REPORTABLE
CASE NO: SA 66/2022
IN THE SUPREME COURT OF NAMIBIA
In the matter between:
MASTER OF THE HIGH COURT First Appellant
MINISTER OF JUSTICE Second Appellant
and
MARUZAAN MARTEZIA MOLLER N.O. First Respondent
MARUZAAN MARTEZIA MOLLER Second Respondent
RAYLAND BEUKES Third Respondent
MERVIN GAY VEUANISA KOZONGUIZI Fourth Respondent
KOZONGUIZI AND ASSOCIATES
CLOSE CORPORATION Fifth Respondent
Coram: SHIVUTE CJ, SMUTS JA and UEITELE AJA
Heard: 24 October 2024
Delivered: 20 November 2024
Summary: This appeal dealt with the statutory duties of the office of the Master of the High Court in the execution of its oversight functions for the administration of deceased estates in terms of the Administration of Estates Act 66 of 1965 (the Act).
Following the death of Yolandi Dorothia Beukes in February 2015, her family, through their legal practitioners, reported the deceased’s estate to the Master and recommended the third respondent to be appointed as the executor of the estate. Noting that the deceased and the third respondent were divorced at the time of the deceased’s passing, the Master required the third respondent to provide security in the amount of N$2,055,000 to ensure the proper execution of his duties as executor. As neither the family nor the third respondent could provide the required security, it was proposed to the Master in a letter that the appointment of an executor be delayed for approximately five months until such time that the deceased’s daughter (second respondent) would turn 21 years of age and thus be eligible for appointment as executrix of the estate. This letter was not responded to by the Master.
Despite being aware of the request and recommendation by the deceased’s family, the Master appointed the fourth respondent as executor of the deceased estate on 18 November 2015. This appointment was made without the Master informing the heirs to the estate or seeking consent from them. The Master required security of N$2 million from the fourth respondent which security was provided. In execution of his duties, the fourth respondent then opened a bank account to collect estate funds. He deposited an amount N$1,274,357.36 into the account. However, between December 2015 and March 2016, the fourth respondent misappropriated the entire amount, transferring it to a close corporation he was part of and to other individuals for personal benefit. The Master terminated his appointment on 3 June 2016, appointing the second respondent as executrix, and canceled the security. The misappropriation was discovered by the new executor and her lawyers in October 2016, leading the first to third respondents to institute an action against the appellants, and fourth and fifth respondents, seeking recovery of the misappropriated funds with interest and costs.
The High Court found that the Master had failed to exercise reasonable care and diligence by not requiring an account of the estate assets before cancelling the security bond, which could have uncovered the misappropriation. The court found in terms of s 100 of the Act that the State was liable and accordingly made an order for the State – together with third and fourth respondents – to pay the new executor the sum misappropriated.
The issue on appeal was whether the Master of the High Court was delictually liable to the heirs of the deceased in circumstances where an executor appointed by the Master to administer the deceased estate misappropriated estate funds. There were also two condonation applications by the appellants for the late filling of the record of appeal and for the late filling of their heads of argument.
Held that, the appellants’ reliance on s 26 of the Act to shift the blame to the second executor for the failure to timeously detect the misappropriation of the estate funds is misplaced. Section 26 does not create a legal obligation for the executor to lodge a complaint to the Master. Section 26 empowers the executor to take into custody the property, books and documents in the estate and where necessary to obtain a warrant from the magistrate to search for the property in circumstances where there is reason to believe that the property is concealed or otherwise unlawfully withheld from the executor.
Held that, the failure to hold Mr Kozonguizi (fourth respondent) accountable by enforcing the security and other acts and omissions on the part of the Master and/or her officials were manifold manifestations of the lack of reasonable care and diligence towards the deceased estate, which caused the estate to suffer damages. The court a quo’s reasoning and its subsequent finding that the Master was grossly negligent cannot therefore be faulted. The State was thus liable for the damage occasioned to the late estate of Yolandi Dorothia Beukes.
Having failed to provide satisfactory explanations in both their condonation applications for the non-compliances with the Rules of Court, coupled with poor prospects of success on appeal, the applications for condonation were refused and the matter was struck from the roll.
APPEAL JUDGMENT
_________________________________________________________________
SHIVUTE CJ (SMUTS JA and UEITELE AJA concurring):
Introduction
The crisp question in this lapsed appeal is whether the Master of the High Court is delictually liable to the heirs of the deceased in circumstances where an executor appointed by the Master to administer the estate of the deceased misappropriated estate funds. The appeal record was filed late and so were the heads of argument. Applications were lodged to condone the infractions. Those applications will be considered and decided towards the end of the judgment.
Background
The facts of the matter are common cause. The late Yolandi Dorothia Beukes (the deceased) died on 8 February 2015. On 5 March 2015, a firm of legal practitioners, Nakamhela Legal Practitioners acting on behalf of the deceased’s family, reported the estate to the Master. Amongst the documents forwarded to the Master, was a recommendation by the family that the deceased’s ex-husband, Mr Raymond Beukes, be appointed as the executor of the deceased’s estate. Mr Beukes signed a power of attorney for Nakamhela Legal Practitioners to act as his agent.
The Master correctly observed that Mr Beukes and the deceased were divorced at the time of her death. Accordingly, the Master required of Mr Beukes to furnish security in the sum of N$2 055 000 for the proper performance of his functions as executor. The amount of security was determined to be the estimated value of the estate according to the inventory furnished when the estate was first reported. In a letter dated 22 April 2015, Nakamhela Legal Practitioners advised the Master that neither Mr Beukes nor the heirs could provide security. They proposed instead that the appointment of an executor be delayed until 9 November 2015 when the deceased’s daughter and heir Maruzaan Martezia Moller would turn 21 years of age and thus be eligible for appointment as the executrix of the estate. This letter was not responded to.
On 26 November 2015, Nakamhela Legal Practitioners addressed a letter to the Master advising that Maruzaan Martezia Moller had attained majority and recommending that she be appointed as executrix. On or about 18 November 2015 nine days after Maruzaan Martezia Moller had become a major, the Master appointed Mr Mervin Gay Veuanisa Kozonguizi (Mr Kozonguizi) as executor of the estate of the late Yolandi Dorothia Beukes.
It would appear that Mr Kozonguizi was not a legal practitioner but a member of a close corporation through which he carried on the business of the administration of estates.
The appointment of Mr Kozonguizi was done despite the facts that the Master was made aware that Maruzaan would become a major on 9 November 2015 and that she was the family’s nominee for appointment as executor of her late mother’s estate. Mr Kozonguizi furnished the Master with security in the sum of N$2 million for the proper performance of his functions as directed by the Master.
Moreover, at the time the Master appointed Mr Kozonguizi as executor of the estate, the Master did not inform the deceased’s heirs or their lawyers of her intention to do so as contemplated in s 18(1) of the Administration of Estates Act 66 of 1965 (the Act). She did not give the deceased’s heirs or their lawyers the opportunity to make a recommendation regarding the appointment of an executor as contemplated in the said section either. Nor did the Master have any document signed by the heirs nominating Mr Kozonguizi for appointment as the executor.
On 22 January 2016, Nakamhela Attorneys addressed a letter to the Master, pointing out that Mr Kozonguizi was not nominated by the deceased’s family and that the family was not informed of the appointment nor did it consent to such appointment. On 3 June 2016, the Master terminated Mr Kozonguizi’s appointment and then appointed Maruzaan Martezia Moller as the executrix of her late mother’s estate. In or about September 2016, the Master effectively cancelled the security provided to her by Mr Kozonguizi by reducing the amount required to N$0.00 (zero Namibia Dollar).
In his capacity as the executor of the estate in question, Mr Kozonguizi caused to be opened a bank account with Bank Windhoek for the purpose of collecting cash in the estate, in which account the sum of N$1 274 357,36, belonging to the estate was deposited. During the period between December 2015 to March 2016, Mr Kozonguizi dissipated the account of the estate of its entire content in the amount of N$1 274 357,36 by transferring the funds to a close corporation of which he is a member and other individuals for his own benefit. The new executor and her lawyers discovered only in October 2016 that Mr Kozonguizi had pillaged the estate bank account and drained it of all its money.
The current first three respondents (as plaintiffs) subsequently instituted an action against the Master, the Minister of Justice and Mr Kozonguizi as well as the close corporation of which Mr Kozonguizi was a member, claiming payment in the amount of N$ N$1 274 357,36, interest thereon at the rate of 20 per cent per annum from 1 December 2015 to date of payment plus costs of suit. Only the Master and the Minister defended the action. Mr Kozonguizi and his close corporation did not file notices to defend and took no part in the trial that ensued. It is not surprising that they did not participate in the appeal either.
The pleadings
In their action, the plaintiffs pleaded that the Master breached both its common law and statutory duties owed to the estate in appointing Mr Kozonguizi who was not a fit and proper person for appointment as executor; that the Master did not exercise reasonable care and diligence in appointing Mr Kozonguizi without following the safeguards set out in s 18 of the Act; that the Master acted negligently by not monitoring Mr Kozonguizi’s actions and supervising the manner in which he administered the estate to combat and/or eliminate the possibility of misconduct on his part; and that the Master acted negligently by failing to require Mr Kozonguizi to account to the satisfaction of the Master, for the property in respect of which he was appointed to liquidate and distribute prior to releasing him from the obligation to provide security without enforcing security.
The plaintiffs furthermore pleaded that by not acting with reasonable care and diligence, the Master enabled Mr Kozonguizi to misappropriate the estate’s money. In the alternative, the plaintiffs instituted a constitutional claim that did not appear to have been pursued in the trial.
The Master and the Minister pleaded that Mr Kozonguizi was removed as executor on the plaintiffs’ request, which request Mr Kozonguizi did not oppose. The Master and the Minister furthermore pleaded that the new executor was obligated to take into custody and control all the property, books and documents in the estate and assess the value of the estate and that she was negligent in the execution of her duties by not notifying the Master of the status of the estate between the date of her appointment on 7 June 2016 to the time the misappropriation of the moneys was detected. As to the cancellation of the security, the Master and the Minister pleaded that this was done to obviate the need to burden the estate with monthly insurance premium costs which were a charge to the estate.
The court a quo’s reasoning
In a judgment rendered with characteristic clarity of thought and in a succinct style, the court a quo found that Mr Kozonguizi was not at any stage called upon to account for his administration of the estate. As such, the Master did not have the slightest idea of what assets were collected, which assets were distributed and which remained to be distributed. Yet despite this lack of knowledge, Mr Kozonguizi was not called upon to account for any of the assets in his control prior to cancelling the bond of security. Had that been done, the misappropriation of the estate’s money would have been discovered and the security enforced. The court held further that the failure to require Mr Kozonguizi to account was not only a flagrant disregard for the provisions of s 24 of the Act, but it was also grossly negligent. Consequently, the State was held liable pursuant to the provisions of s 100 of the Act and ordered – together with Mr Kozonguizi as well as his corporation – to pay the new executor the sum misappropriated by Mr Kozonguizi plus interest thereon from the date of the judgment to the date of final payment, plus costs of suit.
The parties’ contentions on appeal
On behalf of the appellants, it was principally argued that the court a quo erred in finding negligence on the part of the Master as it was impossible for the Master to detect wrongdoing by an executor unless a complaint had been laid with her or the Liquidation and Distribution (L & D) account had been submitted to the Master. As neither a complaint had been instituted with the Master nor the L & D account been lodged, there could have been no basis for the Master to have enforced the security in terms of s 23(5) of the Act prior to Mr Kozonguizi’s removal as executor or thereafter.
As for the first to the third respondents, the principal submission that encapsulated the essence of their case was that the Master acted without reasonable care and diligence in failing to require Mr Kozonguizi to account so that the misappropriation of the estate funds could come to light and to enforce the security.
The legal principles
The Administration of Estates Act
The Act assigns powers and functions to the Master to exercise an oversight role in the administration of deceased estates. Section 13(1) of the Act provides that no person shall liquidate or distribute the estate of any deceased person, except when granted letters of executorship or in pursuance of a direction by the Master. By virtue of the powers vested in the Master by s 18(1)(a) of the Act, the Master appoints and grants letters of executorship to a person the Master deems fit and proper to be executor of the estate of the deceased who died intestate.
Section 23(1) requires the provision of security for liquidation and distribution of a deceased estate in the following terms:
‘23 Security for liquidation and distribution
(1) Subject to the provisions of section twenty-five, every person who has not been nominated by will to be an executor shall, before letters of executorship are granted, or signed and sealed, and thereafter as the Master may require, find security to the satisfaction of the Master in an amount determined by the Master for the proper performance of his functions: Provided that if such person is a parent, spouse or child of the deceased, he shall not be required to furnish security unless the Master specially directs that he shall do so.’
Subsection (5) of s 23 provides:
‘(5) If any default is made by any executor in the proper performance of his functions, the Master may enforce the security and recover from such executor or his sureties the loss to the estate.’
The security given by an executor under s 23 may be reduced by the Master provided that certain requirements are met. Section 24 is the relevant provision in this regard and it reads as follows:
‘24 Reduction of security given by executors
If any executor who has given security to the Master for the proper performance of his functions, has accounted to the satisfaction of the Master for any property, the value of which was taken into consideration when the amount of such security was assessed, the Master may reduce the amount of the security to an amount which would, in his opinion, be sufficient to cover the value of the property which such executor has been appointed to liquidate and distribute, and which has not been so accounted for.’
In terms of s 24 therefore, if an executor who had given security to the Master for the proper performance of his or her work has accounted to the satisfaction of the Master, the Master may reduce the amount of security to an amount sufficient to cover the value of the property which the executor had been appointed to liquidate but which had not been accounted for.
Section 26(1) is also relevant to our enquiry and provides 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.’
The respondents in their claim relied on a statutory and/or common law duty on the part of the Master not to cause them harm. Whether a particular statute was intended to give a person a civil remedy is a question of statutory interpretation. If a statute imposes a duty for the protection of certain class of persons to which a plaintiff belongs, it is a strong indication that the plaintiff was given a right which needs to be protected. At common law, a person for whose benefit a statutory provision operates may have a claim for damages against one who breaches the statutory duty provided the requirements for proof of such claim are satisfied.1
Evaluation
To be fair to the Master, the actions and/or omissions complained of by the respondents (as plaintiffs) were not occasioned by the Master personally but by officials employed in the Master’s Office and acting within the course and scope of their employment. Therefore, reference to ‘the Master’ in this judgment must be understood to refer also to those individuals in the Master’s Office who handled the estate in question. In the trial that ensued in the court a quo, only the Master testified on behalf of the appellants and none of the officials who dealt with the deceased estate gave evidence.
The Master testified, correctly, that the purpose of s 23(1) of the Act was to protect the deceased estate from losses that may be caused by the executor in the event of a default. Although the Master was empowered to enforce security upon Mr Kozonguizi’s default, the Master did not do so. The Master simply neglected to require Mr Kozonguizi to account for his administration of the estate. The failure to demand accountability and to enforce security resulted in the loss on the part of the deceased’s estate. Mr Kozonguizi was, in peremptory terms, required to submit to the Master an account in the prescribed form of the liquidation and distribution of the estate within six months after the letters of executorship had been granted to him. This Mr Kozonguizi failed to do. Yet despite this failure, he was not asked to account prior to the cancellation of the security and it is not clear what considerations informed the decision to reduce the amount of security from two million to zero Namibia Dollar in the complete absence of a report on the performance of his functions.
In her evidence, the Master sought to shift the blame to the second executor for the failure to timeously detect the misappropriation of the estate funds. The Master contended that the executrix was under a duty pursuant to s 26 to collect and take possession of the estate assets and notify the Master of any misappropriation of the estate moneys. As this was not done within three months of the executrix’s appointment, the bond of security was reduced as ‘there was no reason to burden the estate with a monthly premium accruing from the bond of security’. The Master insisted in cross-examination that just as there was an obligation on the part of the Master to account, there was also ‘an obligation on the new executor to account’.
When pressed in cross-examination whether s 26 places a legal obligation on the new executor to report to the Master prior to the Master taking action against the errant executor, the Master resiled from her previous position and correctly stated the obligation placed on the executor under s 26 as that of taking into custody all the property, books and documents in the estate and to apply to a magistrate for a search warrant if the executor has reason to believe that the property is concealed or otherwise unlawfully withheld.
Yet despite the Master resiling from the position she previously articulated that the executrix was under an obligation to report the deficit in the estate account to the Master, the blame game argument was resurrected in the appellants’ argument in this Court. Counsel for the appellants argued that the court a quo erred in finding gross negligence on the part of the Master, because the executrix did not bring the misappropriation to the Master’s attention earlier. It was argued that the Master’s office handles hundreds of estates. As such, so the argument developed, unless a complaint had been made or the L & D account had been lodged, it would be impossible for the Master to detect any wrongdoing by executors.
The reliance on the executrix’s alleged non-compliance with the provisions of s 26 of the Act by the appellants is misplaced. Section 26 does not create a legal obligation for the executor to lodge a complaint to the Master. Section 26 empowers the executor to take into custody the property, books and documents in the estate and where necessary to obtain a warrant from the magistrate to search for the property in circumstances where there is reason to believe that the property is concealed or otherwise unlawfully withheld from the executor.
It is untenable for the Master to rely on the volume of estates under supervision for not devising ways and means of monitoring performance by executors. The landscape of the Master’s jurisdiction has vastly changed. Some estate practitioners do not belong to a professional body to which recourse may be had in the case of misconduct. Charlatans and similar unconscionable elements masquerading as estate practitioners will take advantage of the laxed or non-existent control or accounting measures to misappropriate estate property to the detriment of beneficiaries under the guise of administering estates. The Master’s office can no longer operate business as usual. It has to be in synch with the changed times. It must innovate and leverage Information Technology to craft mechanisms for control and supervision of the executors.
Instead of endeavouring to shift blame, the Master should have regarded this case as a wakeup call and/or a call to action. The Master should have endeavoured to review the Office’s internal oversight procedures so as to ensure that executors adhere to legal requirements, including the proper accounting of estate assets and that irregularities or misconduct by executors are investigated, thereby ensuring the fair and transparent handling of deceased estates. This oversight safeguards the interests of beneficiaries and maintains the integrity of the estate administration. Instead, much time and effort was spent on seeking to prosecute an entirely unmeritorious appeal.
Section 100 of the Act
Section 100 of the Act provides for liability on the State in the event that the Master or officials in that Office fail to exercise reasonable care and diligence. The section provides:
‘100 Exemption from liability for acts or omissions in Master's office
No act or omission of any Master or of any officer employed in a Master's office shall render the State or such Master or officer liable for any damage sustained by any person in consequence of such act or omission: Provided that if such act or omission is mala fide or if such Master or officer has, in connection with such act or omission in the course of his duties or functions, not exercised reasonable care and diligence, the State shall be liable for the damage aforesaid.’
To succeed in their claim, the respondents had to allege and prove that in performing their duties and functions, officials in the Master’s office did not exercise reasonable care and diligence. Should breach of statutory duty be established, then the State and not the Master per se will be liable. As is apparent from the relevant provisions of the Act, the office of the Master was established to provide oversight for the administration of deceased estates. In the exercise of its statutory functions, the Master is expected to do so with reasonable care and diligence. There can be no doubt that on the facts of this case the Master and/or her officials did not exercise reasonable care and diligence. In fact there has been a near total failure to observe care and diligence at every turn of the Master’s decisions. In this respect, the following instances amply demonstrate the lack of reasonable care and diligence.
The Master appointed Mr Kozonguizi after she was made aware that the second respondent had attained majority for the purpose of appointment as executor; Mr Kozonguizi’s appointment was not made known to the respondents; the respondents were not invited to consent or object to his appointment; the Master neglected to supervise the estate by requiring Mr Kozonguizi to lodge the L & D account within the stipulated time or at all; Mr Kozonguizi was not directed to account as to the value of the property in the deceased’s estate during the period he acted as executor prior to the cancellation of his appointment and no such accounting was demanded prior to cancelling the bond of security either. Had Mr Kozonguizi been asked to account, the value of the loss in the estate account in all probabilities would have been discovered and the security in the sum of two million Namibia Dollar provided by Mr Kozonguizi would have been sufficient to cover the N$1,2 million misappropriated by him.
The failure to hold Mr Kozonguizi accountable by enforcing the security and other acts and omissions on the part of the Master and/or her officials were manifold manifestations of the lack of reasonable care and diligence towards the deceased estate, which caused the estate to suffer damages. The court a quo’s reasoning and its subsequent finding that the Master was grossly negligent cannot therefore be faulted. The State is thus liable for the damage occasioned to the estate.
Applications for condonation
As earlier noted, the appellants filed two applications for condonation. First, for the failure to file the record within the prescribed time and lastly for the neglect to file heads of argument within the time stipulated in the Rules of Court. The applications for condonation are not opposed by the respondents. However, the Court is not bound by this stance adopted by the respondents and must consider and decide the applications.
The affidavit explaining the delay in filing the record was deposed to by the Acting Executive Director in the Ministry of Justice and for the delay to file heads of argument by the instructing legal practitioner. In her affidavit, the Acting Executive Director explained that the time within which the record of appeal should have been filed was exceeded by 16 days. This, according to her, was occasioned by the delay on the part of the parties’ legal practitioners to hold a meeting to agree on the content of the record. The transcribed record was received from the company responsible for transcribing court records on 20 September 2022, but the parties were able to agree on the content of the record only on 12 October 2022.
The reason given for the delay was that the legal practitioner for the respondents was on compassionate leave. However, the deponent did not state the period of the leave of absence. The deponent then stated, without citing the source of the information, that ‘I am to understand that compliance with rule 11(10) was only completed on 12 October 2022’. She concluded the explanation by expressing regret that the record was ultimately completed only on 7 November 2022 without explaining what happened between 12 October 2022 and 7 November 2022.
The deponent started off her affidavit by stating that where she made submissions of a legal nature in the affidavit, she did so on the advice of her legal practitioners. It is clear, however, that the statement that ‘I am to understand that compliance with rule 11(10) was only completed on 12 October 2022’ is not a legal submission but a factual averment. As the alleged source of that statement has not been disclosed and in the absence of the source deposing to a confirmatory affidavit, this statement is inadmissible hearsay. The explanation for the delay to file the record is wholly unsatisfactory as it does not cover the entire period of the delay and is based on hearsay on a crucial aspect.
The explanation for the late filing of the heads of argument does not fare better either. The deponent stated that he did not receive the notice of set down in his ‘client file’, but acknowledged that his office ‘seemingly’ had received the notice. He stated further that his attention was drawn to this case only when he attended to the offices of the Registrar of this Court to enquire about another matter.
The deponent then contacted his instructed legal practitioner (whom he named) and informed him of the date of hearing. The instructed legal practitioner informed the deponent that the former did not have the appeal record, adding that as he (the instructed legal practitioner) had moved chambers, he might have had returned the appeal record to the deponent. The appeal record was found on 23 September 2024 and the instructed legal practitioner proceeded to prepare heads of argument. The heads of argument were due for filing on 25 September 2024. The instructing legal practitioner was however, booked off sick from 23 to 27 September 2024 and the heads of argument were filed only on 1 October 2024 and the matter was heard on 24 October 2024.
The explanation is disjointed and hearsay based. The instructed legal practitioner did not file an affidavit confirming the aspects of the explanation attributed to him. A document attached to the affidavit clearly shows that the notice of set down was delivered to the Offices of the Government Attorney, the appellants’ legal practitioners. Proof of receipt had been acknowledged by way of a date stamp and the signature of the person who received it. This person, however, did not depose to an affidavit explaining what happened to the notice of set down. Given the unsatisfactory explanation for the non-compliance with the rules, coupled with the poor prospects of success on appeal, the applications for condonation are to be refused and the matter is to be struck from the roll.
Order
The following order is accordingly made:
The application for condonation and reinstatement of the appeal for the late filing of the record is refused.
The application for condonation for the late filing of the heads of argument is refused.
The applicants are to pay the first to the third respondents’ costs, such costs to include the costs of one instructed legal practitioner and one instructing legal practitioner.
The matter is struck from the roll.
________________________
SHIVUTE CJ
_______________________
SMUTS JA
_________________________
UEITELE AJA
APPEARANCES
APPELLANTS: A W Boesak
Instructed by Government Attorney
FIRST to THIRD RESPONDENTS: E Shifotoka (with her U Nakamhela)
Instructed by Nakamhela Attorneys
1 Minister of Finance & another v Hollard Insurance Co of Namibia Ltd & others 2020 (1) NR 60 (SC) para 74.