, but in regard to private companies I think that the hon. member knows that one needs exchange control approval for such a transfer. Therefore I think his point is without substance.

Dealing specifically with some of the aspects of this legislation, I should like to draw the hon. Minister’s attention to a number of things. Firstly, there is still the problem which arises when different people pay different amounts in respect of their loan indebtedness to the company, so that there is a disproportionate payment in respect of the mortgage bond. I find, unfortunately, inadequate protection in this Bill in respect of the failure of some people in a share block scheme to pay what has to be paid by them, as a result of which either a mortgage bond is called up or other action is taken against the company. I find that there is inadequate protection at the moment in this particular piece of legislation for that type of problem.

The second point to which I want to draw attention is that it is provided in clause 10 that in respect of shares every share should not only confer a right to the use of the immovable property, but should also confer the same vote as every other share in the company. The Bill does not, of course, deal with the fact that one can allocate different numbers of shares for different sizes of flats. Even if there are no different sizes of flats, there is nothing to prevent, for example, flat No. 1 having 100 shares and flat No. 3 having only 50 shares. There is nothing which guarantees that there should be an equal vote for everybody who has a flat in the particular scheme. In other words, there should not be an inequality of voting in respect of each share, but each particular unit in the particular block should really have an equality of votes with any other. Unless one does that, one can actually rig the whole thing in such a way that a small number of units in a scheme could control the whole scheme and could dominate the whole picture. Adequate protection against that is not provided for in this piece of legislation.

The third point to which I want to draw attention is that the articles of a company are to my mind the most vital thing which any shareholder should know when he buys a share. It is perfectly true that one can go to the company’s office or to the Registrar to have a look at the articles, but I believe that with every acquisition of this nature where there is no prospectus and where all sorts of things can be provided for, a copy of the articles should be supplied. Nobody should buy a unit, in this kind of venture, without having seen the articles of the company.

The other problem to which I should like to draw the attention is a problem which I believe is going to exist if there are schemes which are partially sectional title and partially still administered under the share block scheme. I think that in those circumstances the hon. the Minister is really creating an administrative abnormality which to me is most undesirable. I want to draw the hon. the Minister’s attention to a problem which may well exist. In terms of a share block scheme one can have different contributions, depending upon the situation of a particular flat in a building. In other words, let us take Sea Point as an example. For a beautiful and marvellously situated flat overlooking the sea one may well make a bigger contribution to the upkeep of the building, and to everything else connected with it, because one has a more valuable flat than somebody who has one facing the back and overlooking a garage, or whatever it may be. However, if one converts to sectional title, then everything depends upon square footage or square meterage, if we may use that term. Then one finds that one’s contribution is no longer related to the value of the flat one occupies, but actually to the area taken up by the flat. The result of that may be that somebody who is better off with a contribution of that nature, may prefer a sectional title situation, whereas the other man may well decide that he is going to stick to a share block scheme. I think this is an abnormal situation which I believe will have to be looked at, because it is quite clear that this is not a satisfactory way of dealing with the position.

The other question which arises, a question which has also been raised by the hon. member for Hillbrow—and the hon. member for Langlaagte also touched on it—is the question of leasehold and the inability to obtain sectional title in respect of leasehold property. I must tell hon. members that in other parts of the world there is no such problem, because anybody who has a right of occupation of a unit which he is capable of registering, has a real right under those forms of law. If a leasehold tenure may be held on a particular property, I do not see why a sectional title of a similar nature cannot be given for the same period. It is done in other parts of the world, and it seems to me to be utterly illogical that we in South Africa do not seem to be able to cope with this particular problem.

I also want to deal with the question of the buildings in respect of which, for some reason or other, sectional title cannot be obtained except for purposes of leasehold. Let me give the hon. the Minister an example. If one has a building which happens to have been built in such a way that it is partially in one proclaimed township and partially in another proclaimed township, one cannot obtain sectional title. Why that should be, goodness only knows, because there seems to be no reason why sectional title should not be obtained by people who stay in a block of flats which has been built in such a way that it is partially in one township and partially in another township, or which may well be situated in an area which is not a proclaimed township. It seems to me that while we are dealing with this type of legislation, which I think really represents a sort of interim stage before we proceed to sectional title, we should tackle these other problems which prevent the giving of real ownership and real title to people in these particular circumstances.

In accordance with Standing Order No. 22, the House adjourned at 10.30 p.m.