Summary
Summary ISR310 - WEEKS 1-12 (EVERYTHING FOR THE 2023 EXAM)
- Institution
- University Of Pretoria (UP)
Very detailed notes with all applicable case law.
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TECHNICAL ASPECTS (ESTATES THAT CAN BE SEQUESTRATED)Estates that can be sequestrated (according to 1936 Insolvency Act)
Natural persons estate (consumer insolvency)
- Sequestrated under the Insolvency Act.
- Debtor can be the applicant in application for court order OR a curator can bring
sequestration application where a person is incapable of managing their own
affairs.
- Debtor or curator must have locus standi (the right to stand in front of the court
and ask them to do something.
Deceased estate
- Person administering deceased estate has a choice between –
1. Continuing administration under the Administration of Estates Act.
2. Ask for the estate to be sequestrated under the Insolvency Act.
- A creditor can apply for sequestration after the appointment of an administer but
they must prove sequestration will be more advantageous than s34
Administration of Estates Act procedure.
Trust
- Assets are entrusted to a trustee who is responsible for dealing with them
according to a trust deed.
- When a trust goes insolvent the trustee is not sequestrated bcs they are acting in
their official capacity.
- Trust assets do not form part of an insolvent estate bcs they are separate
estates.
Magnum Financial Holdings v Summerly
- Trusts can be sequestrated in terms of the Insolvency Act bcs they are a debtor
in the ordinary sense of the word (they are holders of assets and liabilities).
Partnership (Hawker Air Services)
- When a partnership estate gets sequestrated, all individual partners estates must
also be sequestrated (simultaneous but separate sequestration).
- Individual partners do not have to be insolvent for their personal estate to be
sequestrated when the partnership estate gets sequestrated.
,Content of application/affidavit
Insolvency Act states that debtor must follow this application procedure and not an
action procedure –
- Action proceedings use summons, particular of claims and witnesses.
- Application proceeding put all the info the court needs in an affidavit.
The person bringing the application (whether he is the debtor or creditor) must
identify themselves
- Major/Minor.
- ID number.
- Nature of employment.
- Residence.
Details of the debtor must be brought to the court
- If he is not a natural person, the affidavit must specify.
- Must include whether the debtor is married in community/out of community of
property and provide details of the spouse.
- The residence of the debtor established the jurisdiction of the court.
The sequestration process and manner in which the court should be approached
Voluntary and compulsory sequestration is instituted by notice of motion (application
proceeding) which is regulated by Rule 6 of the High Court rules.
- Evidence is placed before the court in a written affidavit.
Jurisdiction of the court to be approached for sequestration and rehab orders
S2 of Insolvency Act = only the HC can make sequestration and rehab orders
- Because such orders affect a person’s status.
S149 of Insolvency Act = local or provincial divisions have jurisdiction to sequestrate
a debtor if –
- He is domiciled within the area of jurisdiction of the court.
- He owns a property located within the area of the jurisdiction of the court.
,- At any time during the 12 months preceding the date of applicated, he ordinarily
resided or carried on business within the area of the courts jurisdiction.
Different divisions of the HC may have concurrent jurisdiction in terms of the same
estate –
- A court may refuse an application if its more convenient for another court to
sequestrate estate.
- HC has review capacity meaning that they can review decisions by Master.
- Courts considers convenience and equity (where creditors are located, where the
closest Master’s office, where property is situated).
- Application and rehab must be brought in the same division where the debtor is
initially sequestrated.
Magistrate’s courts have jurisdiction to hear insolvency matters if they do not affect a
person’s status.
VOLUNTARY SURRENDER
Application process applicable to voluntary surrender
Voluntary surrender is instituted by way of application proceedings –
- Evidence is placed before the court (affidavits/documents).
An ex parte application is used because there is only 1 party involved (the debtor)
BUT there can be 2 debtors when the debtor is married in community of property
- Parties married in community of property have their joint estate sequestrated.
- S17(4) of Matrimonial Property Act = both spouses must apply for sequestration
of their communal assets (2 applicants).
Partner is partnership estate
- S13(1) of Insolvency Act = sequestration of partnership results in simultaneous
sequestration of individual members estate.
- Exception = partner en commandite – partner who has limited liability to other
partners in terms of a fixed amount, their estate won’t be sequestrated.
- S49 of Insolvency Act = creditors of 1 estate may not prove claims against the
estate of another because estates are sequestrated separately.
, S3 of Insolvency Act = who can apply for voluntary surrender
- Debtor (partnerships + spouses married in community of property).
- Debtor’s representative with special authority.
- Debtor’s curator bonis (uses initials N.O).
Executor of deceased estate
- If insolvency procedure is more beneficial to creditors than s34 of Administration
of Estates Act.
Formal steps taken before application can be made for voluntary surrender
1. S4(1) of Insolvent Act = Applicant must (between 14-30 days prior to date of
application), publish notice of surrender in Gov Gazette and local newspaper.
- What newspaper? The newspaper of the magisterial district where the debtor
resides, trades, or has principal place of business.
- Notice of surrender with Form A of 1st schedule of Insolvency Act.
A debtor can commit an act of insolvency during the period by –
- Revoking the notice of surrender from the Gov Gazette and newspaper:
> However, this debtor may do this without committing an act of insolvency
when he obtains written consent of the Master and published a notice of
withdrawal in the Gov Gazette and newspaper.
- Court rejects application.
- Debtor dies not continue surrender process.
- Debtor fails to apply for acceptance of voluntary surrender of estate.
- Debtor fails to lodge statement of affairs OR lodges incomplete/incorrect
statement.
Publication of notice of surrender effects (come into operation from date of
publication)
- Execution is halted, sheriff cannot pay proceeds from sale of assets to creditors,
he rather hands over assets and proceeds to trustee.
- S5(2) of Insolvency Act = Master can appoint curator to temporarily be in control
of debtors estate.
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