THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT

Case no: 643/07

JOHANNES FREDERICK KLOPPER N.O.

Appellant

and

THE MASTER OF THE HIGH COURT
Respondent

___________________________________________________________

Neutral citation:  Klopper v The Master of the High Court (643/07)
[2008] ZASCA 155 (27 November 2008)

CORAM:
Cameron, Mthiyane JJA and Mhlantla AJA

HEARD:

6 November 2008
DELIVERED:
27 November 2008
CORRECTED:

SUMMARY:
Insolvency Act 24 of 1936 ─ Trustee’s remuneration
─ s 63(1) ─ court upheld Master’s refusal to allow an increase in
remuneration in respect of the administration of the insolvent’s estate.

___________________________________________________________

___________________________________________________________
ORDER
___________________________________________________________

On appeal from: High Court, Pretoria (Bosielo J sitting as court of first
instance).
The appeal is dismissed with costs, such costs to be borne by the
appellant in his personal capacity.
___________________________________________________________

JUDGMENT
___________________________________________________________

MHLANTLA AJA (Cameron and Mthiyane JJA concurring):

[1] This is an appeal with the leave of the court below against an order
of the Pretoria High Court (Bosielo J) dismissing an application for the
review of the Master’s (the respondent’s) decision refusing the trustee’s
(the appellant’s) request for an increased fee in terms of s 63(1) of the
Insolvency Act 24 of 1936 (the Act).

[2] The issue in this appeal is whether the appellant is entitled to
increased remuneration in respect of the administration of an insolvent
estate and whether the respondent’s refusal to allow the appellant
increased remuneration should have been reviewed and set aside by the
court below.1

[3] The appellant is an insolvency practitioner and a director of
Independent Trustees (Pty) Ltd. According to the appellant the primary
objective of the company is the administration of insolvent estates. The

1 Accessible as Klopper NO v Master of the High Court (13493/06) [2007] ZAGPHC 139 (3 August
2007).

respondent is the Master of the High Court, who amongst others, is
responsible for the insolvent estates.

[4]    The remuneration of a trustee or curator bonis is governed by s 63
(1) of the Act which reads as follows:
‘(1)
Every trustee or curator bonis shall be entitled to a reasonable remuneration
for his services, to be taxed by the Master according to tariff B in the Second
Schedule to this Act: Provided that the Master may, for good cause, reduce or increase
his remuneration, or may disallow his remuneration either wholly or in part on
account of any failure of or delay in the discharge of his duties or on account of any
improper performance of his duties.’

[5] The Master is in terms of s 63(1) obliged to determine ‘reasonable
remuneration’ for the trustee or liquidator against the set tariff. Once the
Master has determined what constitutes a reasonable remuneration
depending on the circumstances of the matter, he or she may exercise his
or her discretion either to increase or reduce the fee. The reasonable
remuneration marks a point from which he or she departs. There must of
course, be good cause warranting the departure.

[6] The facts of this case are common cause. On 24 November 2003
the appellant was appointed as a trustee of the insolvent estate of Billy
Oosthuizen. The administration of this estate was fairly simple in that it
consisted of only one major asset being an immovable property which
was sold by way of public auction for R180 000. ABSA Bank was the
only secured creditor. It proved a claim in the estate which was admitted
in the amount of R217 976.39. The creditor was obliged to pay a
contribution of more than R21 000.

[7] Pursuant to the performance of his duties as trustee, the appellant
prepared an amended First and Final Liquidation, Distribution and
Contribution account, in which he made provision for, inter alia, the
trustee’s fees in the amount of R6 752.51 calculated in accordance with
Tariff B of Schedule 2 to the Act: 3 per cent of the gross sum realised
(R5 000), 10 per cent on occupational rental (R389.68) and interest
(R133.50) plus value added tax (VAT). In addition the appellant applied
to the respondent for an increased fee of R8 687.75 in terms of s 63(1) of
the Act on the basis that he and his staff had worked for approximately 29
hours on the administration of the estate. He contended that although the
administration was not of a complex nature, the actual time spent in the
administration of the estate should have been taken into account in
determining a reasonable remuneration. He accordingly sought an
increase to a total sum of R15 440.26.

[8] The respondent refused to increase the appellant’s remuneration
contending that the time spent on the estate was not the sole determining
factor when deciding whether or not to allow an increased fee and that
there were several other factors that had to be considered. One such factor
is the complexity of the matter. There was nothing complicated about this
estate and as pointed out by the respondent, it involved the sale of   an
immovable property for which the appellant had already received a fee.
No further assets were realised and a contribution was payable by ABSA
Bank.

[9] As a result of the respondent’s refusal to increase the remuneration,
the appellant instituted a review application under s 151 of the Act, which
gives the court the power to review any ruling by the Master, invoking
the provisions of the Promotion of Administrative Justice Act 3 of 2000.

He contended that the respondent had failed to take relevant factors into
account and that the decision was not rationally connected to the
information before her.

[10] The court below dismissed the application with costs on an
attorney-client scale to be borne by the appellant in his personal capacity.
The learned judge held that in determining whether ‘good cause’ existed
justifying the increase of the appellant’s remuneration or not, the
respondent had to consider all the facts which had a bearing on the
administration of the estate; that the time factor could not be considered
in isolation nor could it be regarded as the dominant or decisive factor. To
do so would open the door for unscrupulous trustees to abuse s 63(1) of
the Act to the detriment of the insolvent estate and/or its creditors. The
learned judge held that the respondent had applied her mind properly to
all the relevant facts which had been put before her.

[11] In the appeal before us counsel for the appellant argued that the
minimum fee set in the tariff was insufficient when regard is had to the
work performed by insolvency practitioners. He set out a myriad of duties
which according to him were not required to be performed by insolvency
practitioners in 1936 when the Act was promulgated. These were inter
alia:
(a)
there were no financial leases in existence and the insolvency
practitioner was not obliged to take possession of all the assets, which
would include leased assets;
(b)
there were no VAT, pay as you earn (PAYE) or Capital Gains Tax
provisions;
(c)
the insolvency practitioner was not a representative taxpayer;

(d)
there were no contracts of hire for equipment such as office
machines, cellular phones etc.
He furthermore contended that the overhead structure of the appellant’s
company consisted of salaries and various other expenses with the result
that the overheads per month per estate were in the amount of R25 000.
Given present business and economic realities, the appellant argued this
was the minimum remuneration per estate to which a liquidator should be
entitled.

[12] The tariff is a statutory instrument set by the Minister of Justice. It
is admittedly an old tariff and was last reviewed in March 1995. The
minimum fee is in the amount of R2 500. It is indeed not generous. As
already mentioned, the Master can only exercise his or her discretion
once good cause has been shown. He or she cannot use the discretionary
power in order to address limitations in the tariff itself. The same applies
to the function of the courts reviewing the Master’s decisions: if the tariff
is not realistic or just, given the economic and business conditions,
especially since it was last adjusted in 1995, that must be, in the first
instance, a matter for the executive to address.

[13] Accordingly, the strict question before us, is whether the Master
erred in refusing to conclude that ‘good cause’ existed for increased
remuneration on the facts of this case. Counsel for the appellant
contended that the appellant’s remuneration as taxed in accordance with
Tariff B was not reasonable; that it was grossly inadequate as it did not
reflect the time spent in administering the estate and that the time and
effort spent were the overriding factors. In this regard he relied on the
decision of Nel and another NNO v The Master (ABSA Bank Ltd & others

intervening),2 and in particular the following remarks by Van Heerden
AJA:3
‘The fee prescribed by the tariff must be assessed for reasonableness by way of a
critical assessment of such prescribed fee in the light of the time and effort expended
by a liquidator, taking into account (inter alia) the degree of complexity of his or her
duties in the winding-up.’ [My emphasis].

[14] In Nel the appellants were joint liquidators of Intramed (Pty) Ltd.
After performing their duties as such they claimed liquidators’
remuneration in terms of s 384 of the Companies Act 61 of 1973.4 The
Master reduced the remuneration for their services. The appellants sought
an order declaring that they were entitled to remuneration in the higher
amount. With regard to the concept of ‘good cause’ Van Heerden AJA
held as follows:5
‘The concept of “good cause” is very wide and there is nothing in s 384 of the Act
which indicates that it should be interpreted so as to exclude any factor which may be
relevant in determining what constitutes reasonable remuneration for a liquidator’s
services in the circumstances of each case. Obviously, what factors are relevant will
vary from case to case, but may certainly include aspects such as the complexity of
the estate in question, the degree of difficulty encountered by the liquidator in the
administration thereof, the amount of work done by the liquidator and the time spent
by him or her in the discharge of the duties involved. If, in the winding-up of a
company, particular difficulties are experienced by the liquidator because of the
nature of the assets or some other similar feature connected with the winding-up, this

2 2005 (1) SA 276 (SCA).
3 At 293I-J.
4 Section 384(1) and (2) provide:
‘(1)
In any winding-up a liquidator shall be entitled to a reasonable remuneration for his services
to be taxed by the Master in accordance with the prescribed tariff of remuneration: Provided that, in the
case of a members’ voluntary winding-up, the liquidator’s remuneration may be determined by the
company in general meeting.
(2)
The Master may reduce or increase such remuneration if in his opinion there is good cause for
doing so, and may disallow such remuneration either wholly or in part on account of any failure or
delay by the liquidator in the discharge of his duties.’
5 At 285C-F.

would undoubtedly constitute “good cause” entitling the Master to increase the tariff
remuneration.’

[15] The nub of the appellant’s argument is that, even though this was
an avowedly simple and straight-forward liquidation, to mount a
liquidation operation at all, requires a complex business infrastructure
which should automatically qualify for increased remuneration. The
overriding factor, even in such ‘simple’ matters, counsel urged us to find,
was the time and effort required, against the background of the necessary
office infrastructure: The relative simplicity of the estate and the ease of
liquidating the assets, he contended, were of lesser importance.

[16] The argument on behalf of the appellant cannot be sustained. In my
view the learned judge clearly stated that time and effort together with the
degree of complexity of one’s duties have to be taken into account. It is
accordingly clear that the time factor cannot be considered in isolation
nor can it be an overriding factor. The other factors must be taken into
account as well. It is evident in this matter that the respondent provided
reasons for refusing to increase the fee: that the estate was fairly simple,
there being one immovable property which was sold at an auction and
there was one secured creditor who had to pay a contribution. The
appellant had already received a fee for the sale of the immovable
property. It is clear that the respondent did not act contrary to the
principles enunciated in the Nel case. The respondent further stated in her
response that to allow the issue of time-based remuneration seen on its
own would negate the intention of s 63 of the Act.

[17] Counsel for the appellant also relied on the unreported judgment of
Johannes Klopper v The Master of the High Court6 where it was held that
an estimate of time spent would be acceptable. The facts of that case are
however distinguishable from the facts of this matter. In that case there
were about 13 points which warranted an increased fee. I set them out
briefly:
The administration of the estate spanned a period of more than five years;
the winding up process was multifaceted, complex and difficult; there
was a dispute with the South African Revenue Service (SARS) about
custom duties relating to company stock; there were cross-border matters
in respect of Australian suppliers; there were objections by creditors;
legal proceedings were instituted against the liquidator; there were
negotiations in regard to the sale of stock and the company trademark in
South Africa and Australia as well as negotiations in respect of the
release of lien over stock; the company’s book debts had been factored to
Nedbank Ltd; VAT claims by SARS required extensive investigation etc.
None of these points are present in this matter.

[18] As already indicated the respondent in the exercise of her
discretion did not reject the time factor out of hand. She considered all the
relevant factors and concluded that good cause for the increase of the
appellant’s remuneration had not been shown. In my view, the respondent
did not exercise her discretion improperly and there is thus no basis for
the setting aside of her decision. It follows therefore that the appeal must
fail.

[19] I turn to the question of costs. The appellant pursued the matter in
his personal capacity and for his own benefit. The costs are to be borne

6 Unreported judgment of Thring J, case no 2475/2008 (CPD) delivered on 13 June 2008.

by him in his personal capacity. As to the costs order issued by the court a
quo, there is in my view, no basis to interfere with the exercise of its
discretion.

[20] In the result the appeal is dismissed with costs, such costs to be
borne by the appellant in his personal capacity.

________________________
N Z MHLANTLA
ACTING JUDGE OF APPEAL

APPEARANCES:

For Appellant:
F H Terblanche SC

Instructed by

Strydom & Bredenkamp Inc Pretoria

E G Cooper Attorneys Bloemfontein

For Respondent:
B Neukircher SC

Instructed by

State Attorney Pretoria

State Attorney Bloemfontein
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

From:
The Registrar, Supreme Court of Appeal
Date:
27 November 2008
Status:
Immediate
Please note that the media summary is intended for the benefit of
the media and does not form part of the judgment of the Supreme
Court of Appeal

Johannes Frederick Klopper N.O. v The Master of the High Court

Please note that the media summary is intended for the benefit of the media
and does not form part of the judgment of the Supreme Court of Appeal

The Supreme Court of Appeal today dismissed an appeal against a judgment
of the Pretoria High Court in which an application for the review of the
respondent’s decision in refusing the appellant’s request for an increased fee
in terms of s 63(1) of the Insolvency Act 24 of 1936 was dismissed.

The appellant was appointed trustee of the insolvent estate which consisted of
only an immovable property sold by public auction. Although the
administration of the estate was not of a complex nature, the appellant applied
for an increase in remuneration on the basis that he and his staff had worked
on the matter for approximately 29 hours. The nub of the appellant’s argument
was that, even though this was an avowedly simple and straight-forward
liquidation, to mount a liquidation operation at all, required a complex
business infrastructure which should automatically qualify for increased
remuneration. This Court rejected such argument and held that in determining
whether good cause existed justifying the increase of the appellant’s

remuneration or not, the respondent had to consider all the facts which had a
bearing on the administration of the estate. This included time and effort
together with the degree of complexity of the duties. The time factor could not
be considered in isolation nor could it be regarded as an overriding factor. The
court accordingly held that the respondent did not exercise her discretion
improperly when she concluded that no good cause had been shown to justify
the increased remuneration.