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How many submissions can the Master hear when considering a creditor's claim?

In the recent case of Constantia Insurance Company Limited v Master of the High Court, Johannesburg, the High Court considered whether the provisions of the Insolvency Act, No 24 of 1936 permit the Master to consider liquidators' additional submissions in response to a creditor's substantiation of its claim.
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In this case, Constantia Insurance (the applicant) proved a claim against an insolvent estate. In their written submissions, the liquidators requested the Master to expunge the claim. In terms of s45(3) of the Act, the Master is allowed to reduce or disallow a creditor’s claim. In this instance, the Master afforded the applicant an opportunity to substantiate its claim. The applicant then submitted a substantiation of its claim as expressly allowed in s45(3) of the Act.

Thereafter, without there being any express provision in either the Insolvency Act, the Companies Act or the winding up regulations under the Companies Act, the Master provided the liquidators with a copy of the applicant’s submissions and afforded them an opportunity to respond. The liquidators submitted a reply that the Master invited the applicant to deal with in reply. The applicant, however, declined, contending that the Master was obliged to make a decision based only on the parties’ first two submissions as prescribed by the Act.

The question before the court was whether the Master has the discretionary power to call for and consider any additional submission by the liquidators in the absence of any express provision to this effect.

The liquidators argued that the principle of audi alteram partem (let the other side be heard) afforded the Master this discretion. The applicant, however, argued that the audi principle did not apply for two reasons:
  • the liquidators are not persons who are potentially affected by the Master’s decision; and
  • in any event, the audi alteram partem principle does not permit the filing of a document that is not permitted by legislation

The applicant’s main contention was that s44 and s45 of the Act envisage a speedy procedure to kick-start the winding up process and was not the last word on the validity of a claim (the party aggrieved by a decision may challenge it under s151 of the Act or challenge the liquidation and distribution account). The liquidators countered that the legislation assigns a quasi-judicial function to the Master and that, unless audi alteram partem was expressly excluded, the section should be interpreted as including it and that this principle entitled the Master to call for and consider further submissions.

The court held that the principle of audi alteram partem was now subsumed within the right to just administrative action in the Constitution and within the Promotion of Administrative Justice Act PAJA. Unless PAJA afforded a right to be heard beyond that already provided for in s45(3) of the Act, then such right does not exist. Section 45(3) satisfied the requirements of PAJA having regard to the objective and purpose of s45(3) and the Act. The court held that the Master is obliged to determine the validity of a claim on the basis only of the liquidators’ report and the applicant’s written substantiation of its claim and no further submissions are allowed.

This case adds to a growing list of literature, which affirms that in the post-constitutional era, the interpretation of legislation (including pre-constitutional legislation), is centrally informed by the Constitution and the values upon which it is founded. The general overarching principle remains that consideration must be given to the language used in the light of the ordinary rules of grammar and syntax; the context in which the provision appears; the apparent purpose to which it is directed and the material known to those responsible for its production.
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About the author

Thabile Fuhrmann is a director and Vincent Manko, an associate, in Cliffe Dekker Hofmeyr's Dispute Resolution department.
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