Swart v Starbuck and Others (CCT153/16) [2017] ZACC 23; 2017 (10) BCLR 1325 (CC); 2017 (5) SA 370 (CC) (29 June 2017)

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[2017] ZACC 23
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Swart v Starbuck and Others (CCT153/16) [2017] ZACC 23; 2017 (10) BCLR 1325 (CC); 2017 (5) SA 370 (CC) (29 June 2017)

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CONSTITUTIONAL COURT OF
SOUTH AFRICA
Case CCT 153/16
In the matter between:
NICOLAAS JOHANNES
SWART
Applicant
and
CONRAD ALEXANDER
STARBUCK
First Respondent
JAMES HENRY VAN
RENSBURG
Second Respondent
TSIU VINCENT
MATSEPE
Third Respondent
MASTER OF THE HIGH COURT,
PRETORIA
Fourth Respondent
Neutral citation:
Swart v Starbuck
and Others
2017 ZACC 23
Coram:
Mogoeng
CJ, Nkabinde ADCJ, Cameron J, Froneman J, Jafta J,
Khampepe J, Madlanga J, Mhlantla J, Mojapelo AJ, Pretorius AJ and
Zondo
J
Judgments:
Khampepe J (majority): [1] to [49]
Jafta J (dissenting): [50] to [114]
Zondo J (concurring): [115] to [121]
Decided on:
29 June 2017
Summary:
Insolvency Act 24 of 1936
—
section 82(8)
— claim by
insolvent for the payment of damages — leave to appeal
Uniform Rules of Court — rule 53 —
condonation — constitutional challenge — judicial review
ORDER
On appeal from the Supreme Court of
Appeal (hearing an appeal from the High Court of South Africa,
Gauteng Division, Pretoria):
The following order is made:
1.
Condonation is granted.
2.
Leave to appeal is refused,
with costs.
JUDGMENT
KHAMPEPE J (Mogoeng CJ, Nkabinde ADCJ,
Cameron J, Froneman J, Madlanga J, Mhlantla J and Pretorius AJ
concurring):
Introduction
[1]
This is an application for condonation and
leave to appeal.
The applicant seeks
leave to appeal against the dismissal of his appeal by the Supreme
Court of Appeal, including the order on costs.
In the Supreme
Court of Appeal, the applicant appealed the order of the
High
Court of South Africa, Gauteng Division, Pretoria (High Court)
dated
3 December 2013.  There, the
High Court dismissed the
applicant’s claim for damages under section 82(8) of the
Insolvency Act
[1]
(Act).
[2]
[2]
The applicant is Mr Nicolaas
Johannes Swart, a farmer who is a rehabilitated insolvent
[3]
residing in Limpopo.
[3]
The first to third respondents are
Mr Conrad Alexander Starbuck, Mr James Henry van Rensburg and Mr Tsiu
Vincent Matsepe respectively.
They are insolvency practitioners
who were trustees of Mr Swart’s insolvent estate (together the
trustees).  The
fourth respondent is the Master of the High
Court, Pretoria.  Mr Starbuck is the only respondent
participating in this matter.
Background
[4]
Mr Swart’s estate was
sequestrated on 1 November 2005.
At
the time, he was the registered owner of certain immovable properties
known as portions 5, 8 and 13 of the farm Doorndraai 2A
(Registration
Division KR, Limpopo Province) (the properties).
[5]
On 16 November 2005, the L J Moller
Trust submitted three
conditional
offers to Mr Starbuck to purchase the properties.  At this
point, although Mr Starbuck had not been officially appointed as
a
provisional or final trustee, he had already been advised by the
Master of the latter’s intention to appoint him as a
provisional co trustee.
[6]
On 1 December 2005, the three offers
were accepted by Mr Starbuck.  Each was subject to the
suspensive condition that “the
Seller and/or Master . . . grant
the required consent, if applicable . . . .  [T]his agreement is
subject to such consent
being obtained and it shall fall away and be
regarded as pro non scripto if such consent cannot be obtained.”
[4]
The effect of the suspensive condition in each offer was that, if the
consent was not obtained, the contracts would be regarded
as though
they had not been written.
[5]
[7]
On 12 January 2006, and before their
formal appointment as provisional trustees, the trustees submitted a
written application to
the Master for the authority to sell the
properties in terms of section 80
bis
[6]
read with section 18(3)
[7]
of the Act.  The application motivated the
decision to sell the properties of the insolvent estate prior to the
second meeting
of the creditors, and included: (i) consents from
the two secured creditors; (ii) a circular that was sent to all
known
creditors regarding the sale of the properties;
(iii) valuations of the properties; and (iv) the offers to
purchase received
from the Trust.
[8]
It is apposite to recapitulate here that the
creditors and not the insolvent are the masters of the realisation of
the assets in
the insolvent estate; hence their consent and
involvement were pivotal.
[9]
[8]
On 24 January 2006, the trustees
were appointed as provisional trustees of Mr Swart’s
insolvent estate.  On 31 January
2006, the Master consented to
the sale of the properties.
[10]
On 13 April 2006, the trustees executed written powers of
attorney in which they declared that the properties were sold on

1 December 2005 and authorised transfer to the purchaser.  The
properties were transferred to the Trust on 14 June 2006.

On 12 October 2006, at the second meeting of the creditors, the
creditors approved the trustees’ report reflecting
the sale and
transfer of the properties to the Trust.
Litigation history
[9]
Mr Swart instituted action against
the Master and the trustees in the High Court for damages in the
amount of R11 410 000.
[10]
He argued that, when Mr Starbuck entered
into the contracts, he was not a trustee and therefore lacked the
necessary capacity to
enter into the sale agreements.  He also
argued that the provisions of section 82(1) of the Act ought to have
been complied
with.
[11]
Mr Swart contended that, because that section was not
complied with, the trustees were liable to pay statutory damages to
him in
terms of section 82(8) of the Act.
[12]
[11]
The trustees argued that the offers to purchase signed by
Mr Starbuck were “subject to the permission of the
[M]aster
being granted and by implication their formal appointment by
the [M]aster”.
[13]
They submitted that they had been granted authority to sell the
properties, in terms of section 80
bis
, after their appointment
as provisional trustees, and that section 82(8) was accordingly not
applicable.  They denied any
maladministration or liability on
their part.
[12]
The
High Court
held that the offers
to purchase could only constitute valid offers once the suspensive
condition had been complied with.
[14]
The High Court found that, because the trustees had been granted the
necessary authorisation by the Master to sell the properties
in terms
of section 80
bis
, section 82 was not applicable.
[15]
[13]
As to the allegation that the properties could have been sold
for a much higher price, after considering a great deal of evidence

on the point, the High Court found that there was
no basis on
which it could be said that the properties could have been sold at a
higher price.
[16]
Accordingly, there was no link between the conduct of the trustees
and the alleged loss which Mr Swart may have suffered.
The
action was dismissed with costs, including the costs of two counsel.
[14]
Mr Swart then appealed to the
Supreme Court of Appeal.
[15]
The
Supreme Court of Appeal
held
that
Mr Swart’s
claim was based
squarely on section 82(1) read with section 82(8) of the Act and that
Mr Swart’s
cause of action thus
depended on, amongst other things, the absence of a valid
authorisation by the Master for the sale of the
properties in terms
of section 80
bis
of the Act.  The Court found that the
Master had authorised the sale of the properties in terms of
section 80
bis
read with section 18(3) of the Act.
[17]
[16]
In passing, the Court noted that the authorisation by the
Master is administrative action which has legally valid consequences
until
set aside.  It then held that, as no application was made
by Mr Swart to set the authorisation aside, it remained legally
valid.  Mr Swart’s claim should have failed on this
basis alone.
[18]
[17]
The Court then considered Mr Swart’s cause of action as
pleaded and found that section 82 had no application to the facts at

hand as the sale had taken place pursuant to the Master’s valid
authorisation.
[19]
[18]
Finally, the Court held that it was of no consequence that at
the time of Mr Starbuck’s conditional acceptance of the

offers to purchase, the trustees had not yet been appointed.
[20]
The agreements of sale, resulting from the three offers to purchase,
were subject to a suspensive condition and they only
became final and
binding upon the fulfilment of the condition.
[21]
[19]
For these reasons the Court dismissed
Mr
Swart’s
appeal with costs, including the costs of two
counsel.
In this Court
[20]
In his application for leave to appeal to
this Court, Mr Swart persists
with the argument that section
82 of the Act should apply to this matter and that the Master’s
section 80
bis
authorisation was irregular.  In addition,
he has added a new string to the bow of his attack to the effect that
the appeal should be upheld on the basis that
sections 18(3) and 80
bis
of the Act are unconstitutional.
Mr Swart also attempts
to raise a number of questions in this application that have not been
canvassed in the Courts below.
[22]
[21]
Mr Starbuck submits that Mr Swart’s application
must fail on the basis that the constitutionality of sections 18(3)
and 80
bis
of the Act is being raised for the first time.
In the circumstances, he argues that Mr Swart is precluded from
raising a
constitutional challenge at this stage
.
He also submits that the sale of the properties was authorised by the
Master and that the sale of the properties was valid
by virtue of the
fact that the authorisation has neither been challenged nor set aside
by a court of law.
[22]
On 28 November 2016, the Acting
Chief Justice issued directions calling for the parties to file
written submissions addressing specific
issues.  This matter has
been decided without an oral hearing.
Condonation
[23]
Mr Swart asks this Court to condone
the late filing of his application, which ought to have been filed in
this Court on 21 June
2016.  He submits that the violent
protests taking place in Pretoria on 21 June 2016 precluded his
attorneys from serving
papers on the respondents and this Court
timeously.
[23]
The application was, however, served electronically on the
respondents and this Court on 21 June 2016.  The physical

application was subsequently filed on 6 July 2016.  No
explanation is tendered for this additional lapse in time.
[24]
The explanation is satisfactory and
the delay was not long.  In addition, it would seem that no
prejudice will be suffered
by the respondents if the late filing is
condoned.  Accordingly, I find that the interests of justice
weigh in favour of granting
condonation.
[24]
Merits
Cause of action and relief sought
[25]
It is apposite, in the light of the relief Mr Swart seeks in
this Court, to begin with the cause of action that he has actually
raised.  He claims that he is entitled to
R10 627 288,
pursuant to the provisions of section 82(8) of the Act.
[25]
[26]
The High Court and the Supreme Court of Appeal judgments
regarding this claim are well-reasoned and cannot be faulted.
It
cannot be put more plainly: Mr Swart’s claim was based
on section 82(1) read with section 82(8) of the Act.  The

application of this section depends on, amongst other things, the
absence of a valid authorisation by the Master for the sale of
the
properties.  The Master authorised the sale of the properties in
terms of section 80
bis
.  This authorisation has legally
valid consequences until it is set aside.  This authorisation
has not been set aside.
Section 82 can find no application
in the present matter.
[27]
In the circumstances, there is no damages claim to be proved
in terms of section 82(8) of the Act.  In any event, even if
there
were a damages claim to be proved under any other branch of the
law, the conclusion is inescapable that Mr Swart has not been able
to
prove any damages.  This fact is perspicuous from the judgment
of the High Court where, after hearing evidence on this
point, it
concluded that “
there is no basis on which it can be found
that the said properties would have been sold at a higher price at
auctions
”.
[26]
[28]
I have read the judgment of my colleague, Jafta J
(second judgment).  It states that “if the claim was
delictual, I would
not have hesitated to declare that the trustees
were liable for any damages proved at a later trial in the High
Court”.
[27]
I disagree.  Whether in terms of the Act or in terms of
delict, Mr Swart was not able to prove any damages: the statement

that “there is no basis upon which it can be found that the
said properties would have been sold at a higher price”
holds
true regardless.  The trustees cannot be held liable for damages
that have not been proved.  This Court cannot
simply ignore the
factual findings of the High Court.
[29]
What then is left for this Court to
decide?
[30]
Mr Swart has attempted to raise two
other issues in this Court.  The first is a challenge to the
constitutionality of insolvency
law in general and sections 18(3)
and 80
bis
of
the Act in particular, which he raises here for the first time.
The second is, ostensibly, a challenge to the validity
of the
Master’s authorisation in terms of section 80
bis
of the Act.  For the sake of
completeness, I will deal briefly with each of these issues.
Constitutional challenge
[31]
Having regard to this Court’s jurisprudence, it would be
imprudent for us to consider Mr Swart’s constitutional
challenge
as it is being raised impermissibly for the first time in
this Court of final appeal.
[28]
Validity of the section 80bis
authorisation
[32]
The second judgment would make a declaratory order that the
Master’s authorisation was unlawful.  In my view, such an

order would be inappropriate.  It has neither been sought nor is
it of any consequence.  In addition, this route gives
little
regard to settled principles applicable to the review of
administrative action.
[33]
The authorisation in terms of section 80
bis
is an
administrative act within the meaning of the Promotion of
Administrative Justice Act.
[29]
As a result, even if the Master’s authorisation in terms of
section 80
bis
was unlawful, it remains valid and binding, as
it continues to have legally valid consequences until it is set
aside.
[30]
These legally valid consequences include the sale of the properties.
[34]
It begs reiteration here that the sale agreements were subject
to the suspensive condition that the sales would come into effect

only once the requisite permissions (including the Master’s
permission under section 80
bis
) had been obtained.
[31]
The effect of the suspensive conditions was this: once the Master’s
permission was obtained under section 80
bis
, the suspensive
conditions were fulfilled, and legally binding sale agreements came
into effect.  The effect of this Court’s
administrative
law jurisprudence is that these valid sales endure, regardless of the
validity of the Master’s authorisation,
until such time as that
authorisation is set aside by a court.
[35]
It is common cause that no attempt has been made by Mr Swart
to set aside this authorisation. To validly set it aside would
require
rigorous engagement with principles of administrative law.
It does not appear that the second judgment would set the
authorisation
aside either – it would merely declare the
authorisation “unlawful”.  In accordance with the
law as it stands,
the Master’s authorisation remains valid and
binding – as does the resultant sale of the properties.
[36]
Mr Swart could have challenged the decision of the Master but
failed to do so.
[32]
All he has done is contend that section 80
bis
of the Act was
not complied with because at the time that the trustees submitted the
recommendation to sell the properties, they
had not yet been formally
appointed as provisional trustees.  However, without a proper
challenge to the Master’s authorisation,
the contention cannot
be entertained.  Accordingly, the matter must be decided on the
basis that the authorisation was granted
and remains valid.
[37]
The process required to be followed in order for the Master’s
decision to be set aside is set out in rule 53 of the Uniform
Rules
of Court.  Where this rule has not been complied with, it would
be inappropriate and unfair to the respondents for a
court to
consider the lawfulness of the Master’s decision.  It must
remain in force until such time as a proper application
for review
has been brought.  This would be in line with the
well-established principle
[33]
that “until a court is appropriately approached and an
allegedly unlawful exercise of public power is adjudicated upon, it

has binding effect merely because of its factual existence”.
[34]
[38]
To require Mr Swart to adhere to the process prescribed in
rule 53 is not undue formalism.
[35]
Indeed, as this Court held in
Kirland
, the procedural
safeguards applicable to mounting a review application perform an
important role in ensuring that interested parties
are given proper
notice of the review application, and an adequate opportunity to be
heard on whether the decision should be set
aside.  Further,
they ensure that the full record of the relevant decision is placed
before the Court, so that the Court has
all the relevant facts
against which to consider the lawfulness of the decision.
[36]
[39]
The notice of motion in this application makes no reference to
an intended review of the Master’s decision.  Further,
the
founding affidavit does not set out any grounds of review.  In
these circumstances, it would not be fair to the respondents
for this
Court, at this late stage in the litigation and this many years
later, to entertain a challenge to the Master’s
decision.
Furthermore, there is nothing of substance that this Court can do for
Mr Swart; even the proposed declaration of
unlawfulness formulated in
the second judgment provides no effective relief.
[40]
Of course, the rule 53 process is not required to be followed
in instances where a collateral or reactive challenge is brought.

However, I am not convinced that the issue of a collateral challenge
comes into play here.
[37]
In the light of this, my view is that the validity of the Master’s
section 80
bis
authorisation was never properly challenged by
Mr Swart, either directly or collaterally.
[41]
The second judgment entertains a challenge to the Master’s
authorisation, but omits to engage with various principles applicable

to the review of administrative action.  Some of these are
touched on above.  However, one stark omission begs mentioning

here: engagement with the long delay in bringing the purported
administrative challenge and the principle of finality.
[42]
It has long been accepted that an application for review must
be brought within a reasonable time.
[38]
If we
were
seized with a review application here, could we
simply ignore that it is 10 years overdue and that no explanation has
been given
for this delay?  I think not.  Engaging with
this application in spite of the 10-year time lapse and the
absence
of any acceptable explanation of the delay would undoubtedly
have dire consequences for the principle of finality, which is of
import to administrative law.
[39]
This route would not only flout the principle but would also
disregard potential prejudice to the Master, the trustees and

possibly the creditors of Mr Swart’s formerly insolvent
estate.
[40]
[43]
A further impediment to Mr Swart’s purported attack on
the Master’s authorisation is section 157 of the Act, which
provides:
“(1)
Nothing done under this Act shall be invalid by reason of a formal
defect or irregularity,
unless a substantial injustice has been
thereby done, which in the opinion of the court cannot be remedied by
any order of the
court.
(2)
No defect or irregularity in the election or appointment of a trustee
shall vitiate
anything done by him in good faith.”
[44]
Subsection (1) makes it clear that nothing that has been done
by the Master or the trustees pursuant to the provisions of the Act

can be deemed invalid simply because of a formal defect unless, in
the opinion of a court, it has resulted in substantial injustice
that
cannot be rectified by an order of court.  The directions of
this Court specifically asked Mr Swart to point to any substantial

injustice which he may have suffered as a result of the purported
formal defects in the granting of the Master’s authorisation.
[45]
In this regard, he merely contends that the properties could
have been sold at a higher price.  However, as already stated in

this judgment, Mr Swart cannot prove this.  Mr Swart has failed
to point to any other substantial injustice.
[46]
In addition to subsection (1), subsection (2) makes plain that
no defect or irregularity in the appointment of the trustees can
vitiate anything done by them in good faith.  If there were a
defect or irregularity in the appointment of the trustees, this
would
not vitiate the sale of the properties if the sale of the properties
was effected in
good faith.  Mr Swart makes no
averments to indicate bad faith on the part of the trustees.  On
the contrary, the good
faith of the trustees seems evident on the
facts.  At the time when the properties were sold the trustees
had received the
authorisation of the Master; they had received the
consent of the two secured creditors; and they had issued a circular
alerting
all creditors of Mr Swart’s insolvent estate of the
intention to have the land sold.
[47]
For the above reasons, it would not be in the interests of
justice for this Court to consider whether the Master’s section

80
bis
authorisation was valid or not.  Leave to appeal
should be refused on the basis that it is not in the interests of
justice
to determine the matter.
Costs
[48]
I have found that the application
for leave to appeal ought to be refused.  Mr Starbuck has
successfully opposed this
application.  As of November 2015,
Mr Swart became a rehabilitated insolvent by effluxion of time.
There is no
reason why costs should not follow the result.
Order
[49]
The following order is made:
1.
Condonation is granted.
2.
Leave to appeal is refused,
with costs.
JAFTA J (Mojapelo AJ concurring)
[50]
I have read the judgment prepared by my colleague Khampepe J
(majority judgment).  I am unable to agree with the outcome

it reaches and the reasons supporting that outcome.  In my view
leave to appeal should be granted and the appeal must be upheld.
[51]
Before the first to third respondents (trustees) were
appointed, they concluded an agreement in terms of which assets of
the applicant’s
insolvent estate were sold to a third party.
In the main, this raises the question whether the sale was lawful.
The
subsidiary issue that arises from this question is whether the
assets were disposed of in compliance with section 80
bis
of
the
Insolvency Act
[41
]
in terms of which the trustees had claimed to have acted.
[52]
On 28 November 2016 the Acting Chief Justice issued directions
calling on the parties to file written submissions on specified
issues.
[42]
The parties have lodged the submissions and the matter was decided
without oral hearing.
Legal framework
[53]
For a better understanding of the issues, it is necessary to
begin by outlining the relevant statutory provisions.  Lying at

the heart of the matter are provisions of the Act which divest
insolvent persons of their estates and vest them in the Master of
the
High Court (Master) until a trustee is appointed, at which stage the
estate vests in the trustee.
[43]
This position is triggered by an order that sequestrates the estate
of an insolvent person.  From the moment such an
order is
granted, the insolvent person may not deal with or dispose of assets
in his or her estate.  The authority to exercise
rights in
respect of the estate property vests in the Master until a trustee is
appointed.  On the appointment of the trustee,
that authority
relocates to the trustee.
[54]
The Master is empowered to appoint a provisional trustee as
soon as an estate is sequestrated, regardless of whether the
sequestration
is provisional or final.
[44]
After the appointment of a provisional trustee and at any time before
the first meeting of creditors, the Master may give
directions to the
provisional trustee, which could be given to him or her by creditors
at their second meeting.
[45]
A provisional trustee may exercise powers and duties of a
trustee.
[46]
But a provisional trustee may not initiate or defend legal
proceedings without the authority of the court.  The only

proceedings he or she can institute without authority are proceedings
where he or she seeks such authority.  More importantly
for
present purposes, the provisional trustee may not sell any property
belonging to the insolvent estate without the authority
of the court
or the Master.
[55]
The authority contemplated in
section 18(3)
is a valid
authority.  This means that for a provisional trustee to sell
assets of the insolvent estate, he or she must be
in possession of a
valid authority from a court or the Master, empowering him or her to
sell the property in question.
Section 80
bis
outlines a
process to be followed in obtaining authority from the Master.
[47]
Briefly, this section prescribes a jurisdictional fact which
must be in place before the Master issues approval.
It requires
the trustee to furnish the Master with a written recommendation
incorporating reasons why authority to sell is sought.
I return
to this issue later.
[56]
Section 82(1)
is the other provision that governs a sale of
assets of the insolvent estate.
[48]
However, this provision applies to a sale authorised by creditors at
the second meeting of the creditors.  It requires
a trustee to
sell all the property in the insolvent estate upon being authorised
to do so and to act in terms of a direction issued
by creditors at
the meeting in question.
Section 82(8)
protects innocent
purchasers of the assets against liability arising from a sale
conducted in contravention of
section 82.
[57]
Section 82(8)
provides:
“If any
person other than a person mentioned in subsection (7) has purchased
in good faith from an insolvent estate any property
which was sold to
him in contravention of this section, or if any person in good faith
and for value acquired from a person mentioned
in subsection (7) any
property which the last mentioned person acquired from an insolvent
estate in contravention of that subsection,
the purchase or other
acquisition shall nevertheless be valid, but the person who sold or
otherwise disposed of the property shall
be liable to make good to
the estate twice the amount of the loss which the estate may have
sustained as a result of the dealing
with the property in
contravention of this section.”
[58]
Apart from protecting innocent purchasers, the section
stipulates that the acquisition by those purchasers would be valid
even though
it came about through an unlawful sale.  In order to
compensate for the loss suffered by the insolvent estate, the section

imposes liability on the trustee who sold its assets in contravention
of the section.  Such trustee is held liable to make
good to the
estate twice the amount of the loss suffered.  The applicant
invoked this section as a basis for his statutory
damages claim.
It is now convenient to set out the relevant facts.
Factual background
[59]
Mr Nicolaas Johannes Swart was the owner of the immovable
properties described as Portions 5, 8 and 13 of the farm Doorndraai
2A,
before his estate was sequestrated on 4 October 2005.  A
final sequestration order of his estate was granted by the Court on

1 November 2005.  It appears from the papers on record that
the Master did not appoint a trustee of his estate until
24 January
2006 when the trustees were appointed as provisional trustees.
[60]
However, even before his appointment as a provisional trustee,
Mr Conrad Alexander Starbuck had received and accepted
three offers to purchase the immovable properties of the insolvent
estate.  But these offers were subject to the Master granting

authorisation.  It is not clear from the papers in what capacity
Mr Starbuck received and accepted the offers from the
trust.
At that time he had not been appointed as a provisional trustee but
was merely advised by the Master that he was contemplating
appointing
Mr Starbuck as a provisional co-trustee.  What is unusual is the
fact that he accepted and signed the offers as
the seller without the
participation of the other two potential co-trustees.  The
offers were accepted on 1 December
2005.
[61]
Later on 12 January 2006, Mr Starbuck together with his
co-trustees Messrs James Henry van Rensburg and Tsiu Vincent
Matsepe
purported to act as trustees of the insolvent estate.
Without any statutory power, they submitted a written application to

the Master purporting to act in terms of
section 80
bis
of the
Act.  In the application they sought authority to sell the
properties of the insolvent estate by private treaty or
public
auction.  It is not apparent from the papers how the Master
treated the request upon its receipt as it was made by
persons who
were not trustees.
[62]
But what emerges from the record is that the Master appointed
them as provisional trustees only on 24 January 2006, 12 days after

they had submitted the request.  On 31 January 2006, the Master
granted the requested approval purportedly in terms of
section
80
bis
.  As it appears from the judgment of the Supreme
Court of   Appeal, the approval was issued in these terms:
“The powers
of the provisional trustees are hereby extended in terms of
s 80
bis
of the
Insolvency Act 24 of 1936
, as amended, to sell the immovable
properties of the abovementioned insolvent estate, subject to the
following conditions.”
[63]
The trustees who had then assumed the status of provisional
trustees received the purchase price in the composite sum of
R1 625 000
from the trust.  The properties were
transferred to the purchaser on 14 June 2006.
[64]
The first meeting of the creditors of the insolvent estate was
held on 7 September 2006 and their second meeting took place
on
12 October 2006.  The creditors approved the sale and
transfer of the properties to the Trust at the second meeting.
[65]
The applicant avers that the Trust has paid R450 000 for
Portion 5 together with water rights on it.  On 13 June 2006 it

sold the water rights for R1 million, making an immediate profit
of R550 000.  The applicant further states that
in oral
evidence on record, Mr Moller of the Trust testified that he and
Mr Boyle of the Boyle Family Trust contrived to obtain
a lower
price for the property sold by the trustees.  As a consequence
the Moller Trust later sold Portion 13 of the farm
to the Boyle
Family Trust for R709 585, making a profit of R234 585.
And Mr Moller further testified that on 26 February 2007
he
sold the remaining water rights to Akanani Mine for the sum of
R3 791 568.  From these facts the applicant concludes

that the unusual process followed by the trustees and the Master in
disposing of the properties was not in the interests of the
creditors
who were owed about R2 million as well as the insolvent estate
which could have had a residue, had the properties
been sold after
the second meeting of the creditors.
[66]
Notably, these averments are not disputed by the trustees.
The only affidavit filed in this Court on behalf of the trustees
was
deposed to by Mr Starbuck.  With regard to the purchase
price paid by the Trust and the amounts for which the properties
were
resold, Mr Starbuck merely states:
“The
applicant conveniently fails to disclose to the court that the
applicant attempted to sell the farm, which included the
water
rights, directly before his sequestration for R450 000.
This is a clear indication that the value of the property,
on the
applicant’s own conduct, never amounted to the
imaginative values that had to be realised two years after
sequestration.
An insurmountable
fact pertaining to the alleged damages, which is denied, is the fact
that the experts agreed that the value of
the property (including
water rights) was at the time of the sale almost equal to the
amount for which the trustees sold the
properties and that after
taking into account costs which would have been incurred after a sale
by auction the damages, if any,
were negligible.
The applicant
further neglects to state that the secured creditors, whose claims
are the majority of the debt in the insolvent estate,
supported the
sale in the manner and at the price that the trustees effected the
sale.”
[67]
It is significant to note that, unlike the applicant who
referenced specific parts of the record containing the evidence,
Mr Starbuck
does not name the experts whose testimony he relies
on and does not point where such evidence is on the record.  In
addition,
the fact that the applicant had offered the farm for sale
for R450 000 before sequestration does not prove its value on 1
December 2005 when Mr Starbuck agreed to the price.  It is not
clear what he means by “imaginative values that had to
be
realised two years after sequestration”.  The properties
were sold by the trustees within two months from the date
of
provisional sequestration and resold later within six months from the
date of the final sequestration.
In the High Court
[68]
Aggrieved by the trustees’ conduct, the applicant
instituted a damages claim in the High Court seeking payment of
R 11 410 000.
Although the pleadings do not form
part of the record before us, the applicant’s case may be
gleaned from the High Court’s
judgment.  In paragraph
59 that Court recorded his case in these terms:
“The
plaintiff’s claim for damages is not based on a delictual claim
but on the following grounds:
There was no
authorisation given to the defendants in terms of
section 80(bis)
of the Act for the alienation of the involved property.  As a
result thereof, the transfer of
parts 5
,
8
and
13
of the farm
Doorndraai was irregular.
The purchase offer
marked NS 6, 7 and 8 was not agreed to on behalf of all the curators,
alternatively, the first defendant entered
into the offer of purchase
in his personal capacity.
The first, second
and third defendants did not have the necessary capacity to enter
into the purchase agreement on behalf of the
estate on 1 December
2005.
The first, second
and third defendants did not have authorisation to sell the property
in terms of
section 80(bis)
of the Act.
The sale of the
properties occurred contrary to
sections 82
and
80
(bis) of the Act.
The first, second
and third defendants are liable to the plaintiff’s estate in
terms of
section 82(8)
for double the amount of the loss that the
estate suffered.”
[49]
[Own Translation]
[69]
What emerges from the quoted statement is the fact that the
applicant’s claim was not rooted in delict but was based on
section 82(8)
of the Act.  He contended that the properties were
sold in contravention of
sections 82
and
80
bis
.  It is
also apparent from the High Court’s judgment that the trustees
advanced a defence based on
section 80
bis
.  They claimed
that the properties were sold in terms of that section after they had
obtained approval from the Master.
Compliance with
section 80
bis
became a contested issue at the trial.
[70]
It also appears from the High Court’s judgment that the
process that led to the impugned sale was initiated by First National

Bank which had obtained a judgment against the applicant.
Having attached the applicant’s property, a sale in execution

was conducted but was unsuccessful.  Mr Verster, an
employee of the bank, discussed the matter with Mr Starbuck as the

bank wanted to have payment of the debt as soon as possible.
Mr Starbuck indicated to Mr Verster that he was appointed
as the
trustee of the insolvent estate.  They discussed the valuation
of the property in question.  At that time the
first meeting of
the creditors had not yet taken place.  It was decided between
Mr Verster and Mr Starbuck that the Master’s
consent for the
sale be obtained.  According to Mr Verster, the process was
commonly followed by the bank.  Where offers
were made to
purchase a property like the present and if such offers were accepted
by the bank, it required the trustee to get
consent to sell the
property from the Master.  Mr Verster had encouraged Mr Starbuck
on a regular basis to speed up the
process.
[50]
[71]
This explains Mr Starbuck’s conduct of acting in haste
and signing offers to purchase at particular prices even before his

appointment as a provisional trustee.  If the record accurately
reflects Mr Verster’s evidence, Mr Starbuck misled
him
when he indicated that he was already appointed as the trustee.  The
correct position was that, when they agreed to have
the properties
sold, Mr Starbuck was not a trustee of the insolvent estate, whether
provisionally or otherwise.  Even when
they submitted the
application for the Master’s approval on 12 January 2006, they
were not trustees of the insolvent estate.
The Master had
merely informed Mr Starbuck that he was intending to appoint him.
[72]
Having heard evidence from both sides, the High Court held
that the properties were properly sold in terms of
section 80
bis
.
It rejected the contention that this section was not complied with.
The Court held further that
section 82
, on which the applicant based
his claim, did not apply to the present matter.  Accordingly,
the applicant’s claim was
dismissed with costs.
[73]
Unhappy with the outcome, the applicant appealed to the
Supreme Court of Appeal.  That Court upheld the
conclusions
of the High Court on the validity of the Master’s
approval and compliance with
section 80
bis
, in terms of which
the properties were purportedly sold.  With regard to the
applicability of
section 82
, the Supreme Court of Appeal held
that the section did not apply here because the sale was carried out
before the creditors’
second meeting.  It pointed out that
this section applies to a sale that follows the creditors’
second meeting.
In addition, that Court concluded that the
applicant’s claim had to fail because it depended upon the
absence of a valid
authorisation by the Master.  Here the Master
had issued permission which constituted administrative action that
had legal consequences
until set aside.
In this Court
[74]
I agree with the majority judgment that condonation should be
granted to the applicant for reasons fully set out in that judgment.
Leave to appeal
[75]
I do not agree that leave should be refused.  The
majority judgment holds that the matter does not raise a
constitutional issue.
[51]
I disagree.  The matter concerns the exercise of public power
conferred by
section 80
bis
.  The Supreme Court of Appeal
has defined the exercise of power in terms of the section by the
Master as constituting administrative
action.  The applicant
seeks to challenge the validity of the Master’s approval
which is pivotal to the outcome
of the case.  If that approval
was invalid, the consequences would be that the purported sale of the
applicant’s property
would be unlawful.  Whether the sale
remains intact despite the invalidity of the approval is a matter we
may determine only
if leave to appeal is granted.
[76]
What remains for consideration is the question whether it is
in the interests of justice to grant leave.  Factors

like the prospects of success play an important role at this stage of
the enquiry.  This is so because here this is the only
court to
which an appeal can be brought.  The Supreme Court of Appeal has
had the opportunity to consider the matter.
It seems to me that
on the crucial issue relating to compliance with
section 80
bis
and the consequences of non-compliance on the validity of the
Master’s approval, there are prospects of success.
[77]
On its face
section 80
bis
requires a recommendation by
a trustee to precede the granting of approval by the Master as a
condition for the exercise of power
by the Master.  The facts
show that, when the trustees submitted the purported recommendation,
they were not yet appointed
as provisional trustees.  The
question that needs to be considered by this Court, which was
overlooked by the other Courts,
is whether
section 80
bis
contemplates the present “recommendation” as a
jurisdictional fact for the granting of an approval.  In
these circumstances leave to appeal must be granted.
Issues
[78]
In their written submissions the parties confined themselves
to the issues raised in this Court’s directions of 28 November

2016.  Those are the issues we must determine.  They are:
(a)
Whether it is competent to adjudicate the
constitutional challenge
that was raised for the first time in this Court.
(b)
Whether the Master’s approval to sell the
applicant’s
farms was issued in compliance with
section 80
bis
, pertaining
to the trustees’ recommendation.
(c)
If
section 80
bis
was not complied with, what was the effect
that non compliance had on the Master’s approval in light
of
section 157(1)
of the
Insolvency Act?
(d
)
Whether the applicant had
locus standi
to challenge the
Master’s approval on review.
Constitutional challenge
[79]
For the first time in the proceedings before this Court, the
applicant sought to attack the validity of
sections 18(3)
and
80
bis
of the Act.  He contended that these provisions are inconsistent
with his right to not be arbitrarily deprived of property
which is
guaranteed by section 25 of the Constitution.  In addition he
submitted that the impugned provisions limit his administrative

justice rights entrenched in section 33 of the Constitution.
[80]
No reasons were advanced as to why this challenge was raised
for the first time in this Court in view of the general principle
that
constitutional challenges must be raised in the lower courts, as
it is undesirable for this Court to sit over such matters as a
court
of first and last instance.  However, the rule admits of an
exception in special circumstances.  In special
cases where
there are compelling reasons in support of a challenge raised for the
first time, this Court does entertain such
constitutional challenges.
[52]
[81]
The applicant’s case does not meet the test for
entertaining a constitutional challenge raised for the first
time in
this Court.  A further defect is that the Minister
responsible for the administration of the Act is not joined as a
party.
Accordingly, we must decline the request to adjudicate
the constitutional attack.
Compliance with section 80bis
[82]
An answer to this question requires us to interpret the
section in order to determine the conditions it lays down for the
exercise
of power by the Master.  That construction will also
tell us the roles played by persons mentioned in it and their
significance
in the scheme of the section and the entire Act.
[83]
Section 80
bis
provides:
“(1)
At any time before the second meeting of creditors the trustee shall,
if satisfied that
any movable or immovable property of the estate
ought forthwith to be sold, recommend to the Master in writing
accordingly, stating
his reasons for such recommendation.
(2)
The Master may thereupon authorize the sale of such property, or of
any portion thereof,
on such conditions and in such manner as he may
direct: Provided that, if the Master has notice that such property or
a portion
thereof is subject to a right of preference, he shall not
authorize the sale of such property or such portion, unless the
person
entitled to such right of preference has given his consent
thereto in writing or the trustee has guaranteed that person against

loss by such sale.”
[84]
It is apparent from the opening words of the section that it
regulates the sale of the property of an insolvent estate which
occurs
before the second meeting of the creditors.  Once the
second meeting has been held, the sale of such property may only be
conducted in terms of section 82 and under the authority and
direction of the creditors themselves.  Such authority and
directions
may flow from the second meeting only.  But
creditors have no role to play in the scheme created by
section 80
bis
.  Instead it is the Master who
authorises a sale on any conditions he or she deems fit.
[85]
However, the Master does not have the power to initiate the
process that culminates in a sale.  The section confers this
power
exclusively upon a trustee of the insolvent estate.  The
power is not untrammelled.  It is subject to conditions.

The first is that the trustee in question must consider the issue and
be satisfied that the property of the estate ought to
be sold
forthwith.  This means that there must be cogent reasons for not
waiting for the second meeting of creditors and depriving
them of the
role they play in the process under section 82 and for replacing them
with the Master.
[86]
The second condition is that once so satisfied, the trustee
must submit a written recommendation to the Master in which he
or she seeks authorisation for selling the property.  This
recommendation must contain reasons which satisfied the trustee
that
the property in question must be sold forthwith.  The
recommendation and the reasons furnished are crucial to the exercise

of the power by the Master.  He or she must consider the
recommendation and the reasons before approving the sale.  In

short, the recommendation is a condition precedent or jurisdictional
fact for the exercise of the Master’s power.  Absent
it
the Master may not exercise the power.
[53]
[87]
The issue that needs to be determined here is whether when the
Master issued the approval on 31 January 2006, he or she had the
necessary recommendation.  According to the trial Court it was
common cause that when the trustees submitted the written request
on
12 January 2006, they were not trustees of the insolvent estate.
They were appointed as provisional trustees later on
25 January 2006.
[88]
In terms of the Act the word “trustee” means the
trustee of an estate under sequestration and includes a provisional

trustee.  And one becomes a trustee only upon appointment by the
Master.  Nobody may be a trustee in the eyes of that
Act before
he or she is appointed by the Master.  It is the appointment
that entitles a person to exercise powers of a trustee
under the
Act.  This is apparent from the scheme of the Act outlined
earlier in this judgment.  Upon sequestration, the
estate of the
insolvent vests in the Master until a trustee is appointed.  The
appointment of a trustee has the legal effect
of vesting that estate
in the trustee.  It is this legal consequence which
empowers a trustee to act in terms of section
80
bis
and submit
a recommendation to the Master for the sale of property of the
insolvent estate.
[89]
Here the trustees purported to exercise powers in terms of
section 80
bis
at a time when no estate vested in them.
At the relevant time the estate vested in the Master.  The fact
that they were
informed that the Master intended to appoint them as
co-trustees did not clothe them with any legal capacity under the
Act.
They had no power to determine whether the property of the
applicant’s estate should be sold before the second meeting of

the creditors.  Until their appointment on 24 January 2006
what they did purportedly in terms of section 80
bis
had no
legal effect.
[90]
Moreover, the Master knew when he received the so-called
recommendation that those who submitted it were not trustees as he
had
not appointed them as trustees.  Further, the Master knew
when he granted the approval purportedly in terms of section 80
bis
that he did not have the necessary recommendation.
[91]
Although the impugned recommendation is not part of the record
before us, the High Court judgment quotes the following as reasons

furnished in it:
“(a)
The sale of the property should occur on an urgent basis before the
second meeting of the
creditors.
(b)
The saving of costs   if the property is sold expeditiously in
contrast to a
sale on auction and that an auction would not
necessarily ensure a better price.
(c)
The property will be sold voetstoots and for cash.”
[54]
[92]
None of these reasons tell us why the property had to be sold
before the creditors’ second meeting and what the advantage is

to anybody in opting for the section 80
bis
process as opposed
to section 82.  To merely state that the sale must be held
urgently before the second creditors’
meeting does not tell us
why this should happen.  It is not clear what costs were to be
saved by invoking section 80
bis
.  Nor does the fact that
the property was to be sold voetstoots and for cash support the
decision to apply section 80
bis
.  All these reasons do
not show us why the trustees were satisfied that the property had to
be sold forthwith.
[93]
The only reasonable explanation for the course followed by the
trustees is to be found from the evidence of Mr Verster, an employee

of one of the creditors.  It will be remembered that he
testified to the effect that it was a practice commonly followed by

First National Bank to require a trustee to get the Master’s
approval if privately made offers were accepted by the Bank.

And that in this instance Mr Starbuck was “encouraged on a
regular basis to speed up the process”.  This was done

after a sale in execution, following the attachment of the
property for a judgment debt, was unsuccessful.  Therefore
the
process was activated at the instance of one creditor who had acted
individually to the exclusion of the other creditors who
could have
participated in the process during the second meeting of creditors.
The Bank did not want this to happen hence
the property had to be
sold before the second meeting of the creditors.
[94]
Had the Master applied his mind to these issues, together with
the fact that the request to sell was made by persons who were not

functionaries envisaged in section 80
bis
, he is likely to
have declined to grant an approval.  This is because steps
preceding the granting of the approval did not
comply with the
requirements of the provision.  Consequently, I hold that there
was no compliance with the provisions of section
80
bis
,
pertaining to the trustees’ recommendation.
The effect of non-compliance
[95]
Non-compliance with section 80
bis
has a fatal effect on
the Master’s approval.  It is a well-known principle of
our law that where the exercise of statutory
power depends on the
existence of jurisdictional facts, the repository of the power may
not exercise it in the absence of such
jurisdictional facts.  In
South African Defence and Aid Fund
a jurisdictional
fact was defined in these terms:
“[It] is a
fact the existence of which is contemplated by the Legislature as a
necessary pre-requisite to the exercise of
the statutory power.
The power itself is a discretionary one.  Even though the
jurisdictional fact exists, the authority
in whom the power resides
is not bound to exercise it.  On the other hand,
if the
jurisdictional fact does not exist, then the power may not be
exercised and any purported exercise of the power would be

invalid
.”
[55]
[96]
This principle was affirmed by this Court in
South African
Rugby Football Union
where the Court said that
South African
Defence and Aid Fund
remains a leading authority in our law on
jurisdictional facts.
[56]
In
Harrison
this Court said:
“The process
of approving plans is provided for in section 7 of the Building Act.
I shall soon return to the provisions
of section 7 in detail.
Two comments are, however, pertinent for present purposes.
Firstly, section 7(1)
requires a recommendation by the building
control officer as a precondition for any decision to be taken by the
City on an application
for approval in terms of section 4.
In
the context of administrative law, that recommendation is
therefore a jurisdictional fact, the existence of which is a
prerequisite for the exercise of the power under section 7
.”
[57]
[97]
In
Paola
the Supreme Court of Appeal rejected the
argument that approval of building plans submitted by an official,
who was later appointed
as a building control officer had been
validly approved.  There the Court said:
“I cannot
agree that the third respondent’s decision to approve the plans
without considering a recommendation from
a duly appointed
building control officer can be regarded as valid, or that
the fact that a necessary condition precedent
to the exercise by the
third respondent of its discretion to approve plans was not fulfilled
can be regarded as ‘a mere irregularity
of no real
consequence’.  I agree with counsel for the appellant’s
contention that jurisdictional facts necessary
for the exercise of
the statutory power were not present.  It is not possible,
in my view, to interpret sections 5,
6 and 7 of the Act in any
other way.”
[58]
[98]
Since here there was no recommendation by duly appointed
trustees, the purported approval by the Master was invalid.
Unless
what was done as a result of this invalid approval was
preserved by the Act, it follows that what was done on the strength
of the
invalid approval was also invalid.  This is because an
invalid act that was performed unlawfully cannot render legal another

act which is unlawful.  Nor can an unlawful act justify another
act that is unlawful.
[99]
Ordinarily it is unlawful to dispose of another person’s
property without the owner’s authority.  But if one is

authorised by a statutory provision to do so, the disposal becomes
lawful if the relevant statutory requirements are met.
Here the
trustees invoked section 80
bis
as justification for selling
the applicant’s property to the trust.  Their conduct
could be justified only if section
80
bis
had been complied
with.
Effect of section 157(1) on the
non-compliance
[100]
The failure to follow section 80
bis
would ordinarily be
fatal to a sale that was conducted on the authority of an invalid
approval.  But there are provisions
in the Act which suggest
otherwise.  One such provision is section 82(8) quoted in
paragraph 8.  It provides that if
property of an insolvent
estate is sold in contravention of section 82 but is purchased by a
third party in good faith, the purchase
shall be valid.
However, I agree with the High Court and the Supreme Court of
Appeal that section 82 does not apply
to the present case.
[101]
The other provision that condones non-compliance is section
157(1).  It reads:
“(1)
Nothing done under this Act shall be invalid by reason of a formal
defect or irregularity,
unless a substantial injustice has been
thereby done, which in the opinion of the court cannot be remedied by
any order of the
court.”
[102]
The heading of this section is “Formal defects”.
This suggests that the section was designed to regulate
non-compliance
with formalities.  It stipulates that nothing
done in terms of the Act will be invalid by reason of a formal defect
or irregularity.
The word “formal” qualifies both
the defect and the irregularity.  This reveals that Parliament
sought to condone
formal defects and irregularities.  Even then
the defect must not cause a substantial injustice which cannot be
remedied by
a court order.  If the defect is not formal, this
provision finds no application.
[103]
The nature and extent of non-compliance with section 80
bis
we are concerned with here cannot be described as a formal defect.
This non-compliance is not about a failure to follow formalities.

An appointment of a trustee is a substantive matter which has the
consequence of vesting the entire estate of an insolvent person
in
the trustee.  As demonstrated in this judgment, the act of
appointing a trustee alone confers on the appointee extensive
powers
with far reaching consequences.  Accordingly, I hold that
section 157(1) does not apply here.
[104]
But even if it applied, the defect would give rise to a
substantial injustice which cannot be remedied by any order of
court.
The total claims proven against the estate amounted to
R2 155 959.  If the properties were sold after the
second
meeting of the creditors, they could clearly have fetched a
much higher price.  This is borne out by the fact that some of

the properties were resold at a higher price before the
second meeting of the creditors was held.
[105]
Moreover, a distinction must be drawn between the preservation
of what was done in non-compliance with formalities on the one hand

and the wrongful consequences of the non-compliance, on the other.
Section 157(1) does not protect functionaries who cause
damage by not
following its requirements from liability for their irregular
conduct.  Its focus is the protection of the act
wrongly
performed.  It insulates the sale from invalidity.  There
are no reasons of principle or public policy which
militate against
holding those who do not follow the Act liable for any damage they
cause.
[106]
Protection of property is entrenched in our law.  It is
guaranteed by section 25 of the Constitution which outlaws arbitrary

deprivation of property.  This section permits deprivation of
property if it is effected in terms of a law of general application.

The deprivation envisaged is the one effected in compliance with the
requirements of the law authorising it.  The bottom line
is that
a justified deprivation must follow the spirit and letter of the law
that permits it.
[107]
In a claim for damages arising from deprivation of property
all that a claimant needs to prove is the taking away of property
without
his authorisation as the owner.  Such deprivation is
taken as prima facie unlawful.  Once a deprivation of this kind
is established, the onus falls on the person who caused it to
establish a ground that justifies it.
[108]
In
Zealand
this principle was endorsed in these terms:
“It has long
been firmly established in our common law that every interference
with physical liberty is prima facie unlawful.
Thus once the
claimant establishes that an interference has occurred, the burden
falls upon the person causing that interference
to establish a ground
of justification.”
[59]
[109]
The burden fell on the trustees to justify their disposal of
the property of the insolvent estate.  Reliance on the invalid

approval granted unlawfully by the Master could not constitute
justification.  Therefore the High Court and the Supreme Court

of Appeal erred in holding that the sale was lawful.
Locus standi
[110]
While I accept that the applicant had the legal standing to
challenge the Master’s approval on review, I do not think that

his claim for damages depended on a successful review of the
approval.  On the approach laid down in
Zealand
, the
trustees could avoid liability only if they proved that the sale was
authorised by the Act.  They have failed to discharge
the onus
that rested on them.  The issue whether the applicant could have
taken the Master’s approval on review is immaterial.
Remedy
[111]
The rejection of the defence advanced by the trustees does not
automatically result in the claim for damages succeeding.  Much

depends on the nature of that claim.  Although the Supreme Court
of Appeal was willing to entertain a delictual claim that
was
advanced belatedly on appeal, I am not convinced that this Court
should do likewise.  The judgment of the trial Court
explicitly
states that the applicant’s claim for damages is not based on a
delictual claim.
[60]
It is clear from that judgment that the applicant pleaded a statutory
claim based on section 82 of the Act only.
[112]
I agree with both Courts that section 82 applies only to sales
that are conducted after the second meeting of creditors and subject

to the creditors’ instructions.  As the impugned sale
occurred before such meeting, it fell outside the scope of section

82.  Indeed the trustees who effected it claimed to have acted
in terms of section 80
bis
and not section 82.  Their
purported authorisation was granted by the Master and not the
creditors.
[113]
If the claim was delictual, I would not have hesitated to
declare that the trustees were liable for any damages proved at a
later
trial in the High Court.  The difficulty is that the
applicant restricted his cause of action to a statute.  But
since
in the notice of motion filed in this Court, the
applicant also seeks further or alternative relief, I am
inclined
to merely declare that the impugned sale was unlawful.
[114]
Accordingly, I would uphold the appeal and order the Master to
pay costs in
the High Court and Supreme Court
of Appeal.  It was the duty of the Master to ensure that the
relevant provisions were
complied with.  He knew that the
trustees had not been appointed when they submitted their request for
approval.  He
was also aware that his exercise of power under
section 80bis depended upon a recommendation by duly appointed
trustees and that
he should apply his mind to reasons furnished
in support of the request.  But he failed to discharge the
supervisory
obligation imposed on him by the Act.
ZONDO J
[115]
I have read the judgments by my Colleagues, Khampepe J (first
judgment) and Jafta J (second judgment).
[116]
The first judgment sufficiently sets out the factual
background and litigation history in this matter.  It is,
therefore, unnecessary
to repeat those in this judgment.  It is
only necessary to point out that the first, second and third
respondents were appointed
by the Master of the High Court (fourth
respondent) as trustees on 24 January 2006 and the Master authorised
the sale of properties
by the trustees on 31 January 2006.
[117]
For the reasons given up to and including paragraph 28 of the
first judgment and those set out below, I agree with the first
judgment’s
conclusion that the application for condonation
should be granted but that it is not in the interests of justice that
leave to
appeal be granted in this matter.  For the same reasons
I would also say that the application for leave to appeal should be

dismissed because there are no reasonable prospects of success.
I, thus, concur in the order proposed in the first judgment.
[118]
With regard to the challenge to the validity of the Master’s
authorisation of the sale of the properties, the only bases upon

which the applicant contended that the sale or transfer of the
properties in question was in breach of section 80
bis
and
section 82(1)
of the
Insolvency Act
[61
]
were that:
(a)
the offer to purchase the properties was
accepted by the first
respondent before the Master had appointed him as a trustee;
(b)
the first, second and third respondents applied
to the Master for
authority to sell the properties on 12 January 2006 which was before
they were appointed as trustees and, therefore,
before they had
authority to make that application;
(c)
the Master granted authority for the sale
of properties in response
to an application that was made by the first, second and third
respondents before they had authority
to make such an application.
[119]
It is in the above context that in his action in the High
Court the applicant contended that the properties were sold without
the
Master’s authority.  In this regard it is, in my view,
important to note that—
(a)
when the first, second and third respondents
were appointed as
trustees on 24 January 2006, the respondents’ application to
the Master for the authority to sell the properties
was pending
before the Master and they did not withdraw it; this means that, even
after the first, second and third respondents
had been appointed as
trustees, they continued to seek the Master’s authorisation in
respect of which they were waiting to
hear from the Master when they
were appointed.
(b)
when the Master considered and decided the application
for authority
to sell the properties, he knew that the first, second and third
respondents had not changed their minds about their
application for
the authority to sell the properties.
[120]
Given the above, the question that arises is: what should the
first, second and third respondents have done after they had been
appointed if they sought to avoid the alleged non-compliance with the
Insolvency Act?  The
answer can only be that they should have
withdrawn the application they had submitted before they were
appointed and resubmitted
the same application.  That, in my
view, would be the height of formalism.  In my view, it was in
order that they did
not withdraw their application.
[121]
To the extent that the first, second and third respondents’
application to the Master may not have been lawful before the
applicants were appointed, it became lawful when they were appointed
and they did not withdraw it.  Accordingly, when the Master

granted the first, second and third respondents authority on
31 January 2006, that was lawful because they were by then

already trustees and still wanted the Masters authorisation.
For the
Applicant:

Minnaar & De Kock Attorneys
For the First Respondent:
D M Leathern SC and S J van Rensburg
instructed by Van Rensburg Koen
& Baloyi Attorneys
[1]
24 of 1936.
[2]
Nicolaas Johannes Swart v Conrad Alexander Starbuck
,
unreported judgment of the Gauteng Division of the High Court,
Pretoria, Case No 48444/2008 (3 December 2013) (High Court

judgment).
[3]
Mr Swart’s estate was sequestrated on 1 November 2005.
The Act provides for the rehabilitation of an insolvent by
effluxion
of time in terms of section 127A(1), which provides:
“Any
insolvent not rehabilitated by the court within a period of ten
years from the date of sequestration of his estate,
shall be deemed
to be rehabilitated after the expiry of that period unless a court
upon application by an interested person after
notice to the
insolvent orders otherwise prior to the expiration of the said
period of ten years.”
[4]
Swart v Starbuck
[2016] ZASCA 83
;
2016 (5) SA 372
(SCA) (SCA
judgment) at para 5.
[5]
This was an express term of the contracts.  In addition,
generally speaking, a suspensive condition
suspends the operation
of all obligations flowing from a contract until the occurrence
of a future uncertain event.  If the uncertain future event

does not occur, the obligations never come into operation.  See
Command Protection Services (Gauteng) (Pty) Ltd t/a Maxi Security
v South African Post Office Ltd
[2012] ZASCA 160
;
2013 (2) SA
133
(SCA) at para 21; and
Diggers
Development (Pty) Ltd v
City of Matlosana
[2011] ZASCA 247
;
[2012] 1 All SA 428
(SCA) at
para 29.  See also
Southern
Era
Resources
Ltd
v
Farndell
NO
[2009] ZASCA 150
;
2010 (4) SA 200
(SCA) at para 11.
[6]
Section 80
bis
is headed “Sale of movable or immovable
property on authorization of Master” and provides:
“(1)
At any time before the second meeting of creditors the trustee
shall,
if satisfied that any movable or immovable property of the
estate ought forthwith to be sold, recommend to the Master in
writing
accordingly, stating his reasons for such recommendation.
(2)
The Master may thereupon authorize the sale of such property, or
of
any portion thereof, on such conditions and in such manner as he may
direct: Provided that, if the Master has notice that
such property
or a portion thereof is subject to a right of preference, he shall
not authorize the sale of such property or such
portion, unless the
person entitled to such right of preference has given his consent
thereto in writing or the trustee has guaranteed
that person against
loss by such sale.”
[7]
Section 18 is headed “Appointment of provisional trustee by
Master” and in relevant part provides:
“(1)
As soon as an estate has been sequestrated (whether provisionally or

finally) or when a person appointed as trustee ceases to be trustee
or to function as such, the Master may, in accordance with
policy
determined by the Minister, appoint a provisional trustee to the
estate in question who shall give security to the satisfaction
of
the Master for the proper performance of his or her duties as
provisional trustee and shall hold office until the appointment
of a
trustee.
(2)
At any time before the meeting of the creditors of an insolvent

estate in terms of section forty, the Master may, subject to the
provisions of subsection (3) of this section, give such directions

to the provisional trustee as could be given to a trustee by the
creditors at a meeting of creditors.
(3)
A provisional trustee shall have the powers and the duties of a

trustee, as provided in this Act, except that without the authority
of the court or for the purpose of obtaining such authority
he shall
not bring or defend any legal proceedings and that without the
authority of the court or Master he shall not sell any
property
belonging to the estate in question. Such sale shall furthermore be
after such notices and subject to such conditions
as the Master may
direct.”
[8]
SCA judgment above n 4 at para 6.
[9]
See
Janse van Rensburg v Muller
[1995] ZASCA 136; 1996 (2) SA
557 (A).
[10]
Their final appointment as trustees followed on
16 November 2006.
[11]
Section 82(1) provides that a trustee shall, as
soon as he is
authorised to do so
at the second meeting of the creditors
,
sell all property in that estate in such a manner and upon such
conditions as the creditors may direct, and specifically reads
:
“Subject to
the provisions of sections eighty-three and ninety the trustee of an
insolvent estate shall, as soon as he is
authorized to do so at the
second meeting of the creditors of that estate, sell all the
property in that estate in such manner
and upon such conditions as
the creditors may direct: Provided that if any rights acquired from
the State under a lease, licence,
purchase, or allotment of land is
an asset in that estate, the trustee shall, in his administration of
the estate, act in accordance
with those provisions (if any) which
by the law under which the rights were acquired, are expressed to
apply in the event of
the sequestration of the estate of the person
who acquired those rights: Provided that if the creditors have not
prior to the
final closing of the second meeting of creditors of
that estate given any directions the trustee shall sell the property
by public
auction or public tender. A sale by public auction or
public tender shall be after notice in the
Gazette
and after
such other notices as the Master may direct and in the absence of
directions from creditors as to the conditions of
sale, upon such
conditions as the Master may direct.”
[12]
Section 82(8) provides:
“If any
person other than a person mentioned in subsection (7) has purchased
in good faith from an insolvent estate any
property which was sold
to him in contravention of this section, or if any person in good
faith and for value acquired from a
person mentioned in
subsection (7) any property which the last mentioned person
acquired from an insolvent estate in contravention
of that
subsection, the purchase or other acquisition shall nevertheless be
valid, but the person who sold or otherwise disposed
of the property
shall be liable to make good to the estate twice the amount of the
loss which the estate may have sustained as
a result of the dealing
with the property in contravention of this section.”
[13]
See SCA judgment above n 4 at para 11, referring to the trustees’
plea in the High Court.
[14]
High Court judgment above n 2 at para 66.
[15]
Id at para 75.
[16]
Id at para 81.
[17]
SCA judgment above n 4 at para 6.  The Court noted that the
application included a consent from the two secured creditors;
a
circular sent to all known creditors regarding the offers to
purchase received from the Trust; valuations of the properties;
and
the three written offers to purchase received from the Trust.
The Court also noted that no creditor responded to the
circular by
objecting to the anticipated sale of the properties.
[18]
Id at para 17.
[19]
Id at para 18.
[20]
Id at para 25.
[21]
Id at para 28.
[22]
For example: whether insolvency law and practices pose a potential
threat to fundamental rights; what caution needs to be applied
in
matters where access to courts and the
audi alteram partem
principle is restricted; and whether it can be said that
insolvent persons and concurrent creditors have equal protection of
the
law and access to courts if they are not afforded the
opportunity to raise a collateral challenge to the validity of
administrative
action by the Master.
[23]
The correspondent attorney has deposed to an
affidavit in support of this.
[24]
See
Brummer v Gorfil Brothers Investments (Pty) Ltd
[2000]
ZACC 3
;
2000 (2) SA 837
(CC);
2000 (5) BCLR 465
(CC) at para 3.
[25]
Section 82(8) is set out at n 12 above.
[26]
High Court judgment above n 2 at para 81.
[27]
Second judgment at [113].
[28]
See
Prince v President, Cape Law Society
[2000] ZACC 28
;
2001
(2) SA 388
(CC);
2001 (2) BCLR 133
(CC) at para 22, where Ngcobo J
stated:
“Parties who
challenge the constitutionality of a provision in a statute must
raise the constitutionality of the provisions
sought to be
challenged at the time they institute legal proceedings.  In
addition, a party must place before the Court
information relevant
to the determination of the constitutionality of the impugned
provisions. . . .  I would emphasise
that all this information
must be placed before the Court of first instance.  The placing
of the relevant information is
necessary to warn the other party of
the case it will have to meet, so as [to] allow it the opportunity
to present factual material
and legal argument to meet that case.”
See also
Maphango v Aengus Lifestyle
Properties (Pty) Ltd
[2012] ZACC 2
;
2012 (3) SA 531
(CC);
2012
(5) BCLR 449
(CC) at para 109; and
Phillips v National Director
of Public Prosecutions
[2005] ZACC 15
;
2006 (1) SA 505
(CC);
2006 (2) BCLR 274
(CC) at paras 39-40.
[29]
3 of 2000.
[30]
See
Oudekraal Estates (Pty) Ltd v City of Cape Town
[2004]
ZASCA 48
;
2004 (6) SA 222
(SCA) (
Oudekraal
) at para 31:
“Thus the
proper enquiry in each case – at least at first – is not
whether the initial act was valid but rather
whether its substantive
validity was a necessary precondition for the validity of consequent
acts
.  If the validity of consequent acts is dependent on no
more than the factual existence of the initial act then the
consequent
act will have legal effect for so long as the initial act
is not set aside by a competent court
.” (My emphasis)
See also
Department of Transport v
Tasima (Pty) Limited
[2016] ZACC 39
;
2017 (2) SA 622
(CC);
2017
(1) BCLR 1
(CC) (
Tasima
) at paras 88-93;
Merafong City v
AngloGold Ashanti Ltd
[2016] ZACC 35
;
2017 (2) SA 211
(CC);
2017
(2) BCLR 182
(CC) (
Merafong
) at paras 34-6; and
MEC for
Health, Eastern Cape v Kirland Investments (Pty) Ltd
[2014] ZACC
6
;
2014 (3) SA 481
(CC);
2014 (5) BCLR 547
(CC) (
Kirland
) at
paras 101 and 106.
[31]
This is of relevance because pending the fulfilment of a suspensive
condition, the contract is inchoate (see
Joseph
v
Halkett
(1902) 19 SC 289
at 293).  In the context of
sale, the Supreme Court of Appeal has held that a contract of sale
subject to a suspensive condition
that has not yet been fulfilled is
not a sale.  In
Corondimas v Badat
1946 AD 548
at 551,
Watermeyer CJ enunciated the principle relating to a contract of
sale subject to a suspensive condition:
“[W]hen a
contract of sale is subject to a true suspensive condition, there
exists no contract of sale unless and until
the condition is
fulfilled . . . . Until that moment, in the case of a sale subject
to a true suspensive condition, such as this
is, it is entirely
uncertain whether or not a contract of sale will come into existence
at some future time.”
See also above n 5.
[32]
See SCA judgment above n 4 at para 13, where it was correctly
pointed out that—
“[o]ur law
has recognised that in certain circumstances an insolvent has locus
standi by virtue of his or her real interest
in the administration
of the estate”.
See also
Francis
George Hill
Family Trust v South African Reserve Bank
[1992] ZASCA 50
;
1992
(3) SA 91
(A) at 107 B-H;
Nieuwoudt v Meester van
Hooggeregshof
[1988] ZASCA 72
;
1988 (4) SA 513
(A);
Muller
v De Wet NO
1999 (2) SA 1024
(W);
[1999] 2 All SA 163
(W) at
para 1029D-1030H; and
Mears v Rissik, Mackenzie NO and Mears’
Trustee
1905 TS 303
at 305.
In addition, section 151 of the Act
specifically makes provision for an aggrieved person to review any
decision of the Master.
The section, in relevant part,
provides:
“[A]ny
person aggrieved by any decision . . . of the Master . . . may bring
it under review by the court and to that end
may apply to the court
by motion, after notice to the Master or to the presiding officer,
as the case may be, and to any person
whose interests are affected:
Provided that if all or most of the creditors are affected, notice
to the trustee shall be deemed
to be notice to all such creditors.”
[33]
See
Merafong
above n 30 at para 42;
Kirland
above n 30
at paras 101-3;
Bengwenyama Minerals (Pty) Ltd v Genorah
Resources (Pty) Ltd
[2010] ZACC 26
;
2011 (4) SA 113
(CC);
2011
(3) BCLR 229
(CC) at para 85; and
Camps Bay Ratepayers’
Association and Residents’ Association v Harrison
[2010]
ZACC 19
;
2011 (4) SA 42
(CC);
2011 (2) BCLR 121
(CC) (
Harrison
)
at para 62.
[34]
Tasima
above n 30 at para 147.
[35]
Rule 53 requires that proceedings for judicial review be “by
way of notice of motion directed and delivered by the party
seeking
to review such decision” to all affected persons.  The
notice of motion must “set out the decision or
proceedings
sought to be reviewed” and “be supported by affidavit
setting out the grounds and the facts and circumstances
upon which
the applicant relies to have the decision or proceedings set aside
or corrected”.  The notice must call
on the relevant
decision-maker whose decision will be brought under review, and all
other parties affected, to show cause why
the decision should not be
reviewed and set aside.  It must also call upon the
decision-maker concerned to send a record
of the offending
proceedings to the registrar within 15 days of receiving the
notice, together with any reasons the decision-maker
wishes to give
or which the law requires her to give, and notify the applicant that
she has done so.
[36]
Kirland
above n 30 at paras 65 and 67.
[37]
The Supreme Court of Appeal in
Oudekraal
above n 30 at para
35 described a collateral challenge thus:
“It will
generally avail a person to mount a collateral challenge to the
validity of an administrative act where he is threatened
by a public
authority with coercive action precisely because the legal force of
the coercive action will most often depend upon
the legal validity
of the administrative act in question.  A collateral challenge
to the validity of the administrative
act will be available, in
other words, only ‘if the right remedy is sought by the right
person in the right proceedings’.”
This Court in
Merafong
above n
30 at para 23 stated:
“Relying on
the invalidity of an administrative act as a defence against its
enforcement, while it has not been set aside,
has been dubbed a
collateral challenge – ‘collateral’ because it is
raised in proceedings that are not in themselves
designed to impeach
the validity of the act in question.”
The facts of Mr Swart’s case do
not lend themselves to an understanding that he at any point mounted
a collateral challenge
against the Master’s authorisation.
It seems that Mr Swart seeks to impermissibly invalidate the section
80
bis
authorisation in proceedings where he was
dominus
litis
in attempting to enforce the payment of damages for his
own benefit in terms of section 82(8) of the Act.
[38]
Khumalo v Member of the Executive Council for Education: KwaZulu
Natal
[2013] ZACC 49
;
2014 (5) SA 579
(CC);
2014 (3) BCLR 333
(CC) (
Khumalo
) at paras 44-8, 69 and 73.
[39]
See
Khumalo
id at paras 46-8.  See also
Gqwetha v
Transkei Development Corporation Limited
[2005] ZASCA 51
;
2006
(2) SA 603
(SCA) at para 22; and
Wolgroeiers Afslaers (Edms) Bpk
v Munisipaliteit van Kaapstad
1978 (1) SA 13
(A) at 41E-F.
[40]
Recently in
Aurecon
, this Court acknowledged that
unreasonable delay in legality review proceedings must be considered
in the broader context of
the matter, including the prejudice that
would result for other parties and the consequences of setting aside
an action or decision.
See
City of Cape Town v Aurecon
South Africa (Pty) Ltd
[2017] ZACC 5
at para 37 and
Khumalo
above n 38 at para 52.
[41]
24 of 1936 (Act).
[42]
The directions read:
“1.
The parties are directed to file written submissions of not
more
than 25 pages which shall include the following issues:
1.1.
Whether it is competent to adjudicate the constitutional challenge
that was
raised for the first time in this court.
1.2.
Whether the Master’s approval to sell the applicant’s
farms was
issued in compliance with section 80
bis
, pertaining
to the trustee’s recommendation.
1.3.
If section 80bis was not complied with, what was the effect of that
non compliance
on the master’s approval?
1.3.1.
Did such non-compliance result in substantial injustice envisaged in
section 157(1)
of the
Insolvency Act?
1.4.
Whether
the applicant had locus standi to challenge the master’s
approval on review.
1.5.
If he lacked legal standing
a)
whether the Supreme Court of Appeal correctly applied
Oudekraal
Estates v City of Cape Town
2004 (6) SA 222
(SCA), and
b)
what remedy did he have in relation to the master’s approval?
1.6.
How would the resolution of the issues in paragraphs 1-5 impact upon
the
applicant’s claim for damages?
2.
Written argument, including argument on the merits must
be lodged
by―
2.1.
the applicants, on or before Friday 16 January 2017; and
2.2.
the respondents, on or before Friday 23 January 2017.”
[43]
Section 20(1)
provides:
“The effect
of the sequestration of the estate of an insolvent shall be—
(a)
to divest the insolvent of his
estate and to vest it in the Master
until a trustee has been appointed, and, upon the appointment of a
trustee, to vest the estate
in him.”
[44]
Section 18(1)
provides:
“As soon as
an estate has been sequestrated (whether provisionally or finally)
or when a person appointed as trustee ceases
to be trustee or to
function as such, the Master may, in accordance with policy
determined by the Minister, appoint a provisional
trustee to the
estate in question who shall give security to the satisfaction of
the Master for the proper performance of his
or her duties as
provisional trustee and shall hold office until the appointment of a
trustee.”
[45]
This is authorised by
section 18(2).
[46]
Section 18(3)
provides:
“A
provisional trustee shall have the powers and the duties of a
trustee, as provided in this Act, except that without the
authority
of the court or for the purpose of obtaining such authority he shall
not bring or defend any legal proceedings and
that without the
authority of the court or Master he shall not sell any property
belonging to the estate in question. Such sale
shall furthermore be
after such notices and subject to such conditions as the Master may
direct.”
[47]
The full text of the section is quoted in [83] below.
[48]
Section 82(1)
provides:
“Subject to
the provisions of sections
eighty three
and
ninety
the
trustee of an insolvent estate shall, as soon as he is authorized to
do so at the second meeting of the creditors of that
estate sell all
the property in that estate in such manner and upon such conditions
as the creditor may direct: Provided that
if any rights acquired
from the State under a lease, licence, purchase, or allotment of
land is an asset in that estate, the
trustee shall, in his
administration of the estate, act in accordance with those
provisions (if any) which by the law under which
the rights were
acquired, are expressed to apply in the event of the sequestration
of the estate of the person who acquired those
rights: Provided that
if the creditors have not prior to the final closing of the second
meeting of creditors of that estate
given any directions the trustee
shall sell the property by public auction or public tender. A sale
by public auction or public
tender shall be after notice in the
Gazette
and after such other notices as the Master may direct
and in the absence of directions from creditors as to the conditions
of
sale, upon such conditions as the Master may direct.”
[49]
High Court Judgment at para 59.  In Afrikaans this paragraph
reads:
“Eiser se
els vir skadevergoeding is ni gebaseer op ‘n deliktuele els
nie maar op die volgende gronde:
Daar was geen
magtiging gegee aan die verweerdes in terme van Artikel 80 (bis) van
die insolventslewet vir die vervreemding van
die bretrokke elendon
nie.  Gevolglik was die oordrag van gedeelted 58 en 13van die
plaas Doorndraal met waterregte onreelmatig.
Die
koopooreenskomste gemerk NS 6,7 en 8 is nie aangegaan namens al die
kurators in die boedel nie, alternatlewelik, het die eerste

verweerder die koopooreenkomste in sy persoonlike hoedanigheld
aangegaan.
Die eerste, tweede
en derde verweerders het nie oor die nodige bevoegheid beskik om
enige koopooreenkomste namens die boedel van
die eiser op 1 Desember
2005 te sluit nie.
Die eerste, tweede
en derfe verweerders het nie magtiging gehad vir die verkoping van
die eiendom ingevolge Artikel 80 (bis) van
die Insolvenslewet nie.
Die verkoping van
die eiendomme het plaasgevind in stryd met die bepalings van Artikel
82 (8) van die Wet aanspreeklik teenoor
die eiser se boedel vir
dubbel die bedrag van die verlies wat die boedel gely het.”
[50]
High Court judgment above n 2 at paras 49-53.
[51]
Majority judgment at [31].
[52]
S v Mhlungu
[1995] ZACC 4
;
1995 (3) SA 867
(CC);
1995 (7)
BCLR 793
(CC);
Mabaso v Law Society of the Northern Provinces
[2004] ZACC 8
;
2005 (2) SA 117
(CC);
2005 (2) BCLR 129
(CC) at
para 34; and
De Lange v Presiding Bishop of the
Methodist Church of Southern Africa for the time being
[2015]
ZACC 35; 2016 (2) SA 1 (CC); 2016 (1) BCLR 1 (CC).
[53]
Roberts v Chairman of Local Road Transportation Board (1)
1980 (2) SA 472
(C) at 476G–477A.  See also
Pinetown
Town Council v President of the Industrial Court
1984 (3) SA 173
(N) at 179A–E.
[54]
High Court judgment above n 2 at para 72.
[55]
South African Defence and Aid Fund v Minister of Justice
1967
(1) SA 3
(C) at 34G-H.
[56]
President of the Republic of South Africa v South African Rugby
Football Union
[1999] ZACC 11
;
2000 (1) SA 1
(CC);
1999 (10)
BCLR 1059
(CC) (
SARFU
).
[57]
Harrison
above n 33 at para 14.
[58]
Paola v Jeeva NO
[2003] ZASCA 100
;
[2003] 4 All SA 433
(SCA)
at para 14.
[59]
Zealand v Minister of Justice and Constitutional Development
[2008] ZACC 3
;
2008 (4) SA 458
(CC);
2008 (6) BCLR 601
(CC) at para
25.  See also
Minister of Home Affairs v Rahim
[2016]
ZACC 3; 2016 (3) SA 218 (CC); 2016 (6) BCLR 780 (CC).
[60]
High Court judgment above n 2 at para 59.
[61]
24 of 1936.