Is the Master of the High Court supervising liquidators as prescribed by law?

Is the Master of the High Court supervising liquidators as prescribed by law? Before dealing with the complaints that we are getting from the public, it is important that we delve into the existential question – What is the role does South Africa’s Master of the High Court?

Set out below is an extract from the website: https://nationalgovernment.co.za/units/view/65/master-of-the-high-court-of-south-africa.

Overview

The mission of the Master of the High Court of South Africa is to provide efficient, cost-effective, and specialized services of supervision, custodianship, arbitration, and information regarding deceased and insolvent estates and trusts, serving estate practitioners, beneficiaries of estates and trusts, minors, and mentally challenged persons in South Africa for the purpose of safeguarding those beneficiaries’ financial and proprietary rights.

The Master’s office has five main divisions. They all strive to protect the financial interests of persons whose assets or interests are, for various reasons, being managed by others.

The Master’s offices execute, inter alia, the following functions: administration of estates of deceased and insolvent persons in accordance with the applicable statutory prescriptions; protection of the interests of minors and legally incapacitated persons; protection and administration of the funds of minors, the contractually incapacitated, and undetermined and absent heirs that have been paid into the Guardian’s Fund; supervision of the administration of companies and close corporations in accordance with the relevant statutory prescriptions; determination and assessment of estate duties, by virtue of a delegation by the South African Revenue Services; supervision of trusts; safeguarding of all documentary material received by the Master in respect of estates, insolvencies, liquidations and trusts; processing of enquiries by executors, attorneys, beneficiaries and other interested parties; and appointment of impartial and capable persons as executors, trustees, curators and liquidators.

The second-most complaints relate to the appointment of liquidators. The allegations are centered on the appointment process and the alleged interference of officials from the master’s office in favoring particular liquidators.

With respect to insolvency, it is boldly alleged that there are liquidators who effectively control this public office to justify allegations of a captured office.

With regard to the institutional framework of South African insolvency law, South Africa does not at present have specialized insolvency courts. The High Courts in general deal with insolvency matters, and play their part both in applying and developing the law through case law. During the late 1990s a high-level Commission of Inquiry, the Hoexter Commission, rejected proposals for specialized insolvency courts in South Africa. See the third and
final report of the Commission of Inquiry into the Rationalization of the Provincial and Local Divisions of the Supreme Court vol 1 Book 2 Part 3 (1997) Report number RP 201/9.

In the South African insolvency law, the Master of the High Court (Master) is at present acting in a supervisory capacity with regard to the South African insolvency law in general. The Master is appointed in terms of the Administration of Estates Act, which includes the
definition of the “Master” as follows:
“[I]n relation to any matter, property or estate, means the Master, Deputy Master or Assistant Master of a High Court appointed under section 2, who has jurisdiction in respect of that matter, property, or estate and who is subject to the control, direction, and supervision of the Chief Master.”

The present-day institution of the Master acts as a “creature of statute” and possesses only the powers the statute accords, whether expressly or by necessary implication.44 If we thus align the institution of the Master of the High Court with international norms and standards as previously identified, it is particularly difficult to clearly define the role of the Master within the context of an international insolvency regulator. From a strategic point of view, we may argue that the Master’s identity is that of the regulator, as it does possess certain regulatory powers, such as applying its powers to compel an insolvency practitioner to act in the interests of
the creditors.

It should also be noted that although the Master is generally responsible for the supervision of South African insolvency law, this is not the only discipline it has to contend with. In addition to the regulation of insolvency law, the Master has, inter alia, the following functions: supervising the administration of estates of deceased persons, including the registration of wills; registration of trusts; supervising the administration of estates of minors and legally incapacitated persons as well as the administration of the “Guardian’s Fund”, where unclaimed
moneys and certain funds of minors and incapacitated persons are held in reserve.

The legal framework within the South African insolvency law results in the Master being involved and entangled in various technical issues relating to the administration of the insolvent estate. Consequently, the Master does not prioritize matters of a public nature, such as the investigative aspect of the cause of insolvency or being involved in the development of general insolvency policies and law reform, as these represent matters which fall outside the Master’s statutory agenda. Due to its multifarious character, the Master finds itself in the midst of certain challenges relating to the regulation of insolvency law.

The lack of specialization in the office of the Master combined with the lack of resources not only has an impact on service delivery but also prevents the Master from effectively acting out the Constitution’s commitment to “an efficient, equitable and ethical public administration
which respects fundamental rights and is accountable to the broader public”.

Although the Insolvency Act states in the negative the qualifications of a trustee by declaring which persons are disqualified from acting as a trustee, it fails to state the criteria for making such an appointment. This effectively confers on the Master a discretion as to the method and
the identity of the person appointed as the provisional trustee of an insolvent estate.

Although the Insolvency Act sets out certain disqualification criteria for the appointment of trustees, it does not categorically state who should be appointed by the Master as a
provisional or final trustee. In order to circumvent the lack of statutory guidelines the Master, of his own accord, has over the years implemented certain measures such as the use of a register to which he could add the names of persons who, in his view, qualified as persons
suitable for appointment as trustees.68Another informal measure had been the development of a policy document with regard to the criteria which should be followed when making a provisional appointment. The main point of concern, however, remains the legality of the Master’s measures which could be vulnerable to any litigation challenging its
constitutionality.

Below is an interesting read that should help contextualize why it is in the interests of justice to know what this important public office does in the overall context of the promise of an open, transparent, accountable constitutional dispensation: