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Capacity to sell - response

8 March 2012

In response to Capacity to sell my view is that (i) in the context of the Administration of Estates Act, 1965 (Act No. 66 of 1965), as amended, (“the Act”), the duty to liquidate includes the duty to realise the assets to the extent that it is obligatory or necessary to do so and (ii) the scope of the powers vested in a Master of the High Court by section 18 (3) of the Act  is not narrower than the scope of the powers exercised by the legislature as to the manner in which a deceased estate shall be liquidated and distributed by an executor.

It is crucial to note that, in Cradock's Estate v Cradock and Others 1951 NPD 51, Broome JP was considering “the normal duties of an executor” when he said,  " Speaking generally, he must liquidate the estate……………",. Therefore, when Broome JP said “‘But liquidate’ does not mean ‘realise’, but to ‘reduce into possession’”, he merely meant that “to realise” was not a primary duty of the executor. To clarify his statement, Broome J P said at page 59: "In my opinion, there is no doubt that an executor is not obliged to realise the estate assets.  He must, of course, do so if the will so directs him for he must always do what the will tells him. And whether the will authorises him or not, he must do so to the extent that it is necessary to pay creditors. Furthermore, it may not be possible for him to distribute the estate among the beneficiaries without a complete realisation, in which case I have no doubt that he would be entitled to realise the whole estate."

Further, attention is drawn to Clarkson NO v Gelb and Others 1981 (1) SA 288  (W) at 293, where Coetzee J stated that: “A deceased estate is an aggregate of assets and liabilities…………The executor is vested with its administration and he alone has the power to deal with this totality of rights and obligations………….His primary duty is to obtain possession of the assets of the deceased, to realise them as far as may be necessary, to make payment of debts and expenses, to frame a liquidation and distribution account and thereafter to effect a distribution  to the heirs and legatees………”

It is clear from the aforementioned decided cases that the liquidation (administration) of a deceased estate can entail a realisation of assets. Recognition of this fact is, for example, to be found in section 47 of the Act also.

The Act gives direction as to manner in which the estate of a deceased person shall be liquidated and distributed by an executor. The same direction is delegated to a Master in the circumstances set out in section 18 (3) of the Act. Therefore, the Chief Master’s Directive No. 4 of 2009 has a valid legal basis.

However, having regard to the small value of the estate contemplated in section 18 (3) of the Act and the inconvenience inherent in applications under section 42 (2) of the Act, I wonder whether it was desirable to issue the latter Directive, rather than making an appropriate provision, in the Letters of Authority issued, for the realisation of assets.

Thabo Nqhome
05 March 2012

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