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By Kobus Els
In this article, I discuss the provisions of s 47 of the Administration of Estates Act 66 of 1965, which includes a short history of the section, and whether the provisions are peremptory or directory with reference to case law. A recent unreported judgment by the Gauteng Division of the High Court, which deals with the specific section, will also be discussed.
Section 47 of the Administration of Estates Act, provides as follows:
‘47. Sales by executor
Unless it is contrary to the will of the deceased, an executor shall sell property (other than property of a class ordinarily sold through a stockbroker or a bill of exchange or property sold in the ordinary course of any business or undertaking carried on by the executor) in the manner and subject to the conditions which the heirs who have an interest therein approve in writing:
Provided that –
(a) in the case where an absentee, a minor or a person under curatorship is heir to the property; or
(b) if the said heirs are unable to agree on the manner and conditions of the sale,
the executor shall sell the property in such manner and subject to such conditions as the Master may approve.’
It may be worthwhile at this moment to visit the history of s 47. Levinsohn J remarked in Davis and Another v Firman NO and Others [2010] JOL 24849 (N): ‘In the quest for the proper interpretation of the above section [47] it is, I think, necessary to trace its forerunners both statutory and at common law.’
Prior to 1910 powers and duties of executors were regulated statutorily. All deceased estates were administered by executors under the supervision of the Master. In Ex Parte Eckard 1902 TS 169, Innes CJ said that all sales by executors should be by public auction. If it is to the advantage of the estate, sales may be made out of hand, subject however, to the written consent of major heirs. Where there are minor heirs or if any major heirs did not give their consent, an application should be made to the court for the sanction of the sale.
The sale of assets by executors became regulated by statute when s 52 of the Administration of Estates Act 24 of 1913 was passed. Section 52 provided as follows:
‘If the Master, after due enquiry, be of opinion that it will be to the advantage of persons interested in an estate to sell out of hand instead of by public auction, any property belonging to that estate, and if no provision be made in the will of the deceased to the contrary, the Master may grant the necessary authority to the executor so to act.’
The 1913 Act was repealed by the current Act. Section 47 prior to its amendment in 1983 provided as follows:
‘Sales by executor – An executor shall not, unless authorised thereto by the will of the deceased, sell any property … otherwise than by public auction after such notice and upon such conditions (if any) as the Master may direct:
Provided that –
(a) the foregoing provisions in this section shall not apply in respect of property sold in the ordinary course of any business or undertaking of the deceased carried on by the executor, and
(b) the Master may, if it would be to the advantage of the persons interested or if they all consent thereto and it would not be contrary to the terms of the will (if any) of the deceased, authorise the executor to sell any such property on such conditions as the Master may determine, by public tender or out of hand.’
That brings us back to the provisions of the present s 47. A sale by public auction is no longer peremptory and the Master’s consent is no longer required but for the provisos of subss (a) and (b). Although it is within the power of the executor to sell assets, it is subject to the written consent of major heirs to the manner and conditions of sale. The question arises whether the obtaining of the major heirs’ consent is peremptory or directory. Section 47 provides that an executor ‘shall sell property … subject to …’. Here the word ‘shall’ when used in a statute should rather be construed as peremptory than as directory unless there are other circumstances which negative this construction (see Sutter v Scheepers 1932 AD 165 at 173-174). Non-compliance with s 47 attracts criminal sanction. In terms of s 102(1)(g) any person who contravenes or fails to comply with the provisions of s 47 shall be guilty of an offence and liable on conviction to a fine or to imprisonment for a period not exceeding 12 months.
Section 47 relates to the manner and conditions of sale, and not to the decision whether to sell. The decision to sell falls in the province of the executor alone (see Essack v Buchner NO and Others 1987 (4) SA 53 (N)).
In Schofield v Bontekoning [2011] JOL 27906 (GSJ) van Oosten J (writing for the Full Bench) expressly held that s 47 is peremptory and it casts the duty on the executor to fulfil the requirements of obtaining the written consent of the heirs, non-compliance cannot even be cured by a court order.
Is a contract concluded in contravention of s 47 visited with nullity/voidness? ‘It is a fundamental principle of our law that a thing done contrary to the direct prohibition of the law is void and of no effect’. ‘So that what is done contrary to the prohibition of the law is not only of no effect, but must be regarded as never having been done’ (see Schierhout v Minister of Justice 1926 AD 99 at 109).
The role of the Master under the present provisions of s 47 is also diminished. In terms of s 42(2) of the Act, the Master must also issue a certificate that there does not exist any objection against the sale. Thus, if all the heirs have given their consent in writing to the manner and conditions of sale, the Master cannot refuse the request for the certificate. ‘While both the Master and Registrar of Deeds may perform administrative acts in the course of their statutory duties, where they have no decision-making function but perform acts that are purely clerical’, they do not exercise judicial or quasi-judicial acts, which can be taken on review (see Nedbank Ltd v Mendelow and Another NNO 2013 (6) SA 130 (SCA) at paras 25 and 27).
Obviously, the Master does not have to approve of an agreement where all major heirs have given their consent to the manner and conditions of sale. All that he must do is to furnish the executor with their s 42(2) certificate.
In the above case, the first respondent who was the executor in the estate of one Hallatt passed away on 6 July 2020. In the deceased’s will, there are three heirs who will inherit in equal shares. One of the assets, namely a farm, cannot be transferred to the heirs by virtue of the provisions of the Subdivision of Agricultural Land Act 70 of 1970. The executor can either redistribute the assets in the estate or sell the farm. In this instance a company was formed with the three heirs as shareholders and directors. A deed of sale was drafted with the company as purchaser and sent to the heirs. The heirs then signed the agreement on behalf of the company. A valuation of the property was obtained for an approximate R 8 million. On 30 September 2020 one of the heirs sent an e-mail stating that the first respondent and the other heirs had a discussion and that the executor can market the property to interested persons. The arrangement was that the executor could market the property to third parties for R 7,5 million. There was no prohibition in the will of the deceased to the sale of the property. A written offer from the applicant was then received by the first respondent for R 7,5 million. It was accepted by the first respondent on 9 March 2021 and signed by him. The whole agreement was made subject to the approval of the Master of the High Court Pretoria. The executor was mindful of the provisions of s 47 of the Act. On 9 March 2021 a copy of the deed of sale with draft consents were sent to the heirs, which had to be signed by each of them. The consents were never returned. Subsequently on 28 March 2021 one of the heirs sent an e-mail to the executor (with copies to the other two heirs) indicating that they do not wish to sell to the applicant but rather to a family member also for an amount of R 7,5 million. The company, as represented by the heirs, sold the property to their family member for the said amount. On 15 April 2021 the deed of sale between the estate and company was signed on behalf of the estate.
The applicant then brought the application asking for an interdict to prevent the executor from transferring the property to the company pending the outcome of an action instituted against the estate claiming specific performance in terms of the deed of sale dated 9 March 2021.
The applicant interpreted the e-mail of 30 September 2020 by the one heir ‘as written approval on the manner of the sale and the conditions of the sale’ (see para 34).
In the judgment, the court then discussed the provisions of s 47, whether it was peremptory rather than directory and if peremptory, whether the non-compliance of s 47 renders the contract a nullity (see para 23). The court found with reference to case law that the provisions were indeed peremptory and non-compliance rendered the contract null and void.
The applicant went on to say ‘that the probabilities are “overwhelming” that the heirs were fully and timeously appraised of the contract and that the contract would not have been concluded without their blessing’ (see para 35). The facts, however, indicate that the heirs did not approve the manner of the sale and the conditions of the sale in writing (see para 36). ‘Limiting the import and effect of section 47 only to the manner of sale and the price is not consonant with the express terms of section 47’. Heirs must also consent in writing to the conditions of sale as well (see para 39). When the Master approves of the manner and conditions of sale, it must be done prior to the conclusion of the contract and not ex post facto. The application was accordingly dismissed with costs.
It is, therefore, imperative to obtain the written consents of heirs who have an interest in the asset to be sold to the manner and conditions of sale, which include all conditions, not only the manner of sale and price. I submit that a special condition in the sale agreement be inserted, namely, that the whole agreement is subject to compliance with the provisions of s 47 of the Act, failing which the agreement is null and void.
In Legator McKenna Inc and Another v Shea and Others 2010 (1) SA 35 (SCA), the following was said by Brand JA at para 15: ‘First, I am not aware of any rule that a contract cannot be rendered subject to compliance with a condition imposed by statute’. Absent such condition, the executor can ‘run the risk of personal liability on the basis of an implied warranty of authority if the Master’s [certificate] could ultimately not be obtained’ (see Legator McKenna at para 16).
Kobus Els BProc (UP) LLM (Unisa) is a legal practitioner at Els Attorney in Pretoria. The author represented the first respondent in the above matter.
This article was first published in De Rebus in 2022 (May) DR 17.
