Gilbey Distillers & Vintners (Pty) Ltd and Others v Morris NO and Another

• Jurisdiction: South Africa

Gilbey Distillers & Vintners (Pty) Ltd and Others v Morris NO and Another
1991 (1) SA 648 (A)

1991 (1) SA p648

Citation	1991 (1) SA 648 (A)
Court	Appellate Division
Judge	Joubert ACJ, Smalberger JA, Nestadt JA, Kumleben JA and Friedman AJA
Heard	September 17, 1990
Judgment	November 16, 1990

Flynote : Sleutelwoorde

H Insolvency — The trustee — Accounts — Liquidation and distribution account — 'Duly confirmed trustee's account' in s 151 of Insolvency Act 24 of 1936 — Such account being one resulting from proper procedures, as prescribed by ss 108, 111 and 112 — Fact that confirmation flawed by reason of its having been procured by fraud of creditor or of trustee, I or because Master ignorant of facts material to his decision, not detracting from account having been duly confirmed in sense envisaged by s 151.

Insolvency — The trustee — Accounts — Liquidation and distribution account — Reopening of — Insolvency Act 24 of 1936, s 151 allowing any person aggrieved by Master's decision to bring it under review by Court, J provided that 'Court shall not re-open any

1991 (1) SA p649

A duly confirmed trustee's account otherwise than as provided in s 112'— Where 'duly confirmed' trustee's account under attack, Court's power to review governed by s 112— Section 112 providing that Master's confirmation of account 'shall be final save as against a person who may have been permitted by the Court before any dividend has been paid under the account, to reopen it'— Court's power of review under s 112 thus B limited— Where account duly confirmed and dividend paid under account, Court not having power to review such account under s 112 where Master's decision to confirm such account based upon ignorance of true facts. C

Headnote : Kopnota

Section 151 of the Insolvency Act 24 of 1936 provides, inter alia, that any person aggrieved by any decision of the Master may bring it under review by the Court, provided that 'the Court shall not reopen any duly confirmed trustee's account otherwise than as provided in s 112'. In terms of s 112 of the Act, when a trustee's account has been open for inspection by creditors and no objection has been lodged or an objection D has been lodged and the account amended or an objection has been lodged but withdrawn, 'the Master shall confirm the account and his confirmation shall be final save as against a person who may have been permitted by the Court before any dividend has been paid under the account, to reopen it'.

The powers of review conferred by s 151 of the Act are of the widest kind, which means that the Court is not restricted to cases where some irregularity has occurred. Under s 151 the Court acts as a Court of E appeal and is therefore entitled to adjudicate the matter de novo. But the principle must be confined to the type of decision, ruling or order in issue; it cannot operate where a 'duly confirmed' trustee's account is under attack. Where a 'duly confirmed' trustee's account is under attack, the Court's power of review is governed by s 112 and is limited.

A 'duly confirmed' account is one which results from the proper procedures having been followed: the account must have been open for inspection by creditors under s 108; objections must have been dealt F with in terms of s 111; and confirmation by the Master must have taken place consequent upon his honestly applying his mind to the matter. The fact that a confirmation was flawed by reason of its having been procured by the fraud of a creditor or the trustee, or because the Master was ignorant of facts material to his decision, cannot detract from the account having been duly confirmed in the sense envisaged by s 151.

In casu, the appellants, as creditors in an insolvent estate, had sought G an order reviewing and setting aside the Master's confirmation of that part of the first and second liquidation and distribution accounts which had awarded to the respondent, as trustee, remuneration for carrying on in terms of s 80 of the Act the liquor business of the insolvent estate. It was the appellants' case that, although it was the respondent who had been authorised by the creditors to carry on the business, it was the appellants who had in fact continued the business and who had stood to profit or lose from the carrying on of the business, and not the insolvent estate. They argued, accordingly, that the 'overall H responsibility' for carrying on the business upon which the respondent had relied was insufficient to warrant his being remunerated, and that his had merely been a residual duty which had flowed from his representative ownership of the assets of the estate. The accounts had been open for inspection as required by the Act and, as no objections thereto had been lodged, the Master had confirmed them. A dividend had been paid under both accounts. The appellants submitted that even if the provisions of s 112 of the Act governed their application for review, I the Master's confirmation of the accounts was liable to be set aside because (i) his confirmation had been induced by the respondent's fraudulent misrepresentation that he was carrying on the business; (ii) alternatively, the Master had been misled by the conduct of the respondent which had been similar to fraud; and (iii) confirmation had taken place in ignorance of the true facts, viz that the trustee had not been carrying on the business. The application was dismissed by a J Local Division. In an appeal,

1991 (1) SA p650

A Held, assuming in favour of the appellants that it was they who had carried on the business and had effected sales and that the trustee had not been entitled to a fee based upon the turnover of the business, that, in the absence of any dispute that all the requisite formalities had been complied with, the accounts in issue had been 'duly confirmed' in the sense envisaged by s 151 and they could therefore be reopened only in terms of s 112.

Held, further, as to the argument that the Master's decision to confirm B the accounts had been taken in the absence of material facts (see (iii) above), that, assuming that the 'wrong factual basis doctrine' afforded a ground of review in South African law, the word 'final' in the phrase 'his confirmation shall be final' in s 112 did not permit accounts being reopened on the ground under consideration.

Held, further, as to the submission that the respondent had made fraudulent misrepresentations to the Master (see (i) above), that, on C the facts, there was ample justification for concluding that the respondent had not intended to mislead either the Master or the creditors, and that no finding of fraud was therefore justified.

Held, further, as to the submission that the respondent's conduct had been akin to fraud, that, in order to satisfy the mental element, there had to be shown a want of good faith: the respondent in this instance might have been mistaken in what he had reported to the Master, but that appeared to have been nothing other than an innocent mistake.

D The appeal was accordingly dismissed.

The decision in Gilbey Distillers & Vintners (Pty) Ltd and Others v Morris NO and Another 1990 (2) SA 217 (SE) confirmed but for different reasons.

Case Information

Appeal from a decision in the South Eastern Cape Local Division (Kannemeyer JP) reported at 1990 (2) SA 217. The issues appear from the E judgment of Nestadt JA.

J J Gauntlett SC (with him O L Rodgers) for the appellants (the heads of argument were drawn by L R Dison SC and J J Gauntlett SC) referred to the following authorities: As to the fact that the Master's function in relation to the confirmation of accounts is a judicial (and not F administrative) function, cf Aspeling and Another v Hoffman's Trustee 1917 TPD 308; and see Graaff-Reinet Board of Executors and Another v Magistrate of Pearston and Another 1917 CPD 332 at 335; Kilroe-Daley v Barclays National Bank Ltd 1984 (4) SA 609 (A) at 625F - I. As to the fact that confirmation of an account under s 112 does not give rise to absolute finality, see Callinicos v Burman 1963 (1) SA 489 (A) at 499 in G fine and 500 in fine ; Kilroe-Daley v Barclays National Bank (supra at 626B); Schierhout v Union Government 1927 AD 94 at 98. As to the nature of fraud required to defeat finality, see Singh v Umzinto Rural Licensing Board 1963 (1) SA 872 (D) at 877; Red Hill Garage and Others v Buchan's Garage and Others 1954 (4) SA 777 (N) at 780. As to the H finality envisaged by s 112, see Welkom Village Management Board v Leteno 1958 (1) SA 490 (A) at 502; Minister of Law and Order v Hurley 1986 (3) SA 568 (A) at 586; SWAPDUF en Andere v Administrateur, SWA 1983 (1) SA 411 (A); Andrews v Mitchell 1905 AC 78 at 83 ([1904 - 7] All ER Rep 599 at 601H). As to the presumption against the exclusion of the ordinary jurisdiction of the Court, see Hurley's case supra at 584A - B; I Wiechers in Joubert (ed) Law of South Africa vol 1 para 88; Johannesburg Consolidated Investment Co v Johannesburg Town Council 1903 TS 111 at 115; Pyx Granite Co Ltd v Ministry of Housing and Local Government [1959] 3 All ER 1 (HL) at 6D - E; Hotel Association of SR v SR Liquor Licensing Board 1958 (1) SA 426 (SR) at 431; Judes v District Registrar of Mining Rights 1907 TS 1046 at 1051. And see, further, Anisminic v J Foreign Compensation Commissioner

1991 (1) SA p651

A [1969] 1 All ER 208 (HL) at 210; Rootkin v Kent CC [1981] 2 All ER 227 (CA); Webb v Minister of Housing [1965] 2 All ER 193 (CA); In re Preston [1985] 2 All ER 327 (HL). As to the need for the Master to be in possession of all the relevant facts in order to be able to exercise the discretion entrusted to him, see Ford v Lewis [1971] 2 All ER 983 (Ch) at 991, 992; R v Paddington & St Marylebone Rent Tribunal: Ex parte B Haines [1961] 3 All ER 1047 (QB) at 1050B - C; Ronnie's Motors v Van der Merwe 1960 (4) SA 206 (E)...