The appellant, as curator of the insolvent estate of Johannes Jacobus Smith, instituted action against the respondent, an incorporated company trading as attorneys, for payment of R809,806. The appellant claimed that the respondent, appointed to transfer two properties sold from the estate, negligently failed to account to the curators for the proceeds received. Instead, the funds were paid to De Mist Trust Corporate Services (Pty) Ltd ('De Mist'), which was subsequently liquidated and the amounts were never recovered. The respondent defended the action on the basis that part of the mandate given by one of the curators, Mr Lüderitz (who was also a director of both the respondent and De Mist), was that the purchase price should be paid to De Mist as the duly authorized representative of the curators. Lüderitz died before the trial. The court a quo dismissed the appellant's claim with costs. The appellant appealed with leave of the court below.
The appeal was dismissed with costs.
Where an agent (attorney/conveyancer) is sued for allegedly acting outside the scope of a mandate, the onus rests on the party alleging breach of mandate to prove that the disputed term was not part of the mandate. In determining the terms of a mandate, the court may consider evidence of standing practices and instructions within the agent's firm, particularly where such practices were consistently followed, communicated to the principal without objection, and supported by the principal's conduct (such as co-signing cheques). The death of the mandator does not shift the onus of proof from the party alleging breach of mandate.
The court observed that it was fairly common practice among insolvency practitioners to use trust companies or close corporations established by them to handle the practical day-to-day administration of estates. The court also noted that strictly speaking, the bar had been set too high for the respondent, and all that needed to be found was that the appellant had not succeeded in proving that the disputed term was not part of the mandate.
This case clarifies important principles regarding the law of mandate in the context of insolvency practice, particularly concerning the onus of proof when disputing the terms of a mandate. It recognizes the established practice among insolvency practitioners of using trust companies or close corporations to handle the practical day-to-day administration of insolvent estates. The case also demonstrates the approach courts will take when the person who gave the mandate (Lüderitz) is deceased and the terms must be established through other evidence, including evidence of standing practices and conduct consistent with such practices.