Summary LAW OF INSOLVENCY NOTES

Table of Contents
UNIT 4 ..................................................................................................................................................... 3
UNCOMPLETED CONTRACTS............................................................................................................... 3
UNIT 4 ARTICLES AND CASES ................................................................................................................ 10
Sarrawhitz article – van der Linde ................................................................................................... 10
Sarrahwitz article – Heyns and Mmusinyane .................................................................................. 13
UNIT 5 ................................................................................................................................................... 19
INDIVIDUAL TRANSACTIONS ............................................................................................................. 19
Edeling case v Gazit Prop case (NB NB NB) ................................................................................. 21
UNIT 5 ARTICLES AND CASES ............................................................................................................ 21
Mabe article.................................................................................................................................. 21
Gazit Properties v Botha .............................................................................................................. 28
Griffiths v Janse van Rensburg (SCA) ........................................................................................... 29
Janse van Rensburg v Botha......................................................................................................... 31
UNIT 6 ................................................................................................................................................... 32
ADMIN OF INSOLVENT ESTATE ......................................................................................................... 32
UNIT 6 – ARTICLES AND CASES ......................................................................................................... 46
S 2 Definitions............................................................................................................................... 46
INSOLVENCY ACT .......................................................................................................................... 46
THE COMPANIES ACT ................................................................................................................... 47
BERNSTEIN V BESTER.................................................................................................................... 47
CALITZ & BURDETTE ARTICLE ........................................................................................................... 47
SA RESTRUCTURING & INSOLVENCY PRACTITIONERS ASSOCIATION V MINISTER OF JUSTICE &
CONSTITUTIONAL DEVELOPMENT ............................................................................................... 49
CALITZ ARTICLE ON SECTIONS 417 & 418 ........................................................................................ 50
Right to privacy ............................................................................................................................. 51
Effect of insolvency on right to privacy......................................................................................... 51
Conclusion ..................................................................................................................................... 51
JOUBERT & CALITZ “PRIVATE ENQUIRIES” ...................................................................................... 52
Duties of liquidator ....................................................................................................................... 52
Unit 7..................................................................................................................................................... 53
BUSINESS RESCUE ............................................................................................................................. 53
RICHTER V ABSA BANK LIMITED .................................................................................................. 55
Cardinet (Proprietary) Limited v Wedgewood Golf and Country Estates (Pty) Ltd (in
liquidation) (WCC Case no 19599/2012) NB ............................................................................... 56


1

,MORATORIUM.................................................................................................................................. 56
SAA AND RIGHTS OF EMPLOYEES - NUMSA v SAA ...................................................................... 57
THE BUSINESS RESCUE PLAN MUST CONTAIN - PART A: BACKGROUND ................................... 60
THE BUSINESS RESCUE PLAN MUST CONTAIN –PART B: PROPOSALS ........................................ 61
THE BUSINESS RESCUE PLAN MUST CONTAIN –PART C: ASSUMPTIONS AND CONDITIONS .... 61
BUSINESS RESCUE PRACTITIONERS ............................................................................................. 67




2

,__________________________________________________________________________________

UNIT 4
UNCOMPLETED CONTRACTS
__________________________________________________________________________________




LAW OF CONTRACTS

Contract is an agreement entered into between two or more parties with the serious intention of
creating a legal obligation.

– CONCENSUS

– CAPACITY

– LEGAL AND PHYSICAL POSSIBILITY

– FORMALITIES



BREACH

• Party then fails to honour its commitments, such a party would have committed a breach of
contract

• Positive malperformance –Mora creditoris –Mora debitoris –Repudiation –Prevention of
performance

• SELF STUDY….



REMEDIES

• specific performance

• cancellation

• damages



UNCOMPLETED CONTRACT

➢ Contract not completed when party sequestrated



INSOLVENCY

Effect of sequestration on uncompleted contracts?




3

, – If the insolvent has carried out his side of the contract and only the other party’s
performance is outstanding, the right to that performance is an asset in the
insolvent estate and vests in the trustee.

– If insolvent has not performed?



GENERAL RULE

Common law =

• Contract not automatically terminated

• Trustee elects whether to perform or not

- Only power trustee has – can exclude right of other party to use remedy of specific
performance

• Other party’s right to specific performance excluded =

– Thomas Construction case

• Will have concurrent claim for damages and loss



Thomas Construction case

➢ Liquidators could decide not to carry on with the execution of the contract – but such a
decision constitutes a repudiation of the contract

➢ Statement that a trustee/liquidator has a “right of election” whether or not to abide by a
contract only means that the other party cannot exact specific performance against
trustee/liquidator if latter should decide to abandon the contract



Rationale

➢ Concursus creditorum – no specific creditor can be placed in better situation than other
creditors



BRYANT AND FLANAGAN (PTY) LTD V MULLER AND ANOTHER NNO

† Whether or not the contract continues to operate depends on the decision of the trustee,
who is allowed and indeed required to choose which shall happen.
- Agreement does not terminate automatically upon liquidation
† He is, of course, responsible to the creditors for his choice.
† But, as between himself and the other party to the contract, the decision is his alone.
† It must be made within a reasonable time.
† The results of the trustee’s decision to bring the contract to a halt are that he may not insist
on its further performance by the other party, and that he is not himself expected to fulfil
the insolvent’s outstanding obligations under it.

4