The law reports – November 2017

November 1st, 2017
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Heinrich Schulze BLC LLB (UP) LLD (Unisa) is a professor of law at Unisa.

September 2017 (5) South African Law Reports (pp 1 – 354); [2017] 2 All South African Law Reports June (pp 677– 996); [2017] 3 All South African Law Reports July (pp 1– 364); [2017] 2 All South African Law Reports August (pp 365 – 737); 2017 (7) Butterworths Constitutional Law Reports – July (pp 815 – 948)

This column discusses judgments as and when they are published in the South African Law Reports, the All South African Law Reports and the South African Criminal Law Reports. Readers should note that some reported judgments may have been overruled or overturned on appeal or have an appeal pending against them: Readers should not rely on a judgment discussed here without checking on that possibility – Editor.

Abbreviations

CC: Constitutional Court

ECG: Eastern Cape Division, Grahamstown

GJ: Gauteng Local Division, Johannesburg

GP: Gauteng Division, Pretoria

KZP: KwaZulu-Natal Division, Pietermaritzburg

SCA: Supreme Court of Appeal

WCC: Western Cape Division, Cape Town

Company law

Minority shareholder’s claim not a ‘debt’ for purposes of the Prescription Act: In Off-Beat Holiday Club and Another v Sanbonani Holiday Spa Shareblock Ltd and Others 2017 (5) SA 9 (CC); 2017 (7) BCLR 916 (CC) the facts were as follows: The respondent, Sanbonani, (the Shareblock) operated a shareblock scheme in Hazyview in Mpumalanga. The shareblock scheme was developed by Sanbonani Development Limited (the Development). The third respondent, one Harri, owned 80% of the Development’s shares personally or through the Duleda Family Trust, of which he was the trustee, and 46,7% of the shares in the Shareblock. The applicants held or control 29,14% of the shares in the Shareblock.

In 1988 the Shareblock amended its articles of association to give the Development a continuous right to use property demarcated for common facilities and an unlimited discretion to develop a timeshare resort, which included the right to allocate different numbers of shares to different share blocks.

In the period 1999 to 2004 several disputes arose between the applicants and Harri as the controlling mind of the Shareblock and the Development. Among other things, Harri instructed that a VAT refund must be paid to the Development although the South African Revenue Service had indicated that the refund was due to the Shareblock; he called a shareholders’ meeting to remove the directors representing the applicants; and he engineered the appropriation of land earmarked for the common use of all the Shareblock shareholders for himself, the Development and the Duleda Trust.

In 2008 the applicants launched proceedings in the GP based on s 252 and s 266 respectively of the Companies Act 61 of 1973 to address the problems above. The court agreed with the respondents that the claims had prescribed after three years in terms of s 11(d) of the Prescription Act 68 of 1969. On appeal, the SCA used the wide interpretation of ‘debt’ that was used before the decision in Makate v Vodacom Ltd 2016 (4) SA 121 (CC) and ruled that the s 266 claim had not prescribed because prescription only started to run after appointment of the curator bonis. It further held, however, that the s 252 claim had prescribed.

Since the SCA had issued the judgment before the CC decision in Makate and it concerned the proper interpretation of their definition of ‘debt’, an appeal to the CC was allowed in respect of the question whether a s 252 claim was a debt that could prescribe.

In a majority judgment, Mhlantla J confirmed that the narrow interpretation as enunciated in the Makate case had to be applied. It was, therefore, held that a s 252 claim was not a ‘debt’ that could prescribe because the applicants’ claim was for declaratory relief, not an alteration of the terms of a contract or a money award. The court first had to decide whether it would be just and equitable to grant relief before there was an actual claim and thus a ‘debt’. However, although there was also no time limit in the 1973 Companies Act itself for instituting a s 252 action, a court could take into account the length of time that had elapsed between the commission of the actions and the date on which the court proceedings were instituted when deciding whether it was just and equitable to grant relief.

The appeal was accordingly successful and the case was returned to the High Court to decide on the merits of the s 252 application for relief.

 

Voting in of business rescue proceedings: The crisp facts in FirstRand Bank Ltd v KJ Foods CC 2017 (5) SA 40 (SCA); [2017] 3 All SA 1 (SCA) were as follows: The business of the respondent, KJ Foods, was the production and supply of bread. In 2012, after being in business for 20 years, it started experiencing financial problems. One of the reasons advanced for its financial distress was that it was in arrears with its payments towards its flour supplier, Pioneer. KJ Foods applied to be placed under business rescue proceedings.

The appellant, FirstRand, which was a creditor of KJ Foods, objected to the voting process in the approval of the business rescue plan, and it lodged an application in the GP.

In passing, s 152(2) of the Companies Act 71 of 2008 (the Act) sets the required minimum votes for the approval of a business rescue plan on a preliminary basis; s 152(3) provides that, if not so approved, the plan may only be dealt with in terms of s 153. Section 153 contains detailed provisions regarding the voting and setting aside of the voting process.

The High Court set aside, in terms of s 153(7) of the Act, a vote of FirstRand against the adoption of the proposed revised business rescue plan. The court held that FirstRand’s vote was inappropriate and consequently granted an order in terms of which the voting result of rejection was set aside. The High Court further ordered that the proposed revised business rescue plan be adopted by the affected parties in terms of the Act.

On appeal to the SCA, Seriti JA pointed out that the principle issue at stake was whether s 153(1)(a)(ii) or s 153(1)(b)(i)(bb), read with s 153(7) of the Act, entailed that the court must first establish whether the vote was inappropriate before invoking its discretion under s 153(7) to set it aside. A second issue, closely linked to the principle issue, was the effect of a court setting aside a vote under s 153(7), that is, whether the business rescue plan must again be put to the vote after a court set it aside.

The court held that s 153(1)(a)(ii) and s 153(1)(b)(i)(bb) were inextricably linked to s 153(7). On an application to set aside the result of a vote in terms of any of these subsections, the court was prescribed by s 153(7) to determine only whether it was reasonable and just to set aside the particular vote, taking into account the factors set out in s 153(7)(a) – (c) and all circumstances relevant to the case, including the purpose of business rescue in terms of the Act. Put differently, in an application on the grounds that its result was inappropriate, the vote would be set aside if it were reasonable and just to do so in terms of s 153(7). This entailed a single inquiry and value judgment.

If a business rescue plan were again put to the vote at the resumption of the postponed meeting, it would enable a creditor (such as FirstRand) who voted against the adoption of the business rescue plan to vote against it once more, starting the whole process all over again. The Act clearly did not envisage another round of voting. It followed that on setting aside of the vote rejecting the business rescue plan, the business rescue plan would be considered to have been adopted by operation of law.

The order of the court a quo, that the revised business rescue plan be adopted by the affected parties was, therefore, superfluous. Its adoption was a natural consequence of the setting aside of the result of FirstRand’s inappropriate vote.

The appeal was thus dismissed with costs.

Contempt of court

Circumvention of court order constitutes contempt of court: In Readam SA (Pty) Ltd v BSB International Link CC and Others 2017 (5) SA 184 (GJ); [2017] 2 All SA 902 (GJ) the SCA in an earlier judgment, ordered the defendant, BSB, to partially demolish a building it had commenced erecting on an erf in Parkmore, Johannesburg, which it owned. The SCA held that the construction was in violation of the applicable town planning scheme because, among others, its footprint covered more than the prescribed maximum of 60% of the erf’s surface area and it exceeded the three-storey height limit.

It was common cause that BSB failed to partially demolish the building. Instead, and in order to circumvent the need for compliance with the SCA’s order, BSB purchased an erf neighbouring the one on which the non-complying building was erected. BSB consolidated those erven, and applied to the appropriate town planning tribunal for the rezoning of that consolidated erf to allow for a greater building height, and a greater floor area coverage.

The applicant, Readam, was the owner of a neighbouring property. Readam instituted action to commit BSB for contempt of court.

Sutherland J identified two critical issues for consideration in the application for contempt of court. First, did the SCA order, properly interpreted, allow for such a course of conduct? Secondly, as a matter of principle and public policy, could a litigant be allowed to unilaterally choose not to comply with a direct order of court, thereby undermining the authority of the court and de facto achieving the objective of the unlawful enterprise?

The court held that the strategy pursued by BSB was inconsistent with any proper meaning to be given to the SCA order to demolish the unlawfully erected building. The SCA’s order was not an injunction to engage in a process of obtaining authorisation, permissions and consents to keep a building, which was an unlawful enterprise from the very inception of the project.

The court further held that as a matter of principle BSB’s evasive conduct could not be accepted. To do so would be to allow, in conflict with earlier case law, BSB to present to the court an unlawful exercise as a fait accompli, thereby undermining the principle of legality.

The application was accordingly allowed with costs. BSB was ordered to pay the cost of the application on the attorney and client scale.

Constitutional law

Considerations: A matter which is moot: In Afriforum NPC and Others v Eskom Holdings Soc Ltd and Others [2017] 3 All SA 663 (GP) four separate applications against the respondent, Eskom, which all concerned the same legal issue, were lodged for adjudication.

Section 27 of the Electricity Regulation Act 4 of 2006 (ERA) provides that, in relation to the exercise of its powers in respect of the supply of electricity, a municipality must, inter alia, provide basic reticulation services free of charge, or at a minimum cost, to certain classes of end-users. Eskom supplies municipalities in bulk at a pre-determined tariff, and the municipalities then re-sell electricity to end-users within their municipal borders at a mark-up.

At stake was Eskom’s decision to implement scheduled interruptions of the supply of electricity to three municipalities. The scheduled interruptions in certain municipalities were an attempt to collect arrear debts owed to Eskom for the supply of electricity. The applicants sought the review and setting aside of that decision on the grounds that it was unconstitutional, unlawful and unreasonable.

The applicants sought various declaratory orders. Suffice it to mention here that the applicants sought to establish that Eskom is not permitted to interrupt the supply of electricity to any local authority as a means to collect acknowledged debts owed to it; and orders reviewing and setting aside Eskom’s decisions to interrupt electricity to the municipalities on constitutional and administrative law grounds.

Eskom raised several defences and challenged the competency of the relief sought by the various applicants in all the applications. For space considerations the present discussion will be restricted to Eskom’s plea of mootness as a preliminary issue based on the fact that after reaching agreement with two of the municipalities on payment proposals, there was no longer a live controversy.

As regards Eskom’s plea of mootness, Murphy J held that a case is moot and generally not justiciable if it no longer presents an existing or live controversy, which should exist if the court is to avoid giving advisory opinions on abstract propositions of law. For any claim to be justiciable, it must present a real and substantial controversy which unequivocally calls for the adjudication of the rights asserted. A prerequisite for deciding an issue despite the fact that it is moot is that any order the court may make must have some practical effect on the parties or someone else. Relevant factors include the nature and extent of the practical effect that any possible order might have, the importance of the issue, its complexity and the fullness or otherwise of the argument that has been advanced by the parties. Where there is a compelling public interest that the constitutionality of a statutory provision be determined, the doctrine of mootness should be less strictly applied.

The essential question for decision in relation to the justiciability of the issues and the relief sought in these applications, therefore, was whether the voluntary cessation of Eskom’s alleged wrongful conduct has rendered the applications moot. The court found that the prayers of all the applicants seeking declaratory, interdictory and review relief in relation to the impugned decisions on the grounds of constitutionality, illegality and unreasonableness fell to be dismissed.

The claims were moot and there were no exceptional circumstances requiring their decision. The applications were thus dismissed.

 

Procedural fairness of Minister’s determinations: In Earthlife Africa and Another v Minister of Energy and Others 2017 (5) SA 227 (WCC); [2017] 3 All SA 187 (WCC) the court was asked to consider the respondent Minister’s (the minister) s 34 determinations in terms of the Electricity Regulation Act 4 of 2006 (ERA).

On 17 December 2013 the minister, acting in terms of s 34 of the ERA, determined that South Africa required 9,6 gigawatts of nuclear power and that this should be procured by the Department of Energy. This determination, however, was only gazetted on 21 December 2015.

On 10 June 2015 the minister tabled three intergovernmental agreements (IGA) with Russia, the United States (US) and Korea, regarding cooperation in the field of nuclear energy.

On 8 December 2016 the minister issued a second s 34 determination, but with Eskom as the procurer of nuclear plants. This second determination was gazetted on 14 December 2016.

The applicant, Earthlife, applied to have these determinations and IGAs declared unconstitutional and unlawful. Earthlife based its application on various procedural challenges, as well as non-compliance with the provisions in ss 231(2) and 231(3) of the Constitution. The minister, in turn, contended that the determinations were not required to be made in accordance with a procedurally fair process in which the public participated.

Bozalek J decided as follows: First, with regard to the procedural fairness of the s 34 ERA determinations, the court held that s 34(1) of the ERA constitutes the legislative framework within which neither a decision that new electricity generation capacity is required, nor a determination by the minister in that regard, has force and effect unless the National Energy Regulator (NERSA) confirms the minister’s decision. Because a determination in terms of s 34(1) has far-reaching consequences for all concerned, the s 34 determinations constituted an administrative action. Section 33 of the Constitution provides that administrative action must be lawful, reasonable and procedurally fair. Section 10 of the National Energy Regulator Act 40 of 2004 (NERA) provides that any decision taken by NERSA must be taken within a procedurally fair process in which affected persons have the opportunity to submit their views and present relevant facts and evidence to NERSA. A rational and fair process would have allowed for public input in terms of s 10 of the NERA. NERSA’s decision to concur with the s 34 determinations failed to satisfy the test for rationality because it failed to explain, for one, how it acted in the public interest without taking any steps to ascertain the views of the public or any interested or affected party.

Secondly, the minister’s failure to gazette or otherwise make the determination public for two years not only breached the minister’s own decision, thus rendering it irrational and unlawful, but violated the requirements of open, transparent and accountable government.

Thirdly, the Russian IGA’s detail and ramifications were such that it clearly required scrutiny and debate by the legislature in terms of s 231(2) of the Constitution. The minister either failed to apply her mind to the requirements of s 231(3), or at worst to have deliberately bypassed s 231(2) for an ulterior and unlawful purpose.

Fourthly, the USA IGA had been signed in 1995, but it was only tabled two decades later; and the Korean IGA was tabled more than four years after it had been signed. In both instances the minister failed to comply with the requirement of s 231(3) of the Constitution. The tabling of both IGAs had thus to be set aside.

Both the s 34 determinations thus fell to be set aside and the minister had to start with a clean slate.

Delict

‘Foreseeability’: In MTO Forestry (Pty) Ltd v Swart NO 2017 (5) SA 76 (SCA); [2017] 3 All SA 502 (SCA) the appellant, MTO, was the owner of a plantation in the district of Humansdorp. It suffered huge damage when a fire burned through the plantation. The fire had started on the respondent’s (the defendant’s) immediately adjacent farm, in an area on the defendant’s farm with dense thickets of highly flammable alien plants (‘warbos’). The fire spread rapidly as a result of a strong wind.

MTO claimed damages of more than R 23 million. Its claim was rejected in the court a quo.

On appeal to the SCA the court pointed out that although the matter primarily turned on the alleged negligence of the defendant, it was nevertheless necessary to decide on the relevance of the aspect of ‘foreseeability’.

In this regard Leach JA held that one should not take foreseeability into account as a factor common to the inquiry in regard to the presence of both wrongfulness and negligence. It would cause confusion and conflate the elements of negligence and wrongfulness. As a result, so the court reasoned, foreseeability of harm should not be taken into account when determining wrongfulness, and its role should be confined to the rubrics of negligence and causation.

With regard to the element of negligence the court considered the firefighting facilities of the defendant, as well as the presumption created in s 34(1) of the National Veld and Forest Fire Act 101 of 1998. Section 34(1) placed an onus on the defendant to show that the fire spread to MTO’s plantation without negligence in its (the defendant’s) part.

The court decided that a reasonable landowner in the defendant’s position was not obliged to ensure that in all circumstances a fire on its property would not spread beyond its boundaries. In the present case the defendant had shown that he had taken such steps that were reasonable in the circumstances to guard against the fire spreading beyond its property. It employed, among others, an independent and professional fire fighter to make his services available if need be.

Finally, the defendant was not negligent in failing to remove the ‘warbos’, which was a natural resource on his property, as opposed to a ‘man-made tinderbox’.

The appeal was dismissed with costs.

 

Test for wrongfulness: The dispute in Home Talk Developments (Pty) Ltd and Others v Ekurhuleni Metropolitan Municipality [2017] 3 All SA 382 (SCA) turned on a land swap transaction in terms of which a land developer, Booysen, the controlling mind of the three appellants (the plaintiffs), and the respondent, the municipality, each transferred land respectively owned by them to the other. The land was earmarked to be developed as a nature area. In April 2005, the Corporate Affairs Committee (CAC) of the municipality resolved to approve the land swap. However, the municipality was subsequently advised it did not have the power to delegate its function under s 14(2) of the Local Government, Municipal Finance Management Act 56 of 2003 to its CAC, and that such delegation, and subsequent approvals by the CAC, were unauthorised and thus invalid.

By the end of 2007, Booysen believed that all of the required services had been completed and that he was entitled to a certificate (the s 82 certificate) in terms of s 82 of the Town-Planning and Township Ordinance 15 of 1986 (the Ordinance). As the s 82 certificate was still not issued, the plaintiffs applied to the High Court for relief. The thrust of the plaintiff’s application turned on the fact that the relevant municipal manager (one Flusk) had allegedly acted mala fide in withholding the issuance of the s 82 certificate.

The municipality’s pleaded that the Ordinance did not allow for compensation or damages where the municipality delayed or failed in issuing the s 82 certificate.

Ponnan JA, in terms of a majority decision, pointed out that while the plaintiffs were entitled to proper administrative legal proceedings, that did not mean that the breach of the administrative duties (ie, the failure to issue the s 82 certificate) necessarily translated into private law duties giving rise to delictual claims. An incorrect administrative decision is not per se wrongful, and the breach of every legal duty, especially one imposed by administrative law, does not necessarily translate into the breach of a delictual duty. Whether the existence of an action for damages can be inferred from the controlling legislation depends on its interpretation, including the object of the legislation. This, in turn involves a consideration of policy factors.

Conduct is wrongful in the delictual sense if public policy considerations demand that in the circumstances the plaintiff has to be compensated for the loss caused by the negligent act or omission of the defendant. It is then that it can be said that the legal convictions of society regard the conduct as wrongful.

The court referred to earlier case law in which it was held that public policy considerations dictate that adjudicators of disputes are immune to damages claims in respect of their incorrect and negligent decisions.

The plaintiffs failed to adduce evidence that Flusk had acted mala fide and/or with a mala fide ulterior purpose.

The court accordingly held that the municipality did not act wrongfully in the delictual sense and was not in breach of any legal duty owed by it to the plaintiffs, because the municipality enjoyed immunity against liability for damages resulting from the negligent conduct complained of.

The appeal was, therefore, dismissed with costs.

Execution

Jurisdiction: Emolument attachment: At stake in Smith NO v Clerk Pietermaritzburg Magistrates Court 2017 (5) SA 289 (KZP) was the question which court has jurisdiction to issue an emoluments order where two different courts have jurisdiction over, the debtor, on the one hand, and the employer which pays the debtor’s salary, on the other hand.

In May 2015 the Pietermaritzburg Magistrate’s Court granted an administration order against a debtor, and authorised the issue of an allied emoluments attachment order in terms of which the debtor’s employer (the garnishee) was obliged (on a continuing basis, and until such time as the judgment debt has been paid in full) to pay a certain portion of the judgment debtor’s salary to the judgment creditor.

The debtor under administration resided in the district of Pietermaritzburg while his employer’s head offices were in Durban. In short, the debtor and the garnishee resided in two different jurisdictions.

The administrator then asked the clerk of the Pietermaritzburg court to issue the emoluments order. The clerk refused and the administrator sought review of the clerk’s decision. The court dismissed the review, and the administrator appealed to the KZP.

The principle question was which of the Pietermaritzburg or Durban courts could issue the emoluments order?

Madondo DJP held that only the court with jurisdiction over the employer could do so. In this regard the court relied on s 65J(1)(a) of the Magistrates’ Court Act 32 of 1944 (the Act).

The appeal was accordingly dismissed with costs.

Insolvency law

Cirumstances under which insolvent may be represent the estate in litigation: The facts in Mulaudzi v Old Mutual Life Assurance Co (South Africa) Ltd and Others; National Directors of Public Prosecutions and Another v Mulaudzi [2017] 3 All SA 510 (SCA) were as follows: In May 2009, the appellant (the insolvent) invested R 33,5 million in a policy underwritten by the first respondent, Old Mutual. In March 2011, he concluded a written deed of cession with a third party, Nedbank, in terms of which he ceded all rights in the insurance policy. Nedbank subsequently notified Old Mutual of the cession and requested confirmation that the policy had been endorsed with the cession in its favour. Due to an error, Old Mutual did not substitute Nedbank as the owner of the policy in the place of the insolvent on its computer system, and the insolvent continued to be reflected as the owner of the policy. On 2 June 2014, the insolvent submitted a disinvestment application form to Old Mutual in respect of the policy in terms of which he sought payment of the full disinvestment value of the policy. Old Mutual paid the full maturity value of the policy, namely R 48 163 098,55, into a bank account nominated by the insolvent, in the mistaken belief that the insolvent was still the owner of the policy. It only realised its error when Nedbank sought payment in terms of the cession. It paid Nedbank the full maturity value of the policy as it was obliged to in terms of the cession.

Old Mutual thereafter unsuccessfully sought repayment from the insolvent. Old Mutual consequently reported the matter to the South African Police Services pursuant to the provisions of s 34(1)(b) of the Prevention and Combating of Corrupt Activities Act 12 of 2004.

Suffice it to mention here that after the insolvent’s estate was sequestrated and trustees appointed the question was raised in subsequent litigation involving two appeals, whether the insolvent had jurisdiction to represent his insolvent estate.

Ponnan JA held that in terms of s 20(1) of the Insolvency Act 24 of 1936, the effect of the sequestration of the estate of an insolvent is to divest the insolvent of his estate and to vest it in the Master until a trustee has been appointed, and, on the appointment of a trustee, to vest the estate in the trustee. It is then the trustee, and not the insolvent who acts in litigation concerning the estate.

The main issue, therefore was, whether the insolvent should also be entitled to participate in the proceedings in this court (which would be the case if the trustees were to have been joined) or whether he first had to seek and obtain the court’s leave to participate (something he would have to do if the proper course was for the trustees to be substituted for him). The court held that on the sequestration, the trustees had to take the place of the insolvent in the litigation; and that the insolvent could take steps only if the trustees decided not to take steps in the litigation. As the trustees had indicated that they would abide the decision of the court in both matters, the insolvent was entitled to take steps which, if successful, would enhance the value of the estate, in the second appeal or reduce the liabilities in the estate in the first appeal. The insolvent was thus entitled to intervene in both matters.

Intellectual property

Power of Registrar to extend duration of patent: The facts in Trustco Group International (Pty) Ltd v Vodacom (Pty) Ltd and Another 2017 (5) SA 283 (SCA) were that the appellant, Trustco, which was a patent-holder, failed to pay the patent’s renewal, and the patent lapsed. (The reported version of the court’s decision does not specify the nature of the patent in question.)

Trustco then applied to the Registrar of Patents for its restoration. After the Registrar had advertised the application for restoration, the respondent, Vodacom, filed a notice of opposition. From the date of Vodacom’s notice of opposition, Trustco had two months to file a counter-statement, failing which, reg 83 of the Patent Regulations provides its application for restoration would be deemed abandoned.

The two months passed without Trustco filing a counter-statement, but shortly thereafter it applied for an extension of time in which to do so. The Registrar granted the extension in terms of s 16(2) of the Patents Act 57 of 1978. Vodacom successfully appealed this grant of an extension to the Commissioner of Patents.

On appeal to the SCA, Navsa ADP, held that the key issue was whether reg 83 limited the Registrar’s discretion under s 16(2) to extend times of doing of anything. The court decided that it did not. It held that a remedial power, such as the power to extend time periods aimed at avoiding harsh results, should be extended as far as the wording of a statutory provision admits. It referred with approval to the decision in Slims (Pty) Ltd and Another v Morris NO 1988 (1) SA 715 (A).

The appeal was accordingly allowed with costs. The Commissioner’s decision was set aside, and substituted so as to dismiss Vodacom’s appeal.

Law of succession

Powers of a Master’s representative compared to the powers of the executor: The facts in Kenene NO v Invela Financial Corporation (Pty) Ltd and Others [2017] 3 All SA 725 (ECG) were as follows: The executor was the granddaughter of the deceased who died intestate on 7 December 2004. The second respondent was one of the deceased’s daughters and the mother of the executor. The second respondent was appointed as the Master’s representative.

In October 2008, the second respondent concluded an agreement of sale of the property. The transfer of the property was to be effected by the seventh respondent. The second respondent wished to carry out certain renovations to the property, which still formed part of the deceased’s estate. To that end the second respondent, in her capacity as the Master’s representative borrowed money from Invela, in the form of bridging finance in the sum of R 30 000. The loan was arranged through the seventh respondent, as agent. The buyers cancelled the agreement of sale, but the bridging finance advanced by Invela, remained due and payable to it. Invela issued summons in the magistrates’ court against the second respondent claiming repayment of the amount lent, and obtained default judgment against the second respondent in her representative capacity. When Invela applied to have the property declared executable, the second respondent and Invela concluded a settlement agreement in terms whereof the second respondent, still in her representative capacity, agreed to repay the loan by way of monthly instalments. By then, the Master had substituted his representative with the appellant, as executor of the deceased’s estate. Therefore, according to the appellant, when the second respondent concluded the settlement agreement, she had no authority to bind the deceased’s estate.

Since no payments were made in terms of the agreement of settlement, Invela successfully applied in the magistrates’ court for default judgment and later for the property to be declared executable. A warrant of execution was subsequently issued and the property was sold on auction.

On appeal to the ECG, the executor argued, inter alia, that the magistrate ought to have found that good cause was shown for rescinding the judgments in question; the second respondent, who was not issued with letters of authority or executorship from the Master, did not have the necessary authority in terms of s 18(3) of the Administration of Estates Act 66 of 1965 (the Act) to burden the estate in question with debt or to dispose of property and accordingly, any sale in contravention thereof was a nullity and the order thus erroneously made.

Revelas J held that an executor (who is charged with the liquidation of a deceased’s estate) has powers distinct from a Master’s representative, appointed by the Master in terms of s 18(3) of the Act. A Master’s representative is appointed merely to ‘distribute the assets’ of the estate where the value is below R 125 000. Therefore, a Master’s representative has limited powers.

Section 30 of the Act imposes restrictions on the sale in execution of property in deceased estates. Non-compliance with the prescripts of the Act will result in a nullity. Since the property was attached while it still formed part of the deceased’s estate, the ninth respondent was required by s 30 of the Act, to first obtain an order from the High Court directing him to execute. In the absence of such an order the ninth respondent did not have the necessary authority to transfer the property.

It was concluded that the magistrate erred in her application of the relevant legal principles and her judgment was set aside.

Other cases

Apart from the cases and topics that were discussed or referred to above, the material under review also contained cases dealing with: Administrative justice, agricultural land, civil procedure, electricity, environmental law, freedom of the press, international law, land and land reform, minerals and petroleum, motion of no-confidence in State President, privilege of legal professional and revenue.

This article was first published in De Rebus in 2017 (Nov) DR 26.

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