Newsletter 80 (Jul 2023)

Dear Colleague
 
July recently provided some parts of South Africa with their first snowfall experience after more than a decade! This rare event was the reason for a lot of excitement and caused quite a stir among citizens from near and far. The transformation of certain parts of the country into a winter wonderland was mesmerising. And it, of course, gave rise to freezing temperatures, which indicated that winter is in full swing.
 
NATIONAL WOMEN’S DAY
 
National Women’s Day is a public holiday and will be celebrated on Wednesday, 9 August 2023.
 
This day marks the anniversary of the great women’s march that took place in 1956, when approximately 20 000 women marched to the Union Buildings in Pretoria to protest against the carrying of pass books. This day also recognizes women for their achievements irrespective of their differences, whether it be their personal beliefs, ethnicity, language, culture, or economic or political convictions.
 
Enjoy Women’s Day!
 
LIQUIDITY, OR THE LACK THEREOF, IN AN ESTATE
 
A cash shortfall is one of the most frequent occurrences that we encounter when administering an estate. If there is no liquidity in an estate, it means that there is not enough money to settle debts and/or to pay estate costs. This leads to long delays in finalising such an estate as we cannot move forward with winding up the estate until there is enough cash to pay the creditors and estate expenses.
 
Proper estate planning should include the options available to clients to ensure that there is enough cash in an estate to prevent non-cash assets from being sold. Your clients must know that, should they have assets, the executor can either sell these assets to meet the financial obligations, or the heirs will have to pay the shortfall to preserve the assets, such as property.
 
The most effective way to avoid a cash shortfall is for your clients to take out life and/or bond insurance to ensure that there is sufficient cash available to cover estate expenses.
 
We will discuss this topic at length in the next edition of Let’s Talk EFBOE.
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DECEASED ESTATE CLAIMS OUTSTANDING DEBT FROM ESKOM, ASKING FOR A PROVISIONAL WINDING-UP ORDER OF ESKOM
 
This is an interesting court case which occurred in March 2023 between the deceased estate of Christopher Kingsley versus Eskom for owing the estate approximately R116 000 in overpaid electricity accounts.
 
The court was told that the late Mr Kingsley held two electricity accounts with Eskom, both with credit balances of R10 400 and R106 000, respectively. Despite numerous demands for payment to the estate, Eskom failed to do so. According to the executor, Eskom is thus “deemed unable to pay its debts”.
 
As the executor was unable to retrieve the funds from Eskom, they instructed an attorney in July 2020 to recover the outstanding money from Eskom on behalf of Mr Kingsley’s estate. In the meantime, a new account had been opened in the name of the new owner of Mr Kingsley’s property. Eskom acknowledged the request for a refund and undertook to resolve the issue within six to eight weeks, having logged a credit refund status with its relevant department.
 
The attorney had to send another letter of demand in February 2021 as Eskom had still not refunded the estate. Eskom then requested proof of bank account in the form of a bank-stamped letter to confirm the banking details of the estate, and again said that the matter would be resolved soon.
 
This was another unfulfilled promise, which led to the subsequent threatened legal action against the entity. Eskom did not respond to the threat of legal action and again failed to pay the money back into the estate. As a result, the executor of the estate turned to the Gauteng High Court in Pretoria, to ask for a provisional winding up order of Eskom in terms of the Companies Act.
 
Judge Maritz rejected the technical points in law that Eskom put forward. Eskom’s liability to the estate was proven by two tax invoices issued by Eskom in which it was reflected that it owed the estate approximately R116 000.
 
Even though Eskom did not deny that the estate asked for a refund for the overpaid accounts, they put forward the following arguments:

• That they never authorised a refund.
• That the applicant had failed to prove that it was the deceased himself who made the payments to Eskom, resulting in the credit balances.
• That no payment was due as it had not yet concluded its internal verification processes.

These excuses were dismissed by Judge Maritz. He said that Eskom missed the point because, when the tax invoices were issued with a credit balance, the power utility had accepted that there were overpayments and that it was indebted to the deceased. “On Eskom’s own version, it undertook to resolve the refund within six to eight weeks. It failed to do so,” said Judge Maritz.
 
Judge Maritz further added that Eskom had failed to place any evidence before the court that it was able to pay its debts: “This issue was simply not addressed at all. This is regrettable, especially from a state-owned company”.
 
The electricity giant told the court in its argument: “It is a multibillion-rand enterprise, which owns power stations in various parts of the country, which are valued at billions of rand”. It further said that merely refusing to pay an alleged debt of R116 000 was hardly an indication that Eskom was unable to pay its debts.
 
To this argument, Judge Maritz answered that there were “damning reports in the public sphere regarding Eskom’s inability to pay its debts”.
 
The final verdict by Judge Maritz was that, even though there were shortcomings in Eskom’s case, a winding-up order at that stage would not only affect the entity and its employees, but also the public at large. He said that Eskom should be given a further opportunity to pay the debt by the following month. The applicant then had the option to return to the court, should the entity not pay the refund.
 
At the time of writing this newsletter, it was still unclear if Eskom had refunded the estate, or if the case would have to be resumed. What is clear though is that this issue is not only costing the estate a great deal of money but it is also causing a delay in its finalisation.
 
Source: https://www.iol.co.za/pretoria-news/news/deceased-estate-owed-r116-000-applies-for-winding-up-of-eskom-82ade5bf-2b96-46d1-82e4-b5de7f281b72
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A SERIES ON LEADERS WHO LEFT THE BIGGEST LEGACIES – PART 4
 
We continue our series with another example of a selfless legacy that benefitted mankind.
 
Nelson Mandela (1918-2013)
Nelson Mandela was an anti-apartheid revolutionary who spent his early adult life fighting for equal rights for all South  Africans. After violent demonstrations, he was jailed for life on Robben Island, but was subsequently freed after 27 years. Following his release, Mandela promoted messages of forgiveness and equality. Apartheid was abolished in 1991, and Mandela was awarded the Nobel Peace Prize along with FW de Klerk in 1993. One year later, in 1994, Mandela was inaugurated as South Africa’s first black president.
 
Until next time!