THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA

Reportable

CASE  NO: 194/05

In the matter between :

FELDMAN, DAVID CHARLES
Appellant

and

MIGDIN, JACK NO
Respondent
_________________________________________________________________________
Before:
SCOTT,
STREICHER,
NAVSA,
MTHIYANE
&
VAN
HEERDEN JJA
Heard:
16 MAY 2006
Delivered:
26 MAY 2006
Summary:
Administration of Estates – s 46 of the Administration of Estates Act
66 of 1965 – ‘money’ does not include cheques – s 28 only requires
that moneys received ‘for the estate’ be paid into estate’s bank
account.

Neutral citation:
This judgment may be referred to as Feldman v Migdin NO
[2006] SCA 62 (RSA)

_________________________________________________________________________

J U D G M E N T
_________________________________________________________________________

STREICHER  JA

STREICHER JA:
[1] Two issues have to be decided in this appeal. The one is whether
‘money’, within the meaning of that word in s 46 of the Administration of
Estates Act 66 of 1965, includes cheques and the other one is whether an
amount of R150 000, being the purchase price of immovable property,
which had been paid to the appellant, at a time when he was the executor in
the estate of the late Siegfried Migdin, was received by him ‘for the estate’
within the meaning of that phrase in s 28 of the Act.

[2] The appellant is an attorney. During the life of the late Siegfried
Migdin he acted as Migdin’s attorney. In Migdin’s will, which was drafted
by the appellant, Migdin not only appointed the appellant as executor but
also bequeathed a sum of money to him. Unfortunately Migdin’s faith in
the appellant was misplaced. After Migdin’s demise the appellant was, on 4
September 1992, appointed as executor in his estate. However, in
November 1997 the Master removed the appellant as executor for having
failed to perform his duties concerning the administration of the estate. An
application by the appellant to the Transvaal Provincial Division to have
the removal set aside was unsuccessful.

[3] After removal of the appellant as executor the respondent was, on 26
February 1998, appointed as executor in the estate. As executor the
respondent had to apply to court for an order directing the appellant to hand
over to him all the documents and records pertaining to the administration
of the estate. Amongst the documents contained in a file handed to the
respondent pursuant to the court order were a number of cheques which
had not been presented for payment. The file also contained
correspondence in regard to the sale of an immovable property by Hanfried
Investments CC (‘Hanfried’), a close corporation of which the deceased

had been the only member. Further enquiries revealed that the immovable
property had been sold on 23 February 1993 for a purchase price of
R150 000 payable upon registration of transfer into the name of the
purchaser. The deed of sale had been signed by the appellant on behalf of
Hanfried. Transfer took place on 28 May 1993. In a first liquidation and
distribution account dated 20 February 1994, prepared by the appellant
during his tenure as executor, the appellant stated that the value of
Migdin’s interest in Hanfried would be recorded in the second and final
liquidation and distribution account. In a subsequent amended ‘first
liquidation and distribution account’ dated 3 December 1994 a ‘100%
interest in Hanfried Investment CC’ valued at R120 000 is included in the
liquidation account. In yet a further amended ‘first liquidation and
distribution account’ dated 17 January 1997 it is once again stated that the
value of Migdin’s interest in Hanfried would be recorded in the second and
final liquidation and distribution account. No final liquidation and
distribution account was prepared by the appellant.

[4] Letters written by the respondent’s attorney to the appellant
requesting that all documents relating to the sale of the immovable property
be handed over to the respondent and calling upon the appellant to account
in respect of the purchase price were not responded to by the appellant. As
a result the respondent launched an application as first applicant together
with Hanfried as second applicant against the respondent for payment of
the sum of R150 000. The respondent alleged in the founding affidavit that
the amount was due to Hanfried and fell ‘to be distributed to the heirs and
beneficiaries in terms of the last will and testament of (his) late father’. The
appellant responded to the application by way of a letter dated 22 May
2000 addressed to the respondent’s attorneys in terms of which he stated
that he had investigated the matter and that Hanfried had indeed not been
paid the amount received for the selling of the property. He attached a

cheque for the sum of R150 000 made out in favour of Hanfried and
tendered to pay party and party costs and interest on the capital amount
from the date of demand, being 25 November 1999.

[5] The tender was not acceptable to the respondent. He proceeded with
the application in order to recover interest on the sum of R150 000 from 29
May 1993 until 22 May 2000 and costs of the application on the attorney
and own client scale. The appellant did not file an answering affidavit but
did oppose the application. He submitted that the respondent had no locus
standi in judicio, being not himself entitled to payment of the proceeds of
the sale of Hanfried’s property and that Hanfried ‘was not properly before
the court since the respondent had no right to represent it’. Lewis J rejected
these submissions and held: ‘It is clear from the application as a whole that
the first applicant claims only as the representative of the CC, on behalf of
the CC, which he was entitled and indeed obliged to do.’

[6] Having alleged and having succeeded on the basis that the sum of
R150 000 was due to Hanfried and Hanfried having been paid the
R150 000, the respondent, surprisingly, instituted the action which is the
subject matter of this appeal. In his particulars of claim he alleges that not
only the cheques referred to above but also the sum of R150 000 should
have been paid by the appellant to the Master or should have been
deposited into a bank account opened in the name of the estate.  Relying on
the provisions of s 46 of the Act the respondent claims that the appellant is
liable to pay the estate an amount of R428 317,72 being an amount equal to
double the amount which the appellant allegedly failed to pay into the
estate’s bank account.1

1 The amount is made up as follows: 2 x (R150 000 + R60 112,32 + R4 046,54).

[7] The trial court found for the respondent and ordered the appellant to
pay an amount of R218 205,40 plus interest and costs on the scale as
between attorney and client to the respondent. The amount of R218 205,40
was arrived at on the basis that the Master, in terms of s 46 had a discretion
to allow a discount on good cause shown. The trial court assumed that
discretion without stating on what basis it was entitled to do so and, in the
light of the fact that the estate had received payment of the amount of
R150 000 as well as the amount of R60 112,32 in respect of the cheques
that had not been deposited, reduced the claim of R428 317,72 by an
amount of R210 112,32. The appeal is against the whole of this judgment.

[8] Section 28(1)(a) provides that an executor ‘shall, unless the Master
otherwise directs, as soon as he or she has in hand moneys in the estate in
excess of R1 000, open a cheque account in the name of the estate with a
bank in the Republic and shall deposit therein the moneys which he or she
has in hand and such other moneys as he or she may from time to time
receive for the estate’.

[9] Section 46 provides:
‘Any executor who fails to pay over any money to the Master or to any other
person or to deposit it in any banking account under section twenty-eight when required
by or under this Act to do so, or who uses or knowingly permits any co-executor to use
any property in the estate except for the benefit of the estate, shall pay into the estate an
amount equal to double the amount which he has so failed to pay over or to deposit or to
double the value of the property so used: Provided that the Master may , on good cause
shown, exempt any executor, in whole or in part, from any liability which he may have
incurred under this section.’

LIABILITY IN RESPECT OF THE R150 000
[10] In terms of the provisions of s 28(1)(a) the respondent, in order to
succeed, had to prove not only that the sum of R150 000 was received by
the appellant but also that it was received ‘for the estate’. In my view he
failed to do so. The appellant, in his capacity as executor in the estate, acted
on behalf of Hanfried in respect of the sale of the immovable property and
the purchase price was payable to Hanfried. There is, therefore, no reason
to believe that the amount was paid to the respondent and received by him
in any capacity other than as representative of Hanfried. The respondent
himself alleged in the application referred to above that the appellant
received the amount that was due to Hanfried and Hanfried recovered the
amount from the appellant on that basis.

[11] In terms of s 51 of the Close Corporations Act 69 of 1984 payment
could have been made by Hanfried to the estate only –
‘(a)
if, after such payment [was] made, the corporation’s assets, fairly valued,
(exceeded) all its liabilities;
(b)
if the corporation [was] able to pay its debts as they (became) due in the
ordinary course of its business; and
(c)
if such payment [would] in the particular circumstances not in fact [have
rendered] the corporation unable to pay its debts as they [became] due in the
ordinary course of its business.’
Had such a payment been made to the appellant the amount would have
been received by the appellant ‘for the estate’ as required by s 28.
However, there is no evidence on the basis of which it can be found that
such a payment was made.

[12] The trial court held:
‘It is clear that the defendant acted on behalf of the deceased in his
representative capacity as executor when he sold the property and received the
proceeds. He accordingly held the money as executor and was obliged to deposit it into

the estate account, whether directly or via the corporation’s account, and when he failed
to do so and pocketed the money instead he fell foul of section 46.’

[13] However, s 46 relates to a failure by an executor to deposit money
into a bank account under s 28 when required by or under the Act to do so.
Section 28 does not require that an executor should deposit all moneys
received by him into a cheque account opened in the name of the estate.
The section only requires an executor to do so in respect of moneys
received ‘for the estate’. The fact that the appellant represented Hanfried in
his capacity as executor does not make the payment to him a payment ‘for
the estate’, it remained a payment to Hanfried. For these reasons the appeal
should succeed insofar as it relates to the receipt by the appellant of the
R150 000.

LIABILITY IN RESPECT OF THE CHEQUES
[14] The cheques which had not been deposited into a bank account
opened in the name of the estate, consisted of the following:
(a)
A cheque dated 18 April 1997 in the amount of R60 112,32
drawn by Sanlam in favour of the estate.The amount represented
an amount payable in terms of an insurance policy plus interest.
(b)
A cheque dated 9 January 1998 for the same amount drawn by
Sanlam in favour of the estate in respect of the same policy. The
cheque was probably issued to replace the first cheque which had
become stale.
(c)
Ten cheques drawn by Sanlam and Trust Bank during the period
26 October 1994 to 2 February 1998 in favour of the estate for
dividends and interest in respect of investments by Migdin. The
total amount of these cheques is R4 046,54.
All these cheques became stale as a result of them not having been
collected. However, apart from interest on these amounts the estate did not

suffer any loss as a result of the cheques not having been deposited as the
respondent was able to obtain payment of the amounts from the drawers of
the cheques. (In the case of the ten Sanlam and Trust Bank cheques
payment was only obtained after the judgment by the trial court.)

[15] The trial court held that ‘money’ in s 46 should be interpreted to
include cheques, for the following reasons:
(a)
If the legislature intended to restrict the provisions of s 46 to cash
as opposed to other forms of payment such as cheques it would
have used the word ‘cash’ as opposed to money.
(b)
There is no reason why the legislature would want to penalise
defaults in respect of cash received which is likely to be a rare
occurrence but not penalise the non-payment over of cheques
received.
(c)
Section 28 clearly requires a banking account to be opened into
which all money received (in whatever form) is to be deposited.

[16] In Stellenbosch Farmers’ Winery Ltd v Distillers Corporation (SA)
Ltd and Another 1962 (1) SA 458 (A) at 476E-G Wessels AJA formulated
the approach to be followed by a court when interpreting a statutory
provision as follows:
‘In my opinion it is the duty of the Court to read the section of the Act which
requires interpretation sensibly, i.e. with due regard, on the one hand, to the meaning or
meanings which permitted grammatical usage assigns to the words used in the section in
question and, on the other hand, to the contextual scene, which involves consideration
of the language of the rest of the statute as well as the

“matter of the statute, its apparent scope and purpose, and, within limits, its
background”.
In the ultimate result the Court strikes a proper balance between these various
considerations and thereby ascertains the will of the Legislature and states its legal
effect with reference to the facts of the particular case which is before it.’

[17] A cheque is not money. It is an order in writing, signed by the person
giving it, to a banker requiring the banker to pay on demand a sum of
money to a specified person or his order or to bearer.2 The word ‘money’
may of course be used in a much wider sense so as to include cheques. In
order to determine whether that is the case it is necessary to determine
whether there are indications to be found in the Act that the word was
intended to have such wider connotation. In this regard I shall deal with
each of the reasons advanced by the trial court in turn:

(a)
If money in its ordinary signification included cheques one could
of course have reasoned, as was done by the trial court, that if the
intention was to exclude cheques the legislature would have used
another word such as ‘cash’ so as to exclude cheques. That not
being the case there is no merit in the argument that the fact that
the legislature did not use the word ‘cash’ constitutes an
indication that the legislature intended to include cheques.
(b)
I do not agree with the trial court that there is no good reason to
distinguish between money, in the sense of coins and notes, and
cheques. Should coins and notes received by an executor be
mixed with the executor’s other coins and notes in a manner that
renders it impossible to determine in whom the ownership of the
separate coins or notes vests, the executor becomes the owner of
such coins and notes.3 The result is that the money received by an
executor may not subsequently be recoverable from him. The
same does not apply to cheques handed to an executor. There is
also a much greater risk that money belonging to the estate would
be used for ulterior purposes than that cheques would be so used

2 19 Lawsa (first reissue) para 5; see also Tjollo Ateljees (Eins) Bpk v Small 1949 (1) SA 856 (A) at 876.
3 Van der Merwe Sakereg 2 ed p263-265.

for the simple reason that it would generally be much more
difficult to establish the misappropriation of coins and notes than
of cheques. Furthermore, to interpret ‘money’ so as not to include
cheques does not result in the misappropriation of cheques not
being penalised. Section 46 provides that an executor who uses
property in the estate other than for the benefit of the estate shall
pay into the estate double the value of the property so used. The
legislature may well have considered that this provision provided
adequate protection for the estate in respect of cheques.
(c)
The third ‘reason’ advanced by the trial court is not a reason at
all. The trial court in effect states that ‘moneys’ in terms of s 28
clearly includes cheques without giving any reason for the
statement.

[18] The respondent submitted that the purpose of the Act is to provide
for the proper administration of estates and that it would be absurd to
interpret ‘money’ so as not to include cheques. It would indeed have been
strange if the effect of not interpreting ‘money’ so as to include cheques
was that an executor was free to do with cheques whatever he wanted to do.
That is however not the case. The purpose of the Act is in my view
adequately served by the provision providing for the penalisation of an
executor who uses cheques belonging to the estate for purposes other than
the benefit of the estate.

[19] For these reasons I am not persuaded that there are indications to be
found in the Act that the legislature intended ‘money’ in the context of s 46
to have the wider meaning contended for by the respondent. On the other
hand, there are, in my view, indications to the contrary.

[20] Should ‘money’ be interpreted to include cheques an executor who
fails to deposit the cheque into the estate’s bank account would be liable for
double the amount of the cheque subject to the discretion of the Master, on
good cause shown, to exempt him from such liability. Should the failure
have related to coins and notes in the very same amount the executor would
also have been liable for double the amount but having retained the amount
the penalty would, unlike in the case of the cheque, only be equal to the
amount received and not double the amount. It is unlikely that the
legislature intended such an anomalous result.

[21] The mere failure to deposit a cheque would, apart from interest,
generally not cause any loss to an estate, provided of course that the delay
is not so long that the underlying debt has become prescribed and cannot be
recovered.  To impose a penalty equal to twice the amount of the cheque in
these circumstances seems to me to be unduly harsh. I do not think that that
was the intention of the legislature.

[22] Section 46 is punitive in nature and in the absence of indications to
the contrary a more lenient interpretation should be favoured (see R v Milne
and Erleigh (7) 1951 (1) SA 791 (A) at 823A-F). Being aware that that is
the case the legislature would in my view have made it clear that it
intended ‘money’ to include cheques, if that was its intention.

[23] It follows that by failing to deposit the cheques into the banking
account of the estate the appellant did not in terms of s 46 fail to deposit
‘money’ into the banking account of the estate. It follows that the appeal
should succeed also in respect of the respondent’s claim relating to the
cheques.

[24] Apart from the inference to be drawn from the facts in respect of the
R150 000 paid to the appellant, there is no real factual dispute in this
matter. The appeal record nevertheless consists of some 857 pages. Many
of the documents could and should have been omitted. Rule 8 of the rules
of this court require the parties to attempt to confine the record to only such
documents as are required to decide the appeal. It is the duty of the
appellant as well as the respondent to ensure that costs and this court’s time
are not wasted by the inclusion of unnecessary documents. In this case the
parties did agree on the documents that should form part of the record on
appeal but it is clear that no real attempt was made to confine the record to
only those documents that were required for a proper determination of the
appeal. Had it not been for the agreement between the parties I would have
been inclined to deprive the appellant of a substantial part of the costs
relating to the preparation and perusal of the record. In the light of the
agreement the respondent has only himself to blame for having to pay costs
unnecessarily incurred.

[25] In the result the following order is made:
The appeal is upheld with costs.
The order of the trial court is set aside and replaced with the
following order:
‘The plaintiff’s action is dismissed with costs.’

_________________
P E STREICHER
JUDGE OF APPEL

SCOTT JA)
NAVSA JA)
MTHIYANE JA)
VAN HEERDEN JA)