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Summary law of insolvency comprehensive notes
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Comprehensive notes summarised from Hockly's Insolvency Law 9th edition textbook.
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law of insolvency comprehensive notes (Ex Parte Harmse)
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Law of Insolvency: Compulsory Sequestration
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law of insolvency: Effect of sequestration on legal position of insolvent
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Evans article: Constitutionality of s21- Describes s21(5) as contradictory and crazy
- Evans points out, on the one hand, Insolvency Act includes solvent spouse’s property as part of
insolvent spouse’s estate and thereby denying her, her rights
o IOW because one cannot prove ownership to one’s property (for example, lost
documents to confirm ownership of property) it is taken away from L because the
trustee draws the conclusion that such property belongs to the insolvent spouse
- On the other hand, the Insolvency Act, at the same time, regulates the position of L’s creditors
by affording to them certain rights
o This way they are indirectly recognizing that L does have rights to the property
- Though Evans acknowledges that s21 aims to protect creditors of L, he also points out that the
legislature did not give enough thought on s21 before drafting it
Points out that s21(5) is contradictory and makes the whole s21 contradictory and crazy
- If trustee recognizes a claim by L’s creditors, then logically speaking the property which is the
subject of that claim should not form part of insolvent estate
- IOW if the trustee is recognizing the claim to property of a creditor who is not one of X’s
creditors, then surely such property does not belong to the insolvent estate
- Such property should rather vest in the solvent spouse
Evans believes that
- S21 must be removed from the Act
- Believes that the issue of preventing fraudulent transactions between spouses should rather be
dealt with in the same manner as impeachable dispositions are dealt with
As a point of departure Evans makes reference to Maudsley case which explained the rationale behind
s21
- The only effect of s21 is that the onus no longer rests on the trustee to prove ownership of the
property of the solvent spouse
- Instead the owners is now on the solvent spouse to prove valid title
- Previously, it was common for traders to try and avoid paying debts by putting property in their
wives names
- S21 thus regarded to merely shift onus to the solvent spouse and at the same time affords some
relief of preventing fraud from materializing
- If one goes further to interpret s21 as a ground to attack property of a spouse, it would mean to
deprive the solvent spouse of the benefits that the law of marriage out of community of
property affords her
- Held that for s21 to have this effect it would require very clear wording
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