South Africa: North Gauteng High Court, Pretoria

[25]   The applicants aver that despite the above, the first respondent granted the second respondent’s application and took a decision to issue the search warrant in terms of section 26 read with section 85 of the Administration of Estates Act.

[26]   The second respondent avers that subsequent to his appointment as curator bonis of Mrs Prinsloo (patient), he investigated the financial circumstances of the patient and found that the estate of the late Mr Prinsloo contained assets where the patient was the sole heir of the deceased’s estate.

[27]   The second respondent further avers that his investigation revealed that an amount of R 3 746 169.00 was payable to both Mr Prinsloo and the patient. He further established that Mr Hendrik Marthinus van Zyl is a director of VZF Auditors Inc, (fourth applicant), is also a director of VZF Services (Pty) Ltd (third applicant) and is a trustee of Anko Trust either in his personal capacity or as a representative of VZF Services (Pty) Ltd.

[28]   The investigation further revealed that attempts were made to amend the trust deed where the patient and the children were both capital beneficiaries and the patient an income beneficiary. This resulted in the second respondent requesting from Mr Van Zyl recent financial statements of the Anko Trust, confirmation of who deals with the finances of the partnership in which the trust Anko Trust was involved of a day to day basis, the dividend that is paid to Anko trust and in particular who monitors the payments, financial policy of the trust regarding the partnership, the auditors of the partnership, to whom payments as income beneficiaries are being made and whether Mr Van Zyl had knowledge of the frequency of division of income of both the partnership and the trust.

[29]   The second respondent avers that the responses received were not satisfactory and referred him to Dr JD Prinsloo as the beneficiary of the trust and also that there was no loan account for the patient.

[30]   As a result of the unsatisfactory responses, the second respondent indicated to the fourth applicant that he would approach the Magistrate Court in terms of the provisions of section 26 read with section 85 of the Administration of Estates Act. He proceeded to apply for search warrant which was granted and executed.

[31]   The application was brought against the background that Dr DJ Prinsloo, the son of the patient, indicated to the second respondent that the loan account was allegedly fictitious and was removed. The second respondent questioned the explanation given to him as Dr Prinsloo was the executor of his late father’s estate and had reflected the loan account as an asset and awarded it to the patient as part of her inheritance.

[32]   The second respondent avers that sufficient circumstances existed in order for him to rely on section 26 of the Administration of Estates Act. These circumstances caused him to have grave concern pertaining to the changes to the financial position of the patient, in particular assets that were awarded to her in terms of a recorded and official process, that now were alleged not to be due.

[33]   At the heart of this review application is the interpretation of the provisions of section 26 read with section 85 of the Administration of Estates Act \, section 69 of the Insolvency Act, the common law principle of audi alteram partem rule and the common law principles applicable to the ex parte and locus standi of the second respondent in the initial application to the Magistrate.

[34]   Section 26 and 85 of the Administration of Estates Act, reads as follows:

“26   Executor charged with custody and control of property in estate

(1)    Immediately after letters of executorship have been granted to him an executor shall take into his custody or under his control all the property, books and documents in the estate and not in the possession of any person who claims to be entitled to retain it under any contract, right of retention or attachment.

(1A)   The executor may before the account has lain for inspection in terms of section 35(4) with the consent of the Master release such amount of money and such property out of the estate as the executor’s opinion are sufficient for the subsistence of the deceased’s family or household.

(2)    If the executor has reason to believe that any such property, book or document is concealed or otherwise unlawfully withheld from him, he may apply to the magistrate having jurisdiction for a search warrant mentioned in subsection (3).

(3)    If it appears to a magistrate to whom such application is made, from a statement made upon oath, that there are reasonable grounds for suspecting that any property, book or document in any deceased estate is concealed upon any person or at any place or upon any or in any vehicle or vessel or receptacle of any nature, or is otherwise unlawfully withheld from the executor concerned, within the area of the magistrate’s jurisdiction, he may issue a warrant to search for and take possession of that property, book or document.

(4)    Such a warrant shall be executed in like manner as a warrant to search for stolen property, and the person executing the warrant shall deliver any article seized thereunder to the executor concerned.”

[35]   In terms of section 85 of the Administration Estates Act, section 26 applies mutatis mutandis with reference to curators.

[36]   Section 26 read with section 85 of the Administration of Estates Act is akin to section 69 of the Insolvency Act 24 of 1936 (the “Insolvency Act”).

[37]   Section 69 of the Insolvency Act reads as follows:

“69.   Trustee must take charge of property of estate

(1)    A trustee shall, as soon as possible after his appointment, but not before the deputy-sheriff has made the inventory referred to in subsection (1) of section nineteen, take into his possession or under his control all movable property, books and documents belonging to the estate of which he is trustee and shall furnish the Master with a valuation of such movable property by an appraiser appointed under any law relating to the administration of the estates of deceased persons or by a person approved of by the Master for the purpose.

(2)    If the trustee has reason to believe that any such property, book or document is concealed or otherwise unlawfully withheld from him, he may apply to the magistrate having jurisdiction for a search warrant mentioned in subsection (3).

(3)    If it appears to a magistrate to whom such application is made, from a statement made upon oath, that there are reasonable grounds for suspecting that any property, book or document belonging to an insolvent estate is concealed upon any person, or at any place or upon or in any vehicle or vessel or receptacle of whatever nature, or is otherwise unlawfully withheld from the trustee concerned, within the area of the magistrate’s jurisdiction, he may issue a warrant to search for and take possession of that property, book or document.

(4)    Such a warrant shall be executed in a like manner as a warrant to search for stolen property, and the person executing the warrant shall deliver any article seized thereunder to the trustee.”

[38]   In the matter of Hyundai Motor Distributors (Pty) Ltd and Others v Smit NO and Others [2000] ZACC 12; 2001 (1) SA 545 (CC) it was held that:

“One of the core considerations when classifying the discretion is whether in making the decision it is possible that there could be a legitimate difference of opinion as to the proper outcome of the exercise of discretion. In this case, it seems clear that the discretion to issue the warrant is a matter upon which different judicial officers may reasonably and legitimately disagree. An appellate court, therefore, may not interfere with the discretion simply because it would have reached a different conclusion to that reached by the judicial officer issuing the warrant. It may only set aside the warrant if it is persuaded that the discretion has not been exercised judicially, or flowed from a wrong appreciation of the facts or the law.”

[39]   In the matter of Cooper NO v First National Bank of SA Ltd 2001 (3) 705 (SCA) the court held that:

“The primary purpose of section 69(3) is to enable a trustee to collect and take control of assets reasonably believed to belong to an insolvent estate which are being concealed or unlawfully withheld. It does not purport to, nor was it intended to, provide a means for finality determining competing claims to property which is alleged to belong to an insolvent estate.

Section 69(3) was clearly intended to strengthen the hand of a trustee in carrying out the obligation to take charge of all the assets belonging to an insolvent estate.”

[40]   In the matter of Bruwil Konstruksie (Edms) Bpk v Whitson NO and Another 1980 (4) SA 703 (T) the court held as follows:

“It seems to me that the purpose of the section is clearly to enable the liquidator or trustee to obtain speedy possession of goods belonging to an estate which he suspects, or believes on reasonable grounds, to be assets of the estate. The safeguard to the ordinary public lies in the word ‘reasonable’ belief, or ‘reasonable’ grounds for suspecting. I put it to Mr Goldstein whether the words ‘reasonable grounds’ imply that it should amount to a prima facie case in a court of law. Unfortunately, there is no guidance or precedent on this particular section but, in my view, it contemplates a lesser burden than a prima facie case in a court of law, otherwise there would be hardly any purpose in the section. The section is obviously designed to enable a liquidator or trustee to obtain possession of assets speedily and to place an onus on the person in possession to prove his ownership or right to possession, and to remove the burden from an estate of instituting action first and of discharging the onus of proving that the estate is the owner. If this is so, it seems to me that it would be wrong to equate the duty resting on a liquidator or trustee under this section with that of a litigant in proving a prima facie case. It seems clear that sometimes less would suffice. However, he can never be free of a burden before he applies to the magistrate and makes the statement that he had reasonable grounds for suspecting that these are assets belonging to the estate of the insolvent.

It seems to me that the words ‘reasonable grounds’ imply an investigation of some kind. The question is how far does he have to go in his investigation? It also seems clear that the reasonable suspicion which must exist must be an objective and not a subjective one, as far as the particular trustee or liquidator is concerned. This seems to be the error into which the first respondent has fallen, namely that he acted in some respect impulsively, and that he jumped to a conclusion which he should not have done. Had he investigated the matter more fully, had he communicated and consulted with Mr Pols and enquired from him where Pienaar was, he no doubt have been able to contact Pienaar and then it seems clear that he would have been constrained to investigate the question of the offer of compromise which had been made during 1977 and 1978, as a result whereof Pienaar acquired his claims against the company which enabled him to effect the set-off and acquire the assets which he subsequently sold to the applicant.”

[41]   In the Bruwil matter the court found that the Magistrate ought to have called for facts on which the liquidator‘s opinion and conclusions were based and ought not to have merely accepted same without factual proof. The court held that the error of judgement was not only that of the Magistrate but of the liquidator too.

[42]   In the Cooper matter supra, the central issue that the court had to adjudicate on was whether the common law principle of audi alteram partem applied to applications for search warrants brought in terms of section 69 of the Insolvency Act. The court held that the principle applies to an application directed to a magistrate for a section 69 search warrant, unless the applicant can show the following:

42.1   The object and purpose of the search and seizure would be defeated by giving notice;

42.2   It could be inferred that the legislature intended to exclude the giving of notice and the concomitant right to be heard.

[43]   It was further held in the Cooper matter that in circumstances where prior notice ought to have been given, and was not, any such warrant obtained stands to be set aside on that ground alone.

[44]   It is trite that a party who brings an application on an ex parte basis must make full disclosure of all material facts and must observe the utmost good faith in the application.

[45]   In the matter of De Jager v Heilbron and Others 1947 (2) SA 415 (W) at 415 to 420 the court held that :

“It has been laid down, however , in numerous decisions of our Courts that the utmost good faith must be observed by litigants making ex parte applications, and that all material facts must be placed before the Court … If an order has been made upon an ex parte application, and it appears that material facts have been kept back which might have influenced the decision of the Court whether to make the order or not, the Court has a discretion to set aside the order on the ground of the non-disclosure … It is not necessary that the suppression of the material fact shall have been wilful or mala fide.”

[46]   Section 26(1) of the Administration of Estates Act is crystal clear that the executor shall take into his custody or under his control all the property, books and documents in the estate and not in the possession of any person who claims to be entitled to retain it under any contract, right of retention or attachment.

This in my view, means that the assets must belong to the estate of the deceased or patient and the executor or curator must have a reasonable suspicion that such assets are being withheld or concealed from him. The second respondent should not have jumped to the conclusion that the patient is a beneficiary in the trust, he should have rather made enquiries with the Master of the High Court and obtained certified copies of the Trust Deed and any other relevant documents from the Master’s file. Had he done so, he might not have acted so impulsively. Similarly with regard to the Liquidation and Distribution Account that he relied on, it was not yet approved by the Master and could not be considered an asset in the estate of the patient .

[47]   The Applicants aver in their founding affidavit that the fourth applicant advised the second and third respondents that they are in possession of the documents and information they were requesting. Their only predicament was that as the auditors of Anko Trust, they were not at liberty to provide the second and third respondent the information without the approval of their client and directed them to the relevant person to request the documents from. This in my view does not mean that documents or information was being concealed from him.

[48]   The second and third respondents were within their rights to apply to the magistrate in terms of section 26 however they should have given the fourth applicant notice, more so because when they advised the fourth applicant of their intention to invoke section 26, the fourth applicant advised them in writing to serve them at their attorneys’ offices with the application. The fourth applicant advised the second and third respondents that there is no threat of them dissipating the documents as they are ethical auditors. It is my view that because the assets did not belong to the estate of the patient, the search warrant stands to be set aside.

[49]   On careful scrutiny, both section 26 (2) and (3) of the Administration of Estates Act and section 69 (2) and (3) of the Insolvency Act provides that the executor may apply to a magistrate as opposed to approaching the magistrate as the second responded avers.

[50]   The second and third respondents rely on section 29(4) of the National Prosecuting Authority Act which reads as follows:

“Subject to subsection (10), the premises referred to in subsection (1) may only be entered, and the acts referred to in subsection (1) may only be performed, by virtue of a warrant issued in chambers by a magistrate, regional magistrate or judge of the area of jurisdiction within which the premises is situated: Provided that such a warrant may be issued by a judge in respect of premises situated in another area of jurisdiction, if he or she deems it justified.”

[51]   It is my respectful view that it is irrelevant whether the matter was heard in court or in chambers, what is of importance is that the presiding officer must apply their mind properly to the facts placed before him/or her and be satisfied that a clear and substantial case has been made out.

[52]   It is trite that ex parte applications in the Magistrate Court are brought in terms of Rule 55 which provides that the following requirements are satisfied:

(1)   The giving of notice would defeat the purpose of the application; or

(2)   The degree of urgency is so great that the dispensing of notice is justified.

[53]   Turning to the matter before me, the second and third respondents admit in their answering affidavit that their founding affidavit is not beyond criticism, they submit that the affidavit has to be seen in the context on which it was deposed to in order to obtain access to documents that would support the claim and indicate the liability of the trust to the deceased estate and/or the patient. They left out material facts, namely, correspondences between them and the fourth applicant, which might have caused the magistrate to decide otherwise had this information been placed before her. The authorities are crystal clear that the utmost good faith must be observed by litigants making ex parte applications, and “that all material facts must be placed before the Court … If an order has been made upon an ex parte application, and it appears that material facts have been kept back which might have influenced the decision of the Court whether to make the order or not, the Court has a discretion to set aside the order on the ground of non-disclosure … It is not necessary that the suppression of the material fact shall have been wilful or mala fide.” De Jager v Heilbron supra.

[54]   By their own admission in their documents, they state that the matter was not urgent and what is even more glaring is the fact that no information was put before the magistrate to suggest that the matter had to be dealt with urgently.

[55]   Section 26 is clear that the assets must belong to the estate the executor is administering. The second and third respondents did not place any information before the magistrate that proved that the assets belonged to the estate of the patient as required by section 85. What was placed before the magistrate was a liquidation and distribution account that had not been accepted by the Master, they also alluded that the patient was a beneficiary in the trust. Had the curator done a proper investigation with the Master of the High Court, he would have established for himself that the patient was not a beneficiary of the trust and also that the administration of the estate of the patient’s husband was not finalised.

[56]   The first respondent in her reasons for granting the order stated that application was brought before her on an urgent basis as set out in the papers and based on the information before her, believed that the assets belonging to the estate of the patient were being withheld or concealed from the curator. It is my respectful view that there was not enough information in the founding affidavit that could have made the first respondent to grant such a drastic order without calling for facts on which the curator’s (second respondent) opinion and conclusions were based and ought not to have merely accepted same without factual proof.

[57]   The applicants aver that the second and third respondents should have afforded the fourth applicant the right to be heard by serving them with the papers when they made the application to the magistrate. By not serving them, they denied them their right to the common law principles of natural justice , the audi alteram partem principle, which is the right to a fair hearing. The authorities are clear on this matter, and in the Cooper matter it was held that where prior notice ought to have been given and was not, then any warrant granted or obtained stands to be set aside on that ground alone. My view is that the second respondent acted in an unacceptable manner in bringing the application before the magistrate in an ex parte application.

[58]   The applicants are requesting costs de bonis propriis against the second and third respondents, reason being that their conduct in not disclosing extensive correspondence “is most definitely unacceptable and also improper”. The applicants further aver that the correspondence contained detailed reasons by the fourth applicant explaining why the respondent’s demands were not lawful and further why the fourth applicant could not legally and lawfully adhere to such demands. The correspondence went further to indicate that should any litigation be brought in terms of section 26 of the Administration of Estates Act, the applicants should be served by way of service on their attorneys as they intended to oppose such application.

[60]   The second and third respondents on the other hand contend that they had a reasonable suspicion that the assets belonged to their client (patient ) and they were trying to protect the assets and interests of their client.

[61]   In the Cooper matter supra where the court dealt with issue of costs de bonis propriis against a trustee in relation to section 69(3) of the Insolvency Act it was held:

“There remains to be considered the appeal against the cost order. The general principle of the common law is that a trustee, who acts in a representative capacity, cannot be ordered to pay costs de bonis propriis unless he has been guilty of improper conduct. The Judge a quo found the appellant’s conduct to be ‘unacceptable’. Improper conduct is always unacceptable; but unacceptable conduct is not necessarily improper. While the appellant’s conduct may have been ill-considered, and his application lacking in certain essential detail to the extent that it may be said that he did not make a full disclosure of all relevant facts, one cannot, in my view, go so far as to hold that his conduct was improper. It has not been shown that there was a conscious attempt on his part that to mislead the magistrate or to use section 69(3) unfairly to his advantage. In the circumstances the special costs order against the appellant was not justified and falls to be set aside. The appeal succeeds pro tanto.”

[62]   Turning to the matter before me, I am not convinced that the curator acted in an improper manner. In my view the curator was under the mistaken reasonable suspicion that the documents belonged to his client (patient) and acted impulsively. His reasonable suspicion was not objective but rather subjective and the assets did not belong to his client(patient). In my view his conduct was impulsive, ill-considered and unacceptable but not improper nor mala fide.

[63]   I conclude that first responded erred in granting the search warrant, as I am persuaded that the court’s decision flowed from a wrong appreciation of the facts and law. The facts placed before the court were scanty and the magistrate should have asked for further information to support the curator’s opinions and conclusions in the founding affidavit. Further, the application before the magistrate did not require her to make any findings on urgency and nevertheless in her reasons the first respondent based her finding on the grounds of urgency contained in the founding affidavit in support of the ex parte application.

[64]   I further concluded that the second respondent did not establish that the assets belonged to the estate of the patient. Section 26 read with section 85 of the Administration of Estates Act is a draconian provision giving the executor and /or curator extra ordinary powers and should be interpreted strictly, although these powers can only be accessed after an application has been made to a magistrate and a search warrant has been issued. The curator should have made a further investigation with the master’s office and perhaps on doing so may have found information that may have caused him to exercise restraint and have instituted action against the legal owner of the information he was requesting. On the ground that the assets did not belong to the estate of the patient, the curator had no locus standi to bring the application.

[65]   I further conclude that the second respondent did not comply with the requirements for an ex parte application and should have afforded the applicants a right to a fair hearing. The authorities are clear that the common law principle of audi alteram partem is sacrosanct to our jurisprudence and cannot be dispensed of without just and reasonable cause as has been done in the case before me.

[66]   Based on the reasons above I decide that having reviewed the matter, the search warrant stands to be set aside.

[67]   Having decided to set aside the search warrant on the basis indicated above, I consider it unnecessary to deal with the submissions made by the applicants regarding the constitutionality thereof.

[68]   In the premises, the following order is made

1.    The decision of the Magistrate to issue a search warrant on the 22 January 2020 is reviewed and set aside.

2.    The second and third respondents are ordered to return to the fourth applicant all documents attached and/or removed from the third and fourth applicants during the execution of the said search warrant.

3.    The second and third respondents are ordered to compile a list of photographs that were taken by both the Sheriff of the High Court as well as the representatives of the second and third respondents at the fourth respondent’s premises during the execution of the said search and that such list be confirmed under oath.

4.    The second and third respondents are ordered to delete or destroy all photographs taken by both the Sheriff of the High Court as well as the representatives of the second and third respondents on the 22^nd of January 2020 at the fourth applicant’s premises during the execution of the said search warrant and that the second and third respondents are ordered to confirm under oath that such photographs have been deleted and/or destroyed.

5.    The second and third respondents must pay the costs on an Attorney and client scale, including the costs of two counsel.

M.M.D. LENYAI

ACTING JUDGE OF THE HIGH COURT

GAUTENG DIVISION, PRETORIA

CASE NO:        10044/2020

HEARD ON:      28 April 2021

FOR THE APPLICANTS:       ADV. T. STRYDOM SC

                                               ADV. A. CRAUCAMP NÉE VAN NIEKERK

INSTRUCTED BY:               Geyser Attorneys Incorporated, Lynnwood Pretoria

FOR THE FIRST RESPONDENT:          State Attorney, Pretoria

FOR THE SECOND AND THIRD RESPONDENTS:   ADV. G.J. SCHEEPERS SC

INSTRUCTED BY:                                                       JPA Venter Attorneys

DATE OF JUDGMENT:      14 July 2021