African Bank Limited v Weiner and Others (4332/02) [2003] ZAWCHC 42; [2003] 4 All SA 50 (C); 2004 (6) SA 570 (C) (1 September 2003)

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[2003] ZAWCHC 42
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African Bank Limited v Weiner and Others (4332/02) [2003] ZAWCHC 42; [2003] 4 All SA 50 (C); 2004 (6) SA 570 (C) (1 September 2003)

reportable
IN THE HIGH COURT OF SOUTH
AFRICA
(CAPE
OF GOOD HOPE PROVINCIAL DIVISION)
CASE NO: 4332/02
In the matter
between:
AFRICAN BANK LIMITED
Applicant
and
MELVYN WEINER
First
Respondent
NW FINANCIAL ADMINISTRATORS
(PROPRIETARY)
LIMITED
Second
Respondent
(Registration No. 2000/028159/07)
ANTHONY JOHN WEBBSTOCK
Third
Respondent
judgment:
delivered 1 September 2003
Griesel J:
Introduction
The
present application for declaratory relief arises from the
ever-growing South African micro-lending industry and concerns the
rights and duties of administrators appointed in terms of the
pro­visions of sec 74 of the Magistrates’ Courts Act,
32
of 1944 (as amended) (
the Act
). The issues for determination
concern the parties’ competing interpretations of various
pro­visions of sec 74 (including
secs 74A – 74W),
more particularly those provisions relating to the remuneration of
administrators; the extent of their
right to recover legal expenses;
their duty to furnish security; their entitlement (if any) to
interest on moneys collected; their
duty to keep a separate trust
account; as well as the duty to make quarterly distributions to
creditors.
Certain
of these issues were dealt with in recent litigation involving the
present first respondent.
1
In view of the
Weiner
SCA judgment, which was handed down
after the launch of the present appli­cation, some of the issues
debated before us have
undergone a slight shift in emphasis, as will
become apparent in due course.
The
applicant is a registered commercial bank, which specialises in the
provision of micro-loans to individuals who do not otherwise
qualify
for loans from traditional financial institutions. It describes
itself as
‘the largest micro-lender in the country’.
At
the close of its financial year ending 30 Sep­tember 2001, the
applicant’s debtors’ book stood at R3,78 billion,
derived
from loans to some 600 000 clients countrywide, with an average
loan of R4 400 per client.
The first respondent, Mr
Melvyn Weiner
, is an attorney, who
practises as a sole practitioner under the name
‘Weiner &
Associates’
in Goodwood. According to the first respondent,
the nature of his legal practice
‘is exclusively confined to
matters arising from the provisions of section 74 of the Act’
and he accepted nomination as an administrator under sec 74 of the
Act
‘in approximately 80% of administration orders granted in
the Western Cape during the past five years’
. Currently there
are some 10 000 debtors under administration with the first
respondent in the Cape Peninsula and elsewhere
in the country, of
which approximately 5 500 are debtors of the applicant.
The first
respondent controls various corporate entities, through the medium
and with the assistance of which he conducts the adminis­tration
of such debtors. One of these entities is the second respon­dent
herein,
NW Financial Administrators (Pty) Limited
, a private
company with its principal place of business at the same address as
the first respon­dent's law offices. (For ease
of reference, I
shall refer herein only to the role of the second respondent as the
corporate entity concerned, al­though it
must be borne in mind
that, from time to time, the first respondent also utilises other
corporate entities in the administration
process.)
The
third
respondent
is Mr
ANTHONY JOHN
WEBBSTOCK
, an attorney, practising as such in Alberton, Gauteng.
He also does a great deal of work as an administrator. He applied
for, and
was granted, leave to intervene as a
respondent
in this application. He subsequently filed voluminous affidavits in
support of a counter-application, the nature of which will
be dealt
with later in this judgment.
In
the proceedings before us, Mr
Seligson SC
appeared with Mr
Gamble SC
for the
applicant
; Mr
Stephens
appeared with Mr
Goldberg
for the first and
second
respondents; while the third respondent
appeared in person.
Before
discussing the issues in more detail, it is necessary briefly to
examine the statutory framework regulating administration
orders
issued in terms of sec 74 of the Act.
Purpose and Scope of sec
74
Administration
orders, which came into operation in 1944 with the intro­duction
of the present
Magistrates’ Courts Act, have
been regarded by the
Courts as
‘a modified form of insolvency’.
This was
recently reaffirmed in the
Weiner
SCA judgment, where Cameron
JA commented as follows:
2
‘
The new provisions [of
sec
74]
created a procedure that was at the time rightly dubbed a
“modified form of insolvency”, since it is parti­cularly
suited
to dealing with small estates where sequestration pro­ceedings
would swallow the debtors’ assets. As Caney AJ explained more
than
50 years ago:
“This is designed, it seems to me, as a means of obtaining a
concursus creditorum
easily, quickly and inexpensively, and is particularly appropriate
for dealing with the affairs of debtors who have little assets
and
income and genuinely wish to cope with financial misfortune which has
overtaken them. Creditors have certain advantages under
such an
order, including the appointment of an independent admin­istrator
and the opportunity of examining the debtor. They are
not debarred
from sequestrating the debtor if the occasion to do so arises.
”’
Importantly,
while the granting of an administration order does not preclude
steps to sequestrate the estate of the debtor,
3
the aim of the order
‘… is, no doubt, to assist a debtor over
a period of financial embarrassment without the need for
sequestration.’
4
It may be accepted, therefore, that it was never the intention of
the legislature that a debtor should be bound up in an
administration
order indefinitely, where there is no reasonable
prospect of such order being discharged within a reason­able
period of time.
On the con­trary, I am of the view that the
mechanism of an administration order is in­tended to provide a
debtor with
a relatively short moratorium to assist in the payment
of his or her debts in full and to ward off legal action and
execution proceedings
during such period.
Insofar as an administration order is to be regarded as
‘a
modified form of insolvency’,
it follows that the role and
function of the administrator is akin to that of the trustee in an
insolvent estate. The most important
duty of an administrator is to
collect the payments to be made in terms of the administration order
concerned and to distribute
such payments
pro rata
among the
creditors.
5
In doing so, generally speaking, the administrator –
occupies
a position of trust
vis-à-vis
both the creditors of the
person under administration as well as the debtor him- or herself;
6
should
be completely independent and impartial, carrying out his or her
duties in the interest of all creditors and the debtor;
7
like
a trustee, should take expeditious steps for the purpose of enabling
the creditors to obtain as extensive a payment as possible
of their
debts.
8
This construction
is borne out,
inter alia
, by
sec 74J(7)(
a
) of the
Act, which provides that –
‘
No amount with which such
account is credited shall be deemed to be part of the administrator’s
assets’.
From
the aforegoing, it is apparent that, in receiving and depositing
payments made by or on behalf of from the debtor for later
distribution
to the creditors on a
pro rata
basis, the
adminis­trator has a fiduciary duty in respect of such moneys
and, in particular, is not entitled to apply any part
thereof for his
or her own benefit.
Sub-sections
74E(3) and (4) of the Act, which govern the pro­vision of
security by administrators, distinguish between two categories
of
administrators, namely
(a)
‘officers
of the court or practitioners’
; and
(b) those who are neither such officers nor practitioners
.
An administrator who is not an officer of the court or a
practitioner is obliged to give security to the satisfaction of the

court, whereas one who is an officer of the court or a practitioner
need not give security.
The provisions of
sec 74J(7) likewise recognise two distinct cate­gories of
administrator, viz (a) those who are
‘practising
attorneys’
with trust accounts kept in terms of the relevant
legislation (
‘attorney-admin­istrators’
); and
(b) those who are not practising attorneys (
‘non-attorney
administrators’
). Attorney-admin­istrators are required to
deposit all moneys received in their attorney’s trust account,
whereas non-attorney
administrators must deposit such moneys in a
separate trust account.
Before
distributing any moneys to creditors, the administrator is entitled
to deduct
‘necessary expenses and a remuneration determined in
accordance with a tariff prescribed in the rules’
.
9
The computation of such
‘expenses’
and
‘remuneration’
forms the largest part of the
applicant
’s
case before us, as well as the subject of the third
respon­dent
’s
counter-application. In order to follow the parties’ respective
contentions in this regard, it is neces­sary to set out
in some
detail the (rather convoluted) provisions of the Act and the Rules,
as well as the relevant Annexures to the Rules. The
statutory scheme
is the following:
Sec
74L(1)(
a
) of the Act makes provision,
inter alia
, for
‘a remune­ration determined in accordance with a tariff
pre­scribed in the rules’.
10
Rule
33(5)(
a
) of the Magistrates’ Courts Rules regulates
‘the
scale of fees to be taken by attorneys as between party and party’
in relation,
inter alia
, to proceedings under secs 65 and 74.
Rule 33(5)(
a
)(iii) stipulates:
‘
The scale of fees to be
taken by attorneys as between party and party shall in relation to
pro­ceedings under section 74 and 74A
to 74W, in­clusive, of
the Act and all matters ancillary thereto be that set out in Part III
of Table B of the said Annexure’
[being Annexure 2].
11
Table
B, in turn, has three parts, two of which are relevant to this
matter:
Part I
contains
‘General Provisions’
and a
‘Tariff’
in respect of
‘Proceedings in Terms of
Sections 65 and 65A to 65M of the Act’
; and
Part III
also has a
‘Tariff’
and
‘General Provisions in
Respect of Proceedings in Terms of Section 74 of the Act’
.
In
terms of para 3(
b
) of the General Provisions contained in
Part I, an
attorney
is entitled to recover –
‘
A fee of 10% on each
instalment collected in re­demption of the capital and costs of
the action, sub­ject to a maximum amount
of R300.00 on every
instalment. Where the amount is payable in instal­ments the
collection fees shall be recoverable only on
payment of every
instalment. Such fees shall be in substitution for and not in
addition to the collec­tion fees prescribed in
paragraph 13 of
Part I of Table A.’
The
‘paragraph 13’
referred to above is contained in the
‘General Provisions’
in Part I of Table A of Annexure 2
relating to the recovery of costs by an
attorney
in
litigation in the magistrates’ courts and reads as follows:
‘
13. Where the judgment
debt is payable in instalments in terms of the judgment or an
agreement, a fee of 10% on each instalment collected
in redemption of
the capital, costs and interest shall be allowed, sub­ject to a
maximum of R300,00 on each instalment. No additional
fee shall be
charged for any atten­dance in connection with the receipt or
payment of any instalment.’
Reverting
to Table B, para 1(
b
) of Part III thereof provides:
‘
1(b) In addition to the
fees stated below, the
admin­is­trator
shall be
entitled a fee of 10% on each instal­ment collected for the
re­demption of capital and costs.’ [Emphasis added].
Factual Background
As
mentioned above,
12
the first respondent conducts his functions as administrator through
the medium and with the assistance of various corpo­rate
entities controlled by him. He explained that
‘(i)t made good
sense to channel … administration applications through the medium
of a separate entity’.
It
appears from the uncontested evidence that there is a close working
relationship between the first
respondent
’s
legal practice and the operation of the various corporate entities,
including the second
respondent
. They
operate from the same office premises and, as pointed out by the
applicant,
there is no demarcation in the
offices of the second respondent of a separate law practice operated
by the first respondent.
In
conducting their business operations, the first and second
respondents adopt the following
modus operandi
:
The
second respondent (or any of the other corporate entities controlled
by the first respondent) solicits business through advertising
from
debtors who are financially embarrassed and who are unable to meet
their commitments to creditors.
Staff
members of the corporate entities are offered com­mission for
administration client referrals.
The
second
respondent
prepares the debtor’s
statement of affairs and the application for an administration
order; notifies creditors of the application;
and obtains details of
creditors’ claims.
The
application for an administration order is moved in court by the
first respondent (
qua
attorney) or one of his professional
assistants on behalf of the individual debtor.
The
nature of the first respondent’s activities subsequent to the
granting of an administration order is described as follows
in his
opposing affidavit:
‘
Put simply my capacity
changes subsequent to the granting of an administration order only
inasmuch as I implement and monitor the
administration order by
utilising the administrative services of second respondent as opposed
to my legal practice.’
It
appears that, in practice, the administration order in all its
facets is actually administered and implemented almost exclusively
by the second
respondent. Thus, the second
respondent –
collects
and receives pay­ments due in terms of the administration order,
which moneys are paid into a separate bank account
in its name;
utilises
the interest earned to cover bank charges levied on this account and
to obtain fidelity insurance for,
inter alia,
its staff;
prepares
the distribution accounts, circulates them to creditors and makes
pay­ments to creditors pursuant thereto;
files
the distribution accounts with the clerk of the court reflecting the
name of the second respondent and a signature other than
that of the
first respondent as administrator;
makes
deductions in respect of fees and costs as reflected in the
distribution orders and recovers such fees and costs; con­ducts
correspon­dence with creditors and their representatives as if
it were acting as administrator and the debtors were its clients;
maintains
the files and documents rele­vant to the adminis­tration at
its offices; and
treats
the files and documents relating to the administration as if they
were its own.
It
seems clear from the aforegoing, therefore, that it is somewhat of an
under­statement for the first respondent to depict the
second
respondent’s role as being limited to supplying
‘clerical and
admin­istrative support services’
before and after the
granting of an administration order.
The
first respondent’s legal practice on occasion represents debtors
during administration when legal steps are taken by creditors
under
sec 74 of the Act against such debtors.
In
the light of the above facts, it seems fair to say, as was submitted
on behalf of the
applicant,
that the first
respondent offers a
‘one-stop’
service to embarrassed
debtors, providing them with protection under sec 74 of the Act
through the offices of second respondent
(or any other relevant
corporate entity) and, where convenient, through his law practice.
It is further apparent that, in substance,
there is no real
distinction between the roles played by the first respondent (as
attorney-administrator) and the second respondent.
This so-called
‘blurring of functions’,
as it was dubbed by the
applicant
, was also reflected in the
relief claimed when the application was originally launched.
Reference was made in the original Notice
of Motion to the first
respondent being appointed as an administrator
‘in his capacity
as a representative of second respondent’
. Elsewhere, the
applicant
sought to impose a duty on
‘first
respondent and/or
second
respondent’
to give security in terms of secs 74E(3) and (4),
and to deposit moneys collected in a separate trust account.
In
this regard, it is important to note that, in terms of the
pro
forma
draft court orders used by the first and second
respondents, the first respondent is invariably described as
‘Melvyn
Weiner
of
NW Financial Administrators
(Pty) Limited’
(my emphasis) when appointed as
ad­minis­trator. The first respondent denies that he is ever
appointed
‘as a represen­tative of the second respondent’
.
By the close of argument before us, it was accepted on behalf of the
applicant
that – irrespective of any
‘blurring of functions’
that may exist in the structure
of the first respondent’s business and professional affairs – it
is the
first respondent
and he alone who is appointed as
administrator and who bears the responsibility for complying with
the statute. As will be seen
below, this acceptance gave rise to the
final amendment to the Notice of Motion, omitting all the relief
originally claimed
vis-à-vis
the second respondent.
In
the circumstances, the question before us is not whether or not
there is an element of
‘blurring’
between the roles and
functions of the first and second
respondent
s,
but, more fundamentally, what legal conse­quences (if any) flow
from such
‘blurring of functions’
in the context of sec
74 of the Act.
The Relief Claimed
In
the Notice of Motion, as finally amended, the
applicant
seeks a series of declaratory orders in the following terms:
An
order declaring that the first respondent, whenever appointed and
acting as an administrator in terms of sec 74 of the Magistrates’
Courts Act, 32 of 1944
(‘the Act’
), is
entitled to recover in respect of necessary expenses and
remuneration no more than 12,5% of collected monies received from
or
on behalf of any debtor for distribution to the creditors of that
debtor, such limit of 12,5% to apply also in respect of costs
arising from recourse to the provisions of secs 65A – L of the
Act.
(i) An order declaring that no legal costs in respect of the
pre­paration and bringing of an application for an
admin­istration
order under sec 74 of the Act are pay­able
to or recoverable by the second respondent.
(ii) An order declaring that no legal costs in respect of the
implementation of an administration order under sec 74 of the Act

are payable to or recoverable by the first respondent when he does
not act as an administrator in his capacity as a practising

attorney.
An order declaring that the first respondent is obliged to give
security in terms of secs 74E(3) and (4) of the Act in all
instan­ces
where he is appointed and acts as an administrator
other than in his capacity as a practising attorney.
An order declaring that any interest which may accrue on any sums
of money received by the first respondent from or on behalf of
a
debtor under administration in terms of sec 74 of the Act and
deposited into a separate trust account in terms of sec 74J(7)(a)
shall form part of the monies available for distribution in
accordance with the provisions of sec 74 of the Act.
An
order declaring that all monies received by the first respon­dent
when he takes appointment and acts as an administrator
other than in
his capacity as a practising attorney shall be deposited into a
separate trust account
in his name
13
as admin­istrator held with any bank in the Republic of South
Africa as required by sec 74J(7)(a) of the Act.
An order declaring that the first respondent is required to make
a quarterly distribution of monies available for distribution in
accordance with the provisions of sec 74J(1) of the Act except where
the creditors have otherwise agreed or the relevant Magistrate’s
Court has otherwise ordered in any particular case.
Before
dealing with the merits of the individual prayers as set out above,
it is necessary to deal briefly with a point
in limine
raised
on behalf of the first and second
respondents,
namely that the applicant is – in principle – not entitled to
decla­ra­tory relief.
The Applicant’s
Entitlement to Declaratory Relief
The
first and second respondents have challenged, as a point
in
limine,
the applicant’s
locus standi
to seek the
declaratory relief sought under prayers B, C, D and E of the Notice
of Motion. In addition, whilst not disputing that
the applicant has
the necessary
locus standi
to apply for the relief sought in
prayers A and F of the Notice of Motion, they aver that the matter
is not a proper one for the
exercise of this court’s discretion
under section 19 of the Supreme Court Act, 59 of 1959.
It
appears that the first of these contentions is based on the argument
that the applicant has failed to identify or establish the
right in
respect of which it has an interest, as contemplated by the relevant
provision of the Supreme Court Act. The respondents
further aver
that the fact that the applicant might have a commercial or
financial interest in obtaining the relief claimed is
inadequate to
found an application for declaratory relief.
The
second contention is based on the submission that
‘no tangible
and justifiable advantage – with reference to an existing, future
or contingent right – would accrue to Applicant
in the wake of the
grant of the declaratory order sought’.
Although
these matters were raised on behalf of the
respondent
s
in their opposing papers and were dealt with in the written heads of
argument filed herein, very little time was devoted to this
aspect
during the oral arguments before us and the point
in limine
was
all but abandoned on behalf of the
respondents
.
In my view, there is in any event no merit in the point
in
limine
, as I shall briefly attempt to show.
The
jurisdiction of the High Court to grant a declaration of rights is
derived from sec 19(1)(
a
)(iii) of the Supreme Court Act,
which empowers a division of the High Court –
‘
(i)n its discretion, and
at the instance of any interested person, to enquire into and
determine any existing, future or contingent
right or obligation,
notwithstanding that such person cannot claim any relief
consequential upon the determination.’
It is a
requirement for the exercise of the court’s jurisdiction under this
provision
‘… that there should be interested parties upon whom
the declara­tory order would be binding.’
14
In
deciding whether or not a declaratory order should be made, the
court applies a two-stage test: firstly, the court must be satisfied
that the applicant is a person interested in an existing, future or
contingent right or obligation. Secondly, if so satisfied,
the court
must decide whether the case is a proper one for the exercise of the
discretion conferred on it.
15
As
to the first stage of the enquiry, it is in my view self-evident
that the applicant is
‘an interested person’
as
contemplated by sec 19(1)(
a
)(iii) of the Supreme Court Act.
Indeed, it has a direct and substantial interest in relation to an
existing, future or contingent
right or obligation, arising from its
situation as a creditor of some 5 500 debtors who are currently
subject to administration
orders being administered by the first
respondent with the assistance of the second respondent. As a
creditor with proved claims
against such debtors, the applicant has
a manifest entitlement – and therefore an interest – in ensuring
that the administrator
conducts the administration in compliance
with the relevant provisions of the Act.
This
interest extends to ensuring that distributions are properly – and
promptly – made so that it and other creditors may receive
what is
due to them when it is due to them in compliance with the statutory
rights accorded to creditors. The various provisions
of sec 74 make
it abundantly clear that creditors of the debtors concerned, such as
the applicant, have recognised interests and
rights in relation to
the administrator’s compliance with his statutory duties,
including those relevant to the declaratory relief
sought by the
applicant.
16
These interests and rights attach to the applicant personally and
directly and are not simply matters affecting the applicant’s
commercial and financial interests in an indirect way, as suggested
by the respondents. On the contrary, the matters in issue directly
affect the amounts available for distribution to the applicant and
other creditors in relation to existing administration orders,
and
the relief sought goes to the protection of their above­mentioned
interests and rights. So, for example, a declaratory
order in terms
of prayers A or D of the Notice of Motion would ensure that the
applicant and other creditors would receive more
by way of
pro
rata
distributions than would otherwise be the case in respect
of the estates being administered by the respondents under existing
administration
orders.
If
it is so, as was submitted on behalf of the
applicant
,
that the first respondent is acting in breach of the provisions of
the statute, it would mean that the applicant’s rights are
likely
to continue to be infringed in the future. It is also, therefore,
justified in seeking a declaration of rights in advance,
without
waiting until further infringements occur in the context of existing
administration orders and future orders which will
be granted in
respect of debtors of the applicant, having regard to the existence
of the dispute between the applicant and the
first and second
respondents. Where it is clear that an interested party’s rights
might be infringed, it is entitled to obtain
a declaration of rights
before such infringement occurs, and it is not necessary for it to
wait until its rights are infringed.
17
As to the second stage of the enquiry, it was submitted on behalf of
the
applicant
that the matter is eminently
one that qualifies for the exercise of the court’s discretion
under sec 19(1)(
a
)(iii) of the Supreme Court Act. There is an
existing dispute between the applicant, on the one hand, and the
first and second respondents,
on the other, as to whether or not the
respondents are acting contrary to the relevant statutory provisions
in their administration
of the relevant debtors’ estates. The
debate around that dispute occupied some four days of this court’s
time. To my mind,
it is self-evident that this is the type of
situation that cries out for clarification.
Moreover,
in view of the potential multiplicity of future applications in
order to redress perceived irregularities in individual
administrations, declaratory relief is clearly preferable.
A
further reason for the court to exercise its discretion in favour of
declaratory relief is that it would be in the public interest
to
establish the correct legal position in respect of the disputes
which have arisen regarding the duties of the administrator
and the
rights of creditors in relation to administration orders – a
contention with which the third respondent agrees. It is
well
established that considerations of public policy come into play when
the court determines whether or not it should exercise
its
discretion to grant declaratory relief.
18
The existence of other statutory remedies to which creditors may
have recourse in terms of the Act does not preclude the grant
of
appropriate declaratory relief.
19
In
all the circumstances, I am satisfied that the applicant has
established that it is a person interested in an existing, future
or
contingent right or obligation, and that (in principle) the case is
a proper one for the exercise of the court’s discretion
in favour
of declaratory relief. I conclude, therefore, that the preliminary
point raised on behalf of the
respondents
that the applicant lacks the requisite
locus standi
to bring
the application and that this is not an appro­priate case for
declaratory relief, should be dis­missed. I accordingly
turn to
consider the individual prayers, as set out in the amended Notice of
Motion.
Prayer A: Remuneration of
the Administrator
As
noted above,
20
the remuneration that may be deducted and the expenses that may be
retained by an administrator are prescribed in sec 74L
of the
Act. The applicant initially sought an order simply decla­ring
that, in terms of sec 74L of the Act, the first respondent
is
entitled to recover in respect of
‘necessary expenses and
remuneration’
no more than 12,5% of the collected monies. At
that stage, there was a dispute between the
appli­cant
,
on the one side, and the first respondent, on the other, as to the
amount of remuneration which an administrator was entitled
to
recover. The applicant has always maintained that an administrator’s
remuneration is to be limited to a maximum of 12,5% of
monies
collected from a debtor, from which the administrator must also
defray
‘necessary expenses’
.
The
first respondent – and various other adminis­trators
(including the third
respondent
) – were
initially of the view that they were entitled to deduct a minimum of
22,5% from each such distribution. Their contention
was based on the
above-quoted pro­visions of para 1(
b
) of Part III,
21
which the
respondent
s sought to interpret
as a cumulative entitlement, over and above the 12,5% laid down by
sec 74L(2).
In
the
Weiner
SCA judgment, however, the
respondent
s’
inter­pre­tation was rejected in clear and unequi­vocal
terms. As appears from the above synopsis, sec 74(L)(1)
of the Act
deals with three different categories of expenditure that may be
deducted from moneys collected, viz (a)
‘necessary
expenses’
and
‘remuneration’;
and (b)
‘costs’
.
The
Weiner
SCA judgment only dealt with the categories
mentioned in (a). Cameron JA held
22
that the 12,5% deduction which an administrator may make from a
distribution in respect of
‘necessary expenses’
and
‘remuneration’
in terms of sec 74L(2) includes the
afore­mentioned 10% referred to in paragraph 1(
b
) of Part
III. The court, however, did not find it necessary to say anything
about the meaning of ‘costs’.
23
After
the judgment in the
Weiner
SCA matter was handed down, the
first respondent initially contended that the above finding by the
Supreme Court of Appeal was
an
obiter dictum
. In his opposing
affidavit filed herein, however, the first respondent acknowledged
the correctness of the
Weiner
SCA judgment and undertook to
apply its approach in future. For this reason, the first
respondent
contended that there is no dispute between the parties and
accordingly denies the applicant’s entitlement to a declaratory
order.
To
the extent that the first portion of Prayer A is concerned, the
first respondent is undoubtedly correct. It is clear that Prayer
A,
as originally framed, has been overtaken by the authoritative
pronouncement in the
Weiner
SCA judgment. By means of its
latest amendment, however, the
applicant
seeks to add an additional element, which was not dealt with in the
SCA judgment, viz that the limit of 12,5% also includes costs
arising from recourse to the provisions of secs 65A – L of the
Act.
This
amended relief is being opposed on behalf of all of the
respondent
s.
It was submitted on behalf of the
respondents
that the 12,5% cap applies only to
‘necessary expenses and
remuneration’
. They draw attention to the wording of para (
b
)
of sec 74L(1), which refers to the concept of
‘costs’
as
separate and distinct from
‘necessary expenses’
, referred
to in para (
a
). The concept
‘necessary expenses’
in para (
a
), according to the respondents, refers to those
expenses incurred by an administrator arising from work performed in
respect of
which he earns remuneration. It relates specifically to
the expenses incurred by the administrator in effecting a
dis­tribution.
The first
respondent also states that he has always dealt with costs arising
from the application of secs 65A – 65L of the Act
as falling
outside the 12,5 % limit provided in section 74L(2). He points out
that an administrator is empowered, and is in fact
directed, to
employ the mechanisms of the rele­vant provisions of secs 65A –
65L of the Act,
inter alia
by the pro­visions of secs 74D
and 74I(2) and (5). When recourse to secs 65A – 65L is necessary,
it is in any event not the
administrator
, but rather the
attorney
acting on behalf of the admin­istrator, who
employs the tariff provided by the rules, such tariff being that set
out in Parts
I and II of Table B of Annexure 2 to the rules.
The
first respondent points out, further, that legal costs may also be
incurred in the situation contemplated by secs 74J(8) and
(9). These
pro­visions deal with the situation where the debtor is in
arrear with payments or if he has disappeared. The administrator
is
required forthwith to notify the creditors and to request their
instructions. Should the majority of the creditors instruct
him to
do so, or fail to respond, the administrator
‘shall institute
legal proceedings against the debtor for his committal for contempt
of court or take such steps as may be necessary
to trace the debtor
who has disappeared, as the circumstances may require’
. As far
as the costs of such proceedings are concerned, sec 74L(1)(
b
)
provides for the retention of a portion of the money collected to
cover the costs that may have to be incurred if the debtor is
in
default or disappears. In terms of Rule 48(4), the amount that may
be
retained
may not exceed 25% of the amount collected,
provided that such amount may not exceed R30. It will be noted,
however, that the Rule
does not prescribe that the amount that may
be
recovered
may likewise not exceed 25% or R30.
The
question for decision, raised by the
applicant
’s
amended Prayer A, is thus whether the
costs
arising from
recourse to the provisions of secs 65A – L of the Act fall under
(a) or (b). To put it differently, the question
is whether the
administrator should pay such costs from his remuneration, or
whether it should be deducted from moneys collected.
The
approach adopted and interpretation proposed by the first respondent
is supported by the learned authors of
Jones & Buckle,
24
who submit that the costs of an administrator (or his attorney,
where one is employed) for taking the necessary steps under the

above-mentioned sections are recoverable as
‘costs’
under
subsec (1)(
b
). I am satisfied that this interpretation is
preferable to the one advanced on behalf of the
applicant
.
In the result, I find that the amended declarator sought by the
applicant
cannot be granted.
Prayer B: Costs
Prayer B(i):
In
prayer B(i)
(as amended) the applicant seeks a declaratory
order directing that no legal costs in respect of the preparation
and bringing of
an application for an administration order under sec
74 of the Act are payable to or recoverable by the second
respondent.
The
applicant
’s argument in relation to this
prayer proceeds as follows: in the ordinary course, it is the first
respondent,
in his capacity as a director of the second
respondent
, who is appointed as administrator. It is the second
respondent,
de facto
, which does all the work. The second
respon­dent deducts an amount in respect of legal costs from
moneys collected. Such legal
costs are never paid over to the first
respondent’s practice, nor does the first respondent submit an
account to the second respondent
in respect of such costs.
Ergo
,
the legal costs are retained by, and for the benefit of, the second
respondent, which is not entitled to such costs.
Accepting,
for purposes of argument, the factual basis of the
applicant
’s
argument, it does not follow, in my view, that the
applicant
is entitled to the declaratory relief sought. Section 74O of the Act
provides that the costs of the application for an administration
order can be recovered from the admin­istrator concerned, and
then as a first claim against the moneys controlled by him. It
is
not clear whether the
applicant
’s
complaint is simply directed at the insufficiency of the bookkeeping
entries in relation to legal expenses, or whether it is
alleged that
there is some duplication in the costs recovered by the first and
second
respondent
s, respectively. What is
clear, however, is that, in any scenario, legal costs for the
preparation and bringing of the application
for an administration
order will necessarily be incurred. Such costs are payable by the
debtor and may be deducted by the administrator
– as a first claim
– from moneys collected. Whether such costs are paid to the first
or the second
respondent
, or to some other
legal practitioner, can make no differ­ence to the
applicant
.
The latter’s
pro rata
share is not affected in any way by
the identity of the recipient of such legal costs. The
applicant
,
therefore, fails to meet the first requirement for declaratory
relief, as discussed above.
25
In
any event, the second respondent has never contended that it is
entitled to legal costs in respect of the preparation and bringing
of an application for an administration order. On the contrary, in
the answering affidavit filed on behalf of the first and second
respondents herein, they expressly disavowed the second respondent’s
entitlement to legal costs of any nature in respect of either
an
application for, or the implementation of, an administration order.
It follows, therefore, that no dispute exists between the
parties
which is properly susceptible to declaratory relief. The court does
not lend itself to declaring rights where there is
no dispute or to
making an order where no relief is necessary.
26
For these reasons, the relief claimed cannot in my view be granted.
Prayer B(ii):
By
means of this prayer, the
applicant
seeks
to limit the right of the first respondent to recover
‘legal
costs’
in respect of the implementation of an administration
order
‘when he does not act as an administrator
in
his capacity as a practising attorney
’
(my
emphasis).
The
applicant
’s argument in this regard
follows much the same line as with the previous point. In advancing
its claim, the
applicant
introduced an
additional qualification which gave rise to much debate before us,
namely the rider as to the first respondent’s
‘capacity as a
practising attorney’
. The problem with this construction is
that the first respondent is not appointed, nor does he act, in any
particular capacity.
It is true – as argued by the
applicant
–
that, in the process of administration, the first
respondent often wears more than one hat. The fact remains, however,
that the
first respon­dent
is
a practising attorney.
Wearing his hat as administrator, he is entitled to remu­neration
on the basis set out above.
27
As attorney, he is entitled to the prescribed fees for legal work
actually done by him or his legal practice in relation to the
administration. As with the application for an administration order
(dealt with in relation to prayer B(i) above), the simple fact
is
that, where legal work has to be done or is done, legal costs will
be incurred. The legal work will be performed either by the
first
respondent’s legal practice, or by another attorney. Which­ever
route be followed, an attorney will be entitled to
fees for such
work, with the result that the relief sought under this head can
make no difference to the
applicant
’s
prospec­tive distributions.
In
the circumstances, I am of the view that this prayer must likewise
fail.
Prayer C: the Provision of
Security
In
prayer C
the applicant seeks a declaratory order that the
first
respondent
is obliged to give
security in terms of sec 74E of the Act in all in­stances
‘where
he is appointed and acts as an administrator other than in his
capacity as a practising attorney’
.
Section
74E(3) provides as follows:
‘
An administrator who is
not an officer of the court or a
practitioner
shall, before a
copy of the administration order is handed or sent to him by
registered post, give security to the satisfaction of
the court and
thereafter as required by the court for the due and prompt pay­ment
by him to the parties entitled thereto of all
monies which come into
his possession by virtue of his appointment as an administrator.’
[my emphasis]
The
corollary hereto is that an admin­is­trator who
is
‘an
officer of the court or a practitioner’
is
not
obliged
to give security, as contemplated by the section.
In
the
Weiner
CPD judg­ment, it was held that the appellant
in that case (the first respondent
in casu
) was not obliged
to provide security because he was
‘an admitted attorney’
.
After referring to the definition of
‘practitioner’
in
sec 1 of the Act, which includes
‘an advocate, an
attorney, an articled clerk … and an agent as is referred to in
sec 22’
, the court held as follows:
‘
This definition appears to
have amplified the ordinary dictionary meaning of practitioner, which
is “one engaged in the practice
of any art, profession or
occupation especially in medicine, surgery or law” (The Shorter
Oxford English Dictionary), so as to
encompass prac­tising as
well as non-practising attorneys. We say so because when the
Legislature employs that concept in a narrower
sense, for example
practising attorney, it specifically states so (see s 74J(7)). In our
view, the concept attorney in the definition
of practitioner means an
attorney admitted to practice as such (see s 1 of the Attorneys Act
53 of 1979). The magistrate in his judgment
accepted that it was
common cause that the appellant is an admitted attorney. On the basis
of that finding, in our view, he could
not have held that the
appellant was obliged to provide security.’
28
The applicant attempted to persuade us that the
Weiner
CPD
judg­ment falls to be reconsidered on this point in the light of
the facts which have been deposed to in this matter. It
was argued
that the issues before the court in the previous case were limited
by virtue of the matter being an appeal from the
magis­trates’
court based on the record in that court, as opposed to an
appli­cation for a declaratory order in which
all material facts
are set out. In that case, so the argument went, the court did not
specifically look at the question of the
capacity in which the first
respondent took his appointment as administrator. That court was not
aware – according to the
applicant –
of the fact that the first respondent held monies deposited with him
by or on behalf of debtors in an account other than his attorneys’
trust account. The
applicant
further
contended that it could never have been the intention of the court
to have exempted the first respondent from providing
security where
the monies received by him were held in an account which did not
enjoy automatic fidelity cover, purely on account
of the fact that
he was an admitted attorney. In the present case, so it was argued,
the first respondent’s status as an admitted
attorney is quite
incidental to any functions he performs as an administrator in view
of the following facts:
the first
respondent himself stated that the administrations conducted by him
were done outside his law practice;
the
first respondent elected to set up corporate entities through which
to channel his administration business;
the
first respondent himself alleges that he is appointed administrator
‘as a director of second respondent’
;
all
facets of the administration process are administered and
implemented by the second respondent.
It
was accordingly submitted that the approach followed by the court in
the
Weiner
CPD case was wrong.
We were
urged to follow a
‘purposive’
interpretation to the requirement of security, which would – so it
was contended – lead to a restrictive interpretation of
the
concept
‘practitioner’
so as to exclude administrators who are not acting in their capacity
as practising attorneys. Such an interpretation, according
to the
applicant
, would
serve to advance the object of providing adequate security in
respect of monies collected, particularly where the administrator
carries out his or her functions through the medium of a corporate
entity which necessarily employs non-professional persons to
im­plement the administration.
In
this regard, the
applicant
also referred to sec 26(
a
)
of the Attorneys Act, 53 of 1979, which shows that the cover
afforded by the Fidelity Fund only applies to the theft by a
practising
attorney or his or her staff of money entrusted by a person to the
attorney in the course of his or her practice. More­over,
it is
only practising attorneys who are required to keep a trust account
in terms of sec 78(1) of the Attorneys Act.
These
examples do not persuade me that the
applicant
’s
con­tentions are sound. In the first place, the same problem
referred to in the preceding section
29
arises also in relation to this prayer as framed, insofar as the
applicant
seeks to import a qualification
which will apply where the first respon­dent is appointed and
acts as an adminis­trator
‘other than in his capacity as a
practising attorney’.
This is not a dis­tinction required
or recognised by the Act – certainly not as far as section 74E(3)
is concerned – and
can only lead to endless debate, as the
argument before us in the present case amply illustrates.
Secondly,
it is clear from the provisions of
sec 74J(7) of
the Act that the legislature is well aware of the concept of a
‘practising attorney’
.
30
This awareness on the part of the legislature is further
demonstrated by the provisions of
sec 78 of the Attorneys
Act, which recognises the concept of a
‘
practising
practitioner’
.
Where the concept
‘practitioner’,
is,
therefore, used (without any such qualification) in sec 74E(3), it
may con­fidently be accepted that the legislature did
not intend
to refer to a
‘practising attorney’
or
‘practising practitioner’
,
but to a wider group, which may include, but is not limited to, a
practising attorney.
31
Thirdly, I am in any event not persuaded that the
‘purposive’
approach that we were urged to follow necessarily leads to the
conclusion that the concept
‘practitioner’
in sec 74(3)E
must be interpreted to mean
‘practising attorney’
. In
this regard, I am satisfied that the existence of an attorney’s
trust account and fidelity fund are not the only reasons
for
exempt­ing
‘practitioners’
from the obligation of
furnishing security. Of equal impor­tance, in my view, is the
fact that
‘practitioners’
have at least two further
advantages over non-practitioners when appointed as administrators,
viz (a) their legal training
and experience, and (b) the
discipline of a professional body (such as the Law Society or the
Bar Council) to oversee their
profes­sional activities.
In
the circumstances, I conclude that the applicant has failed to make
out a proper case for the relief sought in prayer C.
Prayers D & E –
Interest on Moneys received and the Duty to keep a separate Trust
Account
I
find it convenient to deal with these two prayers together, as they
both involve the interpretation of sec 74J(7) of the Act,
which
provides as follows:
(7)   An
administrator shall deposit all moneys received by him from or on
behalf of debtors whose estates are under adminis­tration—
(a) if he is not a practising
attorney, in a separate trust account with any bank in the Republic,
and no amount with which any such
account is credited shall be deemed
to be part of the administrator’s assets or, in the event of his
death or insolvency, of his
deceased or insolvent estate;
(b) if he is a practising
attorney, in the trust account that he keeps in terms of section 33
of the Attorneys, Notaries and Conveyancers
Admission Act, 1934.’
32
The
evidence shows that the first respondent does not deposit moneys
collected from or on behalf of debtors into his attorney’s
trust
account. In this regard the first respondent explains that he has –
‘
adopted the practice of
putting all monies received into one separate trust account for each
entity through which I conduct the relevant
administration orders and
such funds, where possible, are placed on call which generates a
higher interest rate. The interest which
accrues on such trust
account is then applied to cover bank charges as well as payment of
the premium of a fidelity insurance policy
of R3 million which
covers not only myself, but all the staff of first and second
respondents. I am of course not obliged to
procure this fidelity
cover, but have done so for the sake of good order and indeed I have
mentioned this fact to numerous judicial
officers throughout the
Western Cape as well as during press and radio interviews.’
The question for determination is whether this practice is
permissible, or whether the interest earned on moneys received ought
to be available for distribution to creditors. The further question
is why the first respondent, a practising attorney who keeps
a trust
account in terms of sec 78 of the Attor­neys Act, does not
utilise such trust account for holding monies deposited
with him
prior to distribution in terms of the
Magistrates’ Courts Act.
Indeed
, in terms of sec 78(2)(a) of the Attorneys Act –
‘
Any practitioner may
invest in a separate trust savings or other interest-bearing account
opened by him with any banking institution
or building society any
money deposited in his trust banking account which is not immediately
required for any particular purpose.’
In
terms of sec 78(3) of that Act –
‘
The interest, if any …
on money invested in terms of sub-section (2) shall be paid over to
the [Fidelity] fund by the practitioner
concerned at the prescribed
time and in the manner prescribed.’
However,
on instructions of a client, an attorney may invest such monies in an
interest-bearing account for the benefit of such client.
In such
circum­stances the interest would accrue to the client (see sec
78(2A) of the Attorneys Act).
The issue raised by these prayers illustrates the ambivalence in the
first
respondent
’s position: on the one
hand, it suits him to rely on his status as a
‘practitioner’
in order to gain exemption from the duty of having to furnish
security. On the other hand, when it comes to the duty of keeping

moneys in his attorney’s trust account, it suits him to contend
that he is not acting in his capacity as a
‘practising
attorney’
and is therefore not bound by the pro­visions of
sec 74J(7)(a) of the Act.
I
agree with the
applicant
’s submission
that the only reasonable inference to be drawn from the practice
adopted by the first respondent is that it is beneficial
to both
himself, the second respon­dent and any of the corporate
entities through which he operates
not
to use his attorney’s
trust account. The use of the trust account would have the effect of
channelling interest earned on monies
deposited for distribution to
creditors to the Fidelity Fund (or the client under sec 78(2A)),
whereas the system employed by the
first respondent enables him to
have full control of any such interest which accrues, without the
supervision of the Law Society.
In
line with the approach adopted above,
33
I am of the view that the first respondent ought to be regarded as a
‘practising attorney’
for purposes of sec 74J(7) of the
Act, even where he is appointed as
‘Melvyn Weiner of NW
Financial Administrators’
(or of any other corporate entity).
It follows, there­fore, where he is personally appointed as
administrator, that he is subject
to the rights
and obligations
of a practising attorney. This would entail,
inter alia
, that
the first
respondent
is
not
obliged
to furnish security in terms of sec 74E, but that he
is
obliged to pay moneys received into his attorney’s trust account
and to deal with the interest as provided for by the Attorneys’
Act. It follows from the aforegoing that the relief claimed by the
applicant
in terms of prayer E ought to be
modified to read as follows:
‘
An order declaring that
all monies received by or on behalf of the first respon­dent when
he takes appointment and acts as an
administrator shall be deposited
into the trust account that he keeps in terms of section 78 of the
Attorneys’ Act, 53 of 1979.’
In
view of the foregoing conclusion, prayer D would strictly speaking
become redun­dant. However, in view of the fact that there
are
many instances where moneys have already been deposited into
different accounts by or on behalf of the first respondent, it
is
necessary in any event to deal with this aspect.
The
Magistrates’ Courts Act, unlike
the Attorneys Act, does not
specifically provide for interest earned on moneys collected. Be
that as it may, given the fiduciary
nature of the administrator’s
office as well as the pro­visions of sec 74J(7)(
a
) to the
effect that
‘no amount with which such account is credited
shall be deemed to be part of the administrator’s assets’
,
it is clear that the legislature does not permit an administrator to
claim any portion of such amounts credited – whether capital
or
interest â€“ as being for his or her benefit. Yet, this is
precisely what the first respondent says that he does: he claims
to
use the interest earned to cover bank charges allegedly incurred by
the second respondent (and any of the other corporate entities
which
administer debtor estates) and to pay for fidelity cover in order
that he, and such entities, are covered by some form of
insurance.
Were it not for his use of the interest, first respondent or his
corporate entities would have to finance these expenses
from monies
obtained elsewhere.
The
first and second respondents resist the relief claimed,
inter
alia
, on the grounds that the com­putation of such interest
is problematic and, in any event, prohibitively expensive if use is

made of an appropriate computer programme. The third respondent
likewise opposes the granting of this relief on the basis that the
provisions of sec 74J(7)(
a
) of the Act are clear and
un­equivocal and, more particularly, that there is no reference
in that section to interest.
The
applicant, on the other hand, denies that it is impossible or
pro­hibitively expensive to effect such calculations. In an
affidavit filed in reply to the third respondent’s intervention,
the applicant contends that there is computer software available
–
at an affordable price – which can readily calculate the amounts
of interest that accrue to each debtor and, further, that
the
respondents are not entitled to appropriate such interest for
themselves, due regard being had to the clear wording of the
Act and
the fiduciary nature of an administrator’s office.
As
pointed out above,
34
the first respondent allegedly deposits moneys received in an
interest-bearing call account. The first respondent, however,
furnishes
no details of such account. Assuming, for purposes of
illustration, that the average monthly instalment in respect of
10 000
debtors apparently under administration with the first
and second respondents is an arbitrary amount of R300 per debtor,
and assuming
further that such amounts are invested in a call
account at 10%
per annum
, it would follow that an amount of
R25 000 would accrue monthly by way of interest on such moneys,
adding up to quite a sub­stantial
amount of R300 000
per
annum
. The
respondent
s have not placed
any evidence before us to indicate that monthly bank charges and
insurance premiums would be anywhere close to
this amount. As
matters stand at the moment, all of those funds find their way into
the coffers of the
respondent
s.
I
am not satisfied that the
respondent
s’
complaints regarding the alleged difficulties with calculating
interest are valid or that a
bona fide
dispute of fact is
created thereby. Even if it were so that the computation of interest
is problematic or
‘prohibitively expensive’
, this would
not justify the
respondent
s in applying
any part of such interest for their own benefit.
In
the circumstances, I am satisfied that the applicant has made out a
proper case for the relief sought in prayer D of the Notice
of
Motion and that it is entitled to such relief.
Prayer F – Quarterly
distributions to creditors
Finally,
in
prayer F
the applicant seeks an order
‘declaring that
the first respondent is required to make a quarterly distribution of
monies available for distribution in accordance
with the provisions
of sec 74J(1) of the Act except where the creditors have otherwise
agreed or the relevant Magistrates’ Court
has otherwise ordered in
any particular case’.
The salient
portions of sec 74J(1) of the Act provide as follows:
‘
An administrator shall
collect the payments to be made in terms of the administration order
concerned and shall keep up to date a
list … of all payments and
other funds received by him from or on behalf of the debtor, … and
shall … distribute such payments
pro rata
among the
creditors at least once every three months, unless all the creditors
otherwise agree or the court otherwise orders in any
particular
case.’
In
my view, the relief sought in prayer F ought not to be granted. In
the first place, it incorrectly paraphrases the provisions
of the
section by intro­ducing a concept not defined in the section,
namely ‘
monies available for distribution’
. Section
74J(1) simply obliges the administrator to distribute
‘such
pay­ments’
, (i.e.
‘all payments and other funds
received by him from or on behalf of the debtor’
). As pointed
out by the
respondent
s, it can only lead
to unnecessary uncertainty and dispute if the
applicant
’s
prayer were to be granted in its present form.
In
any event, even if this terminological inaccuracy were to be
corrected, declaratory relief would to my mind still not be
justified,
because the prayer would then simply
‘parrot’
the
provisions of the Act, as submitted by the third
respondent
.
There is no ambiguity or uncertainty in the actual provisions of the
section. What
did
give rise to problems and delays, was the
first
respondent
’s practice of obtaining
authorisation from the court
in anticipando
to make
distributions less frequently, should he be of the view that there
were insufficient funds to ensure a
‘viable’
distribution.
This
practice has been firmly condemned, both in the
Weiner
cpd
and
Weiner
SCA judgments. The duty resting on an
administrator to make quarterly distributions has been placed beyond
any doubt by Cameron
JA in the
Weiner
SCA judgment, where he
remarked that the granting of a discretion to an administrator (as
some of the
pro forma
administration orders have done)
‘leaves the creditors at the mercy of the administrators’
subjective perception of what duty and convenience may require.’
35
The
learned Judge proceeded to say:
‘
Court orders should not be
formulated so as to leave compliance at the discretion of the person
bound by them. This infringes not
only the principle that such orders
should be capable of enforcement, but the principle of certainty by
legal regulation. Such a
state of affairs is intolerable …’
36
As
mentioned previously, the present application was launched before
the
Weiner
SCA judgment was handed down. In my view, it would
be both inappropriate and unnecessary for this court to echo what
has already
been decided (authori­tatively) by the Supreme Court
of Appeal. I accordingly conclude that the
applicant
is not entitled to declaratory relief.
Counter-application by
Third Respondent
In
the Notice of Motion filed together with his opposing affidavit, the
third respondent seeks a declaratory order in the following
terms
(which, for ease of reference, I shall number 1 and 2 respectively):
‘
1. Any administrator duly
appointed under section 74 of the Magistrates’ Courts Act, No 32 of
1944 (“the Act”) is entitled to
charge, in terms of Rule
33(5)(a)(iii) of the Act as limited by Rule 33(5)(b) and in relation
to any proceeding under section 74
and 74A to 74W, inclusive, of the
Act and for all matter ancillary thereto, the scale of fees as set
out in Part III of Table B of
Annexure 2.
2. The remuneration and
expenses referred to in section 74L(1)(a) of the Act does not include
Items 1 and 2 of the General provisions
of Part III of Table B of
Annexure 2 and refers only to the remuneration and expenses that an
administrator incurs in attending to
his duty to distribute under
section 74J(1) and not any other proceeding/s taken by the
administrator in terms of the other sections
enumerated above.’
In
the view I take of the matter, this aspect of the case may be
dis­posed of briefly. As far as para 1 is concerned, it is
to be
noted, first of all, that it is framed in terms that are unduly wide
(
‘
any
administrator…’
) – as if
it were a class action. If it were the third
respondent
’s
intention to bring a class action on behalf of all administrators,
it is not clear that he has succeeded in achieving this
goal.
37
However, since this aspect was not dealt with in argument, it is not
necessary for me to come to any firm conclusion in this regard.
There
is a further basic flaw in the third
respondent
’s
case in that Rule 33(5)(
a
)(iii) – as I have shown above
38
– is only applicable to the scale of fees
‘to be taken by
attorneys
’
(my emphasis)
,
whereas
an admin­istrator does not have to be an attorney.
Moreover,
even if this were not so, a declarator would not be justi­fied,
because – in the third
respondent
’s
own words – it would simply
‘parrot’
the wording of the
Rule, about which there is no dispute.
With
regard to para 2 of the counter-application, the third
respondent
attempts to reopen the debate that has already been decisively
closed in the
Weiner
sca judgment. The thrust of the third
respondent’s case is that the judgment of the Supreme Court of
Appeal in the
Weiner
SCA matter is
obiter;
alter­natively, that it is distinguishable; alternatively, that
it is wrong.
I
am quite satisfied that the conclusion of the court in para [26] of
the
Weiner
SCA judgment is neither
obiter
, nor
distinguishable. In view of the doctrine of
stare decisis
,
that is the end of the matter as far as this court is concerned.
39
It follows, therefore, that the third respondent’s
counter-appli­cation is without any merit and falls to be
dismissed.
Costs
It
appears from the foregoing that the
applicant
was partially successful in obtaining
some
relief. In my
view, however, and bearing in mind the extent and duration of the
debate before us, the degree of success is not sufficient
to justify
a costs order in its favour. Moreover, it cannot be gainsaid that a
considerable portion of the costs were incurred
– and wasted –
as a result of the
applicant
’s late
amendment to its Notice of Motion.
Taking
all things into account – including the fact that the present
application was in the nature of public interest litigation,
rather
than purely adversarial proceedings between individual litigants –
I am of the view that it would be fair to direct each
party to pay
their own costs. This, in my view, ought to apply to the third
respondent
’s counter-application as
well.
Order
For
the reasons set out above, I would grant an order in the following
terms:
An order is granted,
declaring that all monies received by or on behalf of the first
respon­dent when he takes appointment and
acts as an
administrator shall be deposited into the trust account that he
keeps in terms of section 78 of the Attorneys’ Act,
53 of 1979.
An order is granted,
declaring that any interest which may accrue on any sums of money
received by the first or second respondent
from or on behalf of a
debtor under adminis­tration in terms of sec 74 of the Act and
deposited into a separate trust account
in terms of sec 74J(7)(a)
shall form part of the monies available for distribution in
accordance with the provisions of sec 74
of the Act.
Save as set out above,
the application and the third
respondent
’s
counter-application are dismissed.
Each party is directed to
pay their own costs.
B
M Griesel
Selikowitz J:
I agree. It is so ordered.
S
Selikowitz
1
Weiner
N.O. v Broekhuysen
2001
(2) SA 716
(C) (
‘the
Weiner CPD judg­ment’
);
and, on appeal,
Weiner
N.O. v Broekhuysen
[2002]
4 All SA 96
; 2003 (4) 301 (SCA) (
‘the
Weiner SCA judgment’
).
2
Para
[3] (footnotes omitted).
3
See
sec 74R of the Act.
4
Per
Corbett
J in
Cape Town
Municipality v Dunne
1964 (1) SA 741
(C) at 744G.
5
sec
74J(1).
6
Compare
Desai
v Assignee Estate Desai
1935
CPD 503
at 508.
7
Goldseller
v Hill
1908 TS 822
at 835.
8
Meskin
Insolvency
Law
(Butterworths 1990, with loose leaf updates) para 4.18 at 4-26(1).
9
Subsec
74L(2).
10
The
full sec 74L reads as follows:
(1)  An administrator may, before making a
distribution—
(a) deduct from the money collected his necessary
expenses and a remune­ration determined in accordance with a
tariff prescribed
in the rules;
(b) retain a portion of the money collected, in the
manner and up to an amount prescribed in the rules, to cover the
costs that
he may have to incur if the debtor is in default or
disappears.
The expenses and remuneration mentioned in
subsection (1)(a) shall not exceed 12½ per cent of the amount of
collected moneys
received and such expenses and remuneration shall,
upon application by any interested party, be subject to taxation by
the clerk
of the court and review by any judicial officer.
11
In
terms of Rule 33(5)(
b
),
the same scale of fees also applies between attorney and client.
12
Para
supra.
13
The
underlined words do not appear in the amended Notice of Motion, but
we were asked by counsel for the
applicant
,
in the course of his reply, to insert the words as part of the
applicant
’s
entitlement to
‘alternative
relief’
.
14
Shoba
v Officer Commanding, Temporary Police Camp, Wagendrift Dam, and
Another
1995 (4) SA 1
(A) at 14G and other cases referred to therein.
15
Shoba’s
case
,
supra,
at 14H – I;
Reinecke
v Incorporated General Insurances Limited
1974
(2) SA 84
(A) at 93A – B.
16
Compare,
in this regard, the
Weiner
SCA
judgment, para [9] at 101
e
,
where it was held that a creditor is
‘clearly’
an interested party for the purposes of an application in terms of
sec 74Q.
17
See
Afdelingsraad
van Swartland v Administrateur, Kaap en Andere
1983 (3) SA 469
(C) at 484F – 485H and authorities referred to
therein.
18
See
Shell’s
Annandale Farm (Pty) Ltd v Commissioner, South African Revenue
Service
2000
(3) SA 564
(C) at 571C – D.
19
Cf
Metcash
Trading Ltd v Commissioner, South African Revenue Service, and
Another
2001
(1) SA 1109
(CC) para [43] at 1134G – 1135B and paras [46] to [47]
at 1136F – 1137E.
20
Para
supra.
21
Ibid.
22
Para
[26].
23
Ibid
.
24
Civil
Practice of the Magistrates’ Courts in South Africa
(9
th
edition 1997 with loose-leaf updates) Vol I p322
25
Para
supra
.
26
SAPDC
(Trading) Ltd v Immelman
1989 (3) SA 506
(W) at 509A.
27
See
para
supra
.
28
at
725I – 726A
.
29
Para
supra
.
30
Cf
the
Weiner
CPD
judgment at 725J – 726A.
31
See also the definition of
‘practitioner’
in
sec 1 of the Act (para [59]
supra
).
32
Now
sec 78 of the Attorneys’ Act, 53 of 1979.
33
Para
et
seq, supra
.
34
Para
supra
.
35
Para
[15].
36
Para
[16]
.
37
Cf
Permanent
Secretary, Department of Welfare, EC v Ngxuza
2001 (4) SA 1193
(SCA).
38
Para
supra.
39
Cf
Ex
Parte Minister of Safety and Security and Others: In Re S v Walters
and Another
[2002] ZACC 6
;
2002
(4) SA 613
(CC) para [57].