This blog explores the procedure to be followed in terms of section 33 when informing a creditor that their claim has been rejected, as well as the available options for the claimant when their claim is rejected.

Introduction

This blog examines the scenario where an executor rejects a creditor's submitted claim during the wrapping up of a deceased estate. As part of their role, an executor is responsible for evaluating claims against the deceased estate and ensuring the lawful distribution of estate assets. The Administration of Estates Act 66 of 1965 (referred to as Estates Act) provides guidelines for handling these claims. It is crucial for an executor to carefully assess each claim, considering both its factual and legal aspects, to uphold fairness. The case of Van Niekerk v Van Niekerk [2011] 2 All SA 635 (KZP) reinforces the executor's duty in this regard.

The focus of this blog is section 33 of the Estates Act, which outlines the specific procedure that an executor must follow when informing claimants of rejected claims. Furthermore, it sheds light on the provisions within the Estates Act that grant claimants the opportunity to appeal such decisions and outlines the necessary steps involved in seeking redress. By understanding these procedures and remedies, both executor and claimants can navigate the claim process effectively, ensuring a just outcome in the distribution of the estate's assets.

Notice procedure under section 33

When a claim is rejected, the executor must follow the claim procedure outlined in section 33 of the Estates Act. According to section 33(1), if an executor rejects any claim against the estate, they must promptly notify the claimant in writing via registered post. The notice must include the reasons for rejecting the claim, clearly stated within the communication.

Claimant’s recourse options

Options: in general

Section 33 provides the claimant with the option to establish their claim through court action. If the claimant chooses to go to court, under section 33(2), the court can waive costs against the estate if it finds the claimant's information to the executor insufficient or that the executor had valid reasons for rejecting the claim under section 32(3).

Alternatively, the unsuccessful claimant may submit an objection against the liquidation and distribution account when it is lodged with the Master. It is important to note that the Master is unlikely to uphold the objection unless it is evident that the claim cannot be disputed. To exhaust the available remedies under the Estates Act, it is recommended to first submit a timely objection against the executor's decision to the Master in accordance with section 35(7) of the Estates Act. The Master holds a statutory designated jurisdiction over the estates of deceased persons in South Africa, and the objection remedy is the initial recourse for resolving disputes and minimizing costs and expenses.

Procedure at the Master

If a person is dissatisfied with the executor's decision to reject their claim, they can lodge an objection with the Master in accordance with section 35(7) of the Estates Act. The Master, as per section 35(8), will then instruct the executor to provide their comments within 14 days upon receiving the objections.
Upon receiving the executor's comments, the Master may request additional particulars necessary for considering the objection, as deemed required by the Master.

Master's Power to Decide

In accordance with section 35(9) of the Estates Act, the Master has the authority to make a decision on the objection. If the Master finds the objection to be well-founded, they may direct the executor to amend the liquidation and distribution account or provide any other suitable direction regarding the account.

If the objecting party remains dissatisfied with the Master's decision, they have the option to apply to the court for an order within 30 days after the decision. The court may then make an appropriate order, including the possibility of setting aside the Master's decision and substituting it with an order supporting the objection, along with an instruction to amend the liquidation and distribution account.

However, it's important to note that the scope of the Master's decision is limited. Meyerowitz suggests that the Master should exercise their power to direct an amendment mero motu (without a party's request) sparingly, and only when the liquidation and distribution account is clearly incorrect [Administration of Estates para 16.18]. Additionally, the Master retains the ability to amend or alter their decision if new information emerges [section 35(9)].

When may the Master refuse to make a decision?

The Master may decline to make a decision if they believe they lack authorisation, the objection is frivolous or unfounded, or if there is a factual dispute. In cases of a factual dispute, the Master lacks appropriate procedures to determine the facts. It's important to understand that the Master cannot resolve factual disputes between the creditor and the executor. In such instances, the objecting party may seek an order from the court when the Master has determined that it is a factual dispute beyond their ruling authority [section 35(9) of the Estates Act, Gray v The Master 1984 2 SA 271 (T); Van Niekerk v Van Niekerk 2011 2 SA 145 (KZP)].

Conclusion

In conclusion, understanding the procedures, options, and limitations outlined in the relevant sections of the Estates Act is crucial for both the executor and claimants in a deceased estate.

Section 33 of the Estates Act outlines the notice procedure that the executor must follow when rejecting a claim. The claimant has options for recourse, including establishing their claim through court action or in terms of section 35(7) to submit an objection to the Master of the High Court. It is recommended to exhaust the available remedies under the Estates Act by first submitting a timely objection to the Master.

The Master plays a significant role in deciding on the objection, with the power to direct amendments to the liquidation and distribution account if the objection is well-founded. However, it's important to note that the Master's decision is limited, and they should exercise their power to direct amendments sparingly.

In cases where the Master cannot make a decision due to lacking authorisation or factual disputes, the objecting party may seek an order from the court.

By following the prescribed steps and exercising their rights, executors can effectively handle rejected claims, while claimants can seek redress and resolution through appropriate channels.

Sources

Estate Administration Act 66 of 1965
Meyerowitz D The Law and Practice of Administration of Estates 5th ed (Juta Cape Town 2010)
Gray v The Master 1984 2 SA 271 (T)
Van Niekerk v Van Niekerk 2011 2 SA 145 (KZP)