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[2020] ZAGPJHC 6
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Piagalis v Aphane NO and Others (40377/2018) [2020] ZAGPJHC 6 (24 January 2020)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA,
GAUTENG
LOCAL DIVISION,
JOHANNESBURG
CASE
NO: 40377/2018
In
the matter between:
ELEFTERIOS
PIAGALIS
Applicant
And
BERNARD
APHANE
N.O.
First
Respondent
THE
MASTER OF THE SOUTH GAUTENG HIGH COURT
Second
Respondent
GEORGIOS
PIAGALIS
Third
Respondent
STAVROS
PIAGALIS
Fourth
Respondent
PENELOPE-ANN
GRIFFITHS
N.O.
Fifth
Respondent
J
U D G M E N T
MODIBA
J
INTRODUCTION
[1]
This is a
review application, brought on the ground of procedural unfairness.
The applicant, Elefterios Piagalis (“Elefterios”),
seeks
an order setting aside the decision of the first respondent, the
Master of the South Gauteng High Court, (“the Master”)
to
re-appoint the third respondent, Georgios Piagalis (“Georgios”)
as executor of the deceased estate of the late Avgerinos
Piagalis
(“the deceased”). Further, he requests this court to
assume the administrative function of the Master, by
appointing
attorney Stanley Brasg (“Brasg”), as the executor in
terms of section 95 of the Administration of Estates
Act
[1]
and sections 6 (2) (d), (e) (i) and (iii), (f)(ii)(cc) and (h) of the
Promotion of Justice Administration Act (“PAJA”)
[2]
.
BACKGROUND
FACTS
[2]
The background facts to this application are largely common cause.
Elefterios, Georgios and the fourth respondent, Stavros Piagalis
(“Stavros”) are brothers. I refer to them individually by
their names and collectively as the Piagalis brothers. The
deceased
was their father. The deceased passed away on 8 June 2010 not leaving
a will. Therefore, the Piagalis brothers are the
intestate heirs of
his deceased estate. The deceased estate is yet to be wound up. It is
currently being administered by the fifth
respondent, Penelope-Ann
Griffiths (“Griffiths”) in her capacity as an interim
curator. Georgios and Stavros are the
only respondents who are
opposing the application.
[3]
The assets in the deceased estate primarily comprises of members’
interests in three Close Corporations; namely, Holding
16 Properties
CC (“Holding Properties”), Piagalis Property Investments
CC (“Property Investments”) and
Piagalis Group
Investments CC (“Group Investments”), collectively, “the
Close Corporations”. Holding Properties
and Property
Investments are property holding entities. They derive income from
the residential and commercial properties that
are registered in
their respective names. The deceased estate holds 100% membership
interest in Holding Properties, and 50% in
the other close
corporations. The other 50% is held by Elefterios. Property
Investments is the trading entity responsible for the
management of
all the properties held by the Close Corporations. Elefterios has
been the property manager for all the properties
for many years and
continues to be. Apart from his entitlement to share in the profits
of the close corporations by virtue of his
member’s interest,
for his role as the property manager as described, he draws a salary
from Holding Properties and Property Investments.
[4]
Elefterios and Georgios disagree on various aspects of the management
of the close corporations. I do not deem it necessary
to delve into
their disagreements for the present purposes, save to state that
Georgios accuses Elefterios of mismanagement, maladministration
and
unauthorised conduct, while Elefterios accuses Georgios of
interfering with the management of the business and seeking to wind
up the deceased estate contrary to the interest of the business of
the close corporations, mainly to square up with and to deprive
him
of the management of the Close Corporations’ business.
[5]
Elefterios alleges that these differences have a detrimental effect
on the business of the Close Corporations, resulting in
the
truncation of their income. He contends that given that the assets in
the estate are not the assets in the businesses, but
the member's
interests in the Close Corporations, the estate ought to be wound-up
without further delay to allow the members’
interests to be
vested in each of the brothers. Any remaining disputes relating to
the Close Corporations will then be dealt with
in accordance with the
Close Corporations Act and good corporate governance. He
further contends that attempting to resolve
these family disputes
through the laws relating to deceased estates and their
administration, is inappropriate.
[6]
Furthermore, Elefterios contends that expeditious winding up of the
estate can only be achieved by the appointment of an executor
who is
objective and independent and who is not motivated by personal
vendettas, perceived wrongs and subjective prejudice. According
to
Elefterios, Brasg is such a person. He is also experienced in the
administration of deceased estates.
[7]
Elefterios alleges that since Georgios was appointed as the executor
of the deceased estate, he interferes with the running
of the
business of the close corporations to their detriment. Georgios does
not dispute the basis on which Elefterios alleges that
he interferes
with the running of the business of the close corporations. He
justifies it on the basis of allegation of impropriety
by Elefterios,
and contends that for that reason, his actions are in the interests
of the beneficiaries and therefore, consistent
with his role as the
executor of the deceased estate. Elefterios denies the allegations of
impropriety on his part and complains
about the unfair manner in
which Georgios made the allegations.
[8]
The Master initially appointed Georgios as the Executor. Elefterios
successfully challenged Georgios’s appointment, resulting
in
the appointment being set aside by Ismail J on the basis of
administrative defects. In an order handed down on 30 August 2018,
Ismail J, directed the Master to re-appoint the Executor. On 18
October 2018, the Master re-appointed Georgios as the executor
of the
estate, pursuant to Ismail J’s order.
[9]
Elefterios is also discontent with Georgios’s re-appointment.
He contends that his appointment has a negative impact on
the
administration of the estate. He further contends that, owing to
conflict between the Piagalis brothers, the administration
of the
estate is dysfunctional. For that reason, he is of the view that the
Master was remiss to have re-appointed Georgios as
the executor. He
alleges that the Master was aware of the conflict between Georgios
and him as it was set out in the papers that
served before Ismail J.
Further, the conflict was apparent during the meeting the Master
convened to appoint an executor as directed
by Ismail J. Hence he
contends that the Master would not have appointed Georgios, had he
properly applied his mind as required
by the Act.
[10]
On 12
October 2018, pursuant to Ismail J’s order, the Master convened
a meeting in terms of section 18(1) of the Administration
of Estates
Act ("the Act"),
[3]
for the purpose of - to use the Master’s parlance ‘electing
an executor’. He did not attend personally. Assistant
Master
Mcanyana (“the Assistant Master”) presided over the
meeting. Elefterios attended that meeting accompanied by
his legal
representatives. Georgios also attended, accompanied by his business
partner Barry van Wyk, Griffiths and the accountant
of the businesses
of the Close Corporations, Linda Claer.
[11]
When the Assistant Master called for nominations, Georgios and
Stavros nominated Georgios as Executor while Elefterios nominated
Brasg, and himself in the event that Brasg is not appointed.
Griffiths nominated herself.
[13]
Georgios objected to the nomination of Brasg on the basis that a bond
of security will be required if he is appointed. The
meeting closed
without the Assistant Master making a decision. As already mentioned,
the Master re-appointed Georgios as the Executor.
Due to the review,
his appointment remains unresolved. Pending the outcome of the
review, the Master has not issued Letters of
Executorship to him.
Griffiths remains the interim curator.
[16]
The question to be decided is whether the Master properly applied his
mind when he re-appointed Georgios as the executor. If
found that he
did not, whether exceptional circumstances exists, that warrant that
the court assumes the administrative role of
the Master, by
appointing the Executor, rather than referring the matter back to the
Master.
APPLICABLE
LEGAL PRINCIPLES
[17]
The Master’s decision is reviewable in terms of section 95 of
the Act as well as section 6 of PAJA.
[18]
In terms of section 18 of the Act, the Master may appoint any person
whom he may deem fit and proper to be executor or executors
of the
estate of the deceased. Section 18 provides:
“
(1)
The Master shall, subject to the provisions of
subsections
(3)
,
(5)
and
(6)
—
(a)
if any person has died without having by will nominated any person to
be his executor; …
[19]
Where more than one person is nominated as an executor to an estate,
in terms of section 19 of the Act, when making an appointment
in
terms of section 18, the Master shall give preference to:
"
(a) The
surviving spouse or his nominee; or
(b) If no surviving
spouse is so nominated, or the surviving nominated any person, an
heir or his nominee; or
(c) If no heir is so
nominated, or no heir has nominated any person, a creditor or his
nominee; or
(d) The tutor or
curator of any heir or creditor so nominated who is a minor or a
person under curatorship, in the place of such
heir or creditor
Provided that the
Master may-
(i)
Join any of the said persons as executor with any other of them; or
(ii)If
there is any good reason there ore ass b any or all of the persons."
[20]
I find that the Master's decision to re-appoint Georgios, is
procedurally unfair for the reasons set out below.
[21]
The use of "deem" in section 18, requires that the Master
ought to apply his mind to the appointment of an executor.
So is the
proviso in section 19(1)(d).
[22]
In his record filed in terms of Rule 53 (1) of the Uniform Rules of
Court, the Master did not include the minutes of the meeting
at which
nominations were made, presided over by the Assistant Master. He
justifies this omission as follows:
"(i) the
applicant have privy of the reasons for the reasons (ii) The reasons
for the decisions forms crux of the applicants
prayers and the
reasons are fully discussed and or adjudicated in their application
(iii) Moreover, the reasons of the applications
forms part of the
applicant 's annexure "FA21 " at page 16316(sic) and are
already before the Court (iv) The First respondent
has applied his
mind when taking the decision taking into account the history of the
matter, the laws of intestate succession and
mainly the majority
nomination made during the meeting for appointment of executor
”
[23]
The above paragraph, set out in paragraph 9 on page 222 of the
Master’s report, suggests that he conflates the facts
and
reasons. Essentially, he did not provide reasons because in his view,
they are fully canvassed in the papers before court.
The facts are
indeed canvassed in the papers before court. As to the reasons, that
cannot be. The Master ought to set out his reasons
for the decision
in his report as required by Rule 53 (1). This he clearly failed to
do. More so when one has regard to what I
make of the contents of his
report, which I deal with below.
[24]
Although in his report, he states that he applied his mind when
re-appointing Georgios by taking into account the history of
the
matter, the laws of intestate succession and mainly the majority
nomination made during the meeting for appointment of executor,
he
fails to state what he made of the factors that he took into account
and specifically, how these factors influenced his decision
to
re-appoint Georgios.
[25]
He states that the purpose of the meeting held on 12 October 2018 was
for “
election of executor as directed by court order dated
28 April 2018.” I
smail J’s order is rather, dated 30
August 2018. More importantly, section 18 does not provide for the
appointment of an executor
by election. Neither does Ismail J’s
order.
[25.1] Ismail J’s
order directs:
“
(1)
the appointment of the third respondent as executor of the estate in
terms of letters of executorship dated 14 March 2018 is
set aside’
(2)
the second respondent is ordered to convene a meeting of the
beneficiaries in order to appoint an executor;
(3)
this process should be resolved within 90 days of this order;
(4)
the costs of this application should be the costs of the deceased
estate.”
[25.2] Appointment and
election are completely different processes. The ordinary meaning of
these words, without the need for interpretation,
is clear.
Dictionary.com defines these words as follows:
‘“
Appointment
”
- the act of
appointing
,
designating, or placing in office: to fill a vacancy by
appointment.’
[4]
‘”
Election
”
- the selection of a person or persons for office by vote.
[5]
’
[25.3] While section 19
envisages the nomination of the executor, when read with section 18,
particularly the provisos thereto,
the Master is required to apply
his mind to the appointment and not to accept a nominee by virtue of
being the majority nominee.
Where there are circumstances that
renders the majority nominee unsuitable, the Master has the power to
by-pass him.
[26]
In his report, the Master concludes:
"
The decision is
based on section 19 Provision (ii) which provides that: 'if there is
any good reason therefore, pass by any or all
of the persons and in
this regard I hereby pass the nomination of (the Applicant) in that
his nomination is for himself or Stanley
which amounts to One (1)
nomination while (the Third Respondent) has two nominations by
himself and (the Fourth Respondent) which
makes Two (2) nominations
and as a result make the majority of the nominations”.
[27]
He correctly confirms that Georgios and Brasg are eligible to be
appointed as they were nominated by the heirs in accordance
with
section 19(b) of the Act. He notes that Brags has one
nomination, while Georgios has two. Yet he fails to provide
substantive
reasons why by-passed by Brags and preferred Georgios
over him. This, together with his reference to Ismail J’s order
as
directing him to
elect
an Executor, considering the meaning
of this word, the process that the Assistant Master followed at the
meeting, the Master’s
subsequent substantive decision to
re-appoint Georgios and the scant reasons he provides for it, justify
a conclusion that he re-appointed
Georgios by election and that he
failed to apply his mind to his suitability. This procedure is
ultra
vires
as he is not empowered by section 19 of the Act to appoint
an Executor by election. Further, by so doing, he failed to comply
with
Ismail J’s order.
[28]
His statement that he took into account the history of the matter,
says nothing about what he made of it, particularly because
he was
party to the litigation that led to Ismail J’s order and the
fact that the Assistant Master personally observed the
state of
mistrust and hostility between the Applicant and Georgios regarding
the deceased estate and the management of the business
of the Close
Corporations at the 12 October 2018 meeting. If the Master did indeed
take the history of the matter into consideration
as he contends that
he did, his decision to re-appoint Georgios is not rationally
connected to the information before him, as no
reasonable Master with
this knowledge could have reached a decision to re-appoint Georgios
as the Executor of the estate comprised
primarily of the business
managed by Elefterios, given the acrimony and mistrust between
Georgios and him.
[29]
The contention by the opposing respondent’s Counsel, that
Ismail J found that the acrimony was not incapable of resolution
is
also not demonstrably considered by the Master.
[30]
I therefore find that:
[30.1] the Master’s
decision to appoint Georgios by election violates the principle of
legality in that, by deciding Georgios
re-appointment by election,
the Master exceeded his powers under section 19 of the Act.
[30.2] the Master’s
decision to re-appoint Georgios is based on a factual error in that
he fails to take into account the
acrimony between the Piagalis
brothers and its bearing on the administration of the estate given
that the deceased estate assets
mainly comprises member’s
interests in Close Corporations whose business is managed by
Elefterios, but applied irrelevant
considerations under the
circumstances, namely the fact that Georgios is the majority nominee
and for incorrectly, arbitrarily
and capriciously excluding Mr Brasg
as a potential executor
[30.3] His decision to
re-appoint Georgios:
[30.3.1]
fails to apply the proviso in section 19;
[30.3.3]
is not rationally connected to the information before him when he
made the appointment;
[30.3.3]
is unreasonable, in that no reasonable Master in his position could
have so exercised the power in the manner that he did.
[31]
For the above reasons, his decision stands to be set aside.
THE
APPOINTMENT OF AN INDEPENDENT EXECUTOR BY THE COURT
[32]
Rather than referring the decision back to the Master, Elefterios
seeks an order appointing an executor to the Estate.
He contends that Brasg is a suitable candidate for
appointment. He relies on Section 95 of the Act. It provides that on
review,
the court may confirm, set aside or vary the decision of the
Master appointing an executor. The Court accordingly has the power
to
appoint.
[33]
He further contends that referral of the decision back to the Master
will further delay the winding up of the estate, to the
detriment of
the businesses of the Close Corporations, some of which are already
in fragile state. The Master has twice failed
to correctly apply the
Act and exercise his powers when appointing the executor. It is in
the interests of justice that the Estate
be placed in the hands of an
independent executor without further delay. Georgios’ only
objection to Brasg’s appointment
at the 12 October meeting, was
that he will require a bond of security. It is not unusual for
the Master to appoint a person
from whom the Master requires a bond
of security in circumstances where the person is the only suitable
nominee. In this case,
Brasg fits this prism due to his independence,
given the acrimony between the Piagalis brothers and its impact on
the deceased
estate as aforesaid.
[34]
In the answering affidavit Georgios adds that he objected that
Elefterios’ nomination compromises Brasg’s independence.
Elefterios contends that this is not a valid objection to Brasg’s
appointment.
[35]
Given the role of an executor, I have difficulty with understanding
this ground of objection. Brasg independence will only
be compromised
if he fails to act independently once appointed. Georgios has not
advanced any shred of evidence to sustain this
allegation. As an
officer of this court, Brasg is bound by professional ethics to act
independently and with integrity. In the
absence of evidence to the
contrary, the court is entitled to rely on his professional ethical
duties not to doubt Brasg’s
suitability for appointment.
[36]
The present circumstances, as contended by Elefterios, warrant that
the court assumes the administrative functions of the Master
by
appointing an executor. Further, Brasg is found to be suitable
for appointment.
COSTS
[37]
Elefterios seeks costs against the opposing respondents. Such a
prayer is not justifiable under these circumstances, as any
party is
entitled to oppose any relief in which he has a substantial interest.
Georgios and Stavros’s opposition is not malicious
or
vexatious. The general principle that costs follow the cause, which I
find applicable here, already hits them hard, as they
will be liable
for their own legal costs. No further purpose would be served by
strengthening the court’s hand against them
by saddling them
with Elefterios’ legal costs.
[38]
I, therefore find that, the appropriate costs order in these
circumstances is that the costs of the successful party should
lie
against the deceased estate.
[39]
In the premises, the following order is made:
ORDER
1. The decision of the
Master of the High Court, Gauteng Local Division, Johannesburg, taken
on 18 October 2018, re-appointing Georgios
Piagalis as the executor
of the Estate Late Avgerinos Piagalis, is reviewed and set aside.
2. Mr Brasg is appointed
as executor to the Estate Late Avgerinos Piagalis.
3. Costs are costs in the
administration of the estate.
__________________________
MADAM
JUSTICE
L T MODIBA
JUDGE
OF THE HIGH COURT,
GAUTENG LOCAL
DIVISION, JOHANNESBURG
APPEARENCES
Counsel
for applicant:
Advocate A Kemack SC
Advocate M Nieuwoudt
Attorney
for applicant:
Hogan Lovells Inc
Counsel
for 3
rd
and 4
th
respondent:
Advocate P Van Der Berg SC
Advocate N Lindeque
Attorney
for 3
rd
and 4
th
respondent:
Mostert Skosana Inc
Date
of hearing:
15 October 2019
Date
of judgment:
24 January 2020
[1]
66 of 1965
[2]
3 of 2000
[3]
66 of 1965
[4]
https://www.dictionary.com/browse/appointment?s=t
[5]
https://www.dictionary.com/browse/election?s=t