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[2015] ZAKZDHC 44
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Sutherland v Master of the High Court (Kwazulu-Natal, Pietermaritzburg) and Others (13619/2013) [2015] ZAKZDHC 44 (12 May 2015)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, DURBAN
No:
13619/2013
In
the matter between:
BRUCE
ROBERT
SUTHERLAND
......................................................................................
Applicant
and
THE MASTER OF THE
HIGH COURT
(KWAZULU-NATAL,
PIETERMARITZBURG)
.....................................................
First
Respondent
ANNA
NAOMI
SURTHRLAND
............................................................................
Second
Respondent
CHARLES
FRANCIS REID N.O.
….......................................................................
Third
Respondent
GRANT
ROY
SUTHERLAND
...............................................................................
Fourth
Respondent
MOORE
STEPHENS CJL
PARTNERSHIP
............................................................
Fifth
Respondent
In
the matter of the liquidation and distribution account in the
Estate
of the Late Ian Robert Bruce Sutherland
,Estate
Number 6568/2010/ Pietermaritzburg
ORDER:
(a)
The Master’s decision in respect of
paragraph 1(a) of the Notice of Motion is set aside and the matter is
referred back to
the Master of the High Court, KwaZulu-Natal,
Pietermaritzburg, for reconsideration.
(b)
The orders sought in respect of paragraphs
1(b) and (c) of the Notice of Motion are refused.
(c)
The costs of this application shall be paid
as a further administration cost in the deceased’s estate.
J
U D G M E N T
K
PILLAY J
[1]
The applicant seeks an order setting aside or alternatively reviewing
and setting aside the decision of the Master of the High
Court in
respect of three objections lodged against a liquidation and
distribution account in the deceased estate of the late Ian
Robert
Bruce Sutherland (the deceased estate). More particularly the
order sought reads as follows:
‘
That
the following decisions of the first respondent (which were made on 8
November 2013) are set aside, alternatively are reviewed
and set
aside:
(a)
sustaining an objection to compound
interest being charged on the loan advanced by Bruce Robert
Sutherland (the applicant) to the
deceased (the late Ian Robert Bruce
Sutherland, Estate Number 6568/2010) and the second respondent;
(b)
sustaining an objection against an increase
in the remuneration of the executor (the third respondent) from the
prescribed fee of
3.5% to 7.0946%; and
(c)
sustaining an objection to paying
disbursements to Knight Turner Attorneys in the sum of R14 050.50 and
allowing disbursements of
only R9 177.00.
[2]
In addition this court is asked to direct that the first and final
liquidation and distribution account in the aforesaid deceased
estate
does not need to be amended and does not need to be open for
inspection for any further period; that the costs of this
application, if unopposed, be paid, on the attorney and client scale,
as a further administration cost in the deceased estate and
if
opposed to be paid by any party who unsuccessfully opposes the
application. The second respondent is the only party that
opposes this application.
[3]
The applicant’s
locus standi
is challenged by the second respondent on two grounds:
(a)
applicant’s reliance on the
provisions of Section 35(10) of the Administration of Estate’s
Act 66 of 1965 (the Act)
in circumstances where the Master has given
no direction contemplated in Section 35(9); and
(b)
applicant’s
locus
standi
as an aggrieved person in
relation to objections (a) and (c) as referred to above.
[4]
The second respondent, in addition, to the above, challenged this
court’s jurisdiction to hear this matter on two bases
firstly,
that the estate vests in the Master of the High Court,
Pietermaritzburg. Secondly that in terms of Section 35(10)
of
the Act it is the provincial division which has jurisdiction to
review the first respondent’s decision because it is that
court
that has jurisdiction. It is instructive that the Master has
not objected to the jurisdiction of this court to deal
with a review
of its decision.
[5]
As regards the first objection, it is so that, no legal basis for the
contention that the estate ‘vests’ in a Master
is
proferred nor why such ‘vesting’ would affect the
jurisdiction of this Court. As was pointed out, although Section
6(4)
C of the
Superior Courts Act No 10 of 2013
provides for local seats
of court with a limited area of jurisdiction it does not disqualify
seats from being divisions of the
High Court.
[6]
Section 35(10)
of the Act, does not refer to any provincial division
but simply refers to “the court”. Court is defined
under
Section 1
of the Act as “the High Court having
jurisdiction, or any judge thereof”.
[7]
Given that the second respondent and the deceased lived within the
jurisdiction of this court, the only assets in the estate,
are
situated in this jurisdiction, that the fifth respondent conducts
business within this jurisdiction and that the first respondent
is
the Master of this Court, it follows that the most convenient and
appropriate forum for this application is this court.
[8]
It behoves mentioning that the second respondent did not persist with
this ground of opposition during oral submissions at the
hearing.
[9]
The challenge against jurisdiction is therefore dismissed.
BACKGROUND
[10]
The main dispute in this application arises out of the winding up of
the estate of the late Ian Robert Bruce Sutherland (‘the
deceased’) who died on 1 May 2010. The applicant is the
deceased’s son and a creditor of the estate. The first
respondent
is the Master of the High Court, KwaZulu-Natal,
Pietermaritzburg. The second respondent is the deceased’s
surviving
spouse to whom he was married in community of property and
who is also the applicant’s step-mother. The second respondent
had also initially been the executor of the estate, until she was
removed by the Master. The third respondent is the current executor
of the estate, a chartered accountant by profession, who prepared the
liquidation and distribution account. The fourth respondent
is
deceased’s other son who is also a creditor. The fifth
respondent is a partnership of chartered accountants through which
the third respondent conducts business.
[11]
The applicant lodged a claim against the estate in an amount of
R439 607.33 being the capital amount of loans he had advanced
to
the deceased and the second respondent. He also lodged a claim in an
amount of R240 514.02 being the interest owing on
these loans at
the time of the deceased’s death. These amounts were reflected
in the First and Final Liquidation and Distribution
account (‘the
account’) dated 31 January 2013 as claims against the estate.
In the Income and Expenditure section of
the account, three further
amounts were reflected in favour of the applicant, these being
R55 977.97 for the period from 1
May 2010 to 28 February 2011,
R68 739.47 for the period 1 March 2011 to 29 February 2012, and
R54 594.95 for the period
1 March 2012 to 31 January 2013. These
amounts reflected interest accrued on the loans for the respective
periods whilst the estate
was being wound up which had been
calculated on the basis of the interest being compounded.
[12]
Under the heading ‘Administration Costs’ in the
liabilities section of the account, an amount of R173 818.50
was
reflected as due for the executor’s remuneration, being 7.0946
per cent of the value of the assets, instead of the standard
rate of
3,5 per cent. The fifth respondent had in an Annexure to the account,
requested the increase on the basis that ‘the
Estate has been
the subject of a prolonged acrimonious dispute between residual heir
[the second respondent] and two of the creditors’
being the
applicant and fourth respondent.
[13]
The account also included, as a claim against the estate, an amount
of R14 050.50 being a disbursement payable to Attorneys
Knight
Turner on behalf of the deceased for the drafting of the will prior
to his death.
[14]
The second respondent, through her attorney, lodged an objection with
supporting documentation (which included a copy of the
loan agreement
as well as schedules drafted by the third respondent reflecting
payments) dated 22 May 2013 in terms of
s 33(7)
of the Act. The
objection was essentially three-fold in that she objected to:
1.The
increase in the executor’s remuneration. The basis of this
objection was that the executor had not advanced any extraordinary
circumstances whilst dealing with the estate to justify such an
increase;
2.
That
the loan agreement stated that interest on the loans was to be
calculated at ‘the prime overdraft rate’, but did
not
state that the interest was to be compounded. The interest should
therefore have been calculated on the basis that it was simple
interest; and
3.
That
the disbursement to Attorneys Knight Turner should not be allowed at
all. In support of this an account from Knight Turner
was submitted
reflecting an amount of R9 177.00 in respect of attendances to
drafting the will. The second respondent further argued
that should
the claim be owing, which she disputed, it should be for this amount
and not R14 050.50 as reflected in the account.
[15] On 8 November
2013, the Master issued a memorandum containing his decision in
respect of these objections, in which he sustained
the first and
second objections, and partly sustained the third, finding that the
amount of R9 177 was to be paid. These
decisions shall be
referred to as the first, second and third decisions respectively.
In respect of the second objection
the Master decided as follows:
‘
The
loan agreement states, the loan will bear interest at the prime
overdraft rate and is silent with regards to the basis upon
which
interest is to be calculated. If it was the parties’
intention that interest be compounded, same should have
been inserted
in the agreement. In the absence of the contrary, the claim for
compounded interest is rejected. Accordingly,
the objection is
upheld.’
[16]
Having considered and ruled on the objections raised, the Master
concluded as follows:
‘
VI.
REMEDIES
In
terms of section 35(10) of the Administration of Estates Act any
person aggrieved by the Master’s decision may take it
on review
to the High Court. The proceedings must be instituted within 30
days from the date of this letter.’
[17]
The applicant then launched these proceedings in terms of s35(10) of
the Act, seeking the setting aside of the aforesaid decisions.
Only
the second respondent opposed the application, and objected to the
applicant’s
locus standi
in respect of the first and third issues. The issue of
jurisdiction, which was also raised, has already been dealt
with.
Locus
standi
[18] With regard to
the first challenge to
locus standi
the second
respondent submits that the applicant cannot invoke Rule 35(10) of
the Act as the first respondent:
(a) did not give any
direction as contemplated in section 35(9); he only ruled in relation
to the objections raised; and
(b)
did not refuse to sustain an objection lodged; he upheld each of the
objections raised.
[19]
Section 35(9) of the Act provides:
‘
If,
after consideration of such objection, the comments of the executor
and such further particulars as the Master may require,
the Master is
of the opinion that such objection is well-founded or if, apart from
any objection, he is of opinion that the account
is in any respect
incorrect and should be amended, he may direct the executor to amend
the account or may give such other direction
in connection therewith
as he may think fit.’
[20]
The Master’s upholding of the objections will result in the
account having to be amended. The absence of a specific
direction in this regard does not in my view non-suit the applicant
to institute these proceedings in terms of Section 35(10).
In
any event, the Master directed in his/her memorandum that any person
aggrieved by the Master’s decision may take it on
review.
[21]
Section 35(10) of the Act provides that ‘any person aggrieved’
by the direction of the Master to sustain an objection
may apply to
court to have the Master’s decision set aside. The second
respondent argued that, in respect of the Master’s
first and
third decisions, the applicant is not a ‘person aggrieved’
and therefore has no
locus standi
to
bring an application in terms of s35 (10) in respect of these
decisions.
[22]
The applicant argues that he has an interest in these decisions and
therefore has the requisite
locus standi
to institute this application.
[23]
The Act does not contain a definition of the term ‘aggrieved
person’ but the courts have on occasion dealt
with the meaning
of the term or a similar term in various other statutory contexts.
[1]
In
Jeeva
and another v Tuck NO and others
1998
(1) SA 785
(SE), dealing with the term in the context of s151 of the
Insolvency Act, the court said that although the interest need not be
measurable in money,
[2]
a legal right must still be proved:
[3]
‘“
Aggrieved”
means injured or wronged in one's rights (see
The
New Shorter Oxford English Dictionary
).
It follows that any person who was so injured or wronged may take the
matter on review in terms of s 151, and that is no different
from the
position at common law. The expression “aggrieved person”
was defined by James LJ in
Ex parte
Sidebotham
(1880)14 ChD 458 (CA) at 465
as follows:
“
It
is said that any person aggrieved by any order of the Court is
entitled to appeal. But the words “person aggrieved'' do
not
really mean a man who is disappointed of a benefit which he might
have received if some other order had been made. A “person
aggrieved”' must be a man who has suffered a legal
grievance, a man against whom a decision has been pronounced which
has wrongfully deprived him of something, or wrongfully affected his
title to something.”
[24]
This definition was approved and adopted in
Friedman's
Trustee v Katzeff
1924 WLD 298
at 304--5 in construing the expression “aggrieved
person” in s 151 of the previous Insolvency Act 32 of 1916
which
corresponds to s 151 of the present Act. (See also
De
Hart NO v Klopper and Botha NNO and Others
1969
(2) SA 91
(T)
at
99H--100A.) In
De
Hart's
case the Master issued certificates in terms of s 23(11) of the
Insolvency Act that certain property belonged to the estate of
one
Kleynhans. The applicant was the trustee in the liquidation of
certain companies formed after the insolvency of Kleynhans and
before
his rehabilitation. The trustee in the liquidation of the companies
claimed to be entitled to the property involved. It
was held by
Trollip J (as he then was) that the effect of the Master's decision
was that the property belonged to the insolvent's
estate and that
anyone who claims to be entitled to the property would suffer a
legal grievance as long as that decision stands,
for he would thereby
be wrongfully deprived of his legal right to assert his claim to the
property and as that would apply to the
trustee in the liquidation of
the companies, they were persons aggrieved by the Master's decision
(at 100A). It seems clear, therefore,
that Trollip J in arriving at
the aforesaid conclusion applied the definition of an “aggrieved
person” as stated byJames
LJ in
Ex
parte Sidebotham (supra
)
and approved and adopted in
Friedman's
Trustee v Katzeff (supra
).
[25]
In
Francis
George Hill Family Trust v South African Reserve Bank and Others
1992
(3) SA 91 (A)
the
Appellate Division considered the meaning to be attached to the words
`. . . any person who feels himself aggrieved by
the attachment
of money . . .' appearing in reg 22D of the Exchange Control
Regulations promulgated in terms of s 9 of the Currency
and Exchange
Act 9 of 1933 in order to decide whether the appellant in that case
had
locus
standi
to apply for the review of an attachment of certain moneys by the
Reserve Bank, Hoexter JA, who delivered the majority judgment,
agreed
with a statement by Lord Denning in
Attorney-General
of the Gambia v N'jie
[1961] 2 All ER 504
(PC) that the definition of aggrieved person
given by James LJ in the
Sidebotham
case was not exhaustive. As to the meaning to be attached to
the words “person aggrieved” Hoexter JA said the
following at 102C:
“
Leaving
aside the significance of statutory context in particular cases, the
tenor of decided cases in South Africa points, I think,
to the
general conclusion that the words ``person aggrieved'' signify
someone whose legal rights have been infringed - a person
harbouring
a legal grievance. The current of judicial interpretation would
appear to run in the same direction in the decisions
of the English
Courts - see the remarks of Donovan J in
Ealing
Corporation v Jones
(
supra
at 392). Viewed against the background of the regulations as a whole,
that is the proper meaning which in my judgment should be
assigned to
the words in reg 22D in the present case. I have indicated my view
that what was said by the Privy Council in its judgment
in the
N'jie
case
supra
is not irreconcilable with the South African decisions which require
a legal grievance before the objector can qualify as
a “person
aggrieved''. However, if in this respect I am mistaken, and if upon a
true appraisal of the
N'jie
case its tendency should run counter to the definition propounded by
the South African Courts, then, with respect, I would not
be disposed
to be guided by it in determining the issue in the present appeal.
The critical question in the present case is whether
the attachment
by the Reserve Bank of the assets of Phoenix represents an invasion
of the legal rights of the Hill FT.” ’
[26]
Thus, in
Janse
Van Rensburg v The Master and others
2004
(5) SA 173
(T), where the court was considering the phrase in terms
of company legislation, the court said that such a person:
[4]
‘
must
surely be a person who has a legitimate legal grievance, for example,
a person against whom a decision has been pronounced
that wrongfully
deprives him or her of something, for instance an entitlement,
benefit or right, or unlawfully accuses him or her
of something, or
wrongfully affected his or her title to do something.’
[27]
I do not think the term ‘person aggrieved’ in s35 (10) of
the Administration of Estates Act has any meaning substantially
different from that which has been laid down by the cases in
respect of other statutory provisions.
[28]
In paragraph 18 of his replying affidavit the applicant states:
‘
As
the son of the deceased, an admitted creditor of the estate, a
potential heir had the estate been intestate and a person involved
in
the transactions, I submit that I have a sufficiently close interest
in the proper winding up of the estate to qualify as an
aggrieved
person in respect of the executor’s remuneration and attorney’s
fees claim. Apart from anything else, I do
not want my father’s
legacy to be that of a person who failed to pay his professional
advisors.’
[29]
However, none of this gives rise to a legal right that is ‘invaded’
by the Master’s first and third decisions.
For the purposes of
the winding up of the estate, the applicant’s relationship to
the deceased, particularly in circumstances
where the will’s
validity remains unchallenged, is irrelevant and he is merely a
creditor with a proved claim. The Master’s
decision effectively
reducing the amount of remuneration payable to the executor and the
disbursement payable to the attorneys
has no impact on his proved
claim.
[30]
The applicant therefore is not ‘an aggrieved person’ in
so far as the Master’s first and third decisions
are concerned,
and he therefore has no
locus standi
to challenge them.
COMPOUND
INTEREST
[31]
The second respondent objected to the calculation of the interest
owing on the loans to be based on compound interest, which
the Master
sustained on the basis that:
‘
The
loan agreement states, the loan will bear interest at the prime
overdraft rate and is silent with regards to the basis upon
which
interest is to be calculated. If it was the parties’ intention
that interest be compounded, same should have been inserted
in the
agreement. In the absence of the contrary, the claim for compounded
interest is rejected.’
[32] The applicant
argued that interest at the ‘prime overdraft rate’ would
always be compounded, and thus the ordinary
meaning of the phrase ‘at
the prime overdraft rate’ would encompass interest compounded.
He further argued that in
order to raise the funds to advance the
loans, he had to resort to drawing on his home loan facilities, and
was thus himself paying
compound interest on the funds. He argued
that he would never have agreed to place himself in a position where
he would be repaying
interest on more onerous terms than that which
he was receiving.
[33]
The applicant also referred to schedules drafted by the third
respondent during 2008 and which were included in the formal
objection as supporting documentation by the second respondent. These
schedules reflect amounts bearing interest that have been
compounded,
and which schedules were accepted in the loan agreement and signed by
both the second respondent and the deceased.
The argument was
that by accepting these schedules reflecting the interest amounts
which had been compounded, the deceased and
second respondent had
accepted that the interest was to be compounded.
[34]
The argument that the term ‘prime overdraft rate’
encompasses compound interest, either as part of the ordinary
meaning
of the phrase or by implication, cannot be sustained. By arguing that
such interest is ‘always compounded’,
the applicant is in
essence relying on a banking practice. Such an argument would require
evidence of banking practices
[5]
and cannot be something that the Master could assume or the courts
take judicial notice of. Even if this court could do so, it
would
still not be relevant given that the applicant is not a bank. The
Master’s decision therefore cannot be set aside on
the basis
that the term ‘prime overdraft rate’ in itself would show
interest was compounded.
[35]
However, the loan agreement expressly stated that the deceased and
second respondent ‘accept the schedules of the
loan as
supplied by [the third respondent]’ and which agreement bears
both their signatures. This shows an understanding
at the time the
loan agreement was signed, that interest was to be compounded.
However, although these documents were before the
Master, he does not
refer to them in his memorandum; he instead confined himself to the
actual contract. The lack of reference
to these schedules by the
Master in his memorandum indicates that he did not take them into
account when determining the terms
of the loan agreement in order to
reach his decision to sustain the objection. His decision was
therefore not properly exercised
and ought to be set aside.
[36]
As far as the costs are concerned my view is that, neither party has
been substantially more successful than the other.
[37]
In the circumstances I make the following order:
(a)
The Master’s decision in respect of
paragraph 1(a) of the Notice of Motion is set aside and the matter is
referred back to
the Master of the High Court, KwaZulu-Natal,
Pietermaritzburg, for reconsideration.
(b)
The orders sought in respect of paragraphs
1(b) and (c) of the notice of motion are refused.
(c)
The costs of this application shall be paid
as a further administration cost in the deceased estate.
_________________
K
PILLAY J
Date
of Judgment : 12 May 2015
Applicant’s
Counsel: G D Goddard
Instructed by:
Garlicke and Bousfield Inc.
Applicant’s
Attorneys
7
Torsvale Crescent
La
Lucia Office Park 3
La
Rucia Ridge
UMHLANGA
Second
Respondent’s Counsel: P J Combrinck
Instructed by: Carl
Grobler Attorneys & Conveyancer
Second
Respondent’s Attorneys
c/o
Livingston Leandy Inc.
4
th
Floor, Mercury House
320
Anton Lembede Street
DURBAN
[1]
See
Valentino
Glove BV v Phillips
and another
[1998] ZASCA 43
;
1998 (3) SA 775
(SCA) at 780 - 781
[2]
At
792A
[3]
At
792I – 794C
[4]
Para
23
[5]
As
was done in
Barclays
Bank International Ltd v Smallman
1977
(1) SA 401
(R)