CASE LAW UPDATE

Background: Applications for reconsideration of reserve prices are most often brought simply on the assumption that the auction was unsuccessful because the reserve price was too high, and if the reserve were to be lowered or even dispensed with, then a successful sale will follow. Nothing is further from the truth as there may be a number of factors that affect a property’s saleability. Practitioners also tend to take the view that once the decision has been made that the property should be sold in execution, the judgment debtor does not have any further interest in the proceedings. Often the reconsideration application is not served on the judgment debtor or if it is brought to the judgment debtor’s attention, then it is done by email and there is no indication that the email came to the attention of the judgment debtor. In one matter counsel went so far as to submit that the judgment debtor had no further interest in the matter once the initial order of special executability had been made and that he or she had no right to further participate in the proceedings.

Full court: The application of Rule 46A(9), when a court reconsiders a reserve price on an immovable property has confounded a number of courts resulting in an inconsistent application of the rule and in conflicting judgments, not only in this Division but also in other Divisions. The Judge President has convened this full court to give guidance on the manner in which Rule 46A(9) is to be applied.

Reconsideration: Whereas an application is essentially adversarial in nature, the reconsideration procedure is inquisitorial: the court is tasked with considering the information placed before it, and if necessary, calling for more information. The reconsideration of the reserve price is thus based on all relevant factors and there is no onus on any party to prove or disprove anything. Unless special circumstances exist (which is improbable in these cases), the matter must be heard in open court. The execution creditor must serve the sheriff’s report, the supplementary affidavit, and a notice of set down for the unopposed motion roll upon the judgment debtor personally. If personal service is impossible, the execution creditor must make out a case on affidavit for condonation for non-compliance and must explain what alternative steps were taken to bring the reconsideration application to the judgment debtor’s attention. See the process to be followed at para [25].

Powers of court: Rule 46A(9)(c) provides that the reconsidering court must order how execution is to proceed. Rule 46A(9)(e) authorizes a court, after considering the factors in sub-para (d), to order that the property be sold to the person who made the highest bid or offer. The latter implies that the reconsidering court may consider an offer made other than at auction, and sanction it. The very purpose of Rule 46A is to achieve a just outcome between the execution creditor and debtor, to protect both parties’ interests. The judgment debt continues to attract interest, and it is in everyone’s interests to achieve the highest possible price for the property as expeditiously as possible. To interpret the rule otherwise would not result in a purposive interpretation. The court is not functus officio until the execution sale has been successfully concluded. Where circumstances warrant it, the court is entitled to revisit the entire order, including the declaration of executability. The reconsidering judge has the widest possible powers to do justice between the parties, and to facilitate an equitable outcome. It cannot do so unless full and relevant information is placed before it.

SWANEPOEL J (NEUKIRCHER J and RETIEF J concurring)

Facts: The applicant is a foreign female legal practitioner. She had been admitted as an advocate in Lesotho on 20 March 2023. She is a citizen of the Kingdom of Lesotho and is domiciled there. She currently, however, resides in Pretoria. In terms of existing law, the applicant does not qualify to be admitted as a legal practitioner to practice law in South Africa. She contended that the law as it stands is unconstitutional and that the previous dispensation regarding the admission of advocates should be “revived”. In the alternative, she contended that the Minster of Justice should regulate the admission of foreign practitioners in such a fashion that she (and others in her position) be allowed to practice law in South Africa.

Application: In June 2023 the applicant launched an application for her admission as a legal practitioner in terms of the Legal Practice Act 28 of 2014 (LPA). In that application she relied on section 24(3) of the LPA which she claimed, when read with section 119(2), allowed her to invoke section 5 of the Admission of Advocates Act 74 of 1964 (AAA). After objection to her application for admission by the LPC, the applicant withdrew that application. In 2024, the applicant launched the present application. The applicant seeks an order declaring section 24(3) of the LPA as unconstitutional and invalid to the extent that it does not allow foreigners who have been admitted to practice as advocates in other jurisdictions to be admitted and authorised to be enrolled as legal practitioners in Republic of South Africa, together with alternative relief.

Discussion: In terms of the section 24(2) the LPA, admission to practice as a legal practitioner (which includes those wishing to be enrolled as advocates), is restricted to South African citizens or permanent residents of the Republic. This restriction has been found to be constitutionally compliant. The applicant concedes that, as the law currently stands and as interpreted by the respondents, she is not entitled to be admitted to practice law in the Republic. Her suggestion is that “one would have to read into section 24(3) the provisions of section 5” of the AAA. The applicant’s further contentions are that she had a right (to be admitted to practice law in the Republic) under the AAA, which had been “taken away” by its repeal. She argued that such a right could be “revived” in terms of section 119(2) of the LPA. The principal argument of the applicant is that the “rights” which she had in terms of the AAA had been “taken away” from her. Had the applicant been admitted as an advocate in the Kingdom of Lesotho before 1 November 2018, she would, in the same manner as those South Africans who had obtained LLB degrees before that date, have been entitled to apply to be enrolled after that date, in terms of the LPA (on condition that all the other requirements have been met). The applicant had not acquired such rights. She was only admitted as an advocate on 20 March 2023, after having completed her practical vocational training from April 2019 to January 2020.

Findings: The retention provision and the transitional or continued right created by section 115 of the LPA did not extend to rights which had not yet been in existence on 1 November 2018. Any rights which a prospective legal practitioner might acquire after that date, can only be exercised in terms of the LPA and not the repealed AAA. The applicant’s argument that the LPA had “taken away” some of her rights, is therefore unsustainable. At the time the LPA had come into operation, the applicant had no accrued rights. The applicant’s alternative argument, namely that the AAA, insofar as it provided for the admission of foreign advocates from designated countries, be kept “alive” so that persons in the position of the applicant, may at some future date after 1 November 2018, rely on the terms of a repealed act of parliament, flies directly in the face of parliamentary sovereignty. To demand from a court that it deems the provisions of an act of parliament still applicable when parliament has expressly repealed those provisions, would amount to law-making way beyond the separation of powers principle. The applicant has no right to be admitted to practice law in South Africa. The impugned section is not unconstitutional. It reflects the sovereign policy choice of the Legislature and does not unfairly discriminate against the applicant on any of the impermissible grounds set out in section 9(3) of the Constitution. Section 24(3) of the LPA also does not infringe the applicant’s rights to human dignity nor her right of association. It simply regulates access to the legal profession as contemplated in section 22 of the Constitution.

Order: The application is dismissed.

DAVIS J

Facts: The applicant (Discovery Health) is a company and medical schemes administrator managing some 18 medical schemes including Discovery Health Medical Scheme. At the heart of the matter is the Road Accident Fund’s liability for the payment of past medical expenses of road accident victims, who are members of medical schemes, in circumstances where such expenses have been settled by a medical scheme (the disputed medical expenses). In 2022, the RAF issued a directive that instructed its employees to reject road accident victims claims for the disputed medical expenses. The reasoning underpinning this was that those claimants did not suffer any loss, and that the RAF therefore had no duty to reimburse them. Discovery Health initiated urgent proceedings and the court reviewed and set aside the directive and interdicted the RAF from relying on the directive to reject claims for the disputed medical expenses.

Application: For a declarator, amongst others, that the RAF is in breach of the order handed down in 2022 by this court. Discovery Health asserts that the RAF has failed to comply with the order, in that it continues to refuse to pay the disputed medical expenses. Discovery Health further seeks a pronouncement by this court that the RAF’s reliance on the two directives, which it issued subsequent to the order, perpetuates its breach of that order. The second directive required the RAF’s employees to first ascertain whether a claim fell within prescribed minimum benefits (PMB’s) or emergency medical conditions (EMC’s), and only where it was neither, would a claim be processed and honoured if successful. The third directive was based on section 19(d)(i) of the Road Accident Fund Act 56 of 1996 where there has been an agreement to pay another person a portion of the compensation.

Discussion: The key question which must be answered is whether a case has been made, based on policy considerations of fairness, equity and reasonableness, that medical schemes regain what they have paid in discharge of their contractual and statutory obligation, indirectly from the fiscus, through the financially ailing RAF, relying on the principle of res inter alios acta and whether subrogation is applicable to claims submitted by victims of accidents to the RAF. One of those policy considerations is whether it is conscionable that the RAF, in competition to funding the millions of motor vehicle claimants, many of whom are indigent persons, be concerned with funding medical scheme premiums of the small, financially-privileged group who already have access to private healthcare.

Findings: It is time that we confront the reality that the principle of subrogation, which applies to insurance, does not apply in the context of medical schemes. In further considering the issue, one must take into account that the RAF is not an insurance entity and its sole means of income is not premiums as is the case with insurers but a fuel levy. That the Fund is struggling financially and is not adequately funded is no secret. The contestation before the court is simply about whether the RAF’s funds should continue being used to replenish the coffers of medical schemes. The subrogation principle perpetuates the lie that a road accident victim actually has a claim against the RAF when in truth and in fact, that claim was satisfied by the medical scheme. The court was called to decide in this case whether by relying on the two subsequent directives, the RAF breached the 2022 judgment. This court finds that it did not. Discovery Health has also not made out a case to interdict these and/or to set them aside as unlawful. The result is that they remain operative.

Order: The application is dismissed with costs, such costs to include the costs of two counsel, on scale C. The costs are to include the costs related to the strike-out application.

MLAMBO JP and BAM J

OPPERMAN J dissenting from para [105]

Facts: In 2006, the late Dr Sabdia instituted review proceedings against Mr Soma in the Land Claims Court, relating to an immovable property. Dr Sabdia died on 5 November 2013, prior to the final adjudication of the review proceedings. His sons were appointed as executors of Dr Sabdia’s estate (the executors). Mr Soma brought an eviction application against the estate of Dr Sabdia, the heirs and three tenants. The eviction application was successfully opposed by the executors, represented by attorneys Mothle Jooma Sabdia Incorporated (MJS). The court dismissed the application with costs on a punitive scale. MJS set down the bill of costs for taxation before the Taxing Master of the High Court. The Taxing Master upheld the objection by Mr Soma that the estate was not entitled to recover the costs awarded by the court, save for the out-of-pocket expenses. The Taxing Master ruled that Mr Shiraz Sabdia, who was also an attorney practicing at MJS, although he acted in his professional capacity on behalf of the estate in the lawsuit, was not entitled to remuneration as an attorney, notwithstanding his co-executor approval. In addition, the Taxing Master found that the executor’s remuneration covered all the work done on behalf of the estate, and that neither Mr Shiraz Sabdia nor MJS was entitled to recover legal costs for work done in their professional capacity.

Appeal: The executors instituted review proceedings, challenging the decision of the Taxing Master. The High Court dismissed the application with costs. Dissatisfied with the outcome of the application, the executors sought leave to appeal the whole judgment and order of the High Court. The High Court dismissed the application, with costs. Undaunted, the executors petitioned this court for leave to appeal. This matter concerns the following cardinal questions of law. First, whether the executor, who is an attorney and acts in his professional capacity on behalf of the deceased estate in a lawsuit, was not entitled to remuneration as an attorney, notwithstanding the express provisions of the last will and testament (the will). Second, whether the decision to disallow the payment of such fees falls within the discretion of a Taxing Master.

Discussion: The executors asserted that the entitlement to remuneration is supported not only by the terms of the will but also by the provisions of sections 51(1)(a) of the Administration of Estates Act 66 of 1965, which permits the testator to determine the executor’s remuneration. Furthermore, they posited that the context and purpose of clause 4 of the will (the remuneration clause) should be the determining factors in its interpretation. Further, that this purpose and context is to be found in clause 5.3 of the will, which should be read with the remuneration clause. Upon applying the principles of interpretation, the language utilised in the remuneration clause is characterised by its clarity and directness. The direction provided is lucid and unequivocal, as it states that the "executors shall be entitled to charge and shall be paid all usual professional fees and other fees and charges from business transacted". The clause explicitly grants the executors the authority to charge for professional fees. In addition, it specifies that they have the right to charge for time spent and actions taken by them or their associates in connection with the administration of the estate. The remuneration clause pertains to fees levied based on the duration of the professional services rendered. In other words, it is time based. Conversely, the statutory rate for executors is a fixed percentage rate, regardless of the time spent or the nature and amount of work performed by them. It is not time based, but performance based. This demonstrates that Dr Sabdia intended his executors to be recompensed for any professional, and hence legal, services actually rendered by them.

Findings: In the context of the review application in the Land Claims Court, it is important to note that Dr Sabdia had consistently been represented by MJS. It is evident from the remuneration clause and clause 5.3 that Dr Sabdia desired the continued legal representation of MJS in the Land Claims Court litigation, even after his demise. Section 51(1)(a) expressly makes provision for the payment of remuneration, as may have been fixed by the deceased in his will. It negates the conclusion reached by the High Court that such remuneration is ultra vires the settled principles, contra bono mores and in conflict with the fiduciary duties of an executor. The High Court unfortunately did not construe section 51(1) correctly. It ought to have recognised that there are two distinct legislative frameworks in section 51(1) that govern the payment of an executor’s remuneration. Section 51(1) permits a testator to determine remuneration of an executor, including the remuneration that may be earned by an executor who renders professional services to the estate. The legislative scheme clearly envisages two fee payment regimes, namely, the one determined by the testator or the one prescribed by the statute. The remuneration clause and clause 5.3 of the will sanctioned the payment of professional fees due to the executors and MJS.

Order: The appeal succeeds with costs. The order of the High Court is set aside and replaced. The decision and ruling of the Taxing Master are set aside. The allocator of the Taxing Master is set aside. The taxation of the bill of costs is referred to the Taxing Master.

MBATHA JA (HUGHES JA, KEIGHTLEY JA, UNTERHALTER JA, and COPPIN AJA concurring)