Costs and Preferent Claims (ss 82-86)

82.     Funeral expenses; deathbed expenses

            (1) In priority to all other claims or charges against the estate under sequestration there shall be paid out of the free residue of the estate, and if the free residue is insufficient, out of the remaining assets in proportion to their value, in the order of preferences herein set forth-

     (a)     the funeral expenses of the insolvent or, if they were incurred within three months prior to the sequestration, the funeral expenses of his wife or minor child, but the amount payable under this paragraph shall not exceed P50 in all;

     (b)     the death-bed expenses of the insolvent, or, if they were incurred within the three months prior to the sequestration, the death-bed expenses of his wife or minor child, but the amount payable under this paragraph shall not exceed P50 in all.

            (2) Death-bed expenses shall include medical attendances, nursing, drugs and medical necessaries, which shall rank pari passu.

83.     Costs of sequestration

            (1) Subject to section 82, there shall be paid out of the free residue of the estate, in priority to all claims, the costs of sequestration with the exception of those specified in section 89.

            (2) The costs of sequestration shall be paid in the following order-

     (a)     the sheriff's or bailiff's costs incurred since the date of the sequestration order, or under section 6(2) and (3);

     (b)     fees payable to the Master in respect of the sequestration;

     (c)     the following costs and charges which shall rank pari passu and abate in equal proportions if necessary, that is to say, the taxed costs of sequestration, the remuneration of the curator bonis and of the trustee, and all other costs of administration and liquidation including the wages of any such servants of the insolvent as on engagement by the legal representative of the estate continue in the service of the estate.

            (3) For the purposes of this section "taxed costs of sequestration" shall include costs incurred upon the petition of the insolvent or a creditor in so far as any such costs have been necessarily or rightly incurred, but shall not include costs of opposition, unless the court so orders.

84.     Costs of execution

            (1) Subject to sections 82 and 83 there shall be paid out of the free residue of the estate, in priority to other claims, all taxed costs of any execution upon the estate of the insolvent in operation at the date of the sequestration order, to an amount not exceeding the proceeds of the property taken in execution.

            (2) No one shall have any further or other preference by reason of an attachment on any property of the insolvent.

85.     Servants' wages

            (1) Subject to the three preceding sections there shall be paid out of the free residue of the estate, in priority to other claims, but to an amount not exceeding P100 to any one servant, the arrear of wages for one month and the wages for the month current with the sequestration of any servant of the insolvent who is engaged by the month or by some longer period, and the arrear of wages for one week and the wages for the week current with the sequestration of any servant of the insolvent who is engaged by the week.

            (2) The wages specified in this section shall be paid by the trustee so far as there are assets available for that purpose without requiring that claims for the same be proved in the estate in the manner set forth in section 43, but the trustee may require from the person claiming an affidavit that the wages are actually owing.

            (3) Any servant claiming a preference for his wages for the month or week current with the sequestration shall be obliged to continue in the service of the estate during the remainder of such month or week and at the end thereof his contract shall be determined unless he is required by the legal representative of the estate to remain longer in the service of the estate.

            (4) Nothing in this section shall deprive any servant whose contract is determined thereunder of his right to damages.

86.     Preference in regard to taxes on income

            Subject to the four preceding sections, any balance of the free residue shall be applied in paying-

     (a)     any tax on the income of the insolvent levied under any written law relating to income tax or to any other tax upon income or profit or any part thereof, in respect of any period prior to the date of the sequestration of his estate, whether or not that tax has become payable after that date;

     (b)     in the case of an insolvent partnership, so much of any tax due and payable by any partner as is referable to the taxable income derived by him from the partnership; and the amount to be deemed to be so referable shall be a sum which bears to the total amount due by him as tax the same ratio that his taxable income derived from the partnership business bears to his total taxable income from all sources in Botswana.

Secured Claims (ss 87-89)

87.     Landlord's hypothec

            No tacit or legal hypothec (under which shall not be included any right of retention) shall give any preference on the estate of the insolvent except the landlord's hypothec; and that hypothec shall give a preference for all rent in respect of the period current with and up to the sequestration and arrear of rent, not exceeding three months, in respect of a period immediately prior thereto.

88.     Effect of general bond and general clause; mortgages for future advances

            (1) No registered general bond shall confer any preference in respect of immovable property, and no general clause in a registered special mortgage shall confer any preference in respect of immovable property or of movable property which was not delivered to the mortgagee at the time of the mortgage and retained by him during the term thereof:

            Provided that nothing in this section shall affect any preference conferred by a general clause in any mortgage bond passed in favour of a Master in terms of any law for the time being in force in Botswana relating to the administration of the estates of deceased persons.

            (2) On the commencement of this Act, priority under any mortgage for future advances shall be deemed to depend on the date of the registration of that mortgage and not on the date of any advance made under the same.

89.     Costs to which securities are subject

            (1) The cost of maintaining, conserving, and realizing any property which is subject to any special mortgage, legal hypothec, pledge or right of retention shall be paid out of the proceeds of that property, if sufficient, and if insufficient, by those creditors pro rata who are entitled to rank against those proceeds in priority to other persons.

            (2) The trustee's remuneration in respect of that property and all rates, taxes, licences and other payments due in respect thereof at the date of sale and necessary to be paid in order to enable the trustee to give transfer thereof shall form part of the costs of realization.

            (3) If a secured creditor, when proving his claim, states in his affidavit that he relies for the satisfaction of his claim solely on the proceeds of the property which constitues his security, he shall not, except as is prescribed in the first and third provisos to section 92, be liable for any other costs of sequestration than the costs specified in this section.

            (4) Interest on a secured claim for the year preceding the year current with the sequestration and for the year current with the sequestration shall have the like preference as the capital sum.

            (5) Notwithstanding any written law prohibiting the transfer of property on which there are unpaid rates, taxes or licences, no trustee shall be prevented from transferring any property by reason of any unpaid rates, taxes or licences thereon which at the date of sequestration had been in arrear for longer than the calendar year current with the sequestration and the calendar year preceding.

Distributions (ss 90-91)

90.     Distribution to creditors

            (1) After payment of the costs and charges mentioned in section 89(1) and (2) the proceeds of any property subject to a special mortgage, legal hypothec, pledge or right of retention shall be applied in payment of the claims thereby secured in their legal order of preference with interest from the date of sequestration to the date of payment:

            Provided that whenever no claim has been proved in respect of a debt secured by a special mortgage over immovable property of the insolvent and the trustee is not satisfied that such debt has been discharged, the trustee shall deposit with the Master for payment into a special account to be kept by the Master for the purpose, the proceeds of the sale of such property, not exceeding such capital amount of the said special mortgage and such arrears of interest as the mortgage would have had a preferent right to claim; and the amount so deposited or any part thereof shall be paid to the mortgagee if, within a period of one year after confirmation of the distribution account under which the money is distributed he applies to the Master and the Master is satisfied, by a certificate of the trustee or other evidence deemed by him sufficient, that the mortgagee is entitled to the amount or part thereof.

            (2) If the last known address of the mortgagee is ascertainable by the trustee, he shall transmit to the mortgagee at that address by registered post not less than three months before lodging the said account with the Master notice of the sequestration of the mortgagor's estate.

            (3) Any amount which is not paid to the said mortgagee after the expiry of that period shall be distributed amongst the creditors who have proved claims in the insolvent estate prior to the confirmation of the said distribution account, as if the amount had, at the date of such confirmation, been available for distribution among them.

            (4) Any creditor claiming to be entitled to a share in the distribution, shall make written application to the Master for payment of his share, and the Master may pay out to such creditor or may hand the money to the trustee, if any, for distribution amongst the creditors entitled thereto, or, if there is no trustee, may appoint a trustee for the purpose of making such distribution.

            (5) Any trustee charged with the duty of making such a distribution shall lodge a supplementary account in respect thereof and sections 97 to 103 relating to the confirmation of accounts and the distribution and payment of dividends shall apply in respect of such supplementary account.

            (6) After payment of the costs of the sequestration and in so far as the same shall be preferent upon the free residue all preferent claims with interest thereon from the date of sequestration to the date of payment, the free residue shall be applied-

     (a)     in the payment of the concurrent claims in proportion to the amount of the same; and

     (b)     if the concurrent claims have been paid in full, in the payment thereafter of interest on the concurrent claims from the date of sequestration to the date of payment in proportion to the amounts thereof.

            (7) Interest on all claims shall be calculated at the rate of six per cent per annum unless otherwise lawfully stipulated in writing, when it shall be calculated at the stipulated rate.

91.     Equalizing dividends in case of late proof

            Any creditor who has not received a dividend under a distribution of assets by reason of his not having proved his claim before that dividend was paid, shall be entitled on any further distribution after he has proved his claim, to receive the amount that he would have received under the previous distribution if he had so proved so long as such creditor satisfies the Master that his delay in proving was due to some reasonable cause:

            Provided that any creditor who had knowledge of proceedings having been taken under sections 25, 28, 29 or 30, and who delayed proving his claim until after the court had given judgment in such proceedings, shall not be entitled to share in the distribution of the proceeds of any assets or of any moneys recovered in such proceedings.

Contributions (s 92)

92.     Contributions by creditors towards costs of sequestration when free residue insufficient

            (1) When the free residue of the estate is insufficient to pay all the costs in the sequestration hereinbefore declared to be a charge against the same, all creditors who have proved their claims against the estate shall be personally liable to make good any deficiency, the concurrent creditors each in proportion to the amount of his claim and the secured creditors each in proportion to the amount for which he would have ranked upon the surplus of the free residue, if there had been any:

            Provided that-

      (i)     where all the creditors who have proved claims against the estate are secured creditors who would not have ranked upon the surplus of the free residue, if there had been any, such creditors shall be liable to make good the whole of the deficiency, each in proportion to the amount of his claim;

      (ii)     where a creditor has withdrawn his claim he shall be liable to contribute in respect of any deficiency only so far as is provided in section 50, and if a creditor has withdrawn his claim within five days after the date of any resolution, he shall be deemed to have withdrawn the claim before anything was done in pursuance of that resolution; and

     (iii)     where all the creditors who would have ranked upon the surplus of the free residue, if there had been any, have withdrawn their claims and, after payment of their contribution in terms of proviso (ii), there is still a deficiency, the remaining creditors whose claims have been proved against the estate shall, notwithstanding the fact that they would not have ranked upon the surplus of the free residue, if there had been any, be liable to make good such deficiency, each in proportion to the amount of his claim.

            (2) Whenever any creditor who is liable to contribute as aforesaid or under any such supplementary account as is hereinafter provided for is in the opinion of the Master and of the trustee unable to pay the contribution or if costs have been incurred in connection with the recovery of any contribution and are in the opinion of the Master and of the trustee irrecoverable by the trustee, the trustee may within six months after the confirmation of the account or after the date when the amount of such costs has been ascertained or within such further period as the Master may allow, frame a supplementary account-

     (a)     in the case of a creditor who is unable to pay the contribution, apportioning liability therefor among the other creditors; or

     (b)     in the case of costs so incurred and irrecoverable, apportioning liability therefor among the creditors or among such of them as are able to pay.

            (3) Any creditor contributing to the liability of a defaulting creditor shall be entitled to recover the amount so contributed from that defaulting creditor.

            (4) Sections 97, 98, 99, 100(2) and 101(1) shall apply in respect of such supplementary account.

            (5) The said supplementary account shall be lodged and due notice thereof published in the Gazette within the six months aforesaid or within such further period as the Master may have allowed.