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Dembe Dangale 08ha1900848 Insolvency Law (Hlwi230-1) ) Formative Assessment 1
Dembe Dangale 08ha1900848 Insolvency Law (Hlwi230-1) ) Formative Assessment 1
SURNAME: DANGALE
1.1
➢ Insolvency law
➢ A person is declared insolvent if he is unable to pay his debts, but the legal test
of insolvency is whether the debtor's debt assessed by his family exceeds his
assets at a fair value. being unable to pay his debts is the only proof of
insolvency, Julien is unable to meet his financial obligations to creditors from
his business, as well as a loan he made to renovate his house.
➢ As defined in the Act, a debtor is either a person or a partnership or an estate
of such persons or partnerships, In the usual sense, a debtor is any individual,
body, firm, company or other association of individuals that is liable to be
liquidated in accordance with the laws of companies." A company or entity of
persons is considered a “debtor in the sense of the word” if it is capable of
owning property and in debt.
➢ Yes, Julien is a debtor because he owns a company in his personal capacity
and therefore responsible for its own debts.
1.2
The main purpose of a sequestration order is to regulate the debtor's property and
distribute it fairly when it is not sufficient to satisfy the claims of all his creditors.
Confiscation of the assets of a bankrupt debtor inevitably results in the payment of one
or more creditors while others receive little or nothing. The legal mechanism that
applies in the sequestration order is intended to ensure that the debtor's assets are
liquidated and distributed to all creditors according to a pre-determined (and fair) order
of preference.
1.3
The court can only accept the surrender of a debtor's if it can be ascertained that:
1.4
➢ The debtor has shown brutal extravagance and accumulated debt, even after
the judgment has been rendered against him. (Ex parte Logan 1929 TPD
201 204)
➢ The creditor-debtor does not pressure him to pay and is willing to give him time
or accept payments in monthly instalments. (Ex parte Kruger 1928 CPD 233)
➢ The debtor has a latent motive in applying for surrender, for example, to avoid
payment or violate the rights of certain creditors. (Ex parte Stirling; Landsberg v
Stirling (1922)43 NPD 466; Ex parte Van den Berg 1950(1) SA 816 (W); Fesi &
another v Absa Bank Ltd 2000 (1) SA (C)), In the event that his immovable
property is sold in execution or transferred. (cf Naidoo & another v Matlala NO &
others 2012(1) SA 143 (GNP) 156).
➢ The debtor has not submitted his financial condition completely and openly.
➢ Debtor's documents are lacking in several respects. ( Ex parte Harmse 2005) (1)
SA 323 (N) 332).
➢ The debtor's financial problems can be resolved more adequately based on
the National Credit Act34 of 2005.
1.5
➢ A debtor may request court acceptance of the surrender of his estate (section
3(1)) by himself (or by his agent). This is called voluntary surrender.
➢ The creditor or creditors (or an agent of either) may seek the court's assistance
in seizing the debtor's estate (s. 9(1)). The process is called compulsory
sequestration.
Question 2
2.1
of the applicant
NOTICE OF MOTION
TAKE NOTICE that application will be made on behalf of the above applicant on the
17 day of December 2021 at 10h00 or as soon thereafter as Counsel may be heard
for order in the following terms.
DATED at >>> South Gauteng High Court this 17 day of September 2021
Dembe Dangale
APPLICANTS ATTORNEY
TO:
THE REGISTER OF THE HIGH COURT
Ms Roanne Bramdaw
Mr Leonard Pule
b)
➢ A claim made by the applicant entitles him, under section 9(1), to apply for the
sequestration of the debtor's estate.
➢ There has been a breach of insolvency by the debtor, or the debtor is insolvent.
➢ If the debtor's estate is sequestrated, it would be advantageous for his creditors
(section 12(1)).
2.2
Liquidated claims are monetary claims - a claim for the transfer of property
Examples include:
2.3 Disposable property” includes any property which may be attached and sold in
execution, either movable or immovable.
2.4
Acts of insolvency
2.4
Acts of insolvency
➢ If, after having published a notice of surrender of his estate which has not
lapsed or been withdrawn in terms of ss 6 or 7, he fails to comply with the
requirements of s 4(3), or lodges ,in terms of s 4(3), a statement which is
incorrect or incomplete in any material respect, or fails to apply for the
acceptance of the surrender of his estate on the date mentioned in the notice
of surrender as the date on which the application is to be made (s8(f)).
➢ Curtis would have committed an Act of insolvency because he:
➢ Failed to lodge a statement of affairs with the master
➢ Filed a statement of affairs which is incorrect or incomplete in a material
respect.
➢ Failed to apply for acceptance of the surrender on the specified date.
Question 3
3.1
In Mervis Brothers (Pty) Ltd v Hanekom 1963 (2) SA 125 (T) M sued H, an insolvent, for
the amount owed before the sequestration. The lawsuit is based on a promise made
by H after the sequestration to pay M's debts in full. The trustee does not approve of
H assuming this obligation. the magistrate's court deemed that, as the Master had not
assessed a contribution, the undertaking likely affected any contribution that H would
be required to make, if asked, and, in the absence of the trustee's consent, was
unenforceable. The court ruled that because the Master did not assess a contribution,
H was not obligated to make the contribution at the time of contracting. As a result, the
trustee's consent was not required, and H's assurance was legally binding.
3.2
In the case of Kruger v Symington en andere 1958 (2) SA 128 (O), only if there is an
irregularity or the bona fides of the trustee or the creditors is under suspicion.
3.3
a) Martin’s trustee may not interfere with his intended political trajectory…. where
the trustees consent is not necessary, or where it is and is given, the contract
is valid and binding on the parties.
b) If the insolvent enters into a contract which purports to dispose of estate
property, the contract is voidable at the option of the trustee; it is not void (W L
Carroll & Co v Ray Hall Motors (Pty) Ltd 1972 (4) SA 728 (T)). The position is
the same if the insolvent contracts without obtaining his trustees consent where
it is required (Ex parte Olivier 1948 (2) SA 545 (c)).Should the trustee choose
not to set aside the contract simply stand by without avoiding it, the contract
remains binding on the parties( Ex parte Olivier (supra) 549).However, as in
the case of a contract which does not require consent or to which consent has
been given ,the insolvent cannot sue for performance unless there is a
statutory provision giving him the right to enforce for his own benefit
performance under that type of contract.(cf De Polo & another v Dreyer &
others(supra)).
If the trustee elects to set aside a contract, he may recover ant performance
rendered by the insolvent, but he mut restore to the third party any benefits that
the insolvent has received under the transaction(Estate Louw v credit
Corporation of SA Ltd 1956 (3) SA 303 (C )).
Section 24(1) provides a measure of protection to third parties who contract
with the debtor, ignorant of the fact that he is insolvent. The section states that,
if an insolvent purport to alienate for valuable consideration and without the
consent of the trustee property, or any right to property, which the insolvent
acquired after the sequestration of his estate (and which thereby became part
of the estate), to a person who proves that he was not aware and had no reason
to suspect that the estate of the insolvent was under sequestration, the
alienation is nevertheless valid.
➢ The section implies only to new assets which came into the insolvent’s
possession after sequestration and not to assets acquired by the
insolvent in exchange for, or in replacement of, property, in the estate at
the time of sequestration. Wessels v De Klerk & another 1960(4) SA
310(T), the insolvent sold immovable property that formed part of his
insolvent estate at the time of sequestration and received two promissory
notes in part payment of the purchase price. He subsequently endorsed
the notes to a bona fide purchaser. The court held that the sale of the
notes was not validated by s 24 (1) and therefore, was voidable at the
option of the trustee.
➢ The section places the onus upon the third party to prove that, at the
time when he received the property in question, he was neither aware,
nor had any reason to suspect, that he had no reasonable ground to
suspect insolvency; he must go further and establish that he had no
reason whatsoever to suspect it( Fey NO & another v Mackay[ 2004] 4
All SA 50 (C) 54).
Question 4
4.1
4.2
Section 23 (8) permits the insolvent to claim compensation for losses caused by bodily
injury or defamation before or after sequestration of his assets. Personal damage here
refers not just to physiological harm, but also to harm to one's personality interests.
An insolvent who has suffered bodily injury (whether before or after sequestration)
may collect not just so-called "general damages" for his own advantage, but also for
the benefit of his trustee (e.g., compensation for suffering and amenities, loss or pain
and the like) but also "special damages" (e.g., medical, and other additional costs and
lost profits).