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VOLUME: VIII
INSOLVENCY
CHAPTER: 42:02
Part:V Liquidation and Distribution of Estate (ss 58-81)

 

Appointment and Removal of Trustees and Provisional Trustees (ss 58-65)

 

58.     Power of court to appoint provisional trustee

 

            (1) Before a trustee has been appointed to an estate under sequestration, or when a trustee has been removed or is not acting as such, the court, on the petition of the Master or a creditor, may appoint a provisional trustee who shall hold office until the appointment of a trustee by the Master.

            (2) A provisional trustee shall find security to the satisfaction of the Master and shall, immediately after his appointment, lodge with the Master an inventory, under oath, of the estate and a valuation thereof, and, if the Master so directs, that valuation shall be made by a sworn appraiser or by such other person as the Master may appoint.

            (3) A provisional trustee shall have the powers and be subject to the duties of a trustee, as provided in this Act, except that without the authority of the court or for the purpose of obtaining such authority he shall not bring or defend any legal proceedings, and that without the authority of the court or Master he shall not sell any portion of the estate.

            (4) When a meeting of creditors for the election of a trustee has been held and no trustee has been elected, and the estate is vested in a provisional trustee, he shall, subject to a further appointment by the Master and on his finding such additional security as the Master may require, have all the powers and be subject to all the duties of a trustee under this Act.

 

59.     Persons disqualified from being elected trustees

 

            Any of the following persons shall be disqualified from being elected a trustee-

     (a)     an insolvent;

     (b)     a person related to the insolvent by consanguinity or affinity within the third degree;

     (c)     a minor or any other person under legal disability;

     (d)     a person who resides outside Botswana;

     (e)     a person having an interest opposed to the general interest of the creditors of the insolvent estate;

     (f)      a former trustee disqualified under section 67;

     (g)     a person declared under section 60 to be incapacitated for election as trustee, while any such incapacity lasts, or a person removed by the court on account of misconduct from an office of trust;

     (h)     a company or corporation;

     (i)      a person who has at any time been convicted (whether in Botswana or elsewhere) of theft or fraud:

            Provided that-

      (i)     notwithstanding anything contained in paragraph (d) a person who is-

            (a)     a legal practitioner entitled to practise in the courts of Botswana; or

            (b)     a qualified accountant having a place of business in Botswana,

          may, though not resident therein, be elected as trustee of any insolvent estate which has been placed under sequestration by order of the court;

      (ii)     such person is not disqualified for election on any other ground;

     (iii)     any such person who is elected as trustee of any such insolvent estate shall immediately after his election choose for the purpose of his administration of the estate a domicilium citandi et executandi within Botswana which shall be notified by him in the Gazette.

 

60.     Power of court to declare a person disqualified from being a trustee

 

            The court, on the application of any person interested, may, either before or after the appointment of a trustee, declare that the person appointed or proposed is disqualified from holding the office of trustee, and, if he has been appointed, may remove him from office if it so thinks fit, and may in either case declare him incapable of being elected trustee under this Act during the period of his life or such other period as it may determine, if-

     (a)     he has accepted or offered or agreed to accept from any auctioneer, agent, or other person, employed on behalf of the estate, any share of the commission or remuneration of, or any other benefit whatever from, that auctioneer, agent or other person; or

     (b)     in order to obtain or in return for, the vote of any creditor, or in order to exercise any influence upon his election, he has-

           (i)       procured or been privy to the wrongful omission of the name of a creditor from any list or schedule required by this Act;

          (ii)       directly or indirectly given or offered or agreed to give to any person any consideration;

          (iii)       offered or agreed with any person to abstain from investigating any previous transactions of the insolvent; or

         (iv)       been guilty of or privy to the splitting of claims for the purpose of increasing the number of votes.

 

61.     Grounds for removal of trustee

 

            (1) The court, upon the application of the Master, the trustee himself, or any other person interested, may remove any trustee on any of the following grounds-

     (a)     his desire to resign his office, subject to the production of the certificate mentioned in section 62, absence from Botswana, ill-health, or any fact tending to interfere with the performance of his duties as trustee;

     (b)     insolvency or other legal disability;

     (c)     misconduct as trustee, including any failure to satisfy the lawful demand of the Master, or a magistrate, or to perform any of the duties imposed upon him by this Act;

     (d)     illegality in his election or appointment, or disqualification for any of the reasons mentioned in section 59.

            (2) The court may remove any provisional trustee on any ground that it may deem sufficient.

 

62.     Circumstances under which a trustee may resign from office or absent himself from Botswana

 

            (1) Every trustee desiring to resign his office may, after notice in the Gazette, apply to the court by petition for his removal.

            (2) He shall at the same time lay before the court a certificate from the Master to the effect that he has rendered an account of his administration of the insolvent estate until the date of his application, and that the Master is not aware of any reason why his application for removal should not be granted.

            (3) Every trustee intending to absent himself from Botswana shall give notice in the Gazette of such intention, stating in that notice the name, occupation, and address of the person who will act for him during his absence, and the period of his absence:

            Provided that the Master or any person interested in the estate may apply to the court for the removal of the trustee on the ground that the interests of the estate will be prejudiced by his absence, and the court may make such order upon the application as it deems fit.

            (4) Every trustee who has been removed by the court on his own application shall give notice thereof in the Gazette, and the Master shall in like manner give notice of the removal of any trustee upon the application of any other person.

 

63.     Election of new trustee on resignation or removal of a trustee

 

            (1) Upon the removal of a trustee the court may, in place of appointing a provisional trustee as hereinbefore provided, order a new trustee to be elected and at the same time may make such order for the preservation of the estate in the meanwhile as it may deem fit.

            (2) A new trustee shall be entitled to demand from his predecessor an account of his administration up to the date of his removal.

 

64.     Election of new trustee on death of trustee

 

            Upon the death or removal of a trustee or of a provisional trustee having the full powers of a trustee, if there is no trustee or provisional trustee left in office, the Master shall, either himself or upon the request of any person interested in the estate, convene a meeting for the purpose of electing a new trustee in the manner provided in section 53.

 

65.     Confirmation of election of trustee by court or Master

 

            (1) If the decision of the presiding officer as to the election of a trustee has been brought under review by the court, the election shall be subject to confirmation by the court; otherwise the election shall be subject to confirmation by the Master.

            (2) Upon the trustee finding security to the satisfaction of the Master and paying all fees due, and choosing domicilium citandi et executandi within the jurisdiction of the court, if he is not resident within the same, the Master shall appoint the trustee by delivering to him a certificate of appointment, which shall be of full force and effect throughout Botswana.

            (3) The Master shall allow against the estate such costs of finding security as he may consider reasonable.

            (4) If the trustee who has been elected is ineligible or fails to find security to the satisfaction of the Master within seven days after his election or within such further period as the Master having regard to all the circumstances may allow, the Master shall declare that no trustee has been elected and shall himself nominate and appoint a trustee:

            Provided that when a trustee, who has given security to the Master, has accounted to the Master by means of an account supported by vouchers, as required by this Act, for any assets the value of which was taken into account by the Master when the security was assessed, the Master upon that account being confirmed and filed with all the vouchers and acquittances may, if he is satisfied that the security thereafter remaining will be sufficient to cover the value of the assets remaining to be accounted for, reduce the amount of the security by any sum not exceeding the value as it appeared to him when the security was assessed of the assets brought to account as aforesaid.

            (5) On receipt of the certificate aforesaid the trustee shall notify his appointment and full address by advertisement in the Gazette.

            (6) The Master, whenever it appears to him to be desirable, may appoint a person not disqualified from holding the office of trustee, to be co-trustee with the trustee or trustees of any estate under sequestration.

            (7) When so appointed all the provisions of this Act conferring powers and rights or imposing duties and obligations on a trustee shall apply to such co-trustee.

            (8) In the event of any difference arising between such a co-trustee and the other trustee or trustees as to the administration of the estate, the Master may, if the difference is referred to him, determine the matter.

            (9) The Master may similarly determine any difference arising between any trustees.

 

Duties and Powers of Trustees in the Liquidation of the Estate (ss 66-81)

 

66.     Opening of banking account and books

 

            (1) The trustee shall open an account in the name of the estate with a bank, and shall deposit to the credit of the estate from time to time all sums received by him on behalf of the estate.

            (2) All cheques or orders which may be drawn upon that account shall contain the name of the payee and the cause of payment and shall be drawn to order and signed by every trustee of the estate or by his duly authorized agent.

            (3) Immediately after his appointment the trustee shall open a book wherein he shall enter from time to time a statement of all moneys, goods, books, accounts and other documents received by him on behalf of the estate.

            (4) The Master may at any time in writing order the trustee to produce the said book for inspection, and every creditor who has proved his claim against the estate and, if the Master so orders, every person claiming to be a creditor may inspect the said book at all reasonable times.

            (5) Within 14 days after his appointment the trustee shall give the Master notice in writing of the bank and branch thereof with which the said account has been or will be opened, and shall not, without the written permission of the Master, remove that account from that branch.

            (6) The Master and any surety for the trustee, or any inspector appointed by such surety, shall, at all times, be entitled to the same right to information in regard to that account as the trustee himself possesses, and to inspect and examine all vouchers in relation thereto, whether in the hands of the bank or of a trustee.

            (7) The Master may, after notice to the trustee, direct at any time, by letter addressed to the manager of the said branch of the bank, that the trustee shall not be permitted to operate on the said account and that the said manager shall pay over the balance thereof to him; and the said manager shall carry out any such direction.

 

67.     Retention of moneys or employment of assets by trustees

 

            (1) Every trustee who, without good and lawful cause, retains any money belonging to the estate exceeding P40, or knowingly permits his co-trustees to retain such sum of money longer than the earliest day after its receipt on which it is possible for him or his co-trustee to pay that money into the bank, or who uses or knowingly permits his co-trustee to use any assets of the estate except for the benefit of the estate, shall, in addition to any other penalty to which he may be liable, be liable to pay into the estate an amount not exceeding double the amount so retained or double the value of the assets so used.

            (2) The amount which the trustee is so liable to pay may be deducted out of any claim that the said trustee may have against the said estate or may be recovered by action in any competent court at the instance of his co-trustee, the Master or any creditor.

            (3) Every person who, being a trustee, himself becomes insolvent while indebted to the insolvent estate as is specified in subsection (1), for any sum of money belonging to the estate, shall be for ever incapable of holding the office of trustee, provisional trustee, liquidator, curator dative, tutor dative, curator bonis, or executor dative.

 

68.     Legal proceedings against the estate

 

            Every person who, having instituted legal proceedings against the insolvent which were suspended by the sequestration, intends to continue the same, and every person who intends to institute legal proceedings for the purpose of enforcing any claim against the estate which arose before the sequestration shall, within three weeks after the first meeting of creditors, give the trustee not less than three weeks' notice in writing before continuing or commencing those proceedings; in default thereof the proceedings shall be considered to be abandoned, unless the court finds that there was a reasonable excuse for the default and allow the proceedings to continue or be commenced on terms or otherwise, as it may think fit.

 

69.     Power of trustee to take legal advice

 

            (1) The trustee may take legal advice on any question of law affecting the administration or distribution of the estate, and may employ a legal practitioner for the conduct or defence of legal proceedings on behalf of or against the estate, and all costs incurred under this section since the commencement of the sequestration, as well as costs awarded against the estate in those legal proceedings, shall be included under the costs of administration.

            (2) The costs incurred in obtaining a sequestration order shall be taxed according to the tariffs used in the court, unless the court otherwise orders.

            (3) All costs which are not the subject of taxation by the taxing officer of the court shall be taxed by the Master.

 

70.     Improper advising or conduct of legal proceedings

 

            If it appears to the court that any legal practitioner has, with intent to benefit himself, improperly advised the institution, defence or conducting of legal proceedings or has incurred any unnecessary expense therein, the court may order the whole or part of the expense thereby incurred to be borne by that legal practitioner personally.

 

71.     Recovery of debts due to estate

 

            Immediately after his appointment the trustee shall proceed to recover (if need be by legal proceedings) the debts due to the estate, and for that purpose and in the same notice in which he advertises his appointment as trustee, he shall call upon all persons indebted to the estate to pay their debts at such reasonable time and place as he may in that notice appoint.

 

72.     Subsistence allowance for insolvent and family

 

            (1) At any time before the second meeting of creditors the trustee may allow the insolvent such moderate sum out of the estate as may appear to the trustee to be necessary for the support of the insolvent, his wife and minor children.

            (2) The amount of any such allowance to the insolvent and the grounds for making the same shall forthwith be reported in writing to the Master by the trustee and shall be subject to review by the court upon the application of the Master or any person interested.

 

73.     Sale of movable property on authorization of Master

 

            (1) At any time before the second meeting of creditors the trustee shall, if satisfied that any movable property of the estate ought forthwith to be sold, recommend to the Master in writing that any such property be sold and shall state his reasons for such recommendation.

            (2) The Master, if satisfied that any such property ought to be sold, shall authorize its sale, and the same shall thereupon be sold on such conditions and in such manner as the Master may direct:

            Provided that, if the Master has notice that any such property or a portion thereof is subject to a right of preference, he shall not authorize the sale unless the person entitled to such right of preference has given his consent thereto in writing or the trustee has guaranteed that person against loss by such sale.

 

74.     Continuation of insolvent's business

 

            At any time before the second meeting of creditors the trustee may carry on or discontinue any part of the business of the insolvent in so far as may be necessary for the beneficial winding up thereof:

            Provided that, if he carries on the business, it shall not be competent for the trustee as between himself and the creditors to charge the estate with the cost of any goods purchased by him, unless the same have been necessary for the immediate purpose of carrying on that business and there are funds available for payment of the same after providing for the cost of sequestration.

 

75.     Duty of trustee at second meeting to report and take instructions in certain matters

 

            (1) At the second meeting of creditors the trustee shall report to the creditors upon and receive their directions as to the following matters-

     (a)     any allowance he has made to the insolvent and the reasons therefor;

     (b)     any business he may have been carrying on for the estate, any goods he may have purchased for that business, and the result of so carrying on that business;

     (c)     any legal proceedings by or against the estate which were suspended by the sequestration or may be pending or threatened;

     (d)     any such matters or questions as are referred to in sections 35 and 37; and

     (e)     any matter in regard to the administration or realization of the estate requiring the direction of the creditors.

            (2) The trustee may thereafter exercise his discretion in those matters in so far as the creditors have failed to give him directions:

            Provided that, in the absence of authority from the creditors, he may only purchase goods for such business for cash, and as between himself and the creditors he shall be personally liable for the costs of any legal proceedings instituted or defended by him without directions from the creditors in so far as the estate is unable to meet the same, unless the court otherwise orders.

 

76.     What reports to be made at second meeting of creditors

 

            At the second meeting of creditors the trustee shall report fully as to the circumstances of the estate, and more especially as to-

     (a)     the assets and liabilities thereof;

     (b)     the cause of insolvency;

     (c)     the books of the insolvent; stating whether he appears to have kept a proper record of his transactions and, if not, in what respect the record is defective or irregular; and

     (d)     the transactions of the insolvent previous to the sequestration, and what reason (if any) there is for supposing that he is guilty of any contravention of this Act.

 

77.     Sale of property after second meeting and manner of sale

 

            (1) Except as provided in section 73 or 78, the trustee shall proceed after the second meeting of creditors, and not before, to sell all the property in the estate in such manner and upon such conditions as the creditors at the second or any subsequent meeting may direct.

            (2) In default of directions by the creditors the trustee shall sell the property by public auction or public tender.

            (3) A sale by public auction or public tender shall be after notice published in the Gazette and after such other notices as the Master may direct and, in the absence of directions from creditors as to the conditions of sale, upon such conditions as the Master may direct.

            (4) When the sale is by public tender, each tender shall be transmitted by the tenderer in duplicate in a sealed cover to the Master, or if the Master so directs to a magistrate specified by him.

            (5) The Master or such magistrate shall keep each tender so sealed until the expiry of the period for lodging of tenders.

            (6) He shall then open the sealed covers, and, in the case of the Master, file one duplicate of each tender or, in the case of a magistrate, transmit one duplicate of each tender to the Master, who shall file it.

            (7) The Master or the magistrate (as the case may be) shall forthwith transmit the other duplicate of each tender to the trustee.

            (8) The trustee or his representative shall have the right to be present when the Master or the magistrate opens the tenders.

            (9) In the case of a marketable security the creditors may give directions for the sale thereof through a broker without publication.

            (10) Every other sale by private treaty shall be for an amount of not less than an amount fixed by the creditors in the resolution authorizing the sale; and such sale shall not otherwise be complete until ratified by a resolution of the creditors.

            (11) From any such sale there shall be excepted all outstanding accounts and other rights of action which shall, subject to section 75, be realized in the ordinary course of business, unless the creditors otherwise direct.

            (12) From the sale of the movable property shall be excepted the wearing apparel and bedding of the insolvent and the whole or such part of his household furniture and tools as the creditors determine, and the insolvent shall be allowed to retain for his own use any property so excepted from the sale.

            (13) The insolvent shall, if he is at any time before the second meeting of creditors called upon by the trustee, assist him to the best of his ability in collecting, taking charge of, and realizing the assets in the estate:

            Provided that the trustee shall, during the period of such assistance, pay to the insolvent out of the estate such allowance in money or in kind as may appear to the Master to be necessary for the support of the insolvent, his wife (or her husband, as the case may be) and his minor children.

            (14) The trustee or the auctioneer employed to sell, the trustee's or auctioneer's spouse or partner, or an employer or employee or agent of the trustee or of such auctioneer shall not be able to acquire by purchase or otherwise any property of the estate unless the acquisition is confirmed by an order of the court.

            (15) Nothing in this section shall be construed as affecting the rights of any person who acquires title in good faith and for value from any person described in subsection (14); but the trustee shall be personally liable to the creditors for any loss sustained by them by reason of his wrongful action in selling any property of the estate.

 

78.     Realization of securities

 

            (1) Every creditor who holds as security for his claim any movable property shall, before the second meeting of creditors, give notice in writing of that fact to the Master, and to the trustee if appointed, and, when he has given such notice, he shall be entitled at any time before that meeting to realize in the manner and on the conditions provided in this section the movable property which he so holds.

            (2) He shall as soon as possible after he has realized such property, prove the claim thereby secured but without placing a value on the security, but he shall attach to the proof a statement of the proceeds of the realization and of the facts on which he relies for any preference.

            (3) If he does not elect to realize such property, he may prove his claim and place a value on such security as provided in section 43.

            (4) If after the expiry of four weeks after the said second meeting, the creditor has not so proved his claim, the trustee shall be entitled to demand from him delivery of such security and to realize it subject to the right of the creditor to prove his claim.

            (5) If the creditor fails to comply with such demand of the trustee, the Master, on the application of the trustee and after notice to the creditor, shall direct the sheriff or bailiff to attach the security and to deliver it to the trustee, who shall be entitled to deduct the sheriff's or bailiff's costs, as taxed and allowed by the Master, from the proceeds of the realization of the security or from any dividend which may be awarded to the creditor.

            (6) Such security may be realized in the manner and on the following conditions, that is to say-

     (a)     if it is a marketable security, the creditor may forthwith sell it through a broker;

     (b)     if it is a bill of exchange, the creditor may realize it in the ordinary course of business;

     (c)     in the case of outstanding accounts and other rights of action, the creditor shall not realize them except in the ordinary course of business and with the approval of the Master;

     (d)     in the case of any other security, it shall not be sold before the appointment of the trustee without the written permission of the Master or, after the appointment of the trustee, without giving him reasonable notice of the time and place of the sale and a reasonable opportunity to inspect the security.

            (7) If the trustee does not then take over the security at a value agreed between him and the creditor or at the full amount of the claim, the creditor may sell the security by public auction after notice published as directed by the trustee.

            (8) The trustee shall, when giving directions as to publication, give written notice to the other creditors of the date, hour and place of the sale.

            (9) Whenever a creditor realizes a security under subsection (6) he shall pay the net proceeds of the realization to the trustee, if any, or if there is no trustee, to the Master on the trustee's account; but the creditor shall be entitled out of such proceeds to be paid forthwith his preferent claim if such claim is duly proved as provided by section 43 and the trustee is satisfied that the claim was duly secured by the property so realized.

            (10) If the trustee disputes the preference the creditor shall be entitled either to lay before the Master an objection under section 98 to the trustee's account, or to the court, after notice of motion to the trustee, for an order compelling the trustee to pay him forthwith.

            (11) Upon such application the court may make such order as to it seems just.

            (12) Whenever any creditor in proving his claim has placed a value upon the security held by him or in respect of which a special mortgage exists in his favour, the trustee, if authorized at any meeting of creditors, may, within six weeks after the trustee has been appointed or after the claim has been proved (whichever is the later), take over that security at the value placed thereon by the creditor when his claim was proved.

            (13) If the trustee does not, within the period specified in subsection (12), take over the security, he shall proceed to realize the property for the benefit of all creditors according to their legal rights:

            Provided that where two or more creditors have a pledge or mortgage of the same property a creditor who has valued his security shall be deemed to have valued, and the trustee shall be entitled to take over only the preferent rights of the creditor in respect of the property, and not the property itself.

            (14) If the claim of a secured creditor exceeds the amount payable to him in respect of his security he shall be entitled to rank against the estate in respect of the difference.

            (15) For the purpose of realizing the property in accordance with subsection (13), the trustee shall be entitled to demand from the creditor delivery of the property, and if the creditor fails to comply with the demand the trustee shall have the same rights and remedies as he has under subsections (4) and (5).

            (16) A creditor who holds as security for his claim any movable property and who fails to notify the Master or the trustee of the security which he holds or who, after realizing his security, fails to pay over the net proceeds thereof to the trustee or to the Master, on the trustee's account, shall be guilty of an offence and liable to the penalties provided for an offence against section 148(2).

            (17) The provisions of this section shall apply mutatis mutandis in respect of any creditor for value of a solvent spouse for whom provision is made in section 20 and who holds movable property of that spouse as security for his claim as if such security were property of an insolvent over which the creditor had a preferent right by virtue of any special mortgage, legal hypothec, pledge or right of retention.

 

79.     Power to compound for debts due to the estate and to submit matters in dispute to arbitration

 

            (1) The trustee may (subject to the approval of the creditors where the debt exceeds P100) agree to any offer of composition made to the insolvent estate by any debtor and take any reasonable part of the debt in discharge of the whole or may give reasonable time, regard being had to section 93.

            (2) If specially authorized by a resolution of creditors, the trustee may submit to the determination of arbitrators any dispute concerning the estate or any claim or demand upon the estate, when the opposite party consents to arbitration.

            (3) If specially authorized by a resolution of creditors, the trustee may compromise or admit any claim or demand against the estate, including an unliquidated claim.

            (4) When an unliquidated claim has been so compromised or admitted, or when it has been settled by a judgment of a court, the same may be proved against the estate in the manner set forth in section 43.

 

80.     Continuance of pending legal proceedings by surviving or new trustee

 

            (1) Whenever a trustee dies or is removed, no legal proceedings relative to the insolvent estate shall lapse by reason of the death or removal.

            (2) The court in which any such proceedings are pending may, upon receiving notice of the death or removal, allow the name of the surviving or new trustee to be substituted in the place of the former; and the proceedings shall continue as if the surviving or new trustee had been a party to the same.

 

81.     Remuneration of trustee or curator bonis

 

            (1) Every trustee or curator bonis shall be entitled to a reasonable remuneration for his services, to be taxed by the Master according to tariff B set out in the Second Schedule:

            Provided that-

      (i)     the Master may, for good cause, reduce or increase his remuneration; and

      (ii)     the Master may disallow his remuneration either wholly or in part on account of any failure or delay in the discharge of his duties.

            (2) No person who employs, or is a fellow employee of, or is in the ordinary employment of, the trustee shall be entitled to receive any remuneration out of the estate for services rendered to the estate, and no trustee shall be entitled either by himself or by his partner to receive out of the estate any remuneration for services rendered to the estate, except the remuneration to which under this Act he is entitled as trustee.