Cooper NO v First National Bank of SA Ltd

• Jurisdiction: South Africa
• Citation: 2001 (3) SA 705 (SCA)

Cooper NO v First National Bank of SA Ltd
2001 (3) SA 705 (SCA)

2001 (3) SA p705

Citation	2001 (3) SA 705 (SCA)
Case No	272/98
Court	Supreme Court of Appeal
Judge	Smalberger JA, F H Grosskopf JA, Marais JA, Zulman JA and Melunsky AJA
Heard	August 21, 2000
Judgment	September 29, 2000
Counsel	J P Daniels for the appellant.; K J Van Huyssteen (attorney) for the respondent.

Flynote : Sleutelwoorde H

Insolvency — Property passing to trustee — Taking charge of estate property — Warrant in terms of s 69(3) of Insolvency Act 24 of I 1936 — When audi alteram partem principle to be complied with — Section 69(3) clearly intended to strengthen hand of trustee in carrying out obligation to take charge of all assets belonging to insolvent estate — Resorting to its provisions has potential to infringe rights of others in relation to both their J

2001 (3) SA p706

property and privacy when it comes to search and seizure — As general principle, warrant should not A be issued without affording person affected opportunity of being heard, unless it can be said that s 69(3) excludes that right — Opportunity of being heard requiring giving of appropriate notice to person concerned — Application for warrant relating to items suspected of being 'otherwise unlawfully withheld' — Words could govern widely B divergent situations — Words also comprehend situations where continued possession of item could prejudice insolvent estate, as well as those where no danger of loss resulting to insolvent estate from possession of such item pending determination of any dispute concerning rights thereto — Need to have regard to facts of each particular case to determine whether matter is one where audi principle should have application — Where circumstances such that object and purpose of C s 69(3) would be defeated by giving notice, or where identity of affected person not known, giving of notice would be dispensed with — In other instances not — What must be asked is whether, having regard to facts known, when warrant applied for, Legislature must necessarily have intended that audi principle be dispensed with — Unless D answer is unequivocal 'yes', audi principle to be complied with by giving notice to affected person to enable such person to be heard.

Costs — Costs de bonis propriis — When to be awarded — Trustee of insolvent estate — General principle of common law is that trustee, who acts in representative capacity, cannot be ordered to pay costs de bonis propriis unless he or she has been guilty of improper conduct — Improper conduct always unacceptable, but E unacceptable conduct not necessarily improper.

Insolvency — The trustee — Taking charge of estate property — Warrant to search for and take possession of insolvent's property. See Insolvency — Property passing to trustee — Taking charge of estate property

Maxims — Audi alteram partem — Applicability of to application by trustee of insolvent estate for warrant in terms of s 69(3) of Insolvency Act 24 of 1936 — When audi principle can be dispensed with.

Headnote : Kopnota

Per Smalberger JA, F H Grosskopf JA and Melunsky AJA concurring (Marais JA and Zulman JA dissenting): Section 69(3) of the Insolvency Act 24 of 1936 was clearly intended to strengthen the hand of a trustee in carrying out the obligation to take charge of all the F 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, 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 G ascertainable or reasonably ascertainable), an opportunity of being heard, unless it can be said that s 69(3) 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. (Paragraph [23] of Smalberger JA's judgment at H 715D - F/G.)

Per Smalberger JA, F H Grosskopf JA, Marais JA, Zulman JA and Melunsky AJA concurring: 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) I in cases involving concealed items. (Paragraph [26] of Smalberger JA's judgment at 716D/E - F and para [7] of Marais JA's judgment at 722E - E/F.)

Per Smalberger JA, F H Grosskopf JA and Melunsky AJA concurring (Marais JA and Zulman JA dissenting): The position is different, however, where the application for a warrant relates to items suspected of being 'otherwise J

2001 (3) SA p707

unlawfully withheld'. These are words of wide import. They could govern situations as widely divergent A 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 her or 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 B resulting to the insolvent estate from the possession of such item pending determination of any dispute concerning the rights thereto. In these situations one would need to have regard to the facts of each particular case to determine whether the matter was one where the audi alteram partem principle should have application. Where the circumstances are such that the object and purpose of s 69(3) C 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 implication, 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 D 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. (Paragraphs [27] and [28] of Smalberger JA's judgment at E 716F - 717B.)

Where the Court found that a trustee had applied for a warrant in terms of s 69(3) when he was aware of all the circumstances pertaining to his trusteeship of the insolvent's estate and his conduct in regard thereto; that he knew that the title deed of certain property, which was the subject-matter of the warrant, was in the possession of the respondent and was being openly held by it; that for a year and a F half he had taken no active steps to obtain possession of the title deed from the respondent; that it was 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; that prima facie the respondent had bona fide and reasonable grounds for retaining the title deed, even though it could ultimately transpire, G once all the relevant facts had been fully canvassed, that the respondent was not legally entitled to withhold it; that a caveat had been entered in the deeds registry, which effectively precluded the property from being encumbered or sold to the prejudice of the insolvent estate, it held that the matter was one where notice of the s 69(3) application for a warrant should have been given to the respondent and it should have been afforded an H opportunity of being heard. The failure to do so had vitiated the proceedings and justified the warrant being set aside. (Paragraphs [34] and [35] of Smalberger JA's judgment at 718D/E - I/J.)

Per Smalberger JA, F H Grosskopf JA, Marais JA, Zulman JA and Melunsky AJA concurring: The general principle of the common law is that a trustee, who acts in a representative capacity, cannot be I ordered to pay costs de bonis propriis unless she or he has been guilty of improper conduct. Improper conduct is always unacceptable; but unacceptable conduct is not necessarily improper. (Paragraph [37] of Smalberger JA's judgment at 719D - E/F.)

The decision in the Witwatersrand Local Division in First National Bank of SA Ltd v Cooper NO confirmed in part and reversed in part. J

2001 (3) SA p708

Cases Considered

Annotations:

Reported cases A

Advance Mining Hydraulics (Pty) Ltd and Others v Botes NO and Others 2000 (1) SA 815 (T): considered

Bruwil Konstruksie (Edms) Bpk v Whitson NO and Another 1980 (4) SA 703 (T): dictum at 711A - B applied

Byrne and Another v Kinematograph Renters Society Ltd and Others [1958] 2 All ER 579 (Ch): considered B

Cinnamond v British Airports Authority [1980] 1 WLR 582 (CA): considered

De Jager v Heilbron and Others 1947 (2) SA 415 (W): dictum at 419 - 20 applied

Du Preez and Another v Truth and Reconciliation Commission 1997 (3) SA 204 (A): dictum at 321C - E applied C

Duncan v Minister of Law and Order 1986 (2) SA 805 (A): considered

F Hoffmann-La Roche & Co AG and Others v Secretary of State for Trade and Industry [1975] AC 295 (CA): considered

General Medical Council v Spackman [1943] AC 627 (HL): considered

George v Rockett and...