Category Archives: Independent Advisory News

CASE UPDATE – MAINTENANCE CLAIM BY A MINOR AGAINST ESTATE OF A PARENT

By M B Cronje – BA (UP) BIur LLB (UNISA)          

Du Toit NO v Thomas NO and others [2015] JOL 33337 (WCC)

The maintenance court may order the executor of the estate of the father of a minor child to pay maintenance in respect of the minor for the period before the executor’s account has lain open for inspection

Following an application by the mother of a minor child, the Magistrate ordered the executor of the estate of the minor’s father, to pay R10,000 per month towards the maintenance of the child, commencing on 7 August 2014, and thereafter on the seventh day of every following month (maintenance that applicant was liable to pay in terms of section 16(1)(a)(i) of the Maintenance Act 99 of 1998 – the “Maintenance Act”); secondly, to make a once-off payment of R720,000 (money that was payable to the mother of the child in terms of section 16(1)(a)(ii), being the amount which she was entitled to recover from the executor in respect of expenses she had previously incurred for 72 months in connection with the maintenance of the child); and thirdly, to pay an amount of R7,500 on or before 14 August 2014 (a contribution towards the fees of an accountant whose expert report had been relied on to quantify the payment in terms of section 16(1)(a)(ii)). No appeal against these orders has been lodged in terms of section 25 of the Act and the merits of the decision by the magistrate are not in issue.

The executor contends that an executor is not “a person” who has a legal duty to maintain any other person; that the provisions of the Maintenance Act do not apply to the obligation of the deceased estate to maintain the minor child; and that the maintenance court was not entitled to make a maintenance order against the executor. The executor contends that the High Court is the proper forum to adjudicate any dispute relating to the maintenance claims in question. The executor also submits that an interpretation of the Maintenance Act which makes an executor liable to maintain another person is inconsistent with the provisions of the Administration of Estates Act 66 of 1965 (“Administration of Estates Act”); firstly, because the provisions of subsections16(1)(a)(i) and (ii) of the Maintenance Act are contrary to the processes set out in the Administration of Estates Act for establishing rejected claims, and the normal process of paying out claims only after the account has lain open for inspection and objections thereto have been dealt with; and contrary to the requirements for payment and distribution of monies to minors in terms of section 45 of the Administration of Estates Act; and because the requirements that payments of claims for maintenance can, pending the confirmation of the account, only be paid with the consent of the Master in terms of section 26(1A) of the Administration of Estates Act).

It is settled law that the duty of a parent to maintain a child does not cease upon a parent’s death, but is transmissible and becomes a debt resting upon the deceased estate. [Carelse v Estate de Vries (1906) 25 SC 532; Glazer v Glazer NO 1963 (4) SA 694 (A) at 706H – 707A.] The right of a child to maintenance does not arise out of any principle of inheritance, but out of the family relationship between parent and child. A testamentary executor steps into the shoes of the deceased and from the date the executor receives letters of executorship he represents the estate. This included paying, under certain circumstances, estate liabilities. Maintenance of the minor child is one such liability.

In section 1 of the Administration of Estates Act 66 of 1965 executor means “any person who is authorised to act under letters of executorship granted or signed and sealed by a Master, or under an endorsement made under section 15″. An executor is therefore a person in terms of the Administration of Estates Act, and may be regarded as one for purposes of the Maintenance Act.

In terms of section 26(1A) of the Administration of Estates Act the executor may, before the executor’s liquidation and distribution account has lain open for inspection and with the consent of the Master, release such amount of money and such property out of the estate as in the executor’s opinion are sufficient to provide for the subsistence of the deceased’s family or household. This subsection was specifically designed to alleviate family hardship pending the winding-up of the estate.

The construction of the Administration of Estates Act suggests that there are two stages at which a child may claim maintenance from the executor; before or after the executor’s account lies open at the office of the Master. This matter relates to a claim before the account has lain open for inspection. The power to release money or property for the subsistence of the deceased’s family is expressed in the section 26(1A) anterior to and independently of the sections which regulate the separate process of winding up the estate.

The second stage provides a child in need of maintenance with a different remedy to the first. The child (and surviving spouse) of the deceased normally only receive maintenance payments or benefits during the second stage; after the liquidation and distribution account has lain for inspection and during the distribution process. A child’s maintenance claim is a debt sui generis. It does not compete with the claims of creditors. [Lotz v Boedel Van der Merwe 1958 (2) PH.M16 (O).] On the other hand such a claim is preferred to the claims of heirs and legatees whose claims in the event of competition would have to abate proportionately. All of this has to be considered before a final distribution of maintenance is made.

At the first stage a responsibility to alleviate hardship is placed squarely on the executor for the period before his account lies open for inspection. The requirement of consent by the Master does not detract from the above conclusion. Such consent would serve to protect the executor from personal liability should he make a wrong distribution. [Meyerowitz on Administration of Estates and Estate Duty (2007 ed) 12.2A.]

The decision of the Master to give or withhold consent in terms of section 26(1A) constitutes administrative action. An unreasonable refusal of consent would be subject to judicial review in terms of section 7 of the Promotion of Administrative Justice Act 3 of 2000. Such refusal is not an insuperable obstacle to maintenance. However, it would create a situation where the maintenance remedy of a child would have to be pursued in a High Court, albeit that the executor’s account has not yet lain open.

The Legislature must have intended the Maintenance Act to provide a remedy against an executor who fails to carry out responsibility in terms of section 26(1A); and also that the legal duty described in section 2(1) of the Maintenance Act includes a person such as an executor who was already vested with responsibility for the subsistence of a deceased’s family in terms of the earlier Administration of Estates Act.

Six years after the passing of the deceased the child had allegedly not been paid maintenance. As the executor’s account had not been finalised, satisfaction of the child’s overall maintenance claim could not be satisfied in the ordinary course of winding up of the estate. This situation demands the same cheap and effective maintenance relief for the child whose parent is deceased as a child with living parents would be entitled to in terms of the Maintenance Act. Failing this, inequality before the law would exist. The provisions of the concluding clause in section 2(1) of the Maintenance Act make it clear that the Act is intended to cast a wide jurisdictional net. This goes well beyond relationships by blood. It covers an executor exercising the responsibility under section 26(A1) of the Administration of Estates Act. The executor is a person with a legal duty to maintain the minor child of the deceased. He is a person “legally liable to maintain any other person” for purposes of subsections 16(1)(a)(i) and (ii) of the Maintenance Act. Before his account lies open he is a person who may be subjected to investigation under section 6(1)(a) of the Maintenance Act arising from any alleged failure to maintain the minor child of the deceased.

Acting Judge Donen dismissed the application to review and set aside the proceedings in the maintenance court with costs.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted. (E&OE)

A STITCH IN TIME

by HILLARY PLAATJIES

We are at the end of the first quarter of the year and those December holidays are by now, long forgotten. As we sail through the year, we face the challenges life throws at us, the ups and downs of life.

Likewise, there are businesses who experience ups and downs and the misfortune of financial difficulties, threatening job losses or declining businesses opportunities. Whatever difficulties businesses or individuals may face, taking action early, is important in rescuing the situation. Not addressing the problem when facing financial difficulties, can quickly turn into serious financial losses and consequences.

In this issue, we publish an article on when a business fights for its commercial life. Furthermore, the issue also contains informative information regarding capital protection for individuals.

We hope that the article on the responsibilities of the representative taxpayer in terms of the Tax Administration Act, will shed some light on the position for representative tax payers. The recognition of foreign orders in International Transport Trade have never been clear-cut. The article on this subject will shed some light on this topic.

Needless to say, we provide a wide range of services as reflected on our website. We have many tools at our disposal and the means to do a solvency health check of businesses and individuals.

Have a great Easter, and if you are hitting the roads, drive safely.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.

WELCOME BACK!

Now that the Holiday Season is a thing of the past, the New Year promises a fresh start for all of us.  Some of us made new resolutions to stay fit, eat healthy or stay active.  Whatever your resolutions may be, we hope that you have a prosperous and successful 2015!

This issue contains informative information regarding trusts and financial planning.  Furthermore it contains articles on the objectives of business rescue and the opportunity for lenders to invest in companies which are placed under business rescue.

L.M. Montgomery states: “Isn’t it nice to think tomorrow is a new day with no mistakes in it yet?   Likewise, it is comforting that this is a new year with no mistakes in it yet!

Hillary Plaatjies

TEEING OFF

Welcome to the FIRST issue of Independent Advisory News.

It is with great excitement and enthusiasm that we launch this newsletter which we hope will become  essential reading for anyone who wants to keep up to date with the latest news and developments in  our fields of expertise.  This newsletter will also serve as a platform for sharing expert legal knowledge and information which is relevant to all affected persons.

We have taken the liberty signing you up for this newsletter because of our previous dealings or connections with you.   If you ever find that what we offer in our newsletter is not for you, simply click “unsubscribe” at the bottom of this email.

November-this is the time of the year when many people are “hitting the wall”.  Wikipedia states that the meaning of ‘hitting the wall” is, when endurance sports athletes, like cyclist or marathon runners suddenly experience fatigue or loss of energy during their long race.    Amazingly, athletes who push through the wall will emerge on the other side with a “second wind”, renewed energy and a determination to complete the run.

Do you remember the goals and resolution you set out to achieve in the beginning of this year?  Each passing year, change happens whether it is in your personal life or business life, whether the change is good or bad, we are forced to adapt to change and push through the wall.    If you are hitting the wall, be strong, don’t let adversities get you down, push through the wall and find your second wind.    Soon we will hear “jingle bells” playing in the shops and the big hunt for Christmas presents will commence.  Hopefully you will soon have a relaxing, fun filled and safe holiday!

Hillary Plaatjies