Breda NO v The Master of the High Court, Kimberley

The deceased, Sarel Johannes Breda, died on 3 March 2009. The appellant was appointed executrix of his estate on 26 April 2011. The third respondent (Petrus Els) successfully obtained provisional and final sequestration of the deceased estate in May and September 2012 respectively, based on claims that he had made loans to the deceased totaling R3,569,678.97 during 2006-2008, evidenced by handwritten IOUs. At the first meeting of creditors on 27 February 2013, the Assistant Master (second respondent) admitted the third respondent's claim. The third respondent nominated the trustees who were then appointed to administer the insolvent estate. The appellant sought to review and set aside the Assistant Master's decision to admit the claim on grounds that: (a) the claim appeared ex facie the documents to have prescribed; and (b) the affidavit in support of the claim was commissioned by an attorney who had an interest in the matter, allegedly in contravention of regulation 7(1) of the Regulations Governing the Administering of an Oath or Affirmation.

• Whether the Assistant Master erred in admitting a claim which ex facie the documents may have prescribed without interrogating the claimant
• Whether the presiding officer at a first meeting of creditors should reject a claim that appears prima facie prescribed or provisionally admit it subject to examination by the trustees
• Whether an affidavit in proof of a claim under section 44(4) of the Insolvency Act commissioned by an attorney with an interest in the matter is invalid in terms of regulation 7(1) of the Regulations Governing the Administering of an Oath or Affirmation
• Whether an affidavit furnished to a presiding officer under section 44(4) falls within the exemption in item 1(b) of the Schedule to the Regulations (affidavits to be furnished to an officer in the service of the State)
• The scope and nature of a presiding officer's function in admitting or rejecting claims at a first meeting of creditors
• The role of trustees in examining and potentially disputing claims under section 45 of the Insolvency Act

The appeal was dismissed with costs.

The binding legal principles established are: (1) A presiding officer at a first meeting of creditors performs a provisional function requiring only prima facie proof of claims and should not reject a claim solely because it appears ex facie the documents to have prescribed, where the creditor relies on facts showing delay or interruption of prescription. (2) The determination of whether a claim has prescribed falls more appropriately within the powers and functions of the trustee under section 45 of the Insolvency Act, not the presiding officer under section 44. (3) An affidavit submitted in proof of a claim under section 44(4) of the Insolvency Act is furnished to "an officer in the service of the State" and therefore falls within the exemption in item 1(b) of the Schedule to the Regulations Governing the Administering of an Oath or Affirmation (as amended in 1980). (4) Consequently, such an affidavit may validly be commissioned by an attorney who has an interest in the matter, notwithstanding regulation 7(1), because the exemption applies. (5) A presiding officer under section 39(2) of the Insolvency Act, whether the Master, a designated officer, or a magistrate, is an "officer in the service of the State" for purposes of the Schedule.

The court made several non-binding observations: (1) The court noted the distrust between the parties and that the appellant's real objective appeared to be removal of the appointed trustees, though their conduct was not properly challenged with evidence. (2) The court commented on the appellant's failure to join the trustees as respondents despite their clear interest in the proceedings. (3) The court observed that allegations of impropriety against the trustees were made without evidential foundation, and counsel did not persist with these when challenged. (4) The court noted there was no evidence concerning whether the scheduled interrogation of the third respondent proceeded, though it was the appellant's obligation to place such evidence before the court. (5) The court endorsed the view of Catherine Smith that a claim which appears to have prescribed should be provisionally admitted as "prima facie the debt is due," contrasting with the more restrictive views expressed in earlier texts and cases. (6) The court noted that the sequestration judge (Lacock J) had found the third respondent's claims "peculiar" and questioned their bona fides, but recognized that objective investigation by trustees was the appropriate mechanism to resolve such concerns.

This judgment clarifies important principles in insolvency law regarding: (1) the provisional nature of the presiding officer's function at the first meeting of creditors and the limited scrutiny required at that stage; (2) the proper approach to claims that may be prescribed - they should be provisionally admitted rather than rejected, with final determination left to the trustees; (3) the validity of affidavits commissioned by interested attorneys for purposes of proving claims under section 44(4) following the 1980 amendment to the Regulations. The case establishes that the presiding officer's role is not to conduct a mini-trial on prescription or other defenses, but to determine prima facie proof, leaving substantive examination to the trustees. It also settles that the exemption in the Schedule covers affidavits submitted to presiding officers, recognizing them as officers in the service of the State. The judgment emphasizes the statutory scheme that separates initial provisional admission of claims from their subsequent examination and potential dispute by trustees.