Cooper NO v First National Bank of SA Ltd (272/98) [2000] ZASCA 188; [2000] 4 All SA 597 (A) (29 September 2000)

About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2000
>>
[2000] ZASCA 188
|

|

Cooper NO v First National Bank of SA Ltd (272/98) [2000] ZASCA 188; [2000] 4 All SA 597 (A); 2001 (3) SA 705 (SCA) (29 September 2000)

REPORTABLE
Case number: 272/98
IN THE SUPREME COURT OF APPEAL OF
SOUTH AFRICA
BRIAN
ST CLAIR COOPER NO
APPELLANT
and
FIRST
NATIONAL BANK OF SA LTD RESPONDENT
CORAM
: SMALBERGER,
GROSSKOPF, MARAIS, ZULMAN JJA and MELUNSKY AJA
DATE OF HEARING
: 21
AUGUST 2000
DELIVERY DATE
: 29
SEPTEMBER 2000
Issue
of warrant in terms of
sec 69(3)
of the
Insolvency Act 24 of 1936
-
when
notice to affected person required.
__________________________________________________________________
JUDGMENT
__________________________________________________________________
SMALBERGER JA
SMALBERGER
JA:
[1]
The respondent sought an
order in the Witwatersrand Local Division
inter
alia
setting aside a search warrant applied
for by the appellant and issued by a magistrate in terms of sec
69(3) of the Insolvency
Act 24 of 1936 (“the Act”). The
order was granted by Roux J who also ordered the appellant to pay the
respondent’s
costs
de bonis propriis
on a scale as between attorney and client. The learned judge
subsequently granted the appellant leave to appeal to this Court.
[2]
The appellant was
appointed as the trustee of the insolvent estate of one Wilfred
Rosenberg (“the insolvent”) on 3
December 1992. The
insolvent had been provisionally sequestrated on 28 July 1992 and a
final order had been granted on 18 August
1992.
[3]
The insolvent’s
assets, at the time of sequestration, included an undivided
half-share in a property (a flat) situated in
Muizenberg, Western
Cape. The insolvent’s half-share in the property was
transferred to him on 4 June 1992 (i.e. prior to
his sequestration)
and has since remained registered in his name; the remaining
half-share is registered in the names of his children
or on their
behalf. For convenience I shall refer to the insolvent’s
half-share in the property simply as “the property”.
[4]
The first and final
liquidation and distribution account in the insolvent’s estate,
dated 22 October 1993 (“the account”),
drafted by the
appellant, was confirmed by the Master of the Supreme Court (“the
Master”) on 2 March 1994, after compliance
with all the
formalities prescribed by law. The property was not reflected in the
account as an asset. This was because the appellant
considered the
property to have little or no commercial value. He had tried to sell
it by public auction on 30 July 1993, but
no bid was made for it, nor
was any interest shown in it prior to the auction. The title deed
pertaining to the property was left
in the possession of the
insolvent.
[5]
A supplementary
liquidation and distribution account drafted by the appellant was
confirmed by the Master on 31 October 1994.
Consistent with what had
gone before it also contained no reference to the property.
[6]
Only ABSA Bank Limited
(“ABSA”) submitted a claim against the insolvent estate.
The claim, which was duly admitted,
was in respect of monies lent and
advanced by ABSA to the insolvent. No dividend was available for
creditors and ABSA was obliged
to pay a contribution towards the
costs of insolvency.
[7]
On 22 October 1996 the
insolvent applied for his rehabilitation, which was granted on 3
December 1996.
[8]
Prior to this, during
March 1995, the insolvent had become indebted to the respondent in
respect of overdraft facilities, suretyships
and credit card
liabilities in a total amount in excess of R350 000. The respondent
was unaware at the time that the insolvent’s
estate was under
sequestration.
[9]
On 23 March 1995, with
the knowledge and concurrence of the insolvent, the respondent
instructed its attorney (“Van Huyssteen”)
to register a
mortgage bond over the property in respect of the insolvent’s
indebtedness to it. The insolvent had previously
handed over the
relevant title deed to the respondent.
[10]
The papers for the
registration of the mortgage bond were lodged with the relevant Deeds
Office during October 1995. Included
amongst the papers was an
affidavit attested to by the insolvent stating that his estate had
not been sequestrated. The papers
were rejected by the Deeds Office
on the basis that the insolvent was an unrehabilitated insolvent at
the time. This was the first
intimation that the respondent received
of that being the case.
[11]
Subsequently, still
during October 1995, Van Huyssteen ascertained that the appellant was
the trustee of the insolvent’s
estate. He informed the
appellant of the preceding events relating to the attempted
registration of the mortgage bond over the
property and requested the
appellant’s consent thereto. During later discussions with Van
Huyssteen the appellant made it
clear that he was not prepared to
give his consent to the registration of the mortgage bond.
[12]
In due course the
respondent sought and obtained an acknowledgment of debt, dated 30
July 1996, from the insolvent. By this time
the total indebtedness
of the insolvent to the respondent had grown to more than R500 000.
[13]
During 1996 the
appellant obtained a valuation of the property in the amount of R70
000. This was apparently the first time that
the appellant had had
any dealings with the property since he drafted the account in
October 1993. He offered the property to
the insolvent’s
children, but they were unable or unwilling to purchase it at that
price. He then had it put up for sale
at a public auction. The
upshot of this and subsequent events was that he received an offer of
R40 000 for the property. The
insolvent’s children were unable
to match or improve on this offer. A written sale agreement was
accordingly concluded on
4 September 1996 for the sale of the
property to a third party for the sum of R40 000.
[14]
On 14 May 1997, after
the insolvent’s rehabilitation, the appellant wrote to the
respondent requesting the title deed relating
to the property to
enable him to pass transfer to the purchaser. Correspondence
followed between Van Huyssteen and the appellant’s
attorneys.
The outcome was that Van Huyssteen, on behalf of the respondent,
refused to hand over the title deed to the appellant
or his
attorneys. The respondent made no secret of the fact that the title
deed was in its possession, but sought to justify its
refusal to hand
it over on various grounds. In the meantime the respondent had
obtained a judgment against the insolvent arising
out of his
acknowledgment of debt in the sum of R560 000.
[15]
During later discussions
with Van Huyssteen the appellant’s attorneys made it clear that
the appellant was faced with a threat
of cancellation of the
agreement if the title deed was not released to enable transfer of
the property to be given to the purchaser.
[16]
On 10 July 1997 the
appellant applied, in the Magistrate’s Court, Johannesburg, in
terms of sec 69(2) of the Act for the
issue of a warrant to search
for and take possession of the title deed, ostensibly on the basis
that the respondent was unlawfully
withholding them as envisaged by
sec 69(3). The application was made
ex parte
without notice to the respondent. The grant of the application led
to the proceedings referred to in para [1].
[17]
The facts set out above
are either common cause or not in dispute.
[18]
In terms of sec 20(1) of
the Act the effect of the sequestration of the insolvent’s
estate was to divest him of his estate
and eventually to vest such
estate in the appellant as his trustee. It was then incumbent upon
the appellant to collect the insolvent’s
assets, realize them
and, if there were sufficient realizable assets, to distribute the
proceeds amongst the insolvent’s
creditors. As it happened
there were insufficient realizable assets and ABSA, the only creditor
who proved a claim, was called
upon to make a contribution.
[19]
Sec 69(1) of the Act
obliged the appellant, as soon as possible after his appointment, to
take into his possession or under his
control all “movable
property, books and documents” belonging to the insolvent’s
estate. I shall assume, for
the purposes of the appeal, that the
title deed to the property falls within the enumerated items. In
terms of sec 69(2), if a
trustee (such as the appellant) has reason
to believe that any property, book or document “is concealed or
otherwise unlawfully
withheld from him, he may apply to the
magistrate having jurisdiction for a search warrant mentioned in
sub-section (3)”.
[20]
Sec 69(3) reads as
follows:
“
If it appears to a magistrate to whom such
application is made, from a statement made upon oath, that there are
reasonable grounds
for suspecting that any property, book or document
belonging to an insolvent estate is concealed upon any person, or at
any place
or upon or in any vehicle or vessel or receptacle of
whatever nature, or is otherwise unlawfully withheld from the trustee
concerned,
within the area of the magistrate’s jurisdiction, he
may issue a warrant to search for and take possession of that
property,
book or document.”
[21]
As appears from sec
69(3), before a magistrate may exercise his discretion to issue a
warrant in terms of the section, it must
appear to him that there are
reasonable grounds for suspecting that any property, book or document
belonging to an insolvent estate
is either:
(1) concealed in any of the ways set out in the
section, or is
(2) otherwise unlawfully withheld.
A warrant, when issued, confers authority on the person
executing it to search for and take possession of the property, book
or
document concerned and to “deliver any article seized
thereunder to the trustee” (sec 69(3) read with sec 69(4)).
[22]
The primary purpose of
sec 69(3) is to enable a trustee to collect and take control of
assets reasonably believed to belong to
an insolvent estate which are
being concealed or unlawfully withheld. It does not purport to, nor
was it intended to, provide
a means for finally determining competing
claims to property which is alleged to belong to an insolvent estate
- see
Bruwil Konstruksie (Edms) Bpk v Whitson
NO and Another
1980(4) SA 703 (T) at 711 A-B;
Philip Business Services CC v De Villiers and
Others NNO
1991(3) SA 552 (W) at 557 A-B; and
the hitherto unreported judgment of Nugent J in the Witwatersrand
Local Division in
Kerbyn 178 (Pty) Ltd v T.W.
Van den Heever and Others
at pp 7-8 (Case No
4191/00 delivered on 27 March 2000).
[23]
Sec 69(3) was clearly
intended to strengthen the hand of a trustee in carrying out the
obligation to take charge of all the assets
belonging to an insolvent
estate. Resorting to its provisions has the potential to infringe
the rights of others in relation to
both their property (at least to
the extent of depriving them of something in their possession) as
well as their privacy when it
comes to search and seizure. In those
circumstances, in my view, as a general principle, a warrant should
not be issued without
affording the person or persons affected, or
likely to be affected (to the extent that their identities are
ascertainable or reasonably
ascertainable) an opportunity to be
heard, unless it can be said that sec 69(3) (the authorising
provision) excludes that right
either expressly or by necessary
implication. An opportunity to be heard would require the giving of
appropriate notice to the
person or persons concerned.
[24]
This approach would be
in keeping with what was said by Milne JA in
South
African Roads Board v Johannesburg City Council
1991(4) SA 1 (A) at 10 G-I, namely,
“
[T]his Court has expressed a preference for the
view which regards the
audi
principle [the
audi alteram partem
rule] as a rule of natural justice which comes into play whenever a
statute empowers a public official or body to do an act or
give a
decision prejudicially affecting an individual in his liberty or
property or existing rights, or whenever such an individual
has a
legitimate expectation entitling him to a hearing, unless the statute
expressly or by implication indicates the contrary;
as opposed to the
view which requires the
audi
principle,
if it is to apply, to be impliedly incorporated by the statute in
question.”
(See also
Du Preez and Another v
Truth and Reconciliation Commission
1997(3)
SA 204 (A) at 231 C-E.) This principle would apply equally to a case
such as the present where a magistrate is called
upon to exercise a
discretion to issue a warrant in terms of sec 69(3) of the Act. The
approach would also be consonant with the
requirements of sec 39(2)
of the Constitution of the Republic of South Africa, Act 108 of 1996.
According to Baxter,
Administrative Law
at 540 “[t]he principles of natural justice are considered to
be so important that they are enforced by the courts as a
matter
of policy
, irrespective of the merits of the
particular case in question.” Baxter’s view, however,
was not raised or argued
before us and no opinion need be expressed
as to its correctness having regard to the conclusion to which I
ultimately come.
[25]
There is no express
provision in sec 69(3) requiring the giving of notice to an affected
person or affording a right to be heard.
Is this dispensed with by
necessary implication? The fact that a magistrate does not finally
determine legal entitlement to any
property or item envisaged in the
section would not
per se
preclude notice, as he is called upon to apply his mind to whether a
warrant should be issued and to hear an affected person, in
a
appropriate case, would, or could, have a bearing on the decision he
is required to make.
[26]
As pointed out above,
sec 69(3) deals with two classes of cases: items (property, books or
documents) “concealed” and
items “otherwise
unlawfully withheld”. “Conceal” means: “To
keep from the knowledge or observation
of others; To put or keep out
of sight or notice, to hide” (
The
Shorter Oxford English Dictionary
, Vol I, p
388). “Concealed”, in the context in which the word is
used, connotes items which have been hidden with
a view to denying
their existence or preventing their recovery. When seeking to
recover concealed items suspected of belonging
to an insolvent
estate, the giving of prior notice and affording a right to be heard
would, or at least might, defeat the very
object and purpose of the
section. From this it must be inferred, by way of necessary
inference, that the legislature intended
to exclude the giving of
notice (and the concomitant right to be heard) in cases involving
concealed items.
[27]
In my view the position
is different, however, where the application for a warrant relates to
items suspected of being “otherwise
unlawfully withheld”.
These are words of wide import. They could govern situations as
widely divergent as where items,
though not concealed, are being
surreptitiously held, or not disclosed, without any claim of right or
for no legitimate reason,
to items openly held under a
bona
fide
and reasonable claim of right to own or
lawfully possess them as against a trustee in his capacity as such.
The words also comprehend
situations where continued possession of an
item could prejudice the insolvent estate, as well as those where
there is no danger
of loss resulting to the insolvent estate from the
possession of such item pending determination of any dispute
concerning the
rights thereto.
[28]
In the situations
postulated above one would need to have regard to the facts of each
particular case to determine whether the
matter was one where the
audi
principle should
have application. Where the circumstances are such that the object
and purpose of sec 69(3) would be defeated
by giving notice, or where
the identity of the affected person is not known or cannot reasonably
be ascertained, the giving of
notice would, by necessary inplication,
be dispensed with. But in other instances it would not. What must
therefore in every
case be asked, and answered, is whether, having
regard to the facts which were known, or must be taken to have been
known, when
the warrant was applied for, the legislature must
necessarily have intended that the
audi
principle be dispensed with. Unless the answer is an unequivocal
“yes”, the
audi
principle must be complied with by giving notice to the affected
person to enable such person to be heard. In each case therefore,

the particular circumstances will dictate whether the giving of
notice is necessary or may be dispensed with.
[29]
To the extent that views
expressed in reported cases dealing with sec 69(3) are at variance
with the principles enunciated above,
they must be taken to have been
impliedly overruled.
[30]
When applying to the
magistrate for a warrant in terms of sec 69(2) on 10 July 1997 the
appellant was well aware of the following
facts. The (first and
final liquidation and distribution) account submitted and signed by
the appellant was dated 22 October 1993,
more than three years
previously. The appellant was aware at that time that the property
was registered in the name of the insolvent.
An attempt had been
made to sell the property by public auction on 30 July 1993. No bid
was received and no interest shown by
anyone to purchase it. By his
own account the appellant considered the property to have little or
no commercial value. Had he
considered it to constitute realizable
property he should not have filed a final account (see sec 92(4) of
the Act). The account
purported to deal with all known realizable
assets. The property was not reflected therein as an asset nor was
any reference made
to it. The accompanying affidavit of the
appellant specifically records “dat daar na my beste wete en
oortuiging geen verdere
bates is waarvoor verantwoording gedoen moet
word nie” (see sec 107 of the Act). Everything points to the
appellant having
made a conscious decision to disregard the property
as an asset in the insolvent’s estate. This conclusion is
fortified
by the appellant’s subsequent conduct.
[31]
The account was
confirmed on 2 March 1994. From then until October 1995, the
appellant, in the absence of anything suggesting
the contrary (and
nothing appears from the record), must be taken to have shown no
interest in the property. He either never took
possession of the
title deed relating to the property or, having done so, returned it
to the insolvent. Whatever the situation,
the insolvent was
ultimately left in possession of the title deed. The supplementary
liquidation and distribution account confirmed
by the Master on 31
October 1994 also contained no reference to the property. The above
facts justify an inference that the appellant
purported to abandon
the property as part of the insolvent’s estate i.e. he
discarded it with the intention of relinquishing
any rights to it.
Any such abandonment would have occurred prior to the insolvent
agreeing in March 1995 to a mortgage bond being
registered against
the property in respect of his indebtedness to the respondent.
(Whether or not a trustee may lawfully abandon
estate property which
he considers to be of no value to the estate is not a matter we are
required to decide.)
[32]
The request by the
respondent, through Van Huyssteen, to the appellant in October 1995
for his consent to the registration of a
mortgage bond appears to
have resurrected any interest he may once have had in the property.
Although he refused to give his consent
to registration he took no
immediate steps to recover the title deed in the respondent’s
possession. It was only in May
1997, after he had purportedly
entered into a written agreement of sale in respect of the property,
that he requested the title
deed from the respondent. By that time
the insolvent had been rehabilitated.
[33]
In refusing to hand over
the title deed the respondent relied upon the fact that the insolvent
had furnished it with the title
deed, had instructed it to register a
mortgage bond over the property and that the insolvent by then had
already been rehabilitated.
As most of the insolvent’s
indebtedness to the respondent arose after his sequestration, the
respondent may also have been
able to rely on the deeming provision
of sec 24(2) of the Act - a matter on which I express no firm view.
The respondent did not
raise the issue of abandonment. At that time
it was not aware, and could not reasonably have been aware, of all
the relevant and
material facts now known concerning the manner in
which the appellant had dealt with the property. Had it been, it
would no doubt
have raised abandonment as a defence then, as it seeks
to do now.
[34]
To sum up, when the
appellant applied for a warrant in terms of sec 69(3) on 10 July 1997
the position which existed was as follows:
The appellant was aware of all the circumstances
pertaining to his trusteeship of the insolvent’s estate and
his conduct
in regard thereto.
He knew, since October 1995, that the title deed of
the property was in the possession of the respondent and was being
openly
held by it.
He took no active steps between October 1995 and May
1997 to obtain possession of the title deed from the respondent.
It was only in May 1997, after he had entered into a
written agreement for the sale of the property, that he called upon
the
respondent to hand over the title deed.
Prima facie
the respondent had
bona fide
and reasonable grounds for retaining the title deed, even though it
may ultimately transpire, once all the relevant facts have
been
fully canvassed (which has not yet been the case), that the
respondent was not legally entitled to withhold it.
A caveat had been entered in the deeds registry
(presumably in terms of sec 17(3) of the Act) which effectively
precluded the
property from being encumbered or sold to the
prejudice of the insolvent estate.
[35]
In all the circumstances
the matter was one where notice of the sec 69(3) application should
have been given to the respondent
and it should have been afforded an
opportunity of being heard. The failure to do so vitiated the
proceedings and justified the
warrant being set aside in the court
below. In the result the appeal against the court
a
quo
’s decision in this regard must
fail.
[36]
Not all the facts
alluded to in para [30] were brought to the attention of the
magistrate by the appellant when he applied for
the warrant. Some of
the information withheld was in my view material. In
De
Jager v Heilbron and Others
1947(2) SA 415
(W) at 419-420 Roper J stated:
“
It has been laid down, however, in numerous
decisions of our Courts that the utmost good faith must be observed
by litigants making
ex parte
applications, and that all material facts must be placed before the
Court. . . . . If an order has been made upon an
ex
parte
application, and it appears that
material facts have been kept back which
might
have influenced the decision of the Court whether to make the order
or not, the Court has a discretion to set aside the order on
the
ground of the non-disclosure. . . . It is not necessary that the
suppression of the material fact shall have been wilful or
mala
fide
.”
Those words are as valid today as they were then.
However, in view of the conclusion to which I have come it is not
necessary to
decide what the effect of such non-disclosure was in the
present matter and whether it would have permitted or justified the
warrant
being set aside on that ground.
[37]
There remains to be
considered the appeal against the costs order. The general principle
of the common law is that a trustee,
who acts in a representative
capacity, cannot be ordered to pay costs
de
bonis
propriis
unless he has been guilty of improper conduct. The judge
a
quo
found the appellant’s conduct to be
“unacceptable”. Improper conduct is always unacceptable;
but unacceptable
conduct is not necessarily improper. While the
appellant’s conduct may have been ill-considered, and his
application lacking
in certain essential detail to the extent that it
may be said that he did not make a full disclosure of all relevant
facts, one
cannot in my view go so far as to hold that his conduct
was improper. It has not been shown that there was a conscious
attempt
on his part to mislead the magistrate or to use sec 69(3)
unfairly to his advantage. In the circumstances the special costs
order
against the appellant was not justified and falls to be set
aside. The appeal succeeds
pro tanto
.
[38]
It follows that both the
appellant and the respondent have enjoyed a measure of success on
appeal. While it is arguable that the
respondent’s success is
greater than that of the appellant, it is not so significantly
greater as to merit a costs order
on appeal in favour of the
respondent against the appellant. In my view a fair order in all the
circumstances would be that each
party should pay its own costs of
appeal.
[39]
The following order is
made:
The appeal succeeds, but only to the
extent that paragraph 3 of the order of the court
a
quo
in relation to costs is set aside and
the following substituted:
“
The first respondent is ordered to pay the costs
of the application including the costs of the A section of the
Notice of Motion”.
Each party is to pay its own costs of appeal.
____________________
J W SMALBERGER
JUDGE OF APPEAL
GROSSKOPF JA )Concur
MELUNSKY
AJA )
MARAIS
JA
MARAIS JA: [1] With respect, I
am unable to share in my brother Smalberger’s conclusion that
the appeal should fail.
Had I felt able to share in that
conclusion, I would have concurred in his conclusion as to the costs
orders which should have
been made in the court
a
quo
and in this
court. However, my conclusion on the procedural propriety and the
merits of the application for a warrant necessitates
an altogether
different order as to costs in both courts.
[2] There
are essentially three reasons for my inability to concur with
Smalberger JA. First, my reading of s 69 is that it
impliedly
excludes the giving of notice of intention to seek a warrant in all
cases. Secondly, even if it does not, and the
view that in some
cases notice will be required, but in others not, is correct, I do
not think that the failure to give notice
in this particular case
should result in the setting aside of the warrant. For reasons to
be given, I consider it to be manifest
that what respondent has
said it would have raised to justify denial of the warrant, if it
had been given the opportunity to
do so, is devoid of substance. To
set aside the warrant in such circumstances would serve only to
potentially prejudice creditors
and would be to pay undue obeisance
to a requirement the fulfilment of which would have had no effect
whatsoever upon the issue
of the warrant. Thirdly, I do not
consider that there was any material non-disclosure by the trustee
when seeking the warrant.
[3]
Whether
notice of the application should have been given.
I approach the question conscious of
the invasion of privacy inherent in, and the aura of spoliation
(juristically inaccurate
though the use of the word may be)
surrounding, the provisions of s 69. I am also mindful of the
admonitions which are to be
found in the common law and the
Constitution as to the need for legislation to be interpreted,
whenever possible, in such a way
as to maintain and promote core
values such as the right to privacy, to freedom from search and
seizure, and to fair administrative
and, for that matter, judicial
action. However, none of that relieves a court of its primary duty
of ascertaining the intention
of the legislature by reference to the
language of the provision in the context of the statute as a whole
and by reference to
whatever other legitimate aids to interpretation
may be available. If a plain and unambiguous intention to exclude
the giving
of notice emerges, there can be no justification for
assigning a contrary meaning to the provision. As Lord Diplock
observed
in
Regina
v Inland Revenue Commissioners, Ex parte Rossminster Ltd and Others
1
“
The construing court ought, no doubt, to remind
itself, if reminder should be necessary, that entering a man’s
house or
office, searching it and seizing his goods against his will
are tortious acts against which he is entitled to the protection of

the court unless the acts can be justified either at common law or
under some statutory authority. So if the statutory words
which
are relied upon as authorising the acts are ambiguous or obscure, a
construction should be placed upon them that is least
restrictive of
the rights which would otherwise enjoy the protection of the common
law. [Or, in South Africa, of the Constitution.]
But judges in
performing their constitutional function of expounding what words
used by Parliament in legislation mean, must
not be over-zealous to
search for ambiguities or obscurities in words which on the face of
them are plain, simply because the
members of the court are out of
sympathy with the policy to which the Act appears to give effect.”
That
approach to the matter is, in principle, equally appropriate when
considering whether or not the giving of notice has been
impliedly
excluded by necessary implication in s 69. If the implication is
plain, it is entitled to no less deference than that
to which plain
and unambiguous words are entitled.
[4] Before turning to the
interpretive task it would be as well to bear in mind at the
threshold of the enquiry two important
considerations. The first is
that, as has been pointed out in the judgment of Smalberger JA and
in other judgments,
2
the magistrate’s decision to issue a warrant is dispositive of
nothing. No more than reasonable grounds for suspicion
of
concealment or unlawful withholding of the asset need to be found to
exist. The decision to issue a warrant is in no sense
an
adjudication of any substantive issue, existing or potential,
between the trustee and the third party or between the insolvent
and
the third party. Success in obtaining a warrant and success in its
execution brings the trustee no more than provisional
physical
possession of the relevant asset. The trustee’s continued
possession is open to challenge in the courts and the
customary
gamut of remedies ( review proceedings, prohibitory interdicts,
vindicatory actions, declarations of right, etc) is
available to the
third party. A successful challenge will bring an end to the
trustee’s possession.
[5] The second consideration is
that the concept of a warrant in its various manifestations (arrest,
attachment, search, seizure,
etc) is one of the law’s most
familiar creations. However one characterises the act of issuing
such warrants, whether as
judicial, quasi-judicial or
administrative
3
,
the notion that it is subject to the
audi
alteram partem
rule is, as far as I am aware, a relatively novel one. Until the
decision in
Putter
v Minister of Law and Order and Another NO
4
,
I cannot recall ever having seen any authority for the proposition
that the giving of notice is a prerequisite to the exercise
of a
power to issue a warrant of the kind here in question. That does
not mean that that there may not be other types of warrant
which
require notice to be given, but the generalisation that the validity
of the issue of warrants of this particular kind is
not ordinarily
dependent upon the giving of notice to the affected parties remains,
as I see it, the premise from which any enquiry
into the need for
notice must proceed.
[6] That being the case, I am
unconvinced that the question is whether the provision impliedly
excludes the giving of notice.
The very fact that the provision
relates to the issue of warrants of search and of seizure is
prima
facie
inconsistent
with any such requirement and the question, as I see it, is rather
whether there is anything in the provision to
indicate that,
contrary to the position which would normally obtain, warrants
issued in terms of this provision must be preceded
by the giving of
notice and, if required by the third party, the giving of a hearing
to the third party. However that may be,
even were I to assume that
the former question is the correct question to pose, I would
conclude that the giving of notice has
been impliedly dispensed with
by the provision.
[7] I agree with Smalberger JA that
the giving of notice in cases of concealment would defeat the very
purpose of the provision.
That much is clear and the provision
therefore plainly excludes at least
pro
tanto
the giving
of notice. Smalberger JA acknowledges (rightly, in my respectful
opinion) that there are at least some cases of
unlawful withholding
of assets imaginable where no question of concealment is involved,
but where the provision would none the
less impliedly exclude the
giving of notice. However, if one were to accept that there are
other cases in which notice would
be required, the legislature would
have to be taken to have left it to the trustee and/or the
magistrate to decide
ad
hoc,
and by
reference to unspecified criteria, in which cases of unlawful
withholding of assets notice should be given. That that
is what the
legislature intended, strikes me, with respect, as most unlikely.
[8] S
69 cannot be properly interpreted without an appreciation of the
mischief which it is designed to combat. A perusal of
the
Insolvency Act as
a whole shows what that mischief is. The Act is
designed to protect the financial interests of the creditors of an
insolvent
and to sequester his, or her assets in such a way as to
eliminate, as far as possible, the risk of them being put
irretrievably
beyond the reach of the trustee and thus becoming
unavailable for realization in whole or partial satisfaction of the
claims
of creditors. As it has so often been put, the hand of the
law is laid upon the estate of the insolvent in the interests of

creditors. A multitude of complementary and interlocking provisions
have been enacted to achieve that broad purpose.
[9] The insolvent is instantly
divested of all his assets. Ownership of them is vested instead
initially in the Master and then
in his trustee and remains so
vested until the trustee transfers ownership to someone else
5
.
The rehabilitation of the insolvent does not
per
se
bring about a
revesting of any of those assets in the insolvent.
6
Even assets acquired by the insolvent after sequestration vest
(with some qualifications), not in the insolvent, but in the

trustee
7
.
An obligation is cast upon any person in possession of assets
belonging to the insolvent’s estate to deliver them to
the
trustee
8
.
Refusal to do so is an offence.
9
[10] In the case of immovable
property or attached property
caveats
are required to be entered by the relevant official functionaries,
the effect of which is to render alienation of or the imposition
of
burdens upon those assets impossible without the concurrence of the
trustee.
10
[11] The thrust of all this is
obvious. It is to disable the insolvent and anyone else who may be
physically in possession of
such assets from alienating or
encumbering them to the prejudice of creditors. That purpose is
achieved by,
inter
alia
, providing
for the trustee to have physical possession of them in the case of
movables or, in the case of movables under attachment
or immovables,
by having the relevant functionaries place
caveats
against the assets.
[12] Despite all that, but for s
69, there would remain a window of opportunity for a third party in
possession of a movable
asset, the ownership of which is vested in
the trustee, to alienate it in such a way that it could not be
vindicated by the trustee.
Section 33 provides that a person who
acquires such an asset in good faith and for value from someone
other than the insolvent
cannot be called upon to deliver it to the
trustee. The longer a third party can resist handing over the
asset, the more extensive
the opportunities of alienating the asset
to another for value to the prejudice of creditors of the insolvent
may be. That the
trustee may have a claim against the third party
for disposing of the asset is not a sufficient answer. The third
party may
not be able to pay and the real security of the asset
itself will have been lost by the trustee and the creditors in the
insolvent
estate. To throw the trustee back upon the ordinary
litigatory remedies in such situations would not close this window
of opportunity.
The giving of notice inherent in the ordinary
litigatory process could precipitate the very alienation of the
asset which the
litigation is aimed at preventing. The trustee
might also have difficulty in discharging
onera
of proof attendant upon the litigatory process, particularly if the
need for protective action arises soon after his appointment
and
before he or she has been able to investigate matters fully. Hence
the need for a provision such as s 69.
[13] The
giving of notice of an application in terms of s 69 would deprive
the remedy of its efficacy and serve as a stimulus
to the very kind
of action which it is designed to prevent. There are broadly five
classes of situation which could confront
a trustee. The first is
where the whereabouts of the assets are thought to be known but the
identity of the possessor is not.
The second is where the person
thought to be in possession of the asset simply denies knowledge of
the asset. The third is
where the possessor admits possession, sets
up no justification for retention of the asset, but refuses to hand
it over or to
disclose where it is. The fourth is where the
possessor admits possession, sets up what purports to be a
justification for retention,
and refuses to hand the asset over or
disclose where it is. The fifth is where the possessor admits
possession, sets up what
purports to be a justification for
retention, refuses to hand the asset over, but discloses where it
is.
[14] Common to all of these
situations is the potential risk of the asset being put beyond the
trustee’s reach even more
effectively than it was at the
outset once it is known that the trustee lays claim to it and is
seeking a warrant. Whether that
is achieved by hiding it elsewhere,
or by disposing of it hurriedly for value to yet another third
party, or by engaging in
filibustering techniques designed to stall
the issue of a warrant and so keep the window of opportunity open
for a less hurried
disposal of the asset, they are all ways in which
the clear purpose of s 69 could be frustrated. That purpose is the
swift taking
of possession by the trustee of assets belonging to the
estate to ensure that they will be available for realization. In my

view, it seems plain that the provision does not envisage a
situation where the trustee’s possession of the asset would
have to be deferred indefinitely while what may prove to be a long
drawn out battle rages before the magistrate and/or the courts
as to
whether or not the third party should be allowed to remain in
possession. Quite the contrary. It envisages that once
there are
reasonable grounds
for suspicion
that an estate asset is being concealed or otherwise unlawfully
withheld from a trustee in insolvency, the trustee is entitled,
ante
omnia
as it were,
to obtain a warrant and take possession of the asset pending the
outcome of whatever subsequent proceedings may be
instituted by the
third party to recover possession.
[15] The fact that there may be
cases in which the prospect of prejudice to the insolvent estate
occurring if notice is given
is slight or non-existent does not
derogate from the fact that the provision is protective and
preservatory in character, designed
to eliminate or minimise risk,
and therefore inherently incompatible with the notion of
audi
.
I am therefore unable to share the view that whether or not notice
is required is dependent upon such factors as whether or
not the
third party’s possession is “open” or
“bona
fide
” or
claimed to be justified.
[16] The view taken in
Putter’s
case appears, with respect, to have been based upon a misreading of
s 69. The learned judge said:
“
Section 69(3) enjoins the magistrate to act
after he has made a decision:
(i) that some person has concealed property belonging
to the insolvent estate; or
(ii) that a person is holding property, belonging to
the insolvent estate, unlawfully.
It is the second finding that
concerns me. If a magistrate finds that the person is holding the
property lawfully he must refuse
to issue the warrant. A decision
by a magistrate in favour of a trustee would clearly prejudicially
affect the property or the
rights to such property vesting in an
individual. In these circumstances the maxim
audi
alteram partem
must
be considered. See eg
South
African Defence and Aid Fund and Another v Minister of Justice
1967 (1) SA 263
(A) at 270B-G.
When a magistrate is called upon to
issue a writ because property is being concealed, obviously hearing
the other party could
frustrate the whole object of the provision.
However, when a person is holding property openly and maintaining
that such possession
is lawful the position must be different. I
balk when it is suggested that a magistrate, on the say so of a
trustee, may decide
a legal issue without hearing both parties and
the subsequent seizure of the property leaves the absentee helpless
to prevent
its removal. I reject the respondent’s contention
that the Legislature intended to exclude the operation of the maxim

when a magistrate is called upon to consider whether or not a person
holds property lawfully.”
11
With due respect, the provision does
not require the magistrate to make findings of that kind or to
decide a legal issue. As
has already been said, the magistrate
decides no more than that there are
reasonable
grounds for suspecting
12
that an asset is concealed or otherwise unlawfully withheld from the
trustee. In no sense does the magistrate pre-empt the determination

of any dispute which may exist in regard to the right to possession.
In my opinion the learned judge erred in requiring notice
to be
given. I prefer the contrary conclusion reached by Flemming DJP in
the case of
Philip
Business Services CC
13
and
Nugent J in the case of
Kerbyn
178 (Pty) Ltd.
14
[17] In
Life
Science (1994) (Pty) Ltd and Another v Powell NO and Another,
15
too, the view was taken that the s 69 did not require the giving of
notice, regardless of whether it was a case of concealment
or some
other case of unlawful withholding. But it was also suggested that
where there was “a clear and open and reasonable
dispute
between the possessor and the liquidator as to whether the goods
were the company’s goods, and where there was
some adequate
safeguard to there being damage, loss or risk involved or where
there is no possibility of the removal or concealment
of the goods
in question” the “correct approach would then be to
decide whether in such circumstances the issue of
the warrant had
been justified” and “whether or not it was proper for
the applicant to invoke the search procedure”.
These
statements were approved in
Advance
Mining Hydraulics (Pty) Ltd and Others v Powell NO and Another.
16
Prima facie
these suggested limitations upon the powers conferred by s 69 seem
to me to be unjustified and involve reading into the provision
a
host of qualifications which are not readily apparent from either
its language or the object which it is intended to achieve.

However, in the circumstances of this case, it is unnecessary to
take a firm stand one way or the other.
[18] In
this case the trustee was being threatened with cancellation of the
sale of the share in the flat if he did not deliver
the title deed.
It was plainly a matter of urgency that he obtain it and his
recourse to s 69 cannot be said to be an abuse
of the provision.
The
need for and sufficiency of disclosure by the trustee.
[19] It is not self-evident to me
that the obligations of disclosure attendant upon the making of
ex
parte
applications
to courts of law are equally applicable to an application for a
warrant under s 69. That good faith and truthfulness
is required is
obvious. But it may be doubted whether omissions in good faith of
circumstances which are subsequently thought
by a court to be
potentially material should vitiate the issue of warrants of this
kind unless, perhaps, it is reasonably clear
that their disclosure
would, or probably would, have led to the refusal of the warrant.
Where reasonable grounds for suspicion
are what empowers and
triggers the issue of the warrant, where a decision as to the merits
of the trustee’s claim to possession
is in no sense pre-empted
by the issue of the warrant, and where the subsequently disclosed
circumstances do not, objectively
regarded, derogate from the
existence of reasonable grounds for suspicion, it might be contrary
to sound policy and the interests
of innocent creditors to set aside
the warrant solely on the ground of the non-disclosure. However,
these are no more than superficial
ruminations. In the absence of
much fuller debate and argument than we have heard, I prefer to
leave these questions open. I
shall assume in respondent’s
favour that the duty of disclosure is substantially the same.
[20] In
my view, there was no material non-disclosure. The trustee
disclosed to the magistrate that respondent was legally represented

by an attorney and that a letter had been written claiming that
justifications for retaining possession had been set forth in

previous correspondence. The identity of the attorney and his
address and telephone numbers were disclosed. As a fact, one
looks
in vain in the previous correspondence for anything resembling, even
if only faintly, a justification recognizable in law.
There are
simply legally unmotivated refusals to hand over the title deeds and
an attempt to gain time in the Micawber-like
hope that something
would turn up which might provide a justification for retention of
the title deed. (More about that correspondence
anon.) Anyone
required to articulate what justification, real or imagined, was
being advanced by respondent would have been
hard pressed indeed to
do so. That the trustee did not attempt to enlighten the magistrate
further as to the nebulous stance
taken by respondent cannot, in my
opinion, be regarded as a breach of the assumed duty of disclosure.
[21] In so far as non-disclosure of
the facts set forth in paragraph 30 of Smalberger JA’s
judgment is concerned, I do
not consider that it was incumbent upon
the trustee to disclose those facts. They had not been raised as
providing the basis
for any defence to the trustee’s claim by
respondent in the correspondence which passed between the parties
prior to the
application for the warrant, despite respondent being
legally represented and despite those facts being freely accessible
to
respondent at the Master’s office. The bare facts which it
is suggested should have been disclosed constitute no defence
known
to the law. It is the inference of abandonment to be drawn from
them that is suggested to be what made them material.
The highest
the matter can be put is that
if
the trustee was capable in law of abandoning the share in the
property,
if
these facts could justify the inference that the trustee did abandon
it, and
if
the consequence of that would be that Rosenberg re-acquired
ownership of it, it is arguable that they should have been mentioned

by the trustee. Why should the trustee have entertained the notion
that such a submission could ever be raised? His state of
knowledge
at the time was this.
[22] There was a
caveat
against the share in the Deeds Registry which, for as long as it
stood, would prevent any transfer or burdening of the share
without
his consent. He had been trying to sell the share despite the
confirmation of the final account. Rosenberg and his
daughters were
aware of that. Indeed, an opportunity was given to the daughters to
match or better the price he had been offered.
There was no
suggestion from anybody that the share was no longer an asset in the
insolvent estate and that Rosenberg or his
daughters had acquired
ownership of it. Quite the opposite. In applying for his
rehabilitation in October 1996 Rosenberg made
the following
statements on oath:
“14 At the time of my sequestration the only
assets that I had of reasonable value were
(a) the half share in the flat ........... in
Muizenberg.
(b) ................
(c) ................
(d) ................
(e) ................
(f) ................ .
In
regard to these assets I state:-
14.1 The half share in the flat valued at R200 000,00
has as yet not been disposed of by my trustee. The half share has
been
valued at approximately R40 000,00.
(After annexing the first and final liquidation
account and recording that it had been confirmed on 2 March 1994, he
continued.)
18. I have made a complete surrender of my estate and
I have not granted or made promises of any benefit whatsoever to any
person
or entered into any secret arrangement with the intention of
dissuading my trustees or creditors from opposing this Application

and there are no further assets to be realised in my Estate save for
the half share in the flat in Muizenberg which my Trustee
is
attempting to sell by public auction.
20. Since my sequestration I have not acquired any
assets.”
[23] In a supplementary affidavit dated 13 November
1996 he said:
“
The half share in the flat valued at R70 000,00
has been sold by my Trustee for R40 000,00 nett and is in the course
of being
transferred by the Executors of my late wife’s estate
to my insolvent estate and simultaneously to the Purchasers of the

half share. The proceeds of the R40 000,00 will be dealt with in my
insolvent estate in terms of the provisions of the
Insolvency Act.”
He
added:
“
The half share in the Muizenberg property has,
as aforestated, been sold for R40 000,00, the proceeds whereof will
be dealt with
in accordance with the
Insolvency Act.”
[24
] Furthermore,
the correspondence which had passed between respondent’s
attorney and the trustee’s attorney included
a letter from the
former in which the trustee was asked to give his consent to various
transactions which Rosenberg had purported
to enter into. The
letter was dated 19 October 1995 and it read:
“
Re:
WILFRED ROSENBERG
We
refer to the telephone discussion between the writer and your Mr
Boet du Plessis on even date.
We
act for First National Bank of Southern Africa Limited, who have
instructed us to register a 5/6th share mortgage Bond in
their
favour over
Sections 46
&
62
Arlington Court, Muizenberg. It is
further our instructions that once the said Mortgage Bond has been
registered in the Cape
Town Deeds Registry, we are to apply to Court
for the necessary Order so that the further 1/6th share which is
held in Trust
on behalf of Dr Rosenberg’s son until he attains
the age of 25 years may also be Mortgaged.
In
terms of an Agreement made and entered into between Dr Wilfred
Rosenberg and Nicola Amanda Krost (born Rosenberg) and Andrea
Lara
Jayes (born Rosenberg), the said Nicola and Andrea transferred their
combined 1/3rd share to Dr Rosenberg.
The
documents were duly signed by all the parties thereto and lodged for
urgent registration in the Cape Town Deeds Registry.
Immediately
prior to registration we were advised by our Cape Town
correspondents that a note had been raised by the Register
to the
effect that a Dr Wilfred Rosenberg is insolvent. Upon enquiries
made by us we were advised that contrary to our previous

instructions, Dr Wilfred Rosenberg in this transaction is in fact
insolvent.
As
you are no doubt aware an Insolvent person is not entitled to deal
with any property registered in his name. Accordingly,
we require
the Trustee’s consent to the transactions as set out
aforesaid. We would appreciate it if you would also furnish
us with
a copy of the Trustee’s Certificate of Appointment. We
enclose herewith the necessary documentation for your information.
Your
MOST
URGENT
attention
to this matter would be greatly appreciated, as it is a matter of
extreme importance that this situation be resolved
as soon as
possible. Should you require any further details or assistance from
our offices please do not hesitate to contact
the writer.”
[25] Discussions ensued during which the trustee
made it clear that he “could not and would not consent”.

No further action was taken by respondent to pursue the matter and
there it rested until the trustee succeeded in selling the share
and
asked for the title deed. I may add that the title deed had been
handed to the respondent as early as 23 March 1994. This
was prior
to the opening of a new account in Rosenberg’s name on 6
October 1994. Prior to that he had been operating another
bank
account with respondent since 15 June 1992. That account was closed
after the new one was opened. Rosenberg was of course
an
unrehabilitated insolvent on 23 March 1994 and had no right
whatsoever to hand the title deed to respondent and respondent
had
no right to retain it as against the trustee. This was not done in
the belief that the trustee had abandoned the share in
the property.
It was done because Rosenberg naively hoped to conceal his
insolvent status and respondent was ignorant of his
status.
[26] In
the light of all this, I ask myself if it could reasonably have been
expected of the trustee that he should have anticipated
that so
inherently improbable and problematic a proposition as abandonment
by him of the share in the property might conceivably
be advanced by
respondent as a justification for retaining possession of the title
deed, and that he should accordingly have
disclosed the facts set
out in paragraph 30 of Smalberger JA’s judgment. In my
respectful opinion, the answer is no.
[27] Let
us recall how it came about that the abandonment “defence”
first saw the light of day. When respondent
launched its attack
upon the issue of the warrant and set up what purported to be its
justification for retaining possession
of the title deed nary a word
was said about abandonment. Rosenberg was cited by it as second
respondent. No costs order was
sought against him. After the
trustee had filed his answering affidavits Rosenberg came to light
with an answering affidavit.
In the light of what he had said on
oath in his application for rehabilitation, it is an astonishing
document. After noting
that no relief is claimed against him and
saying that he deposes to the affidavit “not with a view to
opposing the relief
claimed, but with a view to setting out certain
salient features” he points to the omission from the first and
final liquidation
and distribution account of any mention of the
share in the Muizenberg flat and claims that this was because
“during 1995
my half-share of the flat was abandoned by
certain Boet du Plessis, the trustee acting in the matter on behalf
of the First Respondent
in favour of my daughters, Andrea Jayes and
Nicola Krost”.
[28] First,
the account was submitted on 22 October 1993. The abandonment
allegedly took place subsequently in 1995. The failure
to mention
the half share in the flat in the account could therefore not have
been because of any abandonment. Secondly, these
allegations are in
brazen and totally unexplained contradiction of the sworn statements
made by him when applying for his rehabilitation.
Thirdly, he is a
deponent whose attitude towards the making of statements on oath is,
to say the least, cavalier. One of the
allegations with which he
felt it necessary to deal (he did not deign to deal with his own
flatly contradictory allegations in
the rehabilitation application),
was his sworn affidavit to his bankers that he had never been
sequestrated. This at a time
when he was an unrehabilitated
insolvent. The explanation was that the bank’s attorney had
prepared the papers for him
to sign and that he signed them without
reading them. The attorney filed an affidavit repudiating his
version. No less unimpressive
was Rosenberg’s assertion on
oath that he was not aware that, when negotiating overdraft
facilities, it was necessary
for him to disclose to the bank that
he was an insolvent.
[29] Notwithstanding
the self-contradictory allegations made by Rosenberg, respondent
latched onto the belated allegation of
abandonment and sought to
make something of it. I am unable to accept that the trustee should
have foreseen that all this might
happen and therefore should have
disclosed the facts set out in paragraph 30. It is too much to
expect.
The
abandonment defence
[30] I have explained the origin of
this defence. The slender foundation upon which it rests is the
trustee’s failure
to reflect the share as an asset in the
final account or the supplementary account as he undoubtedly should
have done; the acquiescence
in Rosenberg remaining in possession of
the title deed; and a lengthy period of apparent inactivity before
seeking again to realise
the asset. The supporting
ipse
dixit
of Rosenberg
is, in the circumstances, not only worthless to respondent, but
positively inimical to its case.
[31] The failure to reflect the
asset in the accounts and the assertion that there were no further
assets available for realization
and distribution are of course
consistent with an abandonment. But they are also consistent with a
misguided decision to ignore
disclosing it for the time being
because it had then no realisable value, and because, unlike a
movable, there was no risk of
it being lost to the estate as long as
the
caveat
registered against it in the Deeds Registry remained in place.
[32] Allowing
Rosenberg to remain in possession of the title deed was of no
significance. He had been allowed to remain in possession
of it
before the first attempt to sell the share was made and there could
have been no suggestion then of that having been indicative
of an
abandonment of the share. The mere continuance of that situation
thereafter is at best a neutral factor.
[33] The
lengthy period of apparent inactivity is of little probative value.
This was a share in a property in which no interest
whatsoever had
been shown at the first auction. Putting property up for auction
costs money. It entails advertising costs and
auctioneer’s
fees. There was no pressure to realize it sooner rather than later.
The only unsecured creditor who proved
a claim had had to pay a
contribution and a final account had been submitted and approved.
The only prospect of achieving anything
worthwhile for the share lay
at some unspecified future date and just when a further attempt to
do so should be made was up to
the trustee to decide.
[34] These circumstances, whether
viewed singly or cumulatively, provide no firm support for an
inference of abandonment. They
are far too equivocal. When one
adds to that the improbability inherent in the proposition that a
trustee would take it upon
himself to simply abandon an asset of
this nature, and when one takes into account the absence of any
credible evidence from
anyone of having acquired the share as a
consequence of its alleged abandonment, the unreality of the
proposition is magnified.
I leave aside yet other problems which
stand in the way of the proposition, problems such as whether a
trustee has the power
to abandon property such as this; whether, if
he may do so, it may be appropriated by anyone (and if so, how), or
whether ownership
passes to the State; whether, if it does not pass
to the State and no one has appropriated it in the meantime, the
trustee may
resume ownership by asserting control over it once more;
and whether, if obligations attach to the owner of the property,
there
can be any effective abandonment of the property. The answers
to these questions are far from clear and the arguments addressed
to
us too perfunctory to permit of confident answers being given. The
dimensions of the problems may be gauged by reference
to
Minister
of Landbou v Sonnendecker
17
,
a note on that case by C G van der Merwe
18
,
and to Carey Miller,
The
Acquisition and Protection of Ownership
,
(1986).
19
[35] The
other attempts at justification for continued retention of the title
deed, in my view, also have no merit. It was not
necessary to
re-open the final account in order to deal with this asset. The Act
contemplates that supplementary accounts may
be filed after the
final account has been confirmed. Where an asset comes to light
after confirmation of the final account nothing
prevents the trustee
from realizing it and filing a supplementary account. The position
is no different where a previously unrealized
asset is subsequently
realized. In so far as an estoppel is raised by virtue of Rosenberg
having allegedly acted to his prejudice,
the simple answer is that
in the face of Rosenberg’s own statements on oath in his
rehabilitation application any such
contention is quite untenable.
As to a waiver by the trustee of the right to this asset, I have
already indicated why, in my
opinion, the facts do not permit of an
inference of waiver.
[36] I
have dealt with the merits of the defences only because I consider
that, even if notice should have been given, it would
serve no
purpose to set aside the warrant on the ground of a failure to give
notice if it is quite clear, as I think it is, that
that which
respondent would have sought to raise before the magistrate to
justify its possession, is devoid of any merit and
could not
conceivably have resulted in a refusal to issue the warrant. To
make an order which would result in the trustee having
to re-apply
for a warrant after giving notice to respondent when the outcome of
the application is bound to be the same, would
serve no useful
purpose. I cannot accept that the law requires futile orders to be
made which will have no practical effect.
[37] The counter-productive
consequences of unyielding adherence, come what may, to the
principle of
audi
can be illustrated
by an example which is clearer still. After his sequestration an
insolvent purports to pledge to a bank as
security for an overdraft
a quantity of bearer bonds. The bank refuses to surrender them to
the trustee. Without notice to
the bank, the trustee obtains a
warrant in terms of s 69. The bank seeks from the High Court an
order setting aside the warrant
on the ground of the failure to give
it notice. It discloses to the court what it would have wished to
place before the magistrate,
namely, that it came into possession of
the bonds in good faith while ignorant of the insolvent’s
sequestration, and that
it holds them as a pledge to secure
repayment of an overdraft. The court holds that those facts provide
no justification in
law for retention of the bonds but sets the
warrant aside solely because of the breach of the
audi
principle. The trustee applies again for the warrant after giving
notice to the bank. The bank appears before the magistrate
and
raises the same justification for retention of the bonds as was
held to be no justification by the court. The trustee replies,

first, that the issue of whether that is a justification is
res
judicata
as
between himself and the bank, secondly and alternatively, that,
whether or not the issue is
res
judicata
, the
justification raised is in law no justification and that it has
already been so held by the High Court. The magistrate
accepts one
or other or both of the trustee’s submissions and re-issues
the warrant. It is not conceivable that he could
have done anything
else.
[38] What
socially useful purpose was served by the setting aside of the first
warrant when, as was plainly foreseeable, it would
only result in a
renewed application which was bound to succeed? And if, as may have
happened after the setting aside of the
first warrant, the bank has
disposed of the bonds to a third party for value and thus put them
irretrievably beyond the reach
of the trustee and the insolvent’s
creditors, what reason is there for the court which set aside the
warrant to look with
satisfaction upon its handiwork? In my
opinion, the answer to both questions is none.
[39] I am alive to the importance
of recognising and preserving the distinction between a fair
procedure and the merits of a
particular case and the need to avoid
being seduced by what may seem to be the inevitable result of a
rehearing. The danger
of assuming that a particular result is
inevitable has been pointed out frequently.
20
It has also been said (inaccurately, in my respectful opinion) that
in doing so, the court is usurping a function which was
entrusted to
the functionary whose decision is under attack. But the fact
remains that the courts have recognised that where
there can be no
doubt whatsoever of the inevitability of the decision remaining the
same, it would serve no worthwhile purpose
to set the decision
reached aside. As Brandon L J put the matter in
Cinnamond
v British Airports Authority
21
(summarising the import of what had been said by Lord Reid and Lord
Wilberforce in
Mallock
v Aberdeen Corporation
22
): “The effect of what Lord Wilberforce said is that no one
can complain of not being given an opportunity to make
representations
if such an opportunity would have availed him
nothing.”
[40] In this area of the law there
are obviously distinctions to be drawn between different types of
decision. For example,
where the imposition of a discretionary
sanction of one kind or another is the question to be decided, a
court will very rarely,
if ever, feel able to conclude that an
opportunity of being heard “would have availed him nothing”.
But where the
decision is not truly discretionary and it is one
which the decision maker is obliged to make if the objective
requirements of
the relevant statute, both factual and legal, are
satisfied, there is greater latitude for the adoption of the
principle that
the “court does not act in vain”. (The
quoted words are those of Lord Wilberforce in
Mallock’s
case
23
.)
This case falls, in my opinion, within the latter class of case.
[41] Professors Wade and Forsyth
appear to grant that distinctions of that nature may be legitimate
24
.
For my part, I have no doubt that they are. Unswerving fidelity to
a revered procedural principle in even palpably hopeless
cases is, I
venture to suggest, too high a price to pay for the limited value
such purely ritualistic demonstrations of loyalty
may have in
advancing the cause of fair administrative action. In my respectful
opinion, the potential damage which the adoption
of so rigidly
doctrinaire an attitude would do to the image of the courts as
sensitive, but sensible, monitors of administrative
action outweighs
that limited value. The undoubtedly important and worthy cause of
fair administrative action can, and should,
be advanced in more
appropriate and deserving cases.
[42] Despite the contrary view of
some eminent writers, I do not see the principle of
audi
in administrative law as an end in itself, but as a means to an end.
That end is to preclude decisions adverse to the legitimate

interests of a person being taken without that person having had an
opportunity of placing before the decision taker facts and/or

submissions which are arguably relevant. Where the facts and
submissions which would have been raised are
plainly
irrelevant or
patently
untenable a denial of an opportunity to advance them does not infect
the making of the decision with unfairness in any appreciable
sense
of the word. As Lord Devlin said, albeit in a somewhat different
context, in
In re K
(Infants)
:
25
“
But a principle of judicial inquiry, whether
fundamental or not, is only a means to an end. If it can be shown
in any particular
class of case that the observance of a principle
of this sort does not serve the ends of justice, it must be
dismissed; otherwise
it would become the master instead of the
servant of justice.”
[43] Nothing that I have said
should be interpreted as a denial of the importance of, and the need
for, a rigorous insistence
upon fulfilment of the
audi
principle in cases in which it is applicable and in which its
non-fulfilment could conceivably have resulted in prejudice. All

that I am at pains to attempt to show is that, in a case where it is
indeed clear beyond any doubt that what the aggrieved party
wished
to say could not conceivably have averted or altered the decision,
the denial of the opportunity to say it cannot sensibly
be said to
have been unfair. In the nature of things the cases in which it
will be so clear that no possible prejudice could
have been suffered
will be rare. But that they will occur from time to time is
certain. This, in my view, is one of them.
[44] There seems to me to be a
growing trend in the courts in England towards acceptance of the
conceptual validity of this limited
exception to what would
otherwise be a purely mechanistic insistence upon compliance with
the
audi
principle
26
.
Those who view these developments as undesirable and unsound
usually call in aid
dicta
such as the following:
“
If the principles of natural
justice are violated in respect of any decision, it is, indeed,
immaterial whether the same decision
would have been arrived at in
the absence of the departure from the essential principles of
justice. The decision must be declared
to be no decision.”
(Lord Wright in
General
Medical Council v Spackman
27
.)
“
I do not find that the answer
put by counsel for the watch committee to your Lordships that the
case was as plain as a pikestaff
is an answer to the demand for
natural justice.” (Lord Hodson in
Ridge
v Baldwin
28
.)
“
If a domestic tribunal fails
to act in accordance with natural justice, the person affected by
their decision can always seek
redress in the courts. It is
prejudice to any man to be denied justice. He will not, of course,
be entitled to damages if he
suffered none. But he can always ask
for the decision against him to be set aside.” (Lord Denning
in
Annamunthodo v
Oilfields Workers’ Trade Union
29
.)
[45] If the cases in which these
dicta
were uttered are examined, they will all be found to be cases in
which there was no doubt that actual or potential prejudice
was the
result of the particular departure from the requirements of natural
justice. In
Spackman’s
case 27 the
dictum
followed immediately after Lord Wright had cited a previous case in
which a decree of Lord Cottonham LC had been set aside because,

unknown to the defendant, he had an interest in the plaintiff
company. Lord Wright pointed out that, in that case, it was

regarded as “immaterial that, as Lord Campbell said, ‘no
one can suppose that Lord Cottonham could be, in the remotest

degree, influenced by the interest that he had in this concern’”.
The reasons why this particular breach (apparent
lack of
impartiality) of the principles of natural justice is irremediable
are so well known that explanation is unnecessary.
I beg leave to
doubt whether Lord Wright would have expressed himself as
expansively as he did if his mind had been pertinently
directed to
the issue under discussion in this case. Moreover, the case was one
in which what the aggrieved doctor wished to
do was to place before
the council obviously relevant evidence which might have affected
the ultimate decision. A denial of
that opportunity was obviously
prejudicial.
[46] In
Annamunthodo’s
case 29 the prejudice was equally clear. New charges were preferred
against him in his absence and sustained. Counsel for the
Union
contended that he had to show prejudice before the decision became
liable to be set aside. This could only mean, so it
was argued,
that he had to show that he would have been acquitted of the new
charges or suffered a different penalty if he had
been given notice.
It was this contention which the
dictum
quoted was intended to address. It was clear that counsel for the
Union was putting the proposition too high. It was enough
that, if
he had been given notice he
might
have been able to avert conviction or mitigate the penalty. The
denial of that opportunity was accordingly a denial of justice.

That, as I see it, is all the
dictum
was intended to convey. Here again the focus was not upon the
particular problem under consideration now.
[47] In
Ridge
v Baldwin
28 too,
the case was one where it was obvious that there had been prejudice
in that it could not be said that the party aggrieved
had nothing of
consequence which could have been put forward had the opportunity to
do so been given him. Here again, there
is reason to doubt whether
the
dictum
quoted was intended to cover every conceivable situation which might
arise.
[48] In my opinion, the state of
the case law in England is fairly summarised by De Smith, Woolf and
Jowell
30
:
“
But on the whole judges have declined to commit
themselves unequivocally to the proposition that intervention will
never be withheld
when they are satisfied that no amount of
procedural propriety would have affected the outcome.”
For
the reasons I have given, I consider their reluctance to do so to be
not only readily understandable but justifiable.
[49] It is perhaps necessary to
raise a skittle if only to knock it down. It may be suggested that
if notice should have been
given and it was not, the decision of the
magistrate was void. No such contention was advanced in argument.
However, had it
been raised, what Lord Denning had to say in the
Court of Appeal in
Hoffmann-La
Roche v Trade Secretary
31
would have been apposite:
“
I have always understood the
word ‘void’ to mean that the transaction in question is
absolutely void - a nullity incapable
of any legal consequences -
not only bad but incurably bad - so much so that all the world can
ignore it and that nothing can
be founded on it: see
MacFoy
v United Africa Co Ltd
[1962]
AC 152
, 160.
If the word ‘void’ is
used in that sense, the report of the Monopolies Commission was
certainly not void. A failure
to observe the rules of natural
justice does not render a decision or order or report absolutely
void in the sense that it is
a nullity. The legal consequences are
best told by recounting the remedies available in respect of it. A
person who has been
unfairly treated (by reason of the breach of
natural justice) can go to the courts and ask for the decision or
order or report,
or whatever it is, to be quashed, or for a
declaration that it is invalid, that it has not and never has had
any effect as against
him. But it is a personal remedy, personal to
him. If he does not choose himself to query it and seek a remedy,
no one else
can do so: See
Durayappah
v Fernando
[1967]
2 AC 337
, 353. But it is within the discretion of the court whether
to grant him such a remedy or not. He may be debarred from relief

it he has acquiesced in the invalidity or has waived it. If he does
not come with due diligence and ask for it to be set aside,
he may
be sent away with nothing: see
Reg.
v Aston University Senate, Ex parte Roffey
[1069]
2 QB 538.
If his conduct has been disgraceful and he has in
fact suffered no injustice, he may be refused relief: see
Glynn
v Keele University
[1971] 1 WLR 487
and
Ward v Bradford Corpn
(1971) 70 LGR 27. If it is a decision or order or report which
affects many other persons besides him, the court may not think
it
right to declare it invalid at his instance alone: see
Maxwell
v Department of Trade and Industry
(unreported), December 20, 1972, a decision of Wien J, of which we
were supplied with a transcript. Moreover, pending a decision
by
the courts as to its validity, other persons may be justified in
acting on the footing that it is valid. If the decision
or order or
report is good on the face of it, and there is no good reason for
supposing it to be invalid, other persons can treat
it as valid. To
it I would apply the words of Lord Radcliffe in
Smith
v East Elloe Rural District Council
[1956] UKHL 2
;
[1956] AC 736
, 769-770:
‘
An order .... is still an act capable of legal
consequences. It bears no brand of invalidity upon its forehead.
Unless the necessary
proceedings are taken at law to establish the
cause of invalidity and to get it quashed or otherwise upset, it
will remain as
effective for its ostensible purpose as the most
impeccable of orders.’
So here, the report of the Monopolies Commission, even
if it was made in breach of the rules of natural justice, is still
capable
of legal consequence.”
[50] While those observations may
not command unqualified acceptance in situations where the giving of
an opportunity to be heard
is a statutorily imposed and peremptory
condition precedent to the exercise of a decision making power, they
appear to me to
be substantially accurate when the need to provide
such an opportunity derives, not from any statutory imperative, but
from the
applicability of the common law principle of
audi.
In the former
class of case, a failure to provide the opportunity will ordinarily
mean that the decision taken is
ultra
vires
. In the
latter class of case, there can be no talk of the decision being
ultra vires
.
The decision will only be vitiated if in fact the failure to afford
the opportunity did amount to a failure of justice in the

circumstances of the particular case in the sense that an
opportunity to say something which could conceivably have brought
about a different result, was denied. The reason why it will be
vitiated will not be because it was
ultra
vires
, but because
it was given in material breach of the common law principles of
natural justice and resulted or may have resulted
in actual (as
opposed to theoretical) unfairness in the decision making process.
At best for respondent the present case would
fall within the latter
class of case. (I may say that since essaying this analysis, I have
found that in some respects it resembles
closely the independent
analysis of Rose Innes in his
Judicial
Review of Administrative Action
32
.
See too the remarks of Lord Devlin in
Ridge
v Baldwin
33
.)
[51] For
the sake of accuracy I should mention that s 69 does not of course
apply to immovable property. The share in the sectional
title unit
is an immovable. The title deed itself is a movable. It is also a
document. It is therefore subject to s 69. On
the tacit assumption
that an abandonment of the share itself would have to be taken to
include an abandonment of the title deed
the contentions of the
parties focused upon the alleged abandonment of the share. That is
why I too have focused upon abandonment
of the share rather than the
title deed.
[52] I would uphold the appeal with
costs and alter the order of the court
a
quo
to read:
“
The application is dismissed with costs.”
R M MARAIS
JUDGE OF
APPEAL
ZULMAN
JA: CONCURS
1
[1979] UKHL 5
;
[1980]
AC 952
(HL) at 1008 C-E
2
Philip
Business Services CC v De Villiers & Others NNO
1991 (3) SA 552
(T) at 557 A-E;
Kerbyn
178 (Pty) Ltd v Van Den Heever &
Others
, unreported judgment of
Nugent
J
, Case No 4191/00, WLD, 27.3.2000.
3
In
Australia it has been held that it is not a judicial act even
although the functionary may be a judicial officer and even although

it is necessary to bring to bear a judicial mind. See
Love
v Attorney-General (N.S.W.)
[1990] HCA 4
;
(1989-1990) 169 CLR 307
(HC of A) at 318-322;
Grollo
v Palmer
[1995] HCA 26
;
[1995] 184 CLR 348
(HC of A)
at 359-360. In New Zealand the contrary view is favoured. See
Simpson v A-G [Baigent’s Case]
[1994] 3 NZLR 667
CA at 674 (20-30), 689 (15-45), 695 (15) - 696
(25). In the latter case, Hardie Boys J encapsulated the approach
of the Australian
High Court in
Love’s
case as drawing a “distinction between a power that is
essentially administrative in nature but must be exercised in a

judicial manner, and the exercise of judicial power, in the sense of
the authority to settle questions of rights and obligations
between
parties”. The distinction had been drawn in England by Lopes
LJ in
Royal Aquarium and Summer and
Winter Garden Society Ltd v Parkinson
[1892] 1 QB 431(CA)
at 452.
4
1988
(2) SA 259
(T)
5
S
20 (1)(a)
6
S
25 (1)
7
S
23 (1)
8
S
142 (2)
9
S
142 (2)
10
S
17 (3) and (3) bis
11
1998
(2) SA 259
(T) at 261 B-E
12
In
George v Rockett
[1990] HCA 26
;
[1990] 170 CLR 104
(HC of A) at 115 it was said: “Suspicion,
as Lord Devlin said in
Hussien v Chong
Fook Kam
[1970] AC 942
at 948] ‘in
its ordinary meaning is a state of conjecture or surmise where proof
is lacking: “I suspect but I cannot
prove’”. The
facts which can reasonably ground a suspicion may be quite
insufficient reasonably to ground a belief,
yet some factual basis
for the suspicion must be shown.” The statement by Lord
Devlin was adopted by this court in
Duncan v Minister of Law and Order
1986 (2) SA 805
(A) at 819 I-J and
Minister of Law and Order v Kader
1991
(1) SA 41
(A) at 50 H.
13
See
note 2
14
See
note 2
15
Unreported
decision of Plewman J, Case no 1882/95, WLD, 24.8.1995
16
2000
(1) SA 815
(T) at 822 A-C
17
1979
(2) SA 944
(A)
18
1980
Tydskrif vir die Suid-Afrikaanse Reg 183 at 186-188
19
At
pages 6-11.
20
Wade
and Forsyth,
Administrative Law
,
7
th
edition, pages 526-528; De Smith, Woolf and Jowell,
Judicial
Review of Administrative Action
, 5
th
edition, page 500; Baxter,
Administrative
Law
, 1984, page 538.
21
[1980]
1 WLR 582
(CA) at
593 F.
22
[1971]
1 WLR 1578
(HL) at p 1582 and p 1595.
23
[1971]
1 WLR 1578
(HL) at p 1595 c.
24
Administrative
Law
, 7
th
edition, p 528
25
[1965] AC 201
(HL) at 238.
26
See,
in addition to the cases already cited,
Byrne
v Kinematograph Reuters Society Ltd
[1958] 2 All ER 579
(ChD);
Glynn v
Keele University
[1971] 2 All ER 89
(ChD);
R v Chief Constable of the
Thames Valley, Ex parte Cotton
[1990]
IRLR 334
(CA).
27
[1943]
AC 627
(HL) at 644-5.
28
[1964]
AC 40
(HL) at 128.
29
[1961]
AC 945
(PC) at 956.
30
Judicial
Review of Administrative Action
,
5
th
ed, at page 501.
31
[1975]
AC 295
(CA) at 319 H - 320 F.
32
At
pages 92-94.
33
[1964]
AC 40
(HL) at 138-139 and 141
in fine
- 142.