Hockly - S Insolvency Law

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Preface
This ninth edition of Hockly’s Insolvency Law follows the expanded format of the previous
three editions, and its basic purpose remains the same: to provide a concise, yet fairly
detailed, account of the law of insolvency, winding-up, and business rescue proceedings
(which have replaced judicial management). The book aims at a wide readership. For the
subject specialist, it offers an update of recent developments in the law relating to
insolvency, winding-up and business rescue proceedings; for students, it is a text for both
undergraduate and postgraduate study; and for insolvency practitioners, it provides both a
clear and practical analysis of the law and material for research and argument. It will also
soon be available as an e-book.
Insolvency is an area in which there are continually developments in the case law and
applicable legislation. We have endeavoured to include all the developments that have taken
place in the six years since the last edition of Hockly’s Insolvency Law, including the
fundamental changes introduced by the Companies Act 71 of 2008. The book mostly reflects
the law of insolvency as at the end of August 2012, with a few additions made during the
production process.
As before, the appendices contain specimen applications, specimen estate accounts and
the Insolvency Act. Further appendices now include excerpts from the Companies Act 61 of
1973, the Companies Act 71 of 2008 and the Close Corporations Act 69 of 1984, as well as
the entire Cross-Border Insolvency Act 42 of 2000. Cross-references throughout are to
paragraphs, not pages.
A sincere vote of thanks must go to Linda van de Vijver for her invaluable assistance and
co-operation in publishing this new edition. We would also like to thank Deidre du Preez for
managing the project and compiling the table of cases, Adami Geldenhuys for compiling the
table of statutes and the subject index, and preparing the statutes that appear in the
appendices, Nic Jooste for designing the book covers, and Tommy Bell for the typesetting.
RD SHARROCK
KE VAN DER LINDE
AD SMITH
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Contents
Preface
Part 1 Introduction
Chapter 1 Introduction
Part 2 Obtaining a sequestration order

Chapter 2 Voluntary surrender
Chapter 3 Compulsory sequestration
Part 3 Effects of sequestration

Chapter 4 The legal position of the insolvent
Chapter 5 Vesting of the assets of the insolvent
Chapter 6 Vesting of the assets of the solvent spouse
Chapter 7 Uncompleted contracts and legal proceedings not yet finalized
Part 4 Collection of estate assets

Chapter 8 Preservation of the estate pending the trustee’s appointment
Chapter 9 Meetings of creditors and proof of claims
Chapter 10 The election of the trustee
Chapter 11 The duties and powers of the trustee
Chapter 12 Impeachable dispositions
Chapter 13 Interrogation of the insolvent and other witnesses
Chapter 14 The duties of the insolvent
Part 5 Realization and distribution of the assets

Chapter 15 Realization of the estate assets
Chapter 16 Creditors’ claims and their ranking
Chapter 17 The estate accounts and the distribution of the estate
Part 6 Composition and rehabilitation

Chapter 18 Composition
Chapter 19 Rehabilitation
Part 7 Miscellaneous
Chapter 20 Partnership and sequestration
Chapter 21 Insolvent deceased estates
Chapter 22 Offences
Part 8 Winding-up and rescue of companies and close corporations

Chapter 23 Winding-up of companies
Chapter 24 Winding-up of close corporations
Chapter 25 Business rescue and compromise
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Part 9 Cross-border insolvency

Chapter 26 Cross-border insolvency
Appendices
Appendix 1 Specimen applications
Appendix 2 Estate accounts
Appendix 3 Insolvency Act 24 of 1936
Appendix 4 Companies Act 61 of 1973, Chapter XIV
Appendix 5 Companies Act 71 of 2008, Chapter 2
Appendix 6 Companies Act 71 of 2008, Chapter 6
Appendix 7 Close Corporations Act 69 of 1984, Part IX
Appendix 8 Cross-Border Insolvency Act 42 of 2000
Table of cases
Table of statutes
Index
Page 1
Part 1
Introduction
Chapter 1: Introduction
1.1 Meaning of ‘insolvency’

1.2 Purpose of a sequestration order
1.3 What may be sequestrated
1.4 Jurisdiction of the court
1.5 The Master
1.6 Condonation of irregularities
1.7 Historical overview
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Chapter 1
Introduction
Synopsis
1.3.1 Meaning of ‘estate’
1.3.2 Meaning of ‘debtor’
1.4.1 Which court has jurisdiction
1.4.2 Jurisdiction over a debtor and his estate
1.4.3 Jurisdiction in litigation against third parties
1.4.4 Competing courts—removal to another court
1.5 The Master
1.7.1 Roman law
1.7.2 Roman-Dutch law
1.7.3 South African law

In common parlance, a person is insolvent when he is unable to pay his debts. But the legal
test of insolvency is whether the debtor’s liabilities, fairly estimated, exceed his assets, fairly
valued (Venter v Volkskas Ltd 1973 (3) SA 175 (T) 179; Ex parte Harmse 2005 (1) SA 323
(N) 325). Inability to pay debts is, at most, merely evidence of insolvency.
A person who has insufficient assets to discharge his liabilities, although satisfying the test
of insolvency, is not treated as insolvent for legal purposes unless his estate has been
sequestrated by an order of the court. A sequestration order is a formal declaration that a
debtor is insolvent. The order is granted either at the instance of the debtor himself
(voluntary surrender: see chapter 2) or at the instance of one or more of the debtor’s
creditors (compulsory sequestration: see chapter 3).
The terms ‘sequestration’ and ‘sequestration order’ should strictly be used only with
reference to a person’s estate. A debtor’s estate is sequestrated, not the debtor himself.
However, both a debtor’s estate and the debtor himself may properly be described as
|‘insolvent’. When the word ‘insolvent’ is used to describe a debtor, it carries two possible
meanings: either that the debtor’s estate has been sequestrated, or that his liabilities exceed
his assets (cf s 2 of the Insolvency Act 24 of 1936, definition of ‘insolvent’). The notion of
‘becoming insolvent’, thus, has a wider meaning than that
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of ‘being sequestrated’ (Land- en Landboubank van Suid-Afrika v Joubert NO 1982 (3) SA

643 (C) 648).
The main objective of a sequestration order is to secure the orderly and equitable
distribution of a debtor’s assets where they are insufficient to meet the claims of all his
creditors. Executing against the property of a debtor who is in insolvent circumstances
inevitably results in one or a few creditors being paid, and the rest receiving little or nothing
at all. The legal machinery that comes into operation on sequestration is designed to ensure
that whatever assets the debtor has are liquidated and distributed among all his creditors in
accordance with a predetermined (and fair) order of preference.
The law proceeds from the premise that, once an order (or provisional order) of
sequestration is granted, a concursus creditorum (‘coming together of creditors’) is
established, and the interests of creditors as a group enjoy preference over the interests of
individual creditors (Richter NO v Riverside Estates (Pty) Ltd 1946 OPD 209 223). The debtor
is divested of his estate and cannot burden it with any further debts. A creditor’s right to
recover his claim in full by judicial proceedings is replaced by the right, on proving a claim
against the insolvent estate, to share with all other proved creditors in the proceeds of the
estate assets. Apart from what is permitted by the Act, nothing may be done which would
have the effect of diminishing the estate assets or prejudicing the rights of creditors (Ward v
Barrett NO & another NO 1963 (2) SA 546 (A) 552). In Walker v Syfret NO 1911 AD
141 166, Innes J explained the underlying principle as follows:
‘The object of the [Insolvency Act ] is to ensure a due distribution of assets among creditors in the
order of their preference. . . . The sequestration order crystallises the insolvent’s position; the hand of
the law is laid upon the estate, and at once the rights of the general body of creditors have to be
taken into consideration. No transaction can thereafter be entered into with regard to estate matters
by a single creditor to the prejudice of the general body. The claim of each creditor must be dealt with
as it existed at the issue of the order.’
The law of insolvency exists primarily for the benefit of creditors (cf Ex parte Pillay; Mayet v
Pillay 1955 (2) SA 309 (N) 311) and, accordingly, a court will not sequestrate a debtor’s
estate unless it is shown that the sequestration will be to the advantage of creditors. Thus,
sequestration will generally not be resorted to if the debtor, although insolvent, has only one
creditor and the latter is already in possession of a judgment against the debtor. In such a
case, the normal execution procedure offers a less expensive means of exacting from the
debtor whatever amount he is able to pay (cf Absa Bank Ltd v De Klerk and related cases
1999 (4) SA 835 (E) 839; Lynn & Main Inc v Mitha NO 2006 (5) SA 380 (N) 383). And
sequestration will not be ordered if the assets in the debtor’s estate will be consumed by
placing the estate under sequestration and there will be nothing left over for creditors. The
court will make an order of sequestration only if the expected result will be an appreciable
dividend for creditors. The requirement of advantage to creditors is discussed further in
2.2.3 and 3.1.3.
Although sequestration was not designed to alleviate the position of the debtor, it
inevitably has this effect because it relieves him from legal proceedings by creditors
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and allows him, through rehabilitation, to free himself from all unpaid pre-sequestration
debts (s 129(1)(b)).
Because insolvency law aims to ensure that creditors receive an equitable share of the
debtor’s estate, it is sometimes regarded as no more than an elaborate system of execution.
In some legal systems, for instance, insolvency law is classified under civil procedure rather
than under mercantile law, as in our system. But the notion that insolvency law is merely a
system of execution is simplistic. If it were merely this, sequestration would affect only the
debtor’s assets, whereas, as will be noted later (chapter 4), sequestration also affects the
debtor personally, restricting his capacity and freedom to enter into contracts, to follow a
chosen vocation, to litigate, and to hold office. In Naidoo v Absa Bank Ltd 2010 (4) SA 597
(SCA) 601, the court accepted that a sequestration order is ‘not an ordinary judgment
entitling a creditor to execute against a debtor’. It affects ‘not only the rights of the two
litigants, but also of third parties, and involves the distribution of the insolvent’s property to
various creditors, while restricting those creditors’ ordinary remedies and imposing
disabilities on the insolvent’. It followed that sequestration proceedings instituted pursuant
to breach of a credit agreement could not be classified as ‘legal proceedings to enforce the
agreement’ as envisaged by s 129(b) of the National Credit Act 34 of 2005. Cachalia JA
remarked (600): ‘[An] order for the sequestration of a debtor’s estate is not an order for the
enforcement of the sequestrating creditor’s claim, and sequestration is thus not a legal
proceeding to enforce an agreement.’ (See also FirstRand Bank Ltd v Evans 2011 (4) SA 597
(KZD) 606.)

The Act provides for the sequestration of the ‘estate’ of a ‘debtor’.
1.3.1 Meaning of ‘estate’

An estate is usually conceived of as a collection of assets and liabilities (cf Ex parte Foxcroft
1923 OPD 234 235), but a debtor who has only liabilities may be regarded as having an
estate for sequestration purposes. In Miller v Janks 1944 TPD 127, M had acquired an estate
by means of his occupation as a professional gambler. His assets had subsequently
disappeared under highly suspicious circumstances, leaving only liabilities. His wife
possessed fixed property which she had received while M was pursuing his occupation. The
court granted an order sequestrating M’s estate. It rejected M’s argument that, because he
no longer had any assets, he had ceased to have an estate and, therefore, sequestration
was not possible. Murray J observed (132):
‘A debtor who has £1,000 assets and £2,000 liabilities has an estate, though one insolvent to the
extent of £1,000: he does not cease to have an estate when the next day he pays over his £1,000 to
his creditors, and remains insolvent to the same extent. . . . [A]n estate . . . is [no] less an estate
because at one time it has only assets, at another time only liabilities, and at yet another time both
assets and liabilities.’
The joint estate of spouses married in community of property is an estate for purposes of
insolvency. A debtor who is married in community of property does not have a separate
estate which can be sequestrated, even where he (or she) is carrying on a business
independently of his (or her) spouse (Ex parte Vally 1930 CPD 304; De Wet NO v Jurgens
1970 (3) SA 38 (A) 48). The spouses are both debtors and, on sequestration of
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their joint estate, they both become insolvent debtors for purposes of the Act (Acar v Pierce
and other like applications 1986 (2) SA 827 (W) 830; Du Plessis v Pienaar NO & others 2003
(1) SA 671 (SCA) 676; Berrange NO v Hassan & another 2009 (2) SA 339 (N) 369). On
divorce, each spouse regains a separate estate which must obviously be sequestrated
separately (sequestration does not extinguish the liability of the solvent spouse for debts of
the joint estate: s 17(5) of the Matrimonial Property Act 88 of 1984; Maharaj v Sanlam Life
Insurance Ltd & others 2011 (6) SA 17 (KZD) 19-20). However, if the divorce takes place
after a creditor has already acquired the right to apply for sequestration of the joint estate,
then the creditor is required to sequestrate the separate estates of both spouses (BP
Southern Africa (Pty) Ltd v Viljoen en ’n ander 2002 (5) SA 630 (O) 638).
A debtor who is married out of community of property has a separate estate that can be
sequestrated. However, as will be seen later (6.1), the solvent spouse’s assets are also
affected by the order, since they vest in the trustee of the insolvent estate until the solvent
spouse can establish her (or his) title to them.
A debtor whose estate has been sequestrated may, during his insolvency, acquire a new
estate under a title valid against his trustee. This new estate may itself be voluntarily
surrendered (Ex parte Foxcroft (supra)) or sequestrated at the instance of a creditor (Ex
parte Geeringh 1980 (2) SA 788 (O) 789). Compulsory sequestration is possible, it seems,
even where the assets in the second estate have been dissipated by the time the application
for sequestration is made (Miller v Janks (supra)).
1.3.2 Meaning of ‘debtor’

A ‘debtor’ for purposes of the Insolvency Act is ‘a person or a partnership, or the estate of a
person or partnership, which is a debtor in the usual sense of the word, except a body
corporate or a company or other association of persons which may be placed in liquidation
under the law relating to companies’ (s 2). An entity or association of persons is regarded as
‘a debtor in the usual sense of the word’ if it is able to possess an estate and incur debts
(Magnum Financial Holdings (Pty) Ltd (in Liquidation) v Summerly & another NNO 1984 (1)
SA 160 (W) 163). The law governing the liquidation of insolvent companies is Chapter 14 (ss
337-426) of the Companies Act 61 of 1973. These provisions were left in operation by the
Companies Act 71 of 2008 and for the time being apply to the winding up and liquidation of
companies (and other entities) under the latter statute (see further chapter 23). The entities
that may be placed in liquidation, according to s 337 of the 1973 Act, are a company, an
‘external’ company (one registered outside the Republic and meeting certain requirements:
see s 1 of that Act), and ‘any other body corporate’. ‘Body corporate’, in this context, refers
to a juristic person or universitas, ie, an association of persons that has perpetual succession
and is capable of holding property and of suing and of being sued in its corporate name
(Magnum Financial Holdings (Pty) Ltd (in Liquidation) v Summerly & another NNO (supra)
163).
The term ‘debtor’, therefore, embraces the following:
• A natural person.
• A partnership—even one whose members are all juristic persons (Commissioner, South
African Revenue Services v Hawker Air Services (Pty) Ltd; Commissioner, South
African Revenue Service v Hawker Aviation Partnership & others 2006 (4) SA 292
(SCA) 306, overruling P de V Reklame (Edms) Bpk v
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Gesamentlike Onderneming van SA Numismatiese Buro (Edms) Bpk en Vitaware

(Edms) Bpk 1985 (4) SA 876 (C)).
• A deceased person and a person incapable of managing his own affairs (cf s 3(1)).
• An external company that does not fall within the definition of ‘external company’ in
the Companies Act 61 of 1973, eg, a foreign company that has not established a place
of business in the Republic (Lawclaims (Pty) Ltd v Rea Shipping Co SA: Schiffscommerz
Aussenhandels Betrieb der VVB Schiffbau intervening 1979 (4) SA 745 (N) 751).
• An entity or association of persons that is not a juristic person, such as a trust
(Magnum Financial Holdings (Pty) Ltd (in Liquidation) v Summerly & another NNO
(supra); Commissioner for Inland Revenue v Friedman & others NNO 1993 (1) SA 353
(A) 356). In Melville v Busane & another 2012 (1) SA 233 (ECP), the court explained
(234–7) that although a trust falls within the definition of a ‘juristic person’ in the
Companies Act 71 of 2008 (s 1), it does not meet the definition of a ‘company’ in that
Act (a juristic person incorporated in terms of the Act) and, hence, cannot be liquidated
under Chapter 14 of the 1973 Companies Act.
A body corporate established in terms of the Sectional Titles Act 95 of 1986 is a ‘body
corporate’ as referred to in the definition of ‘debtor’ in the Insolvency Act and, therefore, is
not capable of being sequestrated. It also cannot be wound up for non-payment of its debts
or by reason of its insolvency. The legislature did not intend the law governing the winding-
up of insolvent companies to apply to bodies corporate (Reddy v Body Corporate of
Croftdene Mall 2002 (5) SA 640 (D) 645-7).

1.4.1 Which court has jurisdiction
As a rule, only a Provincial or Local Division of the High Court may adjudicate upon an
insolvency matter (s 2 sv definition of ‘Court’). A magistrate’s court may preside over
prosecutions for criminal offences under the Insolvency Act (see 22.1), proceedings to set
aside voidable dispositions (see 12.3.2), and a few other matters, provided, in each case,
the ordinary jurisdictional limits as to offence, person, and amount, imposed by the
Magistrates’ Courts Act 32 of 1944, are not exceeded (ibid).
1.4.2 Jurisdiction over a debtor and his estate

In terms of s 149(1), a court has jurisdiction ‘over [a] debtor and in regard to the estate of
[a] debtor’ if:
• on the date when the application for voluntary surrender or compulsory sequestration
of the debtor’s estate is lodged with the Registrar of the court, the debtor is domiciled,
or owns property, or is entitled to property, situated within the jurisdiction of the court
(s 149(1)(a)); or
• at any time within the 12 months immediately preceding the lodging of the application,
the debtor ordinarily resided or carried on business within the jurisdiction of the court
(s 149(1)(b)).
(i) Domicile or property within jurisdiction
A personal right, ie, a right to a performance of some kind, is taken to be situated where the
debtor liable to render the performance is domiciled. In Nahrungsmittel GmbH v
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Otto 1993 (1) SA 639 (A), N applied to sequestrate the estate of O, a German citizen who
was imprisoned in Germany. N sought to found jurisdiction on the fact that O had been
awarded costs in an earlier court case decided in South Africa. N contended that, because of
this award, O owned or was entitled to property situated within the jurisdiction of the court.
The court held that the location of the right to costs, being intangible property without any
physical existence, followed the domicile of the debtor liable to pay the costs. This debtor
was a German company, resident in Germany. It followed that the right was located in
Germany, not within the jurisdiction of the South African court.
(ii) Residence or business within jurisdiction in preceding 12 months
The debtor need not have ordinarily resided or carried on business for the entire 12 months
preceding the application: ordinary residence or conduct of business at any time during that
period suffices. However, ‘ordinary residence’ means something more prolonged than a
temporary stay (Philips v Commissioner of Child Welfare, Bellville 1956 (2) SA 330 (C) 334).
1.4.3 Jurisdiction in litigation against third parties

Section 149 deals with the question when a court has jurisdiction over a debtor and his
estate: it is not relevant where the trustee of an estate litigates against third parties. So, in
proceedings to set aside a voidable disposition made to a third party prior to sequestration,
the ordinary rules of jurisdiction apply and the trustee cannot rely on s 149 (Spendiff NO v
Kolektor (Pty) Ltd 1992 (2) SA 537 (A)).
1.4.4 Competing courts—removal to another court

A court having jurisdiction over a debtor may refuse (or postpone) the surrender or
sequestration of his estate if it appears to the court equitable or convenient that his estate
should be sequestrated by another court within the Republic (s 149(1) proviso). The court
may order that the matter be transferred to the other court (s 9 of the Supreme Court Act
59 of 1959); the transferee court need not have original jurisdiction (Mulder & another v
Beacon Island Shareblock Ltd 1999 (2) SA 274 (C)).
In deciding whether another court should make a sequestration order, a court must
consider whether, on the particular facts, and in the light of factors such as the convenience
of the parties and the court and the general disposal of litigation, the transferee court should
dispose of the matter (Mulder & another v Beacon Island Shareblock Ltd (supra)). The
essential inquiry is not where the sequestration order may more conveniently be granted,
but where the estate may more conveniently be administered (in other words, what the
court must consider is what will happen after the order has been granted). Thus, in Goode,
Durrant and Murray (SA) Ltd & another v Lawrence 1961 (4) SA 329 (W), the court
transferred a sequestration application from the Witwatersrand to the Durban court because
most of the matters which the trustee would have to investigate arose in the Durban area,
and the parties whom the trustee would have to examine—the debtor, his wife and their
witnesses—all resided in that area. The fact that the sequestrating creditors were in the
Witwatersrand was not enough, in the court’s view, to alter the balance of convenience.
In Lawclaims (Pty) Ltd v Rea Shipping Co SA: Schiffscommerz Aussenhandels Betrieb der
VV Schiffbau intervening (supra), the court declined to sequestrate a foreign
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company on the grounds that it would be more equitable and convenient for it to be
sequestrated in its own domicile. The debtor, RS Co, was registered in the Republic of Liberia
with its registered office in Monrovia. RS Co had no place of business in the Republic, but it
owned a ship that was lying in Durban harbour at the time of the application. The Natal court
accepted that it had jurisdiction to sequestrate RS Co, but it held that sequestration should
rather be left to a court where the debtor was domiciled. Factors which weighed with the
court were: RS Co’s only link with South Africa was the entirely fortuitous presence of its
ship in Durban harbour; the claims of creditors relating to the ship were based on contracts
concluded outside South Africa; the order of preference of claims in respect of RS Co’s
movable property would have to be decided according to the law of its domicile; and if a
purchaser were to buy the ship from a local trustee, his title might not be recognized outside
South Africa.
These decisions may be contrasted with Deutsche Bank AG v Moser & another 1999 (4)
SA 216 (C), in which the court refused to relinquish jurisdiction in favour of a foreign court.
The debtor, a German citizen, resided with his wife in Germany and owed debts there. But
he owned immovable property within the jurisdiction of the court and owned virtually no
assets in Germany. The court held that it was more convenient for it, rather than a German
court, to adjudicate on the matter, especially since a foreign order of sequestration would
not, by itself, divest the debtor of his immovable property in South Africa and, consequently,
might not produce any advantage to creditors.
1.5 The master

A Master is appointed in terms of the Administration of Estates Act 66 of 1965 to each of the
areas of the Provincial Divisions of the High Court. The Master has a pivotal role to play in
insolvency matters, as will be seen from his many powers and duties flowing from the Act.
One of the most important functions which the Master exercises is the custody of all
documents relating to insolvent estates (s 154(1)). In Ex parte The Master of the High Court
South Africa (North Gauteng) 2011 (5) SA 311 (GNP), Bertelsmann J remarked (322):
‘Every stage of the administration of insolvent estates and companies and close corporations under
winding-up, from the launching of the original sequestration or liquidation application to the
rehabilitation of the insolvent or the deregistration of the corporate entity, is controlled by the
Master’s office. Its duties include many specialised functions and administrative tasks that can only be
carried out efficiently by a dedicated organisation that exists specifically for that purpose.’
For the performance of various functions the Master is entitled to charge prescribed fees.
These are payable to the Department of Justice and Constitutional Development, either at a
magistrate’s court or directly into an appropriate bank account of the Department (s 153(1);
para 4 of the Third Schedule; GenN 1478 of 6 November 2009; Government Gazette No
32691).
The Master is a ‘creature of statute’ and, as such, has only the powers granted to him by
the legislature (The Master v Talmud 1960 (1) SA 236 (C) 238). He cannot act unless
empowered to do so by statute, either expressly or by necessary implication (Die Meester v
Protea Assuransiemaatskappy Bpk 1981 (4) SA 685 (T) 690; De Lange v Smuts NO & others
1998 (3) SA 785 (CC) 853). He is not a judicial officer, and so cannot issue court orders or
judgments.
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In terms of s 151 of the Insolvency Act, any person aggrieved by a decision, ruling, order,
or taxation of the Master may bring it under review by the court and, to that end, may apply
to the court, after notice to the Master. To be reviewable in terms of the section, the
decision, ruling etc, must be final in effect (not susceptible to alteration) and definitive of
rights; moreover, it must have the effect of disposing of at least a substantial portion of the
relief claimed (Strauss & others v Master of the High Court & others 2001 (1) SA 649 (T)
659). A person is ‘aggrieved’ for these purposes if his legal rights have been infringed or if
he has a legal grievance (Francis George Hill Family Trust v South African Reserve Bank &
others 1992 (3) SA 91 (A) 102; Jeeva & another v Tuck NO & others 1998 (1) SA 785 (SE)
792). The right of review conferred by the section is not limited to the party against whom
the Master’s decision or ruling was pronounced (cf Geduldt v The Master & others 2005 (4)
SA 460 (C) 465); nor is it limited to proved creditors (Tongaat Paper Co (Pty) Ltd v The
Master & others 2011 (2) SA 17 (KZP) 22). Even the trustee of the estate may bring review
proceedings as a ‘person aggrieved’ (Millman & another NNO v Pieterse & others 1997 (1)
SA 784 (C) 788).
The type of review envisaged by the section is one in which the court has powers of both
appeal and review with the additional power, if required, of receiving new evidence and
entering into and deciding the whole matter afresh. The court is not restricted in exercising
its powers to cases where some irregularity or illegality has occurred (Nel & another NNO v
The Master (Absa Bank Ltd & others intervening) 2005 (1) SA 276 (SCA) 286). This does not
mean, however, that the court’s powers under the section are unlimited and that it is free to
disregard the factual material before the Master or the Master’s reasoning. It is only if the
Master has erred or misdirected himself in a material respect, based on what was placed
before him at the time, that the court can intervene and exercise its powers under s 151 (Al-
Kharafi & Sons v Pema & others NNO 2010 (2) SA 360 (W) 369).

As will become apparent from the ensuing chapters, sequestrating and administering an
insolvent estate involve a considerable number of procedures. Not infrequently, a party
making an application or taking some other step in terms of the Act will omit prescribed
details, or fail to act within the time stipulated, or commit some other procedural breach.
Where this happens, it becomes important to establish whether what has been done is
invalid by reason of the defect or irregularity.
The starting point is s 157(1), which provides that ‘nothing done under the Act will be
invalid by reason of a formal defect or irregularity, unless a substantial injustice has been
thereby done, which in the opinion of the court cannot be remedied by any order of the
court’. The effect of this section appears to be the following:
• If a formal defect (or irregularity) has not caused a substantial injustice, the procedural
step in question is valid (see, eg, Ex parte Cowley 1950 (4) SA 161 (GW)). It is usually
said that the court may ‘condone’ the defect in these circumstances, but this seems
incorrect, since s 157 does not confer on the court the power to condone defects (Ex
parte Slabbert 1960 (4) SA 677 (T) 681–2).
• If a formal defect has caused a substantial injustice, but the prejudice to creditors can,
in the opinion of the court, be remedied by an appropriate order, then the defect
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is not fatal, provided, of course, the party concerned complies with the corrective order
(see, eg, Ex parte van Rensburg 1955 (1) SA 570 (O)).
• If a formal defect has resulted in a substantial injustice and the prejudice to creditors
cannot be cured by any order of the court, then the procedural step is invalid.
There is some uncertainty as to what is meant by ‘formal’ for these purposes. It has been
held, for example, that a defect is not formal if it might cause prejudice to creditors (Ex
parte Fakir 1956 (4) SA 177 (C) 179), or if the provision which has been breached aims at
some definite object which could be defeated by the lapse in procedure (Ex parte Foley 1954
(3) SA 1 (O) 3), or if the provision breached is peremptory (imperative) as opposed to
merely directory (directive) (Ex parte Marais & two others 1957 (3) SA 311 (W)); or if the
rights of a creditor would in any way be affected (Western Flyer Manufacturing (Pty) Ltd v
Dewrance & others NNO: In re Dewrance & others NNO v North West Transport Investments
(Pty) Ltd (under Judicial Management) & others 2007 (6) SA 459 (B) 469). The correct
interpretation is probably that adopted in Ex parte Slabbert (supra) 682, namely, that a
formal defect is simply a departure from a prescribed or established procedure (cf Ex parte
Anderson 1995 (1) SA 40 (SE) 43).
The courts have recognized additional grounds on which a breach in procedure may be
overlooked or condoned:
• where the deviation is so slight as to fall within the maxim de minimis non curat lex
(‘the law is not concerned with trifles’) (cf Ex parte Immerman 1941 CPD 369 371–2);
• where all interested parties have waived compliance with the provisions of the Act (Ex
parte Nel 1960 (3) SA 715 (GW));
• where the provision in question is not peremptory and has substantially been complied
with (see, eg, Ex parte Bosch & another 1959 (2) SA 163 (C));
• where it was impossible for the party concerned to have complied with the Act (see,
eg, Ex parte Henri 1974 (3) SA 717 (N)).
It is difficult to reconcile the last two grounds (substantial compliance and impossibility) with
the provisions of s 157(1).
If a defect does not qualify as ‘formal’ for purposes of s 157(1), and none of the grounds
for condonation mentioned above is present, then the procedural step in question is invalid
(see, eg, Ex parte Foley (supra)).

1.7.1 Roman law
Under the Twelve Tables, if a debtor was unable to pay his debts, his creditors could seize
him and sell him into slavery (manusiniectio) or, it seems, cut his body into pieces. In the
latter regard, it was specifically provided that creditors were not to be prejudiced ‘if they
have cut more or less than their shares’. Between 326 and 313 BC the lex Poetelia was
passed, which prohibited the sale of a debtor into slavery in execution of a judgment debt.
After that, imprisonment in a public prison replaced sale into slavery as the punishment for
inability to pay debts.
Execution against the debtor’s property, known as missio in possessionem, was introduced
only in 167 or 104 BC. The praetor had to issue three decrees, each marking a distinct stage
in the proceedings:
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• The first decree authorized one or more creditors to take possession of, protect, and
advertise for sale all the assets of the debtor.
• The second decree empowered creditors to choose from their number a manager
(magister bonorum) to supervise the sale of the assets.
• The third decree authorized the sale, which was held a few days later.
The whole of the debtor’s estate or universitasiuris was sold and transferred en bloc to the
person who offered creditors the largest dividend on their claims. The process was known as
bonorumemptio. In later times, a modified procedure was introduced. Instead of a magister,
a curator was appointed by the creditors, subject to the sanction of the praetor. The curator
sold the property in lots, as was most convenient or advantageous to creditors. This
procedure was called bonorumdistractio.
Relief to the debtor came in the form of the lex Julia (probably 48 BC), which allowed a
debtor to make cessiobonorum, ie, to surrender his estate to his creditors. Surrender
exempted the debtor from arrest, imprisonment, slavery and infamia. Property which he
subsequently acquired could be sold to pay his debts, but he was entitled to keep as much
as was necessary for his subsistence.
1.7.2 Roman-Dutch law

Cessiobonorum, in its main features, was introduced into Dutch law probably towards the
latter part of the fifteenth century. The granting of a cession was regarded as a privilege
which the court could in its discretion confer upon a debtor, and then only if his insolvency
was due to misfortune. A cession was initially administered under the supervision of a local
magistrate but, during the eighteenth century, chambers were established, known as
‘Desolate Boedelkamers’, which had the function, inter alia, of administering insolvent
estates. The Ordinance of Amsterdam, passed in 1777, formed the basis of much of the
South African law of insolvency (Fairlie v Raubenheimer 1935 AD 135 146).
1.7.3 South African law

(i) Insolvency Act
In South Africa, Roman-Dutch law was followed. In 1803, a Desolate Boedelkamer was
established in the Cape for the administration of abandoned estates and the execution of
civil sentences, including the estates of all persons obtaining cessiobonorum. The Desolate
Boedelkamer was abolished in 1818 and a sequestrator appointed to exercise the functions
of the chamber. This was not a success, and the office of sequestrator was abolished in 1829
when Ordinance 64 of 1829 was passed to regulate the administration of insolvent estates.
This was followed by several amending ordinances until it was repealed by Ordinance 6 of
1843. The latter ordinance is regarded as a landmark in the South African law of insolvency.
It both consolidated and changed the law. One of the main changes it introduced was the
abolition of cessiobonorum. Ordinance 6 of 1843 was taken over or followed in the other
colonies and republics. After Union, the Insolvency Act 32 of 1916 replaced existing
statutory law. This Act was amended twice before being replaced by the Insolvency Act 24 of
1936, which is still in force. This statutory code neither states the insolvency law definitively
nor prejudices common-law rights that are consistent with it (Visser’s Trustee v
Spangenberg 1920 CPD 73 75;
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Fairlie v Raubenheimer (supra); Du Plessis & another NNO v Rolfes Ltd 1997 (2) SA 354 (A)
363).
The South African Law Reform Commission has, for more than two decades, been
engaged in a project for the revision of insolvency law. It has been considering, inter alia,
the amalgamation into one enactment of the law governing the sequestration of individuals
and the winding up of companies, close corporations, and other juristic persons. So far, no
fundamental changes have been made to the existing legislative framework, and none
appears to be imminent.
(ii) Constitution
The Constitution of the Republic of South Africa, 1996 (‘the Constitution’) provides a basis
for the reform of all South African law. The Constitution is the supreme law of the land to
which all other laws must conform (s 2). It contains a Bill of Rights (essentially, a chapter
setting out a number of fundamental rights: ss 7 to 39) against which the validity of all laws,
including legislation, may be tested. Insolvency laws pose a potential threat to a number of
fundamental rights, eg, the right to equality (s 9); the right to freedom and security of the
person (s 12); the right to privacy (s 14); the right to access to information (s 32); the right
to property (s 25); and the right to just administrative action (s 33). To date, the
Constitutional Court has been called upon to consider the constitutional validity of several
insolvency provisions, eg, s 21 of the Insolvency Act (upheld in Harksen v Lane NO & others
1998 (1) SA 300 (CC)); s 44 of the (now repealed) Insurance Act 27 of 1943 (held invalid in
Brink v Kitshoff 1996 (4) SA 197 (CC)); and s 66(3) of the Insolvency Act (held invalid to
the extent that it empowered a presiding officer at an interrogation who is not a judge or
magistrate to issue a warrant of committal to prison (De Lange v Smuts NO & others 1998
(3) SA 785 (CC)). Further challenges may be made in the future.
It is important to bear in mind that the mere fact that an insolvency provision conflicts
with a fundamental right in the Bill of Rights does not mean that the provision is
constitutionally invalid. The issue of constitutional invalidity involves a twofold inquiry: Does
the provision conflict with a fundamental right? If it does, is the limitation reasonable and
justifiable in an open and democratic society based on human dignity, equality and freedom
(s 36)? To decide the latter issue, account must be taken of all the relevant factors,
including the nature of the right; the importance of the purpose of the limitation; the nature
and extent of the limitation; the relation between the limitation and its purpose; and less
restrictive means to achieve the purpose (ibid). Only if the provision is not reasonable or
justifiable, taking all the pertinent factors into consideration, may the conclusion be drawn
that it is unconstitutional.
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Part 2
Obtaining a sequestration order
Chapter 2: Voluntary surrender
2.1 Who may apply

2.2 Requirements
2.3 Preliminary formalities
2.4 Effect of notice of surrender
2.5 Application for surrender
2.6 Court’s discretion
2.7 Costs of surrender
2.8 Setting aside sequestration order
Chapter 3: Compulsory sequestration
3.1 Requirements
3.2 Application for sequestration
3.4 Costs of proceedings
3.5 Unwarranted or vexatious proceedings
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Chapter 2
Voluntary surrender
Synopsis
Introduction
2.1 Who may apply
2.2 Requirements
2.2.1 Debtor’s estate insolvent
2.2.2 Free residue sufficient to pay costs of sequestration
2.2.3 Sequestration to be to advantage of creditors
2.3.1 Notice of intention to surrender
2.3.2 Notice to creditors and other parties
2.3.3 Preparation and lodging of statement of affairs
2.4.1 Stay of sales in execution
2.4.2 Curator bonis may be appointed
2.4.3 Potential compulsory sequestration
2.4.4 No withdrawal of notice without consent
2.4.5 Lapse of notice of surrender
2.5.1 Form and contents of application
2.5.2 Filing of application at court
2.5.3 Copy of application to ‘consulting party’
2.5.4 Master’s report
2.5.5 Opposition to application
2.5.6 Adjudication on application
Introduction
There are two ways in which a debtor’s estate may be sequestrated:
• The debtor himself (or his agent) may apply to court for acceptance of the surrender of
his estate (s 3(1)). This is known as voluntary surrender.
• A creditor or creditors (or his or their agent) may apply to court for the sequestration
of the debtor’s estate (s 9(1)). This is called compulsory sequestration.
The procedure and requirements for each method differ in material respects (although the
consequences of the sequestration order are the same in both instances). This chapter deals
with the first method of sequestration, namely, voluntary surrender.
Page 18
2.1 Who may apply
The following persons may apply to surrender the estates mentioned:
• Estate of a natural person: the debtor himself or his agent (s 3(1)). If an agent applies,
he must be expressly authorized to do so (Ex parte Brown 1951 (4) SA 246 (N)).
• Estate of a deceased debtor: the executor (s 3(1)).
• Estate of a debtor who is incapable of managing his own affairs: the party entrusted
with administering the estate, ie, the curator bonis (s 3(1)). In Ex parte Houston 1958
(1) SA 448 (N), the court granted an application for surrender brought by the curator
bonis of a businessman who had disappeared without trace.
• Partnership estate: all the members of the partnership (other than partners en
commandite or certain special partners) who reside in the Republic, or their agent (s 3
(2)). In Ex parte Bester & another 1937 CPD 45, an application for surrender of a
partnership estate was refused because only one member of the partnership had
brought the application. The court held that one member of a partnership is not an
agent of all the other members for the purposes of s 3(2).
• Joint estate of spouses married in community of property: both spouses (s 17(4) of the
Matrimonial Property Act 88 of 1984).
2.2 Requirements
The court may accept the surrender of a debtor’s estate only if it is satisfied that:
• the debtor’s estate is, in fact, insolvent;
• the debtor owns realizable property of sufficient value to defray all costs of the
sequestration which will, in terms of the Act, be payable out of the free residue of his
estate;
• sequestration will be to the advantage of creditors (s 6(1)).
In addition, the court must be satisfied that certain preliminary formalities have been
observed (ibid). These formalities are discussed in 2.3.
2.2.1 Debtor’s estate insolvent

|A debtor is insolvent if the amount of his total liabilities exceeds the value of all of his assets
(see 1.1). The extent of the debtor’s assets and liabilities is generally determined by
reference to the statement of affairs which he is required to prepare and file (see 2.3.3), but
the court is not bound by the valuations in the statement (Ex parte Van den Berg 1962 (4)
SA 402 (O) 404) and may make a finding of insolvency even where the statement (or other
evidence adduced by the debtor) indicates that his assets exceed his liabilities. The test is
whether it is established that the debtor is without funds to pay his debts in full and it is
improbable that the assets will realize enough for this purpose (Ex parte Harmse 2005 (1)
SA 323 (N) 326). In Ex parte Greef 1940 (2) PH C80 (C), the applicant’s statement showed
an apparent surplus of assets over liabilities of £559, but according to the valuation placed
on the assets by a sworn appraiser, there was a deficiency of some £100. It was held that
the applicant was insolvent and that the surrender should be accepted. Again, in Ex parte
Deemter 1962 (2) SA 228 (E), the statement of the debtor’s affairs showed that his assets
exceeded his liabilities by a considerable sum, but he was being sued by several of his
creditors for large amounts, he had been unsuccessful in selling his major assets, and he
had no other source of
Page 19
income. The court accepted that his estate was insolvent and granted the application for
surrender. In Ex parte Harmse (supra), the applicant’s statement indicated an excess of
assets over liabilities, but the only evidence that he adduced to prove otherwise were certain
letters written by estate agents or valuers. The court held that the applicant had failed to
adduce sufficient evidence to establish on a balance of probabilities that he was insolvent.
Magid J remarked (326):
‘It is only acceptable and admissible evidence which can displace the prima facie inference of solvency
when the applicant’s own estimate of values exceeds the amount of the liabilities.’
2.2.2 Free residue sufficient to pay costs of sequestration

The ‘costs of the sequestration’ include not only the costs of surrender but also all the
general costs of administration (s 97). ‘Free residue’ is defined in s 2 as ‘that portion of the
estate which is not subject to any right of preference by reason of any special mortgage,
legal hypothec, pledge or right of retention’. It includes the balance of the proceeds of
encumbered property after discharge of the encumbrances. So, for the purpose of
calculating the amount of free residue in an estate, the surplus in value of encumbered
assets over the amount of the encumbrances must be taken into consideration (Ex parte Van
Heerden 1923 CPD 279). Goods bought by the debtor under an instalment agreement also
form part of the free residue to the extent that their market value exceeds the balance
outstanding in terms of the transaction (Mindel v Shaer 1937 TPD 378). In Ex parte Nortje
1928 SWA 23, the debtor contended that a right to payment which he had ceded to another
fell within the free residue because the cession could be set aside as an undue or voidable
preference. The court did not agree, inter alia, because an action would be necessary to set
aside the cession (if creditors decided on that step) and the action might or might not be
successful.
A logical result of the requirement that the debtor must own sufficient property to meet
the costs of sequestration is that a debtor who has no assets and only liabilities cannot
surrender his estate. Thus, in Ex parte Collins 1927 WLD 172, the court refused to grant an
application for surrender because the debtor had only liabilities, in spite of the fact that the
costs of sequestration had been guaranteed to the Master. It should be noted, however, that
an estate comprising only liabilities may be compulsorily sequestrated (Miller v Janks 1944
TPD 127).
If it is clear that the free residue is insufficient, the court must refuse the application (Ex
parte Swanepoel 1975 (2) SA 367 (O)). The insufficiency cannot be cured by the furnishing
of a guarantee, since the guarantee does not have the effect of creating an asset in the
debtor’s estate (Ex parte Theron 1923 OPD 46). But if it is uncertain whether the free
residue is sufficient, the court may grant the application, provided a guarantee for costs, to
the satisfaction of the Master, has been furnished. The guarantee in such a case is regarded
as removing the uncertainty (Mindel v Shaer (supra)).
2.2.3 Sequestration to be to advantage of creditors

The meaning of the expression ‘advantage to creditors’ is explained in the chapter on
compulsory sequestration (3.1.3). It must be noted that the debtor has to prove that
sequestration will be to the advantage of creditors whereas, in an application for compulsory
sequestration, the creditor has to show merely that there is reason to believe
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that it will be. The onus, in other words, is more strenuous in voluntary surrender than in
compulsory sequestration. One reason for this is, no doubt, that a debtor can normally be
expected to provide a detailed account of his own financial position, whereas a sequestrating
creditor would generally not have access to this information (Hillhouse v Stott; Freban
Investments (Pty) Ltd v Itzkin; Botha v Botha 1990 (4) SA 580 (W) 581). Another reason is
to reduce the ever-present risk of the debtor abusing the sequestration procedure and
resorting to sequestration when it holds little or no real benefit for creditors and simply gives
the debtor a means of escaping his liabilities (cf the problems posed by so-called ‘friendly
sequestrations’—see 3.1.4).
The steps which must be followed prior to the application for surrender are set out in s 4. As
explained in the previous chapter, formal defects do not necessarily invalidate the
application.
2.3.1 Notice of intention to surrender

The first step to be taken by a debtor who wishes to surrender his estate is the publishing of
a notice of surrender in the Government Gazette and in a newspaper circulating in the
magisterial district where he resides or, if he is a trader, in the district where he has his
principal place of business. The notice must correspond substantially with Form A in the First
Schedule. It must state:
• the full names, address and occupation of the debtor;
• the date upon which, and the particular Division of the High Court before which, the
application for acceptance of the surrender will be made; and
• when and where the debtor’s statement of affairs will lie for inspection as required by
the Act (see below).
Publication of the notice in the Gazette and a newspaper must take place not more than 30
days and not less than 14 days before the date stated in the notice as the date for the
hearing of the application.
The purpose of the notice of surrender is to alert creditors as to the intended application,
in case they should wish to oppose it. It follows that the notice must be published in a
‘newspaper’ in the usual sense, ie, a daily or weekly publication, containing reports on local
or foreign happenings of recent occurrence and of a varied character, intended for the
information of the general reader (cf R v Lewin 1930 AD 344 349). Thus, in Ex parte
Goldman 1930 WLD 158, it was held that a weekly journal devoted to Jewish interests and
printed mostly in Yiddish, using Hebrew characters, was not a newspaper for the purposes of
the statute. It follows, too, if the objective of alerting creditors is to be attained, that the
newspaper chosen for publication must circulate in the area in which the debtor’s creditors
are located, even if the debtor no longer resides or carries on business there. In Ex parte
Barton 1926 CPD 252, the notice had been published in a Western Cape newspaper, but the
applicant had previously lived in Durban and all his creditors were in Natal (now KwaZulu-
Natal). The court postponed the application so that the notice might be published in a Natal
newspaper and the debtor’s statement of affairs might lie for inspection in Durban (cf Ex
parte Vos 1930 TPD 381 in which the court, faced with a similar set of facts, invoked the
proviso to s 150(2) of the 1916 Insolvency Act
Page 21
(s 149(1) of the present Act—see 1.4.4) and refused the application on the ground that it
would be equitable or convenient for the debtor’s estate to be sequestrated by the court
having jurisdiction where his creditors were).
The 14-day time limit is evidently to ensure that creditors have sufficient opportunity to
peruse the statement of affairs and decide whether or not to oppose the application. The
legislature’s objective in imposing the 30-day limit was
‘that debtors should not be able to give long notice, months beforehand, and in that way keep
creditors from levying execution and in the meantime dissipate all the assets’
(per De Villiers JP in Ex parte Meyer 1927 OPD 170-1). Failure to adhere strictly to the 30-
day time period has mostly been taken to be fatal to the application (see, eg, Ex parte
Oosthuysen 1995 (2) SA 694 (T) 695-8), but in Ex parte Harmse 2005 (1) SA 323 (N) 329,
the court held that the failure is a formal defect or irregularity as envisaged by s 157(1) and,
therefore, does not invalidate the application unless it has caused a substantial injustice
which cannot be remedied by a court order (see also 1.6).
Publication of the notice of surrender may be proved by means of an affidavit enclosing
copies of the relevant Gazette and newspaper (or cuttings from these publications) (cf Ex
parte Wilson 1921 CPD 377) or in some other appropriate manner (see also 2.5.1).
2.3.2 Notice to creditors and other parties

Within seven days after publication of the notice of surrender, the debtor must furnish copies
of the notice to creditors and other parties, as set out below. Compliance with this
requirement may be proved by means of an affidavit (made either by the debtor or his
attorney) giving details of the steps taken (cf Ex parte Harmse 2005 (1) SA 323 (N) 331).
(i) Notice to each creditor
The debtor must deliver or post a copy of the notice to every one of his creditors whose
address he knows or can ascertain (s 4(2)(a)). It seems clear that the object of this
requirement is to provide further protection to creditors who may wish to contest the
application or take steps to safeguard their interests. In Ex parte Wassenaar 1968 (2) SA
726 (T) 727, Hiemstra J observed that, in requiring that creditors be given personal notice of
the intended application, the legislature was allowing for the fact that it cannot be expected
of creditors continually to peruse the Government Gazette or the legal notices in
newspapers. A failure to give notice to creditors in the prescribed manner will generally be
regarded as fatal to the application (cf, eg, Ex parte Rudolph 1975 (3) SA 974 (E) 976; but
see Ex parte Harmse (supra)) although the courts may, in certain circumstances, be
prepared to condone non-compliance with the time period (see, eg, Ex parte Hetzler 1969
(3) SA 90 (T) 92-5, in which posting four days before publication was not considered to be a
fatal defect).
(ii) Notice to trade union and employees
The debtor must post a copy of the notice to every registered trade union that, to his
knowledge, represents his employees (s 4(2)(b)(i)). In addition, the debtor must give notice
to the employees themselves, either:
• by affixing a copy of the notice to any notice board to which the employees have
access inside the debtor’s premises; or,
Page 22
• if the employees do not have access to these premises, by affixing a copy of the notice
to the front gate of the premises; or,
• failing the latter, by affixing a copy of the notice to the front door of the premises from
which the debtor conducted any business immediately prior to the surrender (s 4(2)(b)
(ii)(aa)–(bb)).
It would appear from these provisions that, if the employees have access to the debtor’s
premises, the debtor is obliged to give notice by means of a notice board on the premises,
even if this means erecting a notice board specifically for this purpose.
(iii) Notice to South African Revenue Service
The debtor is further required to send a copy of the notice by post to the South African
Revenue Service (s 4(2)(b)(iii)).
2.3.3 Preparation and lodging of statement of affairs

(i) Preparation of statement
The statement of affairs referred to in the notice of surrender must be framed substantially
in accordance with Form B in the First Schedule. It comprises the following:
• A balance sheet.
•
A list of immovable assets, with the estimated value of each asset and details of any
mortgages on the assets—Annexure I.
• A list of any movable property not included in Annexures III or V (see below), setting
out the value of each asset mentioned—Annexure II. Merchandise (ie, stock-in-trade)
listed in this annexure must be valued either at its cost price or at its market value at
the time of the making of the affidavit verifying the statement of affairs (as to which,
see below), depending on which amount is the lower, and the annexure must be
supported by detailed stock sheets relating to the merchandise. In Ex parte Nel 1954
(2) SA 638 (O), the applicant disclosed stock-in-trade in his annexure but failed to
support it by detailed stock sheets, merely handing in at the hearing a stock book
containing the relevant details. The court dismissed the application, holding that the
omission to supply stock sheets is not a formal defect which the court can condone.
Van Blerk J remarked (at 639) that stock sheets are of material interest for creditors
and are the only way in which the sheriff can determine the precise extent of the
merchandise when he makes an attachment (see 8.2). This rule has not been applied
in other divisions (eg, Ex parte Dogo 1938 WLD 187; Ex parte Arnold 1939 CPD 392;
Ex parte Lee 1956 (4) SA 587 (D)). In Ex parte Lee, Milne J said (at 587):
‘I . . . think . . . that it is really a question of the degree of detail which should be furnished in
any particular case. To some extent it seems that the question depends on whether it sufficiently
emerges that there are sufficient assets to pay the costs of administering the [applicant’s]
estate. . . . In some cases it may be necessary to show considerable detail so that due
possession of the assets surrendered may be taken by the sheriff and the trustee.’
Page 23
Failure to mention realizable movable property where such property exists may lead to
dismissal of the application (cf Ex parte Bouwer and similar applications 2009 (6) SA
382 (GNP) 385-6).
• A list of debtors with their residential and postal addresses, details of each debt, and
an estimate of the extent to which the debts are ‘good’, or ‘bad or doubtful’—Annexure
III. In Ex parte Silverstone 1968 (2) SA 196 (O) 198, Hofmeyer J said:
‘The object of the Legislature in requiring the applicant to furnish not only the name but also the
residential as well as the postal address of his debtors, must doubtless have been to enable
creditors to trace these debtors and so to form their own independent opinion of the applicant’s
estimated values of his good and bad debts.’
• In casu, the applicant, instead of giving the names and addresses of certain debtors,
had merely stated ‘sundry debtors’. The court held that the irregularity could not be
condoned. Cf Ex parte Murphy 1929 EDL 168 171, in which the failure to give the
addresses of a number of debtors was condoned. Debts due by persons in a foreign
country are not necessarily ‘bad’ for these purposes (Ex parte Lamain 1921 SWA 42).
The applicant need not provide the names of parties or the amounts that he paid in
transactions which have already been completed, even though the transactions may
stand to be impeached by the trustee (cf Ex parte Berson; Levin & Kagan v Berson
1938 WLD 107 112–13).
• A list of creditors, their addresses, and particulars of each claim and any security held
for it—Annexure IV. This list should mention contingent creditors, eg, persons to whom
the debtor has agreed to be liable as surety and co-principal debtor (Cumes & Co v
Sacher & another 1932 WLD 213) and also, it would seem, any party who asserts that
he is a creditor, even if the debtor disputes the claim (cf Van Zyl v Lloyd 1929 WLD
96 100–1).
• A list of any movable assets pledged, hypothecated, subject to a lien, or under
attachment in execution of a judgment—Annexure V. A description of each asset must
be given, along with an estimate of its value, a description of any charge on it, the
amount of the debt to which the charge relates, and the name of the creditor in whose
favour the charge is. Property bought in terms of an instalment agreement governed
by the National Credit Act 34 of 2005, and not yet paid for in full, should be included in
this annexure. This follows from s 84(1) of the Insolvency Act (see 7.2.8).
• A list and description of every accounting book used by the debtor at the time of the
notice of surrender or sequestration or at the time when he ceased to carry on
business—Annexure VI.
• A detailed statement of the causes of the debtor’s insolvency—Annexure VI.
• Certain personal information about the debtor, including details of any prior insolvency
and rehabilitation—Annexure VIII.
• An affidavit, made by the debtor (or the person applying on his behalf), verifying that
the statement of affairs is true and complete and that every estimated amount
contained in it is fairly and correctly estimated. This affidavit may not be attested by
the applicant’s attorney (Ex parte Du Toit 1955 (3) SA 38 (W)).
The Master may, on receiving the statement of affairs, specially direct the applicant to have
any property mentioned in it valued by a sworn appraiser or a person designated by
Page 24
the Master for this purpose (s 4(4)) and the court may, when considering the application for
surrender, call for an independent valuation (Ex parte Prins & another 1921 CPD 616). In the
absence of any direction by the Master or the court, the debtor is not legally obliged to
obtain an independent valuation in support of the values given in his statement (if he does
so unnecessarily, the cost of the appraisement will not be allowed as part of the costs of the
sequestration: Ex parte Kruger 1947 (2) SA 130 (SWA)), but he may effectively be
compelled to do this if he relies on the anticipated proceeds of a single asset to show that
sequestration will be to the advantage of creditors. In Ex parte Anthony en ’n ander en ses
soortgelyke aansoeke 2000 (4) SA 116 (C), it was held that an applicant who relies on the
fact that he has immovable property which can be sold for the benefit of his creditors must
include evidence from an expert proving the likely proceeds of the property in a forced sale
(see also Ex parte Mattysen et uxor (First Rand Bank Ltd intervening) 2003 (2) SA 308 (T)
312; Ex parte Bouwer and similar applications (supra) 388-9; Investec Bank Ltd & another v
Mutemeri & another 2010 (1) SA 265 (GSJ) 271; Naidoo & another v Matlala NO & others
2012 (1) SA 143 (GNP) 155).
In the case of the simultaneous surrender of a partnership estate and the private estate of
a partner, a separate statement of affairs for each estate must be prepared (see 20.1). The
costs of preparing the statement of affairs are part of the costs of sequestration and are,
therefore, payable out of the estate.
(ii) Lodging of statement
The statement of affairs with supporting documents must be lodged in duplicate at the
Master’s Office (s 4(3)). If the debtor resides or carries on business in a magisterial district
in which there is no Master’s Office, he must lodge an additional copy of the statement at
the office of the magistrate of that district (s 4(5)). This latter requirement does not apply to
a debtor residing in the district of Wynberg, Simonstown or Bellville in the Western Cape.
The statement of affairs must lie for inspection by creditors at all times during office hours
for a period of 14 days stated in the notice of surrender (s 4(6)). On expiry of the inspection
period, the Master and the magistrate (where the statement has lain with him) each issues a
certificate to the effect that the statement has duly lain for inspection as advertised in the
notice of surrender and whether any objections have been lodged with him by creditors. This
certificate must be filed with the Registrar before the application is heard.
In Ex parte Viviers et uxor (Sattar intervening) 2001 (3) SA 240 (T), the court accepted
that a debtor who has already made an unsuccessful attempt to surrender his estate may
lodge the same statement of affairs that he used in the earlier abortive application, provided
the relevant facts and reasons for the surrender remained unchanged. In the court’s view, in
the absence of any provision in the Act or other authority providing a legal impediment to
the same material facts being used more than once, there was no reason why the debtor
could not reuse his previous statement of affairs.

The publication of a notice of surrender has important consequences.
Page 25
2.4.1 Stay of sales in execution

After publication of the notice in the Gazette, it is unlawful to sell any property in the estate
which has been attached under a writ of execution or other similar process, unless the
person charged with the sale (ie, the sheriff) could not have known of the publication (s 5
(1)). However, the court, or the Master, if in his opinion the value of the property does not
exceed R5 000, may order the sale of attached property to proceed and direct how the
proceeds of the sale must be applied (ibid). The creditor must show that it would be more to
the advantage of the general body of creditors to go ahead with the sale than to hold it over
(Hulett v Gangat & others 1932 NPD 682) or that the general body of creditors would derive
no benefit from holding over the sale (Master of the Supreme Court v Nevsky 1907 TS 268).
The latter consideration applied in Ex parte Pretoria Hypotheek Maatschappy 1933 OPD 137.
The applicant, a bondholder, had obtained judgment and attached the debtor’s property in
execution. The debtor’s notice of surrender was due to appear in the Gazette on the day
before the date appointed for the sale in execution. There was evidence that the property
would not realize enough to pay the applicant in full. The court held that, as concurrent
creditors could have no interest in the sale, and as there would be a waste of costs if it were
held over, it should be allowed to proceed on the date advertised.
Where the court authorizes the sale to proceed, it may direct that the proceeds be handed
to the Master pending the outcome of the application for surrender (Estate Hart v Robinson
1936 GWL 24), or that the proceeds be retained by the officer charged with the sale until the
date of the application and paid to the Master if the surrender is accepted, or otherwise
applied in terms of the Rules of Court (Mayekiso’s Estate v Menziwa 1931 EDL 376).
No period is fixed for the duration of the prohibition in s 5(1), but it would seem that it
continues until the day that the application for surrender is, or should have been,
adjudicated upon by the court. If the officer charged with the execution of a writ holds a sale
in execution in contravention of s 5(1), the sale is illegal and the debtor can successfully
resist proceedings brought by the buyer to enforce it. This applies even if the application for
surrender is subsequently refused (Webb v Bergsma (1887) 4 HCG 376). However, if
ownership of the property is transferred to the buyer pursuant to the illegal sale, the trustee
of the estate cannot claim the property unless he proves that the buyer acted in bad faith
and with knowledge that the sale was unlawful (Gibson NO v Iscor Housing Utility Co Ltd &
others 1963 (3) SA 783 (T); s 70 of the Magistrates’ Courts Act 32 of 1944).
Publication of a notice of surrender has no effect on other civil and criminal proceedings.
Civil actions and criminal prosecutions may proceed and attachments in execution of
judgments may be made, even though the actual sale in execution is stayed (Amod v The
Messenger 1909 TS 13).
2.4.2 Curator bonis may be appointed

Notwithstanding the publication of a notice of surrender, the debtor is still at liberty to deal
with his property as he chooses. He may, for instance, sell it or pass a mortgage bond over
it. As a safeguard against the debtor dissipating his assets after publishing a notice of
surrender, the Master may appoint a curator bonis to the debtor’s estate (s 5(2)). The
appointment must be made in accordance with policy determined by the
Page 26
Minister (ibid). The curator bonis is obliged forthwith to take the estate into his custody and
assume control of any business or undertaking of the debtor, as the Master may direct
(ibid). The estate remains vested in the debtor, since the curator bonis is only in the position
of a caretaker (Moosagee v Bhyat & Co 1921 TPD 465). The curator bonis is required to open
a bank account and is subject to the same provisions in this regard as a trustee (ss 5(2) and
70; and see 11.6). The curator bonis is entitled to reasonable remuneration for his services,
taxed by the Master (s 63(1)). The remuneration forms part of the costs of sequestration (s
97(2)(c)).
2.4.3 Potential compulsory sequestration

If, after having published a notice of surrender, the debtor fails to lodge a statement of his
affairs, or lodges a statement which is incorrect or incomplete in a material respect, or fails
to make application to court on the appointed day, and the notice of surrender is not
properly withdrawn, the debtor commits an act of insolvency which entitles a creditor to
apply for the compulsory sequestration of his (the debtor’s) estate (s 8(f)). Acts of
insolvency are discussed in the next chapter.
2.4.4 No withdrawal of notice without consent

A notice of surrender published in the Gazette cannot be withdrawn without the written
consent of the Master (s 7(1)). The debtor may apply to the Master for his consent and the
Master is obliged to give it if it appears to him that the notice was published in good faith
and that there is good cause for its withdrawal (s 7(2)). Withdrawal takes effect upon
publication of a notice of withdrawal together with the Master’s consent in the Gazette and in
the newspaper in which the notice of surrender was published (ibid). The cost of publication
must be paid by the debtor (ibid).
2.4.5 Lapse of notice of surrender

The notice of surrender (and consequently the debtor’s application for surrender) lapses if
the court does not accept the surrender, or if the notice of surrender is properly withdrawn
in terms of the Act (see above), or if the debtor fails to make the application for surrender
within 14 days after the date advertised as the date of the hearing of the application (s 6
(2)). In Ex parte Vivierset uxor (Sattar intervening) 2001 (3) SA 240 (T), the debtors had,
prior to publishing their present notice of surrender, published a notice of surrender which
had lapsed due to expiry of the 14-day period. The court rejected a contention that they
were precluded from surrendering their joint estate because the earlier notice had not been
withdrawn in terms of the Act. The court held that, as the first notice had become void on
expiry of the 14-day period, there was nothing for the applicants to withdraw prior to
launching their present application.
If a curator bonis has been appointed in terms of s 5(2) to look after the debtor’s assets,
control of the estate must be restored to the debtor as soon as the Master is satisfied that
sufficient provision has been made for the payment of all costs incurred by the curator under
that section (s 6(2)).
Page 27

2.5.1 Form and contents of application
The application for surrender is brought by way of a notice of motion supported by affidavit
(for a precedent, see Appendix 1 specimens 1.1 and 1.2). The purpose of the founding
affidavit(s) is to persuade the court that the four requirements for voluntary surrender have
been satisfied. It should contain the following information:
• The full name, status, occupation, and address of the applicant. It should be made to
appear that the court has jurisdiction to hear the application (see 1.4.2) and that the
applicant has locus standi to bring it. Where application is made through an agent, it
must be shown that the agent has express authority to bring the application (Ex parte
Brown 1951 (4) SA 246 (N)).
• An allegation to the effect that the debtor is insolvent and facts that establish this. It is
customary to attach a copy of the debtor’s statement of affairs and refer to this to
establish insolvency. Any vagueness or apparent inconsistencies in the statement of
affairs may be clarified in the affidavit (Ex parte Hay Automobile Company 1931 GWL
23). If the statement of affairs reflects a surplus of assets over liabilities, the applicant
must provide additional evidence to show that the assets will probably not yield enough
to discharge his liabilities in full (Ex parte Harmse 2005 (1) SA 323 (N) 326).
• An explanation as to how the insolvency came about. The causes of the debtor’s
insolvency should be set out in some detail to enable the court to determine whether
the application is bona fide (cf Ex parte Bouwer and similar applications 2009 (6) SA
382 (GNP) 385–6).
• An averment that the applicant owns realizable property of sufficient value to defray all
the costs of sequestration which will in terms of the Act be payable out of the free
residue of his estate. It is again usual to refer to the statement of affairs in support of
this allegation. It has been held that the applicant should attempt to specify the costs
of sequestration with precision and that it is not enough for him or his attorney to
make a rough estimate (Ex parte Anthony en ’n ander en ses soortgelyke aansoeke
2000 (4) SA 116 (C) 121). In Ex parte Kelly 2008 (4) SA 615 (T) 618–9, Southwood J
explained:
‘Where the applicant’s attorney presents to the court an application for voluntary surrender or
sequestration in which allegations are made that the costs of the sequestration will amount to a
stated figure, and the court grants that application, it does so in the belief that those figures are
correct.. . . Even though the court does not make an order that the attorneys’ fees and expenses
are to be limited, that is the clear assumption on which the order is made. It is therefore
essential that all funds received by the attorney from the applicant and all funds held by the
attorney on behalf of the applicant and all expenses incurred in connection with the application
must be disclosed.’
• An allegation that it will be to the advantage of creditors if the debtor’s estate is
sequestrated, amplified by facts supporting the allegation (Ex parte Alberts 1937 OPD
2). The court will scrutinize this aspect of the application with particular care so as to
protect the interests of creditors (Ex parte Steenkamp and related cases 1996 (3) SA
822 (W) 830). However, a specific averment regarding advantage to creditors is
probably unnecessary if the advantage is clearly apparent from the facts alleged in the
application and the statement of affairs (Ex parte Smith 1958 (3) SA 568 (O)).
Page 28
Where the applicant’s only asset is his immovable property, and he contends that it will
yield enough to provide a not negligible dividend to creditors, he must produce
evidence of an expert (such as an estate agent) to establish what the property is likely
to fetch on an insolvency auction. The expert must state his opinion, the facts on which
he relies, and the reasons on which his opinion is based (Ex parte Anthony en ’n ander
en ses soortgelyke aansoeke (supra) 124; Ex parte Mattysen et uxor (First Rand Bank
Ltd intervening) (supra) 312; Ex parte Bouwer and similar applications (supra) 386-7;
Investec Bank Ltd & another v Mutemeri & another 2010 (1) SA 265 (GSJ) 271; Naidoo
& another v Matlala NO & others 2012 (1) SA 143 (GNP) 155).
• Details of any salary or income that the debtor is receiving (Ex parte Watson 1926
WLD 237). Surrender of an estate involves, among other things, a financial enquiry,
and the current income of the applicant is frequently an important factor in deciding
whether the surrender would be advantageous to creditors (Ex parte Bouwer and
similar applications (supra) 385–6). In Fesi & another v Absa Bank Ltd 2000 (1) SA
499 (C) 502, the court dismissed as ‘without merit’ an argument that the salaries of
the applicants were not assets and did not have to be disclosed. In the court’s view,
the argument disregarded the ‘good faith’ expected of applicants in ex parte
applications and the general rule regarding the content of affidavits in applications. In
Ex parte Veitch 1965 (1) SA 667 (W), it was held that, when a surplus of income is
alleged to be the only advantage to creditors, the applicant should consent to some
deduction being made from the excess by his trustee in terms of s 23(5) of the Act, so
as to put the matter beyond doubt if and when the surrender is accepted (cf, however,
Ex parte Henning 1981 (3) SA 843 (O) 848, where doubts were expressed as to the
effectiveness of such an undertaking).
• Any other information that may influence the court in granting or refusing the
surrender. The applicant must be candid in his application and must disclose all
material facts. The court has a discretion to refuse the surrender, even if all the
statutory formalities have been complied with, and it may do this if the applicant has
not acted in good faith or has not made a full and frank disclosure (Ex parte Hayes
1970 (4) SA 94 (NC) 96; Fesi & another v Absa Bank Ltd (supra) 502). In Ex parte
Bouwer and similar applications (supra) 384–5, it was pointed out that the court is not
simply ‘a rubber stamp’ in the application process. It has a discretion which must be
exercised judicially, and to enable it to do this the applicant must be candid. The fact
that the application is brought ex parte is reason enough for the applicant to disclose
all facts which may influence the court in reaching a decision.
• A description of the procedural steps followed by the applicant prior to bringing the
application, supported by documents proving that each step has been taken: eg, tear
sheets from the Gazette and newspaper, an affidavit by the applicant or his attorney
giving details of notices sent, and a certificate by the Master and, where necessary, the
magistrate, that the debtor’s statement of affairs has lain for inspection. A general
allegation that the provisions of the Insolvency Act have been complied with is not
sufficient (Ex parte Dickerson 1939 OPD 6).
The affidavit must be signed and sworn to before a commissioner of oaths who is
independent of the office in which the affidavit was drawn. The debtor’s attorney, therefore,
may not attest the signing of the affidavit (Papenfus v Transvaal Board for the Development
of Peri-Urban Areas 1969 (2) SA 66 (T)).
Page 29
2.5.2 Filing of application at court

The notice of motion, founding affidavit(s) and annexures must be filed with the Registrar of
the High Court prior to the date advertised in the notice of surrender.
2.5.3 Copy of application to ‘consulting party’

If the debtor is an employer he must, at the time of making the application, provide a
‘consulting party’ contemplated in s 189 of the Labour Relations Act 66 of 1995 with a copy
of the application (s 197B(2)). Section 189 (which deals with the dismissal of employees for
reasons based on the employer’s operational requirements) requires the employer to consult
one of the following:
• the person whom the employer is required to consult in terms of a collective
agreement;
• if there is no collective agreement that requires consultation, the workplace forum and
registered trade union of the employees likely to be affected by the proposed
dismissals;
• if there is no such workplace forum, the registered trade union whose members are
likely to be affected by the proposed dismissals;
• if there is no such trade union, the employees likely to be affected by the proposed
dismissals or their representative nominated for that purpose.
2.5.4 Master’s report

In the Western Cape, a Master’s report must be obtained and filed prior to the set-down of
the application (Ex parte Anthony en ’n ander en ses soortgelyke aansoeke (supra); Practice
Note 5, as amended 2000 (4) SA 135 (C)).

A creditor has the right to oppose the application even if his claim is less than the amount
required to entitle him to apply for compulsory sequestration of the debtor’s estate (Ex parte
Berson; Levin and Kagan v Berson 1938 WLD 107) and even if his claim is disputed by the
debtor (Ex parte Berman 1972 (3) SA 128 (R)). The creditor must deliver one or more
affidavits, prior to the date of the application, setting out the grounds of opposition. The
debtor may then deliver replying affidavits.
2.5.6 Adjudication on application

On the date that the application is adjudicated upon, the following documents must be
before the court:
• The notice of motion and supporting affidavit(s).
• The debtor’s statement of affairs, incorporating the verifying affidavit.
• Any sworn valuation necessary in the circumstances.
• Proof of publication of the notice of surrender in the Gazette and newspaper, eg, an
affidavit by the debtor’s attorney enclosing copies of the newspapers or the pages on
which the notices appeared.
• Proof by affidavit that the applicant has delivered or posted copies of the notice of
surrender as required.
Page 30
• A certificate from the Master (and the magistrate too, if necessary) that the statement
of affairs has lain for inspection as advertised, and whether any written objections have
been lodged with him.
• Any report by the Master.
• Any opposing affidavits by creditors.
• The debtor’s replying affidavit.
The established practice is for the debtor’s counsel to appear in court and move for
acceptance of the surrender of the estate as insolvent. Opposing creditors may be
represented by counsel when the application is considered by the court. The court may
direct the applicant or any other person to appear and be examined before it (s 3(3)). Before
the court can accept the surrender, it must be satisfied that the applicant has shown, on a
balance of probabilities, that the requirements set out in s 6(1) of the Act (see 2.2) are
satisfied (Nieuwenhuizen & another v Nedcor Bank Ltd [2001] 2 All SA 364 (O) 365).
Although the debtor is required to bring his application for surrender within 14 days after
the advertised date of the hearing, the court is not bound to accept or decline the application
within this period and may, therefore, postpone the application to a date beyond the period
if it sees fit (Ex parte Levin and Gohn; Ex parte Hyton 1939 WLD 219).
Should the court accept the surrender, the debtor’s estate is sequestrated and the debtor
becomes a declared insolvent as from the date of the court order. If the court refuses to
accept the surrender, the debtor is restored to the position he was in before publication of
the notice of surrender (see 2.4.5 regarding the lapsing of the notice of surrender).
Even if the court is satisfied that the requirements discussed above have been met and that
the preliminary formalities have been observed, it still has a discretion to reject the
surrender (s 6(1); Ex parte Hayes 1970 (4) SA 94 (NC) 96). The following are examples of
factors that may influence the court towards refusing the application:
• The debtor displayed gross extravagance and ran up debts on a pretentious scale, even
after judgment had been granted against him (Ex parte Logan 1929 TPD 201 204).
• The debtor’s creditors are not pressing him for payment and are willing to give him
time or to accept payment in monthly instalments (Ex parte Kruger 1928 CPD 233).
• The debtor had an ulterior motive in applying for surrender, eg, to avoid paying or to
defeat the rights of a particular creditor (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 499 (C)), or to prevent the sale in execution and transfer of his
immovable property (cf Naidoo & another v Matlala NO & others 2012 (1) SA 143
(GNP) 156).
• The debtor failed to give a full and frank account of his financial position (see 2.5.1).
• The debtor’s papers were deficient in a number of respects (Ex parte Harmse 2005 (1)
SA 323 (N) 332).
• The debtor’s financial problems could be dealt with more appropriately under the
National Credit Act 34 of 2005. In Ex parte Ford and two similar cases 2009 (3) SA 376
(WCC),
Page 31
the court refused three applications for voluntary surrender on this ground. It appeared
that the indebtedness of the applicants related almost exclusively to ‘credit
agreements’ as defined in the National Credit Act 34 of 2005 (NCA) and there were
good grounds for suspecting that the applicants had been granted ‘reckless credit’ as
envisaged by s 86(7) of the Act. The applicants had failed to explain adequately how
they had come to be granted the credit and why they had not availed themselves of
appropriate relief under the Act. Binns-Ward AJ commented (382-3):
‘Insolvents whose misfortune arises out of credit-agreement transactions would be well advised,
for the reasons that follow, to take into account the policy and objects of the NCA, and also the
special remedies under that Act, before opting to apply for the surrender of their estates under
the Insolvency Act, rather than availing of the provisions under the NCA. . . . The NCA provides
a wide range of remedial relief which can be tailored to the justice of the particular case. The
possibilities extend from disallowance of the recovery of the debt if it arises from reckless credit,
to staying the accrual of interest thereon and ranking liability. . . . In view of the resistance by
the applicants to assistance in terms of . . . the NCA in the context of these proceedings, I have
determined not to refer their credit-agreement debts for investigation and report by a debt
counsellor. It is nevertheless open to them to take the necessary steps that appear to be
indicated under the NCA on their own initiative. I am, however, not disposed to exercise the
court’s discretion in favour of granting their applications for voluntary surrender, in the context
of their failure to properly explain why their credit agreement related debt is not amenable to
administration under the NCA to their own benefit as well as that of their credit-granting
creditors who acted responsibly, as distinct from recklessly, in extending credit.’

The taxed costs incurred in surrendering the estate are included in the costs of sequestration
and are payable out of the estate (s 97(3)). As a general rule, costs occasioned by
unsuccessful opposition to the application must be borne by the creditor(s) concerned (Ex
parte Bellairs 1932 EDL 189), but the court may order these costs (or part of them) to be
paid out of the estate (Ex parte Berman 1972 (3) SA 128 (R)). Attorneys’ fees and expenses
must be limited to the amounts stated in the application (cf Ex parte Kelly 2008 (4) SA 615
(T) 618-9).
No appeal lies against an order refusing to accept the surrender of an estate, but anyone
aggrieved by an order accepting the surrender may appeal against the order (s 150(1) and
(5)). The noting of an appeal does not suspend the operation or execution of the relevant
order, and the provisions of the Act continue to apply as if no appeal has been noted.
However, no property belonging to the sequestrated estate may be realized without the
written consent of the insolvent (s 150(3)).
Section 149(2) empowers the court to ‘rescind or vary’ any order made by it under the
provisions of the Act. This section cannot be invoked simply to obtain a rehearing of the
merits of the sequestration application. The court may exercise its discretionary power to
rescind or vary only if the application was clearly defective (eg, because the debtor’s estate
had already been sequestrated or was prima facie solvent), or if
Page 32
the procedure for rehabilitation would involve unnecessary hardship (Ex parte Mavromati
1948 (3) SA 886 (W) 890), or if there are other exceptional or unusual circumstances which
make rescission or variation of the sequestration order necessary or desirable (Storti v
Nugent & others 2001 (3) SA 783 (W) 806; Naidoo & another v Matlala NO & others 2012
(1) SA 143 (GNP) 152). Unlike an order of rehabilitation, an order rescinding a sequestration
order does not have the effect of releasing the debtor from liability for his debts (see 19.3).
He is simply placed in the position he occupied before the sequestration order was granted,
as to both his person and his property.
Section 149(2) does not empower the court to suspend the operation of its order. In
Mondi Limited v Rhodes [1997] 3 All SA 291 (D), an insolvent sought an interdict on the
basis of s 149(2) preventing the provisional trustee of his estate from exercising his powers
and performing his duties, pending the confirmation or discharge of the rule nisi. It was held
that, although under the common law a court may grant an interdict suspending the
operation of its order in certain circumstances (eg, where the order has been obtained
fraudulently), s 149(2) confers no such power on the court. The power to ‘vary’ conferred by
the section allows the court merely to alter the terms of the order, not effectively to deprive
it of any force or effect. Meskin J explained (295-6):
‘There is . . . no necessity for the existence of the provision sought to be implied. If the provisional
trustee is guilty of conduct which is inconsistent with his fiduciary position . . . the Master may give
directions . . . for the purpose of preventing the continuation of such conduct and, in any event, the
Master may summarily remove the provisional trustee from office . . . [O]r the Court may be
approached under the common law to effect such removal . . . I have no doubt that at common law in
such a case the Court could interdict such conduct by the provisional trustee pending the removal.’
Section 54(5) provides, inter alia, that if, at any meeting of creditors convened for the
purpose of electing a trustee, no trustee is elected, the Master, or the insolvent with his
consent, may apply to court to have the sequestration order set aside.
Page 33
Chapter 3
Compulsory sequestration
Synopsis
Introduction
3.1 Requirements
3.1.1 Applicant entitled to apply in terms of s 9(1)
3.1.2 Debtor committed act of insolvency or is insolvent
3.1.3 Reason to believe sequestration will be to advantage of creditors
3.1.4 ‘Friendly’ sequestration
3.2.1 Form and content of application
3.2.2 Steps prior to adjudication on application
3.2.3 Provisional sequestration
3.2.4 Service of rule nisi
3.2.6 Anticipation of return day
3.2.7 Intervention by another creditor
3.2.8 Final sequestration
Introduction
The second way in which a debtor’s estate may be sequestrated is called compulsory
sequestration. Whereas an application for voluntary surrender is made by the debtor
himself, an application for compulsory sequestration is made by one or more creditors.
3.1 Requirements
The court may grant an application for the sequestration of a debtor’s estate if it is satisfied
that:
• the applicant has established a claim which entitles him, in terms of s 9(1), to apply for
sequestration of the debtor’s estate;
• the debtor has committed an act of insolvency or is insolvent;
• there is reason to believe that it will be to the advantage of creditors of the debtor if
his estate is sequestrated (s 12(1)).
The onus of satisfying the court on these three matters rests throughout on the
sequestrating creditor: there is no onus on the debtor to disprove any element (Braithwaite
v Gilbert (Volkskas Bpk intervening) 1984 (4) SA 717 (W) 718).
| Page 34
3.1.1 Applicant entitled to apply in terms of s 9(1)
Section 9(1) allows proceedings for the compulsory sequestration of a debtor’s estate to be
instituted by:
• a creditor (or his agent) who has a liquidated claim against the debtor for not less than
R100, or
• two or more creditors (or their agents) who have liquidated claims against the debtor
amounting, in aggregate, to not less than R200.
The fact that a creditor holds security for his claim does not debar him from applying, even if
the value of the security exceeds the amount of the claim (R v Hohls 1959 (2) SA 656 (N)).
If an agent applies on behalf of the creditor, he must be authorized to do so prior to bringing
the application. An applicant’s lack of authority cannot be cured by ratification once the
application has been launched (South African Milling Co (Pty) Ltd v Reddy 1980 (3) SA 431
(SE)).
A ‘liquidated claim’ is a monetary claim—a claim for transfer of property, for instance,
does not give locus standi to apply (Friedberg v Van Niekerk 1962 (2) SA 413 (C))—the
amount of which is fixed by agreement, judgment, or otherwise (Kleynhans v Van der
Westhuizen NO 1970 (2) SA 742 (A)). Examples of liquidated claims are a claim for the price
of goods sold and delivered (Kathrada Bros v Asmal (1919) 40 NPD 199), a claim based
upon a provisional sentence judgment (Meskin v Amod 1956 (3) SA 120 (N)), a claim for
return of the price paid under a sale which has been cancelled due to the seller’s repudiation
(Bagatla Ba Makau Tribe & others v Van Cittert 1929 TPD 210) and a delictual claim for the
theft of a fixed and determinable sum of money (Premier Western Cape & others v Parker &
Mohammed & others [1999] 1 All SA 176 (C); cf Lindhaven Meat Market CC v Reyneke 2001
(1) SA 454 (W)). Examples of claims that are unliquidated are a claim for damages for
failure to carry out obligations in terms of a consent paper (Ex parte Bruce 1956 (1) SA 480
(SR)) and a claim for payment of an untaxed attorney and client bill of costs (Simpson &
Liesching v Van Breda 1930 CPD 195). If a debt is disputed, it cannot be regarded as
liquidated unless it is capable of speedy and easy proof (Ex parte Berson; Levin and Kagan v
Berson 1938 WLD 107 115-6; cf Investec Bank Ltd v Lewis 2002 (2) SA 111 (C) 116).
Section 9(2) provides that a liquidated claim ‘which has accrued but which is not yet due’
by the time the application is heard must be regarded as liquidated for these purposes. It
follows that an agreement to give credit, or allow time in which to pay, is not a bar to
sequestration proceedings. But if the creditor has agreed that he will not institute
proceedings for recovery of the claim, or that he will refrain from suing for a definite period
or until the occurrence of a specified event, then he is precluded from applying for
sequestration while the agreement is still applicable (cf Schneider NO v Raikin 1955 (1) SA
19 (W) 21-2). A contractual claim cannot be considered to have ‘accrued’ for purposes of s 9
(2) until the creditor has performed any reciprocal duty resting on him. Thus, in Sanddune
CC v Catt 1998 (2) SA 461 (SE), it was held that a claim for rent cannot be relied upon until
the lessor has made the leased premises available to the lessee for the relevant period.
Nepgen J observed (465):
‘The position is quite different from that which exists in respect of a sale for credit or a loan of money
which is only repayable at some future date, for in both those instances the seller and the money
lender will have performed their obligations in terms of the respective agreements and the liability to
pay of the purchaser and the borrower would be certain. . . .
Page 35
[I]n the case of a lease agreement both the lessor and lessee have future obligations, and the
lessee’s obligation to pay future rentals is [dependent] upon the lessor making the leased premises
available to him. For these reasons . . . the applicant does not have a claim . . . ‘‘which has accrued’’,
in the sense in which the phrase is used in s 9(2) of the Act.’
The applicant must have a liquidated claim of not less than R100, both when he applies for a
provisional order of sequestration, and when he asks for the order to be made final (as to
which, see 3.2.3 and 3.2.8). After the debtor’s estate has been provisionally sequestrated,
the debtor himself cannot make a payment to the sequestrating creditor so as to extinguish
the latter’s claim or reduce it below R100 (Venter v Van Graan 1929 TPD 435). But a third
person, such as a surety, may make payment on the debtor’s behalf, and if the payment
extinguishes the claim or reduces it to less than R100, the provisional order must be
discharged (Johannesburg Livestock Co v Herr 1921 WLD 121). A creditor is not entitled to
refuse payment in full (but may reject part payment) by a third person (Reliance Agencies
(Pty) Ltd v Patel 1946 CPD 463; Paizes v Phitides 1940 WLD 189). Where the sequestrating
creditor’s locus standi is eliminated by a payment, another creditor may intervene and apply
for a further provisional order of sequestration to be granted on discharge of the first order
(Reliance Agencies (Pty) Ltd v Patel (supra)).
3.1.2 Debtor committed act of insolvency or is insolvent

(i) Acts of insolvency
Although a creditor may have good reason for believing that the debtor is insolvent, he will
usually not be in a position to prove that the debtor’s liabilities exceed his assets.
Consequently, the legislature has designated certain acts or omissions by a debtor as ‘acts of
insolvency’ and if the creditor can establish that the debtor has committed one or more of
these ‘acts’, he may seek an order sequestrating the debtor’s estate without having to prove
that the debtor is actually insolvent (De Villiers NO v Maursen Properties (Pty) Ltd 1983 (4)
SA 670 (T) 676). It follows that a debtor’s estate may be sequestrated even though he is
technically solvent (DP du Plessis Prokureurs v Van Aarde 1999 (4) SA 1333 (T) 1335). The
creditor may rely on an act of insolvency committed after commencement of sequestration
proceedings, provided the necessary allegations are properly before the court (Joosub v
Soomar 1930 TPD 773 779; Berrange NO v Hassan & another 2009 (2) SA 339 (N) 366-7).
An act of insolvency need not be committed vis-à-vis the sequestrating creditor. Section 9
(1) gives any creditor of the debtor the right to apply for sequestration once the debtor
commits an act of insolvency, whether or not the debtor directed the act at the creditor
concerned or intended it to have any bearing on that creditor’s affairs (Beira v Raphaely-
Weiner & others 1997 (4) SA 332 (SCA) 338).
An act of insolvency committed by a spouse to a marriage in community of property
operates as an act of insolvency by both spouses and, accordingly, is a good ground for
sequestration of the joint estate (Standard Bank of SA Ltd v Sewpersadh & another 2005 (4)
SA 148 (C) 152-3) and for sequestration of the separate estate of the other spouse after
dissolution of the marriage by divorce (BP Southern Africa (Pty) Ltd v Viljoen en ’n ander
2002 (5) SA 630 (O) 638-9).
An act of insolvency may be proved and relied upon even though it is contained in a
communication that would ordinarily be privileged from disclosure, such as an offer
Page 36
marked ‘without prejudice’ sent in a genuine attempt to reach a compromise in relation to a

disputed debt (Lynn & Main Inc v Naidoo & another 2006 (1) SA 59 (N) 67). In Absa Bank
Ltd v Chopdat 2000 (2) SA 1088 (W), Van Schalkwyk J explained the policy of the law in this
regard (1092-3):
‘A creditor who undertakes the sequestration of a debtor’s estate is not merely engaging in private
litigation; he initiates a juridical process which can have extensive and indeed profound consequences
for many other creditors, some of whom might be gravely prejudiced if the debtor is permitted to
continue to trade whilst insolvent. I would therefore be inclined to draw an analogy between the
individual who seeks to protect from disclosure a criminal threat upon the basis of privilege and the
debtor who objects to the disclosure of an act of insolvency on the same basis.’
The conduct designated as acts of insolvency will now be considered.
(a) Absence from Republic or dwelling
If he leaves the Republic or, being out of the Republic, remains absent from it, or
departs from his dwelling or otherwise absents himself, with intent by doing so to
evade or delay payment of his debts (s 8(a)).
The creditor must establish the debtor’s intention to evade or delay payment of his debts
(Estate Salzmann v Van Rooyen 1944 OPD 1); in particular, that the only probable inference
to be drawn is that the debtor had this intention (Berrange NO v Hassan & another (supra)
365). Proof of departure or absence, by itself, is not sufficient, because a person may leave
or absent himself for reasons completely unconnected with the payment or non-payment of
debts, eg, to avoid a deterioration in his health or to join a close relative (Bishop v Baker
1962 (2) SA 679 (D)), or simply on account of his occupation (Abell v Strauss 1973 (2) SA
611 (W)—the debtor, a taxi driver, was called away frequently and at irregular times). A
factor from which the intention to evade or delay payment may be inferred is that the debtor
made an appointment to make a payment and then departed without keeping it (Rabbich v
Miller (1885) 6 NLR 167). In Estate Salzmann v Van Rooyen (supra) the debtor, a company
director, left for another town—Cape Town—ostensibly for the purpose of visiting his wife
who had fallen ill there. However, prior to his departure, he appointed another person as co-
director to run the company business, disposed of his office equipment, and terminated the
lease of the premises where he had been residing. He gave no address at which he could be
contacted in Cape Town and, immediately on arriving there, resigned from his position as
director. Thereafter, he ignored letters relating to business matters addressed to him. The
court held that the inference was irresistible that the debtor intended to evade payment.
(b) Failure to satisfy judgment
If a court has given judgment against him and he fails, upon the demand of the
officer whose duty it is to execute the judgment, to satisfy it or to indicate to the
officer disposable property sufficient to satisfy it, or if it appears from the return
made by the officer that he has not found sufficient disposable property to satisfy
the judgment (s 8(b)).
This subsection creates two separate acts of insolvency: one, where the debtor, upon
demand by the sheriff, fails to satisfy the judgment or to indicate disposable property
sufficient to satisfy it; and the other, where the sheriff, without presenting the writ to the
Page 37
debtor, fails to find sufficient disposable property to satisfy the judgment and states this fact
in his return. The two acts, although separate, are not independent of each other: the
second act applies only if the first cannot be established, ie, only if the writ of execution
cannot be served personally on the debtor. If the sheriff, on serving the writ, neglects to
demand satisfaction of the writ by the debtor and thereafter simply states in his return that
he was unable to find sufficient disposable property, no act of insolvency is committed
(Nedbank Ltd v Norton 1987 (3) SA 619 (N); cf also Moodley v Medley 1963 (3) SA 453
(N)). And if the debtor fails on demand to satisfy the judgment or indicate sufficient
disposable property, it is irrelevant whether or not the sheriff subsequently finds disposable
property sufficient to satisfy the judgment (Dicks v Marais 1952 (3) SA 165 (N)).
‘Judgment’ includes a provisional sentence judgment, even if the defendant has entered
an appearance to defend the principal case (Meskin v Amod 1956 (3) SA 120 (N)). The
judgment must be against the debtor in his own name and not, for example, in the name of
a firm of which he is the sole proprietor (Stocks & Stocks Industrial Holdings (Pty) Ltd &
another v Roberts t/a Premier Timber & Trading [1998] 4 All SA 231 (SE) 233-4). However,
the judgment does not have to be one obtained by the sequestrating creditor. A creditor
may sequestrate a debtor on the basis of a nulla bona return on a writ issued at the instance
of another creditor (Beira v Raphaely-Weiner & others 1997 (4) SA 332 (SCA) 338),
provided the other creditor has not, in the interim, been paid (Duchen v Flax 1938 WLD
119 125) or agreed to accept payment of the judgment debt in instalments (Abell v Strauss
(supra)). Whether the term ‘court’ includes the small claims court is not clear (cf s 2).
The demand to satisfy the judgment debt must be made of the debtor or his duly
authorized agent (in other words, personal service is required): a demand made to some
other party, such as the debtor’s wife, does not suffice (Rodrew (Pty) Ltd v Rossouw 1975
(3) SA 137 (O)). The writ need not be served on the debtor at his residence or place of
business: s 8(b) requires only personal service and does not say where the service must
take place (Beira v Raphaely-Weiner & others (supra) 338). To ‘indicate’ property, the
debtor should tell the sheriff what the property is and where it is with enough particularity to
demonstrate its sufficiency and enable the sheriff to attach and sell it (Nathan & Co v
Sheonandan 1963 (1) SA 179 (N); Wilken & others NNO v Reichenberg 1999 (1) SA 852 (W)
858). So, for example, a debtor does not indicate immovable property for these purposes if
he merely states that he has property at another address or in a particular area or street (R
v Tewari 1960 (2) SA 465 (D); Wilken & others NNO v Reichenberg (supra)).
The term ‘disposable property’ means any property which may be attached and sold in
execution, even if it is situated in some other locality (Laver v Olivier 1953 (2) SA 437 (T)).
It includes both movable and immovable property, and also incorporeal assets, such as book
debts (Mostert NO v Von Hirschberg 1961 (1) SA 146 (O)). It does not include immovable
property which has been mortgaged, even, it seems, where the value of the property
considerably exceeds the amount owing under the mortgage bond (Tewari v Secura
Investments 1960 (3) SA 432 (N)). But if the applicant himself is the first mortgagee of the
immovable property, it is regarded as disposable (Western Bank Ltd v Els 1976 (2) SA 797
(T)).
Page 38
If the sheriff’s return of service merely refers to movable property, it does not establish an
act of insolvency (Amalgamated Hardware & Timber (Pty) Ltd v Wimmers 1964 (2) SA 542
(T) 544). To avail as an act of insolvency, the return should refer to all disposable property
of whatever description (Saber Motors (Pty) Ltd v Morophane 1961 (1) SA 759 (W)). It has
been held that the expression ‘money, property or assets’ in the printed form commonly in
use covers all disposable property (Amalgamated Hardware & Timber (Pty) Ltd v Wimmers
(supra) 544). In the same case, Vieyra J remarked (at 544):
‘Without special leave of Court, no writ can be issued against immovable property until a nulla bona
return has been made on a writ against movables . . . [But] there is no reason why, after having
made inquiries in regard to movables, with the result indicated in the return, the [Sheriff] should not
also make the further inquiry whether the debtor is possessed of immovable property capable of
attachment. On then receiving an answer in the negative, this could be incorporated in the return,
thus establishing, in appropriate cases, an act of insolvency. . . .’
If the debtor points out insufficient disposable property to satisfy the writ, the sheriff may
refuse to attach it and make a return of nulla bona, in which event the creditor may apply
for sequestration (Kent v Transvaalsche Bank 1907 TS 765). The onus is then on the
sequestrating creditor to establish that the property pointed out was insufficient to satisfy
the judgment (Premier Finance Corporation (Pty) Ltd v B Grillanda, trading as Auto Sales
Centre 1972 (1) SA 347 (D)). If the sheriff attaches the property pointed out by the debtor
and, at the sale in execution, the property does not realize enough to satisfy the judgment,
the creditor may proceed to sequestration on the ground that the debtor has not indicated
property sufficient to satisfy the judgment (Paizes v Phitides (supra)).
To prove that the requirements of the subsection have been satisfied, the sequestrating
creditor may rely solely on the sheriff’s return of service, which is regarded as prima facie
proof of the truth of its contents. The debtor may, of course, dispute the correctness of the
statements in the return, but if the return, on the face of it, establishes an act of insolvency,
the onus is on the debtor to show by the clearest and most satisfactory evidence that the
facts set out in the return are incorrect (Van Vuuren v Jansen 1977 (3) SA 1062 (T)). In the
latter case, the debtor alleged that the sheriff’s return was incorrect because it did not refer
to the debtor’s personal assets (the value of which, according to the debtor, well exceeded
the judgment). The debtor said that, when demanding payment and asking for assets to
satisfy the judgment, the sheriff had referred only to the assets of ‘Le Mans Auto Sales’ (the
debtor’s business), and had not asked the debtor to disclose his personal assets. There was
no mention of the debtor’s business in the writ and the sheriff denied that he had specifically
mentioned it when serving the writ. The court held that the probabilities were against the
debtor and that his allegation was insufficient to rebut the prima facie inference that the
return was correct.
The return relied upon by the sequestrating creditor must obviously be made by the
officer who actually executed the judgment, and not by someone else. In De Wet v Le Riche
2000 (3) SA 1118 (T), the nulla bona return before the court had been certified and signed
by a sheriff who had not executed the judgment. The court ruled that the applicant could not
rely on the return as proof of an act of insolvency. The court stated that a legal practitioner
who draws up or settles an application for compulsory sequestration based on a nulla bona
return should carefully scrutinize the
Page 39
return and, if it is defective or inadequate, should remit it to the officer concerned for
rectification before initiating the application to court.
(c) Disposition prejudicing creditors or preferring one creditor
If he makes, or attempts to make, any disposition of any of his property which has,
or would have, the effect of prejudicing his creditors or of preferring one creditor
above another (s 8(c)).
This subsection envisages two sets of circumstances: an actual disposition of property and
an attempted disposition of property. If there is an actual disposition, it must have the effect
of prejudicing the debtor’s creditors or preferring one creditor above another. If there is an
attempted disposition, it must be such that it would, if completed, have the same effect.
‘Disposition’ is wide enough to include both a contract in which the debtor undertakes to
dispose of property and the actual subsequent delivery of the property (Nahrungsmittel
GmbH v Otto 1991 (4) SA 414 (C)). For further explanation of the concept of ‘disposition’,
see 12.1.
Only the effect of the disposition need be considered. It does not matter whether the
debtor made the disposition deliberately to favour one of his creditors, or recklessly without
regard for its consequences: the debtor’s state of mind in making the disposition is irrelevant
(De Villiers NO v Maursen Properties (Pty) Ltd (supra) 675). A debtor commits this act of
insolvency where, for example, he refuses to meet one debt whilst paying another in full, or
sells an asset manifestly below its market value whilst failing to meet debts that have fallen
due (De Villiers NO v Maursen Properties (Pty) Ltd (supra) 677), or passes a mortgage bond
over his immovable property to secure his indebtedness to one creditor, whilst his business
ventures are in financial difficulties and he is not paying creditors (Fittinghoff & others v
Rollins; Fittinghoff & others v Stockton 1997 (1) SA 535 (W)). In De Villiers’s case (supra), it
was contended that a payment to a single creditor was preferential to that creditor and
prejudicial to the remaining creditors because if all the debtor’s liabilities, whether due or
not, had been made payable then, they would have exceeded the debtor’s assets. The court
rejected the argument. It held that an act of insolvency in terms of s 8(c) is committed only
where there is an actual preference of one creditor above another when more than one debt
has fallen due. As the debtor had not failed to pay any debt when due, he had not
committed an act of insolvency.
It is not sufficient for the applicant to state baldly that the disposition in question has had
the effect of prejudicing creditors: he must explain how it has had this effect. But an
explanation is apparently not required if the disposition, on the face of it, is such that a
reasonable person would infer that it is prejudicial to creditors (Mindel Bros and Mindel v
Selikman 1930 WLD 242 245). Proof that a disposition rendered the debtor’s estate insolvent
(or more insolvent) indicates prejudice to creditors (Standard Bank of South Africa v
Sappeur-Fleury 1925 SWA 7), but the applicant need not establish insolvency in every case.
In Nahrungsmittel GmbH v Otto (supra), a disposition which left the debtor solvent, but so
illiquid that he was unable to pay all of his debts, was held to be prejudicial to creditors. The
court held that in each case regard should be had to all the surrounding circumstances to
ascertain whether there is prejudice.
Page 40
(d) Removal of property with intent to prejudice or prefer

If he removes, or attempts to remove, any of his property with intent to prejudice
his creditors or to prefer one creditor above another (s 8(d)).
This act of insolvency differs from the preceding one in two respects: a disposition of
property is not required—mere removal being sufficient—and the intention of the debtor, not
the effect of what he does, is important. The test for determining whether the debtor had
the requisite intention is a subjective one (De Villiers NO v Maursen Properties (Pty) Ltd
(supra) 676). The intention may be inferred from the circumstances surrounding the
removal. An example of a removal with intent to prejudice creditors is the sending of money
or goods to a foreign country so as not to be available for the settlement of creditor’s claims
(cf Berrange NO v Hassan & another (supra) 367-8).
(e) Offer of arrangement
If he makes, or offers to make, any arrangement with any of his creditors for
releasing him wholly or in part from his debts (s 8(e)).
An arrangement or an offer qualifies as an act of insolvency in terms of this subsection
only if it is indicative of the debtor’s inability to pay his debts (Laeveldse Koöperasie Bpk v
Joubert 1980 (3) SA 1117 (T)). This criterion was clearly satisfied in Joosub v Soomar
(supra), where the debtor offered to pay his creditors 50 cents in the rand and intimated
that, if the offer was not accepted, he would consider surrendering his estate. If the debtor
offers by way of settlement a lesser amount than that claimed and denies liability altogether
or disputes the amount of the debt, he does not commit an act of insolvency, because it
does not appear from his offer that he cannot pay the debt. On the other hand, if the debtor
offers a lesser sum in settlement and expressly or by implication admits that he owes the full
debt, then he commits an act of insolvency, because he tacitly acknowledges that he cannot
pay the debt (Laeveldse Koöperasie Bpk v Joubert (supra)).
The debtor does not have to make the arrangement or offer personally: one made by a
third person with his knowledge and permission suffices (ibid).
The object of the arrangement or offer must be to release the debtor from liability, wholly
or in part. An offer of a certain amount in the rand, subject to the debtor being allowed an
extension of time to pay the balance, does not amount to an act of insolvency (Mackay v
Cahi 1962 (4) SA 193 (O) 206).
(f) Failure to apply for surrender
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 (s 8(f)).
Three acts of insolvency are embodied in this subsection. In each case, the debtor must
have published a notice of surrender which has not lapsed (see 2.4.5) or been withdrawn,
and then he must have done one of the following:
• failed to lodge a statement of affairs with the Master;
• filed a statement of affairs which is incorrect or incomplete in a material respect;
Page 41
• failed to apply for acceptance of the surrender on the specified date.

A material error or omission is one which may affect the minds of creditors in deciding
whether or not to oppose the application for surrender, eg, the omission of a claim not of a
trifling nature (Ex parte Berson; Levin and Kagan v Berson 1938 WLD 107).
(g) Notice of inability to pay
If he gives notice in writing to any one of his creditors that he is unable to pay any
of his debts (s 8(g)).
The notice must be in writing: the debtor does not commit this act of insolvency by
informing the creditor orally that he cannot pay his debts, although he does provide the
creditor with evidence of actual insolvency (Patel v Sonday 1936 CPD 466 469).
The words ‘any of his debts’ are capable of being interpreted as meaning either ‘any one
of his debts’ or ‘all of his debts’, but the courts, following the Afrikaans version of s 8
(g) -‘een of ander van syskulde’-have adopted the former construction. Consequently, the
debtor commits an act of insolvency if he gives notice of inability to pay any single debt
(Optima Fertilizers (Pty) Ltd v Turner 1968 (4) SA 29 (D) 32-3; Court v Standard Bank of SA
Ltd; Court v Bester NO & others 1995 (3) SA 123 (A) 133). A typical example of this act of
insolvency occurs where a debtor (or his attorney) writes to a creditor informing him that he
is not in a position to pay the debt for the time being and offering to pay it in instalments
(Goldblatt’s Wholesale (Pty) Ltd v Damalis 1953 (3) SA 730 (O) 732).
It is usually said that the debtor must have intended to give notice of his inability to pay
(see, eg, Barlows (Eastern Province) Ltd v Bouwer 1950 (4) SA 385 (E) 390), but the court
has regard, not so much to the debtor’s subjective intention, as to whether a reasonable
person in the position of the receiver and having knowledge of the relevant circumstances
would have interpreted the document in question to mean that the debtor cannot pay his
debts (Court v Standard Bank of SA Ltd; Court v Bester NO & others (supra) 134. The
‘relevant circumstances’ are those existing at the time of receipt of the letter. The question
is not how a reasonable person would have understood the letter in the light of events which
occurred or knowledge which was obtained subsequently. The proper approach is to consider
how the letter would be understood by a reasonable person in the position of the creditor at
the time he receives it, taking into account that creditor’s knowledge of the debtor’s
circumstances (O’Shea NO v Van Zyl & others NNO 2012 (1) SA 90 (SCA) 98).
A debtor who applies for an administration order in terms of s 74 of the Magistrates’
Courts Act 32 of 1944 is required to state that he cannot pay any of his debts and, hence,
may commit an act of insolvency in the process (Volkskas Bank (’n Divisie van Absa Bank
Bpk) v Pietersen 1993 (1) SA 312 (C) 316). However, the application has to be construed
according to its tenor as a whole and not according to the meaning in isolation of certain
words used in it (Shaban & Co (Pty) Ltd v Plank 1966 (1) SA 59 (O) 63). If it appears from
other information provided in the application that the debtor did not intend the word ‘unable’
to be taken literally—for instance, if it is clear that he has sufficient means to pay his debts
and is simply unwilling to do so immediately—then he does not commit an act of insolvency.
This was the position in Shaban & Co (Pty) Ltd v Plank (supra) 63; and Rodrew (Pty) Ltd v
Rossouw (supra) 139-40. In Shaban, the debtor’s application for administration showed a
very considerable excess of assets over his liabilities. The court held that
Page 42
the debtor’s statement ‘I am unable to liquidate my liabilities forthwith’ was obviously not
intended to be taken literally because his assets consisted largely of stock-in-trade and loose
items for which a ready market existed. What he in all probability intended to convey was
that, although he could, if forced to do so, liquidate enough of his assets to pay his creditors
in the ordinary course of business, he was unwilling to do this as it would result in a fairly
good business being liquidated. In Rodrew, although the debtor stated categorically that he
was ‘nie in staatom my skuldetebetaalnie’, it appeared clearly from the rest of his affidavit
and other annexures that he considered himself to be solvent and intended making
contractual arrangements with all his creditors to pay them in full by way of monthly
instalments.
In FirstRand Bank Ltd v Evans 2011 (4) SA 597 (KZD) 602-5, the court held that where a
debtor writes to his creditor informing him that he has applied for or been placed under debt
review in terms of the National Credit Act 34 of 2005, he is necessarily informing the creditor
that he is over-indebted and unable to pay his debts and this constitutes an act of insolvency
under section 8(g) of the Insolvency Act. In Firstrand Bank Ltd v Janse van Rensburg and a
related matter [2012] 2 All SA 186 (ECP) 195, it was held that the fact that a debtor applies
for debt review in terms of the National Credit Act does not, in itself, amount to an act of
insolvency in terms of s 8(g) of the Insolvency Act because the application does not involve
any notice given by the debtor to the creditor in which the debtor declares an inability to pay
one or more of his debts.
(h) Inability to pay debts after notice of transfer of business
If, being a trader, he gives notice in the Gazette in terms of s 34(1) [of his
intention to transfer his business] and is thereafter unable to pay all his debts (s 8
(h)).
Section 34(2) provides that, as soon as a notice is published in terms of s 34(1), every
liquidated liability of the trader in connection with his business which would become due at
some future date, falls due forthwith, if the creditor concerned demands payment. The term
‘debts’ in s 8(h) includes debts which become immediately payable by reason of this
subsection.
Proof of inability to pay one debt may be accepted as proof that the debtor is unable to
pay all his debts, but evidence that the debtor was unwilling or has refused to pay a
particular debt is not enough to establish this act of insolvency (SA Spice Works (Pty) Ltd v
Spies 1957 (1) SA 679 (T)).
(ii) Debtor in fact insolvent
Instead of (or in addition to) relying on an act of insolvency by the debtor, the sequestrating
creditor may rely on the fact that the debtor’s estate is insolvent, ie, that his liabilities
exceed his assets. If the creditor relies on an act of insolvency and is unable to establish that
it was committed, but it is clear that the debtor is in fact insolvent, the court may grant a
final sequestration order on the latter ground (Corner Shop (Pty) Ltd v Moodley 1950 (4) SA
55 (T)).
Factual insolvency may be established directly, by evidence of the debtor’s liabilities and
the market value of his assets, or indirectly, by evidence of facts and circumstances from
which the inference of insolvency is fairly and properly deducible (Absa Bank Ltd v
Rhebokskloof (Pty) Ltd & others 1993 (4) SA 436 (C) 443; Cohen v Jacobs (Stand 675
Page 43
Dowerglen (Pty) Ltd intervening) [1998] 2 All SA 433 (W) 443), eg, that the debtor has
failed to pay his debts and admitted that he is insolvent (Hugo NO v Lipkie 1961 (3) SA 66
(O) 67-8). In Patel v Sonday (supra), two default judgments had been taken against the
debtor and a writ issued in respect of one of them had not been satisfied. In addition, the
debtor had approached some of his creditors—those who knew him well—and requested
them to participate in a distribution scheme. The court held that these facts raised a very
strong prima facie view that the debtor was insolvent, and this view was confirmed by the
statement of affairs given by the debtor in his replying affidavit.
Insolvency cannot be inferred simply from the fact that the debtor has not paid his debts,
or has requested time to pay (Corner Shop (Pty) Ltd v Moodley (supra) 60), or has offered
to pay a certain amount in the rand immediately and the balance later (Meyer & Kie v Maree
1967 (3) SA 27 (T) 31).
3.1.3 Reason to believe sequestration will be to advantage of creditors

Before the court can grant a final order of sequestration, it must be satisfied that there is
reason to believe that it will be to the advantage of creditors if the debtor’s estate is
sequestrated (s 12(1)(c)). ‘Creditors’ means all, or at least the general body of creditors
(Lotzof v Raubenheimer 1959 (1) SA 90 (O) 94). The question is whether a ‘substantial
portion’ of the creditors, determined according to the value of the claims, will derive
advantage from sequestration (Trust Wholesalers and Woollens (Pty) Ltd v Mackan 1954 (2)
SA 109 (N) 111; Fesi & another v Absa Bank Ltd 2000 (1) SA 499 (C) 505).
For sequestration to be to the advantage of creditors it must ‘yield at the least, a not
negligible dividend’ (per Selke J in Trust Wholesalers and Woollens (Pty) Ltd v Mackan
(supra) 111; Ex parte Bouwer and similar applications 2009 (6) SA 382 (GNP) 386). If, after
the costs of sequestration have been met, there is no payment to creditors, or only a
negligible one, there is no advantage (London Estates (Pty) Ltd v Nair 1957 (3) SA 591 (D)
591; Ex parte Steenkamp and related cases 1996 (3) SA 822 (W)). The decisions on what
constitutes a sufficient or non-negligible dividend are not harmonious. In Absa Bank Ltd v De
Klerk and related cases 1999 (4) SA 835 (E) 840, a dividend of five cents in the rand was
regarded as sufficient; but in Esterhuizen v Swanepoel and sixteen other cases 2004 (4) SA
89 (W) 102, a dividend of 10 cents was considered insufficient; and in Ex parte Ogunlaja &
Others [2011] JOL 2709 (GNP) para 9, it was held that for voluntary surrender and
compulsory sequestration in the North Gauteng High Court, Pretoria, the dividend must be at
least 20 cents in the rand. To enhance the size of his estate, the debtor may renounce in
favour of his creditors the protection afforded by s 82(6) in respect of particular movable
assets so that these assets may be sold along with the rest of his property (Ex parte
Anthony & ’n ander en ses soortgelyke aansoeke 2000 (4) 116 (C) 125). In Cohen v Jacobs
(Stand 675 Dowerglen (Pty) Ltd intervening) [1998] 2 All SA 433 (W), it appeared that the
debtor’s only asset, a piece of land, could, if rezoned, be sold for nearly three times the price
offered for the property at a sale in execution. The court held that, in the light of this, a
prima facie case had been made out that it would be to the advantage of creditors to
sequestrate the estate.
The fact that there will be a significant amount for distribution after the costs of
sequestration have been satisfied does not necessarily mean that sequestration will be to the
advantage of creditors. Sequestration is, in a sense, merely an elaborate means of execution
and, because of its costs, an expensive one too. It is necessary to compare the
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position of the creditors if there is no sequestration with their position if there is a

sequestration. Sequestration will only be to the advantage of creditors if it will result in a
greater dividend to them than would otherwise be the case—eg, through the setting aside of
impeachable transactions, or the exposure of concealed assets—or if it will prevent an unfair
division of the proceeds of the assets or some creditors being preferred to others (Gardee v
Dhanmanta Holdings & others 1978 (1) SA 1066 (N) 1068-70). In the latter case, a debtor’s
only creditor applied to sequestrate his estate on the basis of a nulla bona return. The court
held that the creditor had to satisfy it that there was reason to believe that, after the costs
of sequestration had been paid, he would recover an amount that was not negligible.
Furthermore, he had to demonstrate some reasonable expectation that the amount would
exceed the likely proceeds of ordinary execution. As he had given no information other than
that he had obtained a nulla bona return, he had failed to show that sequestration would be
to his advantage (see also Mamacos v Davids 1976 (1) SA 19 (C)). Compare Absa Bank Ltd
v De Klerk and related cases (supra). In this case, it was held that where the debtor is
insolvent and the creditor is not yet in possession of a judgment upon which he can execute,
sequestration will be cheaper, quicker and hence more advantageous than forcing the
creditor to issue summons and obtain a judgment which the debtor will be unable to satisfy.
Sequestration is usually considered to hold no advantage for creditors unless the debtor
has assets valued in excess of the estimated cost of sequestration: see Van Eck v Kirkwood
1997 (1) SA 289 (SE) 290. However, the converse does not apply: the fact that there is
more than the required minimum amount in the estate does not mean that sequestration is
assumed to be advantageous to creditors (Nosworthy v Holman 1993 (2) SA 774 (E)).
The court does not have to be satisfied that sequestration will benefit creditors financially,
merely that there is reason to believe that it will:
‘[T]he facts put before the court must satisfy it that there is a reasonable prospect—not necessarily a
likelihood, but a prospect which is not too remote—that some pecuniary benefit will result to creditors’
(per Roper J in Meskin & Co v Friedman 1948 (2) SA 555 (W) 558).
It is not necessary to prove that the debtor has any assets, provided it is shown either
that the debtor is in receipt of an income of which substantial portions are likely to become
available to creditors in terms of s 23(5) (Ressel v Levin 1964 (1) SA 128 (C)), or that there
is a reasonable prospect that the trustee, by invoking the machinery of the Insolvency Act,
will unearth or recover assets which will yield a pecuniary benefit for creditors (BP Southern
Africa (Pty) Ltd v Furstenburg 1966 (1) SA 717 (O) 720; Walker v Walker [1998] 2 All SA
382 (W) 387; Dunlop Tyres (Pty) Ltd v Brewitt 1999 (2) SA 580 (W) 583; Lynn & Main Inc v
Naidoo & another 2006 (1) SA 59 (N) 68-9; Commissioner, South African Revenue Service v
Hawker Air Services (Pty) Ltd; Commissioner, South African Revenue Service v Hawker
Aviation Partnership & others 2006 (4) SA 292 (SCA) 306). In Lotzof v Raubenheimer
(supra), it was unsuccessfully contended that creditors would not benefit from sequestration
because the debtor had no assets. The debtor had been a farmer immediately prior to the
application, and he admitted ownership of a motor car claimed by his wife as her property.
The court held that it was inconceivable that the debtor could have carried on farming
operations, albeit unsuccessfully, without any assets and, accordingly, that there was a
reasonable
Page 45
prospect of an inquiry revealing assets. Furthermore, an investigation might show that the
motor car was available for the benefit of creditors. Again, in Commissioner, South African
Revenue Service v Hawker Air Services (Pty) Ltd; Commissioner, South African Revenue
Service v Hawker Aviation Partnership & others (supra), the debtor (a partnership) had been
the beneficial owner of an aircraft and had transferred the aircraft to another partnership
without receiving any discernible benefit in return. The court considered that the transaction
could be a voidable disposition or a disposition without value or even a simulated transaction
in fraud of the South African Revenue Service. There was thus a reasonable prospect that an
investigation and an inquiry by a trustee would yield a benefit to the creditors of the debtor.
The onus of establishing advantage to creditors remains on the sequestrating creditor
throughout, even where it is clear that the debtor has committed an act of insolvency
(Wilkins v Pieterse 1937 CPD 165). In certain earlier cases (eg, Wilkins v Pieterse), the view
was taken that once an act of insolvency (ie, any act) is proved, the court will require
convincing reasons to persuade it that sequestration will not be to the advantage of
creditors. However, more recently, the courts have held that the commission of an act of
insolvency is not necessarily material to the question of advantage to creditors. Certain acts
of insolvency, by their nature, tend to indicate advantage to creditors—for instance, a
disposition of property which prejudices creditors or prefers one creditor above another—but
other acts, eg, a nulla bona return, do not (see, eg, Lotzof v Raubenheimer (supra) 93).
3.1.4 ‘Friendly’ sequestration

There is nothing to prevent a debtor from having his estate sequestrated by an amicable
creditor. The debtor may, for instance, arrange with a friend to whom he owes a debt and
whom he is unable to pay, that he (the debtor) will commit an act of insolvency—for
instance, write saying that he cannot meet the debt—and the friend will then apply for
compulsory sequestration on the strength of this act of insolvency. An application for
compulsory sequestration brought by a creditor who is not at arm’s length is generally
referred to as a ‘friendly’ sequestration.
In Craggs v Dedekind; Baartman v Baartman & another; Van Jaarsveld v Roebuck; Van
Aardt v Borrett 1996 (1) SA 935 (C) 937, Conradie J described friendly sequestrations as
follows:
‘Friendly sequestrations seem to share certain characteristics. Although, like pornography, they may
be hard to define, they are easy to recognise. The debt which the sequestrating creditor relies upon is
almost always a loan. It is usually quite a small loan, very often made in circumstances where it
would have been apparent to the whole world that the respondent was in serious financial difficulty.
Despite this, the loan is customarily made without security of any sort. It is seldom evidenced by a
written agreement, or even subsequently recorded in writing. The only writing that is produced to the
Court is the letter stating, with appropriate expressions of dismay that the debt cannot be paid, and,
sometimes, for good measure, setting out details of the respondent’s assets and liabilities. Very often
debtor and creditor are related: fathers commonly sequestrate sons, wives sequestrate husbands and
sweethearts sequestrate each other, without, I am sure, any damaging effect on their relationship.’
Page 46
In Smith v Porritt & others 2008 (6) SA 303 (SCA) 308, Scott JA remarked that in practice
friendly sequestrations (or friendly liquidations of companies) are commonplace and, in such
cases, the motive of the creditor instituting proceedings is more often than not simply to
assist the insolvent (or company).
The legal position in regard to friendly sequestrations may be summarized as follows:
• The mere fact that an application for compulsory sequestration is brought by a creditor
who is prepared to co-operate with the debtor, or who is motivated partly by a desire
to assist the debtor, does not preclude the granting of a sequestration order (Jhatam &
others v Jhatam 1958 (4) SA 36 (N); Van Rooyen v Van Rooyen (Automutual
Investments (EC) (Pty) Ltd, intervening creditor) [2000] 2 All SA 485 (SE); Maritz t/a
Maritz & Kie Rekenmeester v Walters & another 2002 (1) SA 689 (C) 703). An order
should not be refused simply because there is goodwill between the parties (Beinash &
Co v Nathan (Standard Bank of South Africa Ltd intervening) 1998 (3) SA 540 (W)
541; Esterhuizen v Swanepoel & sixteen other cases 2004 (4) SA 89 (W) 91).
• However, the court must be mindful of the fact—it being a matter of common
experience—that where debtor and creditor in sequestration proceedings are not at
arm’s length, there is considerable potential for collusion and malpractice. Collusion
consists of an agreement between the parties to suppress facts or manufacture
evidence in order to make it appear to the court that one of the parties has a cause of
action or a defence (Kuhn v Karp 1948 (4) SA 825 (T) 827; Van Rooyen v Van Rooyen
(Automutual Investments (EC) (Pty) Ltd, intervening creditor) (supra) 489). Examples
of malpractices that typically arise in friendly sequestrations are: reliance on a non-
existent claim; inclusion of protected (non-saleable) assets, overvaluation of assets, or
underestimation of costs to convince the court that a significant dividend will be
payable; and repeated extensions of the return date for final sequestration (see, eg, Ex
parte Steenkamp and related cases 1996 (3) SA 822 (W) 825–6; Beinash & Co v
Nathan (Standard Bank of South Africa Ltd intervening) (supra) 542–3; Esterhuizen v
Swanepoel & sixteen other cases (supra) 92–3; Dunlop Tyres (Pty) Ltd v Brewitt 1999
(2) SA 580 (W) 582–3).
• The way in which the sequestration process may be abused is aptly described in the
following passage from Mthimkhulu v Rampersad & another (BOE Bank Ltd, intervening
creditor) [2000] 3 All SA 512 (N) 514:
‘The steep increases in interest rates by banks and other lending institutions over the past year
or two has resulted in a steady if not fast flowing stream of so-called ‘‘friendly’’ sequestrations.
Indeed, among certain attorneys it has become quite a cottage industry. The majority of
applications are sparked off by the imminent sale of the respondents’ property by the Bank. The
respondent hurries off to an attorney who is well known for his expertise in these matters and is
briefed on the requirements for a friendly sequestration. He duly finds a ‘‘creditor’’ to whom he
purportedly is indebted by virtue of an unsecured oral loan in an insignificant amount. He then
supposedly writes a letter to his ‘‘creditor’’ which could just as well be headed ‘‘Letter in terms of
section 8(g) of the Insolvency Act’’ in which with suitable expressions of dismay and apology, he
confesses to be unable to repay the so-called loan. It is not uncommon to find in different
applications that the section 8(g) letter contains precisely the same wording which makes one
suspect that the attorney specializing in these matters has these letters on a word processor. An
application for the
Page 47
sequestration of the debtor is then drafted in which the friendly creditor makes the necessary
allegations and in particular expresses his concern for the interests of the body of creditors if the
property under attachment were to be sold by public auction. A value of the property on the
open market is then given and duly supported by a valuer who also puts up an affidavit. It is
also a feature of these applications that the same valuer is employed in each of them. Invariably
the application is then moved as a matter of urgency on the afternoon of the day before the sale
of the property. If a provisional order is granted, one has the curious phenomenon that the
respondent who has co-operated so admirably up until that date cannot be served with the court
order for a variety of reasons including that he is evading service, is now living elsewhere, is
away on business, etc. The result is that the return date is extended for a number of times until
the genuine creditors have lost interest in the respondent and the rule is then discharged.
Alternatively, the provisional order is confirmed, the friendly creditor makes no effort to have a
trustee appointed or to prove his claim, no creditor takes steps to prove a claim because of a
fear of contribution, the debtor waits for the dust to settle and with his old creditors off his back
carries on business as normal.’
• As is evident from the above quotation, a friendly sequestration application may be,
and often is, brought with the sole purpose of obtaining a stay of civil proceedings, and
in particular, the stay of an approaching sale in execution. The debtor resorts to a
friendly compulsory sequestration rather than voluntary surrender to achieve the stay
because the former procedure is better suited to his purpose: it may be obtained on an
urgent basis and without preliminary formalities or advance notice to creditors; it
involves a less strenuous onus (the applicant being required to establish merely that
there is reason to believe that sequestration will be to the advantage of creditors, not
that it will be); and the result of the application is, initially, only a provisional order
which must be served on the debtor and may be postponed and subsequently
discharged at the instance of the sequestrating creditor.
• A debtor may even use a friendly sequestration as a method of freeing himself entirely
from his debts. As will be seen later (17.1.4(i)), where an application for sequestration
is granted and the free residue in the estate turns out to be insufficient to cover the
costs of sequestration, any creditors who have proved claims are obliged to contribute
to these costs. If the creditors of the debtor in a friendly sequestration are made to
believe (eg, because of the paucity of the known assets) that there is an appreciable
risk that they will be called upon to pay a contribution should they prove claims, they
will refrain from doing so. Where no claims are proved within six months after
sequestration, the debtor may apply for his rehabilitation and is thereupon released
from his debts (see 19.2.1(iii)).
• In the light of the above considerations, the courts have accepted that they must, as a
matter of policy, scrutinize every friendly sequestration with particular care to ensure
that the requirements of the Act are not subverted and the interests of creditors are
not prejudiced (Klemrock (Pty) Ltd v De Klerk & another 1973 (3) SA 925 (W); Epstein
v Epstein 1987 (4) SA 606 (C) 611; Ex parte Steenkamp and related cases 1996 (3)
SA 822 (W) 825; Van Eck v Kirkwood 1997 (1) SA 289 (SE) 290; Streicher v Viljoen
[1999] 3 All SA 257 (NC) 261–2; Dunlop Tyres (Pty) Ltd v Brewitt (supra) 582;
Esterhuizen v Swanepoel & sixteen other cases (supra) 92). In particular, the court
should, in each case, require the following from the sequestrating creditor:
Page 48
— full details of the creditor’s claim and locus standi, eg, what the claim is for, when
and where it arose, the creditor’s relationship with the debtor, who acted for each
of the parties, what circumstances rendered it necessary for the debtor to
become indebted to the creditor, and the terms of payment or repayment
(Craggs v Dedekind (supra) 937; Meyer v Batten 1999 (1) SA 1041 (W) 1042;
Mthimkhulu v Rampersad & another (BOE Bank Ltd, intervening creditor) (supra)
517; Esterhuizen v Swanepoel & sixteen other cases (supra) 95);
— if the debt is an unsecured loan, an explanation for the lack of security
(Mthimkhulu v Rampersad & another (BOE Bank Ltd, intervening creditor) (supra)
517);
— documentary evidence establishing that he has actually performed as alleged, eg,
receipts, paid cheques, withdrawal slips, invoices (Craggs v Dedekind (supra)
937; Meyer v Batten (supra) 1042);
— full details of the debtor’s realizable assets, including cogent evidence (not merely
the creditor’s opinion) as to what the assets are likely to raise on a forced
sale—any expert opinion by a valuer should be based on facts or information
properly proved by the valuer or other witnesses and supported by the valuer’s
reasons (Craggs v Dedekind (supra) 938; Nel v Lubbe 1999 (3) SA 109 (W) 111;
Ex parte Bouwer and similar applications 2009 (6) SA 382 (GNP) 387–9; Naidoo
& another v Matlala NO & others 2012 (1) SA 143 (GNP) 155);
— if it appears that another creditor has already attached the debtor’s property in
execution, proof that prior notice of the application has been given to that
creditor (Mthimkhulu v Rampersad & another (BOE Bank Ltd, intervening
creditor) (supra));
— if he requires an extension of the return date of the rule nisi, an affidavit setting
out proper reasons for the extension (Beinash & Co v Nathan (Standard Bank of
South Africa Ltd intervening) (supra)).

3.2.1 Form and content of application
The application is brought by way of a notice of motion supported by affidavit (for a
precedent, see Appendix 1 specimens 2.1 and 2.2). The affidavit must be by the
sequestrating creditor or anyone else who can attest positively to the facts. The founding
affidavit must set out sufficient facts to establish the requirements for a sequestration order
discussed above. The affidavit should contain the following information and averments:
• The full names, status, occupation and address of the sequestrating creditor. It should
be made evident that the creditor has locus standi to apply. Where the application is
made in the name of an agent, the affidavit must indicate that the agent is duly
authorized to bring the proceedings (Thorne NO v Sinclair 1930 EDL 409). If a director
or an official of a company signs the affidavit on behalf of the company, he must allege
that he is duly authorized to do so, or set out facts establishing as much (Lurie
Brothers Ltd v Arcache (1927) 48 NPD 139).
• The full names, date of birth, identity number, and marital status of the debtor and, if
the debtor is married, the full names, date of birth, and identity number of his or her
Page 49
spouse (s 9(3)(a)). It should be made to appear that the court has jurisdiction to hear
the application (see 1.4.2). It is generally not competent to join two debtors in one
application, even where they are jointly and severally liable to the creditor (Ferela (Pty)
Ltd v Craigie & others 1980 (3) SA 167 (W)), but joinder may possibly be allowed
where all the interested parties consent or where there is complete identity of interests
(Main Industries (Pty) Ltd v Serfontein & another 1991 (2) SA 604 (N)).
Section 17(4)(b) of the Matrimonial Property Act 88 of 1984 provides that an
application to sequestrate the joint estate of spouses married in community of property
must be made against both spouses. The section is peremptory and, hence, the
creditor has to ascertain in advance which matrimonial regime applies (Detkor (Pty)
Ltd v Pienaar 1991 (3) SA 406 (W)). However, in terms of the proviso to the section,
the court cannot dismiss an application for sequestration of a debtor on the ground
that such debtor’s estate is a joint estate if the applicant satisfies the court that,
despite reasonable steps on his part, he was unable to establish whether the debtor
was married in community of property or the name and address of the debtor’s spouse.
Further, failure to comply with s 17(4)(b) does not, per se, invalidate the proceedings
or the court’s order (cf Absa Bank Ltd t/a Trust Bank v Goosen 1998 (2) SA 550 (W)
552). Thus, for example, in Ratilal v Dos Santos 1995 (4) SA 117 (W), where the
applicant had obtained a provisional sequestration order against a joint estate without
joining the other spouse (and without satisfying the requirements of the proviso to s 17
(4)(b)) the court granted an extension of the rule nisi to enable the applicant to serve
the papers on the other spouse.
• The amount, cause, and nature of the claim and a statement as to whether the claim is
secured or not and, if it is, the nature and value of the security (s 9(3)). It should
appear from the information furnished that the sequestrating creditor is entitled to
bring the application in terms of s 9(1). If he applies as a cessionary, details of the
cession should be given (cf Van der Merwe and Sellar v Uys 1932 OPD 125).
• The act (or acts) of insolvency committed by the debtor and/or his de facto insolvency.
If the creditor relies on an act of insolvency, he should follow the wording of the Act in
describing it (cf Merrick & Co v Drew (1908) 29 NLR 557) and set out the facts that
gave rise to the alleged act (cf Linder Bros v Gordon (1913) 34 NPD 225). Where the
act of insolvency alleged is a nulla bona return or written notice of inability to pay, the
return or notice should be attached to the affidavit. (See Kader v Haliman 1958 (4) SA
31 (N) 32 for the statements which should be contained in a nulla bona return.) If the
return is incomplete or defective, the creditor or his legal representative should have it
rectified by the relevant serving officer prior to proceeding with the application (De Wet
v Le Riche (supra)). If the return is on the judgment of another creditor, the
sequestrating creditor must allege that the judgment remains unsatisfied (In re Harpur
(1882) 2 EDC 103 107). In an application on a return which is not recent, the creditor
must make averments supported by facts that the debtor’s position is unchanged
(Bhyat v Khurishi 1929 TPD 896). Where the creditor bases his application on the
insolvency of the debtor, he should make an allegation to this effect and support it with
some prima facie evidence of insolvency (Corner Shop (Pty) Ltd v Moodley 1950 (4) SA
55 (T)).
• An averment that sequestration will be to the advantage of creditors and an
explanation why this will be so (London Estates (Pty) Ltd v Nair 1957 (3) SA 591 (D)
593). If reliance is placed on the fact that immovable property will form part of
Page 50
the insolvent estate, the applicant should adduce expert evidence establishing how
much the property will probably yield for the free residue. The expert should set forth
the amount that the property is likely to realize in an insolvency sale and the basis on
which he has formed his opinion. A mere statement of amount without reasons is not
enough (Nel v Lubbe 1999 (3) SA 109 (W) 111-12).
• Any other relevant facts which might influence the discretion of the court in granting or
refusing a sequestration order, eg, the fact that the debtor has a claim for damages
against the creditor which is the subject of a pending action (Barclays Bank v Giles
1931 TPD 9).
• A statement that security will be furnished to the Master and his certificate obtained as
required by s 9(3) (see 3.2.2(i)). If this has already been done, the certificate should
be attached to the affidavit.
• A statement that a copy of the papers will be lodged with the Master with a view to
obtaining his report in terms of s 9(4) (see 3.2.2(iv)).
• A statement confirming that copies of the application will be furnished to interested
parties as required by s 9(4A)(a), and that an affidavit will be filed before or during the
hearing, setting out the manner in which the section was complied with (see 3.2.2(v)).
In preparing the application, the utmost care should be taken to see that the founding
affidavit complies with the requirements of the Act and that the applicant’s case is properly
made out. Originals of supporting documents need not be attached to the application but
must be available for inspection by the court (Sugden & others v Beaconhurst Dairies (Pty)
Ltd & others 1963 (2) SA 174 (E) 187). Save in exceptional circumstances, and subject
always to the overriding jurisdiction of the court, an applicant in motion proceedings may not
introduce new matter in his replying affidavit (Shepherd v Mitchell Cotts Seafreight (SA)
(Pty) Ltd 1984 (3) SA 202 (T) 205; cf Kleynhans v Van der Westhuizen NO 1970 (1) SA 565
(O), in which the court allowed the creditor to introduce new matter in his replying affidavit
because the ramifications of the debtor’s affairs were extensive and complex and the
creditor could not have had all the relevant facts at his disposal before he commenced his
application).
In Uys & another v Du Plessis (Ferreira intervening) 2001 (3) SA 250 (C), the court
allowed an applicant to include, as part of his case against the debtor, the founding affidavit
of an intervening creditor in a separate application for sequestration of the debtor’s estate.
The court held that the applicant could rely on this affidavit to show that the debtor was
factually insolvent and had committed certain acts of insolvency. Knoll AJ observed (254):
‘[T]o adjudicate [on the case] . . . without reference to the intervening creditor’s papers, would be
artificial and could redound to the disadvantage of the general body of creditors. Should the applicant
not be entitled to refer to such papers and rely on admissible evidence contained therein, he would of
necessity wish to incorporate such evidence in his own case by way of affidavits. This would result in
an unnecessary and costly duplication of papers. . . . [T]he respondent is not prejudiced by . . .
reliance on any evidence presented by the intervening creditor. He has had a full opportunity to
canvass all the relevant issues.’
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3.2.2 Steps prior to adjudication on application

(i) Security for costs
A creditor who institutes sequestration proceedings is bound to prosecute them at his own
expense until a trustee or a provisional trustee has been appointed (s 14(1)). For this
reason, he is required to deposit with the Master security for the payment of all fees and
charges necessary for the prosecution of all sequestration proceedings and of all costs until
the appointment of a trustee or provisional trustee, or if none is eventually appointed, all
fees and charges necessary for the discharge of the estate from sequestration. A certificate
from the Master that the necessary security has been lodged must be given not more than
10 days before the date of the application and must accompany the application (s 9(3)). In
relation to this latter requirement, the courts have held that:
• the expression ‘date of the application’ refers to the date of signature of the notice of
motion, not the date of the hearing (Thomas v Cakebread 1975 (1) SA 616 (D)), the
intention of the legislature being that the party giving security should have 10 days
after doing so to proceed with his sequestration application (Intercontinental Exports
(Pty) Ltd v Fowles 2000 (4) 833 (W) 835);
• the requirement that the certificate ‘accompany the application’ means merely that the
certificate must be before the court when the application is heard, not that it must
accompany the application when it is filed with the Registrar or served on the
respondent (Court v Standard Bank of South Africa Ltd; Court v Bester NO & others
(supra) 131).
(ii) Search of Master’s records
In the Western Cape High Court it is a rule of practice that the applicant’s attorney must file
an affidavit stating that he has searched the records in the Master’s Office and it does not
appear from that search that the debtor’s estate is already under sequestration or that he
has published a notice of intention to surrender (In re Hugo 1921 CPD 742).
(iii) Filing of application at court
The applicant must file the notice of motion, founding affidavit and supporting documents
with the Registrar prior to the hearing of the application.
(iv) Master’s report
Before an application can be adjudicated on by the court, a copy of the notice of motion and
the founding affidavit(s) must be lodged with the Master (s 9(4)). If there is no Master at
the seat of the court, the papers must be lodged with an officer in the public service
designated for that purpose by the Master in the Gazette (ibid). The Master or the
designated officer may then make a written report to the court of any facts which he has
ascertained which would appear to him to justify the court in postponing the hearing or in
dismissing the application (eg, that the debtor’s estate has already been sequestrated). A
copy of this report must be transmitted to the sequestrating creditor or his agent (s 9(4)),
who may file an answering affidavit if he wishes (s 9(5)).
(v) Copy of papers to debtor and other parties
On presenting his application to the court, the applicant must furnish a copy of the
Page 52
application to the debtor (s 9(4A)(a)(iv)). However, the court may, in its discretion, dispense
with this requirement and make a provisional order of sequestration without advance notice
to the debtor if it is satisfied that this would be in the interest of creditors or of the debtor
(ibid).
Since this section does not use the term ‘serve’ but rather the word ‘furnish’, which is not
a term of general application in civil practice or procedure, it seems clear that the legislature
intended that informal service would suffice (Berrange NO v Hassan & another 2009 (2) SA
339 (N) 353). The creditor would necessarily have to make out a case in his founding
affidavit to dispense with the furnishing of the application. Relevant factors in this regard
include the urgency of the matter and the conduct of the debtor in relation to his assets. The
court should obviously weigh up the respective interests of the creditor and the debtor and
take account of any potential prejudice to the creditor if the debtor is forewarned of the
impending application (Berrange NO v Hassan & another (supra) 353; cf Fisher v Pujol 1972
(2) SA 496 (T); Rule 6(2) read with Rule 6(5)(a) of the Uniform Rules of Court). There is no
exhaustive list of relevant factors and each case will depend on its own particular
circumstances (Berrange NO v Hassan & another (supra) 353).
As to the practice of the various High Courts before the introduction of s 9(4A)(a)(iv), see
Gouws v Scholtz 1989 (4) SA 315 (NC); Van Wyk, Von Ludwig & Hanekom Inc v Ferguson
[2001] 2 All SA 592 (C). In view of s 9(4A)(a)(iv), it would seem that it is no longer
permissible for a court to grant a provisional order ex parte merely because the applicant
has clear documentary evidence, such as a nulla bona return. For criticism of the latter
practice, see Stride v Castelein 2000 (3) SA 662 (W) 669. See also Standard Bank of SA Ltd
v Essop 1997 (4) SA 569 (D), in which it was held that a clause in a settlement agreement
that entitled a creditor to reinstate a sequestration application without notice to the debtor
was contrary to public policy.
In addition to providing a copy of the application to the debtor, the applicant is required to
furnish a copy to:
• every registered trade union that, as far as he can reasonably ascertain, represents
any of the debtor’s employees;
• the debtor’s employees themselves; and
• the South African Revenue Service (s 9(4A)(a)(i)–(iii)).
The ‘employees’ referred to here are those employed by any business of the debtor. So, for
example, there is no need to furnish a copy of the application to workers employed at the
debtor’s residence (Gungudoo & another v Hannover Reinsurance Group Africa (Pty) Ltd &
another [2012] 3 All SA 609 (SCA)).
The applicant must furnish the debtor’s employees with a copy of the application in one of
the following ways:
• by affixing a copy of the application to any notice board to which he and the employees
have access inside the debtor’s premises; or
• if the applicant and the employees do not have access to the debtor’s premises, by
affixing a copy of the application to the front gate of the premises; or
• failing the latter, by affixing a copy of the application to the front door of the premises
from which the debtor conducted any business at the time of the presentation of the
application (s 9(4A)(a)(ii)(aa)–(bb)).
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The applicant is obliged, before or during the hearing, to file an affidavit, by the person who
furnished copies of the application to the debtor and other parties mentioned above, setting
out the manner in which he complied with the requirements of the Act in this regard (s 9(4A)
(b)).
In Standard Bank of SA Ltd v Sewpersadh & another 2005 (4) SA 148 (C) 156, it was held
that the requirements of giving of notice to all interested parties and filing an affidavit
detailing what has been done are peremptory and, therefore, must be complied with.
However, it seems that the court will insist on exact compliance with these requirements
only to the extent that the applicant is able to do this. In Hannover Reinsurance Group Africa
(Pty) Ltd & another v Gungudoo & another 2012 (1) SA 125 (GSJ), the applicants did not
serve the application on the respondent’s employees and file the appropriate affidavit
because there was no indication that the respondent had employees. The court rejected the
argument that non-compliance with s 9(4A)(a) and (b) was fatal to the application. It
pointed out (132) that compliance with these requirements presupposes knowledge of the
existence of employees or at least reasonable grounds to suspect that there may be
employees. The court added that even where the applicant suspects that there may be
employees, if he cannot obtain further information, the best that he can do is to state that
he is unable to determine whether there are employees or whether they are unionized.
Similarly, in Hendricks NO & others v Cape Kingdom (Pty) Ltd 2010 (5) SA 274 (WCC) 286
(a case dealing with equivalent notice requirements under s 346(4A) and 346A of the
Companies Act 61 of 1973), it was accepted that personal notification to the relevant
employees instead of notice in the prescribed manner will suffice if the employees are no
longer at the company’s principal place of business or at its alternative premises (286-7). Cf
also Moodliar NO & others v Hendricks NO & others 2011 (2) SA 199 (WCC) 206, in which
Davis J considered that the court may allow substantial compliance with the relevant
provisions.
In terms of s 197B(2) of the Labour Relations Act 66 of 1995, an employer who receives
an application for sequestration of his estate must supply a copy of the application to any
‘consulting party’ as contemplated in s 189 of that Act. The meaning of ‘consulting party’,
which appears from s 189, is essentially the party or parties whom the employer would be
obliged to consult when deciding whether to dismiss an employee for operational reasons
(see also 2.5.3).
3.2.3 Provisional sequestration

The sequestrating creditor has to approach the court twice: once to obtain a provisional
order of sequestration (s 10), and the second time to have the provisional order confirmed
and made final (s 12). On each occasion, the creditor must establish the same requirements,
but the standard of proof differs. At the provisional stage, the court must be of the opinion
that prima facie the requirements for a sequestration order are satisfied; at the final stage,
the court must be satisfied that those requirements are proved on a balance of probabilities
(Sacks Morris (Pty) Ltd v Smith 1951 (3) SA 167 (O) 170; Lindhaven Meat Market CC v
Reyneke 2001 (1) SA 454 (W) 460). A final order cannot be granted without a provisional
one first being made; so, if the provisional order granted is for some reason a nullity, then
the final order has to suffer the same fate (Moch v Nedtravel (Pty) Ltd t/a American Express
Travel Service 1996 (3) SA 1 (A) 9-10).
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When application is made for a provisional order of sequestration, the following must be
before the court:
• The notice of motion (including a draft of the desired provisional order of
sequestration) and the founding affidavit(s).
• The Master’s certificate that security has been given.
• The affidavit of search made by the sequestrating creditor’s attorney (in the Western
Cape).
• The Master’s report or, if none, proof of service of the papers on him.
• The sequestrating creditor’s affidavit (if any) responding to the Master’s report.
• An affidavit by the person who furnished copies of the application to the debtor and
other interested parties in compliance with s 9(4A)(a), setting out the manner in which
this was done.
After considering the documents placed before it, the court may make an order
sequestrating the estate of the debtor provisionally, or it may dismiss the application, or it
may postpone the hearing, or it may make such other order as appears to be just in the
circumstances (s 9(5)). On making a provisional sequestration order, the court must
simultaneously grant a rule nisi, ie, an order calling upon the debtor to show cause, on a day
mentioned in the rule, why his estate should not be finally sequestrated (s 11(1)).
An order of provisional sequestration gives the creditor a simple and speedy remedy for
preserving the debtor’s estate and enforcing his claim (Provincial Building Society of South
Africa v Du Bois 1966 (3) SA 76 (W) 80). The court may make the order based on
incomplete information or hearsay evidence, although it cannot rely on evidence obtained in
violation of the debtor’s constitutional rights (Lenco Holdings Ltd & others v Eckstein &
others 1996 (2) SA 693 (N) 704; Lotter v Arlow & another 2002 (6) SA 60 (T) 64). What
amounts to a prima facie case for the purposes of s 10, differs according to whether the
debtor has placed facts in dispute. If he has not done so, the test is that normally applied to
determine whether a litigant has established a prima facie case, namely, whether the
creditor’s allegations, if taken to be true, satisfy the requirements for a sequestration order.
If the debtor has raised a factual dispute, the test for establishing a prima facie case is
whether, on a consideration of all the affidavits (ie, those filed for both creditor and debtor),
the requirements for sequestration are established on a balance of probabilities. In Kalil v
Decotex (Pty) Ltd & others 1988 (1) SA 943 (A) Corbett JA explained the reason for the
difference in approach (976):
‘Where the application for a provisional order . . . is not opposed or where, though it is opposed, no
factual disputes are raised in the opposing affidavits, the concept of the applicant, upon whom the
onus lies, having to establish a prima facie case . . . seems wholly appropriate; but not so where the
application is opposed and real and fundamental factual issues arise on the affidavits, for it can hardly
be suggested that in such a case the Court should decide whether or not to grant an order without
reference to respondent’s rebutting evidence.’
If, in an opposed application, the creditor succeeds in establishing a balance of probabilities
in his favour, the court will generally refuse any application by the debtor to refer the matter
to oral evidence (to disturb the balance of probabilities). If the creditor cannot show that the
probabilities favour him, he may apply for an order referring the matter to oral evidence
(Provincial Building Society of South Africa v Du Bois (supra) 80-2; Kalil v Decotex (Pty) Ltd
& others (supra) 978-9; Premier Western Cape & others v Parker & Mohammed & others
(supra) 179). The court will be more
Page 55
inclined to grant this application if the probabilities are evenly balanced than if they favour
the debtor (Kalil v Decotex (Pty) Ltd & others (supra) 979; Atkinson v Rare Earth Extraction
Co Ltd 2002 (2) SA 547 (C) 553).
The courts accept the proposition that, since sequestration procedure does not exist to
settle disputed claims, if the debtor disputes the creditor’s claim, genuinely and on
reasonable grounds, then irrespective of where the probabilities lie, the court should
postpone the sequestration proceedings until after the creditor has proved his claim (Payslip
Investment Holdings CC v Y2K TEC Ltd 2001 (4) SA 781 (C) 783; Lindhaven Meat Market CC
v Reyneke (supra) 458-9; Lynn & Main Inc v Naidoo & another (supra) 66). In Payslip
Investment Holdings CC v Y2K TEC Ltd (supra), Brand J observed (783):
‘[A] distinction is . . . drawn between disputes regarding the respondent’s [debtor’s] liability to the
applicant [creditor] and other disputes. Regarding the latter, the test is whether the balance of
probabilities favours the applicant’s version on the papers. If so, a provisional order will usually be
granted. If not, the application will either be refused or the dispute referred for the hearing of oral
evidence, depending on, inter alia, the strength of the respondent’s case and the prospects of viva
voce evidence tipping the scales in favour of the applicant. With reference to disputes regarding the
respondent’s indebtedness, the test is whether it appeared on the papers that the applicant’s claim is
disputed by respondent on reasonable and bona fide grounds. In this event it is not sufficient that the
applicant has made out a case on the probabilities.’
3.2.4 Service of rule nisi

The rule nisi (together with the application papers if the debtor has not already been served
with them) must be served on the debtor in accordance with the Rules of Court (Asmal
Wholesalers (Pty) Ltd v Dawood; Marshall Industrials Ltd & another intervening 1963 (1) SA
250 (N) 255). If the debtor has been absent for 21 days from his usual place of residence
and from his business, if any, within the Republic, the court may direct that the rule will be
sufficiently served if a copy is attached to the door of the courthouse and published in the
Gazette, or the court may direct some other mode of service (s 11(2)). It has been held that
this provision is permissive and not peremptory (Asmal Wholesalers (Pty) Ltd v Dawood;
Marshall Industrials Ltd & another intervening (supra) 254). If the court decides to give
instructions about service, it need not choose the mode of service described in the Act, but
may determine and select the most practical way of bringing the rule to the attention of the
respondent (Skordis v Nissiotis 1955 (1) SA 395 (N) 397).
A copy of the rule nisi must also be served on any registered trade union that represents
the debtor’s employees (s 11(2A)(a)), the employees themselves (s 11(2A)(b)), and the
South African Revenue Service (s 11(2A)(c)). Service on the debtor’s employees must be
effected either:
• by affixing a copy of the papers to a notice board to which the employees have access
inside the debtor’s premises; or
• if they do not have such access, by affixing a copy of the papers to the front gate; or,
• failing the latter, by affixing a copy of the papers to the front door of the premises from
which the debtor conducted any business at the time of the presentation of the
application (s 11(2A)(b)).
Page 56
For the purpose of effecting service in accordance with the above requirements, the sheriff
must establish whether the employees are represented by a registered trade union and
whether there is a notice board inside the employer’s premises to which the employees have
access (s 11(4)).

After granting of the rule nisi, the debtor (if he has not already done so) and other
interested parties may oppose the application by filing affidavits with the Registrar setting
out the grounds of their opposition. These affidavits must be served on the sequestrating
creditor in sufficient time to enable him to reply before the return day. If a provisional
trustee (see 8.4) obtains information which has a bearing on the various matters arising for
determination on the return day, he may place the information before the court by way of
affidavit, although he is under no statutory duty to do so (Smith and Walton (SA) (Pty) Ltd v
Holt 1961 (4) SA 157 (D)).
3.2.6 Anticipation of return day

On the application of the debtor, the court may anticipate the return day of the rule nisi for
the purpose of discharging the provisional order, provided 24 hours’ notice of the application
has been given to the sequestrating creditor (s 11(3)). The court will anticipate the return
day only if it is satisfied that all creditors, not merely the sequestrating creditor, have been
given notice and that none has any valid objection, or if it is obvious that creditors will not
oppose the discharge of the rule (Ferros (OVS) Staalvensterfabrieke (Edms) Bpk v Sullivan
1959 (2) SA 531 (O); Regular Investments (Pty) Ltd v Du Plessis 1972 (2) SA 493 (O)).
3.2.7 Intervention by another creditor

In Fullard v Fullard 1979 (1) SA 368 (T), the position regarding intervention by a creditor
was stated as follows: A creditor is entitled to intervene at any stage, either to have the
provisional order set aside, or, where the sequestrating creditor withdraws his application or
drags his feet, to obtain a fresh sequestration order in his own right and name. In the latter
event, the existing sequestration order cannot be confirmed at the instance of an intervening
creditor: it must be set aside and a fresh order issued with the intervening creditor as the
applicant. He then becomes the dominus litis and the original applicant drops out of the
picture. The intervening creditor must make out a case for sequestration, furnish security for
costs, etc, as though he were the original applicant, but he does not have to restate facts
which appear from the record in the existing proceedings. The court ‘takes a practical view in
these matters, and also bears in mind the interests of the general body of creditors’ (per
Holmes J in Jhatam & others v Jhatam (supra) 38). In M&V Tractor and Implement Agencies
BK v Vennootskap DSU Cilliers en Seuns en andere (Kelrn Vervoer (Edms) Bpk
tussenbeitredend) 2000 (2) SA 571 (NC) 577, the court pointed out that intervention by a
creditor in insolvency proceedings differs substantially from conventional intervention and is,
from a procedural point of view, sui generis, being a substantive application which is
launched when the creditor arrives at court with his own evidence (usually on the return
day).
Page 57
3.2.8 Final sequestration

On the return day, in addition to the papers filed at the provisional stage, the court must
have before it:
• the sheriff’s return of service of the rule nisi;
• any opposing affidavits of the debtor and/or other interested parties;
• the replying affidavit of the applicant;
• any affidavit by the provisional trustee.
The practice is for the applicant’s counsel to appear in court and ask for the provisional order
of sequestration to be made final (or for alternative relief). The insolvent may appear
personally or be represented by counsel to oppose the granting of a final order, and other
creditors may appear to oppose or support it.
The sequestrating creditor bears the onus of proving on a balance of probabilities that the
requirements for final sequestration have been met. There is no onus on the debtor but an
evidentiary burden to show that the provisional order is resisted on bona fide and reasonable
grounds (Hannover Reinsurance Group Africa (Pty) Ltd & another v Gungudoo & another
2012 (1) SA 125 (GSJ) 137). If the court is satisfied that the creditor has discharged the
onus resting on him, it may confirm the provisional order. If it is not so satisfied, it must
either dismiss the application and set aside the provisional order or require the creditor to
produce further proof of the allegations in his application and postpone the hearing for a
reasonable time, but not sine die (s 12(2)). The court may allow such further proof in a
replying affidavit, subject to the debtor’s being allowed an opportunity to deal with the new
matter (Ganes & another v Telecom Namibia Ltd 2004 (3) SA 615 (SCA) 625). It has been
held that, since the ordinary procedure for settling disputed questions of fact is by viva voce
evidence, the court cannot make a final order of sequestration on papers which raise
disputes of fact unless it is satisfied that oral evidence will not disturb the balance of
probabilities (Mahomed v Malk 1930 TPD 615).
Whether, in particular circumstances, an application for sequestration should be dismissed
or whether further proof of insolvency should be allowed is a matter relating to the conduct
of the business of the court hearing the application. A court of appeal can interfere only if
the court a quo exercised its discretion capriciously or upon a wrong principle, or did not
bring its unbiased judgment to bear on the question, or did not act for substantial reasons
(Ganes & another v Telecom Namibia Ltd (supra)).
When a provisional order of sequestration has been made final, the date of sequestration
is thereafter for all purposes taken to be the date upon which the provisional order was
originally granted and not the date upon which it was made final (see the definition of
‘sequestration order’ in s 2).

Even if the court is satisfied that the requirements discussed above have been established
on a balance of probabilities, it is not bound to grant a final order of sequestration. In each
case, it has an overriding discretion, to be exercised upon a consideration of all the
circumstances (Julie Whyte Dresses (Pty) Ltd v Whitehead 1970 (3) SA 218 (D) 219). Thus,
the court exercised its discretion against sequestration, notwithstanding proof of an act of
insolvency and the other requirements of a sequestration order, where the
Page 58
debtor furnished independent evidence that his estate was solvent (Chenille Industries v
Vorster 1953 (2) SA 691 (O); cf Berrange NO v Hassan & another (supra) 368), where the
debtor had instituted an action for damages against the creditor which, if successful, would
wipe out the creditor’s claim (Swellendam Municipality v Kennedy 1934 CPD 448), and
where the creditor’s real motive was to prevent the debtor from enforcing a claim against his
(the creditor’s) son (Amod v Kahn 1947 (2) SA 432 (N)).
The fact that the debtor has committed an act of insolvency is an important consideration
in the decision whether his estate should be sequestrated. In Metje & Ziegler Ltd v Carstens
1959 (4) SA 434 (SWA) 435, Hall JP considered that it places the sequestrating creditor in a
‘much stronger position’ than a mere general allegation of insolvency. In De Waardt v
Andrew & Thienhaus Ltd 1907 TS 727, Solomon J held (736-7):
‘In my opinion, where it is clearly proved that a man has committed an act of insolvency it is a matter
of discretion for the judge to decide whether or not he shall sequestrate the estate, and he is not
debarred from doing so merely because the debtor produces evidence to show that his assets are in
excess of his liabilities. In such cases [the judge] may either sequestrate the estate, or he may in the
exercise of his discretion give the insolvent time to pay.’
See also Berrange NO v Hassan & another 2009 (2) SA 339 (N) 368-9.

The trustee must, from the first available funds of the estate, reimburse the sequestrating
creditor his taxed costs in sequestrating the debtor’s estate (s 14(2)). No claim need be
proved for these costs, as they are part of the costs of sequestration. Costs of opposition to
the sequestration are not paid as part of the costs of sequestration, unless the court has so
ordered when granting the final sequestration order (s 97(3)). The court will make this order
only if it considers that the opposition was both bona fide and reasonable (reasonable in the
sense that there were reasonable prospects of its being successful) (Absa Bank Ltd v
Rhebokskloof (Pty) Ltd & others 1993 (4) SA 436 (C) 450-1; Van Wyk, Von Ludwig &
Hanekom Inc v Ferguson [2001] 2 All SA 592 (C) 603). The costs of intervention by a
creditor are regarded as sequestration costs if the intervention was necessary and bona fide
(Ex parte Jordaan: In re Grunow Estates (Edms) Bpk v Jordaan 1993 (3) SA 448 (O)). A
creditor who has been put to the expense of intervening to oppose an application of
questionable merit may be awarded costs on the attorney and client scale (cf Reuben
Rosenblum Family Investments (Pty) Ltd & another v Marsubar (Pty) Ltd (Forward
Enterprises (Pty) Ltd & others intervening) 2003 (3) SA 547 (C) 550).
As a safeguard against abuse by creditors of the power to bring compulsory sequestration
proceedings, the Act provides that whenever the court is satisfied that an application for
sequestration is an abuse of the court’s procedure or is malicious or vexatious, it may allow
the debtor forthwith (for instance, at the hearing of the application for final sequestration) to
prove any damage which he has sustained by reason of the presentation of the application
and award him such compensation as it may deem fit (s 15). The debtor is not, however,
confined to this method of obtaining summary relief and may, at his option, institute action
at common law to recover
Page 59
damages on the ground that the creditor brought the proceedings maliciously and without
reasonable and probable cause.

Any person aggrieved by a final order of compulsory sequestration, or by an order setting
aside an order of provisional sequestration, may appeal against the order (s 150(1); cf Louw
v WP (Koöperatief) Bpk 1998 (2) SA 418 (SCA)). The aggrieved person must first obtain
leave to appeal from the appropriate court (s 150(1) and s 20(4) of the Supreme Court Act
59 of 1959) and the appeal must be prosecuted with due expedition (Beira v Raphaely-
Weiner & others 1997 (4) SA 332 (SCA) 337). No appeal lies against either the granting of a
provisional sequestration order (Moch v Nedtravel (Pty) Ltd t/a American Express Travel
Service 1996 (3) SA 1 (A) 7) or the refusal of such an order (Gottschalk v Gough 1997 (4)
SA 562 (C) 568).
The power of the court to rescind or vary a sequestration order in terms of s 149(2) and
54(5) has been discussed in the previous chapter (see 2.8).
In Rutherford v Ferguson & others 2000 (2) SA 275 (O), an insolvent whose estate had
been compulsorily sequestrated sought a declaration in terms of s 19(1)(a)(iii) of the
Supreme Court Act 59 of 1959, that the court which had granted the sequestration order
had lacked the necessary jurisdiction to do so and, accordingly, that the sequestration order
was a nullity. The insolvent did not indicate whether he had opposed the sequestration, why
he could not obtain relief by appealing in terms of s 150 of the Insolvency Act 24 of 1936,
the extent to which liquidation and distribution of the estate assets had progressed, and why
creditors who had received dividends (if any) had not been joined as respondents (since they
would be detrimentally affected by a declaration of nullity). The court upheld an exception
that the particulars of claim failed to disclose a cause of action. In the court’s view, the
insolvent had failed to show what existing, future or contingent rights and/or obligations
were the object of the declaration, and had further failed to make out a case on which the
court could exercise its discretion in terms of s 19(1)(a)(iii) of the Supreme Court Act 59 of
1959.
Page 61
Part 3
Effects of sequestration
Chapter 4: The legal position of the insolvent
4.1 Contracting
4.2 Earning a livelihood
4.3 Instituting and defending legal proceedings
4.4 Holding office
Chapter 5: Vesting of the assets of the insolvent
5.1 Vesting of estate in trustee

5.2 Property which falls into estate
5.3 Property which does not fall into estate
5.4 Disposal of estate property by insolvent
5.5 Acquisition of new estate during insolvency
Chapter 6: Vesting of the assets of the solvent spouse
6.1 Vesting of assets in trustee

6.2 Release of solvent spouse’s property by trustee
6.3 Release of property by court
6.4 Rights of solvent spouse’s creditors in respect of property not released
6.5 Sequestration of solvent spouse’s estate
Chapter 7: Uncompleted contracts and legal proceedings not yet finalized
7.1 Contract completed by insolvent but not by other party

7.2 Contract not completed by insolvent
7.3 Legal proceedings commenced before insolvency
Page 63
Chapter 4
The legal position of the insolvent
Synopsis
Introduction
4.1 Contracting
4.1.1 Prohibited contracts
4.1.2 Effect of contract which is not prohibited
4.1.3 Effect of prohibited contract
4.3.1 Proceedings which may be brought/defended personally by insolvent
4.3.2 Security for costs
4.3.3 Entitlement to costs
4.4 Holding office
Introduction
Sequestration of a debtor’s estate imposes on him a form of reduction in status
(capitisdiminutio) (Spencer v Standard Building Society 1931 TPD 481 484), which curtails
his capacity to contract, earn a living, litigate and hold office. This chapter considers these
consequences of a sequestration order. The two chapters that follow deal with the effect of a
sequestration order on the debtor’s property and on that of his spouse. Chapter 7 considers
how sequestration affects uncompleted contracts and unfinished legal proceedings to which
the debtor is a party.
4.1 Contracting
The Insolvency Act does not deprive the debtor of his contractual capacity generally and,
accordingly, he retains a general competency to make binding agreements (cf s 23(2)).
However, to protect creditors, the Act imposes certain restrictions on the debtor’s capacity to
contract.
4.1.1 Prohibited contracts

The debtor may not make a contract which purports to dispose of any property of his
insolvent estate (s 23(2)). Furthermore, he may not, without the written consent of the
trustee, enter into a contract which adversely affects (or is likely to adversely affect) his
estate or any contribution which he is obliged to make towards his estate (ibid).
The contribution referred to here is that claimable by the trustee in terms of s 23(5) from
moneys earned by the insolvent in the course of his profession, occupation or employment
(see 5.3.2). The contribution becomes due to the trustee only once the
Page 64
Master has expressed the opinion that the moneys in question are not necessary for the
|support of the insolvent and his dependants. It follows that, prior to the Master’s assessment
of a contribution, the insolvent need not obtain the trustee’s consent to enter into the
contract. In Mervis Brothers (Pty) Ltd v Hanekom 1963 (2) SA 125 (T), M sued H, an
insolvent, for the amount of a debt incurred prior to sequestration. The action was based on
an undertaking given by H after sequestration that he would pay the full amount of the debt
to M. The trustee had not consented to H’s giving this undertaking. The magistrate’s court
held that the undertaking was likely to affect adversely any contribution which H would be
obliged to make, if called upon to do soand, in the absence of the trustee’s consent, was not
binding. On appeal, the court held that, as the Master had not assessed a contribution, H
was not obliged, at the time of contracting, to make a contribution. Accordingly, the
trustee’s consent had not been required and H’s undertaking was binding.
If a person avers that a particular contract with an insolvent is invalid for any reason, he
must set out the facts on which he bases his allegation (Cowan v Toffee 1947 (2) SA 1148
(T)).
4.1.2 Effect of contract which is not prohibited

Where the trustee’s consent is not necessary, or where it is and is given, the contract is valid
and binding on the parties (s 23(2)). However, according to De Polo & another v Dreyer &
others 1991 (2) SA 164 (W), although the contract is binding, the insolvent may not enforce
performance in his favour unless the Insolvency Act (or some other statute) specifically
gives him the right to do so. In the absence of an empowering statutory provision, the
trustee is the proper person to enforce the claim. Thus, for example, the insolvent cannot
compel payment of money due in terms of a post-sequestration partnership entered into
with the trustee’s consent, since there is no statutory provision which entitles him to recover
for his own benefit money due under a partnership. Only the trustee may demand this
payment (De Polo & another v Dreyer & others (supra)). On the other hand, the insolvent
may enforce payment for work done after sequestration because s 23(9) expressly gives him
the right to recover this remuneration for his own benefit (cf Ex parte Van Rensburg 1946
OPD 64). In De Polo’s case, Morris AJ explained the principle as follows (176):
‘[T]he mere fact that an insolvent can enter into a contract does not have the consequence that he is
entitled to sue on that contract for his own benefit. That follows from the proposition that all assets,
whether pre-existing or after acquired, fall within the estate and vest in the trustee. Where s 23(6)
refers to a claim due to him under this section, in my opinion it refers to the succeeding subsections
which . . . refer to the insolvent being entitled to sue ‘‘for his own benefit’’. That expression occurs in
all three subsections and those, it seems to me, are the circumstances where a claim is due to him
under the section. There is no nexus between the right to enter into a contract and the entitlement to
receive the benefit of that contract adversely to the estate. There may be circumstances in which an
insolvent can enforce a contract which he has entered into, but if it comes to claiming benefits,
whether in the form of assets or money accruing under that contract, I find nothing in the Act which
entitles the insolvent to sue in his own name and for his own benefit . . . Had the Legislature intended
that the insolvent could recover the benefits of the contract without reference to the trustee and for
his own benefit, then that could have been stated in s 23(2) in words similar to those appearing in ss
(7), (8) and (9).’
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The contractual rights which the insolvent is specifically empowered to enforce for his own
benefit in terms of s 23(7)-(9) are set out below (4.3.1).
4.1.3 Effect of prohibited contract

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 trustee’s consent where it is required (Ex parte Olivier 1948 (2) SA 545
(C)). Should the trustee choose not to set aside the contract or 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 any performance rendered by
the insolvent, but he must 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
purports 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 following should be noted in this
regard:
• The section applies 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. In 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 the debtor was an insolvent. It does not suffice for the third party to
show 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).

It being in nobody’s interest that the insolvent or those dependent upon him should be
rendered destitute, he is allowed to follow any profession or occupation or enter into any
employment (s 23(3)) and he may make whatever contracts are reasonably necessary for
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this purpose (cf George v Lewe 1935 AD 249). But the insolvent may not, without the
consent in writing of his trustee, carry on, be employed in any capacity in, or have any direct
or indirect interest in, the business of a trader who is a general dealer or a manufacturer (s
23(3)).
The term ‘trader’ is widely defined in the Act (s 2). It includes, among others, any person
who carries on any trade, business or undertaking in which property (movable or
immovable) is sold, or is bought, exchanged, or manufactured for the purpose of sale or
exchange, or in which building operations of whatever nature are performed. Neither
‘general dealer’ nor ‘manufacturer’ is defined in the Act. It has been held that a milk depot
selling only milk is not a general dealer for these purposes (Ex parte Du Plessis 1957 (2) SA
253 (W)). The same conclusion was reached in regard to a restaurant business (R v
Papangelis 1960 (2) SA 309 (O)). In S v Van der Merwe 1980 (3) SA 406 (NC), the court,
after considering the earlier cases, held that a ‘general dealer’ is someone who trades at a
fixed and recognized place in all sorts of wares and not just in one kind or a few particular
kinds.
A consent to trade in a particular business does not entitle the insolvent to do anything
other than trade in the manner specified in that type of business. But he may make
contracts reasonably incidental to the type of business, including, it would seem, a contract
of partnership (Priest v Charles 1935 AD 147).
If the insolvent pursues a vocation without obtaining consent where it is required, he
commits a criminal offence (s 137(c)). He cannot escape liability on the basis that he did not
know consent was necessary (R v Cassim 1932 CPD 209). Furthermore, any contracts which
he makes in the course of the unlawful vocation are voidable at the option of the trustee (cf
Ex parte Olivier (supra)).
Should the trustee give or refuse his consent to carry on a trade, any of the creditors or
the insolvent, as the case may be, may appeal to the Master whose decision is final (s 23
(3)). A copy of any consent given must immediately be forwarded by the trustee to the
Master (s 23(3)bis).

The fact that a person is insolvent does not necessarily preclude him from being a party to
legal proceedings (Grevler v Landsdown & ’n ander NNO 1991 (3) SA 175 (T) 177).
4.3.1 Proceedings which may be brought/defended personally by insolvent

In terms of s 23(6)-(10), an insolvent may sue or be sued, as the case may be, in his own
name and without reference to the trustee of his estate, in the following cases:
• In a matter relating to status, eg, divorce.
• Where the matter relates to a right which does not affect the insolvent estate, such as
a right to receive maintenance from the insolvent (Weinberg v Weinberg 1958 (2) SA
618 (C)) or the right not to be unlawfully dispossessed of property (Marais v Engler
Earthworks (Pty) Ltd; Engler Earthworks (Pty) Ltd v Marais 1998 (2) SA 450 (E) 454).
• Where the claim is to recover remuneration or reward for work done or professional
services rendered by him or on his behalf after the sequestration of his estate.
• Where the claim is for a pension to which he is entitled for services rendered.
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• Where the claim is for compensation in respect of loss or damage that he has suffered
by reason of defamation or personal injury. (The precise ambit of this claim is
considered in chapter 5.)
• Where the matter concerns a delict committed by him after the sequestration of his
estate.
Although the insolvent is, by and large, divested of his estate, he retains a reversionary
interest in it and, accordingly, may litigate to ensure that it is properly administered (Kuper
v Stern and Hewitt NO 1941 WLD 1 3-4). For instance, he may institute action to recover or
protect property which vests in the trustee, if the latter refuses to take the necessary action
(Mears v Rissik, Mackenzie NO and Mears’ Trustee 1905 TS 303; Nieuwoudt v The Master &
others NNO 1988 (4) SA 513 (A) 524-5 530; Voget & others v Kleynhans 2003 (2) SA 148
(C) 153-4; Haupt t/a Soft Copy v Brewers Marketing Intelligence (Pty) Ltd & others 2005 (1)
SA 398 (C) 424-5), and he may apply for an interdict to prohibit the trustee from realizing
assets in the estate if those already sold have yielded sufficient funds to meet all the claims
proved by creditors (Jacobs v Hessels 1984 (3) SA 601 (T)). He may also sue the trustee for
damages in respect of any loss incurred as a result of his maladministration of the estate
(Ecker v Dean 1940 AD 206).
The fact that the insolvent is entitled to litigate in matters concerning the administration
of the estate does not mean that he has a general right to prescribe how the estate should
be administered. He may bring proceedings to interfere with the administration of the estate
only if he suffers an injustice due to an irregularity or a lack of bona fides on the part of the
trustee or creditors (Jordaan v Richter en andere 1981 (1) SA 490 (O)). This point is
illustrated by Kruger v Symington NO en andere 1958 (2) SA 128 (O). The creditors had
resolved to sell an asset in the estate at a price which, unbeknown to them at the time, was
lower than the real value of the asset. The court held that this fact was not, per se, sufficient
reason for attacking the resolution or prohibiting the sale. (See also Muller v De Wet NO &
others 1999 (2) SA 1024 (W).)
4.3.2 Security for costs

An insolvent who brings an action in the magistrate’s court is obliged to give security for the
costs of the action if the defendant requests it (Rule 62(1)(b) of the Magistrates’ Courts
Rules). If the insolvent fails to give security when called upon by the defendant to do so, the
latter may apply for the action to be dismissed (ibid). In the case of proceedings in the High
Court, the position is different. If the matter is one in respect of which the Insolvency Act
specifically gives the insolvent the right to sue—such as a claim for remuneration for
services rendered—he cannot be required to give security for costs, unless, perhaps, the
failure of the action is a foregone conclusion (Argus Printing & Publishing Co Ltd v
Anastassiades 1954 (1) SA 72 (W) 79). Where the insolvent’s right to sue does not flow from
the Act—eg, where the matter concerns the general administration of the estate—the court
may order him to furnish security if it considers that the action is reckless and vexatious
(Ecker v Dean (supra)). In deciding the latter question, the court will have regard to the
prospects of the action succeeding, whether the action is one which could have been brought
by the trustee or the creditors, and
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whether there has been previous litigation on the same subject matter (Israel v Burger 1961
(1) SA 827 (O)).
4.3.3 Entitlement to costs

Where the insolvent sues or is sued personally in a matter in which he is entitled to litigate
and he obtains an award of costs in his favour, the judgment for costs belongs to him
personally, and he may dispose of it as he likes (Schoeman v Thompson 1927 WLD 298).
Damages for maladministration on the part of the trustee accrue to the insolvent estate, but
an award of costs against the trustee enures for the benefit of the insolvent (Ecker v Dean
(supra)). In Ecker’s case it was held that, if there was any shortfall in the amount recovered
from the trustee in respect of costs, the deficiency should be taken from the damages paid
to the estate.
4.4 Holding office

An unrehabilitated insolvent is disqualified from holding a large number of positions— so
many, in fact, that only a few can be mentioned here:
• He cannot be appointed as a trustee in an insolvent estate (s 55(a) of the Insolvency
Act) and, if he is already a trustee when his estate is sequestrated, he must vacate his
office (s 58(a)).
• He is not capable of being a member of the National Assembly, National Council of
Provinces, or a provincial legislature (ss 47(1)(c), 62 and 106(1)(c) of the Constitution
of the Republic of South Africa, 1996).
• Unless granted an exemption by the court, he is disqualified from being a director of a
company (ss 69(8)(b)(i) and 69(11) of the Companies Act 71 of 2008). Under the
previous Companies Act of 1973, the courts allowed an unrehabilitated insolvent to
become a director of a company only if there was no danger to the private interests of
the members or to the public who might be injured by dishonest trading (cf Ex parte
Harrod 1954 (4) SA 28 (SR) 30; Ex parte Dworsky 1970 (2) SA 293 (T)). Presumably,
the same rule will apply under the new Act.
• Save with the authority of the court he cannot participate in the management of a
close corporation (s 47(1)(b)(i) of the Close Corporations Act 69 of 1984).
• He may not be a member of the governing board of the National Credit Regulator and
may not be a registered credit provider (s 20(2)(a), (c) and s 46(2) of the National
Credit Act 34 of 2005). The National Credit Act, curiously, does not expressly
prohibited him from registering as a debt counsellor, though it prohibits parties who
are subject to administration orders or debt re-arrangement (s 46(4)(a), (b)).
• Being disqualified from acting as a director of a company, he is also disqualified from
being a business rescue practitioner (s 138(1)(d) of the Companies Act 71 of 2008),
and he may not sit on the board of the Land and Agricultural Development Bank of
South Africa (ss 1 and 10(e) of the Land and Agricultural Development Bank Act 15 of
2002).
• If he is a practising attorney, he faces removal from the roll of practising attorneys or
suspension from practice by the court on application by the law society in whose
jurisdiction he practises, unless he can satisfy the court that despite the sequestration
he nevertheless remains a fit and proper person to continue as a practising attorney
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(s 22(1)(e) of the Attorneys Act 53 of 1979). The position is evidently different if he is

a practising advocate—an unrehabilitated insolvent is not expressly disqualified from
continuing to practise as an advocate (cf s 7 of the Admission of Advocates Act 74 of
1964).
• To hold a fidelity fund certificate under the Estate Agency Affairs Act 112 of 1976, he
needs a certificate from the trustee of the insolvent estate to the effect that he (the
insolvent) is a fit and proper person to hold a position of trust and be issued with the
fidelity fund certificate (s 27(a)(ii)).
• He cannot be a registered manufacturer or distributor of liquor (s 11(2)(b) of the
Liquor Act 59 of 2003). The trustee of his insolvent estate may continue the registered
activities in the name of the estate or propose to the Minister that the registration be
transferred to another qualified person (s 17(1) and (2); s 1 sv ‘Minister’).
• His office as executor of a deceased estate is not automatically terminated by the
sequestration of his estate, provided he can otherwise perform his duties (s 23 of the
Administration of Estates Act 66 of 1965; Trustees of Wright v Executors of Wright
(1872) 2 Roscoe 84). The same applies to his tutorship or curatorship (De Villiers v
Stuckeris (1829) 1 Menz 377). However, he faces termination of his office if he does
not lodge sufficient security with the Master on written notice (s 77(3) of the
Administration of Estates Act).
• If he is the trustee of a trust, the Master may remove him from office (s 20(2)(c) of
the Trust Property Control Act 57 of 1988; cf Sinclair v Meintjes (1874) 4 Buch 40).
Sequestration of his estate will, in any event, terminate his trusteeship if the trust deed
contains a provision to this effect.
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Chapter 5
Vesting of the assets of the insolvent
Synopsis
5.3.1 Wearing apparel, bedding, etc
5.3.2 Remuneration for work done
5.3.3 Pension
5.3.4 Compensation for defamation or personal injury
5.3.5 Compensation for occupational injuries or diseases
5.3.6 Benefits payable to miner
5.3.7 Unemployment insurance benefits
5.3.8 Insurance policies
5.3.9 Share in accrual
5.3.10 Trust property/funds
5.3.11 Right of labour tenant to land or right in land
5.3.12 Friendly society moneys and assets
5.3.13 Property acquired with money from above sources

The function of the trustee is to collect the assets in the estate, realize them, and distribute
the proceeds amongst creditors in the order of preference laid down by the Act (Hobson NO
v Abib 1981 (1) SA 556 (N) 559-60). To enable the trustee to do this, the Act provides that
the effect of a sequestration order (including a provisional order: see s 2) is to divest the
insolvent of his estate and vest it in the Master and thereafter in the trustee, once he has
been appointed (s 20(1)(a)). The vesting occurs even in respect of property which has been
sold in execution if the debtor’s estate is sequestrated before delivery or transfer of the
property concerned (Simpson v Klein NO & others 1987 (1) SA 405 (W) 412; Syfrets Bank
Ltd & others v Sheriff of the Supreme Court, Durban Central, & another; Schoerie NO v
Syfrets Bank Ltd & others 1997 (1) SA 764 (D) 772-8; Naidoo & another v Matlala NO &
others 2012 (1) SA 143 (GNP) 154). If a provisional trustee is appointed, the estate vests in
him before vesting in the trustee (cf s 54(5)).
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| The estate remains vested in the trustee until:

• the discharge of the sequestration order by the court (Mahomed v Lockhat Brothers &
Co Ltd 1944 AD 230 241); or
• the acceptance by creditors of an offer of composition made by the insolvent which
provides that the insolvent’s property will be restored to him (see 18.4.2); or
• an order for the insolvent’s rehabilitation is granted in terms of s 124(3) (see 19.2.1
(iii)).
If a trustee vacates his office, is removed from office, or dies, the estate revests in the
Master until a new trustee is appointed (s 25(2)). If there is a co-trustee, the estate remains
vested in him (ibid).

Subject to certain exceptions flowing from the Act and from other enactments, the insolvent
estate comprises the following:
• all property of the insolvent at the date of sequestration, including property (or the
proceeds thereof) in the hands of a sheriff under a writ of attachment; and
• all property which the insolvent acquires or which accrues to him during the
sequestration (s 20(2)), including any property that the insolvent recovers for the
benefit of the estate where the trustee fails to take the necessary action (Voget &
others v Kleynhans 2003 (2) SA 148 (C) 154).
In terms of s 2, ‘property’ means movable or immovable property wherever situate in the
Republic, and includes contingent interests in property, other than the contingent interests
of a fideicommissary heir or legatee. ‘Immovable property’ is defined as land and every right
or interest in land or minerals which is registrable in a deeds registry within the Republic
(ibid). By ‘movable property’ is meant every kind of property and every right or interest
which is not immovable property (ibid). Movable property includes a liquor licence (s 118(a)
of the Liquor Act 27 of 1989) and a right of action, other than one that the insolvent may
enforce personally (as to which see 4.3.1) (Van Niekerk v Bayer Suid-Afrika (Edms) Bpk
[1998] 4 All SA 212 (NC) 224; Vogel & others v Kleynhans 2003 (2) SA 148 (C) 152). Assets
situated outside the Republic are not included even though, if the debtor is domiciled within
the jurisdiction of the court, the sequestration order divests him of all his movable property,
wherever situated (Bekker NO v Kotzé & others 1996 (4) SA 1293 (Nm) 1296).
Whenever an insolvent has acquired possession of property which is claimed by the
trustee, it is deemed to belong to the insolvent estate unless the contrary is proved (s 24
(2)). But if a person who became a creditor of the insolvent after sequestration alleges that
a particular asset does not belong to the estate and claims a right to the asset, it is deemed
not to belong to the estate unless the contrary is proved (ibid).
Sequestration of a joint estate makes both spouses ‘insolvent debtors’ for purposes of the
Act, with the consequence that the property of both of them (comprising their shares in the
joint estate as well as separately owned property) vests in the trustee and is available to
meet the claims of creditors (Du Plessis v Pienaar NO & others 2003 (1) SA 671 (SCA) 676;
cf Berrange NO v Hassan & another 2009 (2) SA 339 (N) 369). Thus, property inherited by a
spouse to a marriage in community of property forms part of the insolvent estate, even if
the will contains a provision
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specifically excluding the property from any community of property (Badenhorst v Bekker
NO en andere 1994 (2) SA 155 (N)).
Property inherited by an insolvent during his insolvency falls into his insolvent estate,
notwithstanding a contrary provision in the testator’s will (Vorster v Steyn NO en andere
1981 (2) SA 831 (O)). However, if an insolvent refuses to accept property bequeathed to
him or an insurance benefit of which he has been nominated as a beneficiary, the property
or benefit in question does not vest in his estate. The reason is that the insolvent merely has
a competence or power (‘bevoegdheid’) to accept the bequest or nomination, and he
acquires no right to the property or benefit until he has accepted (Wessels NO v De Jager en
’n ander NNO 2000 (4) SA 924 (SCA) 928). An insolvent may, thus, by repudiating a legacy,
inheritance or insurance benefit, ensure that it passes to someone other than the trustee
and the creditors of his insolvent estate.
The property of the spouse of the insolvent, where the marriage is out of community of
property, also vests in the trustee of the insolvent estate, until it is released by the trustee
(s 21). The question of the vesting of the property of the solvent spouse is dealt with in
chapter 6.

5.3.1 Wearing apparel, bedding, etc
The insolvent may retain for his own use his wearing apparel and bedding, as well as such
household furniture, tools and other means of subsistence as the creditors may (by
resolution) determine (s 82(6)). The insolvent may renounce, in favour of his creditors, the
protection from execution which the Act confers in respect of particular assets (Ex parte
Anthony en ’n ander en ses soortgelyke aansoeke 2000 (4) SA 116 (C) 125).
5.3.2 Remuneration for work done

Section 23(9) provides that the insolvent may recover for his own benefit (ie, to the
exclusion of the estate) the remuneration or reward for work done or professional services
rendered by him, or on his behalf, after sequestration. This provision is qualified by s 23(5),
which says that the trustee is entitled to any moneys which the insolvent has received (or
will receive) in the course of his profession, occupation, or employment which, in the opinion
of the Master, are not necessary for the support of the insolvent and his dependants. The
combined effect of these two provisions is that the earnings which an insolvent receives for
work done remain vested in him until the Master (on application by the trustee) has
expressed an opinion that a portion thereof is unnecessary (Ex parte Van Rensburg 1946
OPD 64 70). Only if the Master expresses this opinion is the insolvent divested of the
relevant portion of the earnings in favour of the trustee (Miller v Janks 1944 TPD 127 130).
The Master’s decision in this regard constitutes the exercise of a quasi-judicial or
administrative discretion and is, therefore, reviewable under s 151 (Ex parte Theron en ’n
ander; Ex parte Smit; Ex parte Webster 1999 (4) SA 136 (O) 139). To enable the trustee to
place sufficient details before the Master for purposes of making an assessment, the Act
places a duty on the insolvent to keep records of his earnings and to furnish these to the
trustee on demand (see 14.6).
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The trustee may obtain payment of that portion of the insolvent’s wage or salary which
the Master has determined unnecessary, simply by informing the insolvent’s employer that
he (the trustee) is entitled, in terms of s 23(5), to part of the insolvent’s remuneration (s 23
(5)). Moreover, the trustee may recover any amount from the insolvent by writ of execution
issued by the Registrar on production to him of a certificate by the Master stating the
amount claimable (s 23(11)).
The Act does not lay down any time limit within which the trustee must take steps to have
the insolvent divested of surplus income, and the trustee may conceivably act at any time
before rehabilitation. It is open to the insolvent, before or at the time of applying for
rehabilitation, to approach the court for an order declaring particular property to be his own
(Ponammal NO v Taylor NO & another 1963 (2) SA 656 (N) 661-2).
The insolvent’s right to earn and recover income relates only to lawful income: if the
insolvent obtains income from an unlawful source, it is not excluded from his insolvent
estate and he cannot keep any of it for himself (Singer NO v Weiss & another 1992 (4) SA
362 (T)).
5.3.3 Pension
The insolvent may recover for his own benefit any pension to which he may be entitled for
services rendered by him (s 23(7)). There are a number of other statutory provisions
protecting pension moneys, of which the most important is s 3 of the General Pensions Act
29 of 1979.
5.3.4 Compensation for defamation or personal injury

Section 23(8) allows the insolvent to recover for his own benefit compensation for any loss
or damage which he may have suffered, whether before or after sequestration of his estate,
by reason of defamation or personal injury. The term ‘personal injury’ here includes not only
bodily injury, but also injury to personality interests, ie, iniuria in the wide sense (De Wet NO
v Jurgens 1970 (3) SA 38 (A)). In this case, an insolvent was held to be entitled to recover
for her own benefit damages for contumelia (insult) and loss of consortium (marital
companionship) arising from adultery committed by the defendant with the insolvent’s
husband. ‘Loss or damage’ means loss or damage for which damages would normally be
recoverable (Santam Versekeringsmaatskappy Bpk v Kruger 1978 (3) SA 656 (A)). Thus, an
insolvent who has sustained bodily injury (whether before or after sequestration) may
recover for his own benefit, to the exclusion of his trustee, not only so-called ‘general
damages’ (eg, compensation for pain and suffering, loss of amenities and the like) but also
‘special damages’ (eg, medical expenses and other kindred expenses and loss of earnings)
(ibid).
Prior to the Santam case (supra), the courts adopted the view that, in an action for
defamation, the right to recover compensation for damage to the insolvent in his business
(ie, economic loss) vests in the trustee and that the insolvent may recover for his own
benefit only in respect of the injury to his reputation (Argus Printing & Publishing Co Ltd v
Anastassiades 1954 (1) SA 72 (W)). In the light of Santam, it seems that this distinction is
not valid.
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It follows from s 23(8) that, if, prior to sequestration, the insolvent is awarded an amount
of compensation for defamation or personal injury, he may retain that amount as his own
separate property (Santam Ltd v Norman 1996 (3) SA 502 (C)).
In terms of the proviso to s 23(8), the insolvent may not, without leave of the court,
institute an action against the trustee of his estate on the ground of malicious prosecution or
defamation.
5.3.5 Compensation for occupational injuries or diseases

Compensation payable or already paid to an employee in terms of the Compensation for
Occupational Injuries and Diseases Act 130 of 1993 would seem to be excluded from the
insolvent estate on the basis that it is compensation for loss or damage suffered as a result
of personal injury. Another possible ground for the exclusion is s 32(1)(b) of this Act, which
provides that compensation is not subject to attachment or any other form of execution by
an order of the court.
5.3.6 Benefits payable to miner

The right of a miner to a benefit or a gratuity, or money paid to the miner as such, does not
form part of his insolvent estate (s 131(1) of the Occupational Diseases in Mines and Works
Act 78 of 1973).
5.3.7 Unemployment insurance benefits

Section 33 of the Unemployment Insurance Act 63 of 2001 provides that benefits to which
an employee is entitled in terms of the Act are not capable of being assigned or attached by
any order of the court, except one relating to maintenance of the dependants (including the
former spouse) of that employee. It may possibly be contended on the basis of this provision
that benefits in terms of the Act do not vest in the employee’s insolvent estate (the matter is
not free from doubt).
5.3.8 Insurance policies

(i) Policies covering liability to third parties
If, prior to sequestration, the insolvent was insured against liability to third persons and
incurred a liability covered by the policy, his rights against the insurer pass, upon
sequestration, to the third person and not the insolvent estate. In terms of s 156, the third
person is entitled to recover directly from the insurer the amount of the insolvent’s liability,
but not more than the maximum amount for which the insurer has bound himself to
indemnify the insolvent. The third party, being vested with the insolvent’s rights, may
proceed directly against the insurer and need not first obtain judgment against the insolvent
estate or enter into an agreement with the trustee with regard to the claim (Gypsum
Industries Ltd v Standard General Insurance Co Ltd 1991 (1) SA 718 (W)).
The following should be noted with regard to s 156:
• The section is applicable, not only where the insolvent insured himself against liability
to third persons, but also where another person took out a policy extending such cover
to the insolvent. The section merely requires that the insurer be contractually bound to
indemnify the insolvent; whether this is because of a contract
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between the insurer and the insolvent or one between the insurer and someone else,
does not matter (Unitrans Freight (Pty) Ltd v Santam Ltd 2004 (6) SA 21 (SCA) 26). In
this case, the court accepted that the section was applicable where the insolvent
enjoyed insurance cover by virtue of an extension clause in another party’s policy.
• The section is restricted to insurance against liability to third parties under a policy of
indemnity insurance (Venfin Investments (Pty) Ltd v KZN Resins (Pty) Ltd t/a KZN
Resins [2011] 4 All SA 369 (SCA) 383–4): the section has no application, for example,
where the policy obliges the insurer to compensate the insolvent only for damage to
property (Supermarket Leaseback (Elsburg) (Pty) Ltd v Santam Insurance Ltd 1991 (1)
SA 410 (A)).
• The section does not give the third person greater rights against the insurer than the
insolvent had under the policy. So, the insurer may refuse to compensate the third
party beyond the maximum amount stipulated in the policy (Coetzee v Attorney’s
Insurance Indemnity Fund 2003 (1) SA 1 (SCA) 8), and the insurer may resist the third
party’s claim by showing that the insurance contract is not enforceable (Supermarket
Haasenback (Pty) Ltd v Santam Insurance Ltd 1989 (2) SA 790 (W) 794), or by
invoking a defence which the insurer had against the insured (Przybylak v Santam
Insurance Ltd 1992 (1) SA 588 (C) 602), for example, that the liability to the third
party is of a kind which falls outside the ambit of the policy (Canadian Superior Oil Ltd
v Concord Insurance Co Ltd (formerly INA Insurance Co Ltd) 1992 (4) SA 263 (W)), or
that the insolvent failed to observe a provision in the policy requiring him to forward to
the insurer any notice of a claim or legal process issued against him (Le Roux v
Standard General Versekeringsmaatskappy Bpk 2000 (4) SA 1035 (SCA)).
(ii) Life policies etc
Section 63(1) of the Long-term Insurance Act 52 of 1998 excludes certain insurance benefits
from the insolvent estate, namely:
• the policy benefits provided (or to be provided) to the insolvent under an assistance,
life, disability, or health policy (or a number of such policies), which has been in force
for at least three years and in which the insolvent or his (or her) spouse is the life
insured (s 63(1)(a)); and
• any assets which the insolvent acquired exclusively with such policy benefits (s 63(1)
(a)), within a period of five years from the date on which they were provided (s 63(2)
(a)).
The policy benefits or assets are excluded to an aggregate amount of R50 000 or such other
amount as the Minister of Finance may prescribe (s 63(2)(b)). So, for example, if the
insolvent is the named beneficiary of policies totalling R80 000, he is entitled to R50 000 and
the remaining R30 000 vests in his insolvent estate.
Section 63(1) does not apply if the policy benefits in question are payable to a third
person and not the insolvent. The right to the benefits in such a case vests in the third
person (once he communicates his acceptance to the insurer) and there is, therefore, no
question of their becoming part of the insolvent estate (Pieterse v Shrosbree NO & others;
Shrosbree NO v Love & others 2005 (1) SA 309 (SCA) 314). A life policy taken out by the
insolvent in favour of a third person is an asset in the insolvent estate to the extent that the
trustee is vested with any right that the insolvent had to surrender the policy prior to his
death and obtain payment of
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the surrender value. However, beyond this, the trustee has no claim in respect of the policy
(Warricker & another NNO v Liberty Life Association of Africa Ltd 2003 (6) SA 272 (W)).
The onus is on the insolvent to prove, on a balance of probabilities, that he is protected by
s 63(1) (s 63(3)). The protection provided by the section is not available with regard to a
debt secured by the policy (s 63(1)).
The Act states further that the policy benefits in question may not, during the lifetime of
the life insured, be attached or subjected to execution under a judgment of a court (s 63(1)
(a)), and may not on the insolvent’s death be used to pay his debts if he is survived by a
spouse, child, stepchild or parent (s 63(1)(b)).
5.3.9 Share in accrual

In a marriage which is subject to the accrual system, the right of a spouse to share, in terms
of the Matrimonial Property Act 88 of 1984, in the accrual of the estate of the other spouse
does not form part of the insolvent estate of the first spouse (s 3(2) of that Act). This claim
only arises upon the dissolution of the marriage.
5.3.10 Trust property/funds

As a rule, money or property transferred to an agent to enable him to carry out his mandate
falls into the insolvent estate of the agent. The position is different with regard to trust
property and funds:
• The assets of a duly constituted trust, although vesting in the trustee, do not form part
of his personal estate on insolvency (s 12 of the Trust Property Control Act 57 of
1988).
• Money held in the trust account of an attorney, notary or conveyancer, or of an estate
agent, does not form part of the insolvent estate of the person concerned unless and
until all claims against the trust account have been satisfied and a balance remains in
the account (s 78(7) of the Attorneys Act 53 of 1979; s 32(8) of the Estate Agency
Affairs Act 112 of 1976). Similarly, the amount standing to the credit of a sheriff’s trust
account is excluded from his insolvent estate (s 22(3) of the Sheriffs’ Act 90 of 1986).
• Trust property invested, held, kept in safe custody, controlled or administered by a
financial institution or a nominee company does not form part of the assets or funds of
that institution or company (s 4(5) of the Financial Institutions (Protection of Funds)
Act 28 of 2001). The same exclusion applies to an ‘authorized user’ (as defined in s 1
of the Securities Services Act 36 of 2004) authorized by an exchange to perform
securities services under the exchange rules. Funds in a trust account of an authorized
user (as well as any funds which have not been deposited into a trust account but
which are identifiable as belonging to a specific person) are considered to be ‘trust
property’ as defined in the Financial Institutions (Protection of Funds) Act and that Act
applies to those funds, subject to s 27 of the Securities Services Act (s 27(3)). Any
excess left in a trust account after payment of or provision for all claims of persons
whose funds have or should have been deposited in the trust account, is not trust
property as contemplated in s 27(3) (s 27(5)). The term ‘trust property’ here applies
only to property held in trust by the relevant institution or company itself and,
accordingly, the exclusion does not extend to trust moneys
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deposited into an account by an attorney (Louw NO & others v Coetzee & others 2003
(3) SA 329 (SCA) 335-6).
5.3.11 Right of labour tenant to land or right in land

If the insolvent is a labour tenant and entitled to apply for an award of land or a right in land
under the Land Reform (Labour Tenants) Act 3 of 1996, his right in this regard does not
form part of his insolvent estate (s 39(c)).
5.3.12 Friendly society moneys and assets

Moneys due as benefits under the rules of a friendly society to a member who retires having
been a member for at least three years do not fall into his insolvent estate (s 48A(1) of the
Friendly Societies Act 25 of 1956). However, if the benefit has been pledged, only the
amount by which the value of the benefit exceeds the secured liability is excluded from the
estate (s 48A(2)).
5.3.13 Property acquired with money from above sources

Property acquired with money from any of the above sources does not vest in the trustee.
This applies equally to property acquired with remuneration in respect of work done. The
property, like the remuneration itself, is prima facie the property of the insolvent, and it
remains so in the absence of any opinion by the Master that the remuneration, or part of it,
was not necessary for the support of the insolvent or his dependants. In Ex parte Fowler
1937 TPD 353 the insolvent, after his sequestration, had lived frugally on his salary and had
accumulated an estate consisting, inter alia, of certain fixed property registered in his name.
There was no evidence that the Master had at any stage considered whether there was a
surplus of earnings above the amount necessary for the support of the insolvent and his
dependants. The court, in rehabilitating the insolvent, held that the fixed property vested in
him and granted an order authorizing the Registrar of Deeds to make an endorsement on
the title deeds to this effect.

An insolvent, for obvious reasons, cannot dispose of property that forms part of his insolvent
estate, but the Act allows one exception to this rule. According to s 25(3), if the insolvent
brings about any act of registration (transfer, mortgage, etc) in respect of immovable
property in his estate after expiry of every caveat entered against that property by the
Registrar of Deeds, the act of registration is valid. A caveat, as will be seen later (see 8.1), is
entered on the title deeds of the immovable property in the insolvent estate to prevent an
insolvent from transferring the property or registering any right over it. Expiry of a caveat
does not revest the property concerned in the insolvent and hence, in principle, any transfer
or other act of registration brought about after expiry would be void. Section 25(3),
however, renders it valid.
According to s 25(4), if an insolvent unlawfully disposes of immovable property or a right
to immovable property which forms part of his insolvent estate, the trustee may,
notwithstanding the provisions of s 25(3) (which, as we have seen, may render the disposal
valid), recover compensation in respect of the property or right disposed of. The trustee is
entitled to recover from:
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• the insolvent personally;

• a person who acquired the property or right knowing it to be part of the insolvent
estate; or
• a person who did not know that the property or right formed part of an insolvent
estate, but who acquired it without giving sufficient value in return (s 25(4)).
The trustee may claim, in the first two instances, the value of the property or right and, in
the last instance, the difference between the value of the property or right and whatever
value the defendant gave in return (ibid).
The trustee, thus, has two possible remedies where the insolvent disposes of immovable
property or a right to immovable property forming part of the insolvent estate. The trustee
may claim return of the property or right itself (on the basis that he is the owner or holder
and the disposal was invalid) (cf Fey NO & another v Mackay [2004] 4 All SA 50 (C); MacKay
v Fey NO & another 2006 (3) SA 182 (SCA) 187), or he may claim compensation in respect
of the property or right from the insolvent or the person who acquired it (on the basis of s
25(4)). The claim for return of the property or right is excluded, however, if the disposal
occurred after all caveats entered against the property had expired.

In view of the fact that various property does not vest in the trustee, it is clear that the
insolvent may, during the period of his insolvency, acquire a new estate and hold it with a
title adverse to his trustee. The courts have held that the after-acquired estate can, in turn,
be sequestrated (see 1.3.1).
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Chapter 6
Vesting of the assets of the solvent spouse
Synopsis
6.1.1 Meaning of ‘solvent spouse’
6.1.2 Duty of solvent spouse to lodge statement of affairs
6.1.3 Postponement of vesting
6.2.1 Categories of property which must be released
6.2.2 Onus of proof
6.2.3 Procedure for release of property
6.2.4 Effect of release by trustee
6.4 Rights of solvent spouse’s creditors in respect of property not released

In chapter 5, it was explained that the effect of a sequestration order is to vest the property
of the insolvent in the Master and thereafter in the trustee, once he has been appointed. In
terms of s 21(1), the additional effect of a sequestration order—which by definition includes
a provisional order: see s 2 —is to vest the separate property of the spouse of the insolvent
in the Master and subsequently the trustee, as if it were the property of the insolvent estate,
and to empower the Master or trustee to deal with the property accordingly. Sequestration,
thus, makes the trustee owner of the solvent spouse’s property in the same way as it makes
him owner of the insolvent’s property. The transfer of ownership is not intended to be
permanent, since the solvent spouse may secure the release (and thereby regain ownership)
of assets falling within the categories set out in s 21(2) (see below). However, until an asset
is actually released, the solvent spouse has none of the ordinary powers of ownership over it
and cannot, for example, dispose of it or encumber it (De Villiers NO v Delta Cables (Pty) Ltd
1992 (1) SA 9 (A)).
| Section 21 was introduced to prevent, or at least hamper, collusion between spouses to
the detriment of creditors of the insolvent estate (De Villiers NO v Delta Cables (Pty) Ltd
(supra) 13); in particular, to make it difficult for an insolvent and his spouse to deprive the
estate of assets to which it is entitled by pretending that they are the separate property of
the solvent spouse. The section still performs this function (Harksen v Lane
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NO & others 1998 (1) SA 300 (CC) 317; Janit v Van den Heever & others NNO (No 1) 2001
(1) SA 731 (W) 733). However, over the years, s 21 has also come to serve the wider
purpose of assisting the trustee in determining in all cases (ie, even where no collusion is
present) which items of property in the possession of the spouses belong to the insolvent
estate. This is often a matter of complexity for the spouses themselves and, hence, is even
more difficult and complex for a trustee who comes as a complete stranger to the spouses’
financial affairs. In Harksen v Lane NO & others (supra), it was contended that s 21 is invalid
for violating the solvent spouse’s constitutional rights, in particular, the right not to have
property expropriated without compensation and the right to equality before the law and not
to be unfairly discriminated against. The majority of the Constitutional Court rejected the
contention. Its reasoning may be summarized as follows:
• The section cannot be regarded as expropriating the solvent spouse’s property since it
does not contemplate a permanent transfer of ownership to the Master or the trustee.
The purpose of the section is merely to ensure that the insolvent estate is not deprived
of property to which it is entitled.
• The section does indeed differentiate between the solvent spouse and other persons
who might have had dealings with the insolvent, but this differentiation is legitimate
and does not infringe the right to equality before the law because the section has a
legitimate purpose and the differentiation has a rational connection to that purpose.
• The differentiation of the section amounts to discrimination but it does not constitute
unfair discrimination because (a) it does not affect a vulnerable group or a group that
has suffered discrimination in the past; (b) it is intended to achieve a worthy and
important societal goal, viz, protecting the rights of creditors of insolvent estates; and
(c) it does not impair the fundamental dignity of solvent spouses or bring about an
impairment of a comparably serious nature.
6.1.1 Meaning of ‘solvent spouse’

For the purposes of s 21, ‘spouse’ has an extended meaning and includes a wife or a
husband married according to any law or custom, and also a person living with a member of
the opposite sex, although not married to her or him (s 21(13)). However, according to
Chaplin NO v Gregory (or Wyld) 1950 (3) SA 555 (C), on the insolvency of a married man or
woman who is living with a third person (ie, not the legal spouse), only the property of the
legal spouse, and not that of both the spouse and the third person, vests in the trustee.
Parties of the same sex who have concluded a ‘civil union’, as defined in the Civil Union
Act 17 of 2006, qualify as spouses for purposes of s 21 and are subject to its provisions. A
civil union is a voluntary union of two persons who are both 18 years of age or older, which
is solemnized and registered as a marriage or civil partnership in accordance with the
procedures prescribed in the Act, to the exclusion, while it lasts, of all others (s 1 sv ‘civil
union’). The legal consequences of a marriage under the Marriage Act 25 of 1961 apply with
the necessary contextual changes to a civil union (s 13(1) of the Civil Union Act 17 of 2006)
and, with certain exceptions, any reference to a husband, wife or spouse includes a civil
union partner (s 13(2)).
Section 21 applies only where there is, indeed, a solvent spouse. Where the joint estate of
spouses married in community of property is sequestrated, both spouses become insolvents
and s 21, accordingly, has no application. The property of the
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spouses vests in the trustee in terms of s 20, including assets which a spouse owns as his or
her separate property and which, therefore, do not form part of the joint estate (Badenhorst
v Bekker NO en andere 1994 (2) SA 155 (N); Du Plessis v Pienaar NO & others 2003 (1) SA
671 (SCA) 675-6).
Section 21 contemplates an existing relationship between the spouses. If, prior to
sequestration, the relationship has been terminated (by death or divorce in the case of a
marriage, or by separation in the case of an ‘informal’ relationship), then s 21 is not
applicable. It follows that the section does not apply to a previous spouse or to the surviving
spouse in the case of the sequestration of a deceased estate (Janit v Van den Heever &
others NNO (No 1) (supra); Shrosbree & others NNO v Van Rooyen NO & others 2004 (1) SA
226 (SE) 229).
For the sake of brevity, in this chapter it is assumed that the solvent spouse is a woman.
6.1.2 Duty of solvent spouse to lodge statement of affairs

One of the duties of the sheriff on receiving a sequestration order is to serve a copy of the
order on the solvent spouse if she has a separate estate that has not been sequestrated (see
8.2). The solvent spouse must, within seven days of service, lodge with the Master a
statement of her affairs as at the date of sequestration, framed substantially in accordance
with Form B in the First Schedule to the Act, and verified by affidavit (s 16(3)). The
information that must be contained in the statement of affairs is set out in chapter 2. The
Master will allow a reasonable fee for assistance in preparing the statement of affairs if he is
satisfied that the solvent spouse was unable to prepare it without assistance (s 16(5)).
6.1.3 Postponement of vesting

The vesting of the solvent spouse’s property in the trustee may have serious consequences
for her. The Act accordingly makes provision for the postponement of vesting of some or all
of the solvent spouse’s assets. In terms of s 21(10), if the solvent spouse is carrying on the
business of a trader apart from the insolvent spouse, or if it appears to the court that the
solvent spouse is likely to suffer serious prejudice through the immediate vesting of her
property, the court may, when making the sequestration order or at a later date, exclude
her property or part of it from the operation of the order for such period as it thinks fit. The
court may only postpone the vesting of the solvent spouse’s property if it is satisfied that
she is willing and able to make arrangements protecting the interest of the insolvent estate
in the property concerned, and the court must make the postponement conditional upon the
immediate completion of these arrangements (ibid).
To obtain a postponement, the solvent spouse must furnish the court with full particulars
of the nature and value of the assets claimed, the nature and origin of her title to those
assets, the prejudice which she will suffer if the postponement is not granted, and the
arrangements she intends and is able to make to safeguard the interest of the insolvent
estate (Ex parte Vogt 1936 SWA 39 41). The sort of contingencies against which the
insolvent estate must be protected are alienation or fraudulent abandonment of the assets
by the solvent spouse, malicious or accidental damage to the property by the solvent spouse
or by a third person, and theft of the assets by a third person. In each
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case, the court will pose the question whether the arrangements proposed by the solvent
spouse offer adequate protection against all the contingencies that could possibly take place.
Only if there is no reasonable possibility of a contingency occurring may it be left out of the
account (Van Schalkwyk v Die Meester 1975 (2) SA 508 (N)).

6.2.1 Categories of property which must be released
The trustee is obliged to release property of the solvent spouse which is proved to fall into
any of the following categories:
(i) Property owned before marriage to the insolvent
The trustee must release property that was the solvent spouse’s property immediately
before her marriage to the insolvent, or before 1 October 1926 (s 21(2)(a)).
(ii) Property acquired under a marriage settlement
Another category of property which the trustee must release is that acquired by the solvent
spouse under a marriage settlement (s 21(2)(b)). The solvent spouse need not prove that
the settlement was bona fide. She would have to prove this to avoid having the donation set
aside as a disposition without value in terms of s 27 (see 12.2.1(ii)), but s 27 and 21 are
quite independent of each other (Dobrin v Trustees Estate Dobrin 1932 WLD 195). In
Turnbull v Van Zyl NO 1974 (1) SA 440 (C), it was pointed out that an antenuptial contract
is interpreted in accordance with the general rules of interpretation applicable to ordinary
contracts and that, if the terms of a donation in the contract are too uncertain to be
enforced, the solvent spouse cannot rely on the donation to obtain release of the property.
The court held that a clause in an antenuptial contract settling upon the wife ‘all household
furniture and effects’ was too vague to be enforced and therefore was not a valid ground for
releasing the items claimed by the solvent spouse.
(iii) Property acquired by valid title during the marriage
The trustee is obliged to release property which was acquired by the solvent spouse during
her marriage with the insolvent by a valid title against creditors of the insolvent (s 21(2)(c)).
This would include property bought by the solvent spouse from her own earnings or the
proceeds of her personal property and donations received by her from friends and family (cf
Bernard v Klein NO 1990 (2) SA 306 (W)).
A donation between spouses, although formerly invalid, is now permitted (s 22 of the
Matrimonial Property Act 88 of 1984) and is, therefore, enforceable, provided it is sufficiently
certain and the formalities required by s 5 of the General Law Amendment Act 50 of 1956
have been observed. (The latter section provides that an executory contract of donation—ie,
one that has not been fully performed—must be embodied in a written document signed by
the donor or by a person acting on his written authority granted by him in the presence of
two witnesses.) In the result, if the solvent spouse has acquired an asset from the insolvent
as a direct gift or with money provided by the insolvent, she has acquired the asset with a
title adverse to the insolvent’s creditors and the trustee must release it. The fact that the
insolvent made the donation with the specific purpose of shielding the asset in question from
creditors and providing his wife with
Page 83
financial security does not affect the position (Rens v Gutman NO & others 2003 (1) SA 93
(C) 98). However, the trustee may, of course, subsequently institute proceedings in terms of
s 26 to have the gift set aside as being a disposition without value (see 12.2.1).
Obviously, to provide the solvent spouse with a valid title, the transaction by which she
acquired the property must have been a genuine one, concluded in good faith. If it was a
simulated or collusive transaction designed to deceive or defraud creditors, the trustee may
disregard it (Snyman v Rheeder NO 1989 (4) SA 496 (T); Jooste v De Witt NO 1999 (2) SA
355 (T)). An important factor in determining the question of bona fides is whether the
parties, at the relevant time, were aware of the alienator’s actual or imminent insolvency
(Beddy NO v Van der Westhuizen 1999 (3) SA 913 (SCA) 917).
(iv) Property protected under certain other provisions
Section 21(2)(d) provides for the release of property protected by various other provisions,
but the section has become obsolete because the relevant provisions no longer exist.
Section 44(1) and (2) of the Insurance Act 27 of 1943 which protected part of the value of
certain life policies ceded to, or taken out in favour of, a solvent wife, was found to be
unconstitutional and, thus, void (Brink v Kitshoff NO 1996 (4) SA 197 (CC)). The Insurance
Act 27 of 1943 has now been replaced by the Long-term Insurance Act 52 of 1998, which
contains no provision similar to s 44.
(v) Property acquired with proceeds of the above
The trustee is also obliged to release property acquired with any of the property mentioned
above or with the income or proceeds of that property (s 21(2)(e)).
6.2.2 Onus of proof

The onus is on the solvent spouse to prove that the property she claims falls within a
particular category (Maudsley v Maudsley’s Trustees 1940 WLD 166169). If the trustee
raises pertinent issues pointing to possible collusion, and the solvent spouse makes no
genuine attempt to address these issues or to reconstruct a true picture of the transaction,
the court may find that she has not discharged the onus resting on her (cf Beddy NO v Van
der Westhuizen (supra)). On the other hand, if the solvent spouse gives a plausible
explanation establishing her title to the property and the trustee fails to deal specifically with
her allegations or provide any contradictory evidence, she may be held to have discharged
her onus. In Bernard v Klein NO (supra), the solvent spouse provided evidence to show that
she had obtained the money to pay for the property in question from various sources,
including the sale of her engagement ring and donations from her mother, father-in-law and
brother-in-law. The trustee did not allege any facts to refute this, but simply said that he
suspected that the solvent spouse had received money from the insolvent and that the
solvent spouse’s evidence was ‘doubtful’ and ‘suspicious’. The court held that the solvent
spouse’s version of events, although not without some ‘strange features’, was acceptable per
se and, as it was the only version before the court, it had to be believed.
6.2.3 Procedure for release of property

The Act does not stipulate what procedure must be followed to obtain the release of assets.
The practice is for the solvent spouse to apply to the trustee for the release of the property,
but she is not obliged to take this course and may approach the court directly
Page 84
(Hawkins v Cohen NO 1994 (4) SA 23 (W)). When applying to the trustee, the solvent
spouse is normally required to provide him with an affidavit setting out the nature and origin
of her title to the property and any documents supporting her allegations: invoices, receipts,
paid cheques, etc. Affidavits by third parties able to vouch for the genuineness of her claim
may also be included. The trustee must bring his mind to bear on the claim and must
consider any statements by third persons which the solvent spouse submits to establish it
(De Villiers v Estate De Villiers 1930 CPD 387 388). If the solvent spouse proves (on a
balance of probabilities) that an asset falls into one of the prescribed categories, the trustee
is obliged to release it forthwith. He cannot refuse to do so on the basis that he may be
entitled to set the transaction aside under another section of the Act (Conrad v Conrad’s
Trustee 1930 NPD 100). Moreover, a creditor has no power to intervene and prevent the
trustee from releasing the asset (Enyati Resources Ltd & another v Thorne NO & another
1984 (2) SA 551 (C)).
If the vesting of certain assets has been postponed, the solvent spouse must, during the
postponement, lay before the trustee evidence of her claim to the assets, and the trustee
must notify the solvent spouse in writing whether or not he will release them (s 21(10)).
6.2.4 Effect of release by trustee

Where the trustee has released property to the solvent spouse, he is not debarred from
proving subsequently that it belongs to the insolvent estate and from recovering it
accordingly (s 21(12)). The court can moreover, on application by the trustee or a creditor,
grant an interdict prohibiting the solvent spouse from selling, mortgaging, or otherwise
disposing of the released property, pending an action to set aside the transaction under
which the solvent spouse acquired the property (Enyati Resources Ltd & another v Thorne
NO & another (supra)).

Should the trustee refuse to release property claimed by the solvent spouse, she may apply
to court for an order releasing the property or staying the sale of the property (s 21(4)). If
the property has already been sold but the proceeds have not yet been distributed among
creditors, the solvent spouse may ask for an order declaring that she is entitled to the
proceeds (ibid). She may approach the court without first applying to the trustee, but this
could have adverse cost implications for her (Hawkins v Cohen NO 1994 (4) SA 23 (W)). The
court may make whatever order on the application it considers just (ibid). It will ordinarily
order the release of property which the solvent spouse proves falls within one of the
prescribed categories, but it will consider each application on its merits and may, in
exceptional circumstances, apply some other principle, such as estoppel (Van der Bergh v
Insolvent Estate Van der Bergh 1931 CPD 1). Section 21(12), which allows the trustee to
recover property which he has released to the solvent spouse, does not apply where the
court has ordered the release of the property. In other words, once the court has made an
order, the matter is res judicata between the parties (Rautenbach v Morris: In re Estate
Rautenbach 1961 (3) SA 728 (E)).
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6.4 Rights of solvent spouse’s creditors in respect of property

not released
The separate creditors for value of the solvent estate are entitled to prove their claims
against the insolvent estate in the usual way (see 9.2.3) and, having done so, are entitled to
share in the proceeds of the solvent spouse’s property (ie, that not released) in priority to
the separate creditors of the insolvent estate (s 21(5)). However, the solvent spouse’s
property is required to bear a proportionate share of the costs of sequestration (ibid). The
fact that the solvent spouse’s creditors have proved claims does not entitle them to share in
the separate assets of the insolvent estate or to vote at meetings of creditors (ibid).
If any property of the solvent spouse has been released by the trustee or the court, the
separate creditors of the solvent spouse are entitled to share in the proceeds of the solvent
spouse’s property realized by the trustee only if they have excussed the property released as
well as any property acquired by the solvent spouse since the sequestration (s 21(6)).
Before awarding a creditor a share in the proceeds of the solvent spouse’s assets, the
trustee may require the creditor to lodge with him, within a period fixed by the Master, an
affidavit, supported by any available evidence, setting forth the result of the excussion and
disclosing the balance of his claim which remains unpaid (s 21(7)). The creditor is then
entitled to share in respect of that balance only, but if he has incurred costs in excussing the
separate property of the solvent spouse and has been unable to recover those costs from the
proceeds of that property, he is entitled to add the amount of the costs to the amount of his
claim as proved (ibid). If, during the period fixed by the Master, a creditor fails to excuss the
property of the solvent spouse available for satisfaction of his claim, or fails to lodge the
required affidavit, he loses all right to share in the proceeds of the solvent spouse’s
property, unless the court orders otherwise (s 21(8)).

The solvent spouse cannot surrender her estate while it vests in the trustee (Ex parte Venter
1931 SWA 3), but civil proceedings against her are not stayed (Malcomess’s Estate v De
Kock 1937 EDL 18) and, if she commits an act of insolvency, her estate may be sequestrated
by a creditor (Mosenthal Bros Ltd & another v Moritz 1929 WLD 84). The court may postpone
the application for sequestration or make any interim order it considers just, if it is satisfied
that the act of insolvency was due to the vesting and either:
• proceedings are being or will, where necessary, be taken to obtain an order releasing
the property, or
• property of the solvent spouse has been released since the making of the sequestration
order and the solvent spouse is now in a position to discharge her liabilities (s 21(11)).
If the estate of the solvent spouse is sequestrated, the right to obtain release of the property
that belonged to her vests in the trustee of her estate (Souter NO v Said NO 1957 (3) SA
457 (W)).
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Chapter 7
Uncompleted contracts and legal proceedings not yet
finalized
Synopsis
Introduction
7.2.1 Continuance of contract
7.2.2 The trustee’s election
7.2.3 Statutory controls on the exercise of trustee’s election
7.2.4 Consequences of repudiating contract
7.2.5 Consequences of abiding by contract
7.2.6 Contracts which are suspended or terminate automatically on
sequestration
7.2.7 Contracts which trustee cannot repudiate
7.2.8 Purchase of goods in terms of instalment agreement
7.2.9 Transaction on exchange
7.2.10 Agreement on informal market
7.2.11 Provisions designed to protect solvent party
Introduction
An order of sequestration affects not only the insolvent’s property, but also the contracts to
which he is a party and which have not been performed (apart from those contracts he can
enforce for his own benefit—see 4.3.1) and legal proceedings against him which have not
been finalized.

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 the right is one to payment, the trustee may enforce it in the
same way as other debts owed to the insolvent estate (cf s 77). If the right is to some other
performance, the trustee may either sell the right along with the other estate assets, or
enforce performance and then sell the subject matter of the performance.
A right to a performance held by the estate lapses if the other party in good faith, and
without knowledge of the sequestration, performs to the insolvent (s 22).
|
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A right to compensation under an insurance policy indemnifying the insolvent against

liability to third parties vests in the third party concerned, who may recover what the
insolvent owes him directly from the insurer in terms of s 156. The nature of a third party’s
right under s 156 is discussed at 5.3.8(i).

The following principles apply to a contract which the insolvent has not performed (or
performed in full) by the time of sequestration.
7.2.1 Continuance of contract

As a general rule, sequestration does not suspend or put an end to the contract (Bryant &
Flanagan (Pty) Ltd v Muller & another NNO 1978 (2) SA 807 (A) 812; Nedcor Investment
Bank v Pretoria Belgrave Hotel (Pty) Ltd 2003 (5) SA 189 (SCA) 192). For the exceptions to
this rule, see 7.2.6.
7.2.2 The trustee’s election

The trustee (or provisional trustee) generally has an election to perform in terms of the
contract or not (as to when he is compelled to abide by the contract, see 7.2.7). It is
sometimes said that the trustee is empowered by reason of his position to terminate the
contract, but this is misleading: the only ‘power’ which the trustee’s office gives him is to
exclude the right of the other party to invoke the remedy of specific performance (Smith &
another v Parton NO 1980 (3) SA 724 (D) 728-9; Thomas Construction (Pty) Ltd (in
Liquidation) v Grafton Furniture Manufacturers (Pty) Ltd 1988 (2) SA 546 (A) 566-7). The
trustee is given this power so that he may act in the interests of the concursus creditorum
(Glen Anil Finance (Pty) Ltd v Joint Liquidators Glen Anil Development Corporation Ltd (in
Liquidation) 1981 (1) SA 171 (A) 182). It follows that he must obtain and abide by the
instructions of the general body of creditors on the matter, and that he may not competently
adopt a course that is prejudicial to the interests of the concursus (Uys & another v Sam
Friedman Ltd 1934 OPD 80 86; Ward v Barrett NO & another NO 1963 (2) SA 546 (A)).
The question whether the trustee has elected to abide by the contract is one of fact, not
law. In each case, it must be decided by a process of inference, the conclusion drawn to be
consistent with all the proven facts. To the extent that the other party relies upon conduct
by the trustee as constituting an election to abide by the contract, that conduct must be
unequivocal (Du Plessis & another NNO v Rolfes Ltd 1997 (2) SA 354 (A) 364). Thus, for
example, an election to continue with a building contract does not, per se, entail an election
to abide by executory subcontracts (Du Plessis & another NNO v Rolfes Ltd (supra)); a
decision to carry on with a contract of agency is not necessarily an election to complete the
principal contract (Gore & another NNO v Roma Agencies CC 1998 (2) SA 518 (C)); and
realizing property transferred to the estate in terms of the contract does not amount to an
election to abide by the contract (Nedcor Investment Bank v Pretoria Belgrave Hotel (Pty)
Ltd (supra) 193).
Once the trustee has elected to repudiate or continue with the contract, he cannot change
his mind (Noord-Westelike Koöperatiewe Landboumaatskappy Bpk v Die Meester en andere
1982 (4) SA 486 (NC) 495). If he fails to reach a decision within a reasonable time, it is
assumed that he does not intend to perform in terms of the contract.
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In Tangney & others v Zive’s Trustee 1961 (1) SA 449 (W), the insolvent had bought a hotel
business on instalments. The trustee carried on the business for more than six months, but
did not make any payments in terms of the contract or indicate in any other way his
intention to affirm the contract. In response to a letter from the sellers giving notice of
intention to cancel the contract, the trustee simply contended that the sellers were not
entitled to cancel and that the notice was invalid. The court held that, as the trustee had
failed to give due notice of his intention to abide by the contract, the sellers were entitled to
assume that he had repudiated it.
7.2.3 Statutory controls on the exercise of trustee’s election

In regard to certain contracts, the Act lays down when or how the trustee should exercise his
election.
(i) Contract to acquire immovable property
Where the insolvent contracted to acquire immovable property and the property has not
been transferred to him, the trustee must make his election to uphold or repudiate the
contract within six weeks after receiving written notice from the other party calling upon him
to do so (s 35). If the trustee fails to make his election and notify the other party
accordingly, the latter may apply to court for the cancellation of the contract and the return
of possession of the property. In addition, the other party may prove a concurrent claim
against the estate for loss suffered as a result of the non-fulfilment of the contract (ibid).
‘Trustee’, for the purposes of s 35, includes a provisional trustee (ss 2 and 18(3)). If a
provisional trustee is called upon to adopt or abandon a contract, he must ask for directions
from the Master but, if the Master fails to respond, the provisional trustee may use his own
discretion (Botha v Von Reiche NO en ’n ander 1962 (1) SA 863 (T)). The trustee takes
directions from the creditors (s 81).
The courts have differed on whether s 35 applies to a ‘composite’ contract, ie, one for the
acquisition of immovable property together with other property. In Kuming v Paterson NO
1954 (2) SA 130 (E), it was held that a contract of sale of a hotel comprising land, buildings,
furniture and goodwill fell within the terms of s 35, even though the parties had expressly
provided that the sale of the property was ‘indivisible’. De Villiers J took the view that the
section applies if the contract is, inter alia, one for the acquisition of immovable property,
irrespective of whether movables are included in the res vendita as well. By contrast, in
Tangney & others v Zive’s Trustee (supra), the court rejected the reasoning in Kuming’s case
and held that s 35 applies only to an ‘ordinary’ contract for the sale of immovable property,
not a composite one in respect of both immovable and movable assets. It seems clear that
applying the Tangney principle could easily lead to absurd results. For instance, s 35 would
not apply to the sale of a block of flats for R5 million if a few items of furniture formed part
of the res vendita. For this reason, it is submitted, Tangney’s case should not be followed.
The correct inquiry would appear to be whether the contract is substantially one for the
acquisition of immovable property.
(ii) Hire of property
Where the insolvent hired property (movable or immovable: see Montelindo Compania
Naviera SA v Bank of Lisbon and SA Ltd 1969 (2) SA 127 (W)), the trustee may only
Page 89
repudiate (‘determine’) the lease by giving notice in writing to the lessor (s 37(1)). If the
trustee does not, within three months of his appointment, notify the lessor that he desires to
continue the lease on behalf of the lessee’s estate, he is deemed to have repudiated it (s 37
(2)).
Repudiation of the lease in accordance with s 37 deprives the insolvent estate of any right
to compensation for improvements, other than improvements made in terms of an
agreement with the lessor (s 37(4)). The lessor has:
• a preferent claim for rent payable from the date of sequestration to the date of
determination of the lease (this claim is included in the costs of administration of the
estate: s 37(3));
•
if the property is immovable, a secured claim by reason of his tacit hypothec, for rent
owed at the time of sequestration (this claim is limited by the Act: see 16.2.2); and
• a concurrent claim in respect of any other loss sustained because of the non-
performance of the lease (s 37(1); Norex Industrial Properties (Pty) Ltd v Monarch
South Africa Insurance Co Ltd 1987 (1) SA 827 (A)).
The affording of a preference to part of the lessor’s claim for rent does not transform the
obligation to pay the rent into a new obligation or change its essential juristic nature, and so
a third person who has stood surety for the rent cannot competently contend that the
sequestration absolves him from liability because it discharges the principal obligation
(Boshoff v South African Mutual Life Assurance Society 2000 (3) SA 597 (C)).
7.2.4 Consequences of repudiating contract

If the trustee elects to repudiate the contract (or if he is deemed to have done so), the
opposite party is precluded from obtaining an order of specific performance, even if he has
performed his own obligations in full. However, he may exercise the other remedies for
breach of contract. In this respect, the trustee’s act (or deemed act) of repudiation is visited
with the same consequences as an unlawful repudiation by a solvent party (Somchem (Pty)
Ltd v Federated Insurance Co Ltd & another 1983 (4) SA 609 (C) 615-16).
If the opposite party chooses to disregard the repudiation and keep the contract alive, he
may, it seems, prove a concurrent claim for damages in lieu of performance. He then
remains liable for, and must render, his own counter-performance. If he decides to accept
the repudiation (ie, cancel the contract), the following consequences ensue:
• He may recover any property handed over in performance of his obligations and still
owned by him (cf Smith & another v Parton NO (supra)).
• He is obliged to make restitution in accordance with the normal principles of the law of
contract (De Wet NO v Uys NO en andere 1998 (4) SA 694 (T) 705), unless the
contract contains a forfeiture clause excusing him from doing so (Tangney & others v
Zive’s Trustee (supra) 453).
• He has a concurrent claim in respect of property which he has transferred, and
payments which he has made, to the debtor, and for loss which he has suffered
because of the breach (Smuts, Trustee of Neethling v Neethling (1844) 3 Menz
283 286; Harris v Trustee of Buissinne (1840) 2 Menz 105; Gordon NO v Standard
Merchant Bank Ltd 1983 (3) SA 68 (A) 90).
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7.2.5 Consequences of abiding by contract

If the trustee elects to carry on and complete the contract, he ‘steps into the shoes’ of the
insolvent. He may insist on receiving any performance owed by the other party, and he is
bound to carry out any counter-prestation that the contract required of the insolvent. He
cannot demand to be treated differently simply by reason of the sequestration (cf Eastern
Metropolitan Substructure of the Greater Johannesburg Transitional Council v Venter NO
2001 (1) SA 360 (SCA) 369). In Bryant & Flanagan (Pty) Ltd v Muller & another NO 1978 (2)
SA 807 (A), M concluded a building contract with T Co. While building was in progress, T Co
was placed in liquidation and B & F were appointed liquidators. At the time of the liquidation,
T Co owed M an amount for work already performed. After liquidation, B & F called upon M
to finish the work in terms of the contract. M did so. B & F then took the attitude that M had
only a concurrent claim against the estate for work done before liquidation (except for
certain repairs to a beam). The court held that, as B & F had chosen to continue with the
executory contract, they were liable to pay M in full for the pre-liquidation work. Van Winsen
AJA said (at 815):
‘No right in law resides in the [trustees] to abide by the contract and at the same time unilaterally
make a stipulation derogating from [M’s] rights under the contract.’
However, by electing to uphold the contract, the trustee becomes liable to perform only what
is reciprocally due to the other party. The trustee need not, for example, pay an amount still
owing for property transferred to the insolvent prior to sequestration if the obligation to
transfer the property is not, in terms of the agreement, reciprocal to the duty to pay the
balance of the price (Nedcor Investment Bank v Pretoria Belgrave Hotel (Pty) Ltd (supra)
193).
The cost of performing in favour of the other party is an administration expense (Nedcor
Investment Bank v Pretoria Belgrave Hotel (Pty) Ltd (supra) 192) and must be paid for in
full from the proceeds of the estate assets or, if these are insufficient, from contributions
levied against proved creditors (Montelindo Compania Naviera SA v Bank of Lisbon and SA
Ltd (supra) 142; as to the duty to contribute, see 17.1.4). The trustee should obviously take
this factor into account when deciding whether upholding the contract will benefit the
general body of creditors (Du Plessis & another v Rolfes Ltd (supra)).
In taking over the insolvent’s rights under the contract, the trustee automatically takes
over any defects in those rights. Thus, the other party is entitled to raise against the trustee
any defences he could have raised against the insolvent (Thomas Construction (Pty) Ltd (in
Liquidation) v Grafton Furniture Manufacturers (Pty) Ltd (supra) 567-8; Bryant & Flanagan
(Pty) Ltd v Muller & another NNO 1977 (1) SA 800 (N) 805). It follows that, if the opposite
party, prior to the sequestration, acquired the right to cancel the contract on account of
breach, he may exercise that right vis-à-vis the trustee, notwithstanding that the latter
wishes to continue with the contract and tenders the performance promised by the insolvent.
In Smith & another v Parton NO (supra), S sold a restaurant business to P on instalments. P
defaulted in his payments and, in accordance with the agreement, S gave him notice to cure
his breach, failing which S would cancel the contract. This P failed to do, and S caused his
estate to be sequestrated. S then sought to exercise his right to cancel the contract and
claim return of the business, which he still owned. His claim succeeded, the court holding
that his accrued right to cancel the contract had survived
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the insolvency. According to Porteous v Strydom NO 1984 (2) SA 489 (D), the opposite
party may cancel for breach even where a notice which he gave the debtor to cure his
default had not expired by the time of sequestration. Galgut AJ observed (at 494):
‘[Nothing] in our law excuses the trustee from performing the insolvent’s obligations which fall due to
be performed between the date of sequestration and the date on which the trustee makes his
election. In other words should the trustee during this period fail to perform such obligations, and
should the seller in consequence thereof cancel the contract . . . then the trustee cannot be heard to
say . . ., should he elect to abide by the contract, that the seller’s cancellation is then ineffective.’
The Act limits the right of the other party to exercise an accrued right of cancellation where
the contract is a cash sale of movable property. Under such a sale, the parties agree that the
price will be paid on delivery of the merx. Under a credit sale of movables, the parties agree
that the price will be paid on a date after the date of delivery. Ownership of property sold for
cash passes to the buyer only once the property has been delivered and the purchase price
has been paid in full. Ownership of property sold on credit passes to the buyer on delivery of
the property to the buyer, unless it is a term of the agreement that ownership will pass only
at some later stage. By virtue of s 36(1) and (4), a seller of movable property for cash, who
has delivered the property but not been paid (and who, therefore, has the right, in terms of
general contractual principles, to cancel the contract and recover the property) cannot
reclaim the property from the trustee of the buyer’s insolvent estate unless:
• he (the seller) has given notice in writing to the buyer (or the trustee or the Master)
within 10 days after delivery (not sequestration) that he reclaims the property; and
• if the trustee disputes his right to reclaim the property, he institutes legal proceedings
within 14 days of receiving notice of the trustee’s objection.
It should also be noted that s 36 of the Insolvency Act does not apply to an instalment
agreement governed by the National Credit Act 34 of 2005.
7.2.6 Contracts which are suspended or terminate automatically on sequestration

The proposition that insolvency does not suspend or put an end to the insolvent’s
uncompleted contracts must be qualified to some extent.
(i) Employment contract
The sequestration of an employer’s estate suspends the employment contract between him
and his employee with immediate effect (s 38(1)). During the period of the suspension:
• the employee is not obliged to render services, and is not entitled to his salary or wage
(s 38(2)(a)) (he may, however, recover compensation for any loss he suffers as a
result of the suspension (s 38(10)(a));
• no employment benefit accrues to the employee (s 38(2)(b)), although he may receive
unemployment benefits from the date of the suspension (s 38(4)).
The trustee may terminate the contract (s 38(4)), provided he has engaged in consultation
aimed at reaching consensus on appropriate measures to rescue the whole or part of the
insolvent employer’s business (s 38(5)-(7)). The trustee is required to consult whomever the
employer would have been obliged to consult in terms of a collective agreement or,
Page 92
if there is no agreement requiring consultation, the workplace forum and registered trade
union representing the employee, or in the absence of a workplace forum, the employee’s
registered trade union, or if there is no such trade union, the employee personally or his
nominated representative (s 38(5)). If any of these parties wishes to make proposals
regarding what measures should be taken, that party must submit his proposals in writing to
the trustee within 21 days of his appointment, unless the trustee and an employee agree
otherwise (s 38(7)). A creditor of the insolvent employer may, with the consent of the
trustee, participate in the consultation (s 38(8)). The ‘appropriate measures’ considered
must include the sale of the whole or any part of the business (s 38(6)). The transfer of the
business (or part thereof) has the effect that the employment contract continues with the
new owner, the latter being substituted in the place of the old employer (ie, the insolvent) (s
197A(2) of the Labour Relations Act 66 of 1995). However, the rights and obligations which
existed under the contract between the old employer and the employee at the time of
transfer remain in force between these parties, and anything done before the transfer by the
old employer in relation to the employee (eg, dismissal of the employee, or the commission
of an unfair labour practice, or an act of discrimination) is considered to have been done by
the old employer (ibid).
If no measure is adopted which results in a continuation of the contract and the trustee
does not bring the contract to an end, the contract terminates automatically 45 days after
the date of appointment of the trustee (s 38(9)(a)).
On termination of the contract (ie, by the trustee or by effluxion of time), the employee is
entitled to recover any resultant loss he has suffered as well as severance benefits in
accordance with s 41 of the Basic Conditions of Employment Act 75 of 1997 (s 38(10)-(11)).
The employee’s claim for the latter is a preferent one (see 16.3.2(v)).
Sequestration of an employee’s estate does not terminate his contract of employment
unless, by virtue of some statutory provision, he is precluded from holding his particular
position or office while insolvent (see 4.4).
(ii) Mandate
It has been held that a contract of mandate (mandatum), ie, an agreement to perform some
task or render professional services for another, such as the contract between an attorney
and his client, ipso iure comes to an end on the insolvency of the mandator (principal)
(Goodricke & Son v Auto Protection Insurance Co Ltd (in Liquidation) 1968 (1) SA 717 (A)).
However, this view is arguably an overgeneralization: the question in each case seems to be
whether the mandate concerns a matter in which the principal can act without his trustee’s
concurrence (cf Klein NO v South African Transport Services & others 1992 (3) SA 509 (W)
513).
There is Roman-Dutch authority to the effect that an agreement of mandate terminates
on the insolvency of the mandatary (agent) (Voet 17.2.17) but, again, this proposition
probably needs to be qualified. For one thing, a mandate to perform a juristic act of some
kind (eg, conclude a contract) logically should not terminate, since any juristic act performed
by a mandatary is deemed to have been concluded between the mandator and the other
person, and the mandatary is not party to the resultant legal relationship. Secondly, if the
mandate does not call for any special skill or expertise and, therefore, can be satisfactorily
executed by the trustee (eg, by engaging the services of a
Page 93
person of the same profession or training as the insolvent), there seems to be no cogent
reason for denying the trustee the option of enforcing the contract (cf Natal Law Society v
Stokes & another 2002 (3) SA 189 (N) 196).
7.2.7 Contracts which trustee cannot repudiate

The trustee’s power to repudiate is excluded or limited in relation to certain contracts.
(i) Lease of immovable property
Because of the principle of ‘huurgaatvoorkoop’, the trustee cannot, as a rule, repudiate a
lease of immovable property concluded by the insolvent as lessor and must realize the
property subject to the lease. However, the trustee may be compelled to repudiate the lease
if the property is subject to a real right (eg, a mortgage bond) that was registered prior to
the lease. The trustee is required initially to put the property up for sale subject to the lease.
If the highest bid is not sufficient to cover the amount due to the holder of the real right, the
trustee must, at the request of the holder, sell the property free of the lease (Timm v Kay &
another 1954 (4) SA 585 (T); for the steps to be followed, see 15.2.5). The lessee thereafter
has a concurrent claim for damages in respect of loss suffered because of the breach of
contract.
(ii) Sale of land on instalments
The trustee’s right to repudiate may be excluded where the insolvent has:
• sold land on instalments; or
• alienated (ie, sold, donated or exchanged) land which has subsequently been sold on
instalments;
• and the land has not been transferred pursuant to the transaction(s) in question.
Chapter II and s 27 of the Alienation of Land Act 68 of 1981 give the buyer on
instalments and other parties the right to compel transfer of the land, provided they
meet certain requirements.
The type of transaction governed by Chapter II (referred to in the Act as a ‘contract’) is a
sale of land on instalments in which the purchase price is payable in two or more instalments
over a period exceeding one year (s 1). ‘Land’ in the context of Chapter II (but not the rest
of the Act) means land used or intended to be used mainly for residential purposes and
excludes agricultural land as defined in the Subdivision of Agricultural Land Act 70 of 1970
(ibid). Included in the definition of ‘land’ are a unit as defined in the Sectional Titles Act 95
of 1986, a right to claim transfer of land, and an undivided share in land (ibid). The Chapter
does not apply where the State or a local authority is the seller (s 4).
To provide for the case where land is disposed of under successive transactions without
being transferred, Chapter II uses the concepts of an ‘intermediary’ and a ‘remote
purchaser’. A remote purchaser means a person who purchases land in terms of a contract
from another person who is not the owner of the land (s 1). An intermediary is a person who
sells land to a remote purchaser or a person who has alienated land which, after the
alienation, is sold by another person to a remote purchaser and which, at the time of the
sale, has still to be transferred to the first-mentioned person (ibid). ‘Alienate’ for the
purposes of the Act means sell, donate, or exchange (ibid).
Page 94
The main effect of Chapter II is the following:

• Where the insolvent has sold his land in terms of a contract, the buyer may compel the
trustee to pass transfer of the land in his favour, provided he arranges to pay all
transfer costs plus whichever is the larger of:
— the total amount outstanding under the deed of alienation; or
— the sum of the following costs:
• the administration costs payable in terms of s 89(1) of the Insolvency Act;
• any endowment, betterment or enhancement levy, development
contribution or similar imposition, payable in relation to the land; and
• the amount required to discharge any mortgage bond on the land, including
interest to date of transfer (s 22(1)).
The arrangements for payment must be made to the satisfaction of the owner’s trustee
within such period as the trustee may allow, but this period must not be less than 30
days (s 22(2)).
• Where the insolvent has alienated his land to an intermediary, the intermediary is in
the same position as the buyer under a contract and can compel transfer in his favour
(s 22(1)).
• Where the insolvent alienated his land and subsequently it was alienated to an
intermediary or to a remote purchaser, either the intermediary or the remote
purchaser is entitled to transfer if
— he fulfils or undertakes to fulfil the obligations in terms of his own deed of
alienation; and
— the obligations of every intermediary between the owner and himself are fulfilled
(s 22(5) read with s 18(1)).
• If transfer is not claimed by any of the persons entitled to it, and the trustee abandons
the agreement made by the insolvent and realizes the land for the benefit of creditors,
the purchaser of the land under a contract which has been recorded against the title
deed of the land has a preferent claim—not merely a concurrent one—in respect of the
proceeds of the realization (s 20(5)). Section 20(1) provides that any person who sells
land under a contract (whether or not he is the owner of the land) must cause the
contract to be recorded by the Registrar of Deeds, provided a prior contract in force in
respect of the land has not been recorded or is not required to be recorded. The
purchaser’s preferent claim ranks immediately after the claim of a mortgagee whose
bond was registered prior to the recording of the contract and equals the amount that
the purchaser may recover under s 28(1) in the event of the contract being terminated
(s 20(5)(a)).
The Act aims at making sure that every party who has the right to transfer is aware of his
right and can exercise it. A remote purchaser is required immediately to notify the owner of
the land of the conclusion of the contract, his address as set out in the contract, and the
name and address of any intermediary who alienated the land before the conclusion of the
contract (s 21(1)). In the event of the owner’s insolvency, the owner is obliged to pass on
these details to the trustee within 14 days of the latter’s appointment (s 21(2)(a)). Similarly,
a mortgagee must, within 10 days after he receives notice of the insolvency, inform the
trustee of the name and address of any purchaser who gave notice to him that he had
bought the land in terms of a contract (ibid). The trustee is under a duty, as soon as is
practicable, to notify every person who he has reason to believe
Page 95
purchased the land in terms of a contract or is an intermediary of his right (that person’s) to
take transfer of the land (s 21(2)(b)).
In relation to a sale of land on instalments not covered by the Alienation of Land Act, the
common-law principles still apply. The trustee becomes the owner of the property (Harris v
Trustee of Buissinne (1840) 2 Menz 105) and must decide whether to perform or not, having
regard to the best interests of creditors. If he elects not to perform, the other party—even if
he has performed in full—may not demand transfer of the property and must content himself
with a concurrent claim against the insolvent estate for repayment of amounts already paid
and for damages in respect of loss incurred as a result of the breach (Gordon NO v Standard
Merchant Bank Ltd 1983 (3) SA 68 (A) 90).
(iii) Sale of goods on instalments
The type of contract envisaged here is one in which goods are sold on instalments and the
seller reserves ownership in the goods until the buyer has fully performed his side of the
contract (in other words, paid the full price and complied with his other obligations). The
Insolvency Act does not make special provision for this kind of contract. Some academic
writers argue that where the seller is declared insolvent before the price has been fully paid
and ownership has passed to the buyer, the trustee may not repudiate the contract and
vindicate the goods if the buyer continues to pay instalments and fulfil his other obligations
in terms of the contract. There is no clear case authority to this effect, and it is difficult to
see on what basis an exception can be made to the ordinary principles governing
uncompleted contracts and the general rule of treating creditors’ claims proportionately,
unless there is a real right of security or a recognized statutory preference applicable. It is
submitted that the trustee steps into the shoes of the insolvent seller and has an election to
uphold or to repudiate the contract, as he does in relation to uncompleted contracts
generally (see 5.2). If he chooses to repudiate the sale, he may recover the goods (since
they are still owned by the seller’s estate) and the buyer merely has a concurrent claim for
damages.
(iv) Resale of immovable property not yet acquired
The trustee’s right to repudiate is excluded where he obtains transfer of immovable property
which the insolvent bought and resold (without receiving transfer) prior to sequestration. On
receiving transfer, the trustee is bound to pass transfer of the property to the purchaser
against payment of the price, if not already paid. He is not entitled, in other words, having
elected to uphold and take transfer under the first contract, to repudiate liability under the
second (Vision Projects (Pty) Ltd v Cooper Conroy Bell & Richards Inc 1998 (4) SA 1182
(SCA) 1189). The same rule applies where the insolvent did not resell the property which he
bought, but ceded his right to receive transfer under the contract (Britz v De Wet NO en ’n
ander 1965 (2) SA 131 (O); Vision Projects (Pty) Ltd v Cooper Conroy Bell & Richards Inc
(supra)).
7.2.8 Purchase of goods in terms of ‘instalment agreement’

Special rules apply where the insolvent has bought movable goods in terms of an agreement
falling within paras (a), (b) and (c)(i) of the definition of ‘instalment agreement’ in s 1 of the
National Credit Act 34 of 2005. Section 84(1) provides that, on sequestration of the buyer’s
estate, the seller automatically acquires a hypothec over the
Page 96
res vendita, whereby the balance outstanding under the agreement is secured. Since no one
may have a hypothec over his own property, ownership in the res vendita passes from the
seller to the insolvent estate (Williams Hunt (Vereeniging) Ltd v Slomowitz & another 1960
(1) SA 499 (T) 501; see also Van der Burgh v Van Dyk en ’n ander 1993 (3) SA 312 (O);
Standard Bank of South Africa Ltd v Townsend & others 1997 (3) SA 41 (W) 50). The effect
of sequestration of the buyer’s estate, therefore, is that the seller loses his right of
ownership in the property and simultaneously becomes a creditor with a hypothec over the
property. The trustee of the buyer’s estate must, if required by the seller, deliver the res
vendita to him, and thereafter the seller is deemed to hold it as security for his claim, and
has the rights of a secured creditor to realize his security as prescribed by the Act (ibid; see
also 15.2.4).
An instalment agreement envisaged by paras (a), (b) and (c)(i) of the definition of
‘instalment agreement’ in s 1 of the National Credit Act 34 of 2005 is one in terms of which:
• all or part of the price is deferred and is to be paid by periodic payments;
• possession and use of the property is transferred to the buyer;
• ownership of the property passes to the buyer only when the agreement is fully
complied with.
A transaction which meets these requirements is governed by s 84(1) of the Insolvency Act,
even if it falls outside the ambit of the National Credit Act 34 of 2005 (cf Potgieter NO v
Daewoo Heavy Industries (Edms) Bpk 2003 (3) SA 98 (SCA) 100-2). It is not clear whether
an instalment agreement for these purposes includes a sale of goods in which the price is
payable in one lump sum at a future time (cf Sandoz Products (Pty) Ltd v Van Zyl NO 1996
(3) SA 726 (C) and Ukubona 2000 Electrical CC & another v City Power Johannesburg (Pty)
Ltd 2004 (6) SA 323 (SCA) 327). ‘Movables’, in this context, means corporeal movables;
hence the sale of a business falls outside the definition (A-Team Drankwinkel BK en ’n ander
v Botha en ’n ander NNO 1994 (1) SA 1 (A) 17).
Section 84(1) of the Insolvency Act presupposes an agreement still in force: the section
does not apply if the seller has, prior to sequestration, cancelled the agreement on account
of the buyer’s default and the buyer has not obtained reinstatement in terms of the National
Credit Act (Absa Bank Ltd v Cooper NO & others 2001 (4) SA 876 (T)). The section also
presupposes that the seller is the owner of the res vendita—no hypothec arises in favour of a
seller who is not the owner (Ukubona 2000 Electrical CC & another v City Power
Johannesburg (Pty) Ltd (supra) 328). There was formerly some uncertainty as to whether
the section applies if the trustee is not in possession of the property: for example, because
the insolvent sold and delivered the property to another person before sequestration. In UDC
Bank Ltd v Seacat Leasing and Finance Co (Pty) Ltd & another 1979 (4) SA 682 (T), it was
held that the section does not apply in such a case, so that the seller does not lose his
ownership of the thing sold. In Hubert Davies Water Engineering (Pty) Ltd v The Body
Corporate of ‘The Village’ & others 1981 (3) SA 97 (D), the court reached the opposite
conclusion. It held that, when the trustee receives a demand for delivery, he is obliged to
obtain possession of the property from the third party and deliver the property to the seller.
In the court’s view, the only possible exceptions are cases of physical impossibility and the
possessor’s ability to assert a right which defeats the trustee’s right. This view was
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confirmed (and the controversy settled) by the Appeal Court in Venter NO v Avfin (Pty) Ltd
1996 (1) SA 826 (A). Scott AJA said (835):
‘In Hubert Davies Water Engineering (Pty) Ltd v The Body Corporate of ‘‘The Village’’ & Others 1981
(3) SA 97 (D) Hefer J declined to adopt [the] interpretation of s 84(1) [adopted in UDC Bank Ltd v
Seacat Leasing and Finance Co (Pty) Ltd & another 1979 (4) SA 682 (T) 694]. At 101G-H the learned
Judge explained: ‘‘A trustee who does not have possession of the assets of the estate has not
exercised the right nor indeed carried out the duty which he has in terms of s 69(1) of the Act to
reduce all the movable property belonging to the estate into his possession or under his control. He
may exercise that right against anyone in respect of any movable property belonging to the estate,
and he may do so specifically for the purpose of being able to comply with a demand for delivery of
hire-purchase goods in terms of s 84(1). There is thus no question of not being able to comply with
such a demand: if the trustee does not have possession, he can and must obtain it.’’
I respectfully agree with the above statement. It is true that s 84(1) assumes the trustee to be in
possession. But, as pointed out by Hefer J at 102E . . . ‘‘in an insolvency which proceeds normally, the
trustee will obviously carry out the elementary task of taking possession or control of the assets; that
he will do so is assumed and that is why, for purposes of s 84(1), it is assumed that he is in
possession of the hire-purchase goods’’.
With regard to the situation that may arise where the trustee is not in possession of the property, the
learned Judge at 102F-G posed and answered the obvious question: ‘‘Can he (the trustee), eg, when
faced with a demand for delivery in terms of that section (s 84(1)), in the light of his duty to reduce
the assets of the estate into his possession or control, ever be heard to say simply that he does not
possess the property which the creditor wants him to deliver? Obviously not, because he will be
obliged to carry out his duty, to obtain possession and to deliver the property to the creditor.’’
In my view the reasoning of the learned Judge cannot be faulted. I accordingly adopt the decision in
the Hubert Davies case in preference to that in the UDC Bank case (see also Morgan & ’n Ander v
Wessels NO 1990 (3) SA 57 (O) at 65D-G . . .).’
In terms of s 84(2) of the Insolvency Act, if the debtor returns the property to the seller
within one month before sequestration, the trustee may demand that the seller deliver to
him the property or its value at the date of return, subject to payment to the creditor by the
trustee or to deduction by the creditor from the value of the property (as the case may be)
of the difference between the total amount payable under the transaction and the total
amount actually paid under it. Here the legislature clearly intended to enable the trustee to
reclaim the property for the benefit of concurrent creditors, in cases where the outstanding
amount is disproportionately small in comparison to the value of the article returned.
7.2.9 Transaction on exchange

Section 35A lays down special rules with regard to a transaction to which the rules of an
‘exchange’ apply and in which the insolvent was a ‘market participant’. An ‘exchange’ means
an exchange as defined in s 1, and licensed under s 10, of the Securities Services Act 36 of
2004, and includes a central securities depository as defined in s 1 of that Act and which is
also licensed as a clearing house under s 66 of that Act, or a clearing house as defined in s 1
of that Act (s 35A(1)). A ‘market participant’ is any of the following: an authorized user, a
participant, a client or a settling party as defined in s 1 of the Securities Services Act 2004,
or any other party to the transaction (ibid).
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The following rules apply:

• The exchange or any other market participant may, in respect of the obligations owed
to it, terminate the transaction in accordance with the rules of the exchange, and the
trustee is bound by such termination (s 35A(2)).
• Any resultant claim is limited to the amount due upon termination under the rules of
the exchange (s 35A(3)).
• The trustee is bound by the rules and practices of the exchange providing for the
netting of a market participant’s position, or for set-off in respect of transactions
concluded by a market participant, or for the opening and closing of a market
participant’s position if, in terms of such rules and practices, the transaction is to be
settled on a date after the sequestration, or settlement of the transaction is overdue on
the date of sequestration (s 35A(4)).
7.2.10 Agreement on informal market
Section 35B makes special provision for the case where the insolvent was party to a ‘master
agreement’. A ‘master agreement’ includes, inter alia, an agreement in accordance with the
standard terms published by the International Swaps and Derivatives Association, the
International Securities Lenders Association, the Bond Market Association or the
International Securities Market Association (s 35B(2)); for the full definition, see Appendix
3). All unperformed obligations arising out of the agreement terminate automatically on
sequestration (s 35B(1)). The market values of the obligations as at date of sequestration
must be netted and the net amount is then payable (ibid). Section 35B does not apply to a
transaction contemplated in s 35A or to a netting arrangement contemplated in the National
Payment System Act 78 of 1998 (s 35B(3)).
7.2.11 Provisions designed to protect solvent party

The contract may contain one or more provisions designed to protect (or further) one party’s
interests in the event of the insolvency of the other party. This sort of provision is void vis-à-
vis the trustee of the insolvent party if it purports to modify the legal consequences of the
concursus creditorum. The test in each case is whether the provision seeks to confer a power
or a preference, or achieve a distribution of assets, which is not provided for by the law of
insolvency (cf Thorne & another NNO v The Government 1973 (4) SA 42 (T) 46).
(i) Clause reserving ownership in goods until full payment made
The Supreme Court of Appeal has accepted that a clause reserving ownership in movable
goods until the owner has been paid what is due to him is effective to prevent the goods
from vesting in the debtor’s insolvent estate (Pellow NO & another v Club Refrigeration CC
2006 (1) SA 230 (SCA)).
(ii) Clause providing for cancellation on insolvency
A clause encountered in many contracts says that one party may cancel the contract upon,
inter alia, sequestration of the other party’s estate. To the extent that a cancellation clause
allows termination of the contract on the basis of insolvency alone, it would seem to be
unenforceable, because it purports to deprive the trustee of his election to complete the
contract should he consider it to be in the best interests of creditors. This
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view is reinforced by s 37(5), which states that a stipulation in a lease that the lease will
terminate or be varied upon the sequestration of the estate of either party is null and void
(cf Slims (Pty) Ltd & another v Morris NO 1988 (1) SA 715 (A)).
(iii) Clause providing for vesting or continued use of insolvent’s property
In building and engineering contracts, the parties often agree that, in the event of certain
contingencies, including sequestration of the contractor’s estate, the employer will
automatically acquire ownership of the contractor’s plant, materials, and other assets then
on site. In so far as this type of clause provides for vesting on the ground of the contractor’s
insolvency, it would appear to be invalid, since it offends against the rule that, on the
granting of an insolvency order, all the property of the insolvent vests in the Master, and
then the trustee. Open to the same objection is a clause which says that, on the insolvency
of the contractor, all his subcontracts will automatically be assigned to the employer.
A clause intended to achieve a similar practical result is one which says that the employer
may, if the contractor should be declared insolvent, continue to use the contractor’s property
on site at the time of sequestration. This sort of clause would seem to be invalid because it
disregards one of the trustee’s essential duties, namely, to take charge of all the contractor’s
assets and sell them as directed by creditors (cf Kahan NO v Hydro Holdings (Pty) Ltd 1980
(3) SA 511 (T) 514; Roux en andere v Van Rensburg NO 1996 (4) SA 271 (A)).
(iv) Clause providing for direct payment to subcontractors of insolvent
Many building and engineering contracts provide that, if the contractor neglects to pay his
subcontractors, the employer may do so and deduct what he has paid from what he owes
the contractor. This provision, although generally unobjectionable, is invalid as against the
trustee of an insolvent contractor, because it gives the subcontractors a preference over the
other creditors in the concursus creditorum, viz, payment otherwise than in accordance with
the order of preference applicable on insolvency. In Administrator, Natal v Magill, Grant &
Nell (Pty) Ltd (in Liquidation) 1968 (4) SA 44 (D); 1969 (1) SA 660 (A), a building
contractor had been placed in liquidation and its employer, applying a ‘direct payment’
clause in the contract, had made payments to two nominated subcontractors and deducted
the payments from the amount it owed the contractor. The court held that the employer had
not been entitled to make this deduction. Ogilvie Thompson JA said (671-2):
‘Once the liquidation supervened, the two nominated sub-contractors were only entitled to receive
from the plaintiff company [the contractor] whatever dividend was ultimately awarded to its
concurrent creditors. By paying them in full after liquidation had already supervened, the defendant
[employer] thus enabled the nominated sub-contractors to receive more than they were legally
entitled to claim . . .[A]lthough the defendant’s payment to the nominated sub-contractors was made
pursuant to the election conferred upon him, without apparent qualification, by . . . the contract, the
exercise of that election after liquidation had supervened disturbed both the realization and the
distribution of the plaintiff company’s assets as prescribed by the law relating to liquidations.’
(v) Clause providing for set-off on insolvency

The parties may agree that if one of them fails to perform his side of the contract, the other
party may set off his resultant claim for damages against any debt which he owes
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to the party in default. This type of clause cannot be invoked where the defaulter has been
declared insolvent, because it permits the other party (through the process of set-off) to
obtain payment before other concurrent creditors and, thus, transforms his concurrent claim
for damages into a preferent one. In Thorne & another NNO v The Government (supra), a
construction company contracted with the government to carry out three separate building
projects (contracts A, B and C). Whilst engaged upon these projects, the company was
placed in liquidation. The liquidators resolved to complete contracts A and B and to abandon
contract C. After completing contract A, the liquidators claimed payment. The government
contended that it was entitled to set off against this claim its claim for damages arising from
the liquidator’s repudiation of contract C. The government relied on a clause in contract C to
the effect that, if the company failed to complete, the government would be entitled to
employ another contractor and to deduct the cost of doing so ‘from any sums due or to
become due under this or any other contract . . . between the [parties]’. The court held that
the set-off clause was unenforceable as against the liquidators. Margo J said (45-6):
‘[O]nce a concursus creditorum has been established, there can be no [set-off] unless mutuality
between the respective claims existed at the date of the order. . . . In the present case there was no
such mutuality between the respective claims prior to the winding-up order. . . . It cannot make any
difference to the legal consequences of a concursus creditorum that the parties . . . concluded a pre-
liquidation agreement authorizing set-off. . . . [C]ontractual stipulations between the debtor and a
creditor will not entitle the creditor to obtain a preference over other creditors in the concursus
otherwise than in accordance with the order of preference laid down by law.’
The decision in Thorne & another NNO v The Government (supra) was confirmed on appeal
(The Government v Thorne & another NNO 1974 (2) SA 1 (A)) and applied in Roman
Catholic Church (Klerksdorp Diocese) v Southern Life Association Ltd 1992 (2) SA 807 (A)
815 and Siltek Holdings (Pty) Ltd (in Liquidation) t/a Workgroup v Business Connexion
Solutions (Pty) Ltd [2009] 1 All SA 571 (SCA) 573-4.

Criminal proceedings are in no way affected by sequestration, but civil proceedings against
or by the insolvent—except for those proceedings which may, under s 23, be instituted
against or by the insolvent in his own name (see 4.3.1)—are automatically stayed until a
trustee is appointed (s 20(1)(b)).
A party who wishes to continue stayed proceedings against the estate must:
• within three weeks after the first meeting of creditors, give notice of his intention to
the trustee (or the Master if no trustee has been appointed); and
• after expiry of a period of three weeks from the date of the notice, prosecute the
proceedings with reasonable speed (s 75(1)).
If he fails to give the required notice, the proceedings automatically lapse (ibid). But the
court may allow them to continue (on such conditions as it sees fit to impose) if it finds that
there was a reasonable excuse for the failure to give notice (ibid). Before stayed proceedings
can continue, application must be made for substitution of the trustee on the record in the
place of the insolvent, so that the proper person is before the court at the hearing.
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The execution of any judgment against the insolvent is stayed from the moment that the
sheriff whose duty it is to execute the judgment becomes aware of the sequestration order,
except where the court directs otherwise (s 20(1)(c)). The fact that the relevant property
has already been sold does not change the position (provided transfer has not taken place)
(Syfrets Bank Ltd & others v Sheriff of the Supreme Court, Durban Central; Schoerie NO v
Syfrets Bank Ltd & others 1997 (1) SA 764 (D) 775-6; Naidoo & another v Matlala NO &
others 2012 (1) SA 143 (GNP) 154).
If the insolvent is in prison for debt, he may, after notifying the creditor at whose instance
he is being imprisoned, apply to the court for his release (s 20(1)(d)). It seems that this
provision has become largely redundant since civil imprisonment for debt has been abolished
and the Constitutional Court has ruled that those sections of the Magistrates’ Courts Act 32
of 1944 which allow for imprisonment of a debtor for failure to satisfy a judgment debt are
constitutionally invalid (Coetzee v Government of the Republic of South Africa; Matiso &
others v Commanding Officer, Port Elizabeth Prison & others 1995 (4) SA 631 (CC)).
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Chapter 14: The duties of the insolvent
14.1 Delivery of records and statement of affairs

14.2 Delivery of assets
14.3 Providing assistance
14.4 Providing information
14.5 Informing trustee of addresses
14.6 Record of assets and disbursements
14.7 Attending meetings and giving evidence
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Chapter 8
Preservation of the estate pending the trustee’s
appointment
Synopsis
Introduction
8.1 Notice of sequestration and entry of caveats
8.2 Service of order and attachment of property
8.3 Curator bonis
8.4 Provisional trustee
8.4.1 Appointment
8.4.2 Rights and duties
8.4.3 Remuneration
Introduction
Until the trustee has been appointed and can take charge of the estate assets, it is
necessary that the assets be preserved for the benefit of creditors. This chapter explains
how this is achieved.
8.1 Notice of sequestration and entry of caveats

Immediately after a sequestration order is granted, the Registrar is obliged to transmit one
original of the order to the Master (s 17(1)(a)). The Master, in turn, must give notice of the
order in the Gazette (s 17(4)). The Registrar must also send one original of every provisional
sequestration order or final sequestration order not preceded by a provisional order to the
following parties:
|• the sheriff of every district in which the insolvent resides or owns property;
• every Registrar of Deeds;
• every officer having charge of an official register of ships; and
• every sheriff who is holding any of the debtor’s property under attachment (s 17(1)
(b)).
The officers concerned must register the order (s 17(2)) and, where appropriate, must enter
caveats against any transfer of ownership by the insolvent or his spouse and against the
cancellation or cession of any mortgage registered in the name of the insolvent or his spouse
(s 17(3)(a) and (3)bis). A caveat in respect of immovable property expires 10 years after
the date of the relevant order (s 17(3)(b)).
The statutory duties described above are imposed with the object of informing interested
parties that the estate has been sequestrated and preventing any improper
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dealings with the insolvent’s property. The next step is to determine the extent of the assets
and bring the whole estate under proper control.
8.2 Service of order and attachment of property
The Registrar of the court granting a final order of sequestration must, without delay, cause
a copy of the order to be served on the insolvent and on the spouse of the insolvent (if the
latter has a separate estate which has not been sequestrated) and file with the Master a
copy of the sheriff’s return of service (s 16(1)). On being served with the order, the
insolvent is obliged forthwith to hand over to the sheriff all records relating to his affairs and
to lodge with the Master a statement of his affairs (see 14.1). The solvent spouse who is
served with the sequestration order must also lodge a statement of her affairs with the
Master (see 6.1.2).
In addition to serving the order, the sheriff is required to attach and make an inventory of
the movable property of the estate which is in the district, capable of manual delivery and
not in the possession of a person who claims to be entitled to retain it under a right of
pledge, or a right of retention, or under attachment by a sheriff of a magistrate’s court (s 19
(1)). The sheriff must act with reasonable care in carrying out this duty (Judelowitz’s Trustee
v The Sheriff 1904 TS 839 842). Anyone who has an interest in the insolvent estate or the
property attached may be present (s 19(2)), but he may not give directions to the sheriff as
to what property should be attached or included in the inventory. In making the attachment
and inventory, the sheriff discharges a statutory duty. He is legally accountable to the
Master only and owes no duty to the sequestrating creditor or any other interested party
(Administratrise van die Adriaan Odendaal Kindertrust v Adjunk-Balju, Harrismith en andere
1991 (1) SA 465 (O) 471). Section 19(1) relates only to movable property capable of
manual delivery and does not empower the sheriff to attach incorporeal rights (Turquoise
River Incorporated v McMenamin & others 1992 (3) SA 653 (D) 658-9). In the latter case, it
was held that the power to attach and seize assets is a drastic one and, accordingly, s 19(1)
should be strictly construed.
The Act does not say how the trustee should assume control of the separate property of
the solvent spouse which vests in the Master and the trustee in terms of s 21 (see 6.1), but
it has been held that the trustee must have this property attached as well. Until he does so,
he is not entitled to deal with the property in terms of the Act and cannot, therefore, remove
it from the possession of a third party (Cothill et Uxor v Cornelius 2000 (4) SA 163 (T) 167).
Section 19(1) imposes specific duties on the sheriff regarding the way in which the
attachment must be carried out:
• The sheriff must take into his custody all books of account, invoices, vouchers,
business correspondence, and other records relating to the affairs of the insolvent and
make a detailed list of what he has collected. If the insolvent is present, the sheriff
must ask him whether the list is complete, and record his reply. The sheriff is also
obliged to endorse on the list any explanation offered by the insolvent regarding the
list or any books or records which he is unable to produce. If the insolvent intimates
that the list is complete, the books and records referred to in it are, in any criminal
proceedings against him under the Act, deemed to be the only books and records
maintained by him, unless the contrary is proved (s 19(1)bis).
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• The sheriff must gather any cash, share certificates, bonds, bills of exchange,
promissory notes, and other securities. Any cash that he collects must be sent to the
Master.
• The sheriff must leave movable property (other than animals) in a room or other
suitable place properly sealed up, or appoint some suitable person to hold the property
and hand him a copy of the inventory with a notice that the property has been
attached by virtue of a sequestration order. This notice must contain a statement of
the offence and penalty provided for under s 142 of the Act relating to the removing or
concealing of property to defeat attachment or the failure to disclose property. In
Administratrise van die Adriaan Odendaal Kindertrust v Adjunk-Balju, Harrismith en
andere (supra), it was held that, to make a proper attachment of animals, the sheriff
must take them into custody so that he can properly count and classify them. It is not
sufficient for him simply to accept a list prepared by the insolvent.
Immediately after making the attachment, the sheriff must report the attachment in writing
to the Master and submit with his report a copy of the inventory (s 19(3)(a)). In the report,
he must mention any property which, to his knowledge, is in the lawful possession of a
pledgee or a person who is entitled to retain it under a iusretentionis (lien or right of
retention) (ibid). As soon as possible after the appointment of the trustee, the sheriff must
submit a copy of the inventory to him (s 19(3)(b)).
A sheriff of a magistrate’s court who receives a sequestration order from the Registrar is
obliged, without delay, to send to the Master an inventory of all property attached by him
and known to belong to the insolvent estate (s 19(4)).
8.3 Curator bonis

If a curator bonis has been appointed after publication of a notice of intention to surrender,
as described in 2.4.2, he must continue to act in that capacity even after the estate has
been sequestrated, but only until the appointment of a provisional trustee or a trustee.
The assets of the estate do not vest in the curator bonis at any time: he merely has
custody and control of them. They are subject to attachment by the sheriff in the manner
described above.
A curator bonis is entitled to a reasonable remuneration from the estate for his services (s
63(1)), and his fee has to be paid as part of the costs of sequestration (s 97(2)(c)).
8.4 Provisional trustee

8.4.1 Appointment
A trustee can only be appointed some weeks after the granting of a sequestration order and
it is often necessary or desirable to have some person in charge of the estate in the
meantime, with powers which he may exercise in the interests of creditors. For this reason,
the Act provides that, as soon as an estate has been sequestrated (whether provisionally or
finally), the Master may, in accordance with policy determined by the Minister, appoint a
provisional trustee to the estate in question, to hold office until the appointment of a trustee
(s 18(1)). Only the Master can make this appointment: the
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High Court has no inherent power or authority to appoint a provisional trustee or to make
recommendations to the Master in this regard (see Goldfields Trading Co (Pty) Ltd v Schutte
1956 (3) SA 1 (O) 2; Ex parte The Master of the High Court South Africa (North Gauteng)
2011 (5) SA 311 (GNP) 324; The Master of the High Court (North Gauteng High Court,
Pretoria) v Motala NO & others 2012 (3) SA 325 (SCA) 329). Creditors or other interested
persons desiring the appointment of a provisional trustee must apply to the Master setting
out the reasons why it is expedient to have a provisional trustee appointed, eg, that the
insolvent’s business should be carried on in the intervening period, or that perishables
should be sold immediately. The Master has an unfettered administrative discretion as to
whom he appoints, and the exercise of this discretion may be attacked in review proceedings
only on the basis that he acted mala fide (failed to exercise his discretion at all) or was
motivated by improper considerations (Lipschitz v Wattrus NO 1980 (1) SA 662 (T) 671). A
party aggrieved by a decision of the Master may apply to review the decision under s 151 of
the Act (Goldfields Trading Co (Pty) Ltd v Schutte (supra) 2; cf SACCAWU v Master of the
Supreme Court [2007] 4 All SA 1034 (T)).
A provisional trustee must give security to the satisfaction of the Master for the proper
performance of his duties (s 18(1)).
A provisional trustee may also be appointed where a person appointed as trustee ceases
to be trustee or to function as such (s 18(1)).
8.4.2 Rights and duties

As soon as possible after his appointment, the provisional trustee must establish whether
the sequestration order correctly reflects:
• the insolvent’s full names, date of birth, identity number (if any) and marital status;
and
• if the insolvent is married, the full names, date of birth, and identity number (if any) of
his spouse (s 18A).
If any details are lacking or incorrect, the provisional trustee must at once take reasonable
steps to obtain the correct particulars. He must then send a certificate containing the
particulars along with a copy of the sequestration order and of his appointment to the Master
and to every Registrar of Deeds (ibid).
In terms of s 18(3), the provisional trustee has the powers and the duties of a trustee, as
provided in the Act, except that:
• he may not bring or defend legal proceedings without the authority of the court
(although, obviously, he has the power to approach the court to obtain authority); and
• he may not sell any estate property without the authority of the Master or the court,
and then only after such notice and subject to such conditions as the Master may
direct. A sale without prior authority is void and cannot be ratified (SAI Investments v
Van der Schyff NO & others 1999 (3) SA 340 (N) 350–2).
The Master may at any time, subject to the provisions of s 18(3), give such directions to the
provisional trustee as could be given to a trustee by creditors at a duly convened meeting of
creditors (s 18(2)).
Although s 18(3) effectively gives the provisional trustee wide powers, it is accepted that
it is not his function to take steps in the winding up of the insolvent
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estate. His task is simply to take physical control of the estate and preserve it for creditors
pending the appointment of a trustee (Goodwin Stable Trust v Duohex (Pty) Ltd & another
1998 (4) SA 606 (C) 620). It follows that the court will not authorize the provisional trustee
to institute legal proceedings or sell property except in special circumstances. In Warricker &
another NNO v Liberty Life Association of Africa Ltd 2003 (6) SA 272 (W), Van Oosten J
observed (276):
‘An applicant seeking the authority of the Court in terms of [s 18(3)] . . . must satisfy the Court, on
good cause shown, that a departure from the normal course of events provided for in the Act is
warranted. Where the institution of proceedings to enforce a claim is contemplated, to be entitled to
an order the applicant must satisfy the Court, first, that some degree of urgency exists; secondly, that
the cause of action which is to become the subject-matter of the proceedings is prima facie
enforceable; and, thirdly, that the interests of creditors in the insolvent estate will not be prejudiced
by the earlier institution of proceedings.’
8.4.3 Remuneration
The provisional trustee is entitled to a reasonable remuneration from the estate for his
services, to be taxed by the Master (s 63(1)). His fee must be paid as part of the costs of
sequestration (s 97(2)(c)).
It must be remembered that, although the Act makes provision for the appointment of a
curator bonis and of a provisional trustee, neither appointment may be necessary. In such
cases, the sheriff may simply attach the property in the manner described above and retain
it until the appointment of the trustee.
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Chapter 9
Meetings of creditors and proof of claims
Synopsis
9.1 Meetings of creditors
9.1.1 First meeting
9.1.2 Second meeting
9.1.3 Special meeting
9.1.4 General meeting
9.1.5 General provisions relating to meetings
9.2 Proof of claims
9.2.1 Necessity for proof of claims
9.2.2 Time for proof of claims
9.2.3 Procedure for proof of claims
9.2.4 Arrear interest
9.2.5 Conditional debts
9.2.6 Debts payable after sequestration
9.3 Voting and resolutions of creditors
9.3.1 Entitlement to vote
9.3.2 Determination of vote
9.3.3 Questions on which creditors may vote
9.3.4 Voting through agent
9.3.5 Resolutions of creditors
9.3.6 Setting aside creditors’ resolution
9.1 Meetings of creditors

By means of a system of meetings, the insolvent’s creditors, inter alia, establish their claims,
elect a trustee, and give directions to the trustee on the winding up of the estate. ‘Creditors’,
in this context, means creditors in respect of debts incurred before sequestration (cf Vather
v Dhavraj 1973 (2) SA 232 (N) 236; Tongaat Paper Co (Pty) Ltd v The Master & others 2011
(2) SA 17 (KZP) 20). Creditors of the estate whose claims were not in existence at the date
of sequestration, such as an attorney who has rendered professional services at the instance
of the trustee, do not have to prove their claims and have no right to vote at meetings. The
amounts due to them are simply paid as part of the costs of sequestration (Cranko v
Borosch’s Trustee 1924 TPD 645 648).
There are four different types of creditors’ meetings:
• the first meeting;
• the second meeting;
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• a special meeting; and

|• a general meeting.
Often only the first and second meetings are held.
The Act lays down formalities to be complied with in calling the various meetings.
According to Leyds NO v Simon & others 1964 (1) SA 377 (T), the prescribed formalities can
be waived by creditors, and a resolution taken at an informal meeting is valid if everyone
concerned has acquiesced in or condoned the irregularities.
9.1.1 First meeting

On the receipt of a final sequestration order, the Master is obliged to convene immediately,
by notice in the Gazette, a first meeting of creditors of the estate (s 40(1)). The purpose of
the meeting is to enable creditors of the estate to prove their claims against the estate and
elect a trustee (ibid). The notice in the Gazette must appear not less than 10 days before the
date of the meeting (counting backwards from the date of the meeting and excluding the
first day: Nedcor Bank Ltd v The Master & others 2002 (1) SA 390 (SCA) 394) and must
state the time when and place where it is to be held (s 40(2)). The Master must choose a
time and place which he considers to be most convenient for all parties concerned (s 39(1)).
He may, if necessary, alter the time and place of the meeting, provided he gives sufficient
notice of the alteration in the Gazette (ibid).
9.1.2 Second meeting

After the first meeting of creditors and the appointment of a trustee, the Master must fix a
date for a second meeting of creditors (s 40(3)(a)). The purpose of this meeting is to enable
creditors to prove their claims, receive the trustee’s report on the affairs and condition of the
estate (see 11.7), and give the trustee directions in connection with the administration of
the estate (s 40(3)(a)). Although the Master fixes the date of the meeting, he does not
convene it; this is the duty of the trustee, who is required to publish a notice in the Gazette
and in one or more newspapers circulating in the district in which the insolvent resides or
has his principal place of business (s 40(3)(b)). The notice in the newspaper must be
published simultaneously in English and Afrikaans in a newspaper which appears
substantially in both languages or, if there is none, in separate newspapers appearing mainly
in the language concerned (s 40(3)(c)). The publication in each language must, as far as
practicable, occupy the same amount of space (ibid). The Act does not stipulate how long
before the meeting the notice must be published, but obviously interested parties must be
given sufficient time to attend the meeting and to decide upon a suitable course of action.
9.1.3 Special meeting

A special meeting may be called for either of the following purposes:
(i) Proof of claims
After the second meeting, the trustee may be called upon to convene, by notice in the
Gazette, a special meeting of creditors for the proof of claims against the estate. He is
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obliged to convene the meeting whenever he is required to do so by any interested person

who at the same time tenders payment of all expenses to be incurred in connection with the
meeting (s 42(1)). (But see 9.2.2 regarding late proof of claims.)
It has been held that the trustee abuses his powers in terms of s 42(1) if he purports to
call a meeting for ‘further proof of claims’, but his only purpose in convening the meeting is
to interrogate the insolvent and other witnesses. In such a case, the meeting is not properly
convened (Marques & another v De Villiers & another NNO 1990 (4) SA 415 (W)).
(ii) Interrogation of the insolvent
Provided the Master gives his consent, the trustee may at any time, and must if so required
by a creditor who has proved his claim against the estate, convene, by notice in the Gazette,
a special meeting of creditors for the purpose of interrogating the insolvent (s 42(2); see
13.1.1). Since this provision refers only to an interrogation of the insolvent, a special
meeting cannot be convened for the sole purpose of interrogating persons other than the
insolvent (Bernard v Klein NO 1990 (2) SA 306 (W) 308).
9.1.4 General meeting

The trustee may at any time convene a meeting of creditors—called a general meeting—for
the purpose of giving him instructions concerning any matter relating to the administration
of the estate (s 41), for instance, where the directions given at the second meeting do not
cover the matter in question. He is obliged to call a general meeting if required to do so by
the Master or by creditors representing one-fourth of the value of all claims proved against
the estate (ibid). A meeting called for the purpose of considering an offer of composition is a
general meeting (Mia v The Master & others 1940 TPD 86; Ilic v Parginos 1985 (1) SA 795
(A) 803). The trustee is obliged to call this meeting when he informs creditors of the offer of
composition (s 119(5)).
A general meeting must be convened in the same way as the second meeting of creditors,
and the notice must state the matters to be dealt with at the meeting (s 41). A general
meeting cannot be convened solely for the purpose of ‘interrogating witnesses’ (Essop v The
Master & another 1983 (1) SA 926 (C)). But if the meeting is properly called by the trustee
‘for the purpose of giving him directions’, the interrogation of witnesses can take place at the
meeting (ibid; Marques & another v De Villiers & another NNO (supra) 420).
9.1.5 General provisions relating to meetings

(i) Date and venue of meetings
As mentioned above, the Master determines the date and time of the first meeting. The
fixing of the dates and times of other meetings is left to the trustee. The presiding officer
has the power to adjourn a meeting from time to time (s 39(5)).
The Act makes no provision regarding the venue of the various meetings, except that
every meeting must be held at a place which is accessible to the public (s 39(6)). Meetings
are normally held at the office of the Master or magistrate.
(ii) Presiding officer at meetings
If a meeting is held in a district in which there is a Master’s Office, the Master or an
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officer in the public service designated by him must preside over the meeting (s 39(2)). If
held in any other district, the meeting must be held in accordance with the Master’s
directions and must be presided over by the magistrate of the district or by an officer in the
public service designated by him (ibid). Where an officer other than the magistrate presides,
he must state in the record of the proceedings the reason for the magistrate’s absence (s 39
(4)). Any knowledge acquired by the officer in the course of his duties as officer presiding is
imputed to the Master (Wilkens v Potgieter NO & another 1996 (4) SA 936 (T) 939).
According to De Lange v Smuts NO & others 1998 (3) SA 785 (CC), a presiding officer
who is not a judicial officer in the court structure may not commit a recalcitrant examinee in
an interrogation to prison (see 13.1.7). It follows that, as a matter of practice, the person
called upon to preside over a creditors’ meeting in which an interrogation takes place should
be a magistrate.
(iii) Record of proceedings
The presiding officer at every meeting must keep a record of the proceedings, certify it at
the conclusion of the proceedings, and transmit it to the Master (if not himself the Master) (s
39(3)). The minutes of the meeting constitute prima facie evidence of the proceedings (s 68
(1))—they are not incontrovertible proof, and there is no bar to the leading of extraneous
evidence to establish that the minutes do not correctly record what transpired at the
meeting and what did, in fact, occur (Pine Village Home Owners Association Ltd & others v
The Master & others 2001 (2) SA 576 (SE) 580). Unless the contrary is proved, it is
presumed that the meeting was duly convened and that all acts done at it (eg, resolutions
taken by creditors) were validly performed (s 68(2)).
(iv) Statement privileged
The publication of any statement made at a meeting is privileged to the same extent as the
publication of a statement made in a court of law (s 39(6)).
9.2 Proof of claims

9.2.1 Necessity for proof of claims
As a rule, a creditor of the estate has no right to share in the distribution of the assets, vote
on matters concerning the administration of the estate, or challenge any of the trustee’s
actions, unless he has proved a claim against the estate at a meeting of creditors, ie, either
the first or second meetings or a special or general meeting. Proof of the claim gives the
creditor the required locus standi and at the same time provides prima facie proof of the
existence of the debt (Grufin Finance Co (Pty) Ltd v Cohen & others NNO 1991 (2) SA 345
(W) 348). Certain creditors are relieved of the necessity of proving claims in the ordinary
way, such as an employee of the insolvent, in respect of his preferent claim for salary or
wages (see 16.3.2(v)).
A creditor may keep abreast of developments in the estate without proving a claim against
it. Section 43 provides that a person who claims to be a creditor of the insolvent estate may,
upon payment to the trustee of R25, register his name and address (in the Republic) with
the trustee (s 43). The trustee is thereafter obliged to send to that address a notice of every
meeting of creditors, a copy of every account which he intends to
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submit to the Master, and a notice of the date, time and place of the sale of any property
over which the creditor has a preferent right by virtue of a special mortgage, pledge, right of
retention, or a landlord’s hypothec (ibid). Failure by the trustee to comply with this section,
although a breach of his duties, does not invalidate anything done under the Act (ibid).
A creditor of the solvent spouse’s estate is only entitled to share in the proceeds of that
spouse’s assets if the creditor has proved a claim against the insolvent estate in the usual
way (s 21(5)). Proof of his claim entitles the creditor to the same rights and remedies, and
places him under the same obligations, as a creditor of the insolvent estate, except that:
• he is not entitled to share in the separate assets of the insolvent estate (ibid);
• he is not liable to make any contribution under s 106 (s 21(9)); and
• he is not entitled to vote at a meeting of creditors of the insolvent estate (ibid).
9.2.2 Time for proof of claims

In general, a creditor is entitled to prove his claim at any time before the final distribution of
the estate (s 44(1)). But once a period of three months has elapsed from the closure of the
second meeting of creditors, the creditor can only prove his claim if he obtains leave of the
Master or the court and pays whatever amount the Master or the court directs to cover the
cost occasioned by the late proof (s 44(1)). In Cools v The Master & others 1998 (4) SA 212
(C), the court rejected a contention that the Master might not permit a creditor to prove a
claim in terms of s 44(1) after expiry of the three-month period if the creditor did not have
good reason for delaying proof of his claim and, in particular, if the creditor deliberately
withheld proof of his claim out of fear that a contribution would be payable by creditors. In
the latter regard, Prisman AJ said (222):
‘It is, in my view, perfectly proper for a creditor to decline to prove a claim whilst there is such
fear. . . . There is, in my opinion, no basis for attacking the bona fides of [the creditor] for holding
back proof of his claim until he was satisfied to run the risk of a contribution.’
A creditor who proves his claim after the date on which the trustee submits a plan of
distribution to the Master is not entitled to share in the proceeds of the assets brought up for
distribution in the plan unless the Master allows him to do so (s 104(1)). The Master may, at
any time before confirmation of the plan, allow the creditor to share if he is satisfied that the
creditor has a reasonable excuse for not proving his claim earlier (ibid). If the Master does
not so decide, the creditor is entitled to be awarded under any further plan of distribution
the amount which he would have received under the earlier plan (a so-called ‘equalizing
dividend’), provided he satisfies the Master that he has a reasonable excuse for the delay in
proving his claim (s 104(2)).
If a creditor is aware that proceedings have been instituted to set aside a disposition
made by the insolvent before sequestration and delays in proving his claim until judgment
has been given in the proceedings, he is not entitled to share in the distribution of any
money or the proceeds of any property recovered as a result of the proceedings (ibid).
9.2.3 Procedure for proof of claims

Section 44 lays down the procedure for proof of claims. Section 44(1) refers to proof of
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a liquidated claim, but it has been held that the section nevertheless applies to both
liquidated and unliquidated claims (Cachalia v De Klerk NO and Benjamin NO 1952 (4) SA
672 (T) 678; Wynne and Godlonton NNO v Mitchell & another NNO; Wynne and Cornish NNO
v Mitchell & another NNO 1973 (1) SA 283 (E) 290; Ilic v Parginos 1985 (1) SA 795 (A) 803;
Klein NO v Kolosus Holdings Ltd & another 2003 (6) SA 198 (T) 207-9).
(i) Documents which must be lodged
A claim must be proved by way of an affidavit corresponding substantially with Forms C or D
in the First Schedule to the Act (s 44(4)). Form D is used for claims based on a bill of
exchange; Form C for all other claims. The affidavit may be made by the creditor or any
person ‘fully cognizant’ of the claim (ibid). It must set forth the following:
• facts on which the deponent’s knowledge of the claim is based;
• the nature and particulars of the claim;
• whether the claim was acquired by cession after the institution of the sequestration
proceedings; and
• the nature and particulars of any security held by the creditor for the claim and, except
where the creditor has realized the security in terms of s 83 (see 15.2.4), the amount
at which he values it (s 44(4)). Where the creditor has realized the security in terms of
s 83, he is required to annex to the affidavit a statement of the proceeds of the
realization and of the facts on which he relies for his preference (s 83(5) and (10)).
The affidavit is a formal document and is required to be clear and precise (Rossouw and
Rossouw v Hodgson & others 1925 AD 97 99, 104). Where an amount is claimed on more
than one ground of indebtedness, the grounds must be separated and particularized so that
each can be considered properly (Marendaz v Smuts 1966 (4) SA 66 (T)). If the claim is for
the price of goods sold and delivered to the insolvent on an open account, the affidavit must
be supported by a statement showing the monthly total and containing a brief description of
the purchases and payments for the full period of trading or for a period of twelve months
immediately before the date of sequestration (whichever is the lesser) (s 44(6)). If the claim
is founded on a document, such as an acknowledgement of debt or a mortgage bond, the
document, or, in appropriate circumstances, a copy of it, must be attached to the affidavit
(Taylor and Thorne NNO & others v The Master 1965 (1) SA 658 (N)).
(ii) Time and place for lodging claim documents
The affidavit and supporting vouchers must be delivered to the office of the presiding officer
not less than 24 hours before the advertised time of the meeting (s 44(4)). If the required
documents are not delivered timeously, the claim cannot be admitted to proof at the
meeting, unless the presiding officer is of the opinion that the creditor was unable to deliver
the documents through no fault on his part (ibid). The latter provision is peremptory. In
Derby Shirt Manufacturers (Pty) Ltd v Nel NO & another NO 1964 (2) SA 599 (D), a creditor
delivered his claim documents more than 24 hours before the advertised time of the
meeting. However, as a result of an oversight, he had failed to have the affidavit attested by
a commissioner of oaths. He submitted a properly attested affidavit only after the meeting
had commenced. The presiding officer nevertheless accepted it in proof of the claim. The
court held that he had acted beyond his powers in
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doing so. According to Schurmann v The Master and Paxton NO 1925 TPD 188, where the
creditor has delivered his claim documents in time, but the affidavit or supporting vouchers
disclose inadequate information, the presiding officer has a discretion to grant a
postponement to enable the creditor to prove his claim in proper form.
(iii) Examination of claim documents by creditors, etc
Creditors, the trustee, the insolvent, or their representatives may inspect the claim
documents during office hours free of charge (s 44(5)).
(iv) Attendance by creditor
The Act does not require the creditor to attend the meeting in order to prove his claim. A
creditor who has submitted his claim documents timeously (ie, at least 24 hours before the
advertised time of the meeting) to the presiding officer is deemed to have tendered proof of
his claim at that meeting (s 44(3)). But it may be advisable for the creditor, or his
representative, to be present to deal with any queries or objections to the admission of the
claim.
(v) Interrogation of creditor
The presiding officer may call upon any person present at the meeting who wishes to prove,
or who has proved, a claim against the estate to submit to interrogation, under oath, in
regard to the claim (s 44(7)). The interrogation may be conducted by the presiding officer
himself or by the trustee or by a creditor who has proved a claim (or by the agent of either
of them) (ibid). If the claimant is not present at the meeting, the presiding officer may
summon him to appear for the purpose of being interrogated (s 44(8)). If he fails without
reasonable excuse to appear or, when present, refuses to submit to the interrogation or
answer satisfactorily a lawful question put to him, his claim may be rejected by the presiding
officer or, if already proved, expunged by the Master (s 44(9)). (The presiding officer, unless
himself the Master, does not have the power to expunge a claim which has been proved.)
(vi) Adjudication on claims by presiding officer
A claim must be proved to the satisfaction of the presiding officer who must either admit or
reject it (s 44(3)). In reaching his decision, the presiding officer performs a quasi-judicial
function and, as such, must exercise an independent judgment (Aircondi Refrigeration (Pty)
Ltd v Ruskin NO & others 1981 (1) SA 799 (W) 804). His duty is not to look at the claim
cursorily, but to scrutinize it closely to see if it is one which ought to be admitted (Aspeling &
another v Hoffman’s Trustee 1917 TPD 305 307-8). But he must concentrate on the
essential allegations of the claim, and should not look for purely technical or formal defects
(Hassim Moti & Co v Insolvent Estate M Joosub and Co 1927 TPD 778 781). In this case, the
presiding officer had rejected a claim made by one Hassim Moti on behalf of the firm, Hassim
Moti & Co, because Moti had omitted to state in his affidavit what his means of knowledge
were. The claim was based on certain promissory notes made in favour of Hassim Moti & Co.
The court set aside the presiding officer’s decision. It held that the presiding officer could
have inferred from the identity of the names and the fact that Hassim Moti had actually
attached the promissory notes to the affidavit, that he was either the sole proprietor or a
member of Hassim Moti & Co, and consequently that he had derived his knowledge of the
claim from his connection
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with the firm. In the court’s view, the presiding officer’s objection to the claim had been a
technical one with ‘no real substance’ (781).
If the claim is on the face of it bad (eg, if it has prescribed), the presiding officer should
reject it (Aspeling & another v Hoffman’s Trustee (supra)). Conversely, if prima facie proof of
the claim is produced, he should admit it (Ilsley v De Klerk NO & another 1934 TPD 55).
Unless the claim is on the face of it bad, the presiding officer should not reject it without
hearing the creditor’s evidence under s 44(7) (ibid). In Ilsley’s case, the claim was for
money allegedly advanced to the insolvent. In support of the claim, the creditor produced
two cheques drawn by the insolvent. It appeared that the creditor had held these cheques
for upwards of eight months without presenting them for payment. Because of this fact, the
presiding officer decided that the claim was not sufficiently proved and rejected it. It was
held that, as there was nothing in the claim documents to suggest that the claim was not
genuine, the presiding officer should not have rejected it without first calling for and
considering the creditor’s evidence on the precise terms of the loan and how the cheques
had come to be withheld from presentation for so long. It is not competent for the presiding
officer to call for evidence other than that of the creditor for the purpose of deciding whether
the claim is genuine and should be admitted. In other words, the creditor is entitled to have
his claim considered without any evidence being heard, except his own, in terms of s 44(7)
(Peach v Stewart NO & another 1929 WLD 228).
The rejection of a claim does not debar the creditor from proving it at a subsequent
meeting of creditors or from establishing it by action at law (s 44(3)).
(vii) Trustee’s examination of admitted claims
The admission of a claim by the presiding officer is, in a sense, only provisional because the
trustee may still dispute the claim (Cachalia v De Klerk NO and Benjamin NO (supra) 675).
However, the admission has the effect of putting the onus of disproving the existence of the
claim on the trustee (Chappell v The Master & others 1928 CPD 289 291).
After a meeting of creditors at which claims have been proved, the presiding officer must
deliver to the trustee every claim proved along with the documents filed in support of it (s
45(1)). The trustee is obliged to examine all available books and documents relating to the
estate for the purpose of ascertaining whether the estate in fact owes the amount claimed (s
45(2)). He must, in other words, determine whether the records of the estate reflect the
indebtedness which is the subject of the proved claim (Caldeira v The Master & another 1996
(1) SA 868 (N) 874). As it was put in Standard Bank of South Africa v The Master of the
High Court & others 2010 (4) SA 405 (SCA) 426: ‘In the scheme of things [trustees] are
required to examine all available books and documents for corroboration or comparison.’
Although the Act does not say as much, the trustee should also have regard to any other
relevant evidence, such as statements of the insolvent or other witnesses regarding the
claim (Standard Bank of SA v The Master of the High Court (supra) 426). To dispute a claim
validly, the trustee must have a reasonable belief, based on facts which he has ascertained,
that the insolvent estate is not, in fact, indebted to the creditor concerned: a mere suspicion
about the claim does not suffice (Caldeira v The Master & another (ibid); Standard Bank of
SA Ltd v The Master of the High Court 2009 (5) SA 13 (E) 27; Standard Bank of SA v The
Master of the High Court 2010 (4) SA 405 (SCA) 440-1).
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If the trustee decides to dispute the claim, he must report this in writing to the Master,
stating his reasons (s 45(3)). At the same time he must give the claimant a copy of such
reasons and notify him that he may, within 14 days, or any longer period as the Master may
on application allow, show cause why his claim should not be disallowed or reduced (reg 3
(1)). The Master may either confirm the claim or, after allowing the claimant an opportunity
to substantiate it—for instance, by calling evidence—reduce or disallow it (s 45(3)). Before
expunging a claim, the Master must apply his mind to the reasons given by the trustee—the
claim is not expunged simply on the request of the trustee (Caldeira v The Master & another
(supra) 874). On expunging a claim, the Master must forthwith notify the claimant in writing
(s 45(3)).
In Callinicos v Burman 1963 (1) SA 489 (A) 500, the court held that the trustee need not
follow the procedure for disputing a claim under s 45(3) if the issue is not the amount of the
claim, but whether it is a preferent one. In such a case, the trustee may deal with the issue
for the first time in his account.
The reduction or disallowance of the claim does not debar the claimant from establishing it
by action at law (s 45(3); P G Bison Ltd v Johannesburg Glassworks (Pty) Ltd (in Liquidation)
2006 (4) SA 535 (W) 541-2; PG Bison Ltd v Johannesburg Glassworks (Pty) Ltd (in
Liquidation) & others [2008] 1 All SA 473 (W) 488).
(viii) Action to establish disputed claim
The action to establish a claim which has been rejected by the presiding officer or disallowed
by the Master lies against the trustee. The creditor does not, for instance, have a right to
compel the Master to allow the claim against the estate (The Master v Stuart 1981 (2) SA
472 (E)). Section 75(2) provides that no action in respect of any claim which arose before
sequestration may be brought after the Master has confirmed the trustee’s account in terms
of s 112, unless the court finds that there was a reasonable excuse for the delay. This
provision does not apply if the account in question is not a final one and there are further
assets in the estate to be dealt with (Wilkens v Potgieter NO & another 1996 (4) SA 936 (T)
941). In this case, a creditor brought an action to have his claim included in the second
liquidation and distribution account which had not yet been confirmed by the Master. It was
held that it was not necessary for him to obtain the permission of the court to institute
proceedings or offer any excuse for the delay in lodging his claim.
The provision in the Act (ie, s 44(3)), to the effect that the rejection of a claim at a
meeting of creditors does not bar an action to enforce the claim, does not mean that a
rejection is a prerequisite to such an action. A creditor may sue to enforce his claim even if it
has not been rejected by the presiding officer (Barlows Tractor Co (Pty) Ltd v Townsend
1996 (2) SA 869 (A) 879). In this case, it was held that a creditor who had sued to enforce
his claim after withdrawing it from proof at a meeting of creditors was not deprived of his
common-law right to enforce the claim by legal proceedings.
The trustee may, if so authorized by creditors (or the Master, where no creditor has
proved a claim), compromise or admit a disputed claim, provided it has been tendered for
proof at a meeting of creditors (s 78(3)). One of the objects of allowing creditors to
authorize this is to enable them to avoid unnecessary litigation, the cost of which could
reduce considerably the assets of the estate (Standard Bank of South Africa Ltd v Cato and
Gunn NNO & others 1981 (1) SA 647 (W)). Once a claim has been compromised or
admitted, or once it is settled by a judgment of the court, it is deemed to have been
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proved and admitted against the estate in the usual way (although the trustee is not
debarred from appealing against the judgment, if so authorized by the creditors) (s 78(3)).
In Cachalia v De Klerk NO and Benjamin NO (supra), it was held that the deeming provision
in s 78(3) applies only in relation to a claim which has been tendered for proof at a meeting
of creditors.
(ix) Review of decision on proof of claim
Any person (including a creditor, the insolvent or the trustee: Millman & another NNO v
Pieterse & others 1997 (1) SA 784 (C)) who is aggrieved by the decision of the presiding
officer or the Master to admit or reject a claim may apply to court to have the decision
reviewed (s 151). A person is aggrieved for these purposes if he is injured or wronged in his
rights or interests (Jeeva & another v Tuck NO & others 1998 (1) SA 785 (SE) 792), but the
term ‘person aggrieved’ is capable of a wider meaning (see 1.5). The applicant must be
aggrieved in this sense as a result of the decision itself—a party cannot apply for a review in
terms of s 151 because he is adversely affected by the events which have occurred since the
decision was given. In Jeeva & another v Tuck NO & others (supra), the former directors of a
company in liquidation, who were due to be interrogated by a creditor and were concerned
that information elicited at the interrogation might be used for a criminal charge, applied for
a review of the decision admitting the creditor’s claim against the company. The court
dismissed the application, holding that the directors had not shown that they had any rights
which had been adversely affected by the decision.
On review, the court’s powers are of the widest kind—it may adjudicate on the claim de
novo (Talacchi & another v The Master & others 1997 (1) SA 702 (T) 706-7) and may
consider fresh evidence not available to the presiding officer or the Master (De Jager v Harris
NO and the Master 1957 (1) SA 171 (SWA) 174; Nel & another NNO v The Master (Absa
Bank Ltd & others intervening) 2005 (1) SA 276 (SCA) 286). See also 1.5.
9.2.4 Arrear interest

A creditor may include in his claim arrear interest up to the date of sequestration, provided
interest was payable by agreement or as a result of the insolvent’s being in mora (s 50(1)).
A secured creditor has a secured claim for a maximum of two years’ interest (s 89(3)), and a
concurrent claim for interest that is more than two years in arrears.
9.2.5 Conditional debts

A creditor whose claim against the estate is subject to a condition which has not been
fulfilled may prove his claim in the ordinary way (s 48). The manner in which the claim is
dealt with depends upon the time in which the condition may be fulfilled. If the condition is
such that it will, if fulfilled at all, be fulfilled within a year of the sequestration, any dividend
awarded on the claim must be paid to the Master, who must only pay it to the creditor if the
condition is fulfilled; otherwise he must pay it to the trustee for distribution among the other
creditors (s 48(a)). If the condition will not be fulfilled within a year of the sequestration, or
if it may be fulfilled at any time, the creditor may call upon the trustee at a meeting of
creditors to place a value on the claim (s 48(b)). The trustee must place a written valuation
of the claim together with his
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reasons for the valuation before the presiding officer at the meeting, who must either admit
the claim at a value determined by him, or reject it (ibid). Irrespective of the presiding
officer’s decision, where the condition is actually fulfilled before confirmation of the trustee’s
account, the creditor may prove his claim as if it had been unconditional (ibid).
It has been held that the provisions governing conditional claims do not apply in the case
of an unliquidated conditional claim (Proksch v Die Meester en andere 1969 (4) SA 567 (A)).
A creditor with such a claim is, therefore, obliged to wait for the condition to be fulfilled
before he can prove his claim against the estate (Absa Bank Ltd v Scharrighuisen 2000 (2)
SA 998 (C) 1006). An example of an unliquidated conditional claim is that of a surety for the
insolvent where the creditor has proved its claim against the insolvent estate (ibid).
A creditor whose claim is subject to a ‘subordination’ agreement has no claim provable in
insolvency. The effect of a subordination agreement is generally that the creditor’s claim is
enforceable only if the debtor has paid all his other creditors or his assets exceed his
liabilities (excluding the subordinated debt). Prior to sequestration, the creditor’s claim
continues to exist, although it cannot be enforced until the conditions attached to it have
been satisfied. However, on sequestration, the creditor’s claim is extinguished, because the
preconditions are no longer capable of fulfilment (Ex parte De Villiers & another NNO: In re
Carbon Developments (Pty) Ltd (in Liquidation) 1993 (1) SA 493 (A) 504-5).
9.2.6 Debts payable after sequestration

A conditional debt must be distinguished from a debt which is owed but which becomes
payable after the date of sequestration. The former may never have to be paid, whereas the
latter will, even though the precise date of payment may be uncertain.
Where the creditor’s claim is in respect of a debt which falls due after the date of
sequestration, the creditor may prove a claim for the full amount of the debt as if it were
payable on the date of sequestration (s 50(2)). The same applies where only part of the debt
becomes due after sequestration or where the debt is payable in instalments, some of which
fall due after sequestration (Bassa v The Master & another 1963 (4) SA 510 (N)). If the debt
bears interest, the creditor may, it seems, include in his claim interest up to the date on
which the debt falls due, not merely the date of sequestration (cf Trans-Drakensberg Bank
Ltd v The Master & others 1962 (4) SA 417 (N)).
The Act requires a debt payable after sequestration to be abated if it does not bear
interest and a distribution account is confirmed by the Master before the debt becomes due.
The trustee must award the creditor whatever sum he would have paid under the
distribution account, had the debt been payable on the date of sequestration, less eight per
cent of that amount per annum reckoned from the date of sequestration to the due date of
the debt (s 50(2)). The same applies in the case of an interest-free debt, part of which falls
due after sequestration: the portion that has not become due by the time the distribution
account is confirmed must be abated at the rate of eight per cent per annum (Bassa v The
Master & another (supra)). The latter case concerned an interest-free debt payable in
instalments, some due before and some after sequestration. It was held that each
instalment which fell due after confirmation of the trustee’s account should be treated as a
separate claim and abated at the prescribed rate from the date of sequestration to the due
date of that instalment.
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9.3 Voting and resolutions of creditors

The creditors give directions to the trustee regarding the administration of the estate by
means of resolutions voted on and passed by them at meetings. The general purpose of
creditors’ resolutions is to direct the gathering of the available assets and the speedy and
effective liquidation thereof in the best interests of the estate (Jordaan v Richter en andere
1981 (1) SA 490 (O) 496).
9.3.1 Entitlement to vote

In general, every creditor who has proved a claim against the estate is entitled to vote at a
meeting of creditors (s 52(1)). In certain instances, a creditor who has proved a claim has
no or limited voting power:
• A creditor may not vote on the basis of a claim which he acquired by cession after
commencement of the sequestration proceedings (s 52(4)). The purpose of this
restriction is apparently to prevent a creditor from gaining control of an insolvent
estate by taking cession of claims of other creditors and thus increasing his voting
powers (Ruskin NO v Speedy Engineering Works (Pty) Ltd & others 1975 (4) SA 126
(W)).
• A secured creditor may vote up to the full value of his claim on the election of a trustee
or any matter affecting his security, but in all other matters his voting power is limited
to the amount by which his claim exceeds the value which he placed upon his security
when proving his claim or, if he did not value his security, the amount obtained on
realization of the security in terms of s 83 (s 52(5)). A remote possibility of prejudice
to the security is probably not enough to entitle a secured creditor to vote (Brigl v The
Master & others 1980 (1) SA 468 (O)).
• A creditor may not vote on whether steps should be taken to contest his claim or
preference (s 52(6)).
• A creditor whose claim is conditional has no right to vote if the condition is one which
will be fulfilled, if at all, within a year of the sequestration (s 48(a)). If, however, the
condition does not fall into this category, the claim is admitted to proof at a valuation
and the creditor may vote in respect of that value (see 9.2.5).
9.3.2 Determination of vote

In general, the voting power of a creditor is reckoned according to the value (ie, the
amount) of his claim (s 52(2)), and every matter put to a vote is determined by the majority
in value of the votes cast (s 53(2)). In the matters of the election of a trustee and the
acceptance of an offer of composition, votes are counted according to both value and
number (ss 54(4), 119(7)). A claim of less than R1 000 is not taken into account in a vote
by number (s 52(3)).
9.3.3 Questions on which creditors may vote

A creditor may vote (and hence pass resolutions) on all matters relating to the
administration of the estate, but not on matters relating to the distribution of the assets,
except for the purpose of directing the trustee to contest, compromise, or admit a claim
against the estate (s 53(1)).
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9.3.4 Voting through agent

A creditor may vote through an agent to whom he has given a general power of attorney or
special authority to vote (s 53(2)). In Caledon Trust and Fire Assurance Co Ltd v Magistrate
of Riversdale & others 1937 CPD 349, it was held that special authorization by telegram was
sufficient to empower an agent to vote. The legislature has disallowed voting through any of
the following persons, apparently with the aim of curtailing touting for trusteeships: a person
who has been nominated or appointed as trustee, his employer or employee, his spouse or
relative by consanguinity or affinity within the third degree, a co-employee working for the
same employer, and anyone having a direct or indirect pecuniary interest in his
remuneration (s 53(2)(a)-(e)).
9.3.5 Resolutions of creditors

Every resolution at a meeting of creditors and the result of the voting on any matter as
declared by the presiding officer must be recorded in the minutes of the meeting (s 53(3)).
The resolution so recorded is binding upon the trustee, in so far as it is a direction to him
(ibid). He is not bound by any other direction of creditors (ibid). A resolution duly carried at
a meeting of creditors is binding on all creditors: a creditor cannot escape the consequences
of the resolution on the basis that he was not present or did not vote at the meeting or
voted against the resolution (Trustees of the Insolvent Estate of S W Sutton v H & T
McCubbin (1891) 12 NLR 351; Slater’s Trustee v Smith & Co (1886) 4 SC 135). But if he
withdraws his claim within five days after the date of the resolution, he is deemed to have
withdrawn the claim before anything was done in pursuance of the resolution (s 106(b)).
9.3.6 Setting aside creditors’ resolution

The court can set aside a resolution of creditors if it was taken irregularly, or if the creditors
were not competent to take it (Jordaan v Richter en andere (supra)), or if it was not bona
fide, ie, if it was passed, not in the honest belief that it was in the interests of the estate and
for the benefit of creditors, but for some collateral object, fraudulent or otherwise (Paruk &
others v Parker, Wood & Co Ltd 1917 AD 163 168; Janse van Rensburg v Muller 1996 (2) SA
557 (A) 564). Furthermore, the court may set aside any direction which infringes the rights
of a creditor; it may do this at the instance of the creditor himself, or at the instance of the
trustee with the consent of the Master (s 53(4)). A party who has not proved a claim but
who is prima facie a creditor of the estate and whose rights are affected by the direction in
question has locus standi to seek relief in terms of this section (Pine Village Home Owners
Association Ltd & others v The Master & others (supra) 581).
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Chapter 10
The election of the trustee
Synopsis
10.1 Election and appointment
10.1.1 Election
10.1.2 Appointment
10.1.3 Refusal to appoint
10.1.4 Objection to appointment or refusal to appoint
10.1.5 Joint trustees
10.2 Persons disqualified from being trustee
10.2.1 Absolute disqualification
10.2.2 Relative disqualification
10.3 Vacation of, or removal from, office
10.3.1 Vacation of office
10.3.2 Removal from office by Master
10.3.3 Disqualification or removal from office by court
10.4 Resignation and leave of absence
10.5 Election of new trustee
10.6 Recognition of foreign trustee
10.7 Remuneration
10.1 Election and appointment

10.1.1 Election
At the first meeting of creditors, creditors who have proved their claims may elect one or
two trustees (s 54(1)). If more than one person is nominated, the individual who obtains a
majority of votes in both number and value must be elected as sole trustee (s 54(2)). If one
person obtains a majority in value, and another person a majority in number, both must be
elected trustees (s 54(3)(b)). However, if either party declines a joint trusteeship, the other
must be elected sole trustee (ibid). Should one person obtain a majority of votes in number
and no other person obtain a majority in value, or vice versa, the party who obtains the
majority must be elected as sole trustee (s 54(3)(a)).
Where a trustee is elected at a meeting not presided over by the Master, his election is
not valid until confirmed by the Master (s 56(1)).
10.1.2 Appointment
|The Master is the only official with power to appoint the trustee of a sequestrated estate (or
the liquidator of a company). A judge is not empowered to make such an
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appointment or to make recommendations to the Master in this regard (Ex parte The Master
of the High Court South Africa (North Gauteng) 2011 (5) SA 311 (GNP) 327).
The Master may refuse to accept as trustee the person whom the creditors have elected
(see 10.1.3). If he does not do so, he must, once the person has given satisfactory security
for the proper performance of his duties as trustee, confirm his election and appoint him as
trustee by delivering to him a certificate of appointment (s 56(2)). This certificate is valid
throughout the Republic (ibid). The trustee must then give notice of his appointment and his
address in the Gazette (s 56(3)).
If the Master considers it desirable to do so, he may, in accordance with policy determined
by the Minister, appoint as a co-trustee, with the trustee or trustees of an insolvent estate, a
person qualified to act as trustee who has given the security required by s 56(2) (s 57(5)).
That appointee is governed by all the provisions of the Insolvency Act concerning a trustee
(s 57(6)).
10.1.3 Refusal to appoint

The Master may refuse to confirm the election of a person elected as trustee, or to appoint
him as such, if:
• he was not properly elected;
• he is disqualified from being a trustee (see 10.2);
• he has failed to give the required security; or
• in the opinion of the Master, he should not be appointed as trustee to the estate in
question (s 57(1)).
If the creditors have elected a trustee unlawfully, the Master is obliged not to confirm the
election and to convene a creditors’ meeting to elect another trustee (SabieMedieseSentrum
(Edms) Bpk v Die Meester en andere 1977 (4) SA 389 (T)).
In deciding whether a person is a suitable candidate, the Master should consider his
personality, experience, age, and diligence, as well as the complexity or otherwise of the
problems presented by the estate (Meskin v The Master & another 1963 (3) SA 229 (D)).
The person must be capable of filling a trustee’s position of trust towards creditors and the
insolvent and being able to act independently, treat creditors equally, and perform his duties
without fear, favour or prejudice (Standard Bank of South Africa v The Master of the High
Court & others 2010 (4) SA 405 (SCA) 407). The Master cannot refuse an appointment
merely because he believes that the elected party would not be approved of by certain
creditors (ibid). It has been held that the Master may issue a directive to his staff that a
particular person must not be appointed as trustee (Lipschitz v Wattrus NO 1980 (1) SA 662
(T) 672). In Ex parte The Master of the High Court South Africa (North Gauteng) (supra),
the court explained (322):
‘An organisation [of the nature of the Master’s office] has the institutional knowledge and expertise to
apply policy, and to assess the ability and integrity of trustees and liquidators, and is therefore able to
judge whether or not individuals are duly qualified to be appointed, either at all or to a specific estate.
In . . . Lipschitz v Wattrus NO 1980 (1) SA 662 (T) . . . the court emphasised the intricacy and volume
of work that the master’s office has to perform, and recognised that the master keeps lists of the
names of potential trustees, liquidators and judicial managers composed of persons who are prima
facie qualified to be appointed. If the master comes to the bona fide conclusion that a particular
person is no longer fit to fulfil the role of provisional trustee, liquidator or judicial manager, he has the
power, but also the duty, to prevent such person’s appointment.
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If the Master declines to confirm a party’s election or to appoint him as trustee, he must
notify the party in writing and state the reasons for so declining (s 57(1)). If he declines on
the ground that, in his opinion, the person concerned should not be appointed as trustee to
the estate in question, he need only state this as his reason (ibid). Having declined an
election or appointment, the Master must convene a meeting of creditors in the manner set
out in the Act for the purpose of electing another trustee (s 57(2)).
10.1.4 Objection to appointment or refusal to appoint
Any person aggrieved by:
• the appointment of a trustee; or
• the refusal to confirm the election of, or to appoint, a trustee,
may, within seven days from the date of appointment or refusal, request the Master in
writing to submit his reasons for the appointment or refusal to the Minister (s 57(7)). The
Master must comply with the request within seven days, submitting along with his reasons
any relevant documents, information, or objections which he has received (s 57(8)). The
Minister may then give appropriate directions in this regard and his decision is final (s 57(9)
-(10)). The right of appeal to the Minister does not exclude the right under s 59 (see 10.3.3)
to apply to court for an order declaring a person disqualified from being trustee or removing
him from office (Jordaan v Richter en ’n ander 1979 (3) SA 1213 (O)).
10.1.5 Joint trustees

If two or more trustees have been appointed, or if the Master has appointed a co-trustee
under s 57(5), they must act jointly in performing their functions as trustees and they are
jointly and severally liable for every act that they perform jointly (s 56(4); Goldseller v Hill
1908 TS 822 827)). If one co-trustee acts unlawfully without the knowledge or consent of
the other, the latter is not liable (cf Durandt v Fedsure General Insurance Ltd 2005 (3) SA
350 (SCA)). If co-trustees disagree on any estate matter, it must be referred to the Master,
who must determine the issue or give directions as to the procedure to be followed for doing
so (s 56(5)). Joint trustees may delegate administrative acts to a third party for the latter to
perform for them as their subordinate agent, but not matters of discretion that the trustees’
office requires them to exercise both jointly and severally (Miller & others v Nafcoc
Investment Holding Co Ltd & others 2010 (6) SA 390 (SCA) 398).
10.2 Persons disqualified from being trustee

Certain persons are not competent to be appointed trustee in any estate. Others are merely
disqualified from being trustee in a particular estate.
10.2.1 Absolute disqualification

The following persons may not be trustee in any estate:
• an insolvent;
• a minor or other person under legal disability;
• a person who resides outside the Republic;
• a company, close corporation, or other corporate body;
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• a former trustee disqualified under s 72;

• a person declared by the court under s 59 to be incapacitated for election as trustee
(see 10.3.3), while such incapacity lasts, or any person removed by the court from an
office of trust on account of misconduct;
• a person who has been convicted of theft, fraud, forgery, uttering, or perjury, and who
has been sentenced to a term of imprisonment without the option of a fine, or to a fine
exceeding R2 000;
• a person who was at any time party to an agreement with a debtor or a creditor
whereby he undertook that he would, while performing the functions of a trustee, grant
or obtain for a debtor or a creditor a benefit not provided for by law; or
• a person who has, by means of misrepresentation, reward, or the offer of any reward,
whether direct or indirect, induced or attempted to induce, a person to vote for him as
trustee or to assist in having him elected as trustee of any insolvent estate (s 55).
10.2.2 Relative disqualification
The following persons are disqualified in respect of a particular estate:
• a person related to the insolvent in blood or by marriage within the third degree;
• a person having an interest opposed to the general interest of the creditors;
• a person who acted as the bookkeeper, accountant, or auditor of the insolvent at any
time during a period of 12 months immediately preceding the date of sequestration; or
• an agent authorized to vote on behalf of a creditor at a meeting and who acts or
purports to act in terms of that authority (s 55).
10.3 Vacation of, or removal from, office

10.3.1 Vacation of office
A trustee must vacate his office:
• if his estate is sequestrated;
• if an order is issued for his detention under the Mental Health Care Act 71 of 2002, or if
he is declared by the court to be incapable of managing his own affairs;
• if he is convicted of an offence and sentenced to imprisonment without the option of a
fine; or
• if he is convicted of theft, fraud, forgery, uttering a forged document, or perjury (s 58).
10.3.2 Removal from office by Master

The Master may remove a trustee from office on the ground that:
• he was not qualified for appointment, or that his election or appointment was illegal, or
that he has become disqualified;
• he has failed to perform any of his duties satisfactorily or to comply with a lawful
demand of the Master;
• he is mentally or physically incapable of performing his duties as trustee satisfactorily;
• the majority of creditors has requested in writing that he be removed; or
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• he is no longer suitable, in the opinion of the Master, to be the trustee of the estate
concerned (s 60).
10.3.3 Disqualification, or removal from office, by court

On the application of an interested party, the court may declare that the person appointed or
proposed as trustee is:
• disqualified from holding the office; and
• incapable of being elected or appointed trustee during his lifetime or such other period
as the court may determine.
The court may make this order if:
• the person has accepted, or expressed his willingness to accept, a benefit from
someone who performs work on behalf of the estate (such as a discount allowed by a
newspaper in respect of estate advertisements or commission on estate money
invested with a financial institution); or
• the person, in order to obtain the vote of any creditor for his appointment as trustee,
has
— wrongfully omitted or included the name of a creditor from any record required
by the Act; or
— given or offered consideration of any kind; or
— offered to abstain from investigating previous transactions of the insolvent; or
— split claims for the purpose of increasing the number of votes (s 59).
The court may remove a trustee from office on the grounds of his misconduct as a trustee.
The power which the court has at common law to order removal on these grounds has not
been displaced by s 60 of the Insolvency Act (Fey NO and Whiteford NO v Serfontein &
another 1993 (2) SA 605 (A)).
10.4 Resignation and leave of absence

The Master may allow a trustee to resign on such conditions as he may see fit to impose. He
may also allow him to be absent from the Republic, but permission need only be obtained if
the trustee will be absent for more than 60 days (s 61).
10.5 Election of new trustee

When a sole trustee or one of two joint trustees vacates his office, is removed from office,
resigns, or dies, the Master must convene a meeting of creditors for the election of a new
trustee or co-trustee, as the case may be (s 62(1)-(3)). He may appoint a provisional
trustee to preserve the estate while the trustee’s office is vacant (s 62(2)). The appointment
must be in accordance with policy determined by the Minister (ibid).
10.6 Recognition of foreign trustee

A trustee who has to deal with assets situated in a foreign country must take the necessary
steps required by the law of that country to obtain recognition. Similarly, foreign trustees
may obtain recognition from the Republic to enable them to deal with assets in the country.
This topic is considered further in chapter 26.
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10.7 Remuneration
The trustee is entitled to receive a reasonable remuneration for his services, to be taxed by
the Master according to tariff B in the Second Schedule to the Act (s 63(1); Gore & another
NNO v The Master 2002 (2) SA 283 (E)). He is not entitled to remuneration until the estate
account showing the amount to be paid has been confirmed (R v Macleod 1935 EDL 284;
Strydom NO v Master of the High Court & another 2010 (6) SA 630 (GNP) 636). Tariff B
allows the trustee remuneration calculated as a specified percentage on certain items (see
Appendix 3). So, for instance, the trustee is entitled to 10 per cent of the gross proceeds of
the sale of movables (except shares or similar securities) and of the gross amount collected
under promissory notes or book debts or as rent, interest or other income. The tariff was
last adjusted by the Minister of Justice in 1995, setting a scanty minimum fee of R2 500
(Klopper NO v The Master 2009 (3) SA 571 (SCA) 574). Neither the court nor the Master is
empowered to rectify inadequacies of the tariff. This matter has to be dealt with by the
executive branch of government.
The Master may reduce or increase the trustee’s taxed remuneration for good cause, or
disallow the remuneration, wholly or in part, on account of any failure or delay by the
trustee in the performance of his duties (s 63(1)). The concept of ‘good cause’ is very wide,
and relevant factors will vary from case to case. In Nel& another NNO v The Master (Absa
Bank Ltd & others intervening) 2005 (1) SA 276 (SCA), Van Heerden AJA observed (285):
‘[T]he Master has a duty to satisfy himself or herself as to the reasonableness of the remuneration
arrived at by the application of the tariff . . . . The concept of ‘‘good cause’’ is very wide [and
includes] . . . any factor which may be relevant in determining what constitutes reasonable
remuneration for a liquidator’s services in the circumstances of each case. Obviously, what factors are
relevant will vary from case to case, but may certainly include aspects such as the complexity of the
estate in question, the degree of difficulty encountered by the liquidator in the administration thereof,
the amount of work done by the liquidator and the time spent by him or her in the discharge of the
duties involved. If, in the winding-up of a company, particular difficulties are experienced by the
liquidator because of the nature of the assets or some other similar feature connected with the
winding-up, this would undoubtedly constitute ‘‘good cause’’ entitling the Master to increase the tariff
remuneration. On the other hand, in a situation where, having regard to all the relevant factors, the
Master forms the view that the remuneration calculated according to the tariff is excessive in relation
to the work done or the responsibility involved, this would likewise entitle the Master—and the Master
will be obliged—to depart from the tariff figures by decreasing the tariff remuneration to an amount
which would be reasonable in the circumstances.’
The time taken for a particular task is not necessarily conclusive: also relevant are the
amount of effort required and the degree of complexity of the matter (Klopper NO v The
Master (supra) 574).
The trustee or any other interested person may take the Master’s decision on review (s
151; see also 1.5).
In Cooper v The Master & others 1996 (1) SA 962 (N) 967-9, the court accepted the
following propositions with regard to the allowing of an increased fee by the Master:
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• There is no obligation on the trustee to consult any creditor before making application
to the Master for a special fee (although it may make good sense and be good tactics
to consult the major creditors with regard thereto).
• Co-trustees must consult with each other before application is made for a special fee
on behalf of any of them.
• The Master cannot properly exercise his discretion in terms of s 63(1) until all the
trustee’s services have been rendered and it is known to what extent the estate has
benefited thereby.
• The court will not lightly interfere with the Master’s decision to grant an increased
remuneration: in general, there must be evidence of mala fides or illegality.
The trustee’s remuneration may be reduced on the grounds of unsatisfactory performance
(Thorne v The Master 1964 (3) SA 38 (N)) or misconduct (Standard Bank of South Africa v
The Master of the High Court & others 2010 (4) SA 405 (SCA) 435).
The Act does not provide for an increase in the amount of remuneration on the ground
that there is more than one trustee. In the absence of actual consensus, express or tacit, to
the contrary, joint trustees are obliged to divide the remuneration between them equally,
irrespective of the nature and extent of the services rendered by each (Cooper v Master of
the Supreme Court & others [1998] 1 All SA 158 (N); Botha v Swanepoel 2002 (4) SA 577
(T) 579, 581-2).
The trustee is not entitled to any remuneration for services rendered to the estate except
that to which he is entitled as trustee under the Act (s 63(2); George Hartman & Kie v
Landdros, Reitz en andere 1958 (4) SA 514 (O)). For instance, he may not be paid
auctioneer’s commission or receive fees for services rendered as an attorney or
conveyancer. The same applies to a partner of the trustee (s 63(2)). The employer, a fellow
employee, and a person in the ordinary employment of the trustee are not entitled to
receive remuneration for services rendered to the estate (ibid).
The trustee’s remuneration must be paid as a cost of sequestration (ss 89(1) and 97(2)
(c)).
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Chapter 11
The duties and powers of the trustee
Synopsis
Introduction
11.1 Taking charge of assets and documents
11.2 Recovery of debts due to estate
11.3 Continuation of insolvent’s business
11.4 Investigation of insolvent’s affairs
11.5 Receipt book
11.6 Estate bank account
11.7 Report to creditors
11.8 Legal advice and proceedings
11.9 Submission of disputes to arbitration
Introduction
The trustee has the task of collecting and, where necessary, preserving the assets in the
estate so that he can realize them for the benefit of creditors. With this task in mind, the Act
imposes on the trustee a number of specific duties and gives him certain powers. These
duties and powers are discussed in this chapter. Two aspects of the collection procedure are
dealt with in subsequent chapters: impeachable dispositions (chapter 12), and the
interrogation of the insolvent and other witnesses (chapter 13). The Act also imposes
obligations on the insolvent with a view to assisting the trustee in collecting the assets of the
estate. These obligations of the insolvent are treated in chapter 14.
In general, the trustee is required to be wholly independent and impartial, and to regard
equally the interests of all the creditors (Goldseller v Hill 1908 TS 822 835-6; Standard Bank
of South Africa v The Master of the High Court & others 2010 (4) SA 405 (SCA) 407). He
occupies a position of trust towards the insolvent but, since sequestration is intended to be
to the advantage of creditors, the trustee does not act in breach of his position if he takes all
lawful steps in his power to ensure that it is the creditors rather than the insolvent who
benefit from the sequestration (Hobson NO v Abib 1981 (1) SA 556 (N) 560).
If the trustee fails to perform a duty imposed on him by the Act, the Master or a person
having an interest in the liquidation or distribution of the estate may, after giving the trustee
not less than 14 days’ notice, apply to the court for an order directing the trustee to perform
the duty (s 116bis(1)). Costs awarded to the Master or interested persons are, unless
otherwise ordered by the court, payable by the trustee de bonispropriis (s 116bis(2)), but
the court will not leave the trustee to pay from his own pocket unless he has been guilty of
improper conduct (Cooper NO v First National Bank of SA Ltd 2001 (3) SA 705 (SCA) 717).
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11.1 Taking charge of assets and documents

As soon as possible after the sheriff has made an inventory in terms of s 19 (see 8.2), the
trustee is required to take possession or control of all movable property, books, and
documents belonging to the estate and furnish the Master with a valuation of the movable
property by an appraiser appointed under the Act or approved by the Master (s 69(1)). A
creditor who holds movable property as security for his claim may, in certain circumstances,
retain that property and administer it himself in terms of s 83 (see 15.2.4).
Section 69(3) provides that a magistrate may, on application by the trustee in terms of s
69(2), if it appears from a statement made upon oath that there are reasonable grounds for
suspecting that any property, book, or document belonging to the insolvent estate is being
concealed or otherwise unlawfully withheld from the trustee, issue a warrant to search for
and take possession of that property, book, or document. The search warrant must be
executed in the same manner as a warrant to search for stolen property, and the executing
officer is obliged to deliver any article seized to the trustee (s 69(4)). The statement on
which the magistrate relies need not necessarily be made by the trustee, and neither the
statement nor the trustee’s application for the warrant need necessarily be made in writing
(Snyman & others v Simon NO & another 2001 (2) SA 998 (W) 1002). The magistrate
should call for facts to support the deponent’s conclusions—not simply accept them—and he
should exercise his discretion on the given facts (Bruwil Konstruksie (Edms) Bpk v Whitson
NO & another 1980 (4) SA 703 (T) 711). ‘Reasonable grounds for suspecting’ does not mean
prima facie proof: the yardstick is whether the facts justify a reasonable suspicion that
property is being concealed or withheld, even though that suspicion may turn out to be
wrong (Philip Business Services CC v De Villiers & others NNO 1991 (3) SA 552 (T)). It
follows that the warrant is not defective merely because the property attached does not, in
fact, belong to the insolvent estate (Kerbyn 178 (Pty) Ltd v Van den Heever & others NNO
2000 (4) SA 804 (W) 811). However, the section should not be resorted to where there is a
clear, open, and reasonable dispute between the possessor and the trustee as to whether
the property belongs to the insolvent estate and where there is little or no danger of the
property’s being damaged or no possibility of its being removed (Advance Mining Hydraulics
(Pty) Ltd & others v Botes NO & others 2000 (1) SA 815 (T) 822). Once the property has
been delivered to the trustee, the authority conferred by the warrant is exhausted. Section
69(3) does not authorize the trustee to remain in possession of the property. Whether or not
he may keep possession falls to be decided according to ordinary principles of law, the issue
|being whether the estate has a right to the property that is sufficient to resist any competing
claim to possession (Kerbyn 178 (Pty) Ltd v Van den Heever & others NNO (supra) 811-2).
Books and documents recorded on the hard drive of a computer are seizable under s 69.
In Le Roux & others v Viana NO & others 2008 (2) SA 173 (SCA), Mlambo AJA remarked
(175):
‘The objective of s 69(3) contemplates nothing less than the seizure of property, books and
documents relating to the insolvent estate wherever they may be. . . . [P]roperly construed the
reference to books and documents in s 69(3) has nothing to do with the form in which those books
and documents are. The Concise Oxford English Dictionary (10 ed, revised) defines a book as ‘‘a set of
records or accounts or the embodiment of a record of commercial transactions’’ and a document as ‘‘a
piece of written, printed or electronic matter that
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provides information or evidence or that serves as an official record’’. That these definitions accord
with what the section contemplates cannot be disputed. They also fit in with the context within which
one must view the role and functions of a trustee in the scheme of the Insolvency Act. . . . It can
hardly be suggested . . . that we should not take judicial notice of the technological advancements
regarding electronic data creation, recording and storage because this was unheard of in 1936 when
the Insolvency Act was passed.’
Section 69(3) does not expressly provide for the giving of notice to an affected person. In
Cooper NO v First National Bank of SA Ltd (supra) 713-4, the majority of the Appeal Court
pointed out that, since search and seizure may infringe the property and privacy rights of
others, a magistrate should not, as a general principle, issue a warrant without observing
the principle of audialterampartem- in other words, without giving notice to the person (or
persons) affected and allowing him (or them) the opportunity of being heard. However,
notice to the affected party may be dispensed with where circumstances are such that the
object and purpose of the search and seizure provisions would be defeated by giving it (as,
for instance, where the party is concealing the property in question). In these
circumstances, it may be inferred that the legislature intended to exclude the giving of notice
and the concomitant right to be heard. Smalberger JA explained as follows (714-5):
‘[S]ection 69(3) deals with two classes of cases: items . . . ‘‘concealed’’ and items ‘‘otherwise
unlawfully withheld’’. . . . ‘‘Concealed’’ . . . connotes items which have been hidden with a view to
denying their existence or preventing their recovery. When seeking to recover [such] items . . . the
giving of prior notice and affording a right to be heard would, or at least might, defeat the very object
and purpose of the section. . . . [T]he position is different, however, where the application for a
warrant relates to items suspected of being ‘‘otherwise unlawfully withheld’’. These are words of wide
import. They could govern situations as widely divergent as where items, though not concealed, are
being surreptitiously held, or not disclosed, without any claim of right or for no legitimate reason, to
items openly held under a bona fide and reasonable claim of right to own or lawfully possess them as
against a trustee in his capacity as such. . . . [O]ne would need to have regard to the facts of each
particular case to determine whether the matter was one where the audi principle should have
application. Where the circumstances are such that the object and purpose of s 69(3) would be
defeated by giving notice, or where the identity of the affected person is not known or cannot
reasonably be ascertained, the giving of notice would, by necessary implication, be dispensed with.
But in other instances it would not. What must, therefore, in every case be asked, and answered, is
whether, having regard to the facts which were known, or must be taken to have been known, when
the warrant was applied for, the Legislature must necessarily have intended that the audi principle be
dispensed with. Unless the answer is an unequivocal ‘‘yes’’, the audi principle must be complied with
by giving notice to the affected person to enable such person to be heard.’
Apart from a warrant under s 69(2), the trustee may obtain an interdict to prevent the
dissipation of assets (such as funds) being withheld from the insolvent estate, pending
proceedings for delivery of the assets to the estate. Because an anti-dissipation order is
quasi-vindicatory in nature, the trustee need not show either an intention to dissipate on the
part of the possessor or a well-grounded apprehension of irreparable harm, there being a
presumption of such harm until proved otherwise (Fey NO v Van der Westhuizen & others
2005 (2) SA 236 (C) 249-50).
The trustee is also obliged to take charge of any immovable property vesting in the estate
(Kahan NO v Hydro Holdings (Pty) Ltd 1980 (3) SA 511 (T) 514). He is,
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thus, entitled to the undisturbed possession and control of estate property over which a lien-
holder is exercising a lien (Roux en andere v Van Rensburg NO 1996 (4) SA 271 (A)). He
may, with the written consent of the Master, give notice to the Registrar of Deeds to enter a
caveat against the transfer of immovable property, or the cancellation or cession of a bond,
registered in the name of the insolvent or his spouse (s 18B(1)). The notice must be
accompanied by the Master’s written consent and must identify sufficiently the person to
whom and the property or bond to which the caveat will apply (s 18B(2)). The caveat
remains effective until the date indicated by the Master in his consent (s 18B(3)).
At any time before the second meeting of creditors the trustee may, with the consent of
the Master, allow the insolvent such sum of money or quantity of goods out of the assets of
the estate as appears to the trustee to be necessary for the support of the insolvent and his
dependants (s 79).
11.2 Recovery of debts due to estate

In the notice in which the trustee gives notification of his appointment, he is obliged to call
upon all persons indebted to the estate to pay their debts within a time and at a place
mentioned in the notice (s 77). Should payment not be forthcoming, the trustee must
immediately recover the debt, by legal proceedings if need be (ibid). It would seem that the
trustee does not have to send a letter of demand to each debtor individually. There is no
provision for the acceleration of payment of debts which fall due after the date of
sequestration: these debts need only be paid on the due dates.
Where a debtor is unable to pay in full, the trustee may accept a reasonable part of the
debt in discharge of the whole debt (s 78(1)). If the debt exceeds R2 000, the trustee may
compound it only if authorized to do so by the creditors or, where no creditor has proved a
claim, the Master (ibid). It is not competent for the creditors or the Master to give general
instructions to the trustee regarding the compounding of debts. Each debt exceeding R2 000
must be considered separately and the trustee must be given specific instructions as to the
manner in which the debt is to be discharged (George Hartman & Kie v Landdros, Reitz en
andere 1958 (4) SA 514 (O)).
The trustee may grant a debtor an extension of time for payment, provided the extension
does not go beyond the final date for submission of the account in terms of s 91 of the Act (s
78(1)).
If a debtor pays the insolvent, the payment is of no effect unless the debtor proves that it
was made in good faith and without knowledge of the sequestration (s 22).
11.3 Continuation of insolvent’s business

The trustee is bound to realize the estate assets as speedily as possible and, therefore, has
no automatic right to carry on the business of the insolvent (Klatzkin v Noble NO 1915 AD
713 717). He may do so only if authorized by the creditors or, in the absence of instructions
from them, by the Master (s 80(1)). The costs of then continuing the business are costs of
administration (s 97(2)(c)). If the trustee continues the business without authority, the
estate cannot be saddled with any loss or additional expenditure which results from his
actions (Consolidated Caterers Ltd v Patterson NO 1960 (4) SA 194 (E)).
The Master may give authority to continue the insolvent’s business at any time,
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whether before or after the second meeting of creditors (s 80(1)). It would appear that
authority may be given by creditors ex post facto, ie, by way of a resolution ratifying actions
already taken by the trustee. In Klatzkin v Noble NO (supra), where the trustee had
continued running the insolvent’s business in compliance with the wishes of the principal
creditors, it was held that the subsequent ratification of the trustee’s actions by creditors at
a meeting removed ‘any doubt that there might have been as to the power of the trustee to
carry on the business without a formal resolution of creditors’ (717).
The authority given may only be to continue the business temporarily for the purpose of
its being wound up: eg, to preserve its goodwill, so that it can be sold as a going concern (cf
Klatzkin v Noble NO (supra) 717). Authority cannot be granted to continue the business
indefinitely in order to make a profit out of it (Thorne v The Master 1964 (3) SA 38 (N)
50-1). In Marshall Bros Trustee v Transvaalsche Bank 1907 TS 1060, the insolvent estate
comprised certain base-metal claims, and buildings and machinery for working clay situated
on the claims. The majority of creditors resolved that the claims and machinery should not
be sold until they had been brought into good working order as a going concern (a task
requiring considerable work and expenditure) and, even then, not without first obtaining the
sanction of creditors at a special meeting to be convened at a later date. It was held that it
was not permissible for creditors to postpone the sale of the assets to a date to be fixed by
them and, accordingly, that the resolution to this effect could not stand.
Where the trustee is given authority to carry on the business, he must, unless otherwise
directed by creditors, purchase any goods required for the business for cash and from the
takings of the business only (s 80(2)). He is entitled to employ whatever assistance is
reasonably necessary to enable him to carry on the business (Klatzkin v Noble NO (supra)
717).
The trading account which must be drawn up by the trustee after he has carried on a
business on behalf of the estate is discussed in a later chapter (17.1.2).
11.4 Investigation of insolvent’s affairs

The trustee is obliged to investigate the affairs and transactions of the insolvent before the
sequestration of his estate (s 81(1)). The purpose of the investigation is to enable the
trustee to report to creditors on the insolvent’s affairs and transactions and on any matter of
importance relating to the insolvent or the estate (see 11.7 regarding the report which the
trustee must prepare). To assist him in his investigation, the trustee may call upon the
insolvent in writing to give a true, clear, and detailed explanation of his insolvency and to
account correctly and in detail for the excess of his liabilities over his assets (s 138(b)). The
trustee also has the right to inspect and obtain certified copies of all the insolvent’s income
tax returns (s 81(2)). A return certified as correct is admissible on its mere production in any
civil or criminal proceedings (ibid).
11.5 Receipt book

Immediately after his appointment, the trustee must open a book in which he must enter, as
soon as possible, a statement of all moneys, goods, books, accounts and other documents
received by him on behalf of the estate (s 71(1)). The Master, every creditor who has proved
a claim, and, if the Master so orders, any person claiming to be a creditor or a surety for the
trustee, may inspect the book at all reasonable times (s 71(2)).
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11.6 Estate bank account

The trustee must open a cheque account in the name of the estate with a bank in the
Republic and must deposit in the account, from time to time, all sums which he receives on
behalf of the estate (s 70(1)(a)). If he retains an amount of estate money exceeding R40
after the earliest day on which he could have deposited it, he is liable to pay into the estate
double the amount retained (s 72(1)). The same applies if the trustee knowingly allows a co-
trustee to retain money of the insolvent estate (ibid). The trustee may take moneys from the
cheque account which are not immediately required for the payment of any claim against the
estate and place them in a savings account or in an interest-bearing deposit with a bank (or
mutual bank) in the Republic (s 70(1)(b)-(c)). If required by the Master to do so, the trustee
must notify him in writing of the branch of the bank (or mutual bank) where he has opened
an account and furnish the Master with a bank statement or other evidence of the state of
the account (s 70(2)). The trustee may not transfer any account from that branch except
after written notice to the Master (s 70(3)). All cheques drawn on the account must contain
the name of the payee and the cause of payment and must be drawn to order and signed by
every trustee of the estate or his duly authorized agent (s 70(4)). Failure to observe these
requirements does not render the cheque invalid (cf Standard Bank v Estate Van Rhyn 1925
AD 266). The court may order the trustee to fulfil the requirements (s 116bis) and, if he fails
to do so, he may incur the penalties under s 117.
The Master, and any surety for the trustee, has the same right as the trustee to
information concerning the account and may examine all vouchers in relation to the account,
whether in the hands of the bank (or mutual bank) or the trustee (s 70(5)). The Master
may, after notice to the trustee, direct the manager of a branch where an account has been
opened to pay into the Guardian’s Fund all moneys standing to the credit of the account or
which may subsequently be paid into it (s 70(6)).
11.7 Report to creditors

After investigating the affairs and transactions of the insolvent, the trustee must submit a
full written report to creditors (s 81(1)). He must do this:
• at the second meeting of creditors; or
• at an adjournment of the second meeting, provided he has obtained the Master’s
written permission before the second meeting; or
• if an offer of composition has been accepted by creditors, within one month after
acceptance of the offer (ibid).
The report must deal with the affairs and transactions of the insolvent and any matter of
importance relating to the insolvent or the estate (ibid). In particular, the report must deal
with the following (s 81(1)(a)-(i)):
• the assets and liabilities of the insolvent;
• the cause of the debtor’s insolvency;
• the books relating to the insolvent’s affairs and whether he has kept a proper record of
his transactions (and if not, the respects in which the record is deficient);
• whether the insolvent appears to have contravened the Act or any other law—the
trustee must include in the report all the facts relating to the alleged offence and must
furnish any further information subsequently called for by the Master or the Director of
Public Prosecutions (s 81(4));
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• any allowance paid by the trustee to the insolvent and his reasons for paying it;
• any business which the trustee has been continuing on behalf of the estate, any goods
which he has purchased for the business, and the result of carrying on the business;
• any legal proceedings pending or threatened against the estate;
• any uncompleted acquisition of immovable property by the insolvent or current lease
entered into by the insolvent as lessee; and
• any matter relating to the administration or realization of the estate requiring the
direction of creditors.
At least 14 days before the meeting at which the report is to be submitted, the trustee must
send by registered post to each creditor whose name and address he knows a copy of the
report, of the sheriff’s inventory, and of the valuation of the movable property which he (the
trustee) has furnished to the Master (s 81(1)bis(a)). With the report, the trustee must
submit recommendations in respect of any resolution or direction which, in his opinion,
ought to be passed or given at the meeting (ibid). At least 24 hours before the meeting, the
trustee must submit to the presiding officer an affidavit setting out the names and addresses
of the creditors to whom he has sent copies of the report and other documents and
containing full particulars of his recommendations (s 81(1)bis(b)).
The creditors at the second meeting may direct what action must be taken by the trustee
in respect of any matter reported to them (s 81(3)(a)). If they give no directions, the
recommendations of the trustee which could lawfully have been accepted by the creditors
are, provided the Master approves, deemed to have been adopted by them (s 81(3)(b)).
Moreover, the Master may give whatever directions he thinks fit relating to any matter in the
trustee’s report or the administration or realization of the estate (s 81(3)(c)).
11.8 Legal advice and proceedings

In terms of s 73(1), the trustee may engage the services of an attorney or counsel to
perform legal work on behalf of the estate. The section provides that the trustee must obtain
prior written authorization from the creditors specifying the legal work in question or, if this
is not feasible due to the urgency of the matter or the number of creditors involved, from
the Master. However, the section goes on to state (in s 73(1)(b)) that, if it is not likely that
there will be any surplus after the distribution of the estate, the trustee may at any time
before submission of his accounts obtain written authorization from creditors for any legal
work performed by an attorney or counsel. Since there is seldom any prospect of a surplus
after distribution of the estate, it seems that the trustee will, in the vast majority of cases,
be entitled to seek and obtain authorization ex post facto for engaging an attorney or
counsel on behalf of the estate.
Any costs which the trustee incurs in having legal work done on behalf of the estate
(including any costs awarded against the estate in legal proceedings) are included in the
costs of the sequestration of the estate (s 73(1)). The fees of an attorney or counsel
engaged by the trustee are not subject to taxation by the taxing master (or assessment by
the relevant law society or bar council) if the trustee has agreed in writing that they are to
be determined according to a specific tariff and there is no dispute as to the fees payable in
terms of such an agreement (s 73(2)-(3)). A contingency fees agreement mentioned in s 2
(1) of the Contingency Fees Act 66 of 1997 is binding on the estate only if the creditors have
given express prior written authorization to the trustee to conclude
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the agreement (s 73(2)). The Master may disallow any costs incurred by the trustee if he is
of the opinion that they are incorrect or improper or that the trustee acted in bad faith,
negligently, or unreasonably in incurring them (s 73(5)).
A majority of creditors (reckoned in number and in value) may direct the trustee to
employ or not to employ a particular attorney in connection with the administration of the
estate (s 53(5)). If the trustee has reason to believe that it will not be in the best interests
of the estate to carry out the direction, he may submit the matter to the Master whose
decision, after considering any representations in writing by the trustee and the creditors, is
final (ibid).
The fact that the trustee fails to obtain the required authorization for the institution or
defence of legal proceedings would not appear to invalidate the steps which he has taken in
the legal proceedings (cf Patel v Paruk’s Trustee 1944 AD 469 475) or render him personally
liable for costs incurred (cf Re Estate Potgieter 1908 TS 982). In the latter regard, it seems
that he may only be ordered to pay costs de bonispropriisif he acted mala fide, negligently,
or unreasonably.
11.9 Submission of disputes to arbitration

The trustee may submit a dispute concerning the estate to the determination of arbitrators,
provided he is authorized to do so by the creditors or, where no creditor has proved a claim,
by the Master, and provided the other party to the dispute has consented to arbitration (s 78
(2)).
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Chapter 12
Impeachable dispositions
Synopsis
Introduction
12.1 Meaning of ‘disposition’
12.2 Dispositions which may be set aside
12.2.1 Disposition made not for value
12.2.2 Disposition which prefers one creditor above another: voidable preference
12.2.3 Disposition intended to prefer one creditor: undue preference
12.2.4 Collusive disposition which prejudices creditors or prefers one creditor
12.2.5 Disposition in fraud of creditors (action Pauliana)
12.3 Proceedings to set aside voidable disposition
12.3.1 Who may sue
12.3.2 Jurisdiction of court
12.3.3 Time for bringing proceedings
12.3.4 Interim relief
12.3.5 Evidence
12.3.6 Prescription of claim
12.4 Order setting aside disposition
12.4.1 Recovery of any property alienated
12.4.2 Execution on court’s judgment
12.4.3 Indemnity to bona fide recipient of disposition
12.4.4 Effect of order on underlying debt
12.5 Exemption of certain dispositions from Act
12.6 Transfer of business without prescribed notice
12.7 Transfer of business after proceedings instituted
Introduction
In addition to being vested with the property belonging to the insolvent at the time of
sequestration, the trustee has the means of recovering certain property alienated by the
insolvent before his sequestration. The trustee may ask the court to set aside certain
dispositions made by the insolvent before sequestration and may, in certain circumstances,
treat as void the transfer by the insolvent of his business before sequestration. These topics
are discussed in this chapter.
12.1 Meaning of ‘disposition’

According to s 2, the term ‘disposition’ means ‘any transfer or abandonment of rights to
property, and includes a sale, lease, mortgage, pledge, delivery, payment, release,
compromise, donation, or any other contract therefor, but does not include a disposition in
compliance with an order of the court. . .’. The following should be noted in this regard:
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• ‘Property’, according to s 2, means movable or immovable property, wherever situated
within the Republic, and includes a contingent interest in property other than the
contingent interest of a fideicommissary heir or legatee. The definition includes foreign
assets: the purpose of the expression ‘wherever situated within the Republic’ is not to
limit the operation of a sequestration order to property within the Republic, but to
extend it to property beyond the territorial limits of the court which granted the order
(Sackstein NO v Proudfoot SA (Pty) Ltd 2003 (4) SA 348 (SCA) 358–9). Hence,
| ‘property’ includes property situated outside the Republic.
• There was formerly some uncertainty as to whether the repudiation of an inheritance
(ie, a bequest or legacy) or insurance benefit amounts to a disposition for purposes of
the Act (see, eg, Boland Bank Bpk v Du Plessis 1995 (4) SA 113 (T) in which it was
held that it does; but cf Kellerman NO v Van Vuren & others 1994 (4) SA 336 (T);
Klerck and Schärges NNO v Lee & others 1995 (3) SA 340 (SE); Simon NO & others v
Mitsui and Co Ltd & others 1997 (2) SA 475 (W) 520; Durandt NO v Pienaar NO &
others 2000 (4) SA 869 (C) in which the contrary view was adopted). The Supreme
Court of Appeal has now laid down authoritatively that the beneficiary in this type of
case merely has a competence or power to accept the inheritance or benefit in question
and that, until he does so, it does not form part of his estate (Wessels NO v De Jager
en ’n ander NNO 2000 (4) SA 924 (SCA) 928). Consequently, in repudiating (ie,
refusing to accept) the inheritance or benefit, the beneficiary does not abandon any
right to property. For the same reason, a change of beneficiary under a life insurance
policy from the insured to a third party does not amount to a disposition by the
insured. Nomination of the third party beneficiary merely gives him a power or
competence and, hence, is not a transfer or abandonment of any right under the policy
(cf Love & another v Santam Life Insurance Ltd & another 2004 (3) SA 445 (SE) 448
–9).
• A ‘disposition’ includes a contract providing for the alienation or abandonment of rights
to property (Estate Jager v Whittaker & another 1944 AD 246 250; Sackstein NO v Van
der Westhuizen en ’n ander 1996 (2) SA 431 (O) 436). This is sometimes referred to
as an ‘uncompleted’ disposition (see, eg, s 26(2)). A contract of suretyship, although
not specifically mentioned in the definition, is a disposition, since it is a contract which
provides for a payment by the debtor (Langeberg Koöperasie Bpk v Inverdoorn
Farming and Trading Co Ltd 1965 (2) SA 597 (A) 602). Further examples of
transactions which have been held to be dispositions are the issuing of a cheque by the
insolvent, both where his bank account is in credit (De Villiers NO v Kaplan 1960 (4)
SA 476 (C)) and where he has been granted overdraft facilities (Rousseau NO v
Standard Bank of SA Ltd 1976 (4) SA 104 (C)); a contract between the insolvent and a
party indebted to him in terms of which the latter is required to pay the amount of the
debt to a creditor of the insolvent (cf Standard Finance Corporation of South Africa Ltd
(in Liquidation) v Greenstein 1964 (3) SA 573 (A)); and an arrangement by which a
party who has agreed to lend money to the insolvent is required to pay the amount of
the loan into the bank account of a third person for the purpose of channelling the
amount to a creditor of the insolvent (Van Zyl & others NNO v Turner & another NNO
1998 (2) SA 236 (C)).
• The term ‘disposition’ does not include a disposition made in compliance with an order
of court, eg, the payment of a contractual debt or the delivery of property as ordered
by the court (cf Swadif (Pty) Ltd v Dyke NO 1978 (1) SA 928 (A) 944–5),
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even if the insolvent elected not to oppose the proceedings in question (Simon NO &
others v Mitsui and Co Ltd & others (supra) 520), or the order was obtained by
agreement, ie, in terms of a consent paper (Dabelstein & others v Lane & Fey NNO
2001 (1) SA 1222 (SCA) 1228). However, this exclusion does not apply (and,
therefore, the disposition qualifies as a disposition for purposes of the Act) if the
creditor obtained the court order by fraud or by collusion with the insolvent and with
the intention of prejudicing other creditors (Sackstein en Venter NNO v Greyling 1990
(2) SA 323 (O)). The onus of proving fraud or collusion lies on the party seeking to set
aside the disposition (Dabelstein & others v Lane & Fey NNO (supra)).
12.2 Dispositions which may be set aside

The dispositions which may be set aside are those:
• made not for value;
• having the effect of preferring one creditor above another (‘voidable preferences’);
• intended to prefer one creditor above another (‘undue preferences’);
• made in collusion with another person and having the effect of prejudicing creditors or
preferring one above another; and
• made in fraudemcreditorum (‘in fraud of creditors’).
The first four types are voidable in terms of the Insolvency Act (ss 26, 29, 30 and 31); the
last (in fraud of creditors) may be set aside in terms of the common law. In practice,
dispositions often fall into more than one category. Until a disposition is set aside by the
court, it remains valid and binding (cf Harcourt v Eastman NO 1953 (2) SA 424 (N) 428;
Galaxie Melodies (Pty) Ltd v Dally NO 1975 (4) SA 736 (A) 743).
Only dispositions made by the insolvent are impeachable under the Act. Hence, a
disposition made by the insolvent’s bank without his authority does not qualify (Zamzar
Trading (Pty) Ltd (in Liquidation) v Standard Bank of SA Ltd 2001 (2) SA 508 (W) 515).
12.2.1 Disposition made not for value

(i) What must be proved
Section 26(1) empowers the court to set aside a disposition made for no value. The trustee
must prove that the insolvent made the disposition, when he made it, and that he received
no value for it (Rousseau & others NNO v Visser & another 1989 (2) SA 289 (C) 307; Louw
NO v DMA Fishing Enterprises (Pty) Ltd & another 2002 (2) SA 163 (SE)). If the disposition
was made more than two years before sequestration, the court can only set it aside if the
trustee proves also that, immediately after it was made, the liabilities of the insolvent
exceeded his assets (s 26(1)(a)). If the disposition was made within two years of
sequestration, the court must set it aside unless the person claiming under or benefited by it
proves that, immediately after it was made, the assets of the insolvent exceeded his
liabilities (s 26(1)(b)).
It is not necessary to establish whether or not the insolvent intended to prejudice
creditors by making the disposition: the object of s 26 is simply to prevent a person in
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insolvent circumstances from impoverishing his estate by giving away assets without
receiving any appreciable advantage in return (cf Estate Wege v Strauss 1932 AD 76 84).
‘Value’ in s 26 means a benefit received or promised as a quid pro quo (Estate Jager v
Whittaker & another 1944 AD 246 250), either by the recipient of the disposition or by
someone else (Hurley and Seymour NO v W H Muller & Co 1924 NPD 121). Examples of
dispositions not for value are a donation (Estate Jager v Whittaker & another (supra)) and a
payment for a promise which the promissor cannot be compelled to carry out (Harcourt v
Eastman (supra)). To qualify as ‘value’, the reciprocal benefit need not be a monetary or
tangible one (Goode, Durrant& Murray Ltd v Hewitt and Cornell NNO 1961 (4) SA 286 (N)
291)—in Estate Wege v Strauss (supra), for example, being allowed to remain a member of
Tattersall’s was held to be value—but it must be adequate (Terblanche NO v Baxtrans CC &
another 1998 (3) SA 912 (C) 916-17; Cronje NO v De Paiva [1997] 2 All SA 80 (B) 86). So,
for example, the sale of property for a nominal or trifling amount would be a disposition
without value (Bloom’s Trustee v Fourie 1921 TPD 599 601). In Commissioner for Inland
Revenue v Bowman NO 1990 (3) SA 311 (A), the liquidator of a company sued to set aside
payments by the company in respect of income tax as dispositions without value. The tax
had been assessed on the basis of fictitious income and, in fact, no tax had been payable.
The court rejected a suggestion that the services provided by the State with income tax
revenue could be seen as value for purposes of s 26. Goldstone AJA said (317):
‘The benefit which the taxpayer may enjoy from the manner in which the State spends revenue
collected by the Commissioner appears . . . too speculative and tenuous to be regarded as ‘‘value’’
within the meaning of s 26(1).’
Payment of a lawful debt is not a payment without value, because the payer receives
counter-value in the form of a discharge of his liability (Estate Jager v Whittaker & another
(supra) 250; cf Alley Cat Clothing (Pty) Ltd v De Lisle Weare Racing [2002] 1 All SA 123 (D)
135, in which this principle was applied to payment of a gambling debt). Performance in
terms of an illegal agreement can, it seems, qualify as ‘value’, provided the performance has
actually been rendered (Visser en ’n ander v Rousseau en andere NNO 1990 (1) SA 139 (A)
154-5 (obiter)). In each case, the question whether the insolvent has received ‘value’ for his
disposition must be decided by considering all the circumstances in which the transaction
was made (Goode, Durrant and Murray Ltd v Hewitt and Cornell NNO (supra) 291).
The liabilities of the insolvent, for the purposes of s 26 (and also ss 29 and 30), include
any obligation undertaken as a surety, and the insolvent’s assets must be taken to include
any sum recoverable by way of a right of recourse after payment to the creditor (Millman &
another NNO v Masterbond Participation Bond Trust Managers (Pty) Ltd (under Curatorship)
& others 1997 (1) SA 113 (C); Absa Bank Ltd v Scharrighuisen 2000 (2) SA 998 (C)
1004-5).
If it is proved that the liabilities of the insolvent, at any time after making a gratuitous
disposition, exceeded his assets by less than the value of the property disposed of, the
disposition may be set aside only to the extent of the excess (s 26(1)). So, for example, if
the insolvent made a gift of R5 000 which caused his liabilities to exceed his assets by
R10 000, and he then acquired assets which reduced his margin of insolvency to R3 000, the
disposition may be set aside only to the extent of R3 000.
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(ii) Exception to s 26—disposition in terms of ANC

A settlement of property in an antenuptial contract by the husband on his wife or any child
to be born of the marriage is not liable to be set aside as a disposition without value on the
husband’s insolvency if certain requirements are met (s 27(1) and (2)):
• The disposition must be an ‘immediate benefit’, ie, a benefit given by a transfer,
delivery, payment, cession, pledge, or special mortgage of property completed within
three months of the date of the marriage.
• The disposition must have been given in good faith. ‘Good faith’ in this context refers
to the absence of any intention to prejudice creditors in obtaining payment of their
claims or to prefer one creditor above another (s 2).
• The antenuptial contract must have been duly registered at least two years before
sequestration (Enyati Resources Ltd v Glaum NO & another 1989 (2) SA 314 (C)).
(iii) Beneficiary’s right to share in estate limited
The beneficiary of a gratuitous disposition which has been set aside by the court has no right
to claim in competition with the creditors of the insolvent estate (s 26(2)). The same applies
to the beneficiary of a gratuitous disposition which has not been set aside, but which was
uncompleted by the insolvent (ibid). However, there is one exception to the latter rule, viz,
where the uncompleted disposition was made by way of suretyship, guarantee or indemnity.
In this event, the promisee may compete with the creditors of the estate for an amount not
exceeding the amount by which the value of the insolvent’s assets exceeded his liabilities
immediately before the disposition was made (s 26(2) proviso). Thus, for example, if the
insolvent stood surety (gratuitously) for R5 000 and, immediately before entering into the
contract, his assets exceeded his liabilities by R2 000, the creditor in terms of the suretyship
contract may prove a claim of R2 000 in competition with the insolvent’s other creditors. If,
immediately before contracting, the insolvent’s assets were less than his liabilities, the
suretyship creditor cannot prove in competition with other creditors. If, before contracting,
the insolvent’s assets exceeded his liabilities by R6 000, the suretyship creditor in the
example may compete to the full extent of his claim of R5 000.
12.2.2 Disposition which prefers one creditor above another: voidable preference
In terms of s 29(1), the court may set aside a disposition made by the insolvent not more
than six months before the sequestration of his estate or his death (where he is deceased
and his estate is insolvent) if the disposition had the effect of preferring one of the
insolvent’s creditors above another and immediately after the disposition was made, the
liabilities of the insolvent exceeded the value of his assets. The trustee has the onus of
proving all these requirements (Simon NO & others v Coetzee [2007] 2 All SA 110 (T) 112).
The policy behind s 29 is evidently that a person on the brink of insolvency should not be
permitted to select one or a few of his creditors for full payment and disregard the rest.
The disposition does not have to have been made directly to the creditor concerned—it
must merely have had the effect of preferring him (Standard Finance Corporation of South
Africa Ltd (in Liquidation) v Greenstein 1964 (3) SA 573 (A)
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577). Thus, where the insolvent, instead of paying C, his creditor, paid X, a creditor of C, the
trustee can set aside the disposition to X on the ground that it had the effect of preferring C
above the insolvent’s other creditors (ibid; see also Paterson NO v Trust Bank of Africa Ltd
1979 (4) SA 992 (A)). The test whether a creditor has been preferred is whether the proper
distribution of the assets as envisaged by the Act has been defeated or, in other words,
whether the creditor has benefited more or been paid earlier than would have been the case
if he had been paid a dividend in accordance with the Act (Isaacson and Son v Van Druten’s
Trustee 1930 GWL 33 36; Klerck NO v Kaye 1989 (3) SA 669 (C) 675; Simon NO & others v
Coetzee (supra) 114).
The claims proved against the estate are accepted as prima facie proof of the insolvent’s
liabilities as at the date of sequestration and, accordingly, may be relevant for establishing
the extent of the insolvent’s liabilities immediately after the disposition (Ensor NO v New
Mayfair Hotel 1968 (4) SA 462 (N)). The value of the assets to be assessed is the market
value. This has been described, inter alia, as the full and fair price which the assets would be
likely to realize if sold voluntarily under the usual terms and conditions, and the price which
a willing seller might reasonably expect to obtain for the assets from a willing buyer (Venter
v Volkskas Ltd 1973 (3) SA 175 (T) 180).
(ii) Exception to s 29—disposition in the course of business and not intended to prefer
Section 29 enables the trustee to set aside transactions made and assets alienated by the
insolvent while close to insolvency. The spectre of the trustee exercising his powers under s
29 could be an insuperable obstacle for a business person who wishes to surmount his
financial difficulties by carrying on business in the usual way. The legislature has accordingly
included a proviso in s 29 that the court cannot set aside a disposition if the person in whose
favour it was made proves that it was made in the ordinary course of business and that it
was not intended to prefer one creditor above another (s 29(1)). The beneficiary must prove
both elements if the trustee’s claim is to be defeated.
Ordinary course of business
In deciding whether a disposition was made in the ordinary course of business, an objective
test is applied—whether the disposition was one which would normally be entered into
between solvent business persons (Hendriks NO v Swanepoel 1962 (4) SA 338 (A) 345;
Amalgamated Banks of South Africa Bpk v De Goede en ’n ander 1997 (4) SA 66 (SCA)
77-8; Gazit Properties v Botha & others NNO 2012 (2) SA 306 (SCA) 309), or, stated
differently, whether the disposition is in conformity with ordinary business methods adopted
by solvent persons of business (Van Zyl & others NNO v Turner & another NNO 1998 (2) SA
236 (C) 245) or whether it would be anomalous, unbusinesslike or surprising to the ordinary
person of business (Malherbe’s Trustee v Dinner & others 1922 OPD 18 22). In Al-Kharafi &
Sons v Pema & others NNO 2010 (2) SA 360 (W), Malan J remarked (378):
‘As was said in Downs Distributing Co Pty Ltd v Associated Blue Star Stores Pty Ltd [(1948) 76 CLR
463 at 477], the expression [‘‘in the ordinary course of business’’] does suppose that according to the
ordinary and common flow of transactions in affairs of business there is a course, an ordinary course.
It means that the transaction must fall into place as part of the undistinguished common flow of
business done, so that it should form
Page 144
part of the ordinary course of business as carried on, calling for no remark and arising out of no
special situation.’
The court must have regard to the terms of the disposition and the circumstances in which it
was made (including the actions of both parties), but leave out of consideration the fact that
the party making the disposition was insolvent at the time (Van Zyl& others NNO v Turner &
another NNO (supra) 245; Gore & others NNO v Shell South Africa (Pty) Ltd 2004 (2) SA
521 (C) 526; Van der Walt NO & another v Le Roux NO & another [2004] 4 All SA 476 (O)
485; cf Al-Kharafi & Sons v Pema & others NNO (supra) 376-7). The court is concerned only
with the disposition, not with the insolvent’s business generally. A disposition may be made
‘in the ordinary course of business’ if duly made in terms of a valid contract, even though
the insolvent’s overall business model is illegal and the payment is made with stolen money
(Gazit Properties v Botha & others NNO (supra) 309-11).
An example of a disposition made in the ordinary course of business is afforded by
Pretorius’s Trustee v Van Blommenstein 1949 (1) SA 267 (O). The insolvent bought a lorry
and, some time later, pledged it to secure payment of the price. He concluded the pledge
because the seller had sued for the price and was only prepared to give an extension of time
for payment if he received real security. The court held that, although it would not generally
be in the ordinary course of business for a debtor to give a pledge for a debt which he had
incurred earlier, here the insolvent had had little choice and had acted as any ordinary
person of business would have done. Contrast Paterson NO v Trust Bank of Africa Ltd
(supra). In this case, the insolvent, an attorney who had stolen from his trust account and
badly needed to raise money, sold his legal practice to his professional assistant, C, for a
cash sum of R15 000 and further amounts to be paid later. The contract provided that the
R15 000 should be paid into the insolvent’s overdrawn business account with T Bank. This
provision was inserted on the insistence of T Bank, which was prepared to grant C overdraft
facilities for the R15 000 only if the money was applied to reduce the insolvent’s overdraft.
The court held that, although, at face value, the arrangement regarding how the R15 000
was to be paid was a normal banking transaction, when seen in the light of the
circumstances, the arrangement fell outside the ordinary course of business. The contract
between the insolvent and C had been in the nature of a forced sale, concluded because the
insolvent had misappropriated money from his trust account (not an event in the ordinary
course of business). And the insolvent had not been in a position to reject the condition
imposed by the bank, which he would have been if the transaction had been concluded in
the ordinary course of business.
If the disposition was concluded in a specialized field of business, such as, for example,
between brokers on the stock exchange, or between a bookmaker and his client in
connection with the laying of bets, the court will take into account the customs which are
shown to apply in that field of business (Hendriks NO v Swanepoel (supra) 345—where it
was held that ordinary transactions between farmers are not a special field of business). In
Estate Wege v Strauss 1932 AD 76 84, the insolvent paid a betting debt which had been
outstanding for a considerable length of time. The court took cognizance of the custom that
betting debts must be paid immediately and held that the payment in question was not in
the ordinary course of business.
Page 145
To fall within the ordinary course of business, both the making and the receiving of the
disposition must be lawful. Where, for example, a creditor receives usurious interest in terms
of a contract of loan, the disposition is not in the ordinary course of business (Klerck NO v
Kaye 1989 (3) SA 669 (C)).
No intention to prefer
The question of what is meant by intention to prefer is discussed below (12.2.3). Suffice it to
say here that the insolvent will not be held to have intended to prefer if it is established that,
when he made the disposition, he did not contemplate or expect sequestration (cf Pretorius
NO v Stock Owners’ Co-operative Co Ltd 1959 (4) SA 462 (A) 472; Van Eeden’s Trustee v
Pelunski & Mervis & others 1922 OPD 144 148), or that his main purpose or dominant
motive in making the disposition was something other than the conferring of an advantage
on the creditor concerned, eg, to shield himself from a criminal prosecution or to cover up a
misappropriation of assets and save himself from exposure (Pretorius’s Trustee v Van
Blommenstein (supra)) or to comply with a contractual obligation to give possession of his
movable property to the creditor concerned for the perfecting of the latter’s security under a
general notarial covering bond (Cooper & another NNO v Merchant Trade Finance Ltd 2000
(3) SA 1009 (SCA)). It has been held that proof that the insolvent entertained the hope of
tiding over his financial difficulties is not, per se, sufficient to disprove the intention to prefer
(Swanepoel NO v National Bank of South Africa 1923 OPD 35 38).
12.2.3 Disposition intended to prefer one creditor: undue preference

Under s 30, the court may set aside a disposition which the insolvent made at any time
before sequestration if he made the disposition with the intention of preferring one of his
creditors above another and, when he made it, his liabilities exceeded his assets. The trustee
has the onus of proving these elements (Venter v Volkskas Ltd 1973 (3) SA 175 (T) 177).
Once he has done so, judgment must be given in his favour: there are no defences available
to the person benefited by the disposition.
The test for determining whether the insolvent had the intention to prefer is whether his
dominant, operative or effectual intention in making the disposition was to disturb the
proper distribution of the assets on insolvency. The test is subjective (Eliasov NO v Arenel
(Pvt) Ltd 1979 (3) SA 415 (R) 418): the question is not simply whether the insolvent should
have known that the disposition would have the effect of conferring a preference but
whether, as a fact, he intended the disposition to have this effect, and whether this was his
primary objective or main purpose in making the disposition (Pretorius’s Trustee v Van
Blommenstein 1949 (1) SA 267 (O) 279; Cooper & another NNO v Merchant Trade Finance
Ltd 2000 (3) SA 1009 (SCA) 1016-7; Gore & others NNO v Shell South Africa (Pty) Ltd 2004
(2) SA 521 (C) 530). It stands to reason that the insolvent must have applied his mind to
the matter: if he did not actually consider whether he was conferring a preference, he
cannot be said to have intended to do so (Cooper & another NNO v Merchant Trade Finance
Ltd (supra) 1029).
The following factors are relevant in determining whether the insolvent’s dominant
intention was to confer a preference:
Page 146
• Whether the insolvent contemplated insolvency when making the disposition (Giddy,
Giddy and White’s Estate v Du Plessis 1938 EDL 73 79). Contemplation of insolvency is
generally necessary before an intention to prefer can be inferred, but it does not follow
axiomatically from the fact that the insolvent contemplated sequestration that he had
the intention to prefer. Other factors may negate this inference (Cooper & another NNO
v Merchant Trade Finance Ltd (supra) 1029–30). The court will infer that the insolvent
had the intention to prefer if it is established that he realized, when making the
disposition, that sequestration was substantially inevitable (the insolvent in such a case
is assumed to have intended the natural consequences of his act: Du Plessis NO v
Oosthuizen en ’n ander 1999 (2) SA 191 (O) 212–13), unless the evidence negates this
inference and shows that his dominant intention was to achieve some purpose other
than conferring an advantage on the creditor in question, eg, to protect himself from a
criminal prosecution or to avoid exposure (Pretorius NO v Stock Owners’ Co-operative
Co Ltd (supra) 472–3 476–7; Venter NO v Barsouth Investments (Pty) Ltd 1992 (2) SA
78 (C) 84; Van Zyl & others NNO v Turner & another NNO (supra) 244; Cooper &
another NNO v Merchant Trade Finance Ltd (supra) 1030–1; Gore & others NNO v Shell
South Africa (Pty) Ltd (supra) 530).
• Whether the debtor was, at the time of the disposition, in a position to exercise a free
choice. If the debtor paid the creditor under great pressure, for example to avoid
prosecution, an intention to prefer will not be proved. However, it is not any pressure
or coercion that will displace the intention to prefer, only
‘pressure which is akin to duress or undue influence, or what has been described in the cases as
an ‘‘overwhelming sense of imminent peril’’; ‘‘great pressure’’; or even ‘‘severe or terrifying
pressure’’’
(per Griesel J in Gore & others NNO v Shell South Africa (Pty) Ltd 2004 (2) SA 521 (C)
530). In Cooper & another NNO v Merchant Trade Finance Ltd (supra) 1029, the court
accepted that it does not follow, merely because the debtor received no consideration
for the disposition or was not put under any pressure to make it, that the dominant
intention was to prefer the other party. The presence of these factors may indicate
conclusively that there was not a dominant intention to prefer, but the converse does
not necessarily follow. One has to take all the circumstances into account, and consider
what is the correct inference to draw.
• Whether there is any relationship between the insolvent and the creditor (ie, in
addition to that of debtor and creditor) (Cooper & another NNO v Merchant Trade
Finance Ltd (supra) 1030). A close friendship or family relationship may motivate the
insolvent to give a preference and, therefore, the presence of either is a factor to be
taken into account in deciding whether there was an intention to prefer, but it is not
conclusive of the issue (Pretorius’s Trustee v Van Blommenstein(supra) 279–80;
Pretorius NO v Stock Owners’ Co-operative Co Ltd (supra) 476).
In deciding whether the insolvent had the intention to prefer, the court must weigh up all the
relevant facts that prevailed at the time of the disposition and decide the issue on a balance
of probabilities. If the facts permit of more than one inference, the court must select the
most plausible or probable inference. If this favours the trustee, he is entitled to judgment.
If, on the other hand, an inference in favour of both parties is equally possible, the trustee
will not have discharged the onus resting on him (Cooper & another
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NNO v Merchant Trade Finance Ltd (supra) 1027-8). The fact that the insolvent does not
give evidence does not ipso facto mean that one must infer that there was an intention to
prefer (ibid 1028).
(ii) Differences between trustee’s powers under s 30 and 29
It will be observed that the trustee’s powers under s 30 (undue preference) differ
significantly from his powers in terms of s 29 (voidable preference):
• An undue preference may be set aside irrespective of when before sequestration it was
made, whereas a voidable preference can only be set aside if it was made not more
than six months before sequestration or the insolvent’s death (as the case may be).
• For a disposition to be an undue preference, the debtor must actually be insolvent
when he makes it. A disposition may qualify as a voidable preference even if the debtor
is solvent when he makes it, provided he is insolvent immediately thereafter.
• To have a disposition set aside as an undue preference, the trustee must prove that
the debtor actually intended to prefer one creditor above the others. On the other
hand, the trustee may establish a voidable preference by showing merely that the
disposition had the effect of preferring one creditor above another.
• Section 30 does not grant a defence to the beneficiary of an undue preference,
whereas s 29 does, to the beneficiary of a voidable preference.
12.2.4 Collusive disposition which prejudices creditors or prefers one creditor

Section 31(1) provides that the court may set aside a transaction entered into by the debtor
before sequestration in terms of which he, in collusion with another person, disposed of his
property in a manner which had the effect of prejudicing his creditors or of preferring one of
his creditors above another. The element of collusion distinguishes this type of disposition
from voidable and undue preferences. Collusion in this context is an agreement with a
fraudulent purpose, not merely an agreement with the result that one creditor is preferred
over another (Meyer NO v Transvaalse Lewendehawe Koöperasie Bpk en andere 1982 (4) SA
746 (A) 771).
To succeed with an action under s 31(1), the trustee must prove the following:
• The insolvent made a disposition of his property (Louw NO v DMA Fishing Enterprises
(Pty) Ltd & another (supra) 165—the reference in this case to ‘s 36’ is clearly a
mistake);
• The disposition was made ‘in collusion with another person’, that is to say, the
insolvent and the other person both knew that the former was insolvent and expected
the disposition to have the effect of prejudicing creditors or of preferring one above
another (Gert de Jager (Edms) Bpk v Jones NO en McHardy NO 1964 (3) SA 325 (A)
331; Meyer NO v Transvaalse Lewendehawe Koöperasie Bpk en andere (supra) 771).
• The disposition had the effect of prejudicing creditors or preferring one above another
(Lane NO & another v Harksen & others [1998] 4 All SA 7 (C) 15).
In addition to setting aside the collusive disposition, the trustee may recover from any
person who was a party to the disposition:
• any loss which the disposition caused to the insolvent estate; and
Page 148
• a penalty in an amount determined by the court, but not exceeding the amount by
which the party concerned would have been benefited by the disposition if it had not
been set aside (s 31(2)).
The compensation and penalty may be recovered in the action to set aside the disposition (s
31(3)). If the other party to a collusive disposition is a creditor, he forfeits any claim that he
may have had against the estate (ibid; Gert de Jager (Edms) Bpk v Jones NO en McHardy
NO (supra) 337).
12.2.5 Disposition in fraud of creditors (action Pauliana)

Although the Act sets out specific circumstances in which a disposition of the insolvent’s
property may be set aside, it does not deprive creditors of their right under the common law
to have a disposition set aside as being in fraudemcreditorum (Swadif (Pty) Ltd v Dyke NO
1978 (1) SA 928 (A) 938; Peterson & another NNO v Claassen & others 2006 (5) SA 191 (C)
202). The relevant action at common law is known as the action Pauliana (Fenhalls v
Ebrahim & others 1956 (4) SA 723 (D); Nedcor Bank Ltd v Absa Bank & another 1995 (4) SA
727 (W) 729-30).
To succeed in bringing the action Pauliana, the plaintiff must prove that:
• the transaction diminished the debtor’s assets;
• the person who received from the debtor did not receive his own property;
• there was an intention to defraud; and
• the fraud took effect
(see Hockey NO v Rixom NO & Smith 1939 SR 107 118; Fenhalls v Ebrahim & others (supra)
727).
The term ‘fraud’ in this context does not have its criminal-law connotation: the test is
simply whether the object of the transaction was to give one creditor an unfair advantage
over the others in insolvency (Trustees Estate Chin v National Bank of South Africa Ltd 1915
AD 353 363; Beddy NO v Van der Westhuizen 1999 (3) SA 913 (SCA) 916; Al-Kharafi &
Sons v Pema & others NNO 2010 (2) SA 360 (W) 371). In the case of a disposition for value
(ie, one made ex titulooneroso), it must be shown both that the insolvent intended to
commit a fraud on his creditors and that the recipient of the disposition knew of his intention
and was privy to it (Hockey NO v Rixom and Smith (supra) 118). In the case of a gratuitous
disposition (ie, one made ex titulolucrativo), it is sufficient to prove fraud on the part of the
insolvent alone: the bona fides or otherwise of the recipient is irrelevant (Scharff’s Trustee v
Scharff 1915 TPD 463; cf Kommissaris van Binnelandse Inkomste en ’n ander v Willers en
andere 1999 (3) SA 19 (HHA) 28-9).
Creditors may invoke the action Pauliana to recover not only the assets disposed of, but
also any benefits accruing from the insolvent’s fraud. The latter benefits include the
proceeds of trading with the alienated assets as well as any property acquired therewith (or
its value or the proceeds thereof) (Kerbyn 178 (Pty) Ltd v Van den Heever & others NNO
2000 (4) SA 804 (W) 818-20).
12.3 Proceedings to set aside voidable disposition

12.3.1 Who may sue
Proceedings to set aside a disposition rendered impeachable by the Act, or to recover
Page 149
compensation or a penalty payable under the Act, may be instituted by the trustee (s 32
(1)). If the trustee fails to bring the proceedings, a creditor (or creditors) may sue in the
trustee’s name, provided he indemnifies the trustee against all costs (s 32(1); cf Myburgh v
Walters NO 2001 (2) SA 127 (C) 130). The indemnity is necessary to protect the estate
against any adverse costs order that the creditor may incur, the trustee being liable, as
nominal plaintiff, for such costs. Consequently, the indemnity must be given before the
action is instituted and must be adequate for the purpose of the proceedings. In addition,
the creditor must be able to meet his obligations under it within a reasonable time after
being called upon to do so by the trustee (Lane & another NNO v Dabelstein & others (Lane
& another NNO intervening) 1999 (3) SA 150 (C) 163-6; Western Flyer Manufacturing (Pty)
Ltd v Dewrance & others NNO: In re Dewrance & others NNO v North West Transport
Investments (Pty) Ltd (under Judicial Management) & others 2007 (6) SA 459 (B) 465 470).
In Lane’s case, the court accepted that a creditor may sue to avoid a disposition where only
a provisional trustee has been appointed and the latter has failed to obtain leave from the
court to sue in terms of s 18(3). The court held (differing from an earlier decision in Lane NO
& another v Harksen & others [1998] 4 All SA 7 (C)) that the creditor need not obtain leave
of the court, since he is obliged to provide an indemnity in terms of s 32(1) and this protects
creditors of the estate (cf Dabelstein & others v Lane and Fey NNO 2001 (1) SA 1222 (SCA)
1229). In the Western Flyer case, the court explained (470) that although the institution of
proceedings without first providing an indemnity constitutes an irregularity, it does not
necessarily invalidate the proceedings.
‘The purpose of the Legislature as expressed in s 32 of the Act . . . is to provide that in the event of a
creditor instituting action in the name of the trustee, the trustee should be safeguarded by the
indemnity against all costs of the litigation. The purpose of the section is not to regulate principles
relating to locus standi or the validity of the manner by which the action is to be instituted. For that
reason the indemnity must be provided before the action is instituted (ie before any costs have been
incurred.) However, if it is provided after the action has been instituted in such a manner that the
trustee is not at risk as far as costs (both before and after the indemnity) are concerned, the purpose
of s 32 has been achieved.’
Where a creditor institutes action in the trustee’s name, he is obliged to cite the trustee as
plaintiff (ie, nominal plaintiff) in the proceedings. It is not competent for him to sue in his
own name and merely allege that he sues in the name of the trustee (Volkskas Bpk NO v
Barclays Bank (DC & O) 1955 (3) SA 104 (T)). No other creditor is entitled to derive any
benefit from moneys or property recovered in the action until the claim and costs of the
litigating creditor have been paid in full (s 104(3)). Moreover, any creditor who was aware
that the proceedings had been instituted and who delayed in proving his claim until the court
had given judgment, is not entitled to share in any money or in the proceeds of any property
recovered as a result of the proceedings (s 104(2)).
The trustee is also the proper person to institute the action Pauliana at common law
(Wolpe v Gale 1980 (3) SA 259 (W)). The court may, on application, allow a creditor to sue
in his own name, provided he joins the trustee as a party to the suit, either as a co-plaintiff
(if he is willing), or as a co-defendant (if he is unwilling).
Page 150

Proceedings to set aside an impeachable disposition may be brought in the magistrate’s
court, provided the matter falls within the normal jurisdictional limits of that court (s 2 sv
‘Court’).
12.3.3 Time for bringing proceedings

The trustee’s power to bring proceedings to set aside improper transactions in terms of s 32
(1) is not subject to any time constraints. He (or, failing him, a creditor) may institute
proceedings even after confirmation of the liquidation and distribution account. Confirmation
of an account in terms of s 112, in other words, has no bearing at all on a claim in terms of s
32 (Cook NO v SJ Coetzee Inc 2012 (2) SA 616 (GNP) 622).
12.3.4 Interim relief

If the subject matter of an impeachable disposition is in the possession of the creditor, the
trustee may apply to court for an attachment of the property concerned, pending the
determination of proceedings to set aside the disposition (Hawkins’ Trustee v Corio Saw and
Planing Mills Ltd & others 1923 WLD 125). The trustee need only make out a prima facie
case that he is entitled to reclaim the property for the estate: he does not have to show that
the estate will suffer irreparable loss if the attachment is not granted (ibid; see also 11.1).
The requirement of suing in the name of the trustee does not necessarily apply to interim
proceedings. These may be instituted by a creditor in his own name if the situation requires
swift action to protect a right, especially one that is vindicatory or quasi-vindicatory
(Ultrapolymers (Pty) Ltd v Maredi NO & another 2012 (4) SA 232 (GSJ) 234-5).
12.3.5 Evidence
Section 32(2) provides that any party to proceedings to set aside an improper disposition
may subpoena the insolvent to give evidence, and the court may also call upon him to do so.
The section goes on to state that, when giving evidence, the insolvent may not decline to
answer a question on the ground that the answer may tend to incriminate him or may
prejudice him in criminal proceedings which are to be brought against him. In the light of
Parbhoo & others v Getz NO & another 1997 (4) SA 1095 (CC), it seems clear that this latter
provision offends against the constitutional right against self-incrimination (s 35 of the
Constitution of the Republic of South Africa, 1996) and is invalid in so far as it permits the
use of incriminating evidence in criminal proceedings (except proceedings dealing with
perjury or related offences). In Parbhoo, the Constitutional Court declared invalid s 415(5) of
the Companies Act 61 of 1973 (dealing with the admissibility of evidence obtained at an
inquiry in terms of s 415(1) of the Act) to the extent that the section provided for the
admission of incriminating evidence in criminal proceedings, other than for perjury or related
offences (see also 23.9.1).
Where a creditor has instituted proceedings in the trustee’s name, the creditor is not
entitled to make discovery under the Uniform Rules of Court: only the trustee can do so
(Reynolds & others NNO v Standard Bank of South Africa Ltd 2011 (3) SA 660 (W) 662-3).
Page 151
12.3.6 Prescription of claim

In Barnard and Lynn NNO v Schoeman & another 2000 (3) SA 168 (N) 171-2, it was held
that a claim to set aside an impeachable disposition (in casu, a voidable preference) does
not become a debt for purposes of prescription and, hence, prescription in respect of the
claim does not begin to run, until the court has determined the value of the claim and
pronounced upon it, after considering any possible defences available to the debtor. This
view was rejected in Duet and Magnum Financial Services CC (in Liquidation) v Koster 2010
(4) SA 499 (SCA) 505-8. The court accepted that ss 26-31 and 32(3) of the Insolvency Act
give to the trustee (liquidator) a right, in prescribed circumstances, to have a person
declared to be a debtor of the estate, and the complement of this right qualifies as a ‘debt’
for purposes of prescription. The court held further that prescription of the debt ordinarily
commences to run no later than the date upon which the trustee (liquidator) is appointed.
12.4 Order setting aside disposition

12.4.1 Recovery of any property alienated
When setting aside a disposition, the court must declare the trustee entitled to recover any
property alienated under the disposition (s 32(3)). If it is impossible for the third party to
return the property—for instance, because it has been destroyed or transferred to another
person—the court must declare the trustee entitled to recover the value of the property, ie,
the value at the date of the disposition, or at the date on which the disposition is set aside,
whichever is the higher (ibid).
12.4.2 Execution on court’s judgment

Once judgment is granted in favour of the trustee, he is in the same position as any other
judgment creditor and may have recourse to the ordinary methods and processes of
execution, should the defendant not obey the order of his own accord (De Hart NO v
Kleynhans & others 1970 (4) SA 383 (O) 389). Mora interest is payable by the defendant
from the date of the judgment setting aside the disposition (Janse van Rensburg & others
NNO v Steyn 2012 (3) SA 72 (SCA) 80-1). If the defendant’s estate is under sequestration,
the trustee is not entitled to obtain payment of the full amount of the judgment debt, but is
merely entitled to prove as a concurrent creditor in the estate (ibid).
12.4.3 Indemnity to bona fide recipient of disposition

Under s 33(1), the recipient of a voidable disposition who in good faith parted with property
or security or lost a right against another person is not obliged to comply with an order to
restore the subject matter of the disposition, unless the trustee has indemnified him for
parting with the property or security or for losing the right. The recipient must prove, in
particular, the following requirements (the onus being on him to do so: Ruskin NO v Barclays
Bank DCO 1959 (1) SA 577 (W)):
• That, in return for the disposition, he parted with property or security which he held, or
lost a right against another person. The words ‘in return for’ indicate that there must
be reciprocity between the disposition and the passing of the property or loss of the
right: in other words, the latter must be the quid pro quo for the former (Barclays
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National Bank Ltd v Umbogintwini Land and Investment Co (Pty) Ltd (in Liquidation) &
another 1985 (4) SA 407 (D)). Section 33(1) is not applicable if the recipient has
neither parted with property nor given up any right in return for the disposition
(Geyser NO & another v Telkom SA Ltd 2004 (3) SA 535 (T) 548) or if there is merely
an incidental connection between them (Consolidated News Agencies (Pty) Ltd (in
Liquidation) v Mobile Telephone Networks (Pty) Ltd & another 2010 (3) SA 382 (SCA)
398). In the Barclays Bank case, the insolvent (a company) had given a suretyship
undertaking to B Bank and passed a bond in favour of the bank to secure payment in
terms of the suretyship undertaking. The bank contended that, in return for these
dispositions, it had parted with sums of money (viz, amounts lent to the principal
debtor on overdraft after signature of the deed of suretyship) and that it was not
obliged to restore the benefit it had obtained under the dispositions unless the
liquidator indemnified it for the loans in question, which the liquidator had not done.
The court held that the loans were not the consideration or the quid pro quo for the
suretyship undertaking and bond. The loans had been given in terms of an agreement
between the bank and the principal debtor and if they had been made in return for
anything, it was the undertaking by the principal debtor to pay interest on the
overdraft. It followed that the bank’s contention could not be sustained. In the
Consolidated News Agencies case (398-9), the court observed that where the
respective acts of the parties are said to have arisen from an agreement between
them, an examination of the terms of the agreement is the first step in determining
whether the necessary reciprocity is established.
• That he acted in good faith. The requirement of good faith applies to all the
circumstances surrounding the transaction; it is not confined to the conduct that gave
rise to the property or security being parted with or the right being lost (Ruskin NO v
Barclays Bank DCO (supra) 584–5; Geyser NO & another v Telkom SA Ltd (supra) 549;
Consolidated News Agencies (Pty) Ltd (in Liquidation) v Mobile Telephone Networks
(Pty) Ltd & another (supra) 400–1). The creditor must show, inter alia, that at the time
of the transaction (when he parted with the property or gave up the right), he did not
know or contemplate that the debtor was insolvent or on the brink of insolvency (cf
Ruskin NO v Barclays Bank DCO (supra) 584; Consolidated News Agencies (Pty) Ltd (in
Liquidation) v Mobile Telephone Networks (Pty) Ltd & another (supra) 400–1).
The underlying purpose of s 33(1) is to ensure that, when a disposition is set aside in terms
of the Act, there is restitutio in integrum, ie, the restoration of both parties to their positions
before the disposition was made (Barclays National Bank Ltd v Umbogintwini Land and
Investment Co (Pty) Ltd (in Liquidation) & another (supra) 411). Proof of the above
requirements does not affect the right of the trustee to have the disposition set aside, but
the trustee cannot insist on compliance with the court’s order for return of the property or
benefit disposed of until he has given an indemnity to the recipient (Ruskin NO v Barclays
Bank DCO (supra) 583).
12.4.4 Effect of order on underlying debt

It is not entirely clear whether an order setting aside a disposition always extinguishes the
debt between the parties. The issue is important, not only for the beneficiary of the
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disposition, who may wish to claim against the insolvent estate, but also for a surety for the
debtor, since a surety is discharged if the principal obligation is extinguished for any reason.
The courts appear to have accepted that an order setting aside a gratuitous disposition in
terms of s 26 invalidates the debt between the parties, and hence precludes any claim by
the beneficiary and discharges any surety (see, eg, Linden Duplex (Pty) Ltd v Harrowsmith
1978 (1) SA 371 (W); cf also s 26(2)); but there are conflicting decisions on whether an
order setting aside a voidable preference under s 29 has the same effect. In Freedman and
Rossi (Pty) Ltd v Geustyn & others 1986 (4) SA 762 (W), it was held that the order vitiates
the debt but, in Millman NO and Stein NO v Kamfer 1993 (1) SA 305 (C), the court held that
it merely prohibits the unusual, prejudicial performance of the debt and does not extinguish
it. According to this view, the beneficiary may claim against the estate, and a surety for the
insolvent remains liable.
The courts have not yet spelt out the consequences of an order setting aside a disposition
in terms of s 30 (undue preference), or one in terms of s 31 (collusive disposition). For the
beneficiary of the latter, however, the issue is of academic interest, since s 31(2) provides
that if the other party to a collusive disposition is a creditor, he forfeits any claim which he
may have had against the estate (see also Gert de Jager (Edms) Bpk v Jones NO en
McHardy NO 1964 (3) SA 325 (A) 337).
It remains to be seen which approach will find favour with the Supreme Court of Appeal.
Clearly, the same principle should apply irrespective of whether the disposition before the
court is set aside in terms of s 26 or 29 or, for that matter, any other section.
12.5 Exemption of certain dispositions from act

In certain instances, the provisions of the Act governing dispositions do not apply:
• Sections 26, 29 and 30 (dispositions without value, voidable preferences, and undue
preferences) do not apply to property disposed of in accordance with the rules of an
exchange (s 35A(5)), or property disposed of in terms of a master agreement (s 35B
(4)). See also 7.2.9–10.
• Section 35(2)(a) of the Prevention of Organized Crime Act 121 of 1998 provides that, if
the estate of a defendant who has made an affected gift to another person is
sequestrated, a court must not set aside the disposition of that gift under ss 29, 30 or
31 of the Insolvency Act if a prosecution for an offence has been instituted against the
defendant and the proceedings against him or her have not been concluded; or if that
other person’s property is subject to a restraint order. If a court does set aside a
disposition contemplated under s 35(2)(a) after proceedings against the defendant
have been concluded, it must take into account any realization of the property of the
other person under chapter 5 of the Act (s 35(2)(b)).
12.6 Transfer of business without prescribed notice

In terms of s 34(1) of the Insolvency Act, if a trader, without giving notice as prescribed by
the Act, transfers in terms of a contract a business belonging to him, or its goodwill, or any
goods or property forming part of it (except in the ordinary course of that business or for
securing the payment of a debt), the transfer is void as against his creditors for six months
thereafter, and it is void against his trustee if his estate is sequestrated at any time within
that period. ‘Transfer’ for these purposes includes the
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transfer of possession, actual or constructive: the trader does not actually have to transfer
ownership to the other party (s 34(4)). Section 34(1) is applicable irrespective of the
manner in which the transfer takes place or the nature of the preceding agreement (Roos
NO en ’n ander v Kevin and Lasia Property Investments BK en andere 2002 (6) SA 409 (T)
415). The notice referred to is publication of a notice of intended transfer in the Government
Gazette and two issues of an Afrikaans newspaper and two issues of an English newspaper
circulating in the district in which that business is carried on (s 34(1)). The publication must
appear not less than 30 days and not more than 60 days before the date of the transfer
(ibid). It must provide accurate information regarding the transfer—if, for example, it states
the wrong date, it is invalid (Simon v DCU Holdings (Pty) Ltd & others 2000 (3) SA 202 (T)
226). Publication of the notice is required even if the trader’s creditors know about the
intended transfer (Gainsford & others NNO v Tiffski Property Investments (Pty) Ltd & others
2012 (3) SA 35 (SCA) 42).
As soon as a notice is published in terms of s 34(1), every liquidated liability of the trader
in connection with his business which would become due at some future date, falls due
immediately, if the creditor concerned demands payment (s 34(2)).
The following should be noted with regard to the scope and effect of s 34(1):
• The section is designed to protect the creditors of a business. It is aimed at the (all too
common) practice whereby a trader seeks to evade his business debts by disposing of
the business to a third party who is not liable for its debts and thereafter dissipating
the price or using it to pay some creditors, regardless of the claims of others
(Harrismith Board of Executors v Odendaal 1923 AD 530 538; Gainsford & others NNO
v Tiffski Property Investments (Pty) Ltd & others (supra) 43–4). The section applies
whether or not the trader’s estate is sequestrated (Vermaak v Joubert and May 1990
(3) SA 866 (A) 873) and even if the disposal was an advantageous one—for example,
at a price in excess of the value of the assets in question—because creditors may be
prejudiced even where the business or its assets are advantageously disposed of
(Joosab v Ensor NO 1966 (1) SA 319 (A) 326–7).
• The section applies only to traders. A ‘trader’, in terms of s 2, is a person who carries
on a trade, business, industry, or undertaking of a kind specified in the section. The
specified activities cover a wide field and include any business in which property is sold
or is bought, exchanged, or manufactured for purpose of sale or exchange. Certain
activities are not covered—for example, letting and hiring of immovable property
(Kevin and Lasia Property Investment CC & another v Roos NO & others 2004 (4) SA
103 (SCA) 108) and transport haulage (McCarthy Ltd v Gore NO 2007 (6) SA 366
(SCA) 370). The test in each case is whether the person concerned carries on the
relevant activity as part of his core business (McCarthy Ltd v Gore NO (supra) 370–1).
The definition is not applicable if the activity is merely incidental to the primary
business activities of the enterprise (ibid). The definition says that a person is deemed
to be a trader until proved otherwise, so a person alleged to be a trader bears the onus
of proving that his primary business activity falls outside the ambit of the definition
(Gainsford & others NNO v Tiffski Property Investments (Pty) Ltd & others (supra) 44).
A person does not cease to be a trader, for these purposes, simply because he ceases
to operate his business (‘closes his doors’) (Kelvin Park Properties CC v Paterson NO
2001 (3) SA 31 (SCA) 35). He remains a trader and continues to be subject to s 34(1)
for as long as he owns the business or its assets and owes debts in respect thereof. So,
for example, the section is applicable
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where a trader alienates the assets of his business four weeks after he has ceased to
trade (Bank of Lisbon International Ltd v Western Province Cellars Ltd & another 1998
(3) SA 899 (W) 901).
• The section applies to the transfer of part of a business, in particular, the transfer of
the goodwill of the business, or goods or property forming part of the business. In
Joosab v Ensor NO (supra) it was held that, having regard to the purpose of s 34(1), it
would be undesirable to lay down any definite criterion for determining when goods
form part of a business (see also Kelvin Park Properties CC v Paterson NO (supra) 36).
However, any goods purchased and received by a trader ostensibly for his business
must be regarded as forming part of the business, irrespective of whether the goods
have been physically appropriated to its stock in trade. In the court’s view, if the
position were otherwise, the purpose of the section could easily be defeated.
• The section does not apply to the transfer of goods or property of a business if the
transfer is ‘in the ordinary course of that business’. The word ‘that’ is important: the
inquiry is not whether the transaction would normally have been entered into by
solvent business persons (cf 12.2.2(ii)), but whether it would normally have been
concluded by a solvent business person conducting a business of the kind carried on by
the debtor (Joosab v Ensor NO (supra) 326; Gainsford & others NNO v Tiffski Property
Investments (Pty) Ltd & others (supra) 42–3). Regard must be had to what is, or
would be, done by similar businesses in similar circumstances (Ensor NO v Rensco
Motors (Pty) Ltd 1981 (1) SA 815 (A) 825). In this case, M, which carried on business,
inter alia, as a dealer in Mazda vehicles and spare parts under franchise from I, sold its
entire stock of Mazda parts to I. The sale came about because I had terminated the
franchise agreement between the parties and had exercised an option in the
agreement which allowed it, on termination of the franchise, to purchase all unsold
Mazda parts held by M. The court held that, although the sale by a motor dealer of his
stock of spare parts at one and the same time would not normally be in the ordinary
course of that business, in casu the position was different because M had been bound
to sell in terms of the franchise agreement. This agreement had been entered into in
the ordinary course of M’s business and its terms had been part and parcel of the
business. In submitting to I’s exercise of its rights under the agreement, M had acted
as any solvent business person carrying on that type of business would have done.
Trollip JA observed (at 826):
‘[I]t must necessarily be a paramount principle of carrying on business that a solvent trader
should duly honour his obligations under a contract entered into in the ordinary course of his
business.’
Contrast Gore & another NNO v Saficon Industrial (Pty) Ltd 1994 (4) SA 536 (W),
Gainsford & others NNO v Tiffski Property Investments (Pty) Ltd & others (supra), and
Roos NO en ’n ander v Kevin and Lasia Property Investments BK en andere 2002 (6)
SA 409 (T). In Gore’s case, S, a company in the business of selling and servicing
forklifts, sold 90 per cent of its assets in the hope of staving off liquidation of the group
of companies of which it was part. It was held that merely because the sale fell within
the ordinary course of business of the group of companies as a whole (as was alleged),
it did not mean that it was within the ordinary course of S’s business. S was in the
business of providing forklifts and the sale did not fit into the ordinary course of that
business. Similarly, in Gainsford’s case, a company used its
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immovable and movable property to run a ski resort business. The court held that the
company’s disposal of all this property could ‘by no stretch of the imagination’ fall
within the ordinary scope of its business (42, 44).
In Roos, a company earning income from the letting of shops and flats on its
immovable property had two creditors, one of which was a bank holding three
mortgage bonds over the immovable property. To discharge its indebtedness to the
bank, the company sold its entire business, including the immovable property, subject
to the condition that the buyer registered a bond in favour of the bank in the same
amount as the company’s indebtedness to the bank. The transfer of the property left
the company an empty shell, unable to pay its other creditor. The court held that, since
the transfer had effectively rendered the company incapable of carrying on its business
of generating income through property letting, it had not been concluded in the
ordinary course of the business of the company.
• The section is also inapplicable where the transfer is to secure the payment of a debt.
So, for example, the section does not apply to the pledge of a movable.
• Where the trustee alleges that a transfer of goods falls within the section, he bears the
onus of proving that
— the goods formed part of the insolvent’s business at the time of the transfer
(Silverstream Investments (Kranskop) CC v Ronbo Automotive CC 1997 (1) SA
107 (D) 111)—it does not suffice for him to show, for example, that they form
part of the insolvent’s assets generally (Bruyns NO v Aerogrande (Pty) Ltd 1964
(3) SA 554 (W)); and
— the transfer was not in the ordinary course of the insolvent’s business (Ensor NO
v Rensco Motors (Pty) Ltd (supra) 822; Gainsford & others NNO v Tiffski Property
Investments (Pty) Ltd & others (supra) 44).
• A transfer which has not been advertised is void as against the trustee. It follows that
the trustee need not bring an action to have the transfer set aside: he may simply
disregard it and demand return of whatever assets have been delivered to the
transferee (Harrismith Board of Executors v Odendaal 1923 AD 530 538–9). However,
if the transferee resists, the trustee will effectively be compelled to ask the court for an
order declaring the transfer void and requiring the transferee to hand over all the
assets in his possession which originally belonged to the business (Scott-Hayward NO v
Lief NO 1958 (3) SA 65 (T)). If the transferee has already resold the assets and can no
longer restore them to the trustee, the latter may sue for their value by bringing a
delictual action for wrongful disposal (actio ad exhibendum)(Gore & another NNO v
Saficon Industrial (Pty) Ltd (supra)). Once the transferee has returned the assets (or
their value) to the trustee, he has a concurrent claim against the estate for the amount
that he paid or for the other performance that he rendered to the insolvent.
• An unadvertised transfer is not void in any absolute sense, only against the trustee.
This means that it is within the discretion of the trustee to treat the transfer as void or
not. The trustee may always waive or choose not to exercise his powers under the
section and, if he does this, the transfer remains standing (Galaxie Melodies (Pty) Ltd v
Dally NO 1975 (4) SA 736 (A) 743; Gainsford & others NNO v Tiffski Property
Investments (Pty) Ltd & others (supra) 45). The trustee will generally elect to abide by
the transfer if the assets have depreciated since the conclusion of the sale
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and he will find it difficult to match the price agreed upon, or if the price fixed still
exceeds the market value of the assets. A decision by the trustee to treat the transfer
as void invalidates any mortgage bond that the transferee has registered over
immovable property of the business (Gainsford & others NNO v Tiffski Property
Investments (Pty) Ltd & others (supra) 45-9). The reason is that a transfer in
contravention of s 34 is void ab initio and, accordingly, the transferee does not acquire
ownership of the immovable property and cannot encumber it with a mortgage bond.
The mortgagee is not arbitrarily deprived of property as envisaged by s 25(1) of the
Constitution, inter alia, because there is a rational connection between the voidness of
a transfer hit by s 34(1) and the ends sought to be achieved (to protect the creditors of
a trader who transfers his business at a time when he is in financial difficulties) (ibid).
12.7 Transfer of business after proceedings instituted

Section 34(3) deals with the situation where a trader transfers his business after another
person has instituted proceedings against him for the purposes of enforcing a claim against
him in connection with the business. The section renders the transfer void as against the
person concerned for the purpose of such enforcement if either:
• the transferee is aware, at the time of transfer, that the proceedings have been
instituted; or
• the proceedings have been instituted in a High Court or magistrate’s court having
jurisdiction in the district in which the business is carried on.
The following should be noted in regard to s 34(3):
• The section applies irrespective of whether the trader gives notice of the transfer of the
business as prescribed by s 34(1) (Simon v DCU Holdings (Pty) Ltd & others 2000 (3)
SA 202 (T) 222).
• The creditor is protected if he has instituted proceedings prior to the transfer—he need
not have taken judgment (Weltmans Custom Office Furniture (Pty) Ltd (in Liquidation)
v Whistlers CC 1999 (3) SA 1116 (SCA) 1121).
• The protection afforded by the section is not limited as to time (Soomar v Avon Leigh
CC t/a Elsea Products 2000 (1) SA 524 (E) 528–9).
• For the section to apply, the claim sought to be enforced must be one ‘in connection
with the business’—a claim to enforce a liability of the trader unrelated to the business
does not enjoy the protection of the section. In Simon v DCU Holdings (Pty) Ltd &
others (supra), it was held that the phrase ‘in connection with the business’ must not
be interpreted in a narrow or technical way and that it is wide enough to include a
claim for the balance of the price of all the assets of the business.
• The creditor is not denied the protection of the section where the agreement on which
his claim is based has been amended or superseded by another agreement, provided
there is a sufficiently close connection between the proceedings and the second
agreement. In Weltmans Custom Office Furniture (Pty) Ltd (in Liquidation) v Whistlers
CC (supra), the agreement of sale originally sued upon had been replaced by a
settlement agreement. It was held that this agreement was sufficiently closely
connected to the proceedings for the section to apply. Melunsky AJA explained (1122):
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‘[T]he compromise did not change the essential nature of the [creditor’s] claim. . . . Both the
original and the settlement agreements related to the sale of the same business and the
[creditor’s] claim, under each agreement, was for payment of the purchase price. The
compromise differed from the original agreement in relation to the amount payable and the
method of payment but it did not alter the essence of the [creditor’s] claim or the debtor’s
obligation. . . . The result is that the proceedings instituted by the [creditor] before the transfer
are sufficiently closely connected to its claim under the settlement agreement to entitle this
Court to hold the transfer to be void for the purposes of s 34(3).’
• The section does not render the transfer of the business completely void, but only void
as against the creditor who has instituted proceedings and to the extent of his claim
(Weltmans Custom Office Furniture (Pty) Ltd (in Liquidation) v Whistlers CC (supra)
1123).
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Chapter 13
Interrogation of the insolvent and other witnesses
Synopsis
Introduction
13.1 Interrogation by trustee (or creditor or presiding officer)
13.1.1 When and where interrogation may take place
13.1.2 Who may be interrogated
13.1.3 Who may interrogate
13.1.4 Subject matter of interrogation
13.1.5 Procedure at interrogation
13.1.6 Privilege
13.1.7 Failure to attend or submit to interrogation
13.1.8 Interrogation revealing possible offence
13.2 Interrogation by Master
Introduction
To enable the trustee and creditors to investigate the insolvent’s affairs and ascertain his
true financial position, the Act provides for the interrogation of the insolvent and other
witnesses. The Act also empowers the Master to conduct a private interrogation. These
matters are considered in this chapter.
If the trustee merely holds informal discussions to investigate matters which clearly call
for a formal interrogation, he is guilty of a dereliction of duty and may have his
remuneration reduced or disallowed by the Master in terms of s 63(1) (Thorne v The Master
1964 (3) SA 38 (N) 52-3).
13.1 Interrogation by trustee (or creditor or presiding officer)

13.1.1 When and where interrogation may take place
An interrogation may be conducted at any meeting of creditors (s 65(1)). It may take place,
|for instance, at a special meeting called for the purpose of proof of claims (Lubbe v Estate
Lubbe 1935 CPD 299) or at a general meeting convened for the purpose of giving the trustee
directions concerning matters relating to the administration of the estate (Essop v The
Master & another 1983 (1) SA 926 (C)). The meeting must be properly called: if it is not, the
interrogation cannot proceed. In Essop v The Master & another (supra), the trustee called a
general meeting for the purpose of ‘interrogation of witnesses’. It was held that, in terms of
s 41, a general meeting had to be convened by the trustee ‘for the purpose of giving him
directions concerning any matter relating to
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the administration of the estate’ and that it was not competent to call the meeting solely for
the purpose of interrogating witnesses. Accordingly, a subpoena requiring a witness to
attend the meeting for interrogation had to be set aside. Again, in Marques & another v De
Villiers & another NNO 1990 (4) SA 415 (W), the trustee called a special meeting for the
‘further proof of claims’, but his sole purpose in convening the meeting was to interrogate
the insolvent and other witnesses. The court held that the meeting had not been properly
convened and, hence, the interrogation could not proceed.
13.1.2 Who may be interrogated

The persons who may be interrogated are the insolvent and any other person present at the
meeting who has been, or who might have been, summoned to appear for interrogation in
terms of s 64(2). In terms of s 64(2), the presiding officer at any meeting of creditors may
summon any of the following persons to appear at the meeting for the purpose of being
interrogated:
• Any person who is known, or on reasonable grounds believed, to possess or to have
been in possession of property which belonged to the insolvent prior to sequestration
of his estate, or which belongs or belonged to the insolvent estate or to the insolvent’s
spouse.
• Any person who is known, or on reasonable grounds believed, to be indebted to the
estate.
• Any person who, in the opinion of the presiding officer, may be able to give material
information concerning the insolvent or his affairs (whether before or after
sequestration), any property belonging to the estate, or the business, affairs, or
property of the insolvent’s spouse.
The presiding officer may also summon any person who is known, or on reasonable grounds
believed, to possess any book or document containing information referred to in s 64(2), to
produce the book or document (or an extract from it) at a meeting of creditors (s 64(3)). A
person subpoenaed to produce documentation of a certain class in terms of this section must
actually produce it—it is no answer for him to say simply that the trustee may have access
to everything that he (the witness) has (Pitsiladi v Van Rensburg & others NNO 2002 (2) SA
160 (SE) 162).
It will be observed that the range of witnesses who may be summoned to appear and the
documentary evidence that may be called for is extensive. The reason is evidently to allow
the trustee and creditors to investigate the affairs of the insolvent on the widest possible
basis (Yiannoulis v Grobler & others 1963 (1) SA 599 (T) 601). Although a subpoena in
terms of s 64(2) may be couched in wide terms, it must be limited to what is a permissible
investigation under the section (cf Pitsiladi v Van Rensburg & others NNO (supra) 162).
The insolvent is obliged to attend the first and second meetings of creditors (including any
adjournments) unless he has obtained the written permission of the presiding officer to
absent himself (s 64(1)). This permission may only be granted after consultation with the
trustee (ibid). The insolvent must also attend a general or special meeting if required to do
so by written notice of the trustee (ibid).
Where the insolvent or his spouse is called upon to attend a general or special meeting of
creditors, he or she is entitled to an allowance out of the estate to defray necessary
expenses incurred in connection with the attendance (s 65(8)). Any other
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person summoned to attend a meeting for the purpose of interrogation is entitled to be paid
out of the estate the fees to which he would be entitled if he were a witness in civil
proceedings in a court of law (s 65(7)).
13.1.3 Who may interrogate

The interrogation may be conducted by the trustee, any creditor who has proved a claim
against the estate, the presiding officer, or the agent of any of these parties (s 65(1)).
13.1.4 Subject matter of interrogation

Section 65(1) provides that the insolvent or a witness may be interrogated concerning:
• all matters relating to the insolvent or his business or affairs, whether before or after
the sequestration of his estate;
• any property belonging to the estate; and
• the business, affairs, or property of the solvent spouse (s 65(1)).
It will be noted that the scope of the interrogation (like the presiding officer’s power to
summon witnesses) is defined in the widest terms. This is necessary if the interrogation is to
achieve its object, viz, obtaining a complete and detailed picture of the insolvent’s estate
and financial affairs. It follows that it is permissible (and not an abuse of the process) to hold
an interrogation for the purpose of gathering information for possible civil litigation against
parties with whom the insolvent was connected or had dealings (Pitsiladi v Van Rensburg &
others (supra) 161-2).
In Harksen v Lane NO & others 1998 (1) SA 300 (CC), it was argued that s 65(1)
amounted to an unconstitutional violation of the solvent spouse’s fundamental rights
enshrined in the Interim Constitution (Constitution of the Republic of South Africa 200 of
1993), in particular her rights under the equality and property clauses, and her rights to
privacy and freedom and security of the person. The court did not agree. Its reasoning
appears from the following passage (at 330-2):
‘On the basis that it is constitutional to vest the property of a solvent spouse temporarily in the Master
or trustee, it follows that the solvent spouse similarly can have no legitimate complaint to being
interrogated concerning her or his own property and affairs to the extent that they are relevant to the
insolvent estate. As far as reliance is placed upon ss 11(1) and 13 of the interim Constitution [ie, the
clauses dealing with privacy and freedom and security of the person], it is necessary to have regard to
the scope of questions which . . . a person summoned [is required] to answer. . . . [T]he first
limitation . . . relates to their relevance to the purpose of the meeting. That purpose is clearly the
affairs of the insolvent estate. It follows that to the extent that persons may be required to answer
questions concerning the business, affairs or property of the solvent spouse, the information sought
must be relevant to the estate of the insolvent spouse. . . . A second and even wider limitation is to
be found in the provisions of s 139 read with 66(3) of the Act. . . . A presiding officer may not commit
to prison . . . a person who refuses to answer a question not ‘‘lawfully put to him’’. A question which
would constitute an invasion of a constitutional right of an examinee cannot be said to be one
‘‘lawfully put’’. To paraphrase the words of Ackermann J in Nel v Le Roux NO & others [1966 (3) SA
562 (CC) at para [9]] if a presiding officer at a meeting of creditors held under the Act finds that, in
answering any question, the examinee’s rights under chap 3 of the interim Constitution would be
infringed he or she should hold that this did not constitute a question ‘‘lawfully put’’ to the examinee
and that a refusal to answer such a question did not therefore constitute conduct punishable by
imprisonment under s 66(3) and therefore would not constitute an offence under s 139(1).’
Page 162
13.1.5 Procedure at interrogation

The presiding officer must call and administer the oath to the insolvent or other witness who
may then be interrogated (s 65(1)). There are no issues formulated beforehand—the inquiry
is conducted for the purpose of discovery, to obtain facts that the trustee and creditors do
not possess and which may be of financial benefit to the estate (Agyrakis & another v Gunn
& another 1963 (1) SA 602 (T) 604). The statement of any person being interrogated must
be recorded in the same way as the evidence in a civil court (s 65(3)). Where the insolvent
is interrogated, he must be required to make a declaration that he has made a full and true
disclosure of all his affairs (s 65(4)).
The presiding officer must ensure that the proceedings are conducted in accordance with
the fundamental principles of justice and must ensure that he performs his functions fairly
and impartially (Advance Mining Hydraulics (Pty) Ltd & others v Botes NO & others 2000 (1)
SA 815 (T) 824-5). The court may intervene to stop an interrogation if it amounts to an
abuse of s 65, or if it is vexatious or oppressive (Lane & another NNO v Magistrate, Wynberg
1997 (2) SA 869 (C) 874). The presiding officer must disallow any question which is
irrelevant and may disallow a question which would prolong the interrogation unnecessarily
(s 65(1)). It has been held that he should exclude questions on the latter basis if they are
not calculated to produce material information about the insolvent’s affairs or if the
information can be obtained more readily from another source (Agyrakis & another v Gunn &
another (supra) 605). Questions to establish the general credibility of a witness are
permissible, provided they are relevant to the affairs of the insolvent (Pretorius & others v
Marais & others 1981 (1) SA 1051 (A) 1063-4). Questions which infringe a witness’s
constitutional rights are not lawfully put, and he need not answer them (Harksen v Lane NO
& others (supra)332). The fact that the presiding officer is obliged, in certain circumstances,
to hold the inquiry in camera (see 13.1.6) does not mean that in all other circumstances it
must take place in public (Roux v Die Meester en ’n ander 1997 (1) SA 815 (T) 825).
A person called upon to give evidence may be assisted at his interrogation by an
advocate, attorney, or other agent (s 65(6)) and is entitled to be informed of his right to
such assistance (Advance Mining Hydraulics (Pty) Ltd & others v Botes NO & others (supra)).
However, he has no constitutional or other right of access to information prior to the
inquiry—he is called to the inquiry to assist in providing information, not to receive it
(Pitsiladi v Van Rensburg & others NNO (supra) 162).
A witness may be interrogated even though he is a witness in a pending civil trial
concerning the subject of the proposed interrogation (Pretorius & others v Marais & others
(supra) 1064).
13.1.6 Privilege
In general, the law relating to privilege applies in connection with the giving of evidence or
the production of a book or document at an interrogation (s 65(2)). However, the principles
of privilege are relaxed to some extent, to allow an interrogation to achieve its intended
purpose.
The Act lays down the following provisions in this regard:
• A person being interrogated may not refuse to answer a question on the ground that
the answer would tend to incriminate him, or on the ground that he is to be tried on
Page 163
a criminal charge and may be prejudiced at such trial by his answer (s 65(2) proviso).
• A banker of the insolvent or his spouse must, if summoned to do so, produce all
cheques in his possession which were drawn by the insolvent or his spouse within one
year of sequestration (ibid). If a cheque is not available, the banker must produce any
record which he has of the payment (ibid). If called upon to do so, the banker must
give any other information which he has regarding the missing cheque, or the bank
account of the insolvent, or his spouse (ibid).
• Any evidence given at an interrogation is admissible in any proceedings instituted
against the person who gave the evidence (s 65(5)).
Section 65(2A) limits the ambit of the above provisions in two respects: a presiding officer
must hold the incriminating or prejudicial part of any proceedings in camera and prohibit the
publication of any incriminating evidence (s 65(2A)(a)), and no incriminating evidence given
at an inquiry may be admitted in any criminal proceedings, except in proceedings for perjury
or related offences (s 65(2A)(b)). The expression ‘part of the proceedings’ in this context is
not confined to specified or determinable questions and answers (Harksen v The Magistrate,
Wynberg & others [1997] 2 All SA 205 (C) 211-2).
The overall effect of the provisions is that an examinee cannot refuse to answer
incriminating questions, and that the answers he gives may be used against him in civil
proceedings and in criminal proceedings relating to perjury and related offences, but not in
criminal proceedings generally (Du Plessis NO v Oosthuizen; Du Plessis NO v Van Zyl 1995
(3) SA 604 (O) 613; Wessels NO v Van Tonder en ’n ander 1997 (1) SA 616 (O) 621). The
rationale here is not difficult to discern. The purpose of an interrogation is to obtain
information about the insolvent estate which would not otherwise be disclosed to the trustee
or to creditors, and which may be used to recoup money or property for the benefit of the
estate (cf Pitsiladi v Van Rensburg & others NNO (supra) 162). To achieve this purpose, it is
essential that the trustee and creditors be permitted to ascertain whether the insolvent or
any other person has acted improperly or in fraud of creditors of the estate. This task would
be impossible if the examinee could decline to answer questions on the basis that they might
incriminate him and if the evidence elicited at the interrogation could not be used in
subsequent civil proceedings against the examinee.
The Companies Act 61 of 1973 contains a provision similar, although not identical, to s 65,
viz, s 415. Section 415(5) states that any evidence given at an interrogation in terms of s
415(1) of the Act is admissible in any proceedings instituted against the person who gave
the evidence. This section, therefore, allows for incriminating evidence given at such an
interrogation to be admitted in any criminal proceedings against the person concerned (Du
Plessis NO v Oosthuizen; Du Plessis NO v Van Zyl (supra) 609). In Parbhoo & others v Getz
NO & another 1997 (4) SA 1095 (CC), it was held that s 415(5) is constitutionally invalid to
the extent that it permits the use of incriminating evidence in criminal proceedings other
than those for perjury or related offences. In the light of this decision, it may be concluded
that s 65(5) is constitutionally sound, since s 65(2A)(b) limits the scope of s 65(5) and
prohibits the admission of incriminating evidence in terms of the latter section in criminal
proceedings, apart from proceedings on the grounds of perjury and related offences.
Page 164
In Equisec (Pty) Ltd v Rodriques & another 1999 (3) SA 113 (W), a debtor applied to stay
the granting of a final sequestration order against his estate, arguing that exposure to
compulsory interrogation would be prejudicial to him in criminal proceedings which were
pending against him. The court rejected the application, holding that the debtor was
adequately protected by s 65(2A) since it would render incriminating evidence elicited at
such an interrogation inadmissible in criminal proceedings.
Although evidence given at an interrogation is admissible in civil proceedings instituted
against the person who gave the evidence, it does not simultaneously serve as proof of the
facts which it reveals. In this regard, the court must consider the evidence as a whole and
decide how much weight should be given to it. The court may, if it sees fit, accord different
degrees of credence or credibility to different parts of the evidence (Du Plessis NO v
Oosthuizen en ’n ander 1999 (2) SA 191 (O) 206).
13.1.7 Failure to attend or submit to interrogation

If the insolvent or a person duly summoned to appear at a meeting of creditors fails to
attend or remain in attendance at the meeting, the presiding officer may issue a warrant
authorizing a member of the police to apprehend him (ie, the insolvent or person
summoned) and bring him before the presiding officer (s 66(1)). Unless the insolvent or
person summoned satisfies the presiding officer that he had a reasonable excuse for failing
to appear or remain in attendance, the presiding officer may commit him to prison for a
period which the officer may determine (s 66(2)). The officer in charge of the prison must
then detain the person committed and produce him when and where required by the
presiding officer (ibid).
If a party summoned to an interrogation appears, but fails to produce a book or document
which he was required to produce, or if a person who may be interrogated refuses to be
sworn by the presiding officer, or refuses to answer fully and satisfactorily any question
lawfully put to him, the presiding officer may issue a warrant committing the party
concerned to prison, where he must be detained until he has undertaken to do what is
required of him (s 66(3)). In Nieuwoudt v Faught NO en andere 1987 (4) SA 101 (C) 109, it
was held that, where the party gives an answer which is incomplete or unsatisfactory, the
presiding officer must decide whether this is due to an unwillingness to testify, or whether
the party has answered the question to the best of his ability. If the answer is clearly untrue
or evasive, it may be considered to be a form of intentional refusal to answer the question.
But if the answer is not nonsensical or evasive, even if it is improbable, it cannot be said
that the party has failed to answer the question to the best of his ability (ibid). If, after being
released on an undertaking to do what is required of him, the party fails to fulfil his
undertaking, the presiding officer may commit him to prison as often as may be necessary to
compel him to do what is required of him (s 66(4)).
A person committed to prison in terms of this section may apply to the High Court for his
discharge from custody and the court may order his discharge if it finds that he was
wrongfully committed or is being wrongfully detained (s 66(5)). The presiding officer enjoys
the same immunity in connection with the apprehension or committal of a person as is
enjoyed by a judicial officer in regard to any act performed by him in the exercise of his
functions (s 66(6)).
In De Lange v Smuts NO & others 1998 (3) SA 785 (CC), it was argued that s 66(3)
Page 165
(dealing with committal for failing to produce a document, take the oath, or answer a
question satisfactorily) is constitutionally invalid because it violates s 12(1)(b) of the
Constitution (the right not to be detained without a fair trial). The court accepted that the
section is invalid, but only to the extent that it empowers a presiding officer who is not a
judicial officer in the court structure established by the Constitution (in other words, a judge
or a magistrate) to issue a warrant committing an examinee to prison. It seems clear that
the same reasoning applies to s 66(2) (committal for failing to appear or remain in
attendance). Sections 66(2) and (3) should both, therefore, be read subject to the
qualification that a presiding officer may order committal on the grounds stipulated in the
sections only if he is recognized as a judicial officer in the court structure. In De Lange’s
case, Ackermann J remarked as follows (824):
‘It was suggested in argument that if the public service officers did not have summary committal
powers this would give rise to delays which would undermine the efficacy of the sequestration
process. It is not self-evident to me why this must be so if creditors’ meetings and courts are
efficiently run. . . . There is nothing before us to show why these public service officers cannot
legitimately be accommodated in the magisterial judiciary and used exclusively to preside over
creditors’ meetings or why, for that matter, specialist insolvency or bankruptcy courts cannot
effectively be established under the Constitution in which their expertise can also be fully employed.
As judicial officers with true structural and constitutional independence, there could be no objection to
them committing examinees to prison . . . .’
13.1.8 Interrogation revealing possible offence

Where it appears from a statement made at an interrogation that there are reasonable
grounds for suspecting that a person has committed an offence, the Master must transmit
the statement with any necessary documents to the Director of Public Prosecutions, to
enable him to decide whether any criminal proceedings should be instituted in the matter (s
67(1)).
13.2 Interrogation by master

The Act also makes provision for an inquiry to be instituted by the Master, whenever he is of
the opinion that the insolvent, the trustee, or any other person is able to give information
which he (the Master) considers desirable to obtain concerning the insolvent, his estate, the
administration of his estate, or any claim or demand made against the estate (s 152(2)). In
such a case, the Master may summon the party concerned to appear before him (or before a
magistrate or an officer in the public service) at a stated time and place and give the
information (ibid). The Master may exercise this power at any time after sequestration
(including provisional sequestration: Appleson v The Master & others 1951 (3) SA 141 (T))
and before rehabilitation of the insolvent (ibid). It need not be shown that an interrogation
under s 64 or 65 is impossible or impractical (Cools v The Master & others 1998 (4) SA 212
(C) 224-5). The Master may administer the oath to the party summoned, and then the
Master and also the trustee (if the latter is not the person summoned) or his agent may
interrogate him (s 152(4)). After the interrogation, the Master may require the person to
appear again and submit further information or any book or document (s 152(3)). The
relevance of these documents to the insolvent’s affairs outweighs the right of privacy under
s 14 of the Constitution of the Republic of South Africa, 1996 (Gumede & others v Subel NO
&
Page 166
Others 2006 (3) SA 498 (SCA) 504-6). Certain provisions of the Act relating to
interrogations by the trustee apply mutatis mutandis: those concerning privilege and the
giving of incriminating evidence (Wessels NO v Van Tonder en ’n ander (supra) 620), those
dealing with the failure to attend or submit to interrogation and the immunity of the
presiding officer, and those governing witness fees (s 152(5)-(7)). So, for example, a
witness need not attend the interrogation until offered the prescribed witness fees and
allowances (Swart en ’n ander v Cronje en ’n ander NNO 1991 (4) SA 296 (T); Laskarides &
another v German Tyre Centre (Pty) Ltd (in Liquidation) & others NNO 2010 (1) SA 390 (W)
399).
The courts have accepted the following propositions regarding the nature and scope of an
inquiry in terms of s 152:
• The inquiry is purely investigative in nature. The presiding officer investigates facts,
but he makes no finding that can detrimentally affect anyone’s rights, nor does he
determine any rights (Van der Westhuizen v Roodt & others 1986 (1) SA 693 (N) 698;
Podlas v Cohen and Bryden NNO & others 1994 (4) SA 662 (T) 675; Roux v Die
Meester en ’n ander (supra) 824; Nedbank Ltd v Master of the High Court,
Witwatersrand Local Division, & others 2009 (3) SA 403 (W) 414).
• Since the inquiry does not adversely affect anyone’s rights, the Master need not apply
the audi alteram partem rule before deciding to hold the inquiry, and the presiding
officer need not observe the rule while the inquiry is in progress. It follows that the
Master is not obliged to grant a hearing to a person summoned before issuing him with
a notice to appear and that he does not have to provide reasons for his decision to hold
an inquiry (Podlas v Cohen and Bryden NNO & others (supra) 675); and the insolvent
cannot demand to be present at the examination or to be given the opportunity to
cross-examine witnesses (Roux v Die Meester en ’n ander (supra)).
• In regulating and controlling the inquiry, the presiding officer must observe the dictates
of procedural fairness, but this requirement does not mean that he must allow an
examinee access to the information on which the decision to hold the inquiry was
based (Strauss & others v The Master & others NNO 2001 (1) SA 649 (T) 662–3). An
examinee has no constitutional right of access to such information (in terms of s 32 of
the Constitution read with item 23 of Schedule 6), because the inquiry does not
amount to administrative action and does not adversely affect the examinee’s rights
(Strauss & others v The Master & others NNO (supra) 665–6).
• The inquiry need not follow any particular procedure. The presiding officer is not
compelled to keep a record or notes of the inquiry and cannot be made to disclose to
any person, including the examinee himself, any informal notes which he kept of the
proceedings (Stadler en andere v Wessels NO en andere 2000 (4) SA 544 (O) 554).
• A person other than the trustee is not entitled as of right to representation at the
inquiry (Appleson v The Master & others (supra)). However, the presiding officer will
often allow representation, and the court has said that it is desirable that a person who
is being interrogated should be permitted to have a legal adviser present to advise him
of his rights (Van der Westhuizen v Roodt & others (supra) 699), especially where the
interrogation may constitute a step in litigation hostile to the witness (Hosking &
another v Van der Merwe & another NNO 1992 (1) SA 920 (W)).
• Because of the nature of the inquiry, the court’s power of review in terms of s 151 is
very limited. The court may interfere with the Master’s decision to hold an inquiry
Page 167
only if he acted mala fide, from ulterior motives, or failed to apply his mind to the
matter (Strauss & others v The Master & others NNO (supra) 656-7). It may intervene
in the inquiry itself only if it is conducted in an oppressive or vexatious manner or
might result in hardship to the examinee, or where unusual, special or exceptional
circumstances are present (662).
Page 168
Chapter 14
The duties of the insolvent
Synopsis
Introduction
Introduction
To facilitate the trustee’s task of gathering and taking charge of all the assets in the estate,
the Act imposes a number of duties on the insolvent.

On being served with the final order of sequestration, the insolvent is obliged to deliver
forthwith to the sheriff all records relating to his affairs which have not already been taken
into custody (s 16(2)(a)). Within seven days of service, he must lodge in duplicate with the
Master a statement of affairs, framed substantially in the prescribed form—Form B in the
First Schedule to the Act—and verified by affidavit (s 16(2)(b)). A detailed discussion of the
|contents of the statement of affairs appears in chapter 2. If the Master is satisfied that the
insolvent is unable to prepare the statement of affairs without assistance, he may allow a
reasonable fee to be paid as part of the costs of sequestration to the person who assists him
(s 16(5)).

Within 14 days as from the appointment of the trustee, the insolvent must deliver to the
trustee any property belonging to the estate which is in his possession (s 136(b)(i)). Failure
to do so constitutes a criminal offence (ibid).

At any time before the second meeting of creditors the insolvent must, if required by the
trustee, assist him in collecting and taking charge of any property belonging to the estate (s
23(12)). In return for his assistance, the insolvent is entitled to be paid out of the estate
such allowance in money or goods as the Master considers necessary to support the
insolvent and his dependants (ibid).
Page 169
The insolvent is obliged, on pain of criminal prosecution, to provide various information and
details to the trustee or the Master:
• Within 14 days of the trustee being appointed, the insolvent must inform him of the
whereabouts of any estate property not under his (the insolvent’s) control which is not
fully disclosed in the statement of his affairs or which is not already in the possession
of the trustee (s 136(b)(i)). The insolvent is under a similar duty in relation to books or
documents not under his control and which are not already in the possession of the
trustee (s 136(b)(iv)).
• The insolvent must, at the request of the trustee, furnish complete and truthful
information regarding any property which was in his possession, or regarding the time
when, or manner or circumstances in which, he disposed of the property or ceased to
possess it (s 136(c)). Furthermore, the insolvent commits an offence if, at a meeting of
creditors, when required by the trustee or the presiding officer or any creditor, he fails
to disclose what has become of property which was in his possession so recently that
he ought to be able to account for it (s 138(c)).
• If the insolvent learns or suspects that a person has proved or intends proving a false
claim against the estate, he must inform the Master and the trustee in writing within
seven days of acquiring the knowledge or becoming suspicious (s 136(a)).
• The insolvent is obliged, if so required by the trustee, to give a true, clear and detailed
explanation of his insolvency and to account for the excess of his liabilities over his
assets (s 138(b)).

The insolvent must keep the trustee informed of his residential and postal addresses (s 23
(13)). If any notice is required to be given to the insolvent in terms of the Act, it may be
sent by registered letter to either of these addresses (s 23(14)).

The insolvent is obliged to keep a detailed record of all assets which he receives from
whatever source, and of all disbursements which he makes in the course of his profession,
occupation, or employment (s 23(4)). The trustee may inspect the record at all reasonable
times (ibid). If required by the trustee, the insolvent must transmit to him, in the first week
of every month, a statement verified by affidavit of all assets received and disbursements
made during the preceding month (ibid). The trustee may call for reasonable vouchers in
support of any item in the statement (ibid). By examining the information so obtained, the
trustee can decide whether to approach the Master in order to have a portion of the
insolvent’s income declared unnecessary for the support of the insolvent and his dependants
in terms of s 23(5) (see 5.3.2).
Section 23(4) is deficient in so far as it does not compel the insolvent to keep his trustee
informed of his income and financial position after the distribution of his capital assets. It is
impractical to expect the trustee voluntarily to follow up this information without being
guaranteed that his disbursements will be covered. The subsection, therefore, should be
amended (Ex parte Jacobs 1977 (4) SA 155 (NC) 156-7).
Page 170

The duty of the insolvent to attend creditors’ meetings and submit to interrogation has
already been dealt with (see 13.1.2). The insolvent must, if summoned to do so, attend
proceedings instituted by or against the trustee and answer any question lawfully put to him
in the course of the proceedings (s 140). The failure, without a reasonable excuse, to comply
with this duty is an offence (ibid).
Page 171
Part 5
Realization and distribution of the assets
Chapter 15: Realization of the estate assets
15.1 Procedure for realization of estate assets generally

15.2 Special rules governing realization of particular assets
15.3 Realization of solvent spouse’s property
Chapter 16: Creditors’ claims and their ranking
16.1 Types of creditors

16.2 Types of security conferring preference
16.3 Ranking of claims
Chapter 17: The estate accounts and the distribution of the estate
17.1 Estate accounts

17.2 Time within which accounts must be submitted
17.3 Failure to submit accounts
17.4 Examination of accounts by Master
17.5 Inspection of accounts by interested parties
17.6 Objections to accounts
17.7 Confirmation of accounts
17.8 Distribution of estate
Page 173
Chapter 15
Realization of the estate assets
Synopsis
Introduction
15.1.1 Manner of realization
15.1.2 Requirements where assets are sold by public auction/tender
15.1.3 Sale in contravention of Act
15.1.4 Purchase of assets by trustee
15.1.5 Sale of assets before second meeting of creditors
15.2.1 Goods subject to statutory lien
15.2.2 Rights acquired from State in terms of lease, licence, etc.
15.2.3 Interest in close corporation
15.2.4 Movable property held as security
15.2.5 Immovable property held as security
Introduction
Having taken charge of the estate assets, the trustee must realize them for the benefit of
creditors. He is also bound to realize any property of the solvent spouse which vested in him
and which he has not released. This chapter deals with the procedure for the sale of assets
generally, the special rules applicable to the realization of certain assets, and the procedure
governing the sale of property which belonged to the solvent spouse prior to sequestration.
For obvious reasons, the trustee is generally obliged to dispose of the estate assets for
value, and he must dispose of all the assets which he is empowered to realize. However, this
proposition must be qualified to some extent:
• The creditors may authorize the trustee to dispose of an estate asset without receiving
value in return, provided they act bona fide and in the interests of the estate and the
insolvent (Janse van Rensburg v Muller 1996 (2) SA 557 (A) 564–5). In this case, one
of the assets in M’s insolvent estate was a damages claim against JVR (disputed by the
latter) arising from a fire on M’s farm. The creditors of the estate were not interested in
attempting to enforce the claim because of the financial risks which this would involve
and, with M’s approval, they authorized a cession of the claim to M’s spouse for no
value. The court dismissed JVR’s objection that the cession was invalid because the
trustee of M’s estate had been compelled to sell all of its assets.
• The interests of creditors do not go beyond the full settlement of the debts of the
insolvent estate. Should the unusual case present itself in which partial realization of
the estate assets yields enough to meet the claims proved by creditors and the
Page 174
expenses relating to sequestration, the trustee does not have to sell the remaining
assets (Jacobs v Hessels 1984 (3) SA 601 (T)).
The trustee may not realize certain assets, viz, the wearing apparel and bedding of the
insolvent (s 82(6)). The trustee is also not permitted to sell the insolvent’s household
furniture, tools, and other essential means of subsistence; but in relation to these assets the
creditors or, if none has proved a claim, the Master, may determine that only a portion may
be retained by the insolvent for his own use (ibid). Since the prohibition on the sale of
certain assets was enacted for the benefit of the insolvent, he may waive the protection
afforded in respect of specific assets in favour of his creditors and the trustee may then
realize them (Ex parte Anthony en ’n ander en ses soortgelyke aansoeke 2000 (4) SA 116
(C) 125). In general, if an asset to be sold is burdened with a restraint on alienation, the
trustee may not sell the asset contrary to the terms of the restraint (Engelbrecht v Mundell’s
Trustee 1934 CPD 111). However, a pactum de non cedendo is not binding on the trustee
unless:
• the pactum itself provides or makes it clear that it is applicable in insolvency (Lithins v
Laeveldse Koöperasie Bpk & another 1989 (3) SA 891 (T) 895; Goodwin Stable Trust v
Duohex (Pty) Ltd & another 1998 (4) SA 606 (C) 618);
• the pactum is contained in a lease (s 37(5));
• the pactum forms part of the contract which created the right in question. In Capespan
(Pty) Ltd v Any Name 451 (Pty) Ltd 2008 (4) SA 510 (C), Thring J remarked (518–9):
‘[A] distinction must be drawn between a pactum de non cedendo which prohibits the cession of
an existing right, ie one which pre-existed the conclusion of the pactum, on the one hand, and a
pactum de non cedendo of a right which, by means of the pactum itself, was created ab initio as
a non-transferable right, on the other. In the case of the first pactum, that which relates to an
existing right, it will not always be enforceable; in particular, it will not bind the trustee in
insolvency or the liquidator of the creditor and prevent him from executing a valid ‘‘involuntary’’
cession of the right to a third party in the course of carrying out his duties as trustee or
liquidator. However, in the case of the second pactum, that which relates to a right which was
created ab initio as a non-transferable right, the pactum is valid and enforceable against the
world because the right is simply inherently incapable of being transferred by anyone; and a
cession of such a right contrary to the pactum will be putative, and of no force or effect, even if
it is a so-called ‘‘involuntary’’ cession; in other words, it will bind even a trustee in insolvency or
a liquidator of the creditor.’

15.1.1 Manner of realization
The trustee is obliged to realize the estate assets in the manner and upon the conditions
directed by creditors at the second meeting of creditors (s 82(1)). If creditors have not given
any directions by the final closing of the second meeting, the trustee must sell the property
by public auction or public tender (ibid).
15.1.2 Requirements where assets are sold by public auction/tender

Every sale of estate assets by public auction or public tender (whether directed by
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creditors or not) must be preceded by notice in the Gazette and any other notices required
by the Master (s 82(1)). The notices must accurately describe the assets in question (Muller
v De Wet NO & others 2001 (2) SA 489 (W) 494-5). In the absence of directions from
creditors as to the conditions of sale, the sale must be on such conditions as the Master may
direct (s 82(1)).
The Act sets out directions regarding the way in which a sale by public tender must be
conducted. Each tenderer must transmit his tender in duplicate in a sealed envelope to the
Master or a magistrate specified by the Master (s 82(2)). The Master or magistrate is obliged
to keep the tenders unopened until the expiry of the period for lodging of tenders (ibid). The
trustee (or his representative) has the right to be present when the opening takes place
(ibid). At this point, one of the duplicate tenders must be filed with the Master, and the other
must be transmitted to the trustee (ibid). After the opening of the tenders, no further offer
for the property in question may be considered and, unless the creditors or the Master have
directed otherwise, the trustee must either accept the best tender or reject all the tenders
and sell the property by public auction (s 82(5)).
15.1.3 Sale in contravention of Act

A sale of estate property in contravention of the provisions of s 82 is nevertheless valid if the
buyer is in good faith when he enters into the contract (s 82(8); Naude v Serfontein NO en
’n ander 1978 (1) SA 633 (O)). However, the trustee is liable to make good to the estate
twice the amount of any loss which the estate suffers as a result of his wrongful action (s 82
(8)). ‘Good faith’ here means absence of knowledge that the trustee has no authority or is
exceeding his authority (Mookrey v Smith NO & another 1989 (2) SA 707 (C)). A buyer must
produce evidence of his bona fides (Muller v De Wet NO & others (supra)). If the buyer knew
that the trustee had no authority, he is not entitled to the protection of s 82(8), even if he
was bona fide about every other aspect of the transaction and believed that the sale was in
the best interests of the estate (Mookrey v Smith NO & another (supra)).
15.1.4 Purchase of assets by trustee

The trustee may not acquire estate property himself unless the acquisition is confirmed by
the court (s 82(7)). The same prohibition applies to an auctioneer employed to sell the
property in question, and to the spouse, partner, employer, employee, or agent of either the
trustee or the auctioneer (ibid). Confirmation is required even if the person concerned buys,
not personally, but in a representative capacity, eg, as a trustee (cf Estate Jamodien v
Registrar of Deeds 1933 CPD 348). As a rule, the court will confirm a sale to the trustee if it
was concluded in an open and bona fide manner, for instance if it took place at a public
auction which was adequately advertised and the trustee’s bid was the highest obtainable (cf
In re Estate Hough 1919 CPD 160). In the absence of confirmation by the court, an
acquisition cannot be enforced (cf Estate Jamodien v Registrar of Deeds (supra)). But if a
person hit by the prohibition acquires estate property without obtaining confirmation, and
thereafter the property is acquired in good faith and for value by some other person, the
latter acquisition is valid (s 82(8)). However, the person who sold or otherwise disposed of
the property is liable to make good to the estate twice the amount of any loss sustained by
the estate as a result of his actions (ibid).
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15.1.5 Sale of assets before second meeting of creditors

In general, the trustee is obliged to await the directions of creditors given at the second
|meeting before selling the estate property. But if, at any time before this, he is satisfied that
movable or immovable property of the estate should be sold forthwith, he may make a
recommendation to this effect in writing to the Master, stating his reasons (s 80bis(1)). The
Master may authorize the sale of all or a portion of the property and give directions
regarding the manner and conditions of sale (s 80bis(2)). If the Master has had notice that
the property is subject to a right of preference, he cannot authorize the sale unless the
person entitled to the right of preference has given his consent or the trustee has
guaranteed the person concerned against loss resulting from the sale (ibid).

15.2.1 Goods subject to statutory lien
Goods subject to a statutory right of retention may, in certain cases, be sold out of hand by
the lien-holder. For example, the Commissioner for the South African Revenue Services may
sell property which he has impounded to secure an amount due under the Customs and
Excise Act 91 of 1964 if the debt is not paid within three months of its becoming due (s 114
(1) of that Act).
15.2.2 Rights acquired from State in terms of lease, licence, etc

In relation to any right acquired from the State in terms of a lease, licence, purchase, or
allotment of land, the trustee is required to act in accordance with the provisions of the
statute under which the right was acquired, in so far as they are applicable (s 82(1)).
15.2.3 Interest in close corporation

Special provision is made in the Close Corporations Act 69 of 1984 regarding the realization
of an insolvent’s interest in a close corporation. The trustee may sell the interest to the
corporation itself (where the insolvent is not the sole member), or to the members of the
corporation other than the insolvent member (not necessarily in proportion to their
respective interests), or to any other person who qualifies for membership of a close
corporation in terms of s 29 of the Act (s 34(1)). If the corporation has one or more
members apart from the insolvent, and the trustee wishes to sell to a third person, the
following rules apply (s 34(2)):
• The trustee must deliver to the corporation a written statement containing the name
and address of the proposed purchaser, as well as particulars of the purchase price and
the time and manner of payment (s 34(2)(a)).
• The corporation or the members then have the right to be substituted as purchasers of
the insolvent member’s interest at the price and on the terms set out in the trustee’s
written statement (s 34(2)(b)).
• If the corporation or the members fail to exercise this right by giving written notice to
the trustee within 28 days after receipt by the corporation of the trustee’s written
statement, the sale to the third person becomes effective and must be implemented (s
34(2)(b)-(c)).
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15.2.4 Movable property held as security

Section 83 lays down the procedure for the realization of movable property held as security.
Movable property is defined as every kind of property and every right or interest which is not
immovable property (s 2). It is held as security for these purposes if the creditor has a
preferent right over it by virtue of a special mortgage, landlord’s legal hypothec, pledge, or
right of retention (cf definition of ‘security’ in s 2). A special mortgage of movable property is
a notarial bond hypothecating specially described movable property in terms of s 1 of the
Security by Means of Movable Property Act 57 of 1993, or such a notarial mortgage bond
registered before 7 May 1993 under the Notarial Bonds (Natal) Act 18 of 1932 (cf definition
of ‘special mortgage’ in s 2 of the Insolvency Act). Hence, movable property subject to a
notarial bond not governed by either of the above Acts does not fall within the provisions of
s 83 and must be realized in the same way as an unencumbered asset.
(i) Notice that movable security held
A creditor who holds movable property as security for his claim is required to give written
notice of this fact before the second meeting of creditors to the Master and to the trustee (s
83(1)).
(ii) Realization of security by creditor
Where the property consists of a marketable security—ie, property which is ordinarily sold
though a stockbroker—or a bill of exchange or a financial instrument as defined in s 1 of the
Financial Markets Control Act 55 of 1989, the creditor, having given the required notice and
before the second meeting, may himself realize it (s 83(2); note that the Financial Markets
Control Act has been repealed: s 117 of the Securities Services Act 36 of 2004). A
marketable security may be sold through a stockbroker, and a financial instrument through a
financial instrument trader (s 83(8)(a)). A bill of exchange may be realized in any manner
approved of by the trustee or the Master (s 83(8)(b)).
In the case of all other movable property held as security, the trustee has the right to
take the property over at a value agreed upon between him and the creditor or (failing
agreement) at the full amount of the creditor’s claim (s 83(3)). The trustee must make his
election within seven days from receipt of the notice referred to above, or from the date of
his appointment, whichever is the later (ibid). Should the trustee not elect to take over the
property within the seven-day period, the creditor may, after allowing the trustee a
reasonable opportunity to inspect the property, but before the second meeting, sell the
property by public auction (s 83(3) and (8)(d)). However, the creditor cannot sell a right of
action without the approval of the trustee or the Master (s 83(8)(c)). The creditor must give
notice of the time and place of the proposed auction as directed by the trustee (s 83(8)(d)).
On giving directions to the creditor regarding notice of the sale, the trustee is required to
inform the other creditors in writing when and where the sale is to take place (s 83(9)).
After realizing the property as provided above, the creditor must forthwith pay the net
proceeds to the trustee (s 83(10)) and prove his claim, attaching to the affidavit in proof of
claim, a statement of the proceeds of the realization and the facts on which he relies for his
preference (s 83(5)). Thereafter, provided the claim is proved and admitted as envisaged by
s 44 and the trustee is satisfied that it was, in fact, secured by the property
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realized, the creditor is entitled to payment out of the proceeds (s 83(10)). If the trustee
disputes the preference, the creditor may either object to the trustee’s account when it is
lodged with the Master (see 17.6), or apply to court for an order compelling the trustee to
pay him forthwith (s 83(10)).
It is not a requirement for payment that the trustee be satisfied that the estate actually
owes the claim: the section requires simply proof of the claim in terms of s 44, which is no
more than formal proof and establishes merely that the creditor is prima facie entitled to
payment—see 9.2.3(vii)). Thus, the creditor may insist on receiving payment even where
the trustee doubts the validity of the claim and wants time to peruse and investigate it
(Grufin Finance Co (Pty) Ltd v Cohen & others NNO 1991 (2) SA 345 (W)). However, in such
a case, the creditor would be well advised to make provision for repayment in case the
trustee later establishes that the claim is not well founded.
Before making the payment, the trustee should obviously estimate the amount of the
costs which are payable out of the proceeds of the property (for these costs, see 16.3.1(i))
and then either withhold the required amount or make provision for it to be paid on demand.
(iii) Security not realized by creditor
If the creditor does not realize the property before the second meeting of creditors, he must,
as soon as possible after the commencement of the second meeting, deliver the property to
the trustee for the benefit of the insolvent estate (s 83(6)). Should he not do so within three
days of commencement of the meeting, the trustee may demand delivery of the property
and, failing compliance, direct the sheriff to attach and deliver the property to him (ibid).
The creditor does not lose the benefit of a right of retention or landlord’s hypothec by
delivering the property to the trustee, provided, when delivering the property, he informs
the trustee in writing of his rights and in due course proves a claim (s 47).
Once the trustee has received the property, the creditor may prove his claim, placing a
value on the property as required by s 44(4) (s 83(7); see 9.2.3(i)). The trustee may then,
if authorized by creditors, take over the property at the value placed on it by the creditor (s
83(11)). He must do so within three months of his appointment or from date of proof of the
claim, whichever is the later (ibid). If he does not take over the property within this period,
he must realize it for the benefit of all creditors whose claims are secured by it, according to
their respective rights (ibid).
(iv) Effect of non-compliance with requirements of Act
The fact that a creditor fails to comply with the procedural steps set out above does not
mean that he may refuse to hand over the property or its proceeds to the trustee (Venter
NO v Avfin (Pty) Ltd 1996 (1) SA 826 (A)). Nor does it mean that he is precluded from
proving a claim and having it paid by the insolvent estate (Standard Bank of South Africa Ltd
v Townsend & others 1997 (3) SA 41 (W)). In Venter’s case, the secured creditor (A)
realized its security (certain equipment) without complying with the formalities of s 83 —in
particular, it failed to give notice to the trustee that it held the property as security, did not
realize the property before the second meeting of creditors or in the manner provided for in
s 83(8) and (9), and did not prove its claim. The court rejected A’s contention that it was not
obliged to pay the proceeds of the sale
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to the liquidator in terms of s 83(10) because the realization had not taken place in terms of
s 83. Scott AJA explained (833-4):
‘At common law a creditor who held movable property as security for his claim could not realise it
himself. He had to deliver it to the trustee who had the right to administer it subject to the preference
of the creditor in relation to the proceeds derived from its realisation . . . Section 83, however,
permits a creditor who holds movable property as security for his claim, subject to certain limitations,
to retain possession of such property and to realise it himself. But once the property is realised he
must pay the proceeds to the trustee. The provisions in s 83(10) requiring him to do so are consistent
with the general scheme of the Act and, to the extent that the trustee is entitled to receive such
proceeds, with the common law. Viewed against this background it could not, I think, have been
intended that a creditor by his own non-compliance with the provisions of the Act could notionally
place himself in a more favourable position vis-à-vis the trustee and avoid his statutory obligation to
pay over the proceeds to the trustee. That the trustee may himself have failed earlier to recover the
property in terms of s 83(6) does not detract from the obvious anomaly which would result from such
a construction . . . In my view, therefore, the reference in [section 83(10)] to the preceding
provisions was intended to be no more than a general reference to the realisation of securities as
contemplated in the earlier subsections of s 83. It was not intended to import into s 83(10) a
requirement of compliance with those subsections as a precondition to the obligation of the creditor to
pay over the proceeds of his security to the trustee.’
15.2.5 Immovable property held as security

Unlike movable property held as security, which may be realized by the secured creditor
(see above), immovable property held as security must generally be realized by the trustee
in accordance with the directions of creditors given at the second meeting or, in the absence
of directions, by public auction or public tender. The trustee is entitled, in terms of the
common law, to take possession of the property before realizing it, even when it is the
subject of a right of retention (Roux en andere v Van Rensburg NO 1996 (4) SA 271 (A); Ex
parte Van der Merwe 2008 (6) SA 451 (W) 457). The holder of the right of retention who
gives up possession to the trustee retains the benefit of his security, provided he notifies the
trustee of this right when delivering the property and subsequently proves a claim (s 47).
Where immovable property subject to a mortgage bond is also subject to a further real
right, such as a fideicommissum, a usufruct, the right of a lessee under the
‘huurgaatvoorkoop’ rule, or the right of a sharecropper under a partiarian lease, the manner
in which the property must be realized is affected by the relative preference of the
competing rights:
• If the other real right is preferent to the mortgage bond, the property must be sold
subject to the preferent real right (Bell & Co v Ivins & Edmonds (1905) 26 NLR 449).
The bondholder must content himself with the net proceeds of the sale (whatever they
may be) and the bond must then be cancelled (ibid).
• If the bond ranks in preference to the other real right, the property may be sold free of
the other right, but only if it cannot be sold for a sum sufficient to satisfy the claim of
the bondholder (United Building Society Ltd & another NO v Du Plessis 1990 (3) SA 75
(W) 80). The procedure to be followed in this regard is the following (ibid; cf Lubbe v
Volkskas Bpk 1992 (3) SA 868 (A) 875, dealing with competing preferent claims in a
sale in execution):
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— The trustee should first attempt to sell the property subject to the other real
right.
— If the proceeds would be sufficient to satisfy the claim of the mortgagee, the
property must be sold subject to the other real right (United Building Society Ltd
& another NO v Du Plessis (supra)).
— If the highest offer obtained is insufficient to satisfy the mortgagee’s claim (or if it
is established by other means that an adequate price will not be achieved), the
holder of the other right has the opportunity of meeting the mortgagee’s claim. If
he does, the property is freed of the mortgage and it must thereafter be sold,
subject to the other real right, for the benefit of the creditors. If he does not
meet the mortgagee’s claim, the property must be realized free of the other real
right (see Van der Vyver v Estate Van der Vyver 1932 CPD 45—fideicommissum;
Timm v Kay & another 1954 (4) SA 585 (T)—lease; United Building Society Ltd &
another NO v Du Plessis (supra)—usufruct; Lubbe v Volkskas Bpk (supra)—right
of a sharecropper under a partiarian lease).
In Velcich & others v Land and Agricultural Bank of South Africa & others 1996 (1) SA 17
(A), the court acknowledged that the above procedure is the accepted procedure, but held
that non-compliance with it will not necessarily result in the invalidity of the sale. In casu,
the property in question, which was subject to a lease, had, from the outset, been
advertised free of the lease, and had been sold for far less than the outstanding mortgage
debt. The court was prepared to assume, in the particular circumstances of the case, that,
had the property been put up for sale subject to the lease, the highest bid would have been
even lower. The court held that the realization of the property was valid and that the lease
had, therefore, not survived the sale.
Instead of realizing the property, the trustee may, if authorized by creditors:
• abandon the property to the secured creditor as payment in kind to discharge his claim
against the estate (United Building Society Ltd & another NO v Du Plessis(supra) 81);
• take the property over at the value placed on it by the creditor when his claim was
proved (s 83(11)). The taking over must take place within three months from the date
of the trustee’s appointment or the date on which the claim is proved, whichever is the
later (ibid). If the trustee does not take it over within this period, he must realize it for
the benefit of all creditors whose claims are secured by it, according to their respective
rights (ibid). If two or more creditors have a special mortgage over the same property,
each is deemed to have valued only his preferent right in respect of the property, and
the trustee may take over only that right, not the property itself (ibid).

Section 21(1) empowers the trustee to deal with the property of the solvent spouse which
vests in him as if it were the property of the sequestrated estate. But under s 21(3), the
trustee may only realize property which ‘ostensibly belonged’ to the solvent spouse if he has
given her (or him) six weeks’ written notice of his intention to do so, unless the solvent
spouse is outside the Republic, or the trustee is unable to ascertain her address, or the court
has given leave to sell without notice. ‘Ostensibly belonged’ is not defined in the Act, but it
seems safe to assume that it refers to property registered in the name of the solvent spouse
or in her possession at the time of vesting (cf Van der Bergh v
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Insolvent Estate Van der Bergh 1931 CPD 1) and which has not yet been released by the
trustee because there is some doubt over the true ownership of the property. Notice of the
intended sale must also be published in the Gazette and in a newspaper circulating in the
district in which the solvent spouse resides or carries on business, and must invite all
separate creditors for value of the solvent spouse to prove their claims as provided in s 21
(5) (s 21(3)). The trustee does not, by giving notice of the sale, concede that the property in
question actually belongs to the solvent spouse, and the onus remains on her to establish
that the property falls within one of the categories mentioned in s 21(2) of the Act
(Constandinou v Lipkie NO 1958 (2) SA 122 (O)).
In terms of s 83(13), the provisions of s 83 are mutatis mutandis applicable to movable
property of the solvent spouse held as security by a creditor for value of that spouse.
Page 182
Chapter 16
Creditors’ claims and their ranking
Synopsis
Introduction
16.1.1 Concurrent creditors
16.1.2 Secured creditors
16.1.3 Preferent creditors
16.2.1 Special mortgage
16.2.2 Landlord’s legal hypothec
16.2.3 Pledge
16.2.4 Right of retention
16.2.5 Instalment agreement hypothec
16.3.1 Encumbered assets
16.3.2 Unencumbered assets (free residue)
Introduction
As explained in an earlier chapter, the main objective of insolvency law is to ensure that an
insolvent debtor’s assets are distributed among his creditors according to a predetermined
and fair order of preference. This chapter distinguishes among the different types of
creditors and explains the order in which and the extent to which each is entitled to be paid.

Three types of creditors are identified for ranking purposes: concurrent, secured, and
preferent.
16.1.1 Concurrent creditors

A concurrent creditor does not enjoy any advantage over other creditors of the insolvent.
Concurrent creditors are paid out of the free residue after any preferent creditors have been
|paid. The ‘free residue’ is defined as that portion of the estate which is not subject to any
right of preference by reason of any special mortgage, legal hypothec, pledge, or right of
retention (s 2). It is, in other words, the unencumbered part of the estate.
Concurrent creditors all rank equally: should the free residue be insufficient to meet their
claims (as it usually is), each receives an equal proportion of his claim by way of a dividend.
So, if the free residue amounts to R5 000 and A has a concurrent claim for
Page 183
R6 000 and B for R4 000, then A and B will each receive a dividend of 50 cents in the rand
(or one-half of their respective claims, ie, A—R3 000 and B—R2 000).
16.1.2 Secured creditors
A secured creditor is one who holds security for his claim in the form of a special mortgage,
landlord’s legal hypothec, pledge or right of retention (s 2 sv ‘security’). A brief description
of these forms of security is given below. The definition in s 2 contemplates real security
only: a creditor whose claim is secured by suretyship is not secured for purposes of the Act.
A secured creditor is entitled to be paid out of the proceeds of the property subject to the
security, after payment of certain expenses (see 16.3.1(i)) and any secured claim which
ranks before his (see 16.3.1(ii)). If the proceeds of the encumbered property are insufficient
to cover the secured creditor’s claim, he has a concurrent claim for the balance (Singer NO v
The Master & another 1996 (2) SA 133 (A)).
In terms of s 89(2), a secured creditor may, when proving his claim, choose to rely
exclusively on his security. In doing this, the creditor waives, by implication, any right to
participate in the free residue, and it is not open to him to argue later that he proved an
incorrect claim as envisaged in s 44(4). Having made his election, he cannot subsequently
undo it (Eastern Free State Cape Co-operative Ltd v The Master & others 1997 (3) SA 899
(E) 906-7; Absa Bank Ltd v The Master & others NNO 1998 (4) SA 15 (N) 25-31). However,
he may still proceed against a surety for the balance of his claim if realization of the security
does not yield enough to discharge the claim (BOE Bank Ltd v Bassage2006 (5) SA 33 (SCA)
37-9).
Section 89(2) requires the creditor to make an unequivocal election when submitting his
claim form. The section does not apply, for example, if the creditor states that he will elect
in the future whether to rely solely on the proceeds of his security, or that he elects to do
this if there is a danger of a contribution being payable, but not otherwise (Snyman v The
Master & others 2003 (1) SA 239 (T) 242). In Eastern Free State Co-operative Ltd v The
Master & others (supra), the creditor stated simply that ‘the creditor relies on its security for
payment of its claim’. It was held that these words, read in context, fell short of a statement
that the creditor would look solely to the proceeds of its security to satisfy its claim. Hence
the creditor was not precluded from sharing in the free residue for the satisfaction of the
balance of its claim.
The option of relying solely on the security is not as unfavourable as it might at first seem
since, as will appear in chapter 17, a secured creditor who relies solely on his security is less
likely to be called upon to contribute towards the costs of sequestration than one who elects
to preserve his right to share in the free residue (17.1.4(i)). The creditor must in each case
consider whether there is any chance of his security not realizing enough to pay his claim
and, if there is such a possibility, whether there is any prospect of creditors being made to
pay a contribution.
16.1.3 Preferent creditors

The term ‘preferent creditor’ may be used in a wide sense to refer to any creditor who is
entitled to receive payment before other creditors (cf the definition of ‘preference’ in s 2). A
secured creditor qualifies as a preferent creditor in this broad sense. But the term
Page 184
‘preferent creditor’ is usually reserved for a creditor whose claim is not secured but
nevertheless ranks above the claims of concurrent creditors.
The Insolvency Act creates preferences in regard to the following claims: funeral and
death-bed expenses (s 96); costs of sequestration (s 97); costs of execution (s 98); salary
or remuneration of employees (s 98A); statutory obligations (s 99); income tax (s 101);
claims of holders of general bonds and certain special bonds (s 102). These claims are
described in more detail in the discussion on ranking of claims (see 16.3.2).
A preferent creditor is entitled to payment out of the free residue of the estate, ie, that
portion which is not subject to any security interest. Between themselves, the various
categories of preferent creditor rank in a predetermined order of preference laid down by the
Act. Some of the preferences conferred by the Act are limited to maximum amounts (see
below). If a claim exceeds the statutory maximum, the creditor concerned has a concurrent
claim for the balance.

16.2.1 Special mortgage
The definition of ‘special mortgage’ in s 2 embraces the following:
• a mortgage bond hypothecating immovable property;
• a notarial bond hypothecating specially described movable property in terms of s 1 of
the Security by Means of Movable Property Act 57 of 1993—this Act came into
operation on 7 May 1993;
• a notarial bond hypothecating specially described movable property registered before 7
May 1993 in terms of s 1 of the Notarial Bonds (Natal) Act 18 of 1932. The latter Act
was superseded by the Security by Means of Movable Property Act.
The definition excludes any other bond hypothecating movable property; so a general
notarial bond does not qualify as a special mortgage. However, it does confer a preference in
respect of the free residue of the estate (see 16.3.2(viii)). A bond registered in terms of s 31
of the Ship Registration Act 58 of 1998 is deemed to be a special bond as defined in s
2 (s 31(5) of the Ship Registration Act 58 of 1998).
Section 88 lays down that a bond (other than a kustingbrief) gives no security or
preference if:
• the estate of the debtor was sequestrated within six months after the lodging of the
bond with the Registrar of Deeds for registration;
• the debt was incurred more than two months prior to the lodging of the bond; and
• the debt was not previously secured.
A conditional debt is incurred for these purposes when the condition is met (Joint Liquidators
of Glen Anil Development Corporation Ltd (in Liquidation) v Hill Samuel (SA) Ltd 1982 (1) SA
103 (A)).
Section 88 is obviously aimed at the creditor who only takes steps to obtain the protection
of a secured claim once the debtor’s insolvency is imminent; the section is not intended to
restrict the passing of bonds generally. Hence, the section does not apply if the debt had
already been secured and the bond was intended merely to replace that security. But the
section is applicable if only a portion of the debt, and not the whole debt, was previously
secured. In Volkskas Bpk v Meester van die Hooggeregshof en ’n ander 1987 (4) SA 192
(NC), a bond had been registered to
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secure an overdraft facility and, when the facility was increased, a second bond was
registered. As only part of the debt secured by the second bond had previously been
secured, that bond enjoyed no preference.
16.2.2 Landlord’s legal hypothec

A landlord who is owed rent has a hypothec over movable property brought on to the leased
premises for use by the tenant and over all crops raised by the tenant on the premises. On
insolvency, the landlord has a secured claim in respect of all movable assets owned by the
insolvent which are covered by the hypothec (s 85(2)). The claim is secured up to an
amount of:
• three months’ rent, if the rent is payable monthly or at shorter intervals;
• six months’ rent, if the rent is payable at intervals exceeding one month but not more
than three months;
• nine months’ rent, if the rent is payable at intervals exceeding three months but not
more than six months;
• 15 months’ rent, if the rent is payable at intervals exceeding six months (s 85(2)(a)
–(d)).
In respect of any excess, the landlord has a concurrent claim. The landlord obtains no
preference in relation to goods belonging to third parties that are subject to the hypothec
(Kleinsakeontwikkelingskorporasie Bpk v Santambank Bpk 1988 (3) SA 266 (C)).
16.2.3 Pledge
A valid pledge is constituted where there is delivery of movable property to a creditor on the
understanding that it will be retained by him until his claim has been satisfied. Movable
incorporeal property is pledged by means of a cession in securitatemdebiti (Bank of Lisbon
and South Africa Ltd v The Master & others 1987 (1) SA 276 (A)). The holder of a general
notarial bond over movables who obtains possession of the movables pursuant to a court
order authorizing him to exercise his rights under a perfection clause is in the position of a
pledgee (Development Bank of Southern Africa Ltd v Van Rensburg & others NNO 2002 (5)
SA 425 (SCA) 436-7; Contract Forwarding (Pty) Ltd v Chesterfin (Pty) Ltd & others 2003 (2)
SA 253 (SCA) 258-60; Grobler v Oosthuizen 2009 (5) SA 500 (SCA) 506-8).
16.2.4 Right of retention

Broadly speaking, a party has a right of retention (or lien) over specific property belonging
to another if he (the first party) has expended labour or incurred expenses in respect of the
property. There are two types of liens: enrichment liens, and debtor and creditor liens.
Enrichment liens are so called because they are based on unjustified enrichment. There
are two kinds: salvage liens and improvement liens. The holder of an enrichment lien may
retain the property until compensated for his expenses and labour, although he cannot insist
on payment of more than the amount by which the owner has actually been enriched. The
lessee of urban property enjoys this lien for necessary and useful improvements to the
immovable property (Business Aviation Corporation (Pty) Ltd & another v Rand Airport
Holdings (Pty) Ltd 2006 (6) SA 605 (SCA)). As a rule, for a party to have a lien he must be
in possession of the property. However, this does not
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apply to a lien arising in terms of the Admiralty Jurisdiction Regulation Act 105 of 1983
(Euromarine International of Mauren v The Ship Berg & others 1984 (4) SA 647 (N) 652).
In contrast to enrichment liens, debtor and creditor liens are based on contract. A creditor
who holds a debtor and creditor lien is entitled to retain the property as against the debtor
until the latter has paid him the amount due in terms of the contract.
16.2.5 Instalment agreement hypothec

If movable property has been delivered to a debtor under an instalment agreement, the
seller acquires, on sequestration, a hypothec over the property which secures his claim for
the balance outstanding under the contract (s 84(1); and see 7.2.8).

The Act ‘ranks’ the various claims against the insolvent estate, that is to say, lays down the
order in which they must be paid and to what extent each must be paid. The estate, for
purposes of distribution, consists of the proceeds of both the encumbered and
unencumbered assets. The proceeds of each encumbered asset are applied to pay the claim
(or claims) secured by that asset. Any balance remaining after payment of secured creditors
is combined with the proceeds of the unencumbered assets to pay the remaining creditors.
These moneys (known as the ‘free residue’) are applied first to satisfy preferent claims (in
their order of preference) and thereafter to pay the claims of concurrent creditors. Where
two or more preferent claims rank equally and the amount available is insufficient to satisfy
them in full, they abate in equal proportions. Where the balance of the free residue
remaining after settling all preferent claims is insufficient to pay all concurrent creditors in
full, the claims of those creditors are paid proportionately. In the rare case of a balance
remaining after all concurrent claims have been paid in full, post-sequestration interest is
payable on those claims at a prescribed rate.
Distribution of the proceeds of the encumbered and unencumbered assets (free residue)
takes place as explained below.
16.3.1 Encumbered assets

(i) Initial costs
In terms of s 89(1), the proceeds of each encumbered asset must be applied to the payment
of certain costs before payment of the claim(s) secured by the asset (the creditors to whom
these costs are owed cannot recover them by proving claims against the estate: Standard
Bank of South Africa Ltd v Townsend & others 1997 (3) SA 41 (W) 58). The costs are the
following:
• the costs of maintaining, conserving, and realizing the asset in question, eg, the costs
of a night-watchman, auctioneer’s commission, a sectional title levy (s 15B(3)(a)(i)(aa)
of the Sectional Titles Act 95 of 1986; Nel NO v Body Corporate of the Seaways
Building & another 1996 (1) SA 131 (A); Barnard NO v Regspersoon van Aminie en ’n
ander 2001 (3) SA 973 (SCA)); and water, sewerage and other charges paid to a local
authority to obtain a clearance certificate for registration of transfer (Eastern
Metropolitan Substructure of the Greater Johannesburg Transitional Council v Venter
NO 2001 (1) SA 360 (SCA) 370–1);
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• the trustee’s remuneration in respect of the asset (for the rate of remuneration, see
the tariff in the Second Schedule to the Act);
• a proportionate share of the costs incurred by the trustee in giving security;
• a proportionate share of the Master’s fees (for these fees, see the Third Schedule to
the Act);
• if the asset is immovable property, any tax which is, or will become, due on it:
— for a period not exceeding two years immediately preceding the date of
sequestration; and
— for the period from the date of sequestration to the date of transfer of the
property;
— together with any interest or penalty which may be due on the tax.
In City of Johannesburg v Kaplan NO & another 2006 (5) SA 10 (SCA) 19-20, it was
held that in so far as debts due to a municipality for rates and services are not taxes
for purposes of s 89, they are a charge on the property and enjoy preference over a
mortgage bond on the property by virtue of s 118(3) of the Local Government:
Municipal Systems Act 32 of 2000. Furthermore, the period of this preference is limited
only by prescription.
Where there are funeral and death-bed expenses and the free residue is insufficient to
defray them, the deficiency must be paid out of the secured assets in proportion to their
value (s 96(4)). So, if the deficiency is R600 and there are two encumbered assets, one
realizing R90 000 and the other R30 000, R450 is chargeable to the proceeds of the former
asset, and R150 to the proceeds of the latter.
(ii) Secured claims
After payment of the above costs, the balance of the proceeds of the encumbered asset,
including any interest earned on the price obtained for the asset (Singer NO v The Master &
another 1996 (2) SA 133 (A)), must be applied to the payment of all claims secured by the
asset, in the proper order of preference (s 95(1)).
Interest due on a claim for a period not exceeding two years immediately preceding the
date of sequestration is secured as if it were part of the capital sum (s 89(3)). Interest from
date of sequestration to date of payment is also secured (s 95(1)). The applicable rate is
eight per cent per annum unless the claim bears a higher rate in terms of a stipulation in
writing, in which event interest must be calculated at the rate stipulated (s 95(1) read with s
103(2)). The eight per cent provided for by the Act is simple, not compound, interest
(Boland Bank Ltd v The Master & another 1991 (3) SA 387 (A)).
Secured claims rank among themselves in the following order:
Immovable property
• enrichment lien;
• special mortgage bond(s) (and contract recorded in terms of the Alienation of Land Act
(see 7.2.7(ii)) in the order in which they were registered or recorded;
• debtor and creditor lien (D Glaser & Sons (Pty) Ltd v The Master & another NO 1979
(4) SA 780 (C); Land- en Landboubank van Suid-Afrika v Cogmanskloof
Besproeiingsraad 1992 (1) SA 217 (A) 244).
Movable property
• enrichment lien;
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• pledge (including a statutory pledge, such as that created by s 30 of the Land and
Agricultural Development Bank Act 15 of 2002);
• special notarial bonds in the order in which they were registered;
• debtor and creditor lien;
• instalment agreement hypothec;
• landlord’s hypothec.
Not all of these security interests can exist simultaneously over the same movable asset:
• A lien and a pledge cannot exist together because they both require possession of the
property by the creditor in order to exist.
• A landlord’s hypothec cannot exist over the property if
— the property is hypothecated by a notarial bond governed by the Security by
Means of Movable Property Act 57 of 1993, unless the hypothec was perfected by
attachment before the bond was registered; or
— the property is subject to an instalment agreement as defined in s 1 of the
National Credit Act 34 of 2005 (s 2 of the Security by Means of Movable Property
Act 57 of 1993).
As mentioned above (16.1.2), should the proceeds of the security be insufficient to cover the
sum payable to the secured creditor, he is entitled to rank as a concurrent creditor for the
balance unless he has chosen to rely solely on the proceeds of his security.
16.3.2 Unencumbered assets (free residue)

The trustee is obliged to distribute the free residue to the creditors in the order of preference
laid down in ss 95 to 104 of the Insolvency Act. The trustee and the insolvent cannot validly
agree to depart from this scheme of distribution. In Commissioner, South African Revenue
Service v Stand Two Nine Nought Wynberg (Pty) Ltd & others 2005 (5) SA 583 (SCA), it was
argued that an insolvent may arrange with his trustee or liquidator to pay in full the claim of
a particular estate creditor. The court pointed out (586-7) that giving effect to such an
agreement would enable the parties to subvert the scheme of distribution laid down by the
Act. Whatever agreement the trustee might have concluded had to yield to his statutory
duty to recover and reduce into possession all the insolvent’s assets and distribute the
proceeds according to law.
(i) Funeral expenses
The free residue must be applied, in the first place, in defraying the expenses of:
• the funeral of the insolvent, if he died before the trustee’s first account was submitted
to the Master; and
• the funeral of the insolvent’s wife or minor child, if these expenses were incurred within
three months immediately prior to sequestration (s 96(1)).
Funeral expenses enjoy preference to a maximum amount of R300 (ibid).
(ii) Death-bed expenses
After payment of funeral expenses (not exceeding R300), any balance of free residue must
be applied to payment of the death-bed expenses of:
• the insolvent, if these expenses were incurred before the first account was submitted
to the Master; and
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• the insolvent’s wife or minor child, if these expenses were incurred within three months
immediately before sequestration.
Again, the preference does not exceed the sum of R300 in all (s 96(2)). ‘Death-bed
expenses’ means expenses incurred for medical attendance, nursing, and medical
necessaries (s 96(3)). The claims in respect of death-bed expenses rank paripassu and abate
in equal proportions, if necessary (ibid).
(iii) Costs of sequestration
Thereafter, any balance of the free residue must be applied in defraying the costs of
sequestration (s 97(1)). The costs of sequestration, in the order in which they must be paid,
are:
• sheriff’s charges incurred since sequestration (eg, for attaching and making an
inventory of the estate assets);
• Master’s fees; and
• miscellaneous charges (s 97(2)) comprising:
— the taxed costs of sequestration (including the costs of opposition to the
application, if the court so orders: see 3.4);
— the fee allowed by the Master to a person who assisted the insolvent or his
spouse in drawing up a statement of affairs after sequestration (see 6.1.2 and
14.1);
— the remuneration of a curator bonis(if any);
— the remuneration of the trustee (and presumably also the provisional trustee);
— all other costs of administration and liquidation including
• costs incurred by the trustee in giving security for the proper performance
of his duties; completing executory contracts; maintaining, conserving and
realizing unencumbered assets; and litigating in connection with the estate;
•
expenses incurred by the Master or presiding officer at a meeting of
creditors in protecting the estate assets or observing the provisions of the
Act;
• rent owed for any period after sequestration;
• the salary, wages, or fees of any person engaged by the curator bonisor
trustee in connection with the administration of the estate.
The above miscellaneous charges rank paripassu among themselves and must abate in equal
proportions, if necessary (ibid).
(iv) Costs of execution
If any free residue remains after the above-mentioned costs have been paid, it must be
applied in defraying:
• the taxed fees of the sheriff in connection with any execution upon the insolvent’s
property and the proceedings leading to that execution; and
• any other taxed costs in those proceedings, not exceeding R50 (s 98(1)).
The amount paid must not exceed the proceeds of the property in question if the property
was under attachment or if the proceeds of the sale were in the hands of the execution
officer at the date of sequestration (ibid). The attachment of property in execution does not
confer any preference on the judgment creditor other than that provided for here (s 98(2)).
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(v) Salary or remuneration of employees

Any balance of the free residue is then applied to paying the following:
• any salary or wages due to an employee, for a period not exceeding three months (s
98A(1)(a)(i)), to a maximum of R12 000;
• any payment in respect of any period of leave or holiday due to an employee which has
accrued as a result of his being employed by the insolvent in the year of insolvency or
the preceding year, whether or not payment is due at the date of sequestration (s 98A
(1)(a)(ii)), to a maximum of R4 000;
• any payment due in respect of any other form of paid absence for a period not
exceeding three months prior to date of sequestration (s 98A(1)(a)(iii)), to a maximum
of R4 000;
• any severance or retrenchment pay due to the employee in terms of any law,
agreement, contract, wage-regulating measure, or as a result of termination in terms
of s 38 (s 98A(1)(a)(iv)), to a maximum of R12 000;
• any contributions which were, immediately prior to sequestration, owing by the
insolvent in his capacity as employer (including contributions payable in respect of any
of the employer’s employees) to any pension, provident, medical aid, sick pay, holiday,
unemployment or training scheme or fund, or to any similar scheme or fund (s 98A(1)
(b)), to a maximum of R12 000 in respect of each scheme or fund (not each
employee). ‘Unemployment fund’ for these purposes does not include the
Unemployment Insurance Fund referred to in s 6 of the Unemployment Insurance Act
30 of 1966. (This 1966 statute was repealed (s 70 of the Unemployment Insurance Act
63 of 2001), and the assets, liabilities, rights and obligations of the Unemployment
Insurance Fund were transferred to the fund of the same name (para 3 of Schedule 1,
read with s 4).)
The maximum amounts referred to above are determined by the Minister in terms of s 98A
(2)(a) (GN R865 in GG 21519 dd 1/9/00). This section empowers the Minister (after giving
the prescribed notice to interested parties: s 98A(2)(d)) to determine maximum amounts
payable under s 98A(1) so as to ensure that the balance of the free residue is applied in an
equitable manner. The Minister may also, from time to time, change these maximum
amounts in order to take into account subsequent fluctuations in the value of money (s 98A
(2)(b)).
An employee is entitled to be paid his wages, leave pay, and other payments mentioned in
s 98A(1)(a) without proving a claim under s 44 (s 98A(3)). But the trustee may require the
employee to submit an affidavit in support of his claim (ibid).
The claim in respect of salary or wages ranks before all the other claims mentioned in s
98A(1) (s 98A(4)(a)), and the claims for leave pay, other paid absence, and severance or
retrenchment pay, are preferred to the claims for contributions to the various funds or
schemes (s 98A(4)(b)). The claims for leave pay, other paid absence, and severance or
retrenchment pay rank equally and abate in equal proportions, if necessary (s 98A(4)(b)).
The same applies to the various contributions claims (s 98A(4)(c)).
The Minister may, after consultation with the National Economic, Development and Labour
Council (Nedlac), by notice in the Gazette, exclude categories of employees, schemes, or
funds from the operation of s 98A on certain specified grounds (s 98A(6)). The Minister has
exercised his powers under this provision and excluded directors of companies and members
of close corporations (GN R865 in GG 21519 dated 1/9/00). This exclusion means that
company directors and close
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corporation members have none of the preferent claims under section 98A(1), but will rank
as concurrent creditors. Ordinary workers will, thus, stand a better chance of receiving
payment of their claims against the company or corporation.
(vi) Statutory obligations
Thereafter, the balance (if any) of the free residue must be applied in defraying certain
statutory obligations owed by the insolvent prior to the sequestration of his estate (s 99(1)).
The obligations are, broadly, the following:
• any amount due to the Compensation Commissioner in terms of the Compensation for
Occupational Injuries and Diseases Act 130 of 1993;
• any tax (including interest thereon up to the date of sequestration) which the insolvent
deducted or withheld:
— from an employee’s remuneration;
— from royalties paid to a non-resident;
— from interest paid to a non-resident;
— from a benefit under an insurance policy;
— as agent for the Commissioner for the South African Revenue Service, from a
pension, salary, wage, or other remuneration, but did not pay to the
Commissioner for the South African Revenue Service (penalties chargeable under
the Income Tax Act 58 of 1962 do not receive preference);
• any amount (together with interest) due to the Mines and Works Compensation Fund in
terms of the Occupational Diseases in Mines and Works Act 78 of 1973 (ie, where the
insolvent is or was the owner of a mine);
• any customs, excise, sales duty, interest, penalty, or fine due in terms of the Customs
and Excise Act 91 of 1964;
• any amount provided to the insolvent by the State from the National Supplies
Procurement Fund for a purpose contemplated in the National Supplies Procurement
Act 89 of 1970;
• any value-added tax, interest, fine or penalty due by the insolvent in terms of the
Value-Added Tax Act 89 of 1991;
• any contribution, penalty or other payment owed by the insolvent in his capacity as
employer to the Unemployment Insurance Fund in terms of the Unemployment
Insurance Contributions Act 4 of 2002.
The above claims rank paripassu and must abate in equal proportions, if necessary (s 99
(2)).
(vii) Income tax
After all the above costs and claims have been paid, the balance of the free residue is
applied in paying any tax on income or profit and interest on tax for which the insolvent is
personally liable by statute in respect of any period prior to the date of sequestration (s
101).
(viii) Claim secured by general and special bond
Next to be paid are creditors who hold general bonds and also creditors who hold special
bonds over movable property, registered before 7 May 1993, other than special bonds
registered in Natal (s 102). The preference of this type of creditor is not limited to the
proceeds of the bonded property, but extends to the entire free residue (s 1(3) of the
Security by Means of Movable Property Act 1993).
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(ix) Claims of concurrent creditors

Any balance of the free residue remaining after payment of all the above falls to be
distributed among:
• concurrent creditors (s 103(1)(a));
• secured creditors whose claims exceed the sums payable to them from the proceeds of
their respective securities and who did not state in their affidavits submitted in proof of
their claims that they relied solely on the proceeds of their respective securities for the
satisfaction of their claims (ss 83(12) and s 89(2); see 16.1.2); and
• preferent creditors for the non-preferent balance of their claims (s 103(1)(a)).
The balance must be distributed among the various creditors in proportion to the amounts
owing to each of them (s 103(1)(a)). A creditor who is owed more than one debt is not
entitled to apportion the payment he receives according to common-law principles governing
the appropriation of payments (Douglas Green Bellingham v Green t/a Greens Bottle
Recyclers 1998 (1) SA 367 (SCA) 372).
If there is any amount remaining after paying concurrent claims, it must be applied to the
payment of interest on such claims, from the date of sequestration to the date of payment,
in proportion to the amount of each claim (s 103(1)(b)). The interest must be calculated at
the rate of eight per cent per annum or, if the claim bears a higher rate of interest by reason
of a stipulation in writing, then at such higher rate (s 103(2)). The interest provided for in s
103(2) is simple, not compound, interest (Boland Bank Ltd v The Master & another 1991 (3)
SA 387 (A)). However, since the full excess of the claim of a secured creditor, including
interest, ranks under s 103(1)(a) (Singer NO v The Master & another 1996 (2) SA 133 (A)),
a secured creditor may effectively receive compound interest.
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Chapter 17
The estate accounts and the distribution of the estate
Synopsis
Introduction
17.1.1 Liquidation account
17.1.2 Trading account
17.1.3 Plan of distribution
17.1.4 Plan of contribution
17.1.5 Combined plan of distribution and contribution
17.2.1 Normal period
17.2.2 Shorter period
17.2.3 Extended period
17.4 Examination of accounts by Master
17.8.1 Payment of dividends
17.8.2 Collection of contributions
Introduction
Having realized the assets, the trustee’s task is to draw up the estate accounts and, once
they have been confirmed, to distribute the money available as required by the Act (or to
collect a contribution towards costs if the proceeds of the assets prove to be insufficient).

The trustee must frame a liquidation account, setting out the amounts received and
expended by him, and a plan of distribution of the proceeds of the estate available for
payment to creditors (s 91). If the proceeds are insufficient to cover the costs of
sequestration, the trustee must frame a plan of contribution, apportioning the liability for the
deficiency among creditors who are liable to contribute (ibid). In practice, the trustee
invariably also draws up a bank reconciliation statement, to indicate what expenses and
claims are still to be paid from the estate bank account, and to facilitate accurate provision
for future payments. Where the trustee has carried on business on behalf of the estate, he
must prepare, in addition to a liquidation account, a trading account setting out various
details relating to the business (s 93).
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|
Each of the required accounts is described below and examples and explanatory notes are
provided in Appendix 2.
The trustee may not have succeeded in recovering or realizing all the known assets of the
estate by the time he is called upon to lodge a liquidation and distribution account, and
additional assets may only come to light (eg, through the process of investigation or
fortuitously) after he has filed an account and a distribution has been made. In such cases,
the trustee must file a second liquidation and distribution account and, if necessary, further
accounts after that. It follows that, merely because the trustee calls a particular liquidation
and distribution account a ‘final’ account, does not mean that it is necessarily the last
account to be filed in the estate. In fact, until rehabilitation of the insolvent, there is no way
of being certain that the estate property has been fully dealt with (Cools v The Master &
others 1998 (4) SA 212 (C) 221).
17.1.1 Liquidation account

(i) Contents
The liquidation account must contain an accurate record of all moneys received or disbursed
by the trustee other than in the course of a business carried on for the estate (s 92(1)).
(Money received or spent in the course of a business must be reflected in a trading
account—see below.) The amount and date of each receipt or disbursement must be set
forth, as well as sufficient particulars to explain its nature (s 92(2)). The account must be
accompanied by the trustee’s bank pass book and by vouchers in support of the receipts and
disbursements (s 92(3)). If the account is not the final liquidation account it must set forth
the following:
• all property still unrealized;
• all outstanding debts due to the estate; and
• the reasons why that property has not been realized or those debts have not been
collected (s 92(4)).
Where the estate of a partnership is under sequestration, separate accounts must be framed
in the estate of the partnership and in the estates of each partner whose estate is under
sequestration (s 92(5)). The trustee must sign every account which he submits to the Master
and must verify by affidavit that the account is a full and true account of his administration
of the estate and that, as far as he is aware, all the assets of the estate have been disclosed
in the account (s 107).
(ii) Division into encumbered asset section and free residue section
In practice, the liquidation account is divided into two sections—the encumbered asset
section and the free residue section. The former deals with the assets which are held as
security, ie, subject to a special mortgage, legal hypothec, pledge, or right of retention. It
sets out the proceeds of each asset (or group of assets) and the claims and other charges to
which that asset (or group) is subject. It is common practice to place under a separate
heading, or draw up a separate account for, each encumbered asset (or group of assets) and
the items chargeable against it. The free residue section of the liquidation account (often
called the ‘Free Residue Account’) reflects the proceeds of the assets which are not held as
security—in other words, the free residue—and the claims and other charges paid from this
portion of the estate.
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17.1.2 Trading account

Section 93 provides that, if the trustee has carried on any business on behalf of the estate,
he must submit, in addition to the liquidation account, a trading account containing the
following information and no other:
• a record of the value of the stock on hand on the date of sequestration;
• a record of the value of the stock on hand on the date up to which the account is
drawn up;
• the daily totals of receipts and payments in connection with the business;
• the result of his conduct of the business.
17.1.3 Plan of distribution

As the name suggests, a plan of distribution shows how the proceeds of the assets in the
estate are distributed. The Act requires a plan of distribution to show in parallel columns
under separate headings the following:
• every claim, or the part of every claim, which is secured or otherwise preferent;
• every claim, or the part of every claim, which is unsecured and otherwise non-
preferent;
• the amount awarded under that plan and every previous plan of distribution to every
creditor of the estate; and
• the deficiency in respect of each claim (s 94).
In practice, it is customary (although there are small variations) to have separate parallel
columns for the following information:
• the number of the claim, as numbered by the presiding officer at the meeting at which
the claim was proved;
• the name of the creditor;
• the nature of the claim;
• the total amount of claim;
• the secured or preferent portion, if any, of the claim (this may be the full claim);
• the concurrent portion, if any, of the claim (this may be the whole claim);
• the dividend awarded in respect of the claim;
• the dividend awarded under any previous account(s);
• the deficiency in respect of the claim (if any).
At the end of each column, the sum of the amounts in that column is given.
17.1.4 Plan of contribution

(i) Liability to contribute
If the proceeds of a secured asset are insufficient to pay the initial costs mentioned above
(16.3.1(i)), the deficiency must be paid by the creditors whose claims are secured by the
asset, each being liable for a pro rata amount (s 89(1)). Where there are insufficient funds
in the free residue to meet the costs of sequestration referred to in s 97 (see 16.3.2(iii)), the
shortfall must be made good by concurrent creditors and by secured creditors who would
have been entitled to share in the free residue, if there had been any (see 16.1.2 and 16.3.2
(ix) regarding which secured creditors would have been so entitled) (ss 106, 83(12) and 89
(2)). Concurrent creditors must contribute in proportion to the amounts of their respective
claims and secured creditors in proportion to the
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amounts by which they would have ranked against the free residue (s 106). If no concurrent
creditors have proved claims and there are no secured creditors who would have been
entitled to participate in the free residue, then the secured creditors who would not have
ranked upon the free residue must pay the deficiency, each in proportion to the amount of
his claim (s 106(a)). This applies equally where there is only one such creditor (Snyman v
The Master & others 2003 (1) SA 239 (T) 243-4). Creditors who have withdrawn their claims
are only liable to contribute to costs incurred up to the date of withdrawal (s 106(b)). The
sequestrating creditor is liable to contribute, whether or not he has proved his claim (s 14
(3)). Unsecured preferent creditors are not liable to contribute to any deficiency, even if they
are the only creditors who have proved their claims against the estate
(Ongevallekommissaris v Die Meester 1989 (4) SA 69 (T)).
(ii) Form of plan of contribution
Section 105 provides that a plan of contribution must show in parallel columns:
• each claim in respect of which the claiming creditor is liable to contribute; and
• the amount which he is liable to contribute.
In practice, separate parallel columns are usually created for the following details:
• the number of the claim;
• the name of the creditor;
• the amount of the claim;
• the amount in respect of which the creditor is liable to contribute (this will be less than
the claim in the case of a secured creditor whose security does not yield enough to pay
the full amount due, and who does not rely solely on the security to obtain satisfaction
of his claim);
• the amount of the contribution.
17.1.5 Combined plan of distribution and contribution

Not infrequently, a distribution is made to secured creditors and a contribution levied against
the same or other creditors, in which case it is appropriate for the trustee to draft both a
plan of distribution and a plan of contribution or a combined plan of distribution and
contribution.

17.2.1 Normal period
The trustee has a period of six months after his appointment in which to draw up the
required accounts and submit them to the Master (s 91). If he cannot submit a final
liquidation account, he must submit a periodical one every six months (referred to as the
‘First’, ‘Second’, etc liquidation account) until he is able to file a final account (s 92(4)).
17.2.2 Shorter period

If the trustee has funds on hand which, in the opinion of the Master, should be distributed
among creditors, the Master may direct the trustee in writing to submit an account, even
though the prescribed period has not yet lapsed (s 110(1)).
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17.2.3 Extended period

If the trustee is unable to submit an account within the prescribed period, he must apply to
the Master for an extension of time (s 109(1)). The application must be made before the
prescribed period has elapsed or within such further period as the Master may allow (ibid).
The trustee must submit to the Master an affidavit stating the following:
• the reasons for his inability to submit the account concerned;
• any details required by the Master concerning transactions, affairs, and matters of
importance relating to the insolvent or the estate;
• the amount available for payment to creditors, or if there is no or insufficient free
residue, the deficiency the creditors are liable to make good (s 109(1)(a)).
The trustee must also send a copy of this affidavit by registered post to every creditor who
has proved a claim against the estate (s 109(1)(b)). If the Master refuses to give an
extension, the trustee may apply to court for an order extending the period (s 109(3)).
If the trustee falls to submit an account in time, the Master or any person having an interest
in the estate, may serve a notice on the trustee requiring him:
• to submit the account concerned to the Master; or
• if he is unable to submit the account, to submit the affidavit contemplated in s 109(1)
(see above) to the Master and send a copy to each proved creditor, within 14 days
from the date of the notice (s 109(2)).
The Master may extend the latter period (ibid). If he refuses to do so, the trustee may apply
to court for an extension (s 109(3)).
If the trustee fails to:
• submit an account as and when required;
• submit any vouchers in support of his account; or
• comply with any reasonable demand of the Master for information or proof regarding
the account;
then the Master, or any other interested person, may apply to court for an order directing
the trustee to rectify his default (s 116bis(1)). The trustee must be given 14 days’ notice of
the intended application (ibid). If costs are awarded against the trustee, he must pay them
de bonis propriis (ie, out of his own pocket) unless otherwise ordered by the court (s 116bis
(2)).
17.4 Examination of accounts by master

The Master is required to examine the draft accounts submitted by the trustee. He must
study the relevant supporting documents and correlate them with the accounts. If the
trustee has disputed any claims against the estate, the Master must ensure that the
procedure prescribed in s 45(3) for dealing with disputed claims has been observed. The
Master is under a duty to apply his mind honestly to the matter and, if he fails to do this, his
subsequent confirmation of the account will be invalid (Wilkens v Potgieter NO & another
1996 (4) SA 936 (T) 940).
Page 198

After the accounts have been examined and approved by the Master, the trustee must give
notice that they will lie for inspection at the Master’s Office and the office of the magistrate
in the district where the insolvent resided or carried on business before sequestration (if not
the same district as the Master’s Office) (s 108(1)-(2)). The districts of Wynberg,
Simonstown, or Bellville are, for purposes of the Act, considered to fall under the Master in
Cape Town (s 108(1)). The trustee must transmit a duplicate set of accounts to the relevant
magistrate (s 108(1)). Notice must be given in the Gazette and in one Afrikaans and one
English newspaper circulating in the district where the insolvent resided or carried on
business, in the same manner as notice of a second meeting of creditors is given (ss 108(2)
and 40(3); and see also 9.1.2). The accounts must be open for inspection by creditors at the
office of the Master and that of the magistrate (where applicable) for a period of 14 days
from the date of publication in the Gazette (s 108(3)). A magistrate who has received a
trustee’s account must:
• put up a notice stating that he has received it and when it will lie open for inspection (s
108(4));
• when the period for which the account had to lie for inspection has expired, endorse on
the account a certificate to the effect that it has duly lain for inspection and then
forward the account to the Master (s 108(5)).
The insolvent or any person interested in the estate may, at any time before confirmation of
the accounts (as to which see below), lay before the Master a written objection to the
accounts, stating the reasons for his objection (s 111(1)). The Master must consider whether
the objection is valid or not and may then direct the trustee to amend the account or give
such other directions as he deems fit (s 111(2)). If any person feels aggrieved at the
direction given by the Master, or at his refusal to sustain an objection, he may apply to court
for an order setting aside the Master’s decision (s 111(2)(a)). If the direction of the Master
affects a person who has not lodged an objection with the Master, the accounts must again
be advertised and lie open for inspection (s 111(2)(b)).
The Master may, of his own accord, direct that an account be amended if he is of the
opinion that it is incorrect or contains an improper charge, or that the trustee acted mala
fide, negligently, or unreasonably, in incurring costs included in the account (s 111(2)).

If the accounts have duly lain for inspection, and:
• no objection has been lodged; or
• an objection has been lodged but withdrawn or not sustained and no application has
been made to court to set aside the Master’s decision; or
• the accounts have been amended after an objection was sustained and have again
been advertised and lain for inspection;
the Master must confirm the accounts (s 112).
The Master’s confirmation of the accounts is final (provided he has followed the proper
procedure and honestly applied his mind to the matter: Gilbey Distillers & Vintners (Pty) Ltd
& others v Morris NO & another 1991 (1) SA 648 (A) 656), and
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the accounts may not be reopened, except with permission of the court (s 112; First
National Bank of SA Ltd v Cooper NO & another 1998 (3) SA 894 (W) 897). The court takes
a strict approach to these applications, although the grounds are not limited to fraud or
reasonable error (Morris and Strydom NNO v The Master & others 1994 (2) SA 731 (N);
FirstRand Bank Ltd & others v Magistrate, Germiston & others [2004] 2 All SA 629 (W) 639).
The court cannot grant permission once a dividend has been paid under the accounts (s
112), not even if the confirmation of the accounts was based on an error such as the
Master’s ignorance of material facts (Gilbey Distillers & Vintners (Pty) Ltd & others v Morris
NO (supra) 656-8; FirstRand Bank Ltd & others v Magistrate, Germiston & others (supra)
638).
The finality of the account, however, does not preclude an action against the trustee in his
personal capacity if he drew up the account fraudulently (Kommissaris van Binnelandse
Inkomste en ’n ander v Willers en andere 1994 (3) SA 283 (A)).

As soon as the trustee’s accounts have been confirmed, he must give notice of this in the
prescribed form in the Gazette and then distribute the estate and collect from each creditor
liable to contribute the amount for which he is liable (s 113(1) and (3)).
17.8.1 Payment of dividends

The trustee must lodge with the Master the creditors’ receipts or paid cheques as proof of
payment of dividends (s 114(1)). Dividends that have not been paid out within two months
from the date of confirmation of the accounts must be paid into the Guardian’s Fund for the
account of the creditor (s 114(2)).
17.8.2 Collection of contributions

If a contribution is to be levied against creditors, the trustee must state this fact in the
notice of confirmation of the accounts published in the Gazette, and specify fully in the
notice the address at which payment of contributions is to be made (s 113(1)). The trustee
must also deliver or send by registered post a copy of the notice to every creditor liable to
contribute (ss 113(2) and 118(1)). If a creditor fails to pay the amount of his liability within
30 days of the delivery or posting of the notice, the trustee may take out a writ of execution
in the magistrate’s court (s 118(1)).
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Part 6
Composition and rehabilitation
Chapter 18: Composition
18.1 Common-law compromise

18.2 Offer of composition in terms of s 119
18.3 Acceptance of s 119 composition
18.4 Consequences of s 119 composition
18.5 Illegal inducement to accept composition
Chapter 19: Rehabilitation
19.1 Automatic rehabilitation after 10 years

19.2 Rehabilitation by court within 10 years
19.3 Effect of rehabilitation
19.4 Declaratory order regarding property
Page 203
Chapter 18
Composition
Synopsis
Introduction
18.2.1 Submission of offer to creditors via trustee
18.2.2 Terms of composition
18.4.1 All concurrent creditors bound
18.4.2 Restoration of property to insolvent
18.4.3 Restoration of property to solvent spouse
18.4.4 Trustee to frame accounts, administer composition, and report to creditors
18.4.5 Right to prompt rehabilitation
Introduction
A debtor who is in financial difficulty or whose estate has been provisionally sequestrated
can avert insolvency by entering into a compromise with his creditors (Mahomed v Lockhat
Brothers & Co Ltd 1944 AD 230 241). And a debtor whose estate has been sequestrated
finally may obviate the usual process of liquidation of the estate assets and shorten the
period of his insolvency by making a compromise with his creditors in terms of s 119 of the
Act. These two forms of compromise, known as a common-law compromise and a statutory
composition respectively, are discussed in this chapter. A common-law compromise is based
on contract and, hence, requires the approval of all creditors to be of any practical value. By
contrast, a s 119 composition is a statutory mechanism under which the decision of the
majority of creditors binds the dissenting minority.
From a creditor’s perspective, a common-law compromise may be an attractive alternative
to sequestration because, not only will the creditor usually receive his dividend earlier than
in a sequestration, but the dividend may be higher due to the saving of sequestration costs.
|Often a relative of the debtor will be willing to pay in an amount of money to make the
compromise attractive to creditors. And the compromise may also enable the debtor to
continue with his trade, which will obviously be beneficial to creditors whose businesses
depend on that of the debtor, as well as to creditors who supply goods to him. For the
debtor, the obvious advantage of a common-law compromise is that he is released from his
debts without having to suffer the consequences of sequestration of his estate.
Compared to a common-law compromise, the main advantage of a statutory composition
is that it does not depend on the participation of all the creditors. Once
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the required majority of creditors have approved, the dissenting minority are bound.
However, it has the disadvantage that, unlike in the case of a common-law compromise, the
sequestration order is not discharged. The debtor remains an unrehabilitated insolvent,
although he may in certain circumstances apply for early rehabilitation (see below).

After a provisional order of sequestration has been granted, or even before this, the
insolvent may enter into a written agreement with his creditors and the provisional trustee
(if one has been appointed) to pay certain dividends on creditors’ claims, on condition that
he be released from his debts and any provisional order of sequestration be discharged. The
agreement is obviously only of any practical worth if approved by all concurrent creditors
(Prinsloo en ’n ander v Van Zyl NO 1967 (1) SA 581 (T) 583), because a dissenting creditor
is otherwise free to apply for sequestration of the debtor’s estate and thus nullify the effect
of the agreement.
An offer of compromise is often embodied in a single document with provision for
signature by each creditor. If the offer is made on condition that all creditors sign it, as is
invariably the case, the compromise is inchoate until all have duly signed. No liability
attaches to any single creditor until all have signed, and any signatory may withdraw before
this (Kopman & another v Benjamin 1951 (1) SA 882 (W)).
If the offer is accepted and the provisional order (if any) discharged, the rights and duties
of the various parties, including a surety, must be decided in accordance with the terms of
the deed and the provisions of the common law. Should the compromise involve a sale of
assets by the provisional trustee, permission of the Master must be obtained for the sale
(Harrington v Fester & others 1980 (4) SA 424 (C)).

18.2.1 Submission of offer to creditors via trustee
At any time after the first meeting of creditors, the insolvent may submit to the trustee a
written offer of composition (s 119(1)). If the trustee is of the opinion that the creditors will
probably accept the offer, he must immediately post in a registered letter or deliver to every
proved creditor a copy of the offer with his report on it (s 119(2)). If, on the other hand, the
trustee considers that there is no likelihood that creditors will accept the offer, he must
inform the insolvent that the offer is unacceptable and that he does not propose to send a
copy of it to creditors (s 119(3)). The insolvent may, in this event, appeal to the Master
who, after considering a report from the trustee, may direct the trustee to post and deliver a
copy of the offer to every proved creditor (s 119(4)).
When the trustee sends or delivers copies of the offer to creditors, he must
simultaneously convene, and give creditors notice of, a meeting to consider the offer and
any other matter mentioned in the notice (s 119(5)). The date of the meeting must be not
earlier than 14 days, and not later than 28 days, after posting or delivery of the notice (s
119(6)). The meeting is a general meeting in terms of s 41 and, hence, must be convened in
the manner prescribed by s 40, viz, by publication of a notice in the Gazette and in one or
more newspapers (Mia v The Master & others 1940 TPD 86 93-4; see
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further 9.1.4). The notice must contain specific reference to the offer of composition as a
matter to be dealt with at the meeting (ibid).
18.2.2 Terms of composition

In general, an offer of composition may contain any terms the insolvent sees fit to
incorporate in it, including terms to the effect that he should immediately be reinvested with
his assets and that he should be released from further liability in respect of his debts.
However, there are certain requirements and restrictions imposed by the Act:
• Where an offer of composition provides for the giving of security, the nature of the
security should be specified fully and, if the security is to consist of a surety bond or
guarantee, every surety should be named (s 119(7)). In Blou v Lampert and Chipkin
NNO & others 1973 (1) SA 1 (A), it was held that this provision is merely directory and
not imperative: it is conceived in the interests of creditors to ensure that they have
sufficient information to make up their minds. If the details given are insufficient,
creditors may ask for further particulars or reject the offer, but the offer is not void.
• An offer of composition may not be accepted if it contains a condition entitling one
creditor to obtain, as against another creditor, a benefit to which the former would not
have been entitled upon the distribution of the estate in the normal way (s 119(7)).
‘Creditor’ in this context includes a creditor who has not proved a claim (s 119(8)).
• A condition which makes an offer of composition subject to the rehabilitation of the
insolvent is of no effect (s 119(7)). The reason is that the court has to exercise an
unfettered discretion when considering an application for rehabilitation.

To give rise to a binding composition, the offer must be accepted by creditors whose votes
amount to not less than three-fourths in value and three-fourths in number of the votes of
all proved creditors, and payment in terms of the composition must have been made, or
security for payment as specified in the composition must have been given (s 119(7)). The
insolvent is then entitled to a certificate from the Master that the offer of composition has
been accepted (ibid). In computing the vote of creditors, the claim of a secured creditor is
taken into account only in respect of the unsecured balance, if any, of his claim (s 52(5)). A
creditor who has filed his claim in accordance with s 44 must be permitted to prove it before
the offer of composition is considered and, having proved his claim, is entitled to take part in
the discussion and to vote for or against acceptance (Mia v The Master & others (supra) 94).
The resolution to accept must be taken bona fide and in the interests of the general body of
creditors. In Zulman & others v Schultz 1924 TPD 24, it was held that where creditors accept
an offer of compromise, not in the honest belief that the compromise is in the interests of
the estate or for the benefit of creditors generally, but from feelings of pity or benevolence
towards the insolvent, or with a view to benefiting him, or for some other collateral object,
the acceptance is invalid.
Page 206

18.4.1 All concurrent creditors bound
An offer of composition which has been duly accepted is binding on the insolvent and all his
creditors in so far as their claims are not secured or otherwise preferent (s 120(1)). The
composition also encompasses and binds concurrent creditors who have not proved their
claims (Ilic v Parginos 1985 (1) SA 795 (A) 803-4). The basis of liability is, thus, not
contractual, since creditors may be held bound even though they voted against acceptance
or were unable to vote by virtue of their not having proved claims (ibid). The composition is
best described as a statutory novation which discharges the claims of the concurrent
creditors, whose rights must thereafter be determined by reference to the provisions of the
composition itself (ibid).
Although a composition affects the rights of concurrent creditors against the insolvent
personally, it does not affect their rights against a surety of the insolvent (s 120(3)).
18.4.2 Restoration of property to insolvent

If it is a term of the composition that property in the insolvent estate must be restored to
the insolvent, the acceptance of the composition divests the trustee of the property
concerned and revests it in the insolvent (s 120(2)). No transfer or delivery is necessary: the
revesting takes place by operation of law (Lurie NO v Mahomed 1952 (3) SA 194 (N)).
Estate assets not covered by the provisions of the composition remain vested in the trustee
(ibid). Assets acquired after sequestration also become the property of the insolvent if the
terms of the composition provide for this (Ex parte Nieburg 1929 CPD 362); if not, they vest
in the trustee (Moodley NO v Milne NO 1965 (1) SA 154 (D); cf Ex parte Van der Merwe
2008 (6) SA 451 (W) 457).
18.4.3 Restoration of property to solvent spouse

A composition is not binding on the creditors of the solvent spouse and, on acceptance of the
offer of composition, the property of the solvent spouse which vested in the trustee must be
restored to her (s 122). Any movable property held as security by a creditor of the solvent
spouse when the property vested in the trustee must be restored to that creditor, and the
proceeds of any security which has been realized must be paid to the person or persons
entitled to them, according to their rights (ibid).
18.4.4 Trustee to frame accounts, administer composition, and report to creditors

The trustee is obliged to frame a liquidation account and a plan of distribution of the assets
which are, or will become, available for distribution among the creditors under the
composition (s 123(2)). The provisions of the Act relating to a liquidation account and a plan
of distribution are applicable (ibid).
Any moneys to be paid and anything to be done for the benefit of creditors in pursuance
of the composition must be paid and done, as far as practicable, through the trustee (s 123
(1)). But the trustee is under no duty to a creditor who fails to prove his claim before the
trustee has made a final distribution among proved creditors (ibid). The creditor, in such a
case, may recover directly from the insolvent any payment to which he may be entitled
under the composition (ibid). The creditor must exercise his right of
Page 207
recovery within six months from the confirmation of the account under which the distribution
was made (ibid).
Notwithstanding the acceptance of an offer of composition, the trustee is obliged to
investigate the affairs and transactions of the insolvent prior to insolvency and to report on
them to creditors in the usual way (s 81(1)). The report must be submitted within one
month of the acceptance of the offer (ibid). The reason why the trustee should have to
report to creditors in these circumstances is not clear.
18.4.5 Right to prompt rehabilitation

As a rule, an insolvent must wait for a certain period of time before he may apply for his
rehabilitation. However, where an offer of composition has been accepted, the insolvent may
be entitled to apply for his rehabilitation immediately. To be so entitled, the insolvent must
have obtained a certificate from the Master showing that an offer of composition has been
duly accepted and that payment has been made, or that security has been given for
payment, of not less than 50 cents in the rand for every concurrent claim proved against the
estate (s 124(1); see also 19.2.1(i)).
It is a criminal offence for a person to accept a benefit as consideration for agreeing to, or
for not opposing, a composition (s 141). An undertaking to grant a benefit to a person to
induce him (or any other person) to accept an offer of composition is void and the person
accepting the benefit is liable to pay a penalty to the estate equal to the sum of:
• the amount of the claim (if any) which he proved against the estate;
• the amount or value of the benefit; and
• the amount paid or to be paid to him under the composition (s 130).
The trustee may recover the penalty; if he fails to do so, any creditor may proceed in his
name, on indemnifying him against all costs (s 131).
Page 208
Chapter 19
Rehabilitation
Synopsis
Introduction
19.2.1 Circumstances in which rehabilitation may be sought
19.2.2 Preliminary steps which must be taken
19.2.3 Trustee’s report to Master
19.2.4 Application for rehabilitation
19.2.5 Court’s discretion
19.2.6 Illegal inducement not to oppose rehabilitation
Introduction
The insolvency of a party comes to an end when he is rehabilitated. Although a person’s
estate is sequestrated, his person is rehabilitated. Rehabilitation enables the insolvent to
make a fresh start, free from his pre-sequestration debts and from the restrictions placed on
him by the sequestration. Rehabilitation may take place automatically, by lapse of a
prescribed period of time, but the insolvent usually asks the court to rehabilitate him before
expiry of the prescribed period.

An insolvent not rehabilitated by the court within a period of 10 years from the date of
sequestration of his estate is deemed to be rehabilitated unless the court, on application by
an interested person, orders otherwise prior to expiry of the 10-year period (s 127A(1)). The
|10-year period runs from the date of provisional sequestration (Grevler v Landsdown en ’n
ander NNO 1991 (3) SA 175 (T)).
If the court issues an order that an insolvent will not be automatically rehabilitated, the
Registrar must send a copy of the order to every Registrar of Deeds (s 127A(2)). Each
Registrar must enter a caveat against the transfer of all immovable property, or the
cancellation or cession of any bond, belonging to or registered in the name of the insolvent
(s 127A(3)). The caveat remains in force until the insolvent is rehabilitated (s 127A(4)).

The Act sets out the circumstances under which rehabilitation may be sought prior to
expiration of the 10-year period, and the procedure which must be followed to obtain an
order of the court. However, even where the provisions of the Act have been complied
Page 209
with, the court is not obliged to grant rehabilitation (cf Ex parte Woolf 1958 (4) SA 190 (N)).
The insolvent has no right to rehabilitation: it is a matter which rests within the discretion of
the court (Ex parte Hittersay 1974 (4) SA 326 (SWA)). The court has to decide whether the
insolvent is a person who ought to be allowed to trade with the public on the same basis as
any other honest person (Ex parte Heydenreich 1917 TPD 657 658; Greub v The Master &
others 1999 (1) SA 746 (C) 752-3; Ex parte Fourie [2008] 4 All SA 340 (D) 348-9). This
depends on how he conducted his trade before becoming insolvent and whether he will
continue in the same fashion if rehabilitated. As was pointed out in Ex parte Le Roux 1996
(2) SA 419 (C) 423:
‘The effect of rehabilitation of an insolvent is to restore him fully to the marketplace and, more
importantly, to the obtaining of credit. The Court is accordingly as concerned with the probable future
behaviour of the applicant as it is with his past.’
So, for instance, if the insolvent conducted his trade in a negligent manner or so as to
deceive others, he must convince the court that he intends to adopt better methods (Ex
parte Heydenreich (supra)). Other factors which may influence the court in reaching its
decision are mentioned below.
19.2.1 Circumstances in which rehabilitation may be sought

(i) Composition of not less than 50 cents in the rand
An insolvent may immediately seek an order of rehabilitation if he has obtained a certificate
from the Master that creditors have accepted an offer of composition in which payment has
been made, or security has been given for payment, of not less than 50 cents in the rand for
every concurrent claim proved or to be proved against the estate (s 124(1)). If creditors
adopt a composition which provides for less than 50 cents in the rand, the insolvent may
apply for rehabilitation only on the basis of the lapse of the prescribed period (see below).
(ii) Lapse of the prescribed period after confirmation of the first account
Subject to the qualifications mentioned below, an insolvent may apply for his rehabilitation
after 12 months have elapsed from the confirmation by the Master of the first account in the
estate (s 124(2)(a)):
• If the insolvent’s estate has been sequestrated before, the period which must elapse
before he can apply for rehabilitation is three years from the date of confirmation of
the first account (s 124(2)(b)).
• If the insolvent has been convicted of a fraudulent act in relation to his insolvency (or
any previous insolvency), or of an offence under ss 132, 133, or 134 of the Act, he
may apply for rehabilitation only after five years have elapsed from the date of his
conviction (s 124(2)(c)).
• The insolvent may obtain an order of rehabilitation within four years of the date of
sequestration only if the Master has recommended that he be rehabilitated (s 124(2)
proviso). The Master’s recommendation must be based on all the information available
to him (Ex parte Porritt 1991 (3) SA 866 (N); cf Chairperson, Walmer Estate Residents’
Community Forum & another v City of Cape Town & others 2009 (2) SA 175 (C) 178).
Refusal to recommend rehabilitation constitutes a decision which is subject to review in
terms of s 151 (Greub v The Master & others (1999 (1)
Page 210
SA 746 (C) 752-3). The court may consider the matter de novo as if it were a court of
appeal (ibid; see also 1.5).
(iii) No claims proved after six months
An insolvent may apply for his rehabilitation after a period of six months has elapsed from
date of sequestration if:
• at the time of making the application, no claim has been proved against his estate;
• he has not been convicted of any fraudulent act in relation to his insolvency, or of any
offence under ss 132, 133 or 134 of the Act; and
• his estate has not been sequestrated before (s 124(3)).
(iv) Full payment of all proved claims
At any time after confirmation by the Master of a plan of distribution providing for the
payment in full of all claims proved against the insolvent estate with interest calculated in
terms of the Act and all the costs of sequestration, the insolvent may apply for his
rehabilitation (s 124(5)). The Master must have actually confirmed the required plan: it is
not enough that there has been no objection to the liquidation and distribution account (Ex
parte Oosthuizen (unreported, NWM case no 607/12, 12 July 2012)).
In Ex parte Van Zyl 1991 (2) SA 313 (C), it was held that if a secured creditor chose to
rely only on his security in terms of s 89(2) (see 16.1.2), and the security realized less than
the full amount of his claim, he has not been paid in full for the purposes of s 124(5). In Ex
parte Oosthuizen (supra) paras [15]-[21], Landman J pointed out that this approach is
erroneous because s 124(5) refers only to proved claims and if a secured creditor reduces
his claim to the value of the security, that is the amount of the claim that is proved against
the estate. He said:
‘At the time of the [concursus creditorum], there will be a number of creditors ie persons to whom the
insolvent is indebted. But the subsection does not have them in mind. The subsection narrows the
creditors to only those creditors who have proved a claim against the estate. . . . If a secured creditor
elects to play it safe what is the amount of the claim? Is it the whole amount owing or is it the limited
amount claimed ie the value of the security? I think there can be little doubt that when the secured
creditor’s claim serves before the presiding officer it is the limited amount, being the value of the
security, that constitutes the claim. . . . This view is strengthened by the statutory function of a
trustee set out in section 45(2) of the Act. When the proven claim is laid before [the] trustee, the
trustee examines it to determine whether the amount is payable by the estate. . . . There is no cause
for the trustee to be satisfied about the amount which could have been claimed, save insofar as it
proves the debt, and leads to the amount actually claimed and owing. His concern is with the amount
claimed.’
19.2.2 Preliminary steps which must be taken

(i) Notice of intention to apply
An insolvent who intends to apply for his rehabilitation must give notice of his intention. The
notice requirements vary according to the grounds of the application.
Composition
The insolvent must, not less than three weeks before making the application, give notice
Page 211
of his intention by advertisement in the Gazette and by delivering or posting by registered

post a copy of that notice to the trustee (s 124(1)).
Lapse of prescribed period
The insolvent must give six weeks’ notice of his intention to apply, by advertisement in the
Gazette, and by written notice to the Master and the trustee (s 124(2)).
No claims proved
The notice requirements are the same as in the case of lapse of the prescribed period (s 124
(3)(a)).
Full payment of proved claims
The insolvent must, not less than three weeks before making the application, give notice in
writing to the Master and the trustee (s 124(5)). Advertisement in the Gazette is not
necessary.
The three- and six-week periods must be calculated by excluding both the first and the
last day (Ex parte Douglas 1964 (4) SA 385 (O)). The court has the power to condone short
notice and will generally do so where the relevant party is the Master or the trustee, if he
has had enough time to do what is required of him in terms of the Act, or has waived proper
notice (Ex parte Royston 1948 (2) SA 1026 (W); Ex parte Van der Merwe 1963 (1) SA 268
(O) 271). However, the court will not condone short notice in the Gazette (Ex parte Van der
Merwe (supra) 271) except, perhaps, where no creditors have proved claims against the
estate (cf Ex parte Curry 1965 (1) SA 392 (C)).
The notice published in the Gazette must be in the prescribed form, ie, Form 6 in the
Regulations framed under the Act (Ex parte Van Blerk 1938 CPD 133), and must contain the
following information:
• The number of the estate.
• The full name and description of the insolvent, including his identity number, date of
birth, and place of business or residence. The description of the insolvent must be
sufficient to enable his creditors to identify him as the person who was their debtor at
the time of sequestration. In Ex parte Van Zyl 1997 (2) SA 438 (E), it was held that
the notice should state, not only the insolvent’s current place of business or residence,
but also his occupation, address and trading name at the time of sequestration. Failure
to do this could be misleading to creditors and result in the notice being fatally
defective.
• The date of sequestration of the estate.
• The date and time of the application for rehabilitation, and the name of the court to
which it will be made.
• The ground of the application (whether it is based on a composition, lapse of the
prescribed period, or the fact that no claims have been proved).
The court has the power to condone omissions and errors, but will do so only if there is no
prejudice to interested parties (Ex parte Laserow 1939 TPD 422 424; Ex parte Minnie et
Uxor 1996 (3) SA 97 (SE)). In Ex parte Sedeman 1950 (2) SA 689 (C), the notice did not
disclose the Division of the High Court to which application would be made. The court
refused to condone the omission and ordered that the application be readvertised. Similarly,
in Ex parte Anderson 1995 (1) SA 40 (SE), where the notice referred to a court which did
not exist and gave the wrong date for the hearing of the
Page 212
application, the court held that the errors were fatal to the application. Conversely, in Ex
parte Minnie et Uxor (supra), where the notice omitted the identity number of the
applicants, but gave enough information—full names, dates of birth, and occupational
details—to enable creditors to identify them, the court held that the omission did not
invalidate the application.
(ii) Security for costs
The insolvent must provide security, to the amount or value of R500, for the payment of the
costs of any opposition to the application which the insolvent may be ordered to pay (s 125).
The purpose of this provision is to encourage creditors and others to place before the court
facts relevant to the application (Ex parte Schoeman 1943 OPD 197 199-200). The security
must be furnished to the Registrar of the court not less than three weeks before the hearing
of the application (s 125). In Ex parte Elliot 1997 (4) SA 292 (W), it was held that the late
furnishing of security is a fatal defect that cannot be cured by a postponement of the
application.
19.2.3 Trustee’s report to Master
Except where the reason for the application is the payment of creditors in full, the trustee,
on receiving the notice of intention to apply for rehabilitation, must report to the Master any
facts which, in his opinion, would justify the court in refusing, postponing, or qualifying the
insolvent’s rehabilitation (s 124(4)). The trustee is not entitled to a fee for this report (Ex
parte Thomas; Ex parte Thomas [2002] 4 All SA 227 (T) 229-31).
19.2.4 Application for rehabilitation

(i) Form and content of application
An application for rehabilitation is brought by way of a notice of motion supported by
affidavit. The founding affidavit should contain the information and averments set out below
(cf s 126):
• The full name and address of the insolvent and his present occupation.
• Details of the sequestration order and of the trustee’s appointment. The court to which
application is made must be the same court that granted the sequestration order (Ex
parte Garvie 1924 OPD 108).
• The reasons for sequestration (cf Ex parte Davis 1938 CPD 335).
• The total of the insolvent’s assets and liabilities as at the date of sequestration.
• The total amount of the claims proved against the estate (or that no claim has been
proved, if this is the case).
• The dividend (if any) paid to creditors.
• Whether there are any further assets in the estate available for realization and, if there
are, an estimate of their value.
• An allegation that the insolvent has made a complete surrender of his estate and has
not granted or promised any benefit whatever to any person or entered into any secret
agreement with intent to induce his trustee or any creditor not to oppose the
application.
• A statement of the insolvent’s assets, liabilities and earnings as at the date of the
application. It has been held that the reason that these details are required is to
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enable the court to decide whether the insolvent’s means are such that he should be
ordered to make a further payment for the benefit of his creditors (Ex parte Palmer
and Palmer 1961 (1) SA 602 (W)). The insolvent must, therefore, set out the whole of
the income accruing to his household including, for instance, any income received by
his wife and dependants which would diminish the drain on his income (ibid). It is
insufficient for the insolvent to give merely an estimate of his annual earnings without
particulars (Ex parte De la Harpe 1937 OPD 56).
• Allegations establishing the basis on which the application is brought and that the
required circumstances exist.
Composition
The affidavit must give particulars of the composition, stating whether there are creditors
whose claims have not been proved and, if there are, the names and addresses of the
creditors concerned and particulars of their claims. The Master’s certificate must be annexed
to the papers.
Lapse of time
The affidavit must contain facts which show that the insolvent is not precluded from applying
by s 124(2). For instance, if the application is brought within three years of confirmation of
the first estate account, the affidavit must state that the insolvent’s estate has not been
sequestrated before and that he has not been convicted of any fraudulent act or offence
mentioned in s 124(2)(c) (Ex parte Vermaak 1935 CPD 258). Again, if the application is
made within a period of four years from the date of sequestration, the affidavit must state
that the Master has recommended that the insolvent be rehabilitated. According to Ex parte
Albert 1937 CPD 276, it is not necessary to make any averments showing that s 124(2) does
not apply, if it is evident that all the periods of disability under the section have long since
expired.
No claim proved
The affidavit should already have mentioned that no claim has been proved (see above). It
must also contain an averment that the applicant has not been convicted of any offence
mentioned in s 124(2)(c) and that he has not been sequestrated before.
Payment in full
The affidavit must state that the Master has confirmed a plan of distribution providing for
payment as required by s 124(5).
• Any details which might influence the court in granting or refusing the application. In
this regard, the courts have repeatedly stressed that an application for rehabilitation is
not a formality and requires a full disclosure of all relevant facts (Ex parte Koch 1983
(3) SA 700 (SE) 705; Ex parte Fourie[2008] 4 All SA 340 (D) 348). In Greub v The
Master & others 1999 (1) SA 746 (C), the applicant sought an order setting aside the
Master’s refusal to recommend rehabilitation and an order for rehabilitation. The
applicant failed to explain or deal with various matters in his papers: he mentioned
that he had ‘funds available’ to him overseas, but did not state how much or where; he
did not explain the circumstances which led to the sequestration of his estate; he failed
to state to which creditors he was indebted and what amount he owed to each; and he
did not deal with a list of claims annexed to
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his wife’s statement of affairs and a schedule of creditors prepared by his trustees,
other than to say that he objected to ‘certain’ of the latter claims and was not ‘indebted
to these persons in these amounts’. The court held that as the applicant had not been
frank with the court (or the Master or his trustees), his applications had to be
dismissed.
• An averment that notice as required by the Act has duly been given. The relevant page
of the Gazette should be attached to the papers (where applicable), along with the
notice(s) sent out and proof of service.
• An averment that security in terms of s 125 has been given. Proof of this (eg, the
Registrar’s receipt) should be annexed to the papers.
The court will refuse to consider the affidavit if it has been attested by the insolvent’s
attorney or by any party who has an interest in the affidavit (cf Ex parte Van Zyl 1963 (2)
SA 311 (GW)).
(ii) Master’s report
The application papers must be served on the Master in time to enable him to report to the
court on the application (s 127(1)). In practice, the Master incorporates in his report, or
attaches to it, the report which he has received from the trustee (see above).
(iii) Opposition to application
The Master, the trustee, a creditor, or any other person interested in the estate may oppose
the granting of the application (s 127(1)). Opposing affidavits must be filed with the
Registrar and served on the applicant, who is then permitted to deliver one or more replying
affidavits.
(iv) Adjudication on application
When the application is heard, the court must have before it the following documents:
• the notice of motion and supporting affidavit(s);
• the Master’s certificate—where the application is based on the fact that a composition
has been accepted;
• the recommendation of the Master—where the application is based on lapse of the
prescribed time and is made less than four years after the date of sequestration;
• the page from the Gazette in which the application was advertised (where applicable)
and copies of any notices sent to the Master and the trustee with proof of service;
• proof that security has been lodged with the Registrar;
• the Master’s report;
• any opposing affidavit;
• any affidavit by the insolvent in reply.
Whether the application is opposed or not, the court may refuse it, or postpone it, or
rehabilitate the insolvent subject to any conditions it thinks fit to impose (s 127(2)).
19.2.5 Court’s discretion

As mentioned above, the rehabilitation of an insolvent is a matter which lies solely within the
discretion of the court. This discretion, however, must be exercised judicially and not
arbitrarily: in other words, the court must have a sound reason for arriving at its decision
(Ex parte Phillips 1938 CPD 381 384). Previous cases obviously provide
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guidance as to how the court will exercise its discretion in the future. The opinions of the
Master and trustee must be properly considered. In the absence of recommendations, the
court must itself examine the facts and circumstances before reaching a decision. The lapse
of time on its own cannot outweigh other considerations justifying the refusal of
rehabilitation. In each case, it is for the applicant to convince the court to exercise its
discretion in his favour (Ex parte Fourie [2008] 4 All SA 340 (D) 343).
(i) Postponement of rehabilitation
The court may postpone the application where it requires further information for the proper
exercise of its discretion (Ex parte Isaacs 1952 (4) SA 128 (O)) or where criminal
proceedings against the insolvent are pending (Ex parte Josselowitz 1957 (2) SA 120 (W)).
It may also postpone the application as a mark of its disapproval of the applicant’s conduct.
In Ex parte Rupert 1947 (1) SA 147 (C), where the applicant had made a false affidavit that
she had never been insolvent, the court indicated its disapproval by postponing the
application for three months. In Ex parte Hittersay 1974 (4) SA 326 (SWA), the insolvent
had acted recklessly in his dealings with his creditors and the insolvency was a serious one.
To impress upon the insolvent the gravity of the matter and the need to act more
responsibly towards his creditors in the future, the court postponed the application for a
period of four months. Hart J said (328):
‘[I]t should be brought home to the insolvent that rehabilitation is . . . a matter entirely in the
discretion of the Court, is dependent upon his previous history and is not a right to which he is
entitled.’
(ii) Grant of rehabilitation subject to a condition

It has been held that the court will not impose a condition on rehabilitation unless there is
something out of the ordinary to justify it (Ex parte Meine 1937 CPD 154). There must be
special circumstances which make it just and equitable to impose the condition (Ex parte
Cutting 1943 CPD 51) and the imposition of the condition should be properly motivated (Ex
parte Theron en ’n ander; Ex parte Smit; Ex parte Webster 1999 (4) SA 136 (O)). An
example of special circumstances would be blameworthy conduct on the part of the applicant
(before or during his insolvency), coupled with the fact that he is well able to pay any
amount which may be stipulated in the condition. In Ex parte Matthee 1975 (3) SA 804 (O),
the applicant, prior to insolvency, had allowed his financial affairs to deteriorate into a
chaotic state. When he applied for rehabilitation he was in permanent employment and had
accumulated assets out of his earnings. The court held that his rehabilitation should be
granted subject to his paying the balance of the trustee’s fees and the claim of the creditor
who opposed the application. In Ex parte Roos 1955 (1) SA 572 (O), the insolvent had
committed certain contraventions of the Act after his estate had been sequestrated, viz, he
had failed to lodge a statement of his affairs, attend the first and second meetings of
creditors, or assist the trustee in collecting estate assets. At the time of applying for
rehabilitation, the insolvent had accumulated savings and was earning a substantial annual
income. The court made his rehabilitation conditional upon his paying an increased dividend
to concurrent creditors. According to Ex parte Fowler 1937 TPD 353 357, the court will not
impose a condition that the insolvent pay unpaid claims simply because he has managed to
accumulate an estate during sequestration and is in a position financially to discharge the
claims.
Section 127(3) provides that, among the conditions that may be attached to
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rehabilitation, the court may require the insolvent to consent to judgment being entered
against him for the payment of the unsatisfied balance of a debt which was, or could have
been, proved against his estate. In such a case, execution cannot be issued on the judgment
except with leave of the court and on proof that the insolvent has acquired property or
income which is available for the payment of his debts (ibid). A condition commonly attached
to rehabilitation requires the insolvent to refund the contributions paid by his creditors as a
result of there being a deficiency in the estate. For instance, in Ex parte Goshalia 1957 (2)
SA 182 (N), the court ordered that the applicant should be rehabilitated, but that his
rehabilitation should be suspended until he had paid to the trustee all contributions already
levied (whether paid or not) and all contributions to be levied in the future. Section 127(4)
states that, in granting an application for rehabilitation pursuant to a composition, the court
may order that any obligation incurred by the applicant before the sequestration of his
estate will remain binding, notwithstanding the rehabilitation.
(iii) Refusal of rehabilitation
Examples of factors which may persuade the court to refuse an order of rehabilitation are
that the insolvent conducted his business in an improper and negligent manner (Ex parte
Blumberg 1914 EDL 1); that he failed to keep proper books of account (Ex parte Hajee 1939
NPD 197); that he ran up excessive debts prior to sequestration (Ex parte Ezer 1934 CPD
65); that he was difficult and refused to co-operate with the trustee in his administration of
the estate (Ex parte Martens 1951 (4) SA 530 (N)); that he was highly obstructive in the
administration of his estate and made numerous unfounded allegations against his trustees
and against members of the Master’s staff (Greub v The Master & others 1999 (1) SA 746
(C) 749); that he ‘sidestepped the inhibitions of insolvency’ by living in luxury without
making contributions to creditors (Ex parte Porritt 1991 (3) SA 866 (N)); that he failed to
set out in his application for rehabilitation all the circumstances relating to his insolvency (Ex
parte Davis 1938 CPD 335; Greub v The Master & others (supra) 751-3); that he was not
entirely candid about the extent to which he had surrendered his estate or about his
conviction and sentence for criminal conduct prior to sequestration (Ex parte Fourie [2008] 4
All SA 340 (D) 343); and that his application disclosed nothing to suggest that he had
learned the lessons of insolvency or had a genuine appreciation of the possible hardship his
sequestration might have caused his creditors (Ex parte Le Roux 1996 (2) SA 419 (O)).
The court will ordinarily not refuse rehabilitation merely because there was a large excess
of liabilities over assets, but it may be influenced to refuse rehabilitation if there are other
unsatisfactory features as well, eg, that the insolvent recklessly incurred the debts (Ex parte
Du Toit 1964 (3) SA 159 (T) 161).
When refusing an application for rehabilitation, the court will generally indicate some
period after which the application may be renewed; but it may refrain from doing so, leaving
it to the insolvent to apply again when he considers it appropriate (Ex parte Porritt (supra)).
(iv) Considerations in favour of unconditional rehabilitation
Certain factors count in favour of an unconditional rehabilitation, for example, that the
insolvent incurred only very small debts (Ex parte Mark 1932 WLD 53 56); that the insolvent
was not to blame for his sequestration which came about purely through
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misfortune (Ex parte Meine (supra)); that neither the creditors nor the trustee bothered to
take steps under s 23(5) to obtain part of the insolvent’s earnings during his insolvency (Ex
parte Jacobs 1977 (4) SA 155 (NC)); and that there is no opposition to the application from
creditors, the trustee, or the Master (Ex parte Van Staden 1967 (4) SA 375 (R)).
19.2.6 Illegal inducement not to oppose rehabilitation

It is a criminal offence for a person to accept a benefit as consideration for not opposing the
rehabilitation of an insolvent (s 141). An undertaking to grant a benefit to a person to induce
him (or any other person) not to oppose the rehabilitation of an insolvent is void and any
person who accepts such a benefit is liable to pay a penalty to the estate equal to the sum
of:
• the amount of the claim (if any) which he proved against the estate;
• the amount or value of the benefit (s 130).
The trustee may recover the benefit and if he fails to do so, a creditor may proceed in his
name, provided that he indemnifies the trustee against all costs in connection with the action
(s 131).

Rehabilitation has the effect of putting an end to the sequestration. It relieves the insolvent
of every disability resulting from sequestration and discharges all his debts (other than debts
arising out of fraud on his part) which were due or the cause of which arose before
sequestration (s 129(1)), including foreign debts reinforced by judgment of a foreign court
granted after sequestration (North American Bank Ltd (in Liquidation) v Granit 1998 (3) SA
557 (W) 565-7; Ex parte Van der Merwe 2008 (6) SA 451 (W) 458). However, rehabilitation
does not affect the rights, duties, and powers under a composition, or the liability of a surety
for the insolvent, or the liability of any person to pay a penalty or suffer a punishment in
terms of the Act (s 129(3)).
Rehabilitation does not reinvest the insolvent with his former estate (if any of it remains)
except in two cases:
• where a composition provides that the estate will reinvest in the insolvent (s 120(2));
and
• where the basis of the rehabilitation was the fact that no claims were proved within six
months of sequestration (s 129(2)).
Other than in these cases, property which was vested in the trustee before rehabilitation and
which has not been distributed to creditors remains vested in the trustee for purposes of
realization and distribution (s 25(1)). But if the insolvent brings about an act of registration
in respect of immovable property after expiry of every caveat entered against the property
by the Registrar of Deeds, the act of registration is taken to be valid (s 25(3)) and the
trustee is limited to recovering the value of immovable property or the right to immovable
property disposed of (s 25(4); and see 5.4).

If the insolvent can show that neither the trustee nor his creditors laid claim to an asset in
his estate (for example, an asset inherited during his insolvency), he may, on applying
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for rehabilitation, or thereafter, ask for an order declaring that he is entitled to the asset (Ex
parte Parker 1946 CPD 536; Ex parte Kriel 1949 (1) SA 971 (O) 975; Ex parte Van der
Merwe 2008 (6) SA 451 (W) 461-2). The court may grant the order on the basis that the
trustee and creditors, by making no claim in respect of the asset, have waived whatever
rights they might have had to it (Ex parte Olivier 1948 (2) SA 545 (C) 554).
To obtain the order, the insolvent must comply with the following requirements (Ex parte
Steele 1948 (1) SA 1203 (W) 1204; Ex parte Kriel (supra) 976):
• He must publish notice of his intention to apply in the Government Gazette. The notice
must fully describe the property and the manner in which he acquired it.
• He must serve a copy of the notice on the Master, the trustee, and all creditors (proved
and unproved) whose claims have not been satisfied. Cf Ex parte Oosthuizen
(unreported, NWM case no 607/12, 12 July 2012) paras [30]–[32]) in which the court
postponed the application to allow the applicant, inter alia, to obtain reports from the
Master and all the trustees and to notify both proved and unproved creditors of the
application. If the insolvent cannot trace a creditor, he must set out in his application
what efforts he has made in this regard.
• In his application, he must show that the trustee and creditors have full knowledge of
the facts and he must give full information to establish that the property was acquired
adversely to the trustee.
Because the basis of the court’s power to grant a declaratory order is that the trustee and
the creditors do not lay claim to the property in question, it follows that if any creditor
objects to the declaratory order, the insolvent is not entitled to the property and the court
cannot vest it in him (Vorster v Steyn NO en andere 1981 (2) SA 831 (O)).
Ex parte Van der Merwe (supra) illustrates that a revesting order is possible even where
the insolvent acquired the property in question before sequestration. The trustee had
excluded the property (a vacant piece of ground) from the liquidation and distribution
account because the arrear rates and taxes owing on it exceeded its value and the
municipality had been unwilling to take over the property in exchange for abandoning its
claim for rates and taxes. Only one creditor had proved a claim against the estate and a
contribution had been levied against that creditor. Prior to bringing the application, the
applicant had repaid the amount of the contribution along with the outstanding rates and
taxes. The court granted an order revesting the property in the applicant. Moshidi J observed
(467):
‘[T]he present application presents with unique and unprecedented circumstances where the insolvent
acquired the immovable property prior to his sequestration. He disclosed the immovable property to
his trustee. The trustee duly investigated the matter, but thereafter elected to abandon the asset and
excluded same from the first and final liquidation and distribution account. . . . [E]ven though the
property was acquired prior to the sequestration, the applicant has made no attempt to conceal the
asset. The property in question was simply not possible to liquidate, and the only potential creditor
that would have suffered because of it, the municipality, has since been paid in full. The applicant has
at no time harboured the intent of depriving his creditors of any benefit due to them from his
sequestrated estate; he has continuously taken the court into his confidence by revealing his standing
with his creditors, both proved and unproved. . . .There can obviously be no prejudice to any of the
applicant’s creditors, as he has satisfied not only his estate’s sole proven creditor, but has also taken
steps to satisfy the municipality who failed to respond to the publication of his sequestrated estate.’
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Part 7
Miscellaneous
Chapter 20: Partnership and sequestration
20.1 Voluntary surrender of partnership estate

20.2 Compulsory sequestration of partnership estate
20.3 Sequestration of partner’s estate
20.4 Composition
20.5 Proof of claims
20.6 Separate administration of estates
20.7 Surplus in either estate
20.8 Rehabilitation
20.9 Offences
Chapter 21: Insolvent deceased estates
21.1 Determining insolvency and procedure to be followed

21.2 Sale of estate assets
21.3 Estate account
21.5 Sequestration of deceased estate
Chapter 22: Offences
22.1 Jurisdiction
22.2 Partners
22.3 Estate representative
22.4 Employees and agents
22.5 Evidence
22.6 Sentence
22.7 Specific offences
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Chapter 20
Partnership and sequestration
Synopsis
Introduction
20.1 Voluntary surrender of partnership estate
20.4 Composition
20.4.1 Composition by partnership
20.4.2 Composition by partner
20.8 Rehabilitation
20.9 Offences
Introduction
Section 2 defines a ‘debtor’ as including a partnership or the estate of a partnership, and
other provisions in the Act treat a partnership as an entity distinct from its members. A
partnership, therefore, although not a separate juristic person in the eyes of the law, is
regarded for purposes of the Act as a separate entity with an estate which may be
sequestrated like that of a natural person (Commissioner, South African Revenue Services v
Hawker Air Services (Pty) Ltd; Commissioner, South African Revenue Service v Hawker
Aviation Partnership & others 2006 (4) SA 292 (SCA) 306). However, if a partnership
comprises a company and a natural person, the estate of the company (as distinct from
those of the partnership and the natural person) must be wound up under the Companies
Act 61 of 1973 (SA Leather Co (Pty) Ltd v Main Clothing Manufacturers (Pty) Ltd & another
1958 (2) SA 118 (O)).
|20.1 Voluntary surrender of partnership estate

An application to surrender a partnership estate must, as a rule, be brought by all the
partners, or their agents (s 3(2)). Thus, in Ex parte Bester & another 1937 CPD 45, the court
refused the surrender of a partnership estate because only one partner had signed the
application. However, the following need not apply:
• a partner not residing in the Republic (or whose whereabouts are uncertain: Ex parte
Pochlmann& Kohl 1940 WLD 109);
• a partner en commandite (anonymous partner);
• a special partner as defined in the Special Partnerships Limited Liability Act 24 of 1861
(Cape) or Law No 1 of 1865 (Natal) (both enactments repealed in 1976, but without
retroactive effect) (s 3(2)).
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Simultaneously with an application for surrender of a partnership estate, each partner must
apply for the acceptance of the surrender of his private estate, except the partners
mentioned above (ss 3(2), 13). The proper procedure is to give notice of intention to
surrender both the partnership and the individual estates, and to prepare separate
statements of affairs for each estate (s 13). The surrender of the partnership and individual
estates may be dealt with in a single application (s 13(3)).
The court will not sequestrate a partner’s private estate along with the partnership estate
(and, accordingly, that partner need not apply for voluntary surrender of his private estate)
if he gives an undertaking to pay the partnership debts within a period fixed by the court
and gives security for such payment to the satisfaction of the Registrar of the court (s 13(1)
proviso).

If the court sequestrates the estate of a partnership, it is bound at the same time to
sequestrate the private estate of every member of the partnership, except the following:
• a partner not residing in the Republic;
• a partner en commandite (anonymous partner);
• a special partner as defined in the Special Partnerships Limited Liability Act 24 of 1861
(Cape) or Law No 1 of 1865 (Natal) (s 13(1)).
As the partnership itself never becomes an ‘insolvent’, the simultaneous sequestration of the
partners’ estates is not simply procedural, but vital (Acar v Pierce and other like applications
1986 (2) SA 827 (W)). In SA Incorporated Merchants’ Protection Agency Ltd v Kruger &
another 1947 (4) SA 304 (T), the court refused to sequestrate the private estate of a woman
partner because she was married in community of property. This seems incorrect: the court
should have sequestrated the joint estate of the woman and her spouse.
As in the case of voluntary surrender of a partnership estate, the court will not
sequestrate the private estate of a partner if he undertakes to pay the partnership debts
within a period fixed by the court and gives security for such payment to the satisfaction of
the Registrar of the court (s 13(1) proviso).
Where the private estate of a partner is unable fully to meet the costs of sequestration
payable out of that estate, the balance must be paid out of the assets of the partnership (s
13(2)). But the converse does not apply: if there are insufficient assets in the partnership
estate, the estates of the individual partners need not make any contribution towards the
costs of sequestration of the partnership estate.
A partnership estate may be compulsorily sequestrated on the grounds of an act of
insolvency committed by one of the partners only if the latter acted in his capacity as
partner (Stephen Fraser (Pty) Ltd v Ramla & others 1961 (2) SA 554 (W)). Thus, an act of
insolvency committed purely in respect of a partner’s separate estate is not a ground for the
compulsory sequestration of the partnership estate. A creditor who seeks to sequestrate a
partnership estate need not establish that there is reason to believe that sequestration
would be to the advantage of the estates of the individual partners—the ‘debtor’ envisaged
by s 10(c) is the partnership alone, and all that counts is whether there is reason to believe
that the partnership’s own creditors will benefit from sequestration of the partnership estate.
However, this does not mean that the question of advantage to creditors of the partners’
private estates is irrelevant.
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Once s 10(c) is satisfied, the court must consider all the relevant results of the sequestration
of the partnership estate (including the sequestration of the partners’ personal estates) in
deciding whether or not to grant an order (Gardee v Dhanmanta Holdings & others 1978 (1)
SA 1066 (N) 1067-8).
If the estate of a person who is a partner is sequestrated, it is not necessary for the
partnership estate or the private estates of the other partners to be sequestrated. But
sequestration of a partner’s estate, ipso iure, terminates the partnership which must, as a
result, be wound up. It is of course possible for the remaining partners to form a new
partnership in the place of the old one.
When a partnership is dissolved because the estate of one of the partners has been
sequestrated, the partnership assets are divided among the partners in terms of the
partnership contract or the common law. The insolvent partner’s share of the partnership
assets vests in the trustee of his insolvent estate.
20.4 Composition
20.4.1 Composition by partnership
There is some suggestion that a partnership can make a valid composition and be reinvested
with its assets even though at common law it ceases to exist when its estate is sequestrated
(cf Gain NO v Parker & Son 1933 CPD 75). The correct position is probably that a new
partnership takes the place of the old one, which dissolves on the sequestration of its estate.
20.4.2 Composition by partner

When the estates of a partnership and of the individual partners are simultaneously under
sequestration, the acceptance of an offer of composition does not take effect until six weeks
have expired as from the date of a written notice of acceptance given by the trustee of the
private estate to the trustee of the partnership estate (s 121(1)). If the same person is
trustee in both estates, the period expires six weeks after the date of acceptance of the
composition (ibid). A copy of the deed containing the terms of the composition must be sent
with the notice (ibid).
At any time during the period of six weeks, the trustee of the partnership may take over
the assets of the private estate if he fulfils the obligation of the insolvent partner in terms of
the deed, except obligations to render any service or obligations which only the insolvent
partner can perform (s 121(2)). Should the composition provide for the giving of any specific
security, the Master must decide what other security the trustee of the partnership estate
may give instead (ibid).

In principle, partnership assets are applied to payment of partnership debts and separate
estate assets to payment of separate estate debts (Michalow NO v Premier Milling Co Ltd
1960 (2) SA 59 (W) 61-4). Therefore, if the partnership and individual estates are under
sequestration simultaneously, the creditors of the partnership are not entitled to
Page 224
prove against the separate estates of the partners, and the creditors of the individual estates
are not entitled to prove against the partnership estate (s 49(1); Cassim v The Master &
others 1960 (2) SA 347 (D) 606). But the Commissioner for the South African Revenue
Service may prove claims for income tax and interest against a partnership estate for
amounts due by partners (s 49(2)).

If the estates of a partnership and of a partner are under sequestration simultaneously, the
administration of all the estates must be kept entirely separate from each other and
separate accounts must be framed for each estate (s 92(5)).

If, after all the estates have been administered, a surplus remains in a partner’s separate
estate, the trustee in the partnership estate is entitled to this surplus for the benefit of
partnership creditors (s 49(1)). Similarly, the trustee in an individual estate is entitled to the
share of any surplus in the partnership estate to which the partner would have been entitled
if not insolvent (ibid).
20.8 Rehabilitation
As a partnership is ipso facto terminated on sequestration of its estate, a partnership estate
can never be rehabilitated (s 128).
A partner whose separate estate has been sequestrated cannot apply for his rehabilitation
in his capacity as a partner, but may apply as an ordinary debtor whose estate has been
sequestrated. If the partner’s creditors have been paid in full, the court will not refuse
rehabilitation merely because there is a deficiency in the partnership estate or because the
partnership estate has not been finalized (Ex parte Cohen & another 1974 (4) SA 674 (W)
675-7).
An order rehabilitating a partner’s estate releases him from all liability, not only for his
own private debts, but also from his liability for the partnership debts.
20.9 Offences
The liability of individual partners for offences committed by them or by the partnership is
discussed in chapter 22.
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Chapter 21
Insolvent deceased estates
Synopsis
Introduction
21.3 Estate account
21.3.1 Form of account
21.3.2 Time for lodging account
21.3.3 Inspection of account
21.3.4 Objections to account
21.3.5 Confirmation of account
21.3.6 Supplementary account
Introduction
If a person dies insolvent, his estate may be dealt with under the Insolvency Act or under
the Administration of Estates Act 66 of 1965. This chapter focuses primarily on the
procedure to be followed where an insolvent deceased estate is administered in terms of the
Administration of Estates Act. References to sections are to sections of this Act.

The executor of a deceased estate must, after expiry of the period in which creditors are
required to lodge their claims, satisfy himself as to the solvency of the estate (s 34(1)). If he
finds that the estate is insolvent, he must forthwith report the position of the estate to the
creditors (ibid). This report must be in writing and a copy must be lodged with the Master
(ibid). In the report, the executor must state that, unless the majority in number and value
|of all the creditors instruct him in writing within a period specified in the notice (which must
be at least 14 days) to surrender the estate in terms of the Insolvency Act, he will proceed
to realize the assets of the estate in accordance with s 34(2) (ibid). Adoption of this latter
procedure initiates a concursus creditorum (Ward v Barrett NO & another NO 1963 (2) SA
546 (A) 552) and places the estate in a ‘deemed state of sequestration’ (Fairleigh NO v
Whitehead & another 2001 (2) SA 1197 (SCA) 1200).
For purposes of determining the number and value of creditors:
• a creditor whose claim amounts to less than R1 000 is not reckoned in number (s 34(1)
(a));
• a creditor holding movable property as security (other than a marketable security or a
bill of exchange) is reckoned according to the amount by which his claim exceeds
Page 226
the value of his security (s 34(1)(b)). The creditor must, if called upon to do so in
writing by the executor, place a value on the security within the period specified by the
executor (ibid) and, if he fails to do so, he is not reckoned as a creditor for these
purposes (s 34(1)(c)).
Since creditors are required to make a decision on the basis of the executor’s report, it
should inform them about the respective merits of the two procedures. Proceeding in terms
of s 34 is usually cheaper than surrendering the estate as insolvent, but proper
administration of the estate may be impossible without the procedural machinery of the
Insolvency Act, in particular, the power to conduct interrogations and set aside dispositions.
An executor, unlike a trustee, has power merely to administer the estate and cannot bring
any action on behalf of the estate for the benefit of creditors (Du Toit’s Executor v Du Toit
1911 CPD 713).
The executor may initially find that he is unable to determine conclusively whether the
estate is solvent or insolvent (for example, because some of the claims lodged are of
doubtful validity). In these circumstances, it seems that he has two alternatives:
• He may simply advise creditors that the estate is insolvent and proceed in terms of
s 34(1). This will not adversely affect creditors should the estate turn out to be solvent.
• He may continue with the administration of the estate on the basis that it is solvent
and, only once the contrary is clearly established, adopt the procedure in s 34(1). This
course will also not prejudice creditors, provided the executor does not pay any claims
until after the estate accounts have lain for inspection (see below). It seems clear that
the procedure in s 34(1) may be embarked upon at any stage of the administration,
whenever the insolvency of the estate becomes apparent.
Naturally, if creditors reduce their claims sufficiently, or if interested parties pay in enough
to render the estate solvent, the procedure in s 34(1) is not applicable.

If the executor is not directed to surrender the estate within the period specified in the
notice, he must sell the assets in the estate, after giving the creditors at least 14 days’
notice in writing of the manner and conditions of the intended sale (s 34(2)). The provisions
of the Insolvency Act relating to meetings of creditors and the manner of disposal of estate
assets are not applicable. So, for instance, the transfer of immovable property is subject to
s 118 of the Local Government: Municipal Systems Act 32 of 2000 (dealing with clearance
certificates for municipal debts) and not s 89 of the Insolvency Act (City of Johannesburg v
Even Grand 6 CC 2009 (2) SA 111 (SCA) 115-16).
A creditor may, at any time before the sale of an asset, lodge an objection to the intended
sale (s 34(3)). If he does, he must send a copy of the objection to the Master (ibid). After
considering the objection, any comment the executor may have made regarding it, and any
further details which he may have called for, the Master must either order the executor to
proceed with the sale or give any other order regarding the sale as he thinks fit (s 34(4)).
If a creditor who holds movable property as security has placed a value on his security in
terms of s 34(1)(b) (see above), the executor may within six weeks thereafter deal with the
security, mutatis mutandis, in the manner provided in s 83 of the
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Insolvency Act (s 34(6)). Under s 83 of the Insolvency Act, the executor may take over the
security at a value agreed upon between him and the creditor or at the full amount of the
creditor’s claim (see 15.2.4).
21.3 Estate account

21.3.1 Form of account
The executor must draw up an account in the prescribed form, supported by vouchers, of his
liquidation and distribution of the estate (s 34(7)(a)). The account must provide for the
distribution of the proceeds in the order of preference prescribed under the Insolvency Act
for a sequestrated estate (s 34(7)(b); see 16.3).
21.3.2 Time for lodging account

The executor must submit the account to the Master as soon as possible after the s 34(1)
notice expires, but within:
• six months of being granted letters of executorship (s 34(7)(a)(i)); or
• such further period as the Master may allow (s 34(7)(a)(ii)).
The Master may, when granting an extension of time for lodging the account or whenever
the executor has funds in hand which, in the Master’s opinion, ought to be distributed or
applied towards the payment of debts, direct the executor in writing to submit to him, within
a specified period, an interim account in the prescribed form, supported by vouchers (s 34
(8)). The executor must set forth in an interim account all debts due to the estate and still
outstanding and all property still unrealized, and the reasons why such debts or property, as
the case may be, have not been collected or realized (s 34(9); s 35(3)).
21.3.3 Inspection of account

After the Master has examined the account, it must lie open at the office of the Master for
not less than 21 days for inspection by any person interested in the estate (s 34(9); s 35
(4)). If the deceased was ordinarily resident in any district other than that in which the
Master’s office is situated, a duplicate of the account must lie open for inspection for the
same period at the office of the magistrate of the district (ibid; Faure v Britz NO 1981 (4) SA
346 (O) 351-2).
The executor must publish a notice stating when and where the account will lie open for
inspection (s 34(9); s 35(5)(a)). He must publish the notice in the Gazette and in one or
more newspapers circulating in the district in which the deceased was ordinarily resident at
the time of his death (ibid). If the deceased resided in another district at any time within the
12 months preceding his death, the executor must also publish a notice in one or more
newspapers circulating in that district (ibid).
A magistrate is obliged to put up in a public place in his office a list showing the date on
which each account lodged with him will be transmitted to the Master (s 34(9); s 35(6)). On
expiry of the period allowed for inspection of an account, the magistrate must endorse on
the account a certificate that it has duly lain open for inspection and must transmit the
account to the Master (ibid).
Page 228
21.3.4 Objections to account

Any person interested in the estate may, at any time before expiry of the period allowed for
inspection, lodge with the Master an objection to the account in duplicate, stating reasons
for the objection (s 34(9); s 35(7)). The Master must transmit a copy of the objection and
any supporting documents to the executor (ibid), who must, within 14 days after receipt of
the objection, transmit two copies of his comments on the objection to the Master (s 34(9);
s 35(8)).
If, after considering the objection, the executor’s comments, and such further particulars
as he may require, the Master thinks that the objection is well-founded or if, apart from the
objection, he thinks that the account is incorrect and should be amended, he may direct the
executor to amend the account or give any other direction as he thinks fit (s 34(9); s 35
(10)). If the direction affects the interests of a person who has not lodged an objection and
the account is amended, the amended account must be readvertised and must again lie for
inspection, unless the affected person consents in writing to the account being acted upon
(s 34(9); s 35(11)).
21.3.5 Confirmation of account

The Master must confirm the account if it has lain open for inspection and:
• no objection has been lodged; or
• an objection has been lodged and the account has been amended in accordance with
the Master’s direction and has again lain open for inspection and no application has
been made to court to set aside the Master’s decision; or
• an objection has been lodged but has been withdrawn or has not been sustained, and
no application has been made to court to set aside the Master’s decision (s 34(10)).
The Master’s confirmation is conclusive and the accounts cannot be reopened except with
the permission of the court, which cannot be granted once a dividend has been paid under
the account (ibid).
21.3.6 Supplementary account

If, at any time after the account has been submitted to the Master, additional assets are
found in the estate and the account is not amended so as to provide for the application or
distribution of the proceeds of those assets, the executor must, in respect of those assets,
submit to the Master a supplementary account in the prescribed form, supported by
vouchers (s 34(7A)).

As soon as the account has been confirmed by the Master, the executor must pay the
deceased’s creditors in accordance with the account and lodge with the Master receipts or
paid cheques as proof of payment (s 34(11)). If any surplus remains after creditors have
been paid in full, the executor must distribute it to legatees and heirs of the deceased
(Rosenberg v Dry’s Executors & others 1911 AD 679).
If the executor cannot for some reason distribute the money in accordance with the
account, he must, within two months after the estate has become distributable under s 34
(11), pay the money to the Master, who must deposit it in the Guardian’s Fund on behalf of
the person(s) entitled to it (s 34(12)).
Page 229

Section 34 does not exclude the right of a creditor to apply for compulsory sequestration of a
deceased estate (s 34(13)). Application may be brought as soon as an executor has been
appointed: the creditor does not have to wait for the executor to determine the solvency of
the estate in terms of s 34 (Paarl Board of Executors v Estate Ansell 1916 CPD 8; see also
Hassim v Mohideen 1930 TPD 562). It seems that a creditor may apply for compulsory
sequestration even though he has previously expressly consented to the executor’s
administering the estate in terms of s 34 (Lockhat Bros & Co Ltd v Joffe’s Estate 1937 EDL
2). An executor is not under any duty to oppose a sequestration application on behalf of
creditors, and ought to abide by the judgment of the court, unless there are special
circumstances (Stainer v Estate Bukes 1933 OPD 86 92).
The creditor’s application for compulsory sequestration is governed by ordinary principles
of insolvency law, at least to the extent that he must have locus standi to apply in terms of s
9(1) of the Insolvency Act, and the estate must be insolvent or the executor must have
committed an act of insolvency. However, the third leg of the inquiry does not simply focus
on whether sequestration may or will be advantageous for creditors, but whether
administration of the estate would be more advantageous for creditors as a group if it takes
place in terms of the Insolvency Act rather than the Administration of Estates Act. The court
has a discretion to determine this issue and, consequently, it is inaccurate to speak of the
creditor bearing an onus of proof (Standard Bank van SA Bpk v Van Zyl NO en ’n ander 1999
(2) SA 221 (O) 225). The court is obliged to conduct an analytical investigation and
evaluation of all the relevant facts and circumstances and consider, in particular, the
following factors (none of which is necessarily conclusive):
• the size of the estate;
• the complexity and possible complications inherent in the administration of the estate
and to what extent the respective Acts offer the best method of dealing with such
problems;
• the competence and independence of the executor of the deceased estate;
• the costs of the respective options;
• the wishes of the majority of the creditors and the size of the applicant’s claim (ibid).
The court may well be reluctant to grant a sequestration order if the major creditors are
opposed to it and the applicant’s claim is a relatively small one. Conversely, it may be
disposed to grant an order if the powers of a trustee are clearly essential to administer the
estate effectively as, for example, where the deceased, prior to his death, concluded a
number of apparently impeachable transactions which can only be investigated properly and
set aside by a trustee with the full machinery of the Insolvency Act at his disposal (cf
Standard Bank van SA Bpk v Van Zyl NO en ’n ander (supra)). Sequestration may benefit
the creditors even if the estate has no further distributable assets as, for example, where s
156 of the Insolvency Act can be relied on in recovering the amount of an indemnity from an
insurer directly (Tolstrup NO v Kwapa NO 2002 (5) SA 73 (W) 83-4).
An executor of the joint estate of spouses married in community of property cannot
surrender the estate without the consent of the surviving spouse (Grimbeek v The Master &
others 1926 CPD 183), but he can admit to a creditor that the joint estate cannot meet its
liabilities and, in so doing, provide the basis for an application
Page 230
for compulsory sequestration (Netherlands Bank of SA Ltd v Le Roux NO & another 1965 (1)
SA 681 (T)).
There is case authority to the effect that, because s 3(1) of the Insolvency Act specifically
mentions the executor of a deceased estate as a person who may apply for surrender, the
executor may disregard the provisions of s 34 and apply for surrender of the estate without
being instructed by creditors (see, eg, Ex parte Du Plessis NO 1953 (4) SA 11 (T); Ex parte
Estate Benn 1956 (4) SA 184 (C)). It is suggested that s 3(1) of the Insolvency Act merely
confers locus standi on the executor and that he cannot institute an application for surrender
if he has not complied with s 34. Where a partnership estate is surrendered, the court is
bound to accept the surrender of a deceased partner’s estate, notwithstanding that his
creditors want his estate to be administered in terms of s 34 (Ex parte Looney 1938 GWL
21).
Once a sequestration order is granted, the deceased estate vests in a trustee and he is
obliged to realize the assets and distribute the proceeds among creditors according to the
usual order of preference applicable in insolvency. The rights and duties of the executor
must, with certain exceptions, be regarded as being in abeyance (The Master v Omar NO
1958 (2) SA 547 (T)). Section 21(1) of the Insolvency Act does not apply, so the estate of
the solvent spouse does not vest in the trustee (Janit v Van den Heever & others NNO (No 1)
2001 (1) SA 731 (W); Janit v Van den Heever & another NNO (No 2) 2001 (1) SA 1062
(W)).
In principle, a person, and not an estate, is rehabilitated and therefore there is no room
for the rehabilitation of an insolvent deceased estate. However, a problem arises if the
deceased estate is later found to contain a surplus. The trustee of an insolvent estate cannot
distribute a surplus but must pay it into the Guardian’s Fund to await the insolvent’s
rehabilitation (s 116 of the Insolvency Act). It would therefore seem to be necessary to
apply to court for the rehabilitation of the estate and the appointment of an executor to
distribute this surplus.
Page 231
Chapter 22
Offences
Synopsis
Introduction
22.1 Jurisdiction
22.2 Partners
22.5 Evidence
22.5.1 Estate records
22.5.2 Certificate by Master
22.5.3 Record of meeting
22.5.4 Proof of liability
22.5.5 Evidence given at interrogation
22.5.6 Income tax returns
22.6 Sentence
22.7.1 Offences committed by insolvent
22.7.2 Offences committed by trustee
22.7.3 Offences committed by any person
Introduction
The Insolvency Act creates a large number of offences. The Act also deals with matters of a
general nature relating to all prosecutions brought under its provisions. These general
matters are discussed first and thereafter an overview of the specific offences is given.
22.1 Jurisdiction
Offences under the Act can be tried by a High Court or by a magistrate’s court, provided that
such court otherwise has jurisdiction (s 2 sv ‘Court’). A court which has jurisdiction to try an
insolvent in respect of an offence under the Act, because it was committed at the place
where the insolvent mainly carried on business or resided when the offence was committed,
also has jurisdiction to try the insolvent in respect of such offence, even though committed
elsewhere in the Republic (s 147(1)). The word ‘insolvent’, for these purposes, includes a
partner, a person charged with the administration of an estate, and the employee or agent
of an insolvent (s 147(2)).
|22.2 Partners
A person who is or was a member of a partnership and who does (or omits to do) in relation
to any property or to the affairs of that partnership or of the insolvent estate of
Page 232
that partnership, any act which, if done (or omitted) by him in like circumstances in relation
to his own property or affairs, or in relation to any property belonging to, or the affairs of,
his insolvent estate, would have constituted an offence under the Act, is deemed to have
committed that offence (s 143(1)(a); R v Omarjee 1955 (2) SA 546 (A)). Such liability,
however, does not in any way affect the liability of any of his co-partners (s 143(2)).

A person who is or was charged with the administration of an estate and who does, or omits
to do, in relation to any property or to the affairs of that estate, any act which, if done or
omitted by him in like circumstances in relation to his own property or affairs, or in relation
to any property belonging to, or the affairs of, his insolvent estate, would have constituted
an offence under the Act, is deemed to have committed that offence (s 143(1)(b)).

An employee who has had the sole or practical control of any property of his employer and
who does or omits to do in relation to that property of his employer any act which, if done or
omitted by him in like circumstances in relation to his own property or affairs, or in relation
to any property belonging to, or the affairs of, his insolvent estate, would have committed
an offence under the Act, is deemed to have committed that offence (s 143(1)(c); R v
Omarjee (supra)). This applies not only to property of the employer, but also to the affairs of
the employer in general. The section also applies to an agent in respect of the property or
affairs of his principal. Also included is a former employer or principal. Such liability does not
in any way affect the liability of any other employee or agent or of the employer or principal
(s 143(2)).
22.5 Evidence
Some of the special rules relating to evidence set out in the Act apply to criminal prosecution
only, while some to both criminal and civil proceedings. These rules are set out here, but it
must be remembered that those applicable to civil proceedings may be relied on, whether
such proceedings are brought under the Act or otherwise. Such proceedings can include the
setting aside of a disposition without value or an undue or voidable preference, collusive
dealings, as well as any other civil proceedings.
22.5.1 Estate records

Any original document with a certificate thereon or attached thereto, purporting to have
been signed by a person describing himself as Master, wherein he describes the nature of
the document and states that it relates to a specified insolvent person or estate, is on its
mere production deemed prima facie to be what the certificate describes it to be (s 154(2);
R v Klisser & Rosenberg 1949 (3) SA 807 (W)). The same applies to any record certified as
belonging to the person or estate.
A copy or extract similarly certified, on which the certificate describes the original
document or record, is also admissible in evidence and is of the same force and effect as
Page 233
the original document or record would be if it bore or had attached to it the certificate of the
Master (s 154(3)).
22.5.2 Certificate by Master

A certificate purporting to have been signed by a person describing himself as Master,
stating that the estate of a person or a partnership mentioned therein was sequestrated on a
date therein specified, or that an insolvent mentioned therein has or has not been
rehabilitated, or that any person named therein has or has not complied with any particular
requirement of the Act, is received as prima facie evidence of the facts stated therein upon
its mere production by any person (s 154(4)).
22.5.3 Record of meeting

Any record purporting to be a record of any proceeding at a meeting of creditors and
purporting to have been signed by a person describing himself as Master, magistrate or
other presiding officer, is, upon its mere production by any person, prima facie evidence of
the proceedings recorded therein (s 68(1)). The correctness of the record may be challenged
on the grounds that it does not prove what it purports to prove (Pine Village Home Owners
Association Ltd & others v The Master & others 2001 (2) SA 576 (SE) 580). Unless the
contrary is proved, it is presumed that the meeting was duly convened and held and that all
acts performed at the meeting were validly performed (s 68(2)).
22.5.4 Proof of liability

Whenever in criminal proceedings under the Act any liability incurred by an insolvent or the
date or time when the liability was incurred is in issue or relevant to the issue, proof that a
claim in respect of that liability has been duly admitted against the estate is sufficient
evidence of the existence of the liability. Such liability is deemed to have been incurred on
the date or at the time alleged in any document submitted in accordance with the Act in
support of the claim. The accused or the prosecutor may, however, prove that no such
liability, or that a lesser or greater liability, was incurred, or that it was incurred on a date or
at a time other than the date or time alleged (s 146).
22.5.5 Evidence given at interrogation

The evidence of a person who was interrogated at a meeting of creditors is admissible
against him in later civil proceedings or in criminal proceedings for perjury or related
offences (s 65(5), 65(2A); Du Plessis NO v Oosthuizen en ’n ander 1999 (2) SA 191 (O)
206; see also 13.1.6). These provisions also apply if the person made a statement, or
delivered a written statement, to the trustee or his agent, and the statement was read over
to him when he was called as a witness at the interrogation. For the evidence to be
admissible, it must be clear that the formalities of the Act have been strictly observed (R v
Klisser & Rosenberg (supra)).
22.5.6 Income tax returns

The trustee may obtain certified copies of the insolvent’s income tax returns from the
Commissioner for the South African Revenue Service. On production of the returns by any
person, they are admissible in evidence in any proceedings, civil or criminal, in which the
insolvent estate or the insolvent is involved (s 81(2)).
Page 234
22.6 Sentence
For most of the offences which can be committed only by an insolvent, imprisonment for a
maximum period ranging between six months and three years, without the option of a fine,
is prescribed (see ss 132, 133, 134(1), 135(1), 136, 138, 140—the last section also applies
to an insolvent’s spouse). But a suspended sentence can be imposed in terms of s 297 of the
Criminal Procedure Act 51 of 1977 (S v Saunders 1984 (2) SA 102 (T)).
For certain offences created by the Act, a convicted person can be sentenced to a
maximum fine of R10 000 or imprisonment of up to six months without the option of a fine,
but not to both (see ss 139(1), 141 and 145, read with the Adjustment of Fines Act 101 of
1991).
Where a trustee fails to lodge an account or fails to pay money due to the Master or a
creditor, he can be sentenced to payment of a maximum fine of R500 (s 144).

The specific offences created by the Act are set out in ss 132-145 of the Act, to which the
reader is referred (see Appendix 3). These offences may be committed by:
• the insolvent only (ss 132-136, 137(a) and (c), 138, 140);
• the trustee (s 144);
• any person (ss 137(b) and (d), 139, 141, 142, 145).
Some offences can be committed only before sequestration, some only after sequestration,
and others at any time.
22.7.1 Offences committed by insolvent

These offences may be grouped under the following headings:
• concealing or destroying books or assets (s 132(a); R v Kruger 1956 (2) SA 201 (A));
• failure to disclose property (s 132(b));
• concealing liabilities, or pretext to existence of assets (s 133);
• failure to keep proper books or records (s 134; R v Greenspan 1945 AD 474; R v
Vather & another 1961 (1) SA 350 (A));
• giving an undue preference to a creditor (s 135(1); R v Kruger (supra); S v Ostilly &
others (2) 1977 (4) SA 738 (D));
• contracting debts recklessly (s 135(3));
• failure to give information or to deliver assets (s 136);
• obtaining credit during sequestration (s 137(a); S v Clifford 1976 (1) SA 695 (A));
• failure to submit statement of affairs, trading without the necessary permission of the
trustee, failure to keep record of income earned during sequestration, failure to assist
the trustee in collecting property (s 137(c));
• failure to attend meetings or to give information (s 138);
• failure to appear to give evidence (s 140).
Where an act or omission by an ‘insolvent’ is made an offence, that offence may include acts
done or omissions made by the insolvent prior to the sequestration of his estate (s 2,
definition of ‘insolvent’).
Page 235
22.7.2 Offences committed by trustee

Failure by a trustee to submit an account or to pay money due to the Master or a creditor
within two months from the time when the duty arose is punishable (s 144).
22.7.3 Offences committed by any person

These offences may be grouped under the following headings:
• offering certain inducements (s 137(b));
• failure to attend to give evidence, or giving false evidence (s 139);
• acceptance of consideration for illegal acts or omissions (s 141);
• removing or concealing property to defeat attachment (s 142);
• obstructing the trustee (s 145; R v Botha 1951 (1) SA 236 (T)).
Page 237
Part 8
Winding-up and rescue of companies and close
corporations
Chapter 23: Winding-up of companies
23.1 Modes of winding-up and alternatives to winding-up

23.2 Winding-up by court
23.3 Voluntary winding-up
23.4 Consequences of winding-up
23.5 Meetings and proof of claims
23.6 The liquidator
23.7 Duties of liquidator
23.8 Powers of liquidator
23.9 Interrogation and inquiry
23.10 Impeachable transactions
23.11 Release of liquidator
23.12 Personal liability and offences
23.13 Staying or setting aside of winding-up proceedings
23.14 Dissolution and deregistration
Chapter 24: Winding-up of close corporations

24.3 Appointment of liquidator
24.4 Meeting of creditors and members
24.5 Liquidator’s report to creditors and members
24.6 Setting aside of payments to members
24.7 Misapplication of money or property
24.8 Composition
24.9 Dissolution and deregistration of corporation
Chapter 25: Business rescue and compromise
25.1 Business rescue

25.2 Compromise with creditors
Page 239
Chapter 23
Winding-up of companies
Synopsis
Introduction
23.2.2 When company may be wound up by court
23.2.3 Parties who may apply for winding-up of insolvent company
23.2.4 Parties who may apply for winding-up of solvent company
23.2.5 Steps prior to application
23.2.6 Powers of court
23.3.1 Members’ voluntary winding-up and voluntary winding-up by company
23.3.2 Creditors’ voluntary winding-up
23.4.1 Commencement of winding-up
23.4.2 Directors divested of powers and control
23.4.3 Subsequent unauthorized dispositions void
23.4.4 Stay of proceedings
23.4.5 Notice of winding-up
23.4.6 Lodging of statement of affairs with Master
23.5.1 Creditors’ meetings
23.5.2 Members’ meetings
23.5.3 Proof of claims
23.6 The liquidator
23.6.1 Appointment of provisional liquidator
23.6.2 Appointment of liquidator
23.6.3 Persons disqualified from being liquidator
23.6.4 Removal of liquidator from office
23.7.1 General function
23.7.2 Providing information
23.7.3 Keeping records
23.7.4 Bank account and investments
23.7.5 Exposure of offences
23.7.6 Report to creditors
23.7.7 Liquidation and distribution account
23.7.8 Distribution of the assets
23.8.1 Powers for which no permission is required
23.8.2 Powers requiring Master’s consent
23.8.3 Powers requiring authority of members and creditors
Page 240

23.9.1 Interrogation
23.9.2 Inquiry by Master or court
Introduction
The definition of ‘debtor’ in s 2 of the Insolvency Act expressly excludes a company which
may be placed in liquidation under the law relating to companies (see 1.3.2) and, hence, the
estate of such a company cannot be sequestrated. Instead, the company is wound up.
‘Winding-up’ means, essentially, the procedure by which a company’s assets are sold, its
debts are paid, and any money left over is divided amongst the shareholders according to
their rights (or, in the case of a non-profit company, transferred to another non-profit
institution). Both insolvent and solvent companies may be wound up in certain
circumstances. After the process of winding-up is complete, the Companies and Intellectual
Property Commission (the Commission) records that the company has been dissolved and
publishes a notice to this effect. At this point, the company ceases to exist.
The winding-up of companies is regulated by the following legislative provisions:
• Sections 79-81 of the Companies Act 71 of 2008 (the 2008 Act). These provisions deal
with the winding-up of solvent companies.
• Chapter 14 (ss 337-426) of the Companies Act 61 of 1973 (the 1973 Act). This
chapter, with certain exceptions, continues to apply to the winding-up and liquidation
of companies as if the 1973 Act had not been repealed (s 224(3) read with item 9(1)
sch 5 of the 2008 Act). The chapter is to remain in effect until alternative legislation
adequately providing for the winding-up and liquidation of insolvent companies has
been put in operation (item 9(4)(a) sch 5 of the 2008 Act). However, certain provisions
(ss 343, 344, 346 and 348-353) do not apply to solvent companies except to the
extent necessary to give full effect to ss 79-83 of the 2008 Act (item 9(2) sch 5 of the
2008 Act).
• Various provisions of the Insolvency Act. Section 339 of the 1973 Act states that, in
the winding-up of a company unable to pay its debts, the provisions of the law relating
to insolvency must, in so far as they are applicable, be applied mutatis mutandis in
respect of any matter not specifically provided for by the 1973 Act. Other sections of
the 1973 Act make particular areas of insolvency law applicable to the winding-up of a
company: see, eg, s 340 (voidable dispositions); s 342 (application of assets to costs
and claims); s 366 (proof of claims); s 412 (meetings); s 416 (interrogations); and s
417 (inquiries). Some of these sections (ss 340, 416 and 417) apply only to the
winding-up of a company that cannot pay its debts.
In this chapter, references to sections are to those of the 1973 Act, unless otherwise stated.
| Page 241

A company may be wound up in either of two ways: by the court or voluntarily (s 343(1); s
79(1) of the 2008 Act).
• Winding-up by the court (sometimes called ‘compulsory winding-up’) is initiated by an
application to court. The application is usually brought by a creditor in the case of an
insolvent company, and a shareholder in the case of a solvent company.
• A voluntary winding-up is initiated by a special resolution of the shareholders (s 349; s
81(1) of the 2008 Act). The special resolution has to state whether the winding-up is to
be conducted by the creditors (a creditors’ voluntary winding-up) or by the
shareholders (referred to as a members’ voluntary winding-up in the case of an
insolvent company, s 343(2), and a voluntary winding-up by the company in the case
of a solvent company, s 81(1) of the 2008 Act).
The court may, on application by a creditor, a member, the Master, or the company, convert
a voluntary winding-up into a winding-up by the court (s 354(1); ss 79(3) and 81(1)(a)(ii) of
the 2008 Act). Where a conversion takes place, the court may confirm any of the steps
already taken in the voluntary winding-up (s 354(1)).
As an alternative to being wound up, financially distressed companies may be placed in
business rescue, provided there is a reasonable prospect that the company may be rescued.
An application for business rescue must be preferred over a winding-up application (Van
Niekerk v Seriso 321 CC & another [2012] ZAWCHC 63 (20 March 2012)). The court can also
make a business rescue order in any proceedings for the winding-up of the company or for
the enforcement of a security (s 131(7)). A business rescue application suspends liquidation
proceedings pending the adjudication of the business rescue application, and, if a business
rescue order is granted, until the conclusion of the business rescue (s 131(6); see Firstrand
Bank Ltd v Imperial Crown Trading 143 (Pty) Ltd 2012 (4) SA 266 (KZD)). It seems that the
term ‘liquidation proceedings’ in this context is not restricted to court proceedings leading up
to a winding-up order, but includes the entire process of voluntary or compulsory winding-up
even after a final winding-up order.
Despite the preference for business rescue, a court hearing a business rescue application
may make a winding-up order when it dismisses the business rescue application (s 131(4)
(b)).
A company that is not in business rescue may resort to a compromise with its creditors.
This mechanism can be used regardless of whether or not the company is being wound up.

Under s 12(1) of the 1973 Act, the court which had jurisdiction in regard to winding-up was
the High Court having jurisdiction over the area in which the company had its registered
office or main place of business. It followed that if the company’s registered office and main
place of business were in different High Court areas, then both courts had jurisdiction (cf
Payslip Investment Holdings CC v Y2K TEC Ltd 2001 (4) SA 781 (C) 784). The 2008 Act does
not expressly regulate jurisdiction over the person of a
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company but it has been held that the court which has jurisdiction to grant a winding-up
order is the High Court having jurisdiction over the area in which the company has its
registered address (Sibakhulu Construction (Pty) Ltd v Wedgewood Village Golf Country
Estate (Pty) Ltd 2011 JDR 1565 (WCC)). A company is obliged to have a registered address
and this has to be the location of its office in the Republic or, if it has more than one such
office, its principal place of business (s 23(3)(b) of the 2008 Act).
23.2.2 When company may be wound up by court

The grounds for the winding-up of a company are set out in s 344 (insolvent company) and s
81(1) of the 2008 Act (solvent company). As will be observed, these grounds overlap to
some extent. Some of the grounds mentioned in s 344 are not dealt with below because
they are irrelevant or insignificant under the 2008 Act.
Where application is made for the winding-up of a solvent company on one of the grounds
in s 81(1), and it appears that the company is or may be insolvent, the court, on the
application of any interested person, may order that the company be wound up as an
insolvent company (s 79(3) of the 2008 Act).
(i) Special resolution
The court may wind up a company (solvent or insolvent) if it has passed a special resolution
to be wound up by the court (s 344(a); 81(1)(a)(i)).
(ii) Failure to commence or continue with business
The court may wind up a company if it has not commenced its business within a year from
its incorporation, or if it has suspended its business for a whole year (s 344(c)). This ground
should obviously apply to both solvent and insolvent companies but, not being mentioned in
s 81(1), it is limited to insolvent companies.
(iii) Loss of capital
The court may wind up a company if 75 per cent of its issued share capital has been lost or
become useless for its business (s 344(e)). This is another example of a ground which was
originally intended to apply to both solvent and insolvent companies but which now applies
only to the latter.
(iv) Inability to pay debts
The court may wind up a company if it is unable to pay its debts as described in s 345 (s 344
(f)). However, this ground cannot be relied upon if the company is solvent despite being
unable to pay its debts.
In terms of s 345, a company is deemed to be unable to pay its debts in the following
cases:
• A creditor, to whom the company is indebted for at least R100 (then due), has left a
demand for payment at the company’s registered office and the company has
neglected for three weeks thereafter to pay, secure, or compromise the claim to the
satisfaction of the creditor (s 345(1)(a)). The requirement of delivery at the company’s
registered office is peremptory and must be strictly complied with (cf Afric Oil (Pty) Ltd
v Ramadaan Investments CC 2004 (1) SA 35 (N) 44). ‘Pay’ in this context means pay
unconditionally: thus, the tender of a lesser sum ‘in full and
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final settlement’ is not enough to avoid liquidation (Body Corporate of Fish Eagle v
Group Twelve Investments (Pty) Ltd 2003 (5) SA 414 (W) 426-7).
• A warrant of execution (or other process) issued on a judgment against the company
has been returned by the sheriff with an endorsement that he did not find disposable
property sufficient to satisfy the judgment, or that the disposable property he found
did not, upon sale, satisfy the process (s 345(1)(b)).
• It is proved to the satisfaction of the court that the company is unable to pay its debts
(s 345(1)(c)). In considering this question, the court must take into account the
contingent and prospective liabilities of the company (s 345(2); for the meaning of
‘contingent and prospective’, see 23.2.3(ii)). The source of payment is irrelevant, so a
tender to pay by someone other than the company must be taken into account in
determining its ability to pay (Helderberg Laboratories CC & others v Sola Technologies
(Pty) Ltd 2008 (2) SA 627 (C) 632). The fact that the company is factually insolvent
may, depending on the circumstances, indicate that it is unable to pay its debts
(Johnson v Hirotec (Pty) Ltd 2000 (4) SA 930 (SCA) 933–4).
(v) Dissolution of external company
The court may wind up an external company if it has been dissolved in the country in which
it was incorporated, or has ceased to carry on business, or is carrying on business only for
the purpose of winding up its affairs (s 344(g)). This ground relates only to an insolvent
external company.
An external company registered as such in South Africa may be liquidated as if it were an
independent entity, even if the foreign company to which it is ‘related’ is not liquidated or
dissolved (Sackstein NO v Proudfoot SA (Pty) Ltd 2003 (4) SA 348 (SCA) 357). It follows
that such a company may be subjected to two simultaneous and concurrent liquidation
processes: one in South Africa and the other in its country of incorporation (Ward & another
v Smit & others: In re Gurr v Zambia Airways Corporation Ltd 1998 (3) SA 175 (SCA) 183;
Sackstein NO v Proudfoot SA (Pty) Ltd (supra) 357).
(vi) Just and equitable
The court may wind up a company (solvent or insolvent) if it appears that it is just and
equitable that the company should be wound up (s 344(h); s 81(1)(c)(ii) and (d)(iii) of the
2008 Act). The courts do not regard the ‘just and equitable’ ground as some limitless or
‘catch-all’ ground for winding up a company. They generally resort to it in specific categories
of cases only, and are reluctant to extend its application (Rand Air (Pty) Ltd v Ray Bester
Investments (Pty) Ltd 1985 (2) SA 345 (W); see, however, Kia Intertrade Johannesburg
(Pty) Ltd v Infinite Motors (Pty) Ltd [1999] 2 All SA 268 (W) 276-7, 279).
The courts have held that it is just and equitable to wind up a company in the following
instances:
• Where the main object for which the company was formed is not possible of being
attained; in other words, the company’s substratum has failed or disappeared (Rand
Air (Pty) Ltd v Ray Bester Investments (Pty) Ltd (supra)). Thus, in In re Rhenosterkop
Copper Co (1908) 18 CTR 931, the court wound up a company which had been formed
to acquire and exploit certain mining rights because the land subject to the rights was
devoid of minerals. Again, in Apco Africa (Pty) Ltd & another v Apco Worldwide Inc
2008 (5) SA 615 (SCA), the court wound up a
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company which lacked infrastructure of its own and which was unable to obtain work
because of a deadlock between its shareholders. The court found that the company
depended for its existence on work being referred to it by one of its corporate
shareholders and that the deadlock between shareholders had resulted in the
disappearance of the company’s substratum.
• Where the company’s objects are illegal, or the company was formed to defraud the
persons invited to subscribe for its shares. In Cuninghame & another v First Ready
Development 249 (Association incorporated under section 21) 2010 (5) SA 325 (SCA),
the court wound up a company incorporated as an association not for gain because its
real purpose was to conduct a commercial business for gain.
• Where there is a justifiable lack of confidence in the conduct and management of the
company’s affairs. For a lack of confidence to be justifiable, it must relate to the
conduct of the directors in carrying on the company’s affairs, not their private lives
(Loch & another v John Blackwood Ltd [1924] AC 783 (PC)). Mere dissatisfaction at
being out-voted on business matters or policy issues is not enough (ibid). An example
of a justifiable loss of confidence is provided by the case of Moosa NO v MavjeeBhawan
(Pty) Ltd & another 1967 (3) SA 131 (T). The sole director of a company had misled
the members into believing that it would be uneconomical for the company to renovate
and retain a valuable piece of property, and that the company should rather sell the
property. The director had done this fraudulently, with the intention of securing the
asset for himself. The court held that the members’ loss of confidence in the director
had been warranted and that it was just and equitable that the company should be
wound up.
• Where the voting power in the board of directors or in the general meeting of the
company is so divided between dissenting groups that the deadlock cannot be resolved
except by winding up the company (Redler v Collier and The Cereal Manufacturing Co
Ltd 1923 CPD 458; cf Kanakia v Ritzshelf 1004 CC t/a Passage to India & another 2003
(2) SA 39 (D)). A deadlock in management commonly arises where there are only two
directors or two shareholders holding equal voting rights and they have developed
irreconcilable differences. However, the phenomenon is not confined to small domestic
companies. In view of the inclusion of two narrowly circumscribed deadlock situations
as grounds for the winding-up of solvent companies (s 81(1)(d)(i)–(ii) of the 2008 Act;
see (x) below), the just and equitable ground in s 81(1)(d)(iii) does not cover other
instances of absolute deadlock (Budge & others NNO v Midnight Storm Investments
256 (Pty) Ltd & another 2012 (2) SA 28 (GSJ); Cilliers NO & others v Duin& See (Pty)
Ltd 2012 (4) SA 203 (WCC)). The so-called ‘deadlock principle’, which refers to the
breakdown of a relationship of confidence and trust (see immediately below), can still
be invoked under s 81(1)(d)(iii) (Cilliers NO & others v Duin & See (Pty) Ltd (supra)).
• Where the company is a ‘quasi-partnership’ and circumstances exist which would be
good grounds for dissolving a partnership (Erasmus v Pentamed Investments (Pty) Ltd
1982 (1) SA 178 (W); Apco Africa (Pty) Ltd & another v Apco Worldwide Inc (supra)
628–9). Some companies are founded on a personal relationship of confidence and
trust similar to that existing between partners in regard to the partnership business.
This relationship usually requires the members to act reasonably and honestly towards
each other and with friendly co-operation in running the company’s affairs. If one or
more of the members act contrary to the
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spirit of this relationship and, in so doing, effectively destroy it, the court may hold it
just and equitable to wind up the company (Moosa NO v Mavjee Bhawan (Pty) Ltd &
another (supra) 137-8). In Ebrahimi v Westbourne Galleries Ltd [1973] AC 360 (HL), E
and N, who had been partners in a business, formed a company in which they were
members and directors. N and his son, who together held the majority of shares,
subsequently passed a resolution dismissing E as a director. The court held that the
dismissal, although permitted by the articles of the company, violated the personal
relationship between the parties. Hence, it was just and equitable that the company
should be wound up. (See also Wilde & another v Wadolf Investments (Pty) Ltd &
others 2005 (1) SA 354 (W).)
• Where the minority shareholders are oppressed by the controlling shareholders.
However, the court may refuse a winding-up order in this type of case if the oppression
can be removed with some other remedy, for example, by interdicting the wrongdoers
from continuing their oppression (Mouw v Imanu-Shalom Congregation & another 1994
(2) SA 240 (W)), or by making an order compelling the company or certain of its
members to buy the shares of the aggrieved minority. Where the company is insolvent,
alternative measures are unlikely to be considered unless they also address the
financial situation of the company.
(vii) Conversion of voluntary winding-up into winding-up by court
The court may wind up a solvent company that has commenced a voluntary winding-up if
the company applies to have the winding-up continued by the court (s 81(1)(a)(ii) of the
2008 Act).
(viii) No reasonable prospect of business rescue succeeding
The court may wind up a solvent company that is in business rescue if the practitioner
concludes that there is no reasonable prospect of the company’s being rescued (s 81(1)(b)).
Given that only solvent companies may be wound up on this ground, it is unlikely to be of
much use in practice. The 1973 Act does not contain a similar ground for insolvent
companies and a business rescue practitioner cannot bring an application on any of the
grounds mentioned in s 344.
(ix) Termination of business rescue proceedings
The court may wind up a solvent company that has commenced business rescue proceedings
if the proceedings have ended in the manner contemplated in s 132(2)(b) or (c)(i) (filing of
a notice of termination or rejection of the proposed business plan) and it appears just and
equitable in the circumstances for the company to be wound up (s 81(1)(c)(i)).
(x) Deadlock in management or voting
The court may wind up a solvent company where either of the following situations exists:
• The directors are deadlocked in the management of the company, the shareholders are
unable to break the deadlock, and as a result of the deadlock:
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— irreparable injury to the company is resulting, or may result; or

— the company’s business cannot be conducted to the advantage of shareholders
generally.
• The shareholders are deadlocked in voting power, and have failed for a period that
includes at least two consecutive annual general meeting dates, to elect successors to
directors whose terms have expired (s 81(1)(d)(i)-(ii)).
(xi) Fraud, illegality or misapplication of company assets
The court may wind up a solvent company on the grounds that:
• the directors, prescribed officers or other persons in control of the company are acting
in a manner that is fraudulent or otherwise illegal; or
• the company’s assets are being misapplied or wasted (s 81(1)(e)(i)-(ii)).
(xii) Failure to comply with compliance notice
The court may wind up a solvent company where:
• the company, its directors, prescribed officers or other persons in control of it are
acting or have acted in a manner that is fraudulent or otherwise illegal; the
Commission or Panel has issued a compliance notice in respect of that conduct; and
the company has failed to comply with the notice; and
• within the previous five years, enforcement procedures in terms of the 2008 Act or the
Close Corporations Act 69 of 1984 were taken against the company, its directors or
prescribed officers, or other persons in control of it for substantially the same conduct,
resulting in an administrative fine, or conviction for an offence (s 81(1)(f)(i)-(ii)).
23.2.3 Parties who may apply for winding-up of insolvent company

Section 346 says who may apply to court for the winding-up of an insolvent company. The
onus in each case is on the applicant to establish that he has the requisite locus standi to
bring the application (cf Commonwealth Shippers Ltd v Mayland Properties (Pty) Ltd (United
Dress Fabrics (Pty) Ltd & another intervening) 1978 (1) SA 70 (D) 72; Kyle & others v Maritz
& Pieterse Inc [2002] 3 All SA 223 (T) 226).
(i) The company
The company itself may bring the application (s 346(1)(a)). There is a difference of opinion
on whether the company must be authorized by a special resolution of members passed in a
general meeting or whether the company may act on a resolution of directors. In Ex parte
Tangent Sheeting (Pty) Ltd 1993 (3) SA 488 (W) and Ex parte Graaff-Reinet Rollermeule
(Edms) Bpk 2000 (4) SA 670 (E), the courts held that the directors could validly resolve to
apply as the word ‘company’ does not necessarily mean the company in general meeting and
the concept of managing the ‘business’ of a company could include deciding that it should
apply for its winding-up. But in Ex parte Russlyn Construction (Pty) Ltd 1987 (1) SA 33 (D),
Ex parte Screen Media Ltd 1991 (3) SA 462 (W) and Ex parte New Seasons Auto Holdings
(Pty) Ltd 2008 (4) SA 341 (W), the courts took the view that the answer depended on what
powers the company’s articles of association conferred on the board of directors. In each of
these cases it was found that the articles in question did not give directors the power to
terminate the company’s business.
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The 2008 Act expressly provides that directors are to manage the company’s business
‘and affairs’ and further states that the board may exercise all the powers and perform all
the functions of the company except where the Act or the company’s memorandum provides
otherwise (s 66(1) of the 2008 Act). This wide wording suggests that the board can
determine whether the company should apply. It is submitted that requiring only a board
decision is the preferable approach. Convening a meeting of members may be an expensive
exercise (a cost an impecunious company can ill afford) and, in the case of a large company,
may take some time. The delay may not only harm the company and its creditors, but it
may also work to the prejudice of the directors, who may be under a duty to end the
activities of the company promptly to avoid the charge that they carried on the business of
the company recklessly.
(ii) One or more creditors
The application may be brought by one or more creditors, including contingent or
prospective creditors (s 346(1)(b)). The creditor’s claim need not equal or exceed any
particular amount, as it must in an application for compulsory sequestration. (The
requirement, in s 345(1)(a), of a liquidated claim of R100 is relevant only to proof of the
company’s inability to pay its debts.)
A ‘contingent or prospective creditor’ is one with a claim against the company which will
only become enforceable in the future. The expression includes, for example, a party who
has lent money, repayable on a date which has not yet arrived, a surety for the company
(Wilde & another v Wadolf Investments (Pty) Ltd & others (supra) 358), and a person with a
damages claim, the amount of which has not yet been quantified by the court (Gillis-Mason
Construction Co (Pty) Ltd v Overvaal Crushers (Pty) Ltd 1971 (1) SA 524 (T)). It does not
include the claim of a preferent shareholder (Choice Holdings Ltd v Yabeng Investment
Holding Co Ltd 2001 (3) SA 1350 (W) 1356-7).
(iii) One or more of its members
The application may be brought by one or more of the company’s members, or by a person
appointed as executor, trustee, liquidator, curator, or guardian in respect of a member who
is deceased, insolvent or under a disability (s 346(1)(c) and 103(3)). However, a member
may not apply unless he has been registered as such in the register of members for at least
six months prior to the date of the application, or unless the shares he holds have devolved
upon him through the death of a former holder (s 346(2)). Further, a member may not
apply on the grounds mentioned in 23.2.2(i), (vi), and (vii) above (special resolution,
inability to pay debts, dissolution of external company) (s 346(2)).
It will be observed that the members of a company have various ways of initiating the
winding-up of the company:
• The members may resolve by special resolution to proceed with a members’ voluntary
winding-up of the company.
• The members may resolve by special resolution to proceed with a creditors’ voluntary
• The members may resolve by special resolution that the company should apply to court
for a winding-up order. The application may be founded on any of the grounds stated
in s 344, including the fact that the company is unable to pay its debts.
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• One or more members (who meet certain requirements) may apply to court for a
winding-up order. The application may only be brought on some of the grounds stated
in s 344. Most importantly, it cannot be founded on the inability of the company to pay
its debts. An application for a winding-up order on this ground can only be brought by
the company itself (acting pursuant to a special, or perhaps a directors’, resolution),
one or more creditors of the company, the Master, or a provisional or final judicial
manager.
(iv) Any or all of the above parties
The application may be brought jointly by some or all of the parties mentioned above (ie,
the company, creditors, and members) (s 346(1)(d)).
(v) The Master
As mentioned above, the Master may apply to convert a voluntary winding-up into a
winding-up by the court (s 346(1)(e)). This is the only instance where the Master may apply
for the winding-up of a company. The reason why the Master would want to convert a
voluntary winding-up into a winding-up by the court is usually to make available the
procedure for examination and enquiry under ss 417 and 418 (see 23.5.1). The most
probable ground for winding-up on which the Master will base his application is the inability
of the company to pay its debts.
(vi) A provisional or final judicial manager
A provisional judicial manager may bring the application where the provisional order of
judicial management is discharged (s 346(1)(f)). This provision does not preclude a creditor
from applying for the winding-up of a company under judicial management (Confrees (Pty)
Ltd v Oneanate Investments (Pty) Ltd (Snoek Wholesalers (Pty) Ltd & others intervening)
1996 (1) SA 759 (C) 762-3). A final judicial manager is obliged to apply for winding-up if it
appears to him that the company he is managing will not become a successful concern (s
433(1)). Although the judicial management provisions have been repealed by the 2008 Act,
this provision remains relevant to judicial managers appointed under the 1973 Act.
23.2.4 Parties who may apply for winding-up of solvent company

Section 81(1) of the 2008 Act deals with the question of who may apply for the winding-up
of a solvent company on the grounds specified in that section. The list below sets out the
different grounds and the person or persons entitled to apply in each instance. As will be
observed, the question of who has locus standi varies according to the basis of the
application.
• Special resolution — the company.
• Just and equitable — the company, one or more directors, one or more shareholders,
or one or more creditors (s 81(1)(d) and 81(1)(c)(ii)).
• Conversion of voluntary winding-up into winding-up by court — the company (s 81(1)
(a)(ii)).
• No reasonable prospect of business rescue succeeding — the practitioner of the
company appointed during the business rescue proceedings (s 81(1)(b)).
• Termination of business rescue proceedings — one or more creditors (s 81(1)(c)).
Page 249
• Deadlock in management or voting — the company, one or more directors, or one or

more shareholders (s 81(1)(d)).
• Fraud, illegality or misapplication of company assets — any shareholder (with leave of
the court) (s 81(1)(e)).
• Failure to comply with compliance notice — the Companies and Intellectual Property
Commission or Takeover Regulation Panel (s 81(1)(f)).
A shareholder may not apply to wind up the company on the basis of a deadlock in
management or voting or on the ground of fraud, illegality or a misapplication of company
assets unless he has been a shareholder, or he and the party from whom he acquired the
shares have been shareholders, continuously for at least six months immediately before the
date of the application (s 81(2)).
23.2.5 Steps prior to application

Sections 346(3)-(4A) impose several requirements to be complied with in an application for
a winding-up order. It is uncertain whether these requirements apply in an application to
wind up a solvent company, as s 346 applies only ‘to the extent necessary to give full effect
to the provisions of Part G of Chapter 2’ of the 2008 Act (item 9(2) of sch 5 of the 2008 Act).
The better view would seem to be that compliance with these requirements is necessary to
give full effect to ss 79-81 of the 2008 Act (cf s 79(2) of the 2008 Act) and, accordingly, the
requirements are also applicable to the winding-up of solvent companies.
(i) Security for costs
A party applying for winding-up must give sufficient security for the payment of all fees and
charges necessary for the prosecution of all winding-up proceedings and of all costs of
administering the company in liquidation until a provisional liquidator has been appointed,
or, if none is appointed, of all fees and charges necessary for the discharge of the company
from the winding-up (s 346(3)). The application must be accompanied by a certificate issued
by the Master not more than 10 days before the date of the application to the effect that this
security has been given (ibid).
(ii) Master’s report
Before presenting his application to the court, the applicant must serve a copy on the
Master, who may report to the court any facts which he has ascertained which may justify
postponing or dismissing the application (s 346(4)).
(iii) Notification of certain interested parties
When presenting the application to court, the applicant must also furnish a copy of it to the
following (s 346(4A)(a)(i)-(iv)):
• every registered trade union that, as far as the applicant can reasonably ascertain,
represents any of the company’s employees;
• the employees themselves, by affixing a copy of the notice to any notice board
accessible by the applicant and the employees inside the company premises, or, if
there is no such access, by affixing a copy either to the front gate of the premises or to
the front door of the premises from which the company conducted any business at the
time of the application;
• the South African Revenue Service; and
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• the company, unless the application is made by the company, or unless the court, in its
discretion, dispenses with the furnishing of a copy where the court is satisfied that it
would be in the interests of the company or of the creditors to dispense with it.
Further, the applicant must, before or at the hearing, file an affidavit by the person who
furnished a copy of the application, stating how the above requirements were met (s 346
(4A)(b)).
23.2.6 Powers of court

The court may not grant a winding-up order on the grounds listed in s 81(1)(e) (fraud,
illegality or misapplication of company assets; see 23.2.2(xi) above) or s 81(1)(f) (failure to
comply with a compliance notice; see 23.2.2(xii) above) if, before the conclusion of the court
proceedings, the director or directors implicated in that conduct have resigned or have been
removed and the remaining directors were not materially implicated, or if one or more
shareholders have applied for an order of delinquency against the director or director
responsible for the misconduct and the court is satisfied that their removal would bring an
end to the misconduct (s 81(3) of the 2008 Act).
The court may grant or dismiss any application for winding-up, or adjourn the hearing
thereof, conditionally or unconditionally, or make any interim order or any other order it may
deem just (s 347(1)). In practice, the court usually does not make a final order immediately.
It makes a provisional winding-up order (provided the applicant has made out a prima facie
case), and issues a rule nisi calling on all interested parties to show cause on the return date
of the rule why the court should not make an order placing the company under final
liquidation. However, the Act does not oblige the court to make a provisional order and it
may, if it deems it appropriate, make a final order immediately, for instance, where the
issues have been fully ventilated and nothing has been suggested or put forward to indicate
that further relevant facts would be forthcoming if a rule nisi were issued (Johnson v Hirotec
(Pty) Ltd (supra) 934-5).
The court’s power to grant an application for winding-up is discretionary, irrespective of
the ground on which it is sought (SAA Distributors (Pty) Ltd v Sport en Spel (Edms) Bpk
1973 (3) SA 371 (C) 373; Kyle & others v Maritz & Pieterse Inc [2002] 3 All SA 223 (T)
225). When a court is faced with the choice between business rescue and winding-up, the
former must be preferred (Van Niekerk v Seriso 321 CC & another [2012] ZAWCHC 63 (20
March 2012)). While it was previously accepted that creditors have a right to a winding-up
order where a company is unable to pay (see Absa Bank Ltd v Rhebokskloof (Pty) Ltd &
others 1993 (4) SA 436 (C)), this approach has been tempered by the availability of
business rescue proceedings (Southern Palace Investments 265 (Pty) Ltd v Midnight Storm
Investments 386 Ltd 2012 (2) SA 423 (WCC), but see Firstrand Bank Ltd v Imperial Crown
Trading 143 (Pty) Ltd 2012 (4) SA 266 (KZD)). However, winding-up is more appropriate
than business rescue when dispositions made by the company may need to be set aside
(Engen Petroleum Ltd v Multi Waste (Pty) Ltd & others 2012 (5) SA 596 (GSJ); Oakdene
Square Properties (Pty) Ltd & others v Farm Bothasfontein (Kyalami) (Pty) Ltd & others 2012
(3) SA 273 (GSJ); Gormley v West City Precinct Properties (Pty) Ltd & another, Anglo Irish
Bank Corporation Ltd v West City Precinct Properties (Pty) Ltd & another [2012] ZAWCHC 33
(18 April 2012)) or where the company is involved in legal disputes, particularly
Page 251
pertaining to contracts such as leases of immovable property, that could simply be

terminated by a liquidator, where there is a deadlock between the shareholders, or where
there is a lack of up-to-date financial information about the company (Firstrand Bank Ltd v
Imperial Crown Trading 143 (Pty) Ltd (supra)).
The court may not refuse a winding-up order merely because the company has no assets
or because its assets have been mortgaged to their full value (s 347(1)). And, unlike in the
case of an application for sequestration, the court need not be satisfied that winding-up will
be to the advantage of the company’s creditors (although the likelihood or otherwise of a
dividend is obviously an important factor for the court to consider) (Securefin Ltd v KNA
Insurance and Investment Brokers (Pty) Ltd [2001] 3 All SA 15 (T) 27).
Where the company disputes allegations of fact in the creditor’s application, the court may
make a provisional winding-up order only if it is satisfied, from all the papers filed, that the
requirements for a winding-up order have been established on a balance of probabilities
(Reynolds NO v Mecklenberg (Pty) Ltd 1996 (1) SA 75 (W) 81). On the return day, the court
may refer one or more disputed questions of fact to oral evidence or postpone the
application pending the outcome of a trial action (ibid).
The court will ordinarily not grant a provisional winding-up order if the company bona fide
and on reasonable grounds disputes its indebtedness to the creditor (although the rule here
is not entirely inflexible) (Kalil v Decotex (Pty) Ltd & another 1988 (1) SA 943 (A) 980-2). In
such a case, it does not matter that the creditor has made out a case on a balance of
probabilities (Payslip Investment Holdings CC v Y2K TEC Ltd 2001 (4) SA 781 (C) 783). The
reason for refusing the order is essentially that the application amounts to an abuse of the
winding-up procedure (ibid; see also Hülse-Reutter & another v HEG Consulting Enterprises
(Pty) Ltd (Lane and Fey NNO intervening) 1998 (2) SA 208 (C) 218-20). The courts have
frequently emphasized that the procedure for winding-up is not designed for the resolution
of disputes as to the existence or non-existence of a debt, and that a party should not resort
to the procedure as a means of putting pressure on a company to pay a debt which the
company genuinely disputes on reasonable grounds (ibid). To resist the application
successfully, the company does not have to establish that it would prove or succeed with its
defence; it merely has bona fide to allege facts which, if proved, would constitute a good
defence to the claim (ibid; see also Robson v Wax Works (Pty) Ltd & others 2001 (3) SA
1117 (C) 1122).
Where the application is presented by members of the company, the court will not make a
winding-up order if some other remedy (for example, relief in terms of s 163 of the 2008
Act) is available to the applicants and they are acting unreasonably in seeking to have the
company wound up instead of pursuing that other remedy (s 347(2); Robson v Wax Works
(Pty) Ltd & others (supra)). In Theron v Phoenix Marketing (Pty) Ltd (Heyman intervening)
1998 (4) SA 287 (W), the court refused to make a winding-up order on the just and
equitable ground because the applicant shareholder had failed to adhere to the terms of a
shareholder agreement which obliged him to offer his shares to the other shareholders
before resorting to an application for winding-up.
Page 252

An insolvent company may be wound up voluntarily if it has adopted a special resolution to
that effect (s 349) and that resolution has been registered by the Commission in accordance
with the formalities laid down in s 200 (ss 350(1) and 351(1); see also Botha & others NNO
v Van den Heever NO & others (unreported, GNP case no 40406/12, 23 July 2012)). A
special resolution to wind up a company must state whether the winding-up is a members’
voluntary winding-up or a creditors’ voluntary winding-up (ibid).
A solvent company may be wound up voluntarily if it has adopted a special resolution to
this effect and filed it with the Commission (s 80(1)-(2) of the 2008 Act). The resolution
must provide for the winding-up to be by the company, or by its creditors (s 80(1) of the
2008 Act).
23.3.1 Members’ voluntary winding-up and voluntary winding-up by company
A members’ voluntary winding-up and a voluntary winding-up by the company can take
place only if the company is able to pay its debts in full. Before the process can proceed—
• security must be furnished to the satisfaction of the Master for payment of the debts of
the company within 12 months from the beginning of the winding-up; or
• the Master must dispense with such security. The Master may do this only upon
receiving an affidavit by the directors of the company that it has no debts and a
certificate by the auditor of the company (or if the company does not have an auditor,
a person meeting the requirements for appointment as auditor) that, to the best of his
knowledge and belief, and according to the records of the company, it has no debts (s
350(1); s 80(3) of the 2008 Act).
A members’ voluntary winding-up or voluntary winding-up by the company may be resorted
to for a variety of reasons; for example, the purpose for which the company was formed
may have been fulfilled, or the members responsible for running the company may no longer
be on amicable terms. The procedure is simpler and quicker than a winding-up by the court
or a creditors’ voluntary winding-up. The members control the process throughout: creditors
do not prove their claims or hold meetings.
Although the notion of an insolvent company under members’ voluntary winding-up may
seem strange, it is not impossible for a factually or commercially insolvent company to
arrange security for the full payment of its debts.
The provision for voluntary winding-up by special resolution of shareholders cannot be
excluded from a company’s articles of association, and a court will not interfere with the
exercise by the requisite majority of shareholders of the right to resolve that the company
be voluntarily wound up (National Union of Leather Workers v Barnard and Perry NNO 2001
(4) SA 1261 (LAC) 1262).
23.3.2 Creditors’ voluntary winding-up

A creditors’ voluntary winding-up, unlike a members’ voluntary winding-up or voluntary
winding-up by the company, may be resorted to where the company is unable to pay its
debts. A creditors’ voluntary winding-up can be of a solvent or an insolvent company (s 79
(1)(a)(ii) of the 2008 Act; s 343(2)(a), 351). A solvent company might
Page 253
wish to resort to this type of winding-up where it has debts but is unable or unwilling to
furnish security for the full payment of its debts within 12 months. The procedure resembles
a winding-up by the court in that meetings of creditors are held and the liquidator is subject
to the directions of the creditors who have proved claims. The procedure may aptly be
described as a ‘voluntary winding-up under creditors’ supervision’. The directors must
prepare a statement in the prescribed form of the company’s affairs and lay it before the
meeting convened to pass the resolution (s 363(1)). Certain criminal provisions which apply
to a winding-up by the court do not apply to a creditors’ voluntary winding-up (s 425).

23.4.1 Commencement of winding-up
A winding-up by the court of an insolvent company is deemed to commence ‘at the time of
the presentation to court of the application for the winding-up’ (s 348). An application for
winding-up is presented to the court for these purposes when the papers are duly lodged
with the Registrar of the court (Nel & others NNO v The Master & others 2002 (3) SA 354
(SCA) 358). The phrase ‘at the time’ is given its ordinary meaning, namely at that specific
point in time, rather than on the day or date in question (Development Bank of Southern
Africa Ltd v Van Rensburg & others NNO 2002 (5) SA 425 (SCA) 431-2). If two or more
applications are made, the winding-up commences as soon as any of them is lodged with the
Registrar, irrespective of whether security in respect of this application was lodged first (First
National Bank Ltd v E U Civils (Pty) Ltd; First National Bank Ltd v E U Plant (Pty) Ltd;
Bassett v EU Civils (Pty) Ltd; E U Holdings (Pty) Ltd v E U Plant (Pty) Ltd 1996 (1) SA 924
(C)), and even if the final winding-up order is granted on another application (Nel & others
NNO v The Master & others (supra) 354). In this case, a provisional winding-up order
brought by one creditor was discharged and immediately replaced by a final order granted at
the instance of an intervening creditor. It was held that the winding-up commenced on the
date when the original application was lodged with the Registrar.
A winding-up by the court of a solvent company begins when an application ‘has been
made’ to the court on one of the following grounds:
• the company has adopted a special resolution that it be wound up by the court;
• the company has applied to court to have its voluntary winding-up continued by the
court; or
• the business rescue practitioner has applied for liquidation on the ground that there is
no reasonable prospect of the company being rescued (s 81(4)(a) read with 81(1)(a)
-(b)).
In all other cases the winding-up by the court of a solvent company begins when the court
has actually made the winding-up order (s 81(4)(b)).
The voluntary winding-up of an insolvent company commences when the relevant special
resolution of members is registered with the Commission in terms of s 200 (s 352(1); see
also Botha & others NNO v Van den Heever NO & others (unreported, GNP case no
40406/12, 23 July 2012)). The voluntary winding-up of a solvent company begins when the
special resolution is filed with the Commission (s 80(6)).
Page 254
Determining the precise time of commencement is important because various

consequences of winding-up come into effect when the winding-up commences, as opposed
to when the court makes a provisional or final winding-up order.
23.4.2 Directors divested of powers and control

Winding-up, like sequestration, establishes a concursus creditorum, which is aimed at
ensuring that the company’s property is collected and distributed among creditors in the
prescribed order of preference (Taylor and Steyn NNO v Koekemoer 1982 (1) SA 374 (T)
377; and see 1.2). The concursus creditorum is established by the granting of a winding-up
order, including a provisional order (Excellent Petroleum (Pty) Ltd (in Liquidation) v Brent Oil
(Pty) Ltd 2012 (5) SA 407 (GNP)).
The company does not lose its corporate identity (s 353(1); and see s 80(8)(a) of the
2008 Act in relation to voluntary winding-up of a solvent company), nor does it lose title to
its assets (unless so ordered: s 361(2)). But from the moment the winding-up commences,
the following consequences ensue:
• The powers of directors cease and the directors become functus officio (Attorney-
General v Blumenthal 1961 (4) SA 313 (T); s 353(2)). In a voluntary winding-up, the
liquidator, creditors, or members may sanction a continuance of directors’ powers, in
whole or in part (s 353(2); and see s 80(8)(b)(ii) of the 2008 Act in relation to
voluntary winding-up of a solvent company).
• The company’s property is deemed to be in the custody and under the control of the
Master until a provisional liquidator has been appointed and has assumed office (s 361
(1)-(2)). A company thus retains the dominium of its property. Section 339 does not
have the effect of applying s 20(1)(c) of the Insolvency Act, which divests an insolvent
of his assets, to the winding-up of a company that is unable to pay its debt (Legh v
Nungu Trading 353 (Pty) Ltd & another 2008 (2) SA 1 (SCA)).
• The company may not continue with its business, except in so far as may be necessary
for its beneficial winding-up (Letsitele Stores (Pty) Ltd v Roets & others 1958 (2) SA
224 (T); s 353(1); and see s 80(8)(b)(i) of the 2008 Act in relation to voluntary
winding-up of a solvent company).
23.4.3 Subsequent unauthorized dispositions void

After the winding-up of a company has commenced:
• any transfer of shares of the company without the liquidator’s permission is void (s 341
(1)); and
• if the company is unable to pay its debts, every disposition of its property (including
rights of action) not sanctioned by the court is void (s 341(2); see also Schmidt &
another NNO v Absa Bank Ltd 2002 (6) SA 706 (W)712–13).
Furthermore, no set-off can take place unless mutuality of the respective claims existed at
the time of the winding-up (Thorne & another NNO v The Government 1973 (4) SA 42 (T)).
In deciding whether to sanction a disposition made after the commencement of winding-
up, the court has regard to all the circumstances and, in particular, to the good faith (or
otherwise) of the recipient and the company, and the interests of the general body of
creditors (Lane NO v Olivier Transport 1997 (1) SA 383 (C)). The court’s discretion applies
only to dispositions after the deemed commencement
Page 255
of winding-up but before a winding-up order (provisional or final) has been made (Excellent
Petroleum (Pty) Ltd (in Liquidation) v Brent Oil (Pty) Ltd (supra)).
23.4.4 Stay of proceedings

Once a winding-up order is made or a special resolution for voluntary winding-up is
registered or filed, all civil proceedings (including judgments: Richard Keay Pollock NO v
North Copper Wire (Pty) Ltd [2002] 1 All SA 244 (T) 246) by or against the company are
suspended until the appointment of a liquidator (s 359(1)(a)). (An application for the
winding-up of a company is not a civil proceeding for these purposes and may thus be
proceeded with despite the registration of a resolution for voluntary winding-up: King Pie
Holdings (Pty) Ltd v King Pie (Pinetown) (Pty) Ltd; King Pie Holdings (Pty) Ltd v King Pie
(Durban) (Pty) Ltd 1998 (4) SA 1240 (D)). Any attachment or execution put in force against
the assets of the company is void (s 359(1)(b); The Nantai Princess: Nantai Line Co Ltd &
another v Cargo Laden on the MV Nantai Princess and Other Vessels & others 1997 (2) SA
580 (D)). An attachment is ‘put in force’ within the meaning of these words if, in pursuance
of a writ of execution, the sheriff of the court takes possession of the property (Rennie NO v
Registrar of Deeds & another 1977 (2) SA 513 (C) 515; LL Mining Corporation Ltd v Namco
(Pty) Ltd (in Liquidation) & others 2004 (3) SA 407 (C) 411-12). If a sale in execution took
place before commencement of the winding-up but has not been completed, the sheriff may
not give transfer to the buyer (Syfrets Bank Ltd & others v Sheriff of the Supreme Court,
Durban Central, & another 1997 (1) SA 764 (D); contra Shurrie v Sheriff for the Supreme
Court, Wynberg, & others 1995 (4) SA 709 (C); cf Edkins v Registrar of Deeds,
Johannesburg & others [2012] ZAGPJHC 58 (9 March 2012)).
After appointment of the liquidator, civil proceedings against the company may continue
or commence provided the litigant concerned, within four weeks of the liquidator’s
appointment, gives him at least three weeks’ notice in writing before continuing or
commencing the proceedings (s 359(2)). ‘Civil proceedings’ here includes execution
proceedings put in force before the commencement of the winding-up order. So, if the
company’s property has already been attached when the company is wound up, the creditor
concerned may continue with the execution after notice to the liquidator. However, he has
no preferent claim in respect of the proceeds, other than for the costs of execution (Strydom
NO v MGN Construction (Pty) Ltd & another: In re Haljen (Pty) Ltd (in Liquidation) 1983 (1)
SA 799 (D)). The requirement of notice was enacted for the benefit of the liquidator alone
and, accordingly, it is unnecessary for a litigant to give notice to the liquidator where the
defendant is a surety for the company and not the company itself (Nedcor Bank Ltd v
Samuel & others 2005 (2) SA 439 (W) 441).
If notice of continuance of the proceedings is not given, the proceedings are considered to
have been abandoned unless the court directs otherwise (s 359(2)(b)). The court has an
unfettered discretion to allow the continuation of proceedings and must have regard to the
interests of the creditors, liquidators and members (Ronbel 108 (Pty) Ltd v Sublime
Investments (Pty) Ltd (in Liquidation) 2010 (2) SA 517 (SCA)).
Page 256
23.4.5 Notice of winding-up

The Master must, on receipt of a winding-up order, give notice of the winding-up in the
Gazette (s 356(1) and (2)(b)). The Registrar of the court must transmit a copy of the
winding-up order to certain sheriffs and Registrars of Deeds (s 357(1) and (3)).
A copy of the winding-up order must also be served on:
• any registered trade union that represents the company’s employees;
• the company’s employees themselves, by affixing a copy of the application to a notice
board accessible to them inside the debtor’s premises, or to the front gate or to the
front door of the premises from which the debtor conducted business when the
application was presented;
• the South African Revenue Service; and
• the company, unless it made the application (s 346A(1)).
To serve the winding-up order, the sheriff must establish whether a registered trade union
represents the company’s employees and whether the employees have access to a notice
board inside the company premises (s 346A(2)). Where employees can no longer be found
at the premises, personal notification will constitute substantial compliance with the
notification requirement (Hendricks NO & others v Cape Kingdom (Pty) Ltd 2010 (5) SA 274
(WCC)).
An insolvent company which has passed a resolution for its voluntary winding-up (ie, by
creditors or members) must, within 28 days after registration of the resolution, give notice
of the voluntary winding-up in the Gazette and lodge a certified copy of the resolution with
the Master together with the following:
• in the case of a members’ voluntary winding-up, a certified copy of any resolution
passed by the company nominating a liquidator (s 356(2)(a)(i));
• in the case of a creditors’ voluntary winding-up, two certified copies of a statement (in
the prescribed form) setting out the affairs of the company (s 356(2)(a)(ii)).
In a voluntary winding-up of a solvent company, the Commission has to deliver a copy of the
filed resolution to the Master (s 80(7) of the 2008 Act).
23.4.6 Lodging of statement of affairs with Master

Where the court has made a winding-up order, the directors and officers of the company
must prepare a statement in the prescribed form of the affairs of the company and lodge two
certified copies with the Master within 14 days of the date of the winding-up order (or such
further period as the Master or the court may allow) (s 363(2)). The Master may call upon
any person who, at any time during the year before the winding-up order, had been a
director or officer of the company, or had participated in the formation of the company, to
prepare the statement (ibid). The Master must send a copy of the statement to the liquidator
on his appointment (s 363(5)).

23.5.1 Creditors’ meetings
Creditors’ meetings are held in a winding-up by the court and in a creditors’ voluntary
winding-up. At least two meetings must be held. The first must be called as soon as possible
after the final winding-up order has been made by the court or the special resolution for a
creditors’ voluntary winding-up has been registered (s 364(1)). The
Page 257
purpose of this meeting is to allow creditors to consider the company’s statement of affairs,
prove claims against the company, and nominate a liquidator (ibid). Both the first and
second meetings must be convened and held as far as possible in the same manner as
meetings of creditors under the Insolvency Act (s 412(1); and see 9.1.1-9.1.2). Further
meetings of creditors must be authorized by the court (s 413).
In the case of a company unable to pay its debts, directors and officers are obliged to
attend the first and second meetings of creditors (s 414(1)). The Master may subpoena
other persons to appear at such meetings for the purpose of being interrogated (s 414(2)).
An interrogation may be held after the first and second meetings, and even after
confirmation of a final account (Standard Bank of SA Ltd v The Master & others 1999 (2) SA
257 (SCA)).
23.5.2 Members’ meetings

In a winding-up by the court and a creditors’ voluntary winding-up, a meeting of
shareholders or members must be held. It must be called as soon as possible after the final
winding-up order has been made or the special resolution has been registered or filed (s 364
(1)). The purpose of this meeting is to allow members to consider the company’s statement
of affairs and nominate a liquidator (ibid). If the company has already disposed of these
matters in general meeting when passing a resolution to wind itself up voluntarily, no
meeting need take place (ibid). The court may direct that further meetings of members be
held (s 413). Meetings of members are held in the manner prescribed by the regulations to
the Companies Act (s 364(2); 412(1)).
23.5.3 Proof of claims

In a winding-up by the court or a creditors’ voluntary winding-up, creditors must prove their
claims against the company at creditors’ meetings mutatis mutandis in accordance with the
provisions relating to the proof of claims against an insolvent estate (s 366(1)). The
liquidator may apply to the Master to fix a time by which the creditors have to prove their
claims (s 366(2)). A creditor who does not prove his claim in time will not be able to benefit
under an account lodged with the Master before the claim was proved (ibid).
In a members’ voluntary winding-up, creditors do not have to prove their claims. The
liquidator simply settles all outstanding debts, realizes the assets, and submits his liquidation
and distribution account to the Master.
23.6 The liquidator

23.6.1 Appointment of provisional liquidator
As soon as a winding-up order has been made in relation to a company, or a special
resolution for a voluntary winding-up of a company has been registered, the Master may
appoint any suitable person as provisional liquidator of the company (s 368). The provisional
liquidator must give security to the satisfaction of the Master for the proper performance of
his duties (ibid). He is required to hold office until the appointment of a liquidator (ibid). The
Master may restrict the powers of a provisional liquidator (s 386(6)). However, a provisional
liquidator may approach the court for leave to do anything necessary for the winding-up of
the company (Fourie NO v Le Roux & others 2006 (1) SA 279 (T) 285-6).
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23.6.2 Appointment of liquidator

The Master must appoint as liquidator(s):
• in the case of a members’ voluntary winding-up, the person (or persons) nominated in
the resolution lodged with the special resolution for the winding-up of the company (s
369(1); and see 23.5.2);
• in the case of a creditors’ voluntary winding-up and a winding-up by the court, the
person (or persons) nominated by the first meeting of creditors and the initial meeting
of members (s 369(2)(a)). If these meetings nominate different persons, the Master
must decide whether either or both are to be appointed (s 369(2)(b)).
The Master may decline to appoint a nominee if he was not properly nominated, or is
disqualified from being appointed (see below), or fails to give security timeously for the
proper performance of his duties (s 370(1)).
The Master may at any time appoint a co-liquidator (s 374).
In terms of s 371(1)-(3), any person aggrieved by the Master’s appointment or refusal to
appoint a liquidator may call upon the Master to submit his reasons to the Minister and the
latter may, after considering the Master’s reasons, any reply by the aggrieved party, and all
relevant documents and information, confirm or set aside the Master’s decision. According to
Janse van Rensburg v The Master & others 2004 (5) SA 173 (T), a person is ‘aggrieved’ for
the purposes of s 371 only if his nomination of a liquidator has not been given effect to by
the Master. However, in Geduldt v The Master & others 2005 (4) SA 460 (C) 464-5, it was
held that this interpretation is too narrow. What is required is a legal grievance, and if a
member or creditor does not want a specific person to be appointed liquidator, that
constitutes a legal grievance.
The remedy provided by s 371 does not apply to the appointment or non-appointment of
a provisional liquidator (Minister of Justice v Firstrand Bank Ltd & others 2003 (6) SA 636
(SCA) 642).
23.6.3 Persons disqualified from being liquidator

The following persons are disqualified from being nominated or appointed as a liquidator (s
372(a)-(j)):
• an insolvent;
• a minor or any other person under legal disability;
• a person declared to be incapable of being appointed as a liquidator for dishonesty or
abuse of his position;
• a person who has been removed from an office of trust by the court, or who has been
disqualified from being a director;
• a body corporate;
• a person who has, at any time, been convicted of theft, fraud, forgery, uttering a
forged instrument, or perjury, and has been sentenced to imprisonment without the
option of a fine or to a fine exceeding R20;
• a person who has, by misrepresentation or reward, induced or attempted to induce any
person to vote for or nominate him as liquidator, or have him appointed as liquidator;
• a person who does not reside in the Republic;
Page 259
• a person who has acted as director, officer, or auditor of that company at any time
within the 12 months before the winding-up (but in the case of a members’ voluntary
winding-up, the auditor may act as liquidator);
• an agent authorized to vote for or on behalf of a creditor at a meeting of creditors who
acts or purports to act under such authority.
If business rescue proceedings of a company conclude in a winding-up order, any person
who has acted as practitioner during those proceedings may not be appointed as liquidator
(s 140(4) of the 2008 Act).
23.6.4 Removal of liquidator from office

The liquidator may, on certain grounds, be removed from his office before he has completed
his duties as liquidator. The Master may remove the liquidator if:
• the liquidator was not qualified for nomination or appointment, or has become
disqualified, or if his nomination or appointment was for any other reason illegal;
• the liquidator has not performed his duties satisfactorily;
• the liquidator’s estate has become insolvent or he has become mentally or physically
incapable of acting as liquidator;
• the majority in number and value of the creditors or, in the case of a members’
voluntary winding-up, the majority of the members, has requested the Master in
writing to remove the liquidator;
• in the opinion of the Master, the liquidator is no longer suitable to be the liquidator of
that company (s 379(1)(a)–(e)).
If the Master does not remove the liquidator, the court may, in any of the above
circumstances or for any other good cause, remove the liquidator on application by the
Master or any other interested person (s 379(2)). The court will hold that good cause exists
only if it is satisfied that removal of the liquidator will be to the general advantage and
benefit of all persons interested in the winding-up of the company (Ma-Afrika Groepbelange
(Pty) Ltd & another v Millman and Powell NNO & another 1997 (1) SA 547 (C) 566). In this
regard, the court will take into account, inter alia, the impact that the removal will have on
the liquidator’s professional standing and reputation (Hudson & others NNO v Wilkins NO &
others 2003 (6) SA 234 (T) 239) and the expense, disruption, and inconvenience of
employing a new liquidator to complete the work (Ma-Afrika Groepbelange (Pty) Ltd &
another v Millman and Powell NNO & another (supra)).

23.7.1 General function
The liquidator’s primary duty, in any winding-up, is forthwith to take possession of all the
movable and immovable property of the company, to realize this property in the prescribed
manner, to apply the proceeds towards payment of the costs of the winding-up and the
claims of creditors, and to distribute any balance among the members (s 391). Whatever
mandate the liquidator may have received from a particular creditor and whatever
agreement the liquidator may have concluded on the company’s behalf has to yield to this
statutory duty (Commissioner, South African Revenue Service v Stand Two Nine Nought
Wynberg (Pty) Ltd & others 2005 (5) SA 583 (SCA) 587).
Page 260
In a winding-up by the court and a creditors’ voluntary winding-up, the liquidator must,
when administering the assets of the company, have regard to any directions given by
resolution of the creditors or members (s 387(1); 351(2)). If creditors and members give no
directions or conflicting ones, the liquidator may seek directions from the Master and, if he
fails to give any, from the court (s 387(2) and (3)).
The liquidator of a company stands in a fiduciary relationship to the company, to the body
of its members as a whole, and to the body of its creditors as a whole. He must not only be
detached, independent, impartial, and even-handed in his dealings with the parties
interested in the winding-up, but he must also be seen to be so. It follows that he may be
removed from office in terms of s 379(2) if he loses his independence or sides with one
party or faction in a dispute concerning the winding-up, or manifests hostility to an
interested party (James v Magistrate, Wynberg & others 1995 (1) SA 1 (C) 14). And the
same applies if, through some relationship, direct or indirect, with the company or its
management or some other person concerned in its affairs, he is in a position of actual or
apparent conflict of interest (Ma-Afrika Groepbelange (Pty) Ltd & another v Millman and
Powell NNO & another (supra); Hudson & others NNO v Wilkins NO & others (supra) 240-1).
In Standard Bank of South Africa v The Master of the High Court & others 2010 (4) SA 405
(SCA), one of the two joint liquidators of a company had also been appointed as a liquidator
of that company’s holding company and other companies in the same corporate group (a
practice often resorted to in group insolvencies). The court found that the liquidators had
lost the required objectivity and had improperly failed to dispute a large claim proven by the
holding company. They were removed as liquidators for having breached their fiduciary
duties.
Joint liquidators must act jointly in carrying out the required tasks. So, eg, a search
warrant obtained by only one of them is invalid (Powell & another v Leech & another; Leech
& others v Powell & others [1997] 4 All SA 106 (W)).
23.7.2 Providing information

The liquidator must give the Master such information and allow him such access to the books
and documents of the company as enable him to perform his duties under the Act (s 392).
23.7.3 Keeping records

The liquidator must keep records of all money, goods, books, accounts and other documents
received by him on behalf of the company (s 393(1)). The Master and any creditor may
inspect these records (s 393(2)-(3)).
23.7.4 Bank account and investments

The liquidator must open a current account in the name of the company with a bank and
must deposit in it all moneys which he receives for the company (s 394(1)). He may also
open a savings account and deposit in it moneys not immediately required for paying the
company’s debts (ibid).
23.7.5 Exposure of offences

The liquidator must examine the affairs and transactions of the company before its winding-
up in order to ascertain whether any of the present or former directors and
Page 261
officers of the company have contravened or appear to have contravened any provision of
the Act or have committed any other offence (s 400(1)). At the same time, he must
establish whether there are any grounds for an application to court under s 219 for the
disqualification of any director from office (ibid). He must submit a full report to the Master
before lodging his final account (s 400(2)). This report is thenforwarded to the Director of
Public Prosecutions, if necessary (s 400(3)). If there are grounds for an order disqualifying a
director from taking part in the management of any company, that application is brought by
the Director of Public Prosecutions (s 401).
23.7.6 Report to creditors
Except in the case of a members’ voluntary winding-up, a liquidator must, not later than
three months after his appointment, submit a report to a general meeting of creditors (s
402). The Master may grant an extension of time for submission of the report (ibid). The
report must deal with the following (s 402(a)-(i)):
• the issued capital of the company and the estimated amount of its assets and
liabilities;
• the causes of the company’s failure, if it has failed;
• whether the liquidator has submitted, or intends to submit, to the Master a report
about contraventions by any of the directors;
• whether any present or former director or officer appears to be personally liable for
damages or compensation to the company or for any debts or liabilities of the company
as provided in the Act;
• any legal proceedings by or against the company which may have been pending at the
date of the commencement of winding-up or which may have been or may be
instituted;
• whether further inquiry is, in the liquidator’s opinion, desirable in regard to any matter
relating to the promotion, formation or failure of the company or the conduct of its
business;
• whether the company has kept the accounting records required by the Act, and, if not,
in what respects these requirements have not been met;
• the progress and prospects of the winding-up; and
• any other matter which the liquidator may think fit, or in regard to which he may
desire the directions of the creditors.
23.7.7 Liquidation and distribution account

(i) Preparation and lodging
Within six months of his appointment, a liquidator must prepare and lodge with the Master a
liquidation and distribution account or, if necessary, a liquidation and contribution account (s
403(1)). The Master may grant the liquidator an extension of time for lodging the account (s
404). The account should follow the form adopted for an insolvent estate. The proceeds of
the company’s assets must be applied in payment of the costs, charges and expenses
incurred in the winding-up and the claims of creditors as nearly as possible as they would be
applied under the law of insolvency (s 342).
Page 262
(ii) Inspection
The account must lie for inspection at:
• the Master’s office;
• the office of the magistrate of the district where the registered office of the company is
located (if there is no Master’s office in this district);
• the office of the magistrate of any other district in which the company carried on
business (s 406(1)).
The account must be available for inspection for whatever period the Master determines, but
not less than 14 days (s 406(1)). Any person having an interest in the company may inspect
the account and lodge a motivated objection to it (s 407(1)). The Master may either reject
the objection, or sustain it and direct the liquidator to amend the account (s 407(2)). Any
person aggrieved by the decision of the Master may, within 14 days after the Master’s
decision, apply to the High Court that ordered the winding-up of the company to have the
Master’s decision set aside (s 407(4); Tongaat Paper Co (Pty) Ltd v The Master & others
2011 (2) SA 17 (KZP)). In Van Zyl NO v The Master 2000 (3) SA 602 (C) 607, it was held
that, since the Master is the official whom the legislature has entrusted with administration
of all estates, including companies in liquidation, his rulings ordinarily deserve some
deference. Hence, in exercising its powers under s 407(4), the court will be reluctant to
interfere with the Master’s ruling and substitute its opinion for that of the Master, and will do
so only if new facts have been placed before it, or the ruling in question is clearly tainted by
irregularity or error.
(iii) Confirmation of the account
After the account has lain open for inspection and any objections have been disposed of, the
Master must confirm the account. The confirmed account has the status of a final judgment
(s 408).
23.7.8 Distribution of the assets

Once the account has been confirmed, the liquidator must distribute the estate or collect
contributions in accordance with the account (s 409). Unless the memorandum or articles
provide otherwise, any assets remaining after payment of costs and creditors must be
distributed among the members according to their rights and interests in the company (s
342).

To perform his duties, a liquidator is vested with various powers. Some of these he may
exercise only if he has the consent of the Master or the authority of creditors and members.
The liquidator may also obtain leave from the court to raise money on the security of the
company’s assets or to do any other thing which the court may consider necessary for
winding up the company and distributing its assets (s 386(5)). Where a provisional liquidator
applies for leave, the court need not consider the probability of a final order being granted
but should determine whether the powers sought are necessary for the proper exercise of
the liquidator’s fiduciary mandate (Moodliar NO & others v Hendricks NO & others 2011 (2)
SA 199 (WCC) 212).
Page 263
23.8.1 Powers for which no permission is required

A liquidator may, by virtue of his office, do any of the following (s 386(1)(a)-(d)):
• execute in the name of the company any deed, receipt or other document, using the
company’s seal;
• prove a claim in the estate of any debtor of the company and receive payment of any
dividend;
• draw, accept, make and endorse any bill of exchange or promissory note on behalf of
the company;
• summon a general meeting of the company, or of creditors, in order to obtain authority
in regard to any matter he considers necessary.
The liquidator also has automatic authority, subject to certain limitations, to take such
measures for the protection and better administration of the affairs and property of the
company as the trustee of an insolvent estate may take in the ordinary course of his duties
and without the authority of a resolution of creditors (s 386(1)(e)).
23.8.2 Powers requiring Master’s consent

A liquidator may perform the following acts if he has the Master’s consent or authority:
• He may, at any time before convening the general meeting referred to above,
terminate any lease under which the company has hired movable or immovable
property (s 386(2)).
• He may, at any time before convening the general meeting referred to above, sell any
movable or immovable property of the company (s 386(2A) and (2B)). He must make
a prior written recommendation to the Master stating reasons why an immediate sale is
necessary (ibid). The Master may not give authority unless any holder of any
preferential right over the property consents to the sale (ibid). A court cannot usurp
the power which this section affords the Master by purporting to authorize, in its
provisional order, a (still to be appointed) provisional liquidator to sell property of the
company (Turnover Holdings (Pty) Ltd v Saphi (Pty) Ltd 1997 (1) SA 263 (T)).
• He may take urgent legal proceedings for the recovery of outstanding accounts (s 386
(4)(a)).
23.8.3 Powers requiring authority of members and creditors

Most of the powers of the liquidator may be exercised only with the authority of creditors or
members (or both). In a winding-up by the court, the authority must be granted by
meetings of members and creditors (s 386(3)). In the case of a members’ voluntary
winding-up, the authority must ordinarily emanate from a meeting of members, and in a
creditors’ voluntary winding-up, from a meeting of creditors (ibid). However, it has been
held that a liquidator in a voluntary winding-up may, in terms of s 386(5) read with 388(1),
approach the court for leave to exercise a power without first having approached the
members or creditors to obtain their authority (Gainsford & others NNO v HIAB AB 2000 (3)
SA 635 (W)).
The powers which require authority are as follows (s 386(4)(a)-(i)):
• to institute or defend legal proceedings generally (urgent legal proceedings for the
recovery of outstanding accounts may be authorized by the Master);
Page 264
• to compromise debts due to the company, or to accept part payment by a debtor in

settlement of his debt to the company;
• to compromise or admit any claim or demand against the company, including an
unliquidated claim;
• to make an arrangement with creditors, except if the company is unable to pay its
debts;
• to submit disputes to arbitration;
• to carry on or discontinue any part of the business of the company in so far as may be
necessary for its beneficial winding-up;
• to enforce or abandon uncompleted contracts for the acquisition of immovable property
(where the company is unable to pay its debts);
• to terminate contracts of lease;
• to sell any movable and immovable property of the company by public auction, public
tender or private contract, and to deliver the property;
• to perform any act or exercise any power for which the Act does not expressly require
him to obtain the leave of the court.

23.9.1 Interrogation
At any meeting of creditors of a company that is being wound up and is unable to pay its
debts, the Master, presiding officer, liquidator and any creditor who has proved a claim, may
interrogate any director or subpoenaed person about the company, its business or affairs,
and its property (s 415(1)). In principle, an examinee is not entitled to refuse to answer a
question on the ground that the answer would tend to incriminate him (s 415(3)). However,
if an examinee does refuse to answer on this ground, the Master or presiding officer may
compel him to answer only if the former has consulted with the Director of Public
Prosecutions having jurisdiction (ibid). Incriminating evidence obtained at or derived directly
from an interrogation is not admissible in criminal proceedings against the examinee or the
company of which he was an officer, other than proceedings for perjury and related offences
(s 415(5)).
23.9.2 Inquiry by Master or court

In the winding-up of a company unable to pay its debts, the Master or the court may, at any
time after the winding-up order has been made, hold an inquiry, or appoint a commissioner
to hold an inquiry, into the trade, dealings, affairs or property of the company (ss 417 and
418). The Master’s decision to hold an inquiry is reviewable under s 151 of the Insolvency
Act, but it is not an administrative action and hence not subject to review under the
Promotion of Administrative Justice Act 3 of 2000 (Nedbank Ltd v Master of the High Court,
Witwatersrand Local Division, & others 2009 (3) SA 403 (W) 412, 416).
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The parties who may be summoned to appear are any director or officer of the company
or any person known or suspected to have in his possession any property of the company or
believed to be indebted to the company, or any person deemed capable of giving information
concerning the trade, dealings, affairs or property of the company (s 417(1)). The presiding
officer at the inquiry is bound to act in accordance with the precepts of natural justice, which
enjoins him to apply procedural fairness and even-handed impartiality to all persons who
might be adversely affected by his actions (Absa Bank Ltd v Hoberman & others NNO 1998
(2) SA 781 (C) 796; Leech & others v Farber NO & others 2000 (2) SA 444 (W) 449-50;
Mitchell & another v Hodes & others NNO 2003 (3) SA 176 (C) 187-8). In particular, the
presiding officer must see to it that the inquiry is not conducted in an oppressive, vexatious
or unfair manner (Lategan & others v Lategan NO & others 2003 (6) SA 611 (D) 623-5). The
inquiry is essentially an interrogation in which information is sought to be pieced together so
that the affairs of the company may be properly wound up (Leech & others v Farber NO &
others (supra) 450-1). Although the Master or commissioner appointed to conduct the
inquiry is in overall control of it, the liquidator and any creditor, member or contributory to
the company has the right to interrogate witnesses (s 418(1)(c)). The presiding officer is
under no legal obligation to provide examinees with a list of the topics on which they are to
be interrogated or respond to questions regarding the subject matter of the inquiry (Lategan
& others v Lategan NO & others (supra) 623-5). An examinee, for his part, has no right to
disclosure of information or access to documents in the possession of the questioner and is
not entitled to refuse to answer questions concerning his dealings with the company until
such disclosure or access has been provided (Leech & others v Farber NO & others (supra)
449-53). An examinee is also not entitled to rely on the ‘right to a fair trial’ or potential loss
of tactical advantage to escape examination on issues that are the subject of pending
criminal charges (Mitchell & another v Hodes & others NNO (supra)).
An examinee may be required to answer a question despite the fact that the answer may
incriminate him. If the examinee refuses to answer on that ground, the Master or the court
may, after consulting with the Director of Public Prosecutions having jurisdiction, compel the
examinee to answer (s 417(2)(b)). As in the case of an interrogation in terms of s 415,
incriminating evidence obtained at or derived directly from the inquiry is inadmissible in
criminal proceedings against the witness or the company of which he was an officer, with the
exception of criminal proceedings for perjury and related offences (s 417(2)(c)).
Since s 417 refers to the making of a winding-up order, an inquiry in terms of s 417
cannot be held in a voluntary winding-up, unless it has been converted into a winding-up by
the court in terms of s 346(1)(e) (South African Philips (Pty) Ltd & others v The Master &
others 2000 (2) SA 841 (N)). The reference in s 417 to a company unable to pay its debts
means that a s 417 inquiry cannot be held if the company was placed in liquidation on the
just and equitable basis, unless it is proved that when the inquiry was called for, the
company was unable to pay its debts (Hudson v The Master & others 2002 (1) SA 862 (T)
868).
Page 266

In terms of s 340(1), if a company is wound up and unable to pay its debts, every
disposition of its property may be set aside, if the disposition, had it been made by an
individual, could be set aside if he became insolvent. The provisions of the law of insolvency
will apply, mutatis mutandis, to the disposition. The company must be unable to pay its
debts at the time the section is invoked by the liquidator or creditor (Sackstein NO v
Proudfoot SA (Pty) Ltd 2006 (6) SA 358 (SCA) 361-2).

When a liquidator has performed all his prescribed duties and met all the requirements of
the Master, he is entitled to a certificate to that effect. At the same time, the Master must
state that he consents to the reduction of the security given by the liquidator to a stated
amount or to its cancellation (s 385).

The court may in the course of the winding-up of a company, inquire into the conduct of any
promoter, director, or officer of the company (s 423(1)). If the court finds that there has
been any breach of faith or trust in relation to the company, or that any property of the
company has been misapplied or retained, it may order repayment or restoration of money
or property to the company (ibid). Similarly, if it appears that any business of the company
has been carried on recklessly or with the intent to defraud creditors, the court may declare
that any person who was knowingly a party to the carrying on of the business in this manner
will personally and without limitation of liability be responsible for all or any of the debts or
other liabilities of the company as the court may direct (s 424).
The following should be noted in regard to this latter section:
• Despite the fact that s 424 still refers to ‘winding-up, judicial management or
otherwise’, its field of application is now restricted to companies being wound up (sch 5
item 9(1) of the 2008 Act).
• In considering whether a company’s business has been carried on recklessly, the court
has regard to the scope of operations of the company, the role, functions and powers
of the directors, the amount of the debts, the extent of the company’s financial
difficulties, and the prospects, if any, of recovery (Philotex (Pty) Ltd & others v Snyman
& others; Braitex (Pty) Ltd & others v Snyman & others 1998 (2) SA 138 (SCA) 144).
The mere fact that a company trades while insolvent does not imply that its business is
being carried on fraudulently or recklessly (Ozinsky NO v Lloyd & others 1995 (2) SA
915 (A)). The enquiry is essentially whether, at the time a debt was incurred, there
was a genuine belief that the company would be able to pay it (Heneways Freight
Services (Pty) Ltd v Grogor 2007 (2) SA 561 (SCA) 569).
• A person is regarded as having acted ‘knowingly’ for purposes of the section if he knew
of facts from which the conclusion might properly be drawn that the business of the
company was being carried on recklessly or with intent to defraud creditors, even
though he may not have had actual knowledge of the legal consequences of those facts
(Howard v Herrigel & another NNO 1991 (2) SA 660 (A)).
Page 267
• A director may be a ‘party’ to the reckless or fraudulent conduct of the company’s
business even though he has not taken any positive steps in the carrying on of the
company’s business (Howard v Herrigel & another NNO (supra)). However, a person
who, while carrying out his own independent business and, without joining the
company in a common pursuit, incidentally enables a company to carry on its business
fraudulently or recklessly, cannot be regarded as a party to the carrying on of the
company’s business (Cooper & others NNO v SA Mutual Life Assurance Society & others
2001 (1) SA 967 (SCA)).
• Although there need not be a causal link between the reckless conduct and the debts
and liabilities in respect of which liability is to be imposed, the absence of a causal link
is relevant to determining whether it is just and equitable to make an order (Saincic &
others v Industro-Clean (Pty) Ltd & another 2009 (1) SA 538 (SCA)).
• A creditor’s rights under the section are not extinguished by the sanctioning and
implementation of a compromise (Kalinko v Nisbet & others 2002 (5) SA 766 (W)).
However, if the compromise results in the termination of the company’s winding-up, s
424 can no longer be invoked.
• Proceedings to obtain a declaration of personal liability in terms of the section may be
brought in the name of the liquidator, acting nomine officio, or in the name of the
company in liquidation (Fundstrust (Edms) Bpk (in Likwidasie) v Marais en andere
[1996] 3 All SA 574 (C)).

The court may, at any time after the commencement of a winding-up, on the application of
any liquidator, creditor, or member, stay or set aside the proceedings for winding-up (s 354
(1)). Such an order may be made either on the basis that the winding-up order ought not to
have been granted at all, or because supervening events render a stay or setting aside
necessary or desirable (Ward & another v Smit & others: In re Gurr v Zambia Airways
Corporation Ltd (supra) 180, overruling Storti v Nugent & others 2001 (3) SA 783 (W); Klass
v Contract Interiors CC (in Liquidation) & others 2010 (5) SA 40 (D)).
An applicant who seeks to stay or set aside winding-up proceedings bears the ordinary
civil onus, regardless of whether the winding-up is a voluntary winding-up or a winding-up
by the court (Ex parte Strip Mining (Pty) Ltd: In re Natal Coal Exploration Co (in Liquidation)
(Kangra Group (Pty) Ltd & another intervening) 1999 (1) SA 1086 (SCA)). In reaching a
decision, the court may have regard to the wishes of the creditors or members if proved to it
by sufficient evidence (s 354(2); SAA Distributors (Pty) Ltd v Sport en Spel (Edms) Bpk
(supra) 375). For evidence to be ‘sufficient’ for these purposes, it should indicate that the
creditors have applied their minds to the matter and it should provide the factual basis on
which they have formed their view (Porterstraat 69 Eiendomme (Pty) Ltd v PA Venter
Worcester (Pty) Ltd 2000 (4) SA 598 (C) 613). More is required, for example, than a set of
vaguely couched letters which fail to indicate any knowledge of the company’s financial woes
or show why a postponement would be advantageous for creditors (ibid).
The court may also intervene in a voluntary winding-up and give directions on how that
winding-up must be continued (s 354(1)).
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The dissolution and deregistration of companies is regulated by ss 82 and 83 of the 2008
Act. Deregistration entails removing the name of a company from the companies register (s
83(1)). The effect is generally that the company is dissolved, the only exception being where
the reason for the removal is that the company is transferring its registration to a foreign
jurisdiction (s 83(1) of the 2008 Act). Although the terms dissolution and deregistration are
used, these concepts cannot be separated.
In a winding-up, when the affairs of a company have been completely wound up, the
Master must send a certificate to that effect to the Commission (s 82(1) of the 2008 Act),
who has to record the dissolution of the company and remove its name from the companies
register (s 82(2) of the 2008 Act). In addition to this provision, s 419 of the 1973 Act also
continues to apply to this situation as it forms part of chapter 14 of that Act (see sch 5 item
9 of the 2008 Act). In relation to solvent companies, the provisions of the 2008 Act prevail in
the event of a conflict between it and chapter 14 of the 1973 Act (sch 5 item 9((3) of the
2008 Act). However, the transitional arrangements are silent on the solution of a conflict in
relation to an insolvent company. Section 419 of the 1973 Act is more onerous than s 82 of
the 2008 Act in that the Commission is required to publish a notice of dissolution in the
Gazette (s419(2)).
When a company is dissolved, its legal life comes to an end and nothing remains of it. If
assets of the company were not transferred before dissolution, they accrue to the State as
bona vacantia (Rainbow Diamonds (Edms) Bpk en andere v Suid-Afrikaanse Nasionale
Lewensassuransie maatskappy 1984 (3) SA 1 (A)).
The Commission is obliged to keep a register containing particulars of directors of
dissolved companies which were unable to pay their debts (s 421).
A company that has ceased carrying on business can be deregistered on request to the
Commission if it has been determined that the company has no assets or, because of the
inadequacy of its assets, there is no reasonable probability of the company being wound up
(s 82(3)(b)(ii) of the 2008 Act).
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Chapter 24
Winding-up of close corporations
Synopsis
Introduction
24.2.2 When corporation may be wound up by court
24.4 Meeting of creditors and members
24.6.1 Payments by reason of membership
24.6.2 Salary or remuneration
24.6.3 Liquidator’s duty to investigate personal liability of members
24.8 Composition
Introduction
In this chapter, references are to sections of the Close Corporations Act 69 of 1984 unless
otherwise indicated. A close corporation is called simply a ‘corporation’.
The winding-up of a close corporation is dealt with by the Close Corporations Act, but this
Act effectively incorporates many of the provisions of the 1973 and 2008 Companies Acts on
winding-up and makes them applicable to close corporations. Thus, s 66(1) of the Close
Corporations Act says that the provisions of chapter 14 of the 1973 Companies Act, with the
changes required by the context, apply to the liquidation of a close corporation, unless the
matter has been specifically provided for by the Close Corporations Act. The winding-up of a
corporation must be administered in accordance with the 1973 Companies Act (s 67(2)).
Section 66(2) sets out how various words and phrases should be understood when the
Companies Act and Insolvency Act are being applied to close corporations.
Like a company, a close corporation may be wound up voluntarily or by the court. A
voluntary winding-up may be either a creditors’ voluntary winding-up, a voluntary winding-
up by the corporation (solvent close corporation) or a members’ voluntary winding-up
|
(insolvent close corporation).
A close corporation can be placed in business rescue and can also conclude a statutory
compromise with its creditors (s 66(1A)). In addition, a close corporation may, once it is in
liquidation, enter into a composition (s 72).
Page 270
A corporation may be wound up voluntarily through a unanimous written resolution of its
members (s 66(2)(b)(i); cf s 1 sv ‘special resolution’ of the 2008 Companies Act). The
provisions of the 2008 and 1973 Companies Acts apply to close corporations, read with the
changes required by the context (see 23.3).

Although only a high court has jurisdiction to wind up a company (see 23.2.1), both a High
Court and a magistrate’s court have jurisdiction to wind up a corporation (ss 7 and s 66(2)
(a)(xiv); see also s 29(1)(fA) of the Magistrates’ Courts Act 32 of 1944). The court having
jurisdiction is that which has jurisdiction where the corporation’s registered office or main
place of business is situated (s 7).
24.2.2 When corporation may be wound up by court

The grounds for the winding-up of a close corporation, and the parties who may apply for its
winding-up, mirror those for solvent and insolvent companies (see 23.2.2-23.2.4). Although
s 69 sets out when a corporation will be deemed unable to pay its debts, it does so expressly
‘[f]or the purpose of section 68(c)’ and s 68 (which previously set out the grounds for the
winding-up of a corporation) has been repealed. It would seem to follow, therefore, that
despite the retention of s 69, a corporation’s inability to pay its debts, as a ground for its
winding-up, must be established in terms of s 345 of the 1973 Companies Act (but see
Scania Finance Southern Africa (Pty) Ltd v Thomi-Gee Road Carrier CC, Absa Bank Ltd v
Fernofire Bethlehem CC [2012] ZAFSHC 148 (19 July 2012)). Section 345 differs only in
minor respects from s 69.

As soon as practicable after a provisional winding-up order has been made or a resolution for
voluntary winding-up has been registered, the Master must, in accordance with policy
determined by the Minister, appoint a suitable natural person as a liquidator (s 74(1)-(2)).
In the case of a members’ voluntary winding-up, the Master must, when deciding whom to
appoint, take into consideration any person nominated by the corporation (s 74(3)). In other
cases, the Master has a wide discretion.
The Master may decline to appoint a nominee if he was not properly nominated, or is
disqualified from being appointed, or if he fails to give security within the stipulated time for
the due performance of his duties (s 76(1)).
Any person aggrieved by the Master’s appointment of, or refusal to appoint, a liquidator
may, within seven days, request the Master in writing to submit his reasons for such
appointment or refusal to the Minister (s 66 read with 371 of the Companies Act 61 of 1973;
Geduldt v The Master & others 2005 (4) SA 460 (C) 463-4; see also 1.5 and 23.6.2).
The Master may appoint a person as co-liquidator (ie, joint liquidator) if he was nominated
as such at the first meeting of creditors and gives security to the satisfaction of the Master
for the proper performance of his duties (s 74(4)). Before nominations for
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a co-liquidator may be considered at the first meeting of creditors, the meeting has to vote,
according to value, on whether a co-liquidator should be appointed (Spence v The Master &
others 2000 (2) SA 717 (T)).
24.4 Meetings of creditors and members
Within a month after a final winding-up order has been made or a resolution for a creditors’
voluntary winding-up has been registered, the liquidator (not the Master) must summon a
meeting of creditors and a meeting of members (s 78(1); De Wit v Boathavens CC (King &
another intervening) 1989 (1) SA 606 (C) 615)). The purpose of the creditors’ meeting is to
consider the statement of the corporation’s affairs lodged with the Master, prove claims
against the estate, decide whether a co-liquidator should be appointed, and receive
directions or authorization on any matter regarding the liquidation (s 78(1)(a)). The
members’ meeting is held to consider the statement of the corporation’s affairs (unless this
has been done already by the members when passing a resolution for voluntary winding-up),
and for the liquidator to receive or obtain directions or authorization on any matter regarding
the liquidation (s 78(1)(b)).

Except in the case of a members’ voluntary winding-up, a liquidator must, within three
months from the date of his appointment, submit to a general meeting of creditors and
members a report on the following matters (s 79(a)-(i)):
• the estimated amounts of the corporation’s assets and liabilities;
• if the corporation has failed, the causes of the failure;
• whether he has submitted or intends to submit to the Master a report about possible
offences committed by members;
• whether any member or former member appears to be liable to the corporation for
breach of trust or negligence;
• whether any member or former member appears to be liable to make repayments to
the corporation or to a creditor of the corporation (see below);
• any legal proceedings by or against the corporation which may have been pending at
the date of the commencement of the winding-up, or which may have been or may be
instituted;
• whether further inquiry is in his opinion desirable in regard to any matter relating to
the formation or failure of the corporation or the conduct of its business;
• whether the corporation has kept the accounting records required by s 56 and, if not,
in what respects the requirements of that section have not been met;
• the progress and prospects in respect of the winding-up; and
• any other matter which he may consider fit, or in connection with which he may
require the directions of the creditors.

In the winding-up of a corporation unable to pay its debts, members may be compelled to
repay money which they received from the corporation prior to liquidation. If what is owed is
not repaid in full, former members may be called upon to contribute.
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24.6.1 Payments by reason of membership

A member who received a payment by reason only of his membership (eg, a distribution of
profit or a repayment of his contribution to the corporation), within two years before the
commencement of the winding-up, must repay the amount concerned to the corporation
unless he can prove that:
• after the payment was made, the corporation’s assets, fairly valued, exceeded its
liabilities;
• the payment was made while the corporation was able to pay its debts as they became
due in the ordinary course of its business; and
• the payment, in the particular circumstances, did not in fact render the corporation
unable to pay its debts as they became due in the ordinary course of its business (s 70
(2)).
A person who ceased to be a member within the two-year period is liable to contribute to the
repayment to the extent that the amount repaid by present members, together with all other
available assets, is insufficient to discharge all the debts of the corporation (s 70(3)).
A certificate by the Master as to the amount payable by a member or former member has
the effect of a civil judgment upon which a warrant of execution may immediately be issued
(s 70(4)).
24.6.2 Salary or remuneration

A member may be required to return a salary or other remuneration paid to him in his
capacity as an officer or employee of the corporation within two years before the
commencement of the winding-up (s 71(1)). The Master must consider the payment and if,
in his opinion, it was not bona fide or reasonable in the circumstances, he must direct that it,
or such part as he may determine, be repaid by the member (ibid).
The Master may also direct that a former member—ie, one who ceased to be a member in
the two-year period—must contribute to the repayment to the extent that the amount repaid
by the present members, together with all the other available assets of the corporation, is
insufficient to pay all the debts of the corporation (s 71(2)).
A certificate by the Master as to the amount payable has the effect of a civil judgment (s
71(3)).
24.6.3 Liquidator’s duty to investigate personal liability of members

The liquidator has a duty to ascertain whether members of the corporation are liable to
make repayments or whether circumstances justify an approach to the Master for a direction
that repayments be made (s 80(a)-(b)). Where necessary, the liquidator must take steps to
enforce the repayments (s 80(c)).
The liquidator also has a duty to establish whether any member, former member, or other
person is, by virtue of Part VIII of the Act, jointly and severally liable with the corporation for
one or more of its debts (s 81(1)). (Part VIII deals with the following: s 63—joint liability of
certain persons for the corporation’s debts; s 64—liability for reckless or fraudulent carrying
on of the corporation’s business; and s 65—the court’s powers in relation to abuse of the
corporation’s separate juristic personality.) If the liquidator finds that there is personal
liability to a creditor who has proved his claim, he must inform the creditor concerned and, if
the latter recovers any amount directly from
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the person concerned, the liquidator must take this into account when determining the
dividend payable to the creditor.

Section 73(1) provides a remedy similar to that created by s 423(1) of the Companies Act
(see 23.12). The remedy is available against any present or former member, any officer or
accounting officer of the corporation, or any person who has taken part in the formation of
the corporation who has:
• misapplied, or retained, or become liable or accountable for, the corporation’s money
or property; or
• been guilty of any breach of trust in relation to the corporation.
On application by the liquidator, or any creditor or member, or the Master, the court may
inquire into the person’s conduct and order him to:
• repay the money (with interest) or restore the property, or any part of it; or
• contribute to the assets of the corporation, by way of damages, a sum which the court
considers just (s 73(1)).
Section 73(1) applies notwithstanding that the perpetrator concerned may also be criminally
responsible for his conduct (s 73(2)).
24.8 Composition
At any time after the commencement of the liquidation of a corporation unable to pay its
debts, any person may submit a written offer of composition to the liquidator (s 72(1)). If
the liquidator considers that the creditors will probably accept the offer, he must send or
deliver a copy of the offer, together with his report thereon and an explanation of the effect
of the composition, to every known creditor and to the Master (s 72(2)). If the liquidator
considers that the creditors will be unlikely to accept the offer, or that he has insufficient
information at his disposal to make a recommendation, he must inform the offeror in writing
that the offer is unacceptable and that he does not propose circulating it to creditors (s 72
(3)). The offeror may then, within a prescribed period, make written representations to the
Master. After allowing the liquidator 14 days to comment on the offeror’s representations,
the Master must consider the representations and comment and may then direct the
liquidator to circulate a copy of the offer to the creditors, together with his report on it and
an explanation of the effect of the composition (s 72(4)).
When circulating an offer of composition, the liquidator must notify the creditors of the
meeting at which the offer will be considered (s 72(5)). This may be a general meeting of
the creditors, duly publicized (s 72(6)). Such a meeting may be held only once a final
winding-up order has been made (see De Wit v Boathavens CC (King & another intervening)
(supra)).
Once accepted, the composition binds every person who had notice and was entitled to
vote at the meeting, provided that:
• it was accepted by two-thirds (in number and in value) of the creditors who proved
claims against the corporation;
• payment under the composition is made or secured as specified in the offer;
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• the rights of secured or preferent creditors are not prejudiced (unless waived in
writing) (s 72(7)).
An offer of composition may not be accepted if it contains any provision by which a creditor
would receive a benefit not obtainable in the ordinary distribution of the estate (s 72(7)(a)).
A composition does not affect the liability of a surety for the corporation, which continues
unchanged (s 72(8)).
All payments to, and steps in favour of, the creditors under the accepted composition
must be paid and taken by the liquidator (s 72(9)). He must frame an account and plan of
distribution of the corporation’s assets (s 72(10)).
The composition may provide for the winding-up of the corporation to be set aside by the
court (s 72(11)). If so, the offeror may apply to court for the relevant order. He must, at
least three weeks before the application, advertise his intention in the Government Gazette
and serve copies of the application on the Master, the Registrar, and the liquidator (ibid).
The offeror’s application may be opposed by a creditor or interested person on the grounds
that (a) the composition unfairly harms the interests of the creditor; (b) the meetings for
considering the composition involve a material irregularity; (c) insufficient or materially
inaccurate information about the composition was disclosed; or (d) there is another ground
which the court may deem sufficient (s 72(12)).

The provisions of the 2008 Companies Act on the deregistration and dissolution of
companies, read with the changes required by the context, also apply to close corporations
(s 26 of the Close Corporations Act, referring to ss 81(1)(f), 81 (3), 82(3)-(4), and 83 of the
2008 Act; see 23.14).
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Chapter 25
Business rescue and compromise
Synopsis
Introduction
25.1.1 Commencement of business rescue proceedings
25.1.2 Effect of business rescue proceedings
25.1.3 The business rescue practitioner
25.1.4 Investigation of affairs of company
25.1.5 Rights of affected persons
25.1.6 Meetings and committees
25.1.7 Financing during business rescue proceedings
25.1.8 The business rescue plan
Introduction
A company in financial trouble has two possible alternatives to winding-up: business rescue
proceedings or a compromise with its creditors. These procedures are explained in this
chapter. Both business rescue and compromise are dealt with in Chapter 6 of the Companies
Act 71 of 2008. References to sections are to sections of this Act.
Chapter 6 applies also to close corporations, with changes as required by the context (s
66(1A) of the Close Corporations Act 69 of 1984). In this chapter any reference to a
company must be taken to include a corporation also.

The purpose of business rescue is to facilitate the rehabilitation of a financially distressed
company. The idea is that the company’s problems will be attended to by an independent
|business rescue practitioner who will propose a plan to rescue its business. While winding-up
falls under the regulation of the Master of the High Court, the regulator in respect of
business rescue is the Companies and Intellectual Property Commission (the Commission).
As one of the express purposes of the Companies Act is to facilitate the efficient rescue of
financially distressed companies (s 7(k)), a court will give preference to business rescue over
liquidation, but only where there is a genuine attempt to achieve the aims of the Act
(Southern Palace Investments 265 (Pty) Ltd v Midnight Storm Investments 386 Ltd (2012
(2) SA 423 (WCC)). In the nature of things, there is always the risk that business rescue
proceedings may be abused by a company with no prospect of financial recovery to obtain a
temporary respite from creditors (Swart v Beagles Run Investments 25 (Pty) Ltd (Four
Creditors intervening) 2011 (5)
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SA 422 (GNP); Engen Petroleum Ltd v Multi Waste (Pty) Ltd & others 2012 (5) SA 596
(GSJ); Absa Bank Ltd v Newcity Group (Pty) Ltd, Cohen v Newcity Group (Pty) Ltd & another
[2012] ZAGPJHC 144 (18 August 2012)).
‘Rescuing the company’ in this context means achieving the goals set out in the definition
of ‘business rescue’ (s 128(1)(h) sv ‘rescuing the company’). These are to facilitate the
rehabilitation of a company or corporation in financial distress through:
• the temporary supervision of the company and the management of its affairs, business
and property;
• a temporary moratorium on the rights of claimants against the company or in respect
of property in its possession;
• the development and implementation of a plan to rescue the company by restructuring
its affairs, business, property, debt and other liabilities, and equity in a manner that
maximizes the likelihood of it continuing in existence on a solvent basis or, if this is not
possible, that results in a better return for the company’s creditors or shareholders
than would result from the immediate liquidation of the company (s 128(1)(b) sv
‘business rescue’).
The courts have differed on the issue whether business rescue proceedings may be used to
secure a better return for creditors or shareholders where there is no clear prospect of the
company continuing to operate on a solvent basis or being restored to solvency. In Swart v
Beagles Run Investments 25 (Pty) Ltd (Four Creditors intervening) (supra) the court gave an
affirmative answer to this question. It regarded the goal of ensuring a better return for
creditors as an independent alternative goal that may be pursued for its own sake. This view
was echoed in Southern Palace Investments 265 (Pty) Ltd v Midnight Storm Investments
386 Ltd (supra). The court noted that if the aim is simply to secure a better return for
creditors, it must be made clear what resources will be made available to the company and
on which terms because, in the absence of such information, it would be mere speculation to
say that creditors will be better off than they would have been with immediate liquidation.
For similar views, see Koen & another v Wedgewood Village Golf & Country Estate (Pty) Ltd
& others 2012 (2) SA 378 (WCC) and Oakdene Square Properties (Pty) Ltd & others v Farm
Bothasfontein (Kyalami) (Pty) Ltd; Farm Bothasfontein (Kyalami) (Pty) Ltd v Kyalami Events
and Exhibitions (Pty) Ltd 2012 (3) SA 273 (GSJ). On the other hand, in AG Petzetakis
International Holdings Ltd v Petzetakis Africa (Pty) Ltd & others (Marley Pipe Systems (Pty)
Ltd & another intervening) 2012 (5) SA 515 (GSJ), it was doubted whether the objective of
ensuring a better return for creditors or shareholders can be relied on to support a business
rescue application at the outset. The court pointed out that in terms of s 131(4), before a
court may make an order commencing business rescue proceedings, it must be satisfied that
the company can indeed be ‘rescued’. A similar approach was followed in Gormley v West
City Precinct Properties (Pty) Ltd & another, Anglo Irish Bank Corporation Ltd v West City
Precinct Properties (Pty) Ltd & another [2012] ZAWCHC 33 (18 April 2012). The court
considered that the concept of ‘business rescue’ envisages the restructuring of a potentially
viable company so that it can continue to function as an economic entity. It followed that the
business rescue plan in casu, which merely entailed the company’s carrying on business as
before while gradually selling off its assets, did not justify the granting of an order for
business rescue. (See also Kovacs Investments 571 (Pty) Ltd v Investec Bank Limited &
another:
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In re Investec Bank Limited v Also Holdings (Pty) Ltd ([2012] ZAWCHC 110 (22 February
2012)).
25.1.1 Commencement of business rescue proceedings

Business rescue proceedings against a company may be commenced by way of either
• a resolution adopted by the company’s board of directors (‘voluntary business rescue’);
or
• a court order (‘compulsory business rescue’).
(i) Voluntary business rescue (directors’ resolution)
The board of directors of a company may resolve that the company voluntarily begins
business rescue proceedings and may place the company under supervision if:
• the board has reasonable grounds to believe that the company is financially distressed;
and
• there appears to be a reasonable prospect of rescuing the company (s 129(1)(a)–(b)).
A resolution to this effect may not be adopted if liquidation proceedings have been initiated
by or against the company and the resolution is of no effect until it has been filed (s 129(2)
(a)-(b)).
A company is ‘financially distressed’ if:
• it appears to be reasonably unlikely that the company will be able to pay all of its debts
as they become due and payable within the immediately ensuing six months; or
• it appears to be reasonably likely that the company will become insolvent within the
immediately ensuing six months (s 128(1)(f) sv ‘financially distressed’).
In Gormley v West City Precinct Properties (Pty) Ltd & another, Anglo Irish Bank Corporation
Ltd v West City Precinct Properties (Pty) Ltd & another (supra), the court adopted a narrow
interpretation of ‘financially distressed’ and held that a company that is already insolvent,
even if only able to pay its debts over an extended period, is not financially distressed as
defined in the Act.
Within five business days after filing the resolution to commence business rescue
proceedings (or such longer time as the Commission may on application allow) the company
must
• publish a notice of the resolution and its effective date, in the prescribed manner, to
every affected person, and include with the notice a sworn statement of the facts
relevant to the grounds on which the board resolution was founded; and
• appoint a business rescue practitioner who satisfies the requirements for appointment
(set out in s 138), and who has consented in writing to being appointed (s 129(3)(a)
–(b)).
The company must, within two business days after appointing the practitioner, file a notice
of appointment and within five business days after doing this, publish a copy of the notice to
each affected person (s 129(4)(a)-(b)).
If the company fails to appoint a practitioner as required, or fails to comply with any of
the above filing and notice requirements, the resolution to begin business rescue
proceedings lapses and becomes a nullity (s 129(5)(a); Advanced Technologies and
Engineering Company (Pty) Ltd v Aeronotique et Technologies Embarquées SAS (unreported,
GNP case no 72522/11, 6 June 2012)); Madodza (Pty) Ltd v Absa Bank
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Ltd & others [2012] ZAGPPHC 165 (15 August 2012)). Furthermore, the company may not
file another business rescue resolution for a period of three months from the date on which
the lapsed resolution was adopted unless the court, on good cause shown, orders otherwise
(s 129(5)(b)).
Once a business rescue resolution has been adopted, the company may not during the
period of business rescue adopt a resolution to begin liquidation proceedings (s 129(6)).
If the board has reasonable grounds to believe that the company is financially distressed,
but does not adopt a business rescue resolution, it must notify each affected person in
writing of the relevant criteria of financial distress that are applicable to the company and its
reasons for not adopting the resolution (s 129(7)).
(ii) Right of ‘affected person’ to object to voluntary business rescue
The Act allows an ‘affected person’ to apply to court to set aside a business rescue resolution
on the ground that:
• there is no reasonable basis for believing that the company is financially distressed;
• there is no reasonable prospect of rescuing the company;
• the company has failed to comply with the relevant procedural requirements (s 130(1)
(a)). This last ground seems superfluous, since a business rescue resolution lapses
automatically if any of the procedural requirements is not complied with (s 129(5)(a);
Advanced Technologies and Engineering Company (Pty) Ltd v Aeronotique et
Technologies Embarquées SAS (supra); Madodza (Pty) Ltd v Absa Bank Ltd & others
(supra)).
An ‘affected person’ means a shareholder or creditor of the company; any registered trade
union representing employees of the company; and if any of the employees of the company
are not represented by a registered trade union, each of those employees or their respective
representatives (s 128(1)(a) sv ‘affected person’). A director who voted in favour of the
resolution is disqualified from bringing the application unless he satisfies the court that, in
supporting the resolution, he acted in good faith on the basis of information that has
subsequently been found to be false or misleading (s 130(2)).
The application to set aside the resolution may be brought at any time before the adoption
of a business rescue plan (s 130(1)(a)). The applicant is required to serve a copy of the
application on the company and the Commission and notify every other affected person of
the application in the prescribed manner (s 130(3)). Each affected person has a right to
participate in the hearing of the application (s 130(4)).
The court may grant the application on any of the grounds specified above, or on the
ground that it is otherwise just and equitable to grant it (s 130(5)(a)). Before making its
decision, the court may give the business rescue practitioner time to prepare a report
indicating whether the company appears to be financially distressed or whether there is a
reasonable prospect of rescuing it (s 130(5)(b)). On setting aside the resolution, the court
may make any further necessary and appropriate order, including an order placing the
company in liquidation and a costs order against any director who voted in favour of the
resolution when there were no reasonable grounds for believing that the company would be
unlikely to pay all of its debts as they became due and payable (s 130(5)(c)).
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An affected person is also entitled to apply to court for an order:

• setting aside the appointment of the business rescue practitioner on the grounds that
he does not qualify for the position under s 138, is not independent of the company or
its management, or lacks the necessary skills, having regard to the company’s
circumstances (s 130(1)(b));
• requiring the business rescue practitioner to provide security in an amount and on
terms and conditions that the court considers necessary to secure the interests of the
company and any affected persons (s 130(1)(c)).
If the court sets aside the appointment of the practitioner, it must appoint an alternative
practitioner who qualifies for appointment and who is recommended by, or acceptable to,
the holders of a majority of the independent creditors’ voting interests who were
represented in the hearing (s 130(6)(a)).
(iii) Compulsory business rescue (court application)
An affected person may at any time apply to court for an order placing a company under
supervision and commencing business rescue proceedings (s 131(1)). The application may
be made even if proceedings for the liquidation of the company have already commenced (s
131(6); Van Niekerk v Seriso 321 CC & another [2012] ZAWCHC 63 (20 March 2012)).
However, the application may not be brought if the company has already adopted a business
rescue resolution (s 131(1)).
The applicant must serve a copy of the application on the company and on the
Commission and notify each other affected person in the prescribed manner (s 131(2)(a)
-(b)). Regulation 124 of the Companies Regulations requires that affected persons also
receive a copy of the application—a requirement more onerous than mere notification (cf
Cape Point Vineyards (Pty) Ltd v Pinnacle Point Group Ltd & another (Advantage Projects
Managers (Pty) Ltd intervening) 2011 (5) SA 600 (WCC)). Each affected person has the right
to participate in the hearing of the application (s 131(3)).
If liquidation proceedings have already been commenced by or against the company at
the time the application for business rescue is made, the application has the effect of
suspending the liquidation proceedings until the court has dismissed the business rescue
application or, if the court grants the order applied for, until the end of the business rescue
proceedings (s 131(6)).
The court may grant a business rescue order if it is satisfied that:
• the company is financially distressed (see (i) above); or
• the company has failed to pay any amount due in terms of a public regulation or
contract pertaining to employment-related matters; or
• it is otherwise just and equitable to do so for financial reasons; and
• there is a reasonable prospect for rescuing the company (s 131(4)).
On granting the order, the court may appoint an interim practitioner nominated by the
applicant, subject to ratification by the holders of a majority of independent creditors’ voting
rights at the first meeting of creditors (s 131(5)).
If the court dismisses the application, it may make any further necessary and appropriate
order, including a liquidation order (s 131(4)(b)).
A company that has been placed under supervision by the court must notify each affected
person of the order within five business days (s 131(8)(b)) and may not adopt a resolution
placing itself in liquidation until the business rescue proceedings have ended (s 131(8)(a)).
It is interesting to compare this latter provision to s 129(6)
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which applies to companies that commence business rescue proceedings by means of a

board resolution. Section 129(6) refers to a resolution to ‘initiate liquidation proceedings’
while s 131(8) refers to ‘a resolution placing itself in liquidation’. So while the latter provision
apparently prevents voluntary liquidation, the first also prevents a company from applying to
court for its liquidation on the ground of a special resolution (see s 344(a) of the 1973 Act).
This prohibition does not prevent the court from converting the business rescue into a
liquidation as envisaged in Chapter 6 of the 2008 Act.
A court may meromotu place a company under business rescue and appoint an interim
practitioner during the course of liquidation proceedings or proceedings to enforce any
security against the company (s 131(7)).
(iv) Duration of business rescue proceedings
Business rescue proceedings commence when any of the following occurs:
• the company files a resolution to place itself under supervision;
• the company applies to court for permission to file another business rescue resolution
within three months of the lapse of an earlier resolution as envisaged by s 129(5)(b);
• an affected person applies to the court for an order placing the company under
supervision; or
• during the course of liquidation proceedings, or proceedings to enforce a security
interest, the court makes an order placing the company under supervision (s 132(1)).
It seems obvious (although the Act does not expressly say so) that in the second and third
instances the proceedings commence only once the company subsequently files a resolution
as permitted by the court or the court actually grants the order applied for.
Business rescue proceedings end when any of the following occurs:
• the court sets aside the resolution or order that began the proceedings;
• the court converts the proceedings into liquidation proceedings;
• the practitioner files with the Commission a notice terminating the proceedings;
• the business rescue plan that has been proposed is rejected and no steps are taken to
extend the proceedings; or
• a business rescue plan has been adopted and the practitioner files a notice of
substantial implementation of the plan (s 132(2)).
If a resolution lapses for non-compliance with the appointment and notification requirements
set out in s 129(5)(a) (as to which see above), the resolution becomes a nullity and the
effect is as if business rescue proceedings never commenced (Advanced Technologies and
Engineering Company (Pty) Ltd v Aeronotique et Technologies Embarquées SAS (unreported,
GNP case no 72522/11, 6 June 2012)).
25.1.2 Effect of business rescue

(i) Legal proceedings
The commencement of business rescue proceedings results in a general moratorium on legal
proceedings against the company. During business rescue proceedings:
• no legal proceeding (including enforcement action) against the company, or in relation
to any property belonging to or in the lawful possession of the company, may be
commenced or proceeded with in any forum, except with the written consent
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of the practitioner or with the leave of the court and in accordance with such terms the
court considers suitable (s 133(1)(a)-(b));
• a guarantee or suretyship undertaking by the company may not be enforced except
with leave of the court and in accordance with any terms the court considers just and
equitable in the circumstances (s 133(2)).
If any right to commence proceedings or otherwise assert a claim against the company is
subject to a time limit, the measurement of that time must be suspended during the
company’s business rescue proceedings (s 133(3)). The suspension has the effect of
extending the time period regardless of how long before the completion of prescription the
business rescue ends, and must thus be distinguished from circumstances delaying the
completion of prescription under the Prescription Act 68 of 1969.
The moratorium on legal proceedings does not apply to certain proceedings:
• criminal proceedings against the company or any of its directors or officers (s 133(1)
(d));
• proceedings against the company by a regulatory authority in the execution of its
duties—the authority may continue with the proceedings after written notification to
the business rescue practitioner (s 133(1)(f));
• proceedings concerning any property or right over which the company exercises the
powers of a trustee (s 133(1)(e));
• proceedings instituted as a set-off against any claim made by the company itself in any
legal proceedings (s 133(1)(c)).
(ii) Property interests
While a company is subject to rescue proceedings, it may dispose, or agree to dispose, of its
property only:
• in the ordinary course of business;
• in a bona fide transaction concluded at arm’s length for fair value approved in advance
and in writing by the practitioner; or
• in a transaction contemplated by, and undertaken as part of, the implementation of an
approved business rescue plan (s 134(1)(a)).
To validly dispose of property subject to a security or title interest, the company must obtain
the prior consent of the holder of the interest, unless the proceeds of the disposal would be
sufficient to fully discharge the secured or protected debt (s 134(3)(a)). Having disposed of
the property, the company must promptly pay the proceeds to the holder up to the amount
of the company’s indebtedness or alternatively provide security to the satisfaction of the
holder for the amount of the proceeds (s 134(3)(b)).
Other persons are prohibited from exercising any rights in respect of property lawfully in
the possession of the company (irrespective of who owns the property), except to the extent
that the practitioner consents in writing (s 134(1)(c)). The practitioner may not
unreasonably refuse to consent, having regard to the purposes of business rescue, the
circumstances of the company, and the nature of the property and the rights claimed in
respect of it (s 134(2)). This provision supplements s 133(1), which prohibits the
commencement or continuance of legal proceedings against any property lawfully in the
possession of the company.
If another person is in lawful possession of any property owned by the company as a
result of an agreement concluded in the ordinary course of the company’s business before
the business rescue, the other party may, unless the agreement is
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suspended by the practitioner or cancelled by the court (as to which, see below), continue to
exercise any right which it confers in respect of the property (s 134(1)(b)).
(iii) Employment contracts
During business rescue proceedings, employees of the company continue to be employed on
the same terms and conditions as immediately before the proceedings except to the extent
that changes occur in the ordinary course of attrition or the employees and the company
agree upon different terms and conditions in accordance with applicable labour laws (s 136
(1)(a)). Any retrenchments contemplated in a business rescue plan are subject to ss 189
and 189A of the Labour Relations Act 66 of 1995 and other applicable labour legislation (s
136(1)(b)).
(iv) Other contracts
While business rescue proceedings are in place, the business rescue practitioner may
suspend, entirely, partially or conditionally, any agreement or provision of an agreement to
which the company was a party at the commencement of the proceedings, other than an
employment contract or a contract to which s 35A (transactions on exchanges) or s 35B
(market agreements on informal markets) of the Insolvency Act would apply if the company
or corporation were liquidated (s 136(2)(a)). This power applies despite any agreement to
the contrary (ibid)). The Act provides that where the practitioner exercises the power, the
other party to the agreement may assert only a claim for damages against the company (s
136(3)). However, it is suggested that in the case of a reciprocal contract, the other party
would also be entitled to rely on the principle of reciprocity and withhold performance.
Where the practitioner suspends a provision relating to security granted by the company, the
creditor is nevertheless entitled to be regarded as a secured creditor when the company
wants to dispose of the property given as security (s 136(2A)(c)). As s 136 allows the
suspension of outstanding obligations of the company only, this provision apparently
envisages the situation where the company has an obligation in respect of the finalization of
the security. The practitioner may also approach the court for the complete, partial or
conditional cancellation of any obligation due by the company, on terms that are just and
reasonable in the circumstances (s 136(2)(b)).
(v) Shareholders
During business rescue proceedings, an alteration in the classification or status of a
company’s issued securities is invalid unless it takes place by way of a transfer of the
securities in the ordinary course of business, or in terms of a court order, or pursuant to an
approved business rescue plan (s 137(1)). It is not clear whether, in determining whether a
transfer of securities took place in the ordinary course of business, the motives of the
transferor and transferee and the general pattern of transfers in the company are relevant
factors.
(vi) Directors
As will be seen below, for the duration of business rescue proceedings the practitioner has
full management control of the company in substitution for its board and management (s
140(1)(a)). During this period, each director of the company:
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• must continue to exercise the functions of director, subject to the authority of the
practitioner;
• has a duty to exercise any management function within the company in accordance
with the express instructions or direction of the practitioner, to the extent that it is
reasonable to do so;
• must attend to the requests of the practitioner at all times, and provide the practitioner
with any information about the company’s affairs as may reasonably be required (s
137(2)-(3)).
If the board of directors, or one or more directors, purports to take any action on behalf of
the company that requires the approval of the practitioner, the action is void unless
approved by the practitioner (s 137(4)).
A director remains bound by the duty to disclose personal financial interests or those of a
related person as required by s 75 (s 137(2)(c)). However, he is relieved from the duties of
a director set out in s 76 and from most liabilities under s 77, provided he acts under the
authority and according to the instructions or direction of the practitioner (s 137(2)(d)). The
liabilities for which a director remains liable under s 77 are in respect of loss sustained by
the company as a result of:
• acting on behalf of the company despite knowing that he lacks authority (s 77(3)(a));
• acquiescing in the carrying on of the company’s business despite knowing that it is
being conducted recklessly, with gross negligence or with intent to defraud or for a
fraudulent purpose (s 77(3)(b) read with s 22(1));
• being a party to an act or omission knowing that it is calculated to defraud a creditor,
employee or shareholder or the company or that it has another fraudulent purpose (s
77(3)(c)).
The directors are obliged to co-operate with and assist the practitioner. In particular, they
are bound to:
• deliver to the practitioner books and records in their possession that relate to the
company’s or corporation’s affairs;
• inform the practitioner of the whereabouts of other books and records; and
•
provide the practitioner with a statement of the company’s affairs within five business
days after the commencement of business rescue proceedings (or within such
extended time allowed by the practitioner) (s 142(1)-(3)). The minimum content of the
statement of affairs is prescribed by s 142(3)).
The practitioner may apply to court for an order removing a director from office on the
ground that:
• he has failed to comply with a requirement of Chapter 6; or
• through an act or omission, he has impeded or is impeding the practitioner’s exercise
of his functions or powers, his management of the company, or the development and
implementation of a business rescue plan (s 137(5)).
25.1.3 The business rescue practitioner

(i) Qualifications
For a person to be appointed as a practitioner, he must be:
• a member in good standing of a legal, accounting or business management profession
accredited by the Commission; and
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• licensed as such by the Commission (s 138(1)(a)–(b)).

The Minister is empowered to make regulations prescribing minimum qualifications for
practitioners and laying down standards and procedures to be followed by the Commission in
carrying out its licensing functions (s 138(3); see regs 126-127).
A person may not be appointed as a practitioner if:
• he is subject to a probation order as director or disqualified from acting as director of
the company (s 138(1)(c)–(d));
• he has a relationship with the company that would lead a reasonable and informed
third party to conclude that his integrity, impartiality or objectivity is compromised, or
he is related to someone who has such a relationship with the company (s 138(1)(e)
–(f)).
(ii) Appointment
A practitioner is appointed by the company on adopting a business rescue resolution (s 129
(3)(b)) or by the court on granting a business rescue application (s 131(5)). A court
appointment may also be made where the court upholds an objection against a practitioner
appointed by the company (s 130(6)(a)). Court appointments must be ratified by an
independent creditor vote at the first meeting of creditors (s 131(5)).
(iii) Removal and replacement
The court may remove a practitioner from office following an objection to his appointment in
the case of a business rescue resolution (see above) or otherwise on any of the following
grounds:
• incompetence or failure to perform the duties of a practitioner of the particular
company;
• failure to exercise the proper degree of care in the performance of his functions;
• engaging in illegal acts or conduct;
• a conflict of interest or lack of independence;
• the fact that he no longer satisfies the requirements for appointment as practitioner;
• the fact that he is incapacitated and unable to perform the functions of his office and
unlikely to regain that capacity within a reasonable time (s 139(1)-(2)).
If a practitioner dies, resigns or is removed from office, the company or creditor who
nominated him must appoint a new practitioner (s 139(3)). An affected person may apply to
court to set aside the new appointment (ibid).
(iv) General functions and duties
During a company’s business rescue proceedings, the practitioner has full management
control of the company in substitution for the incumbent board and management (s 140(1)
(a)). He may delegate powers and functions to directors or other persons who formed part of
management, remove from office any member of that management, and appoint persons as
part of management, whether to fill a vacancy or not (s 140(1)(b); see also s 140(2)).
As soon as possible after his appointment, the practitioner must inform all relevant
regulatory authorities having authority in respect of the activities of the company, that the
company has been placed under business rescue proceedings and that he has been
appointed as practitioner. The most important functions of the practitioner are to investigate
the affairs of the company and to develop and implement a business rescue
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plan (see below). No person is entitled, as against the practitioner, to retain possession of or
assert a lien over any books or records of the company, unless they are in the lawful
possession of that person and he has made copies available to the practitioner or afforded
the practitioner a reasonable opportunity of inspecting the books or records concerned (s
142(4)).
If the business rescue proceedings have not ended within three months after
commencement or within a longer period allowed by the court, the practitioner must:
• prepare a report on the progress of the business rescue proceedings and update it at
the end of each subsequent month until the end of the proceedings; and
• deliver the report and each update to every affected person as well as to the court, if
the proceedings have been the subject of a court order, or the Commission in any
other case (s 132(3)).
The practitioner is an officer of the court (s 140(3)(a)) and is subject to the duties and
liabilities of a director under ss 75-77 (s 140(3)(b)). In relation to other conduct, the
practitioner is liable only for gross negligence in the exercise of his powers, and is not liable
for any act or omission in good faith (s 140(3)(c)).
If business rescue proceedings are superseded by an order placing the company in
liquidation, the practitioner may not be appointed as liquidator of the company (s 140(4)).
(v) Remuneration
The practitioner is entitled to remuneration and expenses in accordance with a prescribed
tariff (s 143(1)). However, he may also make an agreement with the company providing for
further remuneration to be calculated on the basis of a contingency related to:
• the adoption of a business rescue plan, the adopting of such a plan within a particular
time, or the inclusion of any particular matter in such a plan; or
• the attainment of any particular result or combination of results relating to the
business rescue proceedings (s 143(2)).
To be binding on the company, an additional remuneration agreement has to be approved at
a meeting called to consider it by:
• the holders present and voting of the majority of the independent creditors’ voting
interests; and
• the holders present and voting of the majority of the voting rights of shares entitling
the shareholder to a portion of the residual value of the company on winding-up (s 143
(3));
A creditor or shareholder who voted against adopting the agreement may apply to court for
an order setting it aside on the grounds that it is not just and equitable or provides for
remuneration that is unreasonable having regard to the financial circumstances of the
company (s 143(4)). This application must be brought within 10 business days of the date of
voting on the proposal (ibid).
The practitioner’s claim for remuneration and expenses ranks ahead of all secured and
unsecured claims (s 143(5); see s 135(3)). It retains this preference if business rescue is
superseded by a winding-up order, but ranks behind the costs of liquidation (s 135(4)).
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25.1.4 Investigation of affairs of company

The first major task of the practitioner, which he must undertake as soon as practicable after
his appointment, is to investigate the company’s affairs, business, property, and financial
situation, and having done so, to consider whether there is any reasonable prospect of the
company being rescued (s 141(1)). If the practitioner concludes that there is no such
prospect, he must inform the court, the company and all affected persons in the prescribed
manner and apply to the court for an order discontinuing the business rescue and
commencing liquidation (s 141(2)(a)). If he concludes that there are no longer reasonable
grounds for believing that the company is financially distressed, he must inform the court,
the company and all affected persons in the prescribed manner and apply to court for an
order terminating the business rescue, if the process was initiated or confirmed by a court
order, or otherwise file a notice of termination of the business rescue proceedings (s 141(2)
(b)). If the practitioner concludes that there is evidence of voidable transactions, or a failure
by the company or any director to perform any material obligation relating to the company,
he must take any necessary steps to rectify the matter and may direct management to take
appropriate steps (s 141(2)(c)). As ss 29-31 of the Insolvency Act are not applicable to
business rescue proceedings (cf Oakdene Square Properties (Pty) Ltd & others v Farm
Bothasfontein (Kyalami) (Pty) Ltd; Farm Bothasfontein (Kyalami) (Pty) Ltd v Kyalami Events
and Exhibitions (Pty) Ltd 2012 (3) SA 273 (GSJ); Engen Petroleum Ltd v Multi Waste (Pty)
Ltd & others 2012 (5) SA 596 (GSJ)), the reference to ‘voidable transactions’ would appear
to cover only transactions that are voidable under the principles of contract law. If there is
evidence of reckless trading, fraud or any other contravention of the law governing the
company, the practitioner must forward the evidence to the appropriate authority for
investigation and prosecution, and direct the management to take any necessary steps to
rectify the matter, including recovering any misappropriated assets of the company (s 141
(2)(c)).
After completing the above investigation into the company’s affairs, the practitioner is
bound to continue monitoring the situation. He is required to take the appropriate steps as
outlined above if ‘at any time during [the] business rescue proceedings’ he concludes that
there is no reasonable prospect of the company being rescued, or that the company is no
longer financially distressed, or that there is evidence of voidable transactions or unlawful
conduct (s 141(2)(a)).
25.1.5 Rights of affected persons

(i) Employees
During a company’s business rescue proceedings, every registered trade union representing
one or more employees of the company, and every employee who is not represented by a
trade union, is entitled to:
• receive notice of each court proceeding, decision, meeting or other relevant event
concerning the business rescue proceedings—such notice to be served at the head
office of the relevant trade union concerned, or given in the prescribed manner and
form to employees at their workplace (as the case may be);
• participate in any court proceedings during the business rescue;
• be consulted by the practitioner on the business rescue plan and afforded sufficient
opportunity to review the plan and prepare a submission (see below);
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• be present at and make submissions to the meeting of holders of voting interests

before a vote is taken on any proposed business rescue plan;
• vote with creditors, to the extent that the employee is a creditor, on a motion to
approve a proposed business plan;
• propose the development of an alternative plan if a proposed business rescue plan is
rejected;
• present an offer in terms of s 153(1)(b)(ii) (see below) to acquire the voting interests
of anyone who opposes the adoption of a business rescue plan (s 144(1)-(3)).
Employees represented by a registered trade union exercise their rights as affected persons
collectively through the trade union and in accordance with applicable labour law (s 144(1)
(a)). A registered trade union enjoys rights not extended to individual employees, such as
the right to access the company’s annual financial statements to enable it to apply for
business rescue proceedings (s 31(3)). Employees not represented by a registered trade
union exercise their rights either directly or by proxy through an employee organization or
representative (s 144(1)(b)). Trade unions and employees may form a committee of
employee representatives (s 144(3)(c)).
Section 144(2) provides that to the extent that any remuneration, reimbursement for
expenses or other amount of money relating to employment became due and payable by the
company to an employee, and was not paid, before the beginning of the business rescue
proceedings, the employee is a ‘preferred unsecured creditor’ of the company for the
purposes of Chapter 6. The purpose of the section is obscure. The business rescue plan has
to set out the types of claims according to insolvency law (s 150(2)(a)(ii)), and this law
imposes certain limits on preferent claims of employees (see s 98A of the Insolvency Act).
However, the full claims of employees must be afforded preference under the business
rescue plan (CSARS v Beginsel NO & others WCC 31 October 2012, Case No 15080/12,
unreported). The exact order of preference of pre-commencement claims will depend on the
business rescue plan (s 155(2)(b)(v)).
A medical, pension or provident scheme for the benefit of a past or present employee of
the company is regarded as an unsecured creditor of the company to the extent of any
outstanding amount that was due and payable by the company to the trustees of the
scheme at the time of commencement of business rescue (s 144(4)(a)). A defined benefit
pension scheme also qualifies as an unsecured creditor to the extent of the present value at
the commencement of the business rescue proceedings of any unfunded liability under the
scheme (s 144(4)(b)).
(ii) Creditors
Each creditor is entitled, or has the right, to:
concerning the business rescue proceedings;
• participate in any court proceedings arising during business rescue proceedings;
• formally participate in the business rescue proceedings to the extent provided for in
Chapter 6;
• informally participate in the business rescue proceedings by making proposals for a
business rescue plan to the practitioner;
•
vote in the prescribed manner to amend, approve or reject a proposed business rescue
plan;
• propose the development of an alternative plan in the event of rejection of a proposed
plan; and
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• make an offer in terms of s 153(1)(b)(ii) (see below) to acquire the voting interests of
any persons who oppose the adoption of a business rescue plan (s 144(1)-(2)).
Voting interests are determined primarily by the value of the claims. Secured and unsecured
creditors have voting interests equal to the value of the amount owed to them by the
company (s 145(4)(a)). However, a concurrent creditor who would be subordinated in a
liquidation has a voting interest equal to the amount (if any) that he could reasonably expect
to receive in a liquidation (s 145(4)(b)). This amount has to be determined by an
independent expert valuation procured by the practitioner (s 145(5)(b)). It seems that the
only possible basis upon which concurrent claims could be so subordinated is through
contract.
The creditors are entitled to form a creditors’ committee and to be consulted by the
practitioner through that committee during the development of the business rescue plan (s
145(3)). Only independent creditors—those that are not related to the company, its directors
or the practitioner—may be members of the committee (s 128(1)(g)). The practitioner has
to determine whether a creditor is independent for these purposes (s 145(5)(a)). At least 15
business days prior to the meeting to consider the business plan, the practitioner must
inform each creditor whether he has been classified as independent or not and must inform
subordinated creditors of the valuation placed on their claims (s 145(5)(c)). A creditor may
approach the court for a review of the practitioner’s decision (s 145(6)).
(iii) Securities holders
During a company’s business rescue proceedings, each holder of any issued security of the
company is entitled to:
• participate in any court proceedings that arise during the business rescue proceedings;
• formally participate in a company’s business rescue proceedings to the extent provided
for in Chapter 6;
• vote in the prescribed manner to approve or reject a proposed business rescue plan if
it affects the rights associated with the class of security that he (the security holder)
holds;
• propose in the manner contemplated the development of an alternative to the business
rescue plan if it is rejected,
• make an offer in terms of s 153(1)(b)(ii) (see below) to acquire the voting interests of
any persons who oppose the adoption of a business rescue plan (s 146).
Holders of debt instruments also qualify as creditors of a company and therefore fall into two
categories of affected persons. It is suggested that they can vote as creditors in respect of
the debts the company owes them. If the plan affects the rights attaching to the debt
instruments, including any special privileges such as voting rights, they may also vote as
holders of securities.
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25.1.6 Meetings and committees

(i) First meeting of creditors
The practitioner must convene and preside over a first meeting of creditors within 10
business days after being appointed (s 147(1)). At this meeting, the practitioner must inform
the creditors whether he believes that there is a reasonable prospect of rescuing the
company. He may receive proof of claims by creditors who may determine whether to form a
creditors’ committee and appoint the members of that committee (ibid). Decisions at the
meeting are made by simple majority of the independent creditors’ voting interests (s 147
(3)).
(ii) First meeting of employees’ representatives
The practitioner must also convene a first meeting of employees’ representatives within 10
days of his appointment (s 148(1)). The purpose of this meeting is to enable the practitioner
to inform the employees whether he thinks there is a reasonable prospect of rescuing the
company and to allow the employees to decide whether they want to form an employees’
committee (ibid). The practitioner must give notice of the meeting to every registered trade
union representing one or more employees of the company and, if there are any employees
who are not represented by a registered trade union, to those employees, or their
representatives, setting out thedate, time and place of the meeting, as well as the agenda
for the meeting (s 148(2)).
(iii) Functions, duties and membership of committees
A committee of creditors, or of employees, may:
• consult with the practitioner about any matter relating to the business rescue
proceedings, but may not direct or instruct the practitioner; and
• on behalf of the general body of creditors or employees receive and consider reports
relating to the business rescue proceedings (s 149(1)(a)–(b)).
The committee is obliged to act independently of the practitioner so as to ensure fair and
unbiased representation of creditors’ or employees’ interests (s 149(1)(c)).
To be a member of a committee of creditors or employees, a person must be:
• an independent creditor, or an employee, of the company;
• an agent, proxy or attorney of an independent creditor or employee, or other person
acting under a general power of attorney; or
• authorized in writing to be a member by an independent creditor or employee (s 149
(2)).
25.1.7 Financing during business rescue proceedings

During business rescue proceedings, a company may obtain financing, secured if necessary
by any of the company’s assets which are not otherwise encumbered (s 135(2)). The claims
of creditors who provide such financing rank in the order in which they were incurred, and
have preference over all unsecured claims against the company (s 135(2) read with 135 (3)
(b)). The claims of company employees in respect of salary, expenses, and other
employment-related matters that have become due and payable during the business rescue
proceedings and remain unpaid are treated as a form of post-commencement financing (s
135(1)). The employees’ claims rank equally and have preference over the claims of
creditors (whether secured or not) who provided
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other post-commencement financing to the company (s 135(1) read with 135(3)(a)). A claim
in respect of post-commencement financing ranks after the claim of the practitioner for
remuneration and expenses and other claims arising out of the costs of the business rescue
proceedings (s 135(3)). If the business rescue proceedings are superseded by a liquidation
order, the preferences described here continue to apply, but the claims rank below that for
the costs of liquidation (s 135(4)).
25.1.8 The business rescue plan
The business rescue plan is the central feature of business rescue proceedings because it
sets out the practitioner’s blueprint for rescuing the company. Before preparing the plan, the
practitioner must consult with creditors, other affected persons, and the management of the
company (s 150(1)).
(i) Content of plan
The plan must comprise three parts. Part A must set out the background; Part B, the
proposals; and Part C, an explanation of any assumptions and conditions (s 150(2)). The
prescribed minimum content of each of these parts is set out in s 150(2). The plan must
contain a projected balance sheet and a statement of income and expenses for the ensuing
three years (s 150(2)(c)(iv)). The material assumptions on which the projections are based
must be set out and alternative projections based on varying assumptions may be included
(s 150(3)). A cash flow projection is apparently not required. The practitioner must certify at
the end of the plan that actual information provided appears to be accurate, complete and
up to date and that projections are good-faith estimations based on the facts and
assumptions set out in the statement (s 150(4)).
(ii) Publication of plan
The plan must be published by the company within 25 business days after the practitioner’s
appointment unless the court (on application by the company) or holders of a majority of
creditors’ voting interests allow a longer time (s 150(5)).
(iii) Meeting to consider and vote on plan
The practitioner is obliged to convene and preside over a meeting of creditors and any other
holders of a voting interest, called for the purpose of considering the proposed business
rescue plan, within 10 business days after publication of the plan (s 151(1)). At least five
business days before this meeting, the practitioner must deliver to all affected persons a
notice of the meeting setting out the date, time and place of the meeting; the agenda of the
meeting; and a summary of the rights of affected persons to participate in and vote at the
meeting (s 151(2)).
At the meeting, the practitioner must do the following:
• introduce the plan for consideration and inform the meeting whether he continues to
believe that there is a reasonable prospect of the company being rescued (s 152(1)(a)
–(b));
• provide an opportunity for the employees’ representatives to address the meeting (s
152(1)(c));
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• invite discussion and hold a vote on any motions to amend the plan in any respect or
to direct him (the practitioner) to adjourn the meeting so that he may revise the plan
for further consideration at the adjourned meeting (s 152(1)(d));
• call for a vote for ‘preliminary approval’ of the plan (as amended, if applicable) unless
the meeting has been adjourned to enable him to develop a revised plan. A plan
receives preliminary approval for these purposes if it is supported by creditors holding
more than 75 per cent of the creditors’ voting rights, and the vote includes at least 50
per cent of independent creditors’ interests, if any, that have voted (s 152(2)).
The meeting may be adjourned from time to time until a vote is taken on whether or not to
approve the plan (s 151(3)).
If the plan is not approved on a preliminary basis, it is rejected (s 152(3)(a)). Approval on
a preliminary basis also constitutes final approval (subject to compliance with any
suspensive conditions) if it does not alter the rights of holders of any class of the company’s
securities (s 152(3)(b)). If the plan affects the rights of securities holders, the practitioner
must immediately hold a meeting of the holders whose rights are affected. If the majority of
them (the majority of the voting rights exercised) support the plan, it is taken to be finally
adopted, subject to compliance with any suspensive conditions; if the majority oppose the
plan, it is rejected (s 152(3)(c)).
(iv) Implementation of plan
Once approved, a business rescue plan is binding on the company, and on all creditors and
holders of the company’s securities (shareholders), whether or not they attended the
meeting or voted in favour of the plan (s 152(4)). The company, under the direction of the
practitioner, must take all necessary steps to satisfy any conditions attached to approval of
the plan and implement the plan as adopted (s 152(5)). To the extent necessary to
implement the plan, the practitioner is empowered to issue authorized securities and
determine the consideration for their issue, notwithstanding the provisions of s 38 or 40 to
the contrary (s 152(6)(a)). If the plan was approved by shareholders, the practitioner may
amend the company’s Memorandum of Incorporation to authorize the issue, and to
determine the preferences, rights, limitations and other terms, of further securities
contemplated under the plan, notwithstanding provisions in ss 16, 36 or 37 to the contrary
(s 152(6)(b)). Unless the plan provides otherwise, shareholders’ pre-emptive rights do not
apply to shares issued in terms of the plan (s 152(7)). A plan may provide that a creditor
who has agreed to the discharge of the whole or part of a debt owing to him will lose the
right to enforce that debt (s 154(1)). Provided the plan is duly implemented, a creditor
cannot enforce any debt owed to him by the company immediately before the beginning of
the business rescue process, except to the extent provided for in the business rescue plan (s
154(2)).
Once the plan has been substantially implemented, the practitioner must file a notice to
this effect, thus ending the business rescue proceedings (s 152(8) read with 132(2)(c)(ii)).
(v) Non-adoption of plan
If the plan is rejected, the practitioner may either obtain approval from the meeting for him
to prepare and publish a revised plan, or he may apply to court to set aside the result
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of the vote on the ground that it was ‘inappropriate’ (s 153(1)(a)). In the former instance,
the practitioner must prepare and publish the revised plan within 10 business days, after
which the normal procedure for notification and the convening of a meeting to consider the
plan must be followed (s 153(3)). If the practitioner decides to approach the court, he must
adjourn the meetinguntil the court has disposed of the contemplated application (s 152(2)).
If the practitioner does not take either of the courses of action open to him, any affected
person may do so (s 153(1)(b)(i)). Alternatively, an affected person (or combination of such
persons) may make an offer to acquire the voting interest of any person who opposed
adoption of the business rescue plan at a price to be determined by an independent expert
(s 153(1)(b)(ii)). This price must represent the likely return the person concerned would
receive upon immediate liquidation of the company (ibid). Where such an offer is made, the
practitioner must adjourn the meeting for no more than five business days, to enable him to
make any necessary revisions to the plan to reflect the results of the offer, andset a date for
resumption of the meeting, without further notice, at which the same procedure for
consideration of the offer (as outlined above) will apply afresh (s 153(4)).
If none of the possible courses of action is taken in response to rejection of the plan, the
business rescue is terminated and the practitioner is obliged to file a termination notice (s
153(5)).
A company in financial difficulty that is not engaged in business rescue proceedings may
enter into a compromise with its creditors (or a class of creditors). This procedure is
available to a company regardless of whether it is in liquidation or is financially distressed (s
155(1)).
The board or the liquidator of the company (if it is being wound up) may propose an
arrangement or compromise of the financial affairs of the company (s 155(2)). A proposal
containing the minimum prescribed information must be submitted to all the creditors (or all
the creditors of the relevant class), together with a notice of the meeting at which it will be
considered (ibid). A copy must also be filed with the Commission (ibid). The proposal must
contain all information reasonably required to assist creditors in their decision whether to
accept or reject the proposal (s 155(3)). It must consist of three parts, namely Part A,
containing the background information; Part B, containing the proposals; and Part C, setting
out any assumptions and conditions. A projected balance sheet showing significant
assumptions and a statement of income and expenses for the following three years must be
included (s 155(3)-(4)). An authorized director or officer must certify the accuracy of factual
information and declare that the projections and estimates were made in good faith and on
reasonable grounds (s 155(5)).
A compromise must be approved by a majority in number, representing 75 per cent or
more in value of the creditors or class of creditors present and voting at the meeting (s 155
(6)). Upon obtaining the required approval, the company or corporation must apply to court
for the sanctioning of the compromise (s 155(7)(a)). The court will sanction the compromise
if it appears just and equitable (s 155(7)(b)). The court pays regard to the number of
creditors represented and, in the case of a company or corporation in winding-up, the report
of the Master.
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A copy of the court order must be filed within five business days and must thereafter be
attached to each copy of the memorandum (s 155(8)(a)-(b)). Upon sanctioning by the court
the compromise binds all the creditors or creditors of the relevant class from the date of its
filing (s 155(8)(c)). The liability of a surety of the company or corporations is not affected by
an arrangement or compromise (s 155(9)).
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Part 9
Cross-border insolvency
Chapter 26: Cross-border insolvency
26.1 Definition of cross-border insolvency

26.2 Main problems of cross-border insolvency
26.3 South African common law of cross-border insolvency
26.4 Cross-Border Insolvency Act
26.5 Conclusion
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Chapter 26
Cross-border insolvency
Synopsis
26.5 Conclusion

Cross-border insolvency deals with a sequestration or a winding-up involving property or
debts in a jurisdiction other than the one in which the relevant court order is granted. In a
cross-border insolvency, therefore, the law of insolvency and winding-up intersects with the
conflict of laws (private international law).

The main problems presented by cross-border insolvency include the following (see, eg,
Hakan Friman ‘The UNCITRAL Model Law on Cross-border Insolvency: An Introduction’ in:
|UNCITRAL Instruments in Southern Africa (1999) Rand Afrikaans University 2-3):
• The globalization of international business. People and assets can now move around
the world more quickly than before. Representatives such as trustees and liquidators
find it difficult to keep up with currency movements by clever debtors using modern
technology.
• Limitations on state power. Each state can dispose only of the debtor’s effects and
affairs in its own territory, but making the best use of a multinational debtor’s assets in
business rescue attempts is less successful if impeded by state boundaries.
• Lack of international instruments for dealing with cross-border insolvency law. Few
international instruments (eg, treaties or conventions) exist; those that do are not
wide enough to cover all countries.
• Conflict between the universalist and the territorialist approaches to cross-border
insolvency law. The universalist approach would see all the debtor’s assets and affairs
being dealt with in one proceeding, to which the courts and lawyers of other countries
would give their assistance. The territorialist approach, by contrast, confines the effects
of the debtor’s insolvency to the jurisdictional limits of each country in which there are
assets and debts. Most legal systems blend the
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universalist and the territorialist approaches. Some countries are more in favour of the
universalist approach than others.
• Equal treatment of similar classes of creditors. The principle that creditors in the same
class should in principle be treated equally is a good reason not to discriminate against
foreign creditors. Nevertheless, in territorialist fashion each legal system preserves
some protection for local creditors before foreign representatives such as trustees or
liquidators will be allowed to take local assets or their proceeds out of the relevant
jurisdiction and back to the foreign proceedings for distribution.
There being no international convention as such to deal with the problems outlined above,
the United Nations Commission on International Trade Law (UNCITRAL) has proposed a
‘Model Law on Cross-Border Insolvency’ (1997), suggesting how matters such as access by
foreign representatives and creditors, recognition of such persons and foreign proceedings,
and co-operation between courts and practitioners should be dealt with by each state in its
insolvency laws. This Model Law is not a treaty but a template which individual states are
free to adopt and adapt. At present the South African law on cross-border insolvency law is
controlled by common-law principles. But the Legislature has enacted a South African
version of the UNCITRAL Model Law: this statute, the Cross-Border Insolvency Act 42 of
2000, with a commencement date of 28 November 2003, will come into effect only once the
Minister of Justice has designated the foreign countries to which the Act will apply (see s 2
(2)-(5)).

Whether the foreign representative such as the trustee or liquidator may deal with South
African assets is a question determined by a division of types of property, and the
classification of persons. Movable property is governed by the law of the natural person’s
domicile (lex domicilii). The debtor declared insolvent by the court of his domicile is thus, by
a fiction, automatically divested of his movables throughout the world and therefore in South
Africa (see, eg, Viljoen v Venter NO 1981 (2) SA 152 (W) 155). The foreign representative is
still prudent in seeking recognition from the South African courts before dealing with local
assets (Ex parte Palmer NO: In re Hahn 1993 (3) SA 359 (C) 362). The representative of a
debtor that is a juristic person is obliged to seek such recognition (Ward & another v Smit &
others: In re Gurr v Zambia Airways Corporation Ltd 1998 (3) SA 175 (SCA); Lamonica v
Baltic Reefers Management Ltd 2011 (3) SA 164 (WCC) 167). He must show that he was
appointed where the company is registered or has its principal place of business (169), and
that his claim is genuine. Whether it is valid is a decision, not for this court, but in
proceedings that he may bring after he has been recognized. Immovable property is
governed by the law of the place where the immovable property is situated (the lex situs),
whether the debtor is an individual or a juristic person (Ex parte BZ Stegmann 1902 TS
40 47-8; Moolman v Builders & Developers (Pty) Ltd (in Provisional Liquidation): Jooste
intervening 1990 (1) SA 954 (A) 960).
The South African courts apply comity, convenience and equity in exercising their
discretion to recognize the foreign representative (Ward & another v Smit & others: In re
Gurr v Zambia Airways Corporation Ltd (supra); Lamonica v Baltic Reefers
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Management Ltd (supra) 168). Comity is not applied, though, if it conflicts with public policy
(Society of Lloyd’s v Romahn and two other cases 2006 (4) SA 23 (C) 64).
South African creditors are protected by conditions in the relevant court order providing
for the realization of the assets and the payment of local creditors’ claims before those
assets or their proceeds may be removed to the foreign jurisdiction (Ex parte Steyn 1979 (2)
SA 309 (O)). Recognition of the foreign representative enables him to rely on domestic
South African law in carrying out his duties (see, eg, the provisions for the holding of
commissions and interrogations under the Companies Act 61 of 1973 (‘the 1973 Act’):
Moolman v Builders & Developers (Pty) Ltd (in Provisional Liquidation): Jooste intervening
(supra)).
An external company registered as such in South Africa may be wound up as though
independent of its related foreign company, even if the latter continues; and the opposite
also applies (Sackstein NO v Proudfoot SA (Pty) Ltd 2003 (4) SA 348 (SCA) 357). The
company may thus be subject to simultaneous, concurrent winding-up processes, and the
discontinuation of foreign winding-up proceedings cannot in itself affect South African
process. The respective liquidators can deal independently with the assets and liabilities of
the company in the various countries. The Supreme Court of Appeal in Proudfoot’s case did
not explore the implications of the concurrence of separate proceedings regarding a single
entity, however, Olivier JA holding (at 357) that
‘the registration in the Republic of South Africa of an external company does not result in there being
two separate legal personae, registered respectively in two countries. . . . There is only one legal
persona, registered in two countries. . . . The consequence of this situation can obviously lead to
seemingly irreconcilable conflicts of authority and powers between two simultaneous and concurrent
liquidators, and hence to difficult legal and commercial problems. In cases of dual registration, a
principle of demarcation in the event of a dispute between the liquidators will have to be developed.’
It follows that an external company retains its separate legal personality (persona) even
after being deregistered in South Africa (Manitoba Investment Holdings Ltd v Lipchin &
others 2010 (2) SA 612 (GNP) 620).
The South African liquidator may act under s 391 of the 1973 Act to impeach voidable
transactions in South Africa, regardless of where the relevant property is situated. If that
property is situated outside South Africa, the liquidator must then seek recognition of the
South African court order in the appropriate foreign country. The liquidator may thus choose
whether to act under s 391 of the Companies Act or to seek foreign recognition of his
appointment with a view to pursuing impeachment and recovery processes outside South
Africa (Sackstein NO v Proudfoot SA (Pty) Ltd (supra) 359-60).
The court a quo, applying the principle that the company in these circumstances remains
a single entity, nevertheless held that ‘the separate winding-up proceedings in two different
countries can only relate to separate, non-identical estates of that company, each having its
own assets and liabilities’ (Sackstein NO v Proudfoot SA (Pty) Ltd [2005] JOL 14088 (W)
para [20] at 10). The status of a company in private international law is determined by the
law of its country of incorporation (paras [16]-[19] at 8-9). Section 340 of the Companies
Act governs companies unable to pay their debts at the institution of the impeachment
proceedings. In Proudfoot’s case the parent company in the Namibian winding-up, which was
subsequently rescued in the Namibian compromise, was no longer a company unable to pay
its
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debts in Namibia, and that compromise bound all creditors of the Namibian estate of the
company. The subsequent action by the South African liquidator of the South African
external company in winding-up to impeach as voidable dispositions certain payments
received in South Africa by a South African creditor of the parent company thus failed (paras
[23]-[30] at 11-5).
In a further appeal in the South African liquidator’s impeachment action, the Supreme
Court of Appeal decided the matter not on the basis of cross-border insolvency law but of
the interpretation of s 340(1) of the Companies Act, read together with ss 29(1) and 30 of
the Insolvency Act 24 of 1936 (see Sackstein NO v Proudfoot SA (Pty) Ltd 2006 (6) SA 358
(SCA) paras [5]-[9]. It was held that this action ‘was instituted after the compromise was
sanctioned and the compromise had a considerable impact on the solvency of the
company’ (para [6] at 3). The liquidator had not proved that the debtor company was unable
to pay its debts at the institution of his action. The order by the court a quo was therefore
amended to one of absolution from the instance.
It is suggested that a principle of demarcation is required when a dispute between the
respective liquidators of a company incorporated in one state and registered as an external
company in another state has to be settled on the basis of cross-border insolvency. Such a
principle should acknowledge that the company, though remaining a single person, has
separate estates in separate states.
If a South African representative such as a trustee or liquidator seeks to pursue
investigation and recovery processes outside South Africa, he may have to apply to the
South African High Court for ‘letters of request’ recognizing his appointment as a preparatory
step for approaching the relevant foreign authorities. In seeking these ‘letters of request’,
the representative need only hold the genuine belief that foreign proceedings should be
initiated; he is not required to establish a prima facie case or prove a reasonable prospect of
success in uncovering assets through foreign examination, in order to convince the South
African court to grant him ‘letters of request’ (Gardener & another v Walters & another NNO
(In re Ex parte Walters & another NNO) 2002 (5) SA 796 (C) 810-11; contra Ex parte
Wessels & Venter NNO: In re Pyke-Nott’s Insolvent Estate 1996 (2) SA 677 (O) 681). It does
not matter whether the representative, in taking this decision which is his alone to take,
relies on impeccable information or mere hearsay (Gardener & another v Walters & another
NNO (In re Ex parte Walters & another NNO) (supra) 810).

The Cross-Border Insolvency Act includes chapters on interpretation and fundamental
principles; access of foreign representatives and creditors to South African courts;
recognition of foreign proceedings and relief; co-operation with foreign courts and foreign
representatives; and concurrent proceedings. The Act aims at co-operation between South
African courts and foreign courts in cross-border insolvency matters; improved legal
certainty for trade and investment; good administration to protect creditors and other
interested persons, including the debtor; protection of the assets and the maximization of
their value; and assistance in business rescues, thus protecting investment and saving jobs
(preamble).
Page 301
The Act applies where a foreign court or representative asks South Africa for assistance in
foreign proceedings, or, conversely, where such help is requested in a foreign court in
proceedings under the laws of the Republic relating to insolvency. It also applies where
foreign proceedings and South African insolvency proceedings run concurrently as regards
the same debtor, or where creditors or other interested foreigners ask to begin or to take
part in South African insolvency proceedings (s 2(1)). By a South African deviation from the
UNCITRAL Model Law, however, the Cross-Border Insolvency Act then limits its operation in
terms of s 2(1) to certain designated states (s 2(2)-(5)). The Act applies in respect of any
state designated by the Minister of Justice by notice in the Government Gazette. Before
designating such a foreign state, the Minister must be satisfied that the recognition accorded
by the law of that state to proceedings under the South African insolvency laws justifies the
application of the Cross-Border Insolvency Act to foreign proceedings in that state. The
Minister may by notice in the Gazette withdraw any such notice (though this withdrawal does
not affect pending legal proceedings, which thus continue as if the notice had not been
withdrawn (s 2(5)). All notices must be approved by Parliament before they are published.
So, although the Act was assented to on 8 December 2000, it will not take effect until the
Minister designates the relevant states.
The Act yields to a treaty or other agreement concluded by South Africa and conflicting
with the terms of the Act (s 3). The High Court recognizes foreign proceedings and co-
operates with foreign courts (s 4), and a South African representative (such as a trustee,
liquidator, or judicial manager) may act in a foreign state for South African insolvency
proceedings, as allowed by the relevant foreign law (s 5). Section 5 should now be read as
referring to the business rescue practitioner (cf chapter 6 of the Companies Act 71 of 2008;
and 23.2.3(vi)). The court may refuse to carry out an action falling under this Act if this
would conflict with South African public policy (s 6). The Act is to be interpreted against its
international background and with a view to uniform application and the upholding of good
faith (s 8).
As regards foreigners’ access to South African courts, the foreign representative may
apply directly to our courts (s 9), and in doing so does not automatically subject himself or
the debtor’s matters to that jurisdiction for other purposes (s 10). He may seek to begin
insolvency proceedings here if the South African requirements for doing so are met (s 11).
Once recognized, he may take part in South African proceedings (s 12). Foreign creditors
enjoy the same rights as their South African counterparts. Although the South African
ranking of claims applies, foreign creditors’ claims do not rank lower than non-preferent
claims (s 13(1)-(2)). Those creditors are entitled to notification as creditors (s 14).
The foreign representative may seek the High Court’s recognition of the foreign
proceedings in which he has been appointed. The relevant documentary confirmation must
be supplied, including a statement of all foreign proceedings that he knows relate to the
debtor (s 15). The debtor’s registered office, or habitual residence, is rebuttably presumed
to be the centre of its or his main interests (s 16(3)).
Subject to the public policy exception, the foreign proceedings, if they meet the s 1(g)
definition and the foreign representative meets the s 1(h) definition, must be recognized
once the documentary requirements (s 15) have been fulfilled and the application is made to
the High Court (s 17). The foreign proceedings must be recognized either as foreign main
proceedings in the state where the debtor has the centre of its main interests, or otherwise
as foreign non-main proceedings if the debtor has an
Page 302
establishment in the foreign state. (An establishment is ‘any place of operations where the
debtor carries out a non-transitory economic activity with human means and goods or
services’ (s 1(c)).
Pending the recognition decision, the High Court may, at the foreign representative’s
request, grant urgent provisional relief to protect the debtor’s assets or the creditors’
interests. This relief would include a stay of execution; the entrusting of perishables,
depreciating, or endangered assets to the representative or another court designee for
preservation or realization; suspension of the debtor’s right to dispose of his assets; the
examination of witnesses and the collection of evidence; or any other appropriate relief
available under South African law (s 19(1)). Relief may be refused if it would hinder the
foreign main proceedings (s 19(4)).
The recognition of foreign main proceedings stays the commencement or the continuation
of individual proceedings in connection with the debtor’s affairs, as well as execution against
assets, and suspends the debtor’s right to dispose of assets (s 20(1)). The ambit of this stay
and suspension is controlled by ss 20, 23 and 75 of the South African Insolvency Act and ss
341 and 359 of the South African Companies Act 61 of 1973 (s 20(2) of the Cross-Border
Insolvency Act). Despite the stay, it remains competent to begin proceedings for preserving
a claim against the debtor, to request the opening of South African insolvency proceedings,
or to file claims in those proceedings (s 20(3)-(4)). In addition, the recognition of foreign
proceedings as foreign main proceedings renders s 21 of the South African Insolvency Act
applicable to assets situated in South Africa to the same extent as if the debtor had been
sequestrated by a court (s 20(1)(d)).
The court may grant various forms of relief after recognizing foreign proceedings, whether
main proceedings or non-main proceedings (s 21). The court may thus stay proceedings and
execution, suspend the debtor’s right of disposition, allow examinations of witnesses and the
collection of evidence, entrust the administration or realization of assets to the foreign
representative or a designee, extend urgent provisional relief granted under s 19(1), and
grant any additional relief that would be available to a trustee, liquidator, judicial manager,
curator of an institution, or receiver under South African law. At that foreign representative’s
request, the court may even permit the distribution of the debtor’s South African assets, if it
is sure that South African creditors are protected (s 21(2)). For foreign non-main
proceedings, the court has to be sure that the relief concerns assets that, under South
African law, should be dealt with in such proceedings, or concerns information needed there
(s 21(3)).
The court is obliged, when granting relief under s 19 or 21, to ensure that adequate
protection is accorded to creditors and others, including the debtor. It may set conditions for
such relief, and alter or amend it, either at the request of the foreign representative or a
person affected thereby or on its own initiative (s 22).
The foreign representative may rely on South African impeachment provisions (s 23). If
he is acting in foreign non-main proceedings, however, the High Court has to be sure that
the legal action concerns relevant assets (s 23(2)). The representative may also intervene in
proceedings to which the debtor is a party (s 24).
In the proceedings mentioned in s 2(1), the court ‘shall co-operate to the maximum
extent possible with foreign courts or foreign representatives, either directly or through a
trustee, liquidator, judicial manager, curator, or receiver’ (s 25(1)). And the court may
communicate and seek information or help directly from foreign courts or
Page 303
representatives (s 25(2)). With the High Court’s supervision, similar co-operation is expected
of a South African representative, who in turn has the right of direct communication with
foreign courts and representatives (s 26). Examples of co-operation include the appointment
of a person to follow the court’s directions, communication of information, co-ordination of
the administration of the debtor’s affairs, judicial approval and carrying out of agreements
about the co-ordination of proceedings, and the co-ordination of concurrent proceedings
against the same debtor (s 27).
As regards concurrent proceedings, it is provided that once foreign main proceedings have
been recognized by the High Court, it is possible to launch South African insolvency
proceedings only if the debtor has assets in South Africa (s 28(1)). The effects of the South
African proceedings are then limited to those assets and to any others which, so as to co-
ordinate proceedings in terms of ss 25 to 27, should be administered in those proceedings (s
28(2)). If foreign proceedings and South African proceedings concerning the same debtor
are running concurrently, the High Court must seek co-operation and co-ordination under ss
25 to 27 (s 29). Further rules are supplied that depend on the timing of the respective
proceedings (s 29(a)-(c)).
If several foreign proceedings are in progress, the High Court must seek co-operation and
co-ordination under ss 25 to 27 (s 30). Provision is made for any relief already granted in
foreign non-main proceedings to conform with foreign main proceedings that are later
recognized (s 30).
Once the foreign main proceedings are recognized by the High Court, the debtor is
rebuttably presumed to be insolvent for the purposes of institution of South African
proceedings (s 31).
In general, a creditor who has been paid part of its claim in foreign insolvency proceedings
is not entitled to be paid for the same claim in South African insolvency proceedings
regarding the same debtor, so long as other creditors of the same class are paid
proportionately less than the payment that that creditor has already received (s 32). The
‘hotchpot’ rule thus applies.
26.5 Conclusion
The Cross-Border Insolvency Act, when it comes into force in the international system for
co-operation intended by the Model Law, will provide a gateway for foreign representatives
to gain access to South African proceedings, and for South African representatives to gain
access to foreign proceedings. The Act, though limited by the designation requirements in s
2(2)-(5), does enable South African courts and practitioners to play a positive role in co-
operating with their foreign counterparts, particularly in attempting business rescues. Once
the foreign representatives have gained access to the South African legal system via the
Cross-Border Insolvency Act, however, they will have to abide by the relevant South African
rules, substantive and procedural.
Page 305
Appendices
Appendix 1: Specimen applications

1 Application for voluntary surrender
2 Application for compulsory sequestration
3 Application for rehabilitation
4 Application for winding-up of a company (as an insolvent company)
Appendix 2: Estate accounts

1 Liquidation and distribution account
2 Plan of distribution and contribution
3 Liquidation and distribution account pursuant to s 119 composition
Appendix 3: Insolvency Act 24 of 1936
Appendix 4: Companies Act 61 of 1973
Appendix 7: Close Corporations Act 69 of 1984
Appendix 8: Cross-Border Insolvency Act 42 of 2000

Page 307
Appendix 1
Specimen applications
1 APPLICATION FOR VOLUNTARY SURRENDER

1.1 Notice of motion
IN THE HIGH COURT OF SOUTH AFRICA
............................................................... CASE NO.......................
In the matter of: APPLICANT
............................................................... In the matter of an application for the
voluntary surrender of the estate
of the applicant
NOTICE OF MOTION
TAKE NOTICE that application will be made on behalf of the above applicant on the ...........................
day of .................................. 20.......... at 10h00 or as soon thereafter as Counsel may be heard for an
order in the following terms.
1. That the surrender of the applicant’s estate is accepted.
2. That further or alternative relief is granted to the applicant.
FURTHER TAKE NOTICE that the affidavit of ................ annexed hereto will be used in support of the
application.
KINDLY place the matter on the roll for hearing accordingly.
DATED at.............................this.....................day of..............................20..........
......................................................
APPLICANT’S ATTORNEY
.......................................................
TO:
THE REGISTRAR OF THE HIGH COURT
.............................................................
THE MASTER OF THE HIGH COURT
..............................................................
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1.2 Affidavit
.............................................................. CASE NO.......................

.............................................................. In the matter of an application for the
voluntary surrender of the estate
of the applicant
AFFIDAVIT
I, the undersigned, ................................................... declare under oath as follows.

1. I am the applicant in this matter and the facts deposed to are within my own knowledge.
2. I am a major male, identity number ..............presently residing at..................
.............................., and employed as ....................................
........................................ by ................................................
I am married out of community of property to .......................................
[NOTE: If the debtor and his spouse are married in community of property, the application must be made
by both spouses (see para 2.1) and the affidavit must provide full details of each spouse.]
3. I am domiciled within the jurisdiction of the above Honourable Court.
4. I am insolvent and wish to surrender my estate for the benefit of my creditors. I refer to the
statement of my affairs annexed, marked ‘A’, from which it will be seen that my liabilities total
R ............... and my assets amount to R ............... in value, leaving a deficiency of
R .................................
5. I submit that the realizable property reflected in my statement of affairs is of sufficient value to
defray the costs of sequestration.
6. The reasons for my insolvency are as follows.
6.1 ........................................................
6.2 .........................................................
7. I submit, for the reasons mentioned below, that it will be to the advantage of creditors if the
surrender of my estate is accepted.
7.1 If the assets in my estate are realized by a trustee they will yield a substantial dividend for
my creditors.
7.2 Various creditors have instituted action against me and some have already obtained
judgment. I expect that others will commence proceedings against me shortly. If my estate is
not sequestrated, considerable legal costs will be run up and my financial position will
deteriorate. Further, if my assets are not divided by a trustee amongst all my creditors,
certain creditors will be preferred to others, and some may receive nothing at all.
7.3 I am presently in receipt of a salary of R................per month, which is more than sufficient
to cover the costs of supporting myself, my wife and my two children. I anticipate that a
portion of my salary will be available for distribution by the trustee amongst my creditors.
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8. I submit that I have complied with the provisions of section 4 of the Insolvency Act, 1936, by reason
of the following facts.
8.1 I caused a notice of surrender in the prescribed form to be published in the Government
Gazette and in the ................ newspaper on ................ The relevant pages from the
Gazette and ................ are annexed, marked ‘B’ and ‘C’ respectively. I am informed and
verily believe that the ................ newspaper circulates in the district of ................ where
my place of business was situated.
8.2 Within a period of seven days after publication of the notice of surrender in the Gazette, I
furnished copies of the notice as set out below.
8.2.1 I caused copies of the notices to be posted to every one of my creditors whose
address I know or have been able to ascertain. I annex, marked ‘D’ proof of postage.
8.2.2 I caused a copy of the notice to be posted to ................ which is the registered trade
union that, to my knowledge, represents my employees [OR: which are the registered
trade unions that, to my knowledge, represent my employees]. I annex, marked ‘E’
proof of postage.
8.2.3 I caused a copy of the notice to be affixed to a notice board inside my business
premises and to which my employees have access [OR: I caused a copy of the notice
to be affixed to the front gate of my business premises; OR: I caused a copy of the
notice to be affixed to the front door of the premises from which I conducted my
business immediately prior to bringing this application]. I annex, marked ‘F’ an
affidavit by ................ confirming that this notice was given in the manner described.
8.2.4 I caused a copy of the notice to be posted to the South African Revenue Service. I
annex, marked ‘G’ proof of postage.
8.3 My statement of affairs (Annexure ‘A’) lay for inspection at the office of the Master
in ................ and the office of the magistrate of the district of ................ for a period of 14
days as from ................ being the date mentioned in the notice of surrender. I annex
certificates from the Master and magistrate, marked ‘H’ and ‘I’ respectively.
9. I refer to the affidavit of ..............., annexed hereto marked ‘F’, from which it will appear that I
have caused a copy of this application to be provided to ................ as required by section 197B(2)
of the Labour Relations Act, 1995. I submit that ............... is a consulting party as contemplated by
section 189(1) of the said Act.
10. I have not previously been declared insolvent and, as far as I am aware, there are no applications
for sequestration pending against me.
......................................................
APPLICANT
Page 310
I certify that the deponent has acknowledged that he knows and understands the contents of this
affidavit which was sworn to and signed before me at ............. on ..................................., the
regulations contained in Government Notice R1258 dated 21 July 1972 (as amended) having been
complied with.
......................................................
COMMISSIONER OF OATHS
FULL NAMES
ADDRESS
AREA
EX OFFICIO
Page 311
2 APPLICATION FOR COMPULSORY SEQUESTRATION

2.1 Notice of Motion
......................................................... CASE NO ................
.........................................................
and RESPONDENT
..........................................................
NOTICE OF MOTION
TAKE NOTICE that application will be made on behalf of the above applicant on the .................. day
of .................... 20 .......... at 10h00 or as soon thereafter as Counsel may be heard for an order in the
following terms.
1. That this application be regarded as urgent and that the usual rules as to notice and service
required by rule 6(5)(b) be dispensed with.
2. That the estate of the Respondent is provisionally sequestrated.
3. That a rule nisi is issued calling on the Respondent and any other interested parties to show cause
to this Court on the ....................day of ................ 20 .......... at 10h00 why the Respondent
should not be finally sequestrated.
4. That the costs of the application are costs of sequestration.
5. That the Applicant is granted further or alternative relief as this Honourable Court may deem fit.
FURTHER TAKE NOTICE that the affidavit of .............................................. annexed hereto will be
used in support of the application.
DATED at ............... this .................day of ..................... 20 ..........
......................................................
TO:
......................................................
.......................................................
THE RESPONDENT
.......................................................
.................................................................
Page 312
2.2 Affidavit
......................................................... CASE NO ................
..........................................................
and RESPONDENT
...........................................................
AFFIDAVIT
I, the undersigned, ................................................, declare under oath as follows.

2. I am a major male ...................................., presently residing at ................................
3. The respondent is ........................................................................................, a major male,
born on ......................... identity number ........................., presently residing
at ............................. The respondent is married out of community of property to ......................
born on .........................., identity number ...........................
[NOTE: If the debtor and his spouse are married in community of property, the application must be
brought against both spouses and full particulars of each spouse must be provided. See para 3.2.1]
4. The respondent is domiciled within the jurisdiction of this Honourable Court.
5. On ..................................... in this Honourable Court I obtained judgment against the respondent
for R ..................., arising from moneys which I lent and advanced to the respondent, together
with interest on the amount of the judgment at the rate of .........% per annum calculated from the
date of judgment, and costs of suit. The judgment remains wholly unsatisfied. In the premises, I
have a liquidated claim against the respondent in excess of R100.
6. I hold no security for my claim.
[OR: As security for my claim, I hold ................................................................. to the value
of..................................... but I hold no further security.]
7. After obtaining the above judgment, I caused a writ of execution to be issued against the
respondent’s property. I annex, marked ‘A’, the return of service made by the Sheriff for this
Honourable Court from which it will be observed that the respondent failed, on demand by the
Sheriff, to satisfy the judgment or to indicate to the Sheriff disposable property sufficient to satisfy
it. By virtue of this, I submit that the respondent has committed an act of insolvency as envisaged
by section 8(b) of the Insolvency Act, 1936.
[NOTE: (1) If the applicant relies upon any other act of insolvency, he must, when describing the
act, follow the wording in s 8. See para 3.1.2 for the other acts of insolvency. (2) If the applicant
relies upon the fact that the respondent is de facto insolvent, he must allege this and provide details
of the respondent’s assets and liabilities.]
8. The respondent is the owner of the immovable property described
as .............................................. which he holds
Page 313
under deed of transfer .............................. The property is subject to a mortgage bond in the
amount of R................in favour of ................................registered
on ..............................................
9. I have caused inquiries to be made at the office of the Sheriff of this Honourable Court and am
informed and verily believe that the property has been attached by several other creditors of the
respondent and that a sale in execution is to be held on ..............................................
10. Until recently, the respondent was a partner in the firm of stockbrokers ................................and
enjoyed a lifestyle expected of a professional man of some standing. He may well have been in
receipt of a considerable monthly income from the partnership.
11. The respondent’s wife is carrying on her own business as ............................... and is in possession
of a number of assets.
12. I submit, for the reasons which follow, that it will be to the advantage of creditors of the respondent
if his estate is sequestrated.
12.1 If the assets in the respondent’s estate are realized they will probably yield a substantial
dividend for creditors.
12.2 A trustee will be able to ensure that the respondent’s property is realized for its true value
and that the proceeds are distributed pro rata among the respondent’s creditors. If the
intended sale in execution takes place, the proceeds will probably be less than the actual
value of the property and, moreover, only creditors who have obtained attachments will
receive a payment.
12.3 A trustee will have the power to ascertain whether the respondent has made any dispositions
which may be set aside under the Insolvency Act, 1936. In particular, he will be able to
investigate the circumstances surrounding the registration of the mortgage bond over the
property, and to make inquiries regarding what has happened to income previously earned by
the respondent.
12.4 A trustee will be able to determine whether the respondent’s wife owns the assets in her
possession and, if so, whether she has acquired them by a title valid against the respondent’s
creditors.
13. In view of the fact that the respondent’s property is to be sold in execution
on ................................................, I submit that this application is urgent.
14. I shall furnish security to the Master of this Honourable Court, as required by the Insolvency Act,
1936, and shall obtain a certificate from the Master in terms of section 9(3) of the Act. Furthermore,
I shall cause a copy of this application to be lodged with the Master, with a view to obtaining his
report in terms of section 9(4) of the Act.
15. I shall also cause a copy of this application to be furnished to the following parties as required by
section 9(4A)(a) of the Insolvency Act, 1936.
15.1 ................................, the registered trade union that represents the respondent’s
employees;
15.2 the respondent’s employees;
15.3 the respondent;
15.4 the South African Revenue Service.
Prior to the hearing, I shall file an affidavit by ................................setting out the manner in
which section 9(4A)(a) was complied with.
Page 314
WHEREFORE I pray for an order in terms of the Notice of Motion filed herewith.
................................
APPLICANT
affidavit which was sworn to and signed before me at ................................on ................, the
complied with.
................................
FULL NAMES
ADDRESS
AREA
EX OFFICIO
Page 315
3 APPLICATION FOR REHABILITATION

................................................ CASE NO ................
................................................ In the matter of an application for the
rehabilitation of the applicant
NOTICE OF MOTION
TAKE NOTICE that application will be made on behalf of the above applicant on the ....................day
of ................ 20 .......... at 10h00 or as soon thereafter as Counsel may be heard for an order in the
following terms.
1. That the applicant is rehabilitated;
2. That further or alternative relief is granted to the applicant.
FURTHER TAKE NOTICE that the affidavit of ................................annexed hereto will be used in
support of the application.
DATED at ................ this ................ day of ....................20 ..........
......................................................
.......................................................
.......................................................
TO:
............................................................
............................................................
THE TRUSTEE
............................................................
Page 316
3.2 Affidavit
................................................. CASE NO ................
................................................ In the matter of an application for the
rehabilitation of the applicant
AFFIDAVIT
I, the undersigned, ................................................ declare under oath as follows.

2. I am a major male ................................................................................, identity
number ..............................., presently residing at ................................
3. I am domiciled within the jurisdiction of this Honourable Court.
4. On ................................my estate was finally sequestrated by this Court (case
number ................................). ................................ of ................ ................ was duly
appointed as trustee of my estate by the Master of this Honourable Court under Certificate of
Appointment No ................ dated ................................
5. My insolvency came about by reason of the following facts.
5.1 ......................................................................................................
5.2 ......................................................................................................
5.3 ......................................................................................................
6. At the date of my sequestration, the total amount of my liabilities was R ............... My assets were
the following:
Item: Value:
Lot
No ....................... R .......................
Fixed Deposit ........ R .......................
R .......................
7. After sequestration, claims totalling R ................ were proved against my estate.
8. In terms of the First and Final Liquidation and Distribution Account, which was confirmed by the
Master of this Court on ................, my creditors were paid R ................, leaving a deficiency of
R ................on claims proved against the estate. Details of the names of the proved creditors, their
claims, and the amount awarded in respect of each claim, appear in the said Account, a copy of
which is annexed, marked ‘A’.
9. There are no further assets in my estate available for realization.
10. I have made a complete surrender of my estate and have not granted or promised any benefit
whatever to any person, or entered into any secret agreement, with intent thereby to induce my
trustee or a creditor not to oppose my rehabilitation.
11. I am presently employed as ................ by ................ My gross monthly salary is R ................
and from this a total of R ................ is deducted each month for pension, medical aid, and income
tax, leaving a net amount of R ................ My wife is employed by ................ earning a net salary
of R ................ per month. Our joint net monthly income, therefore, is R ................
Page 317
My wife is employed by ................ earning a net salary of R ................ per month. Our joint net
monthly income, therefore, is R ................
12. I have not acquired any assets since the sequestration of my estate, except for small personal
belongings. My assets at the present time comprise the following:
Item: Value:
....................... R .......................
....................... R .......................
....................... R .......................
13. I do not have any liabilities. My approximate monthly expenditure is as follows:
Item: Value:
....................... R .......................
....................... R .......................
....................... R .......................
....................... R .......................
14. My estate has not under the Insolvency Act, 1936, or any prior law, been sequestrated prior to the
existing sequestration order. Further, I have not been convicted of any fraudulent act in regard to
my insolvency or of any offence under sections 132, 133, or 134 of the Insolvency Act, 1936. [Note:
The basis of this particular application is lapse of the prescribed period of time (twelve months) after
confirmation of the first account. The allegations in this clause are only necessary where the
application is brought within three years of confirmation of the first account. If the application is
made on different grounds, the affidavit must be suitably modified. See para 19.2.1 for the different
sets of circumstances under which rehabilitation may be applied for. See para 19.2.4 for the
allegations which must be made in each case.]
15. I submit, by reason of the following facts, that I have given notice of this application as required by
the Insolvency Act, 1936.
15.1 Notice of my intention to apply for rehabilitation was published in the GovernmentGazette
on . .............................. in the form prescribed by the regulations framed under the
Insolvency Act, 1936. I annex, marked ‘B’, the relevant page of the Gazette in question.
15.2 On ............................... my attorneys gave written notice to the Master of this Honourable
Court and to the trustee of my estate of my intention to apply for rehabilitation. I annex,
marked ‘C’ and ‘D’, copies of the notices with proof of service endorsed thereon. [Note: The
notice requirements vary according to the grounds relied upon for the application. See para
19.2.2.]
16. Not less than three weeks prior to the hearing of this matter, I caused to be furnished to the
Registrar of this Honourable Court the security required in terms of section 125 of the Insolvency
Act, 1936.
17. I shall arrange for a copy of these papers to be served on the Master of this Honourable Court for
his report and shall obtain his recommendation in terms of section 124(2) of the Insolvency Act,
1936.
[Note: If the application is made within four years from the date of sequestration, the applicant must
obtain a recommendation from the Master that he be rehabilitated. See para 19.2.1.]
Page 318
WHEREFORE I pray for an order in terms of the Notice of Motion filed herewith
..................................
APPLICANT
affidavit which was sworn to and signed before me at ................ on ................................, the
complied with.
................................
FULL NAMES
ADDRESS
AREA
EX OFFICIO
Page 319
4 APPLICATION FOR WINDING-UP OF A COMPANY (AS AN INSOLVENT COMPANY)

................................................. CASE NO ................

................................................
and RESPONDENT
................................................ In the matter of an application for
the provisional winding up of the
respondent
NOTICE OF MOTION
TAKE NOTICE that application will be made on behalf of the above applicant on the ....................day
of .................... 20 .......... at 10h00 or as soon thereafter as Counsel may be heard for an order in the
following terms.
1. That ................................, the Respondent, is placed under an order of provisional liquidation in
the hands of the Master.
2. That a rule nisi is issued calling on the Respondent and any other interested parties to show cause
to this Court on the ....................day of .................... 20 .......... at 10h00 why the Respondent
should not be placed under a final winding-up order.
3. That this order be served forthwith on the Respondent at its registered office and published, on or
before ................, once in the Government Gazette, and once in a daily newspaper published and
circulating in ................................
4. That the costs of the application are costs of winding-up.
5. That the Applicant is granted further or alternative relief as this Honourable Court may deem fit.
FURTHER TAKE NOTICE that the affidavit of ................................annexed hereto will be used in
support of the application.
DATED at ................ this ................................day of ................ 20 ..........
................................
...............................
................................
TO:
..........................................................
...........................................................
THE RESPONDENT
..........................................................
...........................................................
Page 320
4.2 Affidavit
.................................................. CASE NO ................

................................................
and RESPONDENT
................................................
AFFIDAVIT
I, the undersigned, ................................................, declare under oath as follows.

2. I am a major male presently residing at ................................................
3. The respondent is ................................, registration number ............................... a company
duly incorporate under the company laws of South Africa, carrying on business
as ................................, with its registered office at ................................
4. The respondent is indebted to me in the amount of R20 000 for ................................ The sum of
R20 000 is presently due. In the premises, I have locus standi to bring this application.
[NOTE: For other grounds on which an insolvent company may be wound up, see para 23.2.2]
5. I hold no security for my claim.
[OR: As security for my claim, I hold ................................................ to the value
of ..............................................., but I hold no further security.]
6. On ................................ I left at the Respondent’s registered office, a demand requiring the
Respondent to pay the amount due to me. I annex hereto, marked ‘A’, a copy of the demand with
proof of service endorsed thereon. The Respondent has failed to pay the amount due and has not
made any attempt to secure or compromise for it to my satisfaction. I submit that, in the premises,
the Respondent is unable to pay its debts as described in s 345 of the Companies Act 61 of 1973.
7. I submit, for the reasons which follow, that it will be to the advantage of creditors of the respondent
if the respondent is wound up:
7.1 .....................................................................................................
7.2 .....................................................................................................
7.3 ......................................................................................................
8. I shall furnish security to the Master of this Court, as required by the Companies Act 61 of 1973,
and shall obtain a certificate from the Master in terms of section 346(3) of the Act. Furthermore, I
shall cause a copy of this application to be lodged with the Master, with a view to obtaining his
report in terms of section 346(4) of the Act.
9. I shall also cause a copy of this application to be furnished to the following parties as required by
section 346(4A)(a) of the Companies Act, 61 of 1973.
9.1 ................, the registered trade union that represents the respondent’s employees;
9.2 the respondent’s employees;
9.3 the respondent;
9.4 the South African Revenue Service.
Prior to the hearing, I shall file an affidavit by ................................................ setting out the
manner in which section 346(4A)(a) was complied with.
Page 321
WHEREFORE I pray for an order in terms of the Notice of Motion filed herewith.
.................................
APPLICANT
affidavit which was sworn to and signed before me at ............. on ..................., the regulations
contained in Government Notice R1258 dated 21 July 1972 (as amended) having been complied with.
................................
FULL NAMES
ADDRESS
AREA
EX OFFICIO
Page 322
Appendix 2
Estate accounts
1 LIQUIDATION AND DISTRIBUTION ACCOUNT

The following details are provided for the drafting of a liquidation and distribution account in the insolvent
estate of N O LUCKE.
1.1 Assets
• Lot 1 Hicksville – sold by public auction for R230 000. Occupational interest of R5 000 was paid to
the estate in terms of the sale.
• Toyota Hilux motor vehicle purchased by the insolvent in terms of an instalment agreement from
HI-FINANCE (PTY) LTD (not fully paid for at the time of sequestration) – sold by public auction for
R70 000.
• Office furniture, equipment, and fittings – sold by public auction for R15 000.
• Book debts recovered – R12 000.
• Cash collected from the insolvent’s premises – R1 000.
• Amount standing to the credit of the insolvent’s current account with ABC BANK LTD, withdrawn by
the trustee – R12 000.
• Claim against ALL RISK INSURANCE CO paid to the estate – R8 000.
• Machinery, tools, and stock – sold by public auction for R25 000.
1.2 Claims against the estate
• STABLE BANK LTD (proved claim no 1) – R200 000 lent and advanced to the insolvent. The creditor
holds as security a first mortgage bond for the sum of R200 000 passed by the insolvent over Lot 1
Hicksville. The creditor relies solely on its security for the satisfaction of its claim.
• HI-FINANCE (PTY) LTD (proved claim no 2) – R80 000 outstanding in terms of an instalment
agreement, in which the creditor sold a Toyota Hilux motor vehicle to the insolvent. The creditor has
a hypothec for the amount due and relies solely on its security for the satisfaction of its claim.
• REALTY ESTATES (PTY) LTD (proved claim no 3) – R12 000, being four monthly rent payments of
R3 000 each, due by the insolvent for the hire of premises. The rent owing is for the four months
preceding sequestration. The creditor has a landlord’s hypothec as security, but does not rely solely
on this for the satisfaction of its claim.
• LENDALOT (PTY) LTD (proved claim no 4) – R15 000 lent and advanced to the insolvent. The
insolvent ceded book debts totalling R12 000 to the creditor as security for repayment of the loan.
The creditor does not rely solely on its security for the satisfaction of its claim.
• HICKSVILLE MUNICIPALITY – R11 550 rates on Lot 1 Hicksville computed as follows: (i) R9 900 for
the three years immediately prior to sequestration (R3 300 per year); (ii) R1 650 for the six months
immediately after sequestration.
• COMMISSIONER, SARS – R700 income tax for the year preceding sequestration.
• COMPENSATION COMMISSIONER – R200 contribution due in respect of unemployment insurance.
• J SOAP – R5 000 salary due in respect of employment for two months prior to sequestration.
• CONCURRENT CREDITORS:
Page 323
• J SOAP – R5 000 salary due in respect of employment for two months prior to sequestration.
• CONCURRENT CREDITORS:
+ John Citizen and Associates - goods sold ....................................... R 6 000
+ Sellquick Merchants - goods sold .................................................. R12 000
+ Bill Greenback - money lent ........................................................ R 1 000
+ XYZ Repairs - services rendered .................................................. R 2 000
+ George Porge & Son - services rendered ....................................... R16 000
+ Big Bargains (Pty) Ltd - goods sold ............................................... R 5 000
+ NAB Sales (Pty) Ltd - goods sold .................................................. R10 000
+ Giant Discounters - goods sold ..................................................... R15 000
+ Kloppers and Co - goods sold ....................................................... R 4 000
+ Sonny’s Supplies - goods sold ...................................................... R10 000
+ Construx (Pty) Ltd - services rendered .......................................... R 5 000
+ Pottie Lucke - money lent ........................................................... R 6 000
+ East-End Stores - goods sold ....................................................... R 9 000
1.3 Expenses incurred by the trustee

• Security services for Lot I Hicksville – R600.
• Sworn valuation of Lot 1 Hicksville – R400.
• Auctioneer’s fees and expenses (advertising, transport, storage, and auction):
+ Residence - R13 000;
+ Toyota Hilux - R3 500;
+ Office furniture, equipment and fittings - R2 000;
+ Machinery, tools and stock - R1 250.
• Attorney’s fee for recovery of book debts – R3 000.
• Bond of security – R4 160.
• Insurance cover for: (i) Toyota Hilux; (ii) office furniture, equipment, and fittings; and (iii) all assets
in the free residue – total premium – R700.
• Sheriff’s charges for serving sequestration order and attaching the estate property – R750.
• Taxed costs of sequestrating creditor – R9 000.
• Advertising the first and second meetings – R290 (2 x R145).
• Rent due in terms of the lease with REALTY ESTATES (PTY) LTD (see above), which lease was
terminated one month after sequestration. The rent is in respect of the month following
sequestration – R3 000.
• Wages of a casual employee engaged by the trustee to assist him with his administration of the
estate – R200.
1.4 Expenses to be incurred by the trustee
• Trustee’s remuneration at the prescribed rate.
• VAT at 14% on the trustee’s remuneration.
• Master’s fees at the prescribed rate.
• Advertising the account and its confirmation (R290).
• Bank charges (R350).
Page 324
INSOLVENT ESTATE N O LUCKE

MASTER’S REF NO: ..........................................
First and Final Liquidation and Distribution Account
Encumbered Asset Account 1
Immovable property described as Lot 1 Hicksville
Mortgage bond in favour of STABLE BANK LTD (proved claim no 1)
Receipts
Date Details Voucher No Amount
–/–/– Proceeds of auction – 230 000,00
–/–/– Occupational interest – 5 000,00
235 000,00
Payments
–/–/– Security services – 600,00
–/–/– Valuation of property – 400,00
–/–/– Auctioneer’s charges
Trustee’s remuneration – 13 000,00
3% on 230 000 6 900,00
10% on 5 000 500,00
14% VAT on 6 900 966,00
Bond of security (proportion) 2 586,24
Master’s fees (proportion) 1 305,55
–/–/– Rates on Lot 1 Hicksville
Arrears (2 years) 6 600,00
Post-sequestration 650,00
Award to secured creditor (No 1) 200 000,00
Surplus to Free Residue Account 429,21
235 000,00
Page 325

Toyota Hilux motor vehicle
Hypothec in favour of HI-FINANCE (PTY) LTD arising from an instalment agreement (proved claim no 2)
Receipts
70 000,00
Payments
–/–/– Insurance (proportion) – 374,05
–/–/– Auctioneer’s charges
Trustee’s remuneration – 3 500,00
10% on 70 000 7 000,00
14% VAT on 7 000 980,00
Bond of security (proportion) 770,37
Master’s fees (proportion) 388,89
70 000,00
Page 326

Office furniture, equipment, and fittings
Landlord’s hypothec in favour of REALTY ESTATES (PTY) LTD (proved claim no 3)
Receipts
15 000,00
Payments
–/–/– Insurance (proportion) – 80,15
–/–/– Auctioneer’s charges 2 000,00
Trustee’s remuneration
10% on 15 000 1 500,00
14% VAT on 1 500 210,00
Award to secured creditor (No 3)* 9 000,00
Surplus to Free Residue Account 1 961,44
15 000,00
*NOTE: In terms of s 85(2)(a), a landlord’s hypothec is security for three months’ rent only. The claim in
respect of rent for the fourth month is a concurrent one.
Page 327

Book debts of N O Lucke
Cession as security in favour of LENDALOT (PTY) LTD (proved claim no 4)
Receipts
–/–/– Book debts collected as per Annexure ‘‘A’’ 12 000,00
12 000,00
Payments
–/–/– Attorney’s fees for recovery of book debts – 3 000,00
10% on 12 000 1 200,00
14% VAT on 1200 168,00
12 000,00
Free Residue Account
Receipts
–/–/– Cash found in estate 1 000,00
–/–/– Bank Current Account – 12 000,00
–/–/– Insurance claim paid – 8 000,00
–/–/– Machinery, tools and stock auctioned – 25 000,00
Balance b/d from
Encumbered Asset Account 1 429,21
Encumbered Asset Account 3 1 961,44 2 390,65
48 453,60
Payments
–/–/– Sheriff’s charges – 750,00
–/–/– Taxed costs of sequestrating creditor – 9 000,00
1% on 13 000 130,00
10% on 8 000 800,00
10% on 25 000 2 500,00
14% VAT on 2 500 350,00
–/–/– Asset insurance (proportion) 245,80
–/–/– Auctioneer’s charges – 1 250,00
–/–/– Bank charges (provision) 350,00
Page 328
–/–/– Advertising
First meeting 145,00
Second meeting 145,00
Provision for this account 145,00
Provision for confirmation 145,00
–/–/– Post-sequestration rent (1 month) – 3 000,00
–/–/– Casual wages – 200,00
Preferent creditors
Employee’s salary – J Soap 5 000,00
Contribution due to Compensation Commissioner 200,00
Commissioner, SARS 700,00 5 900,00
Award to concurrent creditors 22,573.04
48 453,65
Apportionment Schedule
Total Bond.sec Master Insurance
Free Residue 46 000,00 506,25 255,56 245,80
Encumbered asset 1 1 235 000,00 2 586,24 1 305,55 –
Encumbered asset 2 2 270 000,00 770,37 388,89 374,05
Encumbered asset 3 3 15 000,00 165,08 83,33 80,15
Encumbered asset 4 4 12 000,00 132,06 66,67 –
378 000,00 4 160,00 2 100,00 700,00
Bank Reconciliation Statement

Debit Credit
Balance as per bank statement 307 837,00
Investment on call account 20 000,00
TO PAY:
Trustee’s remuneration 20 530,00
VAT on trustee’s remuneration 2 674,00
Master’s fees 2 100,00
Advertising 290,00
Bank charges 350,00
Award to secured creditors 273 419,96
Award to preferent creditors 5 900,00
Award to concurrent creditors 22 573,04
327 837,00 327 837,00
Page 329
Insolvent Estate N O Lucke

Master’s Ref No: ..........................................
Plan of distribution
Claim Creditor Nature of Total CLAIMS AWARDS

No claim claim
Secured Preferent Concurrent Secured Preferent Concurrent Deficiency
1 Stable Bank Money lent 200 000,00 200 000,00 200 000,00
Ltd
2 High-Finance Instalment 80 000,00 80 000,00 56986,69 23 013,31
(Pty) Ltd agreement
3 Realty Estates Rent 12 000,00 9 000,00 3 000,00 9 000,00 599,99 2 400,01
(Pty) Ltd
4 Lendalot (Pty) Money lent 15 000,00 12 000,00 7 566,73 7 433,27 1 513,33 6 053,40
Ltd
5 Hicksville Rates 3 300,00 3 300,00 659,99 2 640,01
Municipality
6 Income tax 700,00 700,00 700,00
Commissioner,
SARS
7 Compensation Contribution 200,00 200,00 200,00

Commissioner
8 J. Soap Salary 5 000,00 5 000,00 5 000,00
9 John Citizen & Goods sold 6 000,00 6 000,00 1 199,98 4 800,02

Associates
10 Sellquick Goods sold 12 000,00 12 000,00 2 399,97 9 600,03
Merchants
11 Bill Greenback Money lent 1 000,00 1 000,00 200,00 800,00

12 XY Repairs Services 16 000,00 16 000,00 3 199,96 12 800,04
rendered
13 Big Bargains Goods sold 5 000,00 5 000,00 999,99 4 000,01
(Pty) Ltd
14 Nab Sales Goods sold 10 000,00 10 000,00 1 999,97 8 000,03
(Pty) Ltd
15 Giant Goods sold 15 000,00 15 000,00 2 999,96 12 000,04
Discounters
16 Klopper & Co Goods sold 4 000,00 4 000,00 799,99 3 200,01
17 Sonny’s Goods sold 10 000,00 10 000,00 1 999,97 8 000,03

Supplies
18 Construx (Pty) Services 5 000,00 5 000,00 999,99 4 000,01

Ltd rendered
19 Pottie Lucke Money lent 6 000,00 6 000,00 1 199,98 4 800,02
20 East-end Goods sold 9 000,00 9 000,00 1 799,97 7 200,03
Stores
415 200,00 301 000,00 5 900,00 112 866,73 273 419,96 5 900,00 22 573,04 113 307,00
NOTES
• It is common practice to give an address for each creditor.
• HI-FINANCE (PTY) LTD relied solely on its security for payment of its claim, and so the unsatisfied portion does not participate in the free residue.
LENDALOT (PTY) LTD did not rely solely on its security, and so the balance of its claim (R7 566,73) is treated as a concurrent claim.
• The claim of the Hicksville Municipality for rates is for that portion of the outstanding rates which is not recoverable as an expense in terms of s
89(1).
• An employee has a preferent claim only for three months’ salary and up to a maximum of R12 000 (s 98A(1)(a)(i)). If J Soap had claimed more,
the additional claim would have been a concurrent one.
• The amount awarded to each concurrent creditor is calculated as follows:
Page 330
Affidavit in terms of s 107 of the Insolvency Act

I, the undersigned .........................................., in my capacity as trustee in the insolvent estate of N
O LUCKE declare on oath that the above account is a full and true account of my administration of the
estate to date and that, as far as I am aware, all the assets of the estate have been disclosed in the
account.
..........................................
TRUSTEE
affidavit which was sworn to and signed before me at.............. on ................................, the
regulations contained in Government Notice 81258 dated 21 July 1972 (as amended) having been
complied with.
..........................................
FULL NAMES
ADDRESS
AREA
EX OFFICIO
Page 331
2 PLAN OF DISTRIBUTION AND CONTRIBUTION

The following details are provided for the drafting of a plan of liquidation and contribution for Slipshod
Enterprises CC (in liquidation).
2.1 Assets
• Immovable property – sold for R150 000.
• Movable assets – sold for R4 000.
2.2 Claims against the estate
• QUICKBUCK ACQUISITIONS – R140 100 money lent and advanced, secured by a first mortgage
bond on the immovable property in the sum of R140 000. The creditor did not elect to rely solely on
its security for payment of its claim.
• CONCURRENT CREDITORS
+ T Tucker - goods sold.................................................................... R20 000
+ J Horner - money lent and advanced .............................................. R10 000
+ J B Nimble - services rendered ....................................................... R15 000
2.3 Application of proceeds of the estate
(i) Immovable property
Debit Credit
Proceeds of auction 150 00,00
Auctioneer’s charges 6 000,00
Trustee’s remuneration (incl VAT) 5 130,00
Bond of security (prop) 1 168,83
Master’s fees (prop) 774,35
Award to Quickbuck Acquisitions 136 926,82
150 000,00 150 000,00

(ii) Movable property
Debit Credit
Proceeds of auction 4 000,00
Auctioneer’s charges 700,00
Taxed costs of sequestrating 8 500,00
creditor
Trustee’s remuneration (incl VAT) 456,00
Bond of security (prop 31,17
Master’s fees (prop) 20,65
Bank charges 200,00
Advertising 600,00
Amount to be contributed 6 507,87
10 507.82 10 507,82
Page 332
Slipshod Enterprises CC (In Liquidation)

Master’s Ref No: ..........................................
Claim Creditor Nature Total CLAIMS AWARDS

No of claim claim
1 Quickbuck Money 140 00,00 140 00,00 3 073,18 136 26,82 416,03 3 489,21
Acquisitions lent
2 T. Tucker Goods 20 000,00 20 000,00 2 707,46 22 707,46
sold
3 J. Horner Money 10 000,00 10 000,00 1 353,73 11 353,73

lent
4 J. B. Services 15 000,00 15 000,00 2 030,60 17 030,60

Nimble rendered
185 00,00 140 00,00 48 073,18 6 507,82 54 581,00
NOTES
• The contribution payable is calculated as follows:
• The deficiency is the amount by which each creditor is out of pocket, i.e. the amount of his unpaid claim together with the amount
which he has to contribute to the estate.
Page 333
3 LIQUIDATION AND DISTRIBUTION ACCOUNT PURSUANT TO S 119 COMPOSITION

AM Broke’s estate was finally sequestrated on 1 April 20XX. At the first meeting of creditors, the insolvent entered into a s 119 composition
with his creditors. The following information is provided for the drafting of a liquidation and distribution account.
3.1 Details of the composition
• secured and preferent creditors are to be paid in full;
• concurrent creditors are to be paid 50c in the rand;
• payment is to take place on 31 July, 20XX (ie four months after the date of sequestration).
3.2 Claims against the estate and expenses
• LASTDITCH FINANCE (PTY) LTD – R80 000 in respect of money lent and advanced together with interest thereon at the rate of 15%
per year. The sum of R80 000 is made up as follows:
+ Capital ............................................................................................ R75 000
+ Arrear interest to date of sequestration .............................................. 5 000
The creditor also has a claim for interest at 15% per year from date of sequestration to date of payment.
The claim is fully secured by a first mortgage bond over Lot 100 Happyville.
• HAPPYVILLE MUNICIPALITY – R600, being rates for the preceding year on Lot 100 Happyville.
• L BONES – R6 000 in respect of wages due by the insolvent for the six months preceding sequestration (6 x R1 000).
• TICK, BIRD & CO – R1 000 in respect of auditors’ fees for work done prior to sequestration.
• COMMISSIONER, SARS – R1 000, being a year’s arrear income tax.
• Bond of security costs – R500.
• Sequestrating creditor’s taxed costs – R2 664.
• Sheriff’s charges in serving the sequestration order, etc – R200.
CONCURRENT CREDITORS
+ B Quiet - goods sold .......................................................................... R30 000,00
+ I M Patient - services rendered ............................................................ R10 000,00
+ S Ailing - goods sold .......................................................................... R 5 178,08
Page 334
INSOLVENT ESTATE A M BROKE

MASTER’S REF NO: ..........................................
First and Final Liquidation and Distribution Account
Receipts
–/–/– Cash paid to the estate –
in terms of s 119 composition 120 620,00
Payments
–/–/– Claim of bondholder
Capital plus interest to date of sequestration – 80 000,00
Interest from 4 April 20XX to 31 July 20XX at 15% – 4010,96
Trustee’s remuneration 2% on 120 000 – – 2400,00
|
VAT of 14% on 2 400 336,00
Bond of security 500,00
Master’s fees 625,00
–/–/– Arrear rates 600,00
Balance c/d to Free Residue Account 32 148,04
120 620,00
Free Residue Account
Receipts
–/–/– Balance b/d from
Encumbered Asset Account 1 32 148,04
32 148,04
Payments
–/–/– Sheriff’s charges – 200,00
–/–/– Taxed costs of sequestrating creditor – 2 664,00
–/–/– Bank charges (provision) 50,00
–/–/– Advertising first meeting 145,00
Preferent creditors
Employee’s wages – L Bones 3 000,00
Auditors’ fees 1 000,00
Commissioner, SARS 1 000,00 5 000,00
Award to concurrent creditors (50c in the rand) 24 089,04
32 148,04
Page 335
Insolvent Estate A M Broke

Master’s Ref No: ..........................................
Claim Creditor Nature Total CLAIMS AWARDS

No of claim claim
1 Lastditch Money 84 010,96 84 010,96 84 010,96
Finance (Pty) lent
Ltd
2 L Bones Wages 6 000,00 3 000,00 3 000,00 3 000,00 1 500,00 1 500,00

3 Tick Bird & Co Fees 1 000,00 1 000,00 1 000,00
4 1 000,00 1 000,00 1 000,00
Commissioner, Income
SARS tax
5 B Quiet Goods 30 000,00 30 000,00 15 000,00 15 000,00
sold
6 IM Patient Services 10 000,00 10 000,00 5 000,00 5 000,00

rendered
7 S Ailin Goods 5 178,08 5 178,08 2 589,04 2 589,04
sold
137 189,04 84 010,96 5 000,00 48 178,08 84 010,96 5 000,00 24 089,04 24 089,04
Affidavit in terms of s 107 of the Insolvency Act

I, the undersigned, ......................................., in my capacity as trustee in the insolvent estate of A M BROKE declare on oath that the above
account is a full and true account of my administration of the estate to date and that, as far as I am aware, all the assets of the estate have been
disclosed in the account.
......................................................
TRUSTEE
I certify that the deponent has acknowledged that he knows and understands the contents of this affidavit which was sworn to and signed before
me at ….................... on ………............., the regulations contained in Government Notice R1258 dated 21 July 1972 (as amended) having been
complied with.
......................................................
FULL NAMES
ADDRESS
AREA
EX OFFICIO
Page 336
Appendix 3
Insolvency Act 24 of 1936
[References appearing in square brackets are to paragraph numbers in the text.]

[ASSENTED TO 17 JUNE 1936] [DATE OF COMMENCEMENT: 1 JULY 1936]
(Signed by the Governor-General in Afrikaans)
as amended by
Finance Act 17 of 1938
Income Tax Act 31 of 1941
Hire-Purchase Act 36 of 1942
Insolvency Law Amendment Act 16 of 1943
Insurance Act 27 of 1943
Merchant Shipping Act 57 of 1951
General Law Amendment Act 32 of 1952
Proclamation 229 of 1956
Farmers’ Assistance Amendment Act 16 of 1960
Finance Act 64 of 1960
Income Tax Amendment Act 6 of 1963
Insolvency Amendment Act 99 of 1965
Sales Tax Act 103 of 1978
Transfer of Powers and Duties of the State President Act 97 of 1986
Financial Institutions Amendment Act 54 of 1991
Security by Means of Movable Property Act 57 of 1993
Page 337
General Law Third Amendment Act 129 of 1993

General Law Fifth Amendment Act 157 of 1993
Judicial Matters Amendment Act 104 of 1996
Judicial Matters Second Amendment Act 122 of 1998
Cross-Border Insolvency Act 42 of 2000
Administration of Estates Laws Rationalisation Act 20 of 2001
Insolvency Second Amendment Act 69 of 2002
Securities Services Act 36 of 2004
National Credit Act 34 of 2005
ACT
To consolidate and amend the law relating to insolvent persons and to their
estates.
1 Repeal of laws
The Insolvency Act, 1916 (Act 32 of 1916), the Insolvency Act, 1916, Amendment Act,
1926 (Act 29 of 1926) (except the title and preamble thereof and sections one, seventy-one,
seventy-two and seventy-four thereof) and section twenty of the Land Bank Amendment
Act, 1934 (Act 58 of 1934) are hereby repealed: Provided that if an estate was sequestrated
or assigned before the commencement of this Act the sequestration or assignment and all
proceedings in connection therewith shall be completed, and a person whose estate was
sequestrated or assigned before such commencement and any matter relating to such
sequestration, assignment or person shall be dealt with as if this Act had not been passed;
and provided further that if, before the said commencement, any action was taken under the
said Act 32 of 1916 with a view to the surrender or sequestration of an estate but the
surrender or sequestration was not effected before the said commencement, such action
shall, after such commencement, be deemed to have been taken under this Act, in so far as
this Act makes provision therefor.
2 Definitions
In this Act unless inconsistent with the context -
‘account’, in relation to a trustee, means a liquidation account or a plan of distribution
or of contribution, or any supplementary liquidation account or plan of distribution or
contribution, as the case may require;
‘banking institution’ means a banking institution as defined in section 1 of the Banks
Act, 1965 (Act 23 of 1965), and registered or provisionally registered or deemed to be
registered as a banking institution in terms of section 4 of that Act, but does not include a
provisionally registered banking institution which is so registered provisionally after the
coming into operation of the Insolvency Amendment Act, 1972;
[Definition of ‘banking institution’ inserted by s. 1 of Act 6 of 1972.]
Page 338
‘building society’ means a building society as defined in section 1 of the Building

Societies Act, 1965 (Act 24 of 1965), and finally registered or deemed to be finally
registered as a building society in terms of section 5 of that Act;
[Definition of ‘building society’ inserted by s. 1 of Act 6 of 1972.]
‘Court’ or ‘the Court’, in relation to any matter means the provincial or local division
of the Supreme Court which has jurisdiction in that matter in terms of section one
hundred and forty-nine or one hundred and fifty-one, or any judge of that division; and in
relation to any offence under this Act or in section eight, twenty-six, twenty-nine, thirty,
thirty-one, thirty-two, paragraph (a) of subsection (3) of section thirty-four, seventy-two,
seventy-three, seventy-five, seventy-six, seventy-eight or one hundred and forty-seven
the expression ‘Court’ or ‘the Court’ includes a magistrate’s court which has jurisdiction in
regard to the offence or matter in question;
[1.4.1, 12.3.2, 22.1]
‘debtor’, in connection with the sequestration of the debtor’s estate, means a person
or a partnership or the estate of a person or partnership which is a debtor in the usual
sense of the word, except a body corporate or a company or other association of persons
which may be placed in liquidation under the law relating to Companies;
[1.3.2, 20intro, 23intro]
‘disposition’ means any transfer or abandonment of rights to property and includes a
sale, lease, mortgage, pledge, delivery, payment, release, compromise, donation or any
contract therefor, but does not include a disposition in compliance with an order of the
court; and ‘dispose’ has a corresponding meaning;
[12.1, 12.2.1(ii)]
[Definition of ‘disposition’ substituted by s. 1 of Act 27 of 1987.]
‘free residue’, in relation to an insolvent estate, means that portion of the estate
which is not subject to any right of preference by reason of any special mortgage, legal
hypothec, pledge or right of retention;
[2.2.2, 16.1.1]
[Definition of ‘free residue’ amended by s. 2 (a) of Act 16 of 1943.]
‘Gazette’ . . .
[Definition of ‘Gazette’ inserted by s. 2 (b) of Act 16 of 1943 and deleted by s. 1 of Act 49 of
1996.]
‘good faith’, in relation to the disposition of property, means the absence of any
intention to prejudice creditors in obtaining payment of their claims or to prefer one
creditor above another;
‘immovable property’ means land and every right or interest in land or minerals
which is registrable in any office in the Republic intended for the registration of title to
land or the right to mine;
[15.2.4]
‘insolvent’ when used as a noun, means a debtor whose estate is under sequestration
and includes such a debtor before the sequestration of his estate, according to the
context;
[1.1]
‘insolvent estate’ means an estate under sequestration;
‘magistrate’ includes an additional magistrate and an assistant magistrate;
‘Master’ in relation to any matter, means the Master of the Supreme Court within
whose area of jurisdiction that matter is to be dealt with and includes an Assistant Master;
‘messenger’ means a messenger of a magistrate’s court and includes a deputy-
messenger;
Page 339
‘Minister’ means the Cabinet member responsible for the administration of justice;
[Definition of ‘Minister’ inserted by s. 1 of Act 16 of 2003.]
‘movable property’ means every kind of property and every right or interest which is
not immovable property;
‘preference’, in relation to any claim against an insolvent estate, means the right to
payment of that claim out of the assets of the estate in preference to other claims; and
‘preferent’ has a corresponding meaning;
[16.1.3]
‘property’ means movable or immovable property wherever situate within the
Republic, and includes contingent interests in property other than the contingent interests
of a fidei commissary heir or legatee;
[5.2, 12.1]
‘Republic’ . . .
[Definition of ‘Republic’ (‘Union’) added by s. 2 (d) of Act 16 of 1943 and deleted by s. 1 of Act 49
of 1996.]
‘security’, in relation to the claim of a creditor of an insolvent estate, means property
of that estate over which the creditor has a preferent right by virtue of any special
mortgage, landlord’s legal hypothec, pledge or right of retention;
[15.2.4, 16.1.2]
‘sequestration order’ means any order of court whereby an estate is sequestrated
and includes a provisional order, when it has not been set aside;
[3.2.8, 5.1, 6.1]
‘sheriff’ includes a deputy sheriff;
‘special mortgage’ means a mortgage bond hypothecating any immovable property or
a notarial mortgage bond hypothecating specially described movable property in terms of
section 1 of the Security by Means of Movable Property Act, 1993 (Act 57 of 1993), or
such a notarial mortgage bond registered before 7 May 1993 in terms of section 1 of the
Notarial Bonds (Natal) Act, 1932 (Act 18 of 1932), but excludes any other mortgage bond
hypothecating movable property;
[16.2.1]
[Definition of ‘special mortgage’ inserted by s. 2 (c) of Act 16 of 1943 and substituted by s. 4 of
Act 57 of 1993 and by s. 1 (1) of Act 157 of 1993.]
‘Supreme Court’ . . .
[Definition of ‘Supreme Court’ inserted by s. 2 (c) of Act 16 of 1943 and deleted by s. 1 of Act 49
of 1996.]
‘the Territory’ . . .
[Definition of ‘the Territory’ inserted by s. 2 (c) of Act 16 of 1943 and deleted by s. 1 of Act 49 of
1996.]
‘trader’ means any person who carries on any trade, business, industry or undertaking
in which property is sold, or is bought, exchanged or manufactured for purpose of sale or
exchange, or in which building operations of whatever nature are performed, or an object
whereof is public entertainment, or who carries on the business of an hotel keeper or
boarding-house keeper, or who acts as a broker or agent of any person in the sale or
purchase of any property or in the letting or hiring of immovable property; and any
person shall be deemed to be a trader for the purpose of this Act (except for the purposes
of subsection (10) of section twenty-one) unless it is proved that he is not a trader as
hereinbefore defined: Provided that if any person carries on the trade, business, industry
or undertaking of selling property which he produced (either personally or through any
servant) by means of farming operations, the provisions of this Act relating to traders only
shall not apply to him in connection with his said trade, business, industry or undertaking;
[4.2, 12.6, 22.7.1]
Page 340
‘trustee’ means the trustee of an estate under sequestration, and includes a

provisional trustee.
[7.2.3(i)]
3 Petition for acceptance of surrender of estate
(1) An insolvent debtor or his agent or a person entrusted with the administration of the
estate of a deceased insolvent debtor or of an insolvent debtor who is incapable of managing
his own affairs, may petition the court for the acceptance of the surrender of the debtor’s
estate for the benefit of his creditors.
[2intro, 1.3.2, 2.1, 21.5]
(2) All the members of a partnership (other than partners en commandite or special
partners as defined in the Special Partnerships Limited Liability Act, 1861 (Act 24 of 1861) of
the Cape of Good Hope or in Law 1 of 1865 of Natal) who reside in the Republic, or their
agent, may petition the court for the acceptance of the surrender of the estate of the
partnership and of the estate of each such member.
[2.1, 20.1]
(3) Before accepting or declining the surrender, the court may direct the petitioner or any
other person to appear and be examined before the court.
[2.5.6]
4 Notice of surrender and lodging at Master’s office of statement of debtor’s
affairs
[2.3]
(1) Before presenting a petition mentioned in section three the person who intends to
present the petition (in this section referred to as the petitioner) shall cause to be published
in the Gazette and in a newspaper circulating in the district in which the debtor resides, or, if
the debtor is a trader, in the district in which his principal place of business is situate, a
notice of surrender in a form corresponding substantially with Form A in the First Schedule
to this Act. The said notice shall be published not more than thirty days and not less than
fourteen days before the date stated in the notice of surrender as the date upon which
application will be made to the court for acceptance of the surrender of the estate of the
debtor.
[Sub-s. (1) amended by s. 3 (a) of Act 16 of 1943 and by s. 1 of Act 49 of 1996.]
(2) (a) Within a period of seven days as from the date of publication of the said notice in
the Gazette, the petitioner must deliver or post a copy of the said notice to every one of the
creditors of the debtor in question whose address he or she knows or can ascertain.
[2.3.2(i)]
(b) The petitioner must further, within the period referred to in paragraph (a), furnish
a copy of the notice -
(i) by post to every registered trade union that, to the petitioner’s knowledge,
represents any of the debtor’s employees; and
[2.3.2(ii)]
(ii) to the employees themselves –
(aa) by affixing a copy of the notice to any notice board to which the employees
have access inside the debtor’s premises; or
[2.3.2(ii)]
(bb)
if there is no access to the premises by the employees, by affixing a copy
of the notice to the front gate of the premises, where applicable, failing
which to the front door of the premises from which the debtor conducted
any business immediately prior to the surrender; and
[2.3.2(ii)]
(iii) by post to the South African Revenue Service.
[2.3.2(iii)]
[Sub-s. (2) amended by s. 3 (b) of Act 16 of 1943 and substituted by s. 1 of Act 69 of 2002.]
Page 341
(3) The petitioner shall lodge at the office of the Master a statement in duplicate of the
debtor’s affairs, framed in a form corresponding substantially with Form B in the First
Schedule to this Act. That statement shall contain the particulars for which provision is made
in the said Form, shall comply with any requirements contained therein and shall be verified
by an affidavit (which shall be free from stamp duty) in the form set forth therein.
[2.3.3(ii)]
(4) Upon receiving the said statement, the Master may direct the petitioner to cause any
property set forth therein to be valued by a sworn appraiser or by any person designated by
the Master for the purpose.
[2.3.3(i), 3.1.2(i)(f)]
(5) If the debtor resides or carries on business as a trader in any district (other than the
district of Wynberg, Simonstown or Bellville in the Province of the Cape of Good Hope)
wherein there is no Master’s office, the petitioner shall also lodge a copy of the said
statement at the office of the magistrate of the district, or, if the debtor resides or so carries
on business in a portion of such district in respect of which an additional or assistant
magistrate permanently carries out the functions of the magistrate of the district at a place
other than the seat of magistracy of that district, at the office of such additional or assistant
magistrate.
[2.3.3(ii)]
[Sub-s. (5) amended by s. 19 of Act 62 of 1955.]
(6) The said statement shall be open to the inspection of any creditor of the debtor during
office hours for a period of fourteen days from a date to be mentioned in the notice of
surrender.
[2.3.3(ii)]
5 Prohibition of sale in execution of property of estate after publication of notice
of surrender and appointment of curator bonis
(1) After the publication of a notice of surrender in the Gazette in terms of section four, it
shall not be lawful to sell any property of the estate in question, which has been attached
under writ of execution or other process, unless the person charged with the execution of
the writ or other process could not have known of the publication: Provided that the Master,
if in his opinion the value of any such property does not exceed R5 000, or the Court, if it
exceeds that amount, may order the sale of the property attached and direct how the
proceeds of the sale shall be applied.
[2.4.1]
[Sub-s. (1) substituted by s. 1 of Act 99 of 1965 and amended by s. 1 of Act 101 of 1983.]
(2) After the publication of a notice of surrender as aforesaid in the Gazette the Master
may, in accordance with policy determined by the Minister, appoint a curator bonis to the
debtor’s estate, who shall forthwith take the estate into his or her custody and take over the
control of any business or undertaking of the debtor, as if he or she were the debtor, as the
Master may direct, including any business the debtor is licensed to carry on in terms of the
Liquor Act, 1989 (Act 27 of 1989), but subject in every case, mutatis mutandis, to the
provisions of section 70.
[2.4.2, 2.4.5]
[Sub-s. (2) amended by s. 4 of Act 16 of 1943 and substituted by s. 2 of Act 16 of 2003.]
6 Acceptance by court of surrender of estate

[3.1.2(i)(f)]
(1) If the court is satisfied that the provisions of section four have been complied with,
that the estate of the debtor in question is insolvent, that he owns realizable property of a
sufficient value to defray all costs of the sequestration which will in terms
Page 342
of this Act be payable out of the free residue of his estate and that it will be to the
advantage of creditors of the debtor if his estate is sequestrated, it may accept the
surrender of the debtor’s estate and make an order sequestrating that estate.
[2.2, 2.5.6, 2.6]
(2) If the court does not accept the surrender or if the notice of surrender is withdrawn in
terms of section seven, or if the petitioner fails to make the application for the acceptance of
the surrender of the debtor’s estate before the expiration of a period of fourteen days as
from the date specified in the notice of surrender, as the date upon which application will be
made to the court for the acceptance of the surrender of the debtor’s estate, the notice of
surrender shall lapse and if a curator bonis was appointed, the estate shall be restored to
the debtor as soon as the Master is satisfied that sufficient provision has been made for the
payment of all costs incurred under subsection (2) of section five.
[2.4.5]
7 Withdrawal of notice of surrender
[3.1.2(i)(f)]
(1) A notice of surrender published in the Gazette may not be withdrawn without the
written consent of the Master.
[2.4.4]
(2) A person who has published a notice of surrender in the Gazette may apply to the
Master for his consent to the withdrawal of the notice, and if it appears to the Master that
the notice was published in good faith and that there is good cause for its withdrawal, he
shall give his written consent thereto. Upon the publication, at the expense of the applicant,
of a notice of withdrawal and of the Master’s consent thereto, in the Gazette and in the
newspaper in which the notice of surrender appeared, the notice of surrender shall be
deemed to have been withdrawn.
[2.4.4]
8 Acts of insolvency
A debtor commits an act of insolvency -
(a) if he leaves the Republic or being out of the Republic remains absent therefrom,
or departs from his dwelling or otherwise absents himself, with intent by so doing
to evade or delay the payment of his debts;
[3.1.2(i)(a)]
(b) if a court has given judgment against him and he fails, upon the demand of the
officer whose duty it is to execute that judgment, to satisfy it or to indicate to
that officer disposable property sufficient to satisfy it, or if it appears from the
return made by that officer that he has not found sufficient disposable property to
satisfy the judgment;
[3.1.2(i)(b)]
(c) if he makes or attempts to make any disposition of any of his property which has
or would have the effect of prejudicing his creditors or of preferring one creditor
above another;
[3.1.2(i)(c)]
(d) if he removes or attempts to remove any of his property with intent to prejudice
his creditors or to prefer one creditor above another;
[3.1.2(i)(d)]
(e) if he makes or offers to make any arrangement with any of his creditors for
releasing him wholly or partially from his debts;
[3.1.2(i)(e)]
(f) if, after having published a notice of surrender of his estate which has not lapsed
or been withdrawn in terms of section six or seven, he fails to comply with the
requirements of subsection (3) of section four or lodges, in terms of that
subsection, a statement which is incorrect or incomplete in any material respect
or fails to
Page 343
apply for the acceptance of the surrender of his estate on the date mentioned in
the aforesaid notice as the date on which such application is to be made;
[2.4.3, 3.1.2(i)(f)]
(g) if he gives notice in writing to any one of his creditors that he is unable to pay
any of his debts;
[3.1.2(i)(g), 3.1.4]
(h) if, being a trader, he gives notice in the Gazette in terms of subsection (1) of
section thirty-four, and is thereafter unable to pay all his debts.
[3.1.2(i)(h)]
9 Petition for sequestration of estate
(1) A creditor (or his agent) who has a liquidated claim for not less than fifty pounds, or
two or more creditors (or their agent) who in the aggregate have liquidated claims for not
less than one hundred pounds against a debtor who has committed an act of insolvency, or
is insolvent, may petition the court for the sequestration of the estate of the debtor.
[2intro, 3.1, 3.1.1, 3.1.2(i), 3.2.1, 21.5]
[Sub-s. (1) amended by s. 6 (a) of Act 16 of 1943.]
(2) A liquidated claim which has accrued but which is not yet due on the date of hearing of
the petition, shall be reckoned as a liquidated claim for the purposes of subsection (1).
[3.1.1]
(3) (a) Such a petition shall, subject to the provisions of paragraph (c), contain the
following information, namely -
[3.2.1]
(i) the full names and date of birth of the debtor and, if an identity number has been
assigned to him, his identity number;
(ii) the marital status of the debtor and, if he is married, the full names and date of
birth of his spouse and, if an identity number has been assigned to his spouse,
the identity number of such spouse;
(iii) the amount, cause and nature of the claim in question;
(iv) whether the claim is or is not secured and, if it is, the nature and value of the
security; and
(v) the debtor’s act of insolvency upon which the petition is based or otherwise allege
that the debtor is in fact insolvent.
(b) The facts stated in the petition shall be confirmed by affidavit and the petition shall
be accompanied by a certificate of the Master given not more than ten days before the date
of such petition that sufficient security has been given for the payment of all fees and
charges necessary for the prosecution of all sequestration proceedings and of all costs of
administering the estate until a trustee has been appointed, or if no trustee is appointed, of
all fees and charges necessary for the discharge of the estate from sequestration.
(c) The particulars contemplated in paragraph (a) (i) and (ii) shall also be set out in
the heading to the petition, and if the creditor is unable to set out all such particulars he
shall state the reason why he is unable to do so.
(d) In issuing a sequestration order the registrar shall reflect any of the said particulars
that appear in the heading to the petition on such order.
[3.2.1, 3.2.2(i)]
[Sub-s. (3) amended by s. 6 (b) of Act 16 of 1943 and substituted by s. 2 of Act 99 of 1965 and
by s. 1 of Act 122 of 1993.]
(4) Before such a petition is presented to the court, a copy of the petition and of every
affidavit confirming the facts stated in the petition shall be lodged with the Master,
Page 344
or, if there is no Master at the seat of the court, with an officer in the public service
designated for that purpose by the Master by notice in the Gazette, and the Master or such
officer may report to the court any facts ascertained by him which would appear to him to
justify the court in postponing the hearing or in dismissing the petition. The Master or the
said officer shall transmit a copy of that report to the petitioning creditor or his agent.
[3.2.1, 3.2.2(iv)]
(4A) (a) When a petition is presented to the court, the petitioner must furnish a copy of
the petition-
[3.2.1, 3.2.2(v), 3.2.3]
(i) to every registered trade union that, as far as the petitioner can reasonably
ascertain, represents any of the debtor’s employees; and
[3.2.2(v)]
(ii) to the employees themselves –
[3.2.2(v)]
(aa) by affixing a copy of the petition to any notice board to which the
petitioner and the employees have access inside the debtor’s premises; or
[3.2.2(v)]
(bb) if there is no access to the premises by the petitioner and the employees,
by affixing a copy of the petition to the front gate of the premises, where
applicable, failing which to the front door of the premises from which the
debtor conducted any business at the time of the presentation of the
petition;
[3.2.2(v)]
(iii) to the South African Revenue Service; and
[3.2.2(v)]
(iv) to the debtor, unless the court, at its discretion, dispenses with the furnishing of
a copy where the court is satisfied that it would be in the interest of the debtor or
of the creditors to dispense with it.
[3.2.2(v)]
(b) The petitioner must, before or during the hearing, file an affidavit by the person
who furnished a copy of the petition which sets out the manner in which paragraph (a) was
complied with.
[3.2.2(v)]
[Sub-s.(4A) inserted by s. 2 of Act 69 of 2002.]
(5) The court, on consideration of the petition, the Master’s or the said officer’s report
thereon and of any further affidavit which the petitioning creditor may have submitted in
answer to that report, may act in terms of section ten or may dismiss the petition, or
postpone its hearing or make such other order in the matter as in the circumstances appears
to be just.
[3.2.2(iv), 3.2.3]
10 Provisional sequestration
[3.2.3]
If the court to which the petition for the sequestration of the estate of a debtor has been
presented is of the opinion that prima facie -
(a) the petitioning creditor has established against the debtor a claim such as is
mentioned in subsection (1) of section nine; and
(b) the debtor has committed an act of insolvency or is insolvent; and
(c) there is reason to believe that it will be to the advantage of creditors of the
debtor if his estate is sequestrated,
[20.2]
it may make an order sequestrating the estate of the debtor provisionally.
11 Service of rule nisi
(1) If the court sequestrates the estate of a debtor provisionally it must simultaneously
grant a rule nisi calling upon the debtor upon a day mentioned in the rule to appear and to
show cause why his or her estate should not be sequestrated finally.
[3.2.3]
Page 345
(2) If the debtor has been absent during a period of twenty-one days from his or her
usual place of residence and of his or her business (if any) within the Republic, the court
may direct that it is sufficient service of that rule if a copy thereof is affixed to or near the
outer door of the buildings where the court sits and published in the Gazette, or may direct
some other mode of service.
[3.2.4]
(2A) A copy of the rule nisi must be served on -
(a) any trade union referred to in subsection (4);
[3.2.4]
(b) the debtor’s employees by affixing a copy of the petition to any notice board to
which the employees have access inside the debtor’s premises, or if there is no
access to the premises by the employees, by affixing a copy to the front gate,
where applicable, failing which to the front door of the premises from which the
debtor conducted any business at the time of the presentation of the petition;
and
[3.2.4]
(c) the South African Revenue Service.
[3.2.4]
(3) Upon the application of the debtor the court may anticipate the return day for the
purpose of discharging the order of provisional sequestration if twenty-four hours’ notice of
such application has been given to the petitioning creditor.
[3.2.6]
(4) For the purposes of serving the rule nisi in terms of subsection (2A), the sheriff must
establish whether the employees are represented by a registered trade union and determine
whether there is a notice board inside the employer’s premises to which the employees have
access.
[3.2.4]
[S. 11 substituted by s. 3 of Act 69 of 2002.]
12 Final sequestration or dismissal of petition for sequestration

[3.2.3]
(1) If at the hearing pursuant to the aforesaid rule nisi the court is satisfied that -
[3.1]
(a) the petitioning creditor has established against the debtor a claim such as is
mentioned in subsection (1) of section nine; and
[3.1]
(b) the debtor has committed an act of insolvency or is insolvent; and
[3.1]
(c) there is reason to believe that it will be to the advantage of creditors of the
debtor if his estate is sequestrated,
[3.1, 3.1.3]
it may sequestrate the estate of the debtor.
[3.1]
(2) If at such hearing the court is not so satisfied, it shall dismiss the petition for the
sequestration of the estate of the debtor and set aside the order of provisional sequestration
or require further proof of the matters set forth in the petition and postpone the hearing for
any reasonable period but not sine die.
[3.2.8]
13 Sequestration of partnership estate
[20.1]
(1) If the court sequestrates the estate of a partnership (whether provisionally or finally or
on acceptance of surrender), it shall simultaneously sequestrate the estate of every member
of that partnership other than a partner en commandite or a special partner as defined in the
Special Partnerships’ Limited Liability Act, 1861 (Act 24 of 1861) of the Cape of Good Hope
or in Law 1 of 1865 of Natal, who has not held himself out as an ordinary or general partner
of the partnership in question: Provided that if a partner has undertaken to pay the debts of
the partnership within a period determined by the court and has given security for such
payment to the satisfaction of the registrar, the
Page 346
separtate estate of that partner shall not be sequestrated by reason only of the
sequestration of the estate of the partnership.
[20.1, 20.2]
(2) Where the individual estate of a partner is unable fully to meet the costs of
sequestration, the balance shall be paid out of the assets of the estate of the partnership.
[20.1, 20.2]
[Sub-s. (2) added by s. 7 (b) of Act 16 of 1943 and substituted by s. 3 of Act 99 of 1965.]
(3) The surrender of the estate of a partnership shall not be accepted unless and until the
court is satisfied that petitions have been presented for the acceptance of the surrender of
the separate estates of all the partners in the partnership concerned, and that in this regard
the requirements of section four have been observed. The petitions re the surrender of the
separate estates of the several partners may be incorporated in the petition re the surrender
of the estate of the partnership.
[20.1]
[Sub-s. (3) added by s. 7 (b) of Act 16 of 1943.]
14 Petitioning creditor to prosecute sequestration proceedings until trustee

appointed
(1) The creditor upon whose petition a sequestration order has been made shall, at his
own cost, prosecute all the proceedings in the sequestration until a provisional trustee has
been appointed or if no provisional trustee has been appointed until a trustee has been
appointed.
[3.2.2(i)]
(2) The trustee shall pay to the said creditor out of the first funds of the estate available
for that purpose under section ninety-seven his costs, taxed according to the tariff applicable
in the court which made the sequestration order.
[3.4]
(3) In the event of a contribution by creditors under section one hundred and six, the
petitioning creditor, whether or not he has proved a claim against the estate in terms of
section forty-four, shall be liable to contribute not less than he would have had to contribute
if he had proved the claim stated in his petition.
[17.1.4(i)]
15 Compensation to debtor if petition is an abuse of court’s procedure or malicious
or vexatious
[3.5]
Whenever the court is satisfied that a petition for the sequestration of a debtor’s estate is
an abuse of the court’s procedure or is malicious or vexatious, the court may allow the
debtor forthwith to prove any damage which he or she may have sustained by reason of the
presentation of the petition and award him or her such compensation as it may deem fit.
16 Insolvent and spouse whose separate estate has not been sequestrated must
deliver his business records and lodge statement of his affairs with Master
(1) The registrar of the court granting a final order of sequestration (including an order on
acceptance of surrender) shall without delay cause a copy thereof to be served by the
deputy sheriff, in the manner provided by the rules of court, on the insolvent concerned and
if such order relates to the separate estate of one of two spouses who are not living apart
under a judicial order of separation, also on the spouse whose estate has
Page 347
not been sequestrated, and file with the Master a copy of the deputy sheriff’s return of
service.
[8.2]
(2) An insolvent upon whom a copy of such order has been served shall -
(a) forthwith deliver to the deputy sheriff all books and records relating to his affairs,
which have not yet been taken into custody in terms of paragraph (a) of
subsection (1) of section nineteen and obtain from the deputy sheriff a detailed
receipt therefor; and
[14.1]
(b) within seven days of such service lodge, in duplicate, with the Master a statement
of his affairs as at the date of the sequestration order, framed in a form
corresponding substantially with Form B of the First Schedule to this Act,
containing the particulars for which provision is made in the said Form and
verified by an affidavit (which shall be free from stamp duty) in the form set forth
therein.
[14.1]
(3) A spouse whose separate estate has not been sequestrated and upon whom a copy of
an order referred to in subsection (1) has been served shall within seven days of such
service lodge, in duplicate, with the Master a statement of his affairs, as at the date of the
sequestration order, framed in a form corresponding substantially with Form B of the First
Schedule to this Act containing the particulars for which provision is made in the said Form
and verified by affidavit (which shall be free from stamp duty) in the form set forth therein.
[6.1.2]
(4) In the statement referred to in paragraph (b) of subsection (2) or in subsection (3)
any merchandise mentioned therein shall be valued at its cost price or at its market value, at
the same time of the making of the said affidavit whichever is the lower.
(5) If the Master is satisfied that the insolvent or a spouse referred to in subsection (3)
was unable to prepare, without assistance, such a statement which he lodged as aforesaid,
the person who assisted the insolvent or such spouse with the preparation of the statement
shall be entitled to a reasonable fee, to be determined by the Master, which shall be deemed
to be part of the costs of the sequestration.
[6.1.2, 14.1]
[S. 16 amended by s. 9 of Act 16 of 1943 and substituted by s. 4 of Act 99 of 1965.]
17 Notice of sequestration
(1) The registrar shall without delay transmit -
(a) one original of every sequestration order and of every order relating to an
insolvent estate or to a trustee or to an insolvent, made by the court, to the
Master;
[8.1]
(b) one original of every provisional sequestration order or if a final sequestration
order was not preceded by a provisional sequestration order, then of that final
order, and of every order amending or setting aside any prior order so
transmitted, which was made by the court to-
[8.1]
(i)
the deputy-sheriff of every district in which it appears that the insolvent
resides or owns property;
(ii) every officer charged with the registration of title to any immovable property
in the Republic;
(iibis)every officer having charge of a register of ships kept at a port of registry
appointed as such in terms of paragraph (c) of section four of the Merchant
Shipping Act, 1951, for the registration of ships;
[Sub-para. (iibis) inserted by s. 1 of Act 57 of 1951.]
Page 348
(iii) every sheriff and every messenger who or whose deputy holds under
attachment any property belonging to the insolvent estate.
(2) Every officer who has received an order transmitted to him in terms of subsection (1),
or a certificate and a copy of an order transmitted to him in terms of section 18A, shall
register each such order, certificate or copy and note thereon the day and hour when it was
received in his office.
[8.1]
[Sub-s. (2) substituted by s. 2 (a) of Act 122 of 1993.]
(3) (a) Upon the receipt by any officer referred to in subparagraph (ii) of paragraph (b) of
subsection (1) of a sequestration order, or of a certificate and a copy of an order referred to
in section 18A, he shall, if he has not yet entered such a caveat, enter a caveat against the
transfer of all immovable property or the cancellation or cession of any bond registered in
the name of or belonging to the insolvent, and if the sequestration order or the certificate
referred to in section 18A contains the name of the spouse of the insolvent, he shall in like
manner enter a caveat in respect of such spouse.
[8.1]
(b) A caveat contemplated in this subsection, whether it was entered before or after
the commencement of the Insolvency Amendment Act, 1993, shall expire ten years after the
date of the sequestration order in question, or six months after the commencement of the
said Act, whichever date is the later.
[8.1]
[Sub-s. (3) substituted by s. 2 (b) of Act 122 of 1993.]
(3)bis Upon the receipt by any officer referred to in subparagraph (ii)bis of paragraph (b)
of subsection (1) of a sequestration order he shall enter a caveat against the transfer of
every ship or share in a ship or the cancellation or cessation of every deed of mortgage of a
ship or share in a ship registered in the name of or belonging to the insolvent or his or her
spouse.
[8.1]
[Sub-s. (3)bis inserted by s. 1 of Act 57 of 1951.]
(4) When the Master has received a sequestration order or an order setting aside a
provisional sequestration order he shall in each case give notice in the Gazette of such order.
[8.1]
[Sub-s. (4) substituted by s. 10 of Act 16 of 1943.]
18 Appointment of provisional trustee by Master

(1) As soon as an estate has been sequestrated (whether provisionally or finally) or when
a person appointed as trustee ceases to be trustee or to function as such, the Master may, in
accordance with policy determined by the Minister, appoint a provisional trustee to the
estate in question who shall give security to the satisfaction of the Master for the proper
performance of his or her duties as provisional trustee and shall hold office until the
appointment of a trustee.
[8.4.1]
(2) At any time before the first meeting of the creditors of an insolvent estate in terms of
section forty, the Master may, subject to the provisions of subsection (3) of this section, give
such directions to the provisional trustee as could be given to a trustee by the creditors at a
meeting of creditors.
[8.4.2]
(3) A provisional trustee shall have the powers and the duties of a trustee, as provided in
this Act, except that without the authority of the court or for the purpose of obtaining such
authority he shall not bring or defend any legal proceedings and that without the authority of
the court or Master he shall not sell any property belonging to
Page 349
the estate in question. Such sale shall furthermore be after such notices and subject to such
conditions as the Master may direct.
[7.2.3(i), 8.4.2, 12.3.1]
(4) When a meeting of creditors for the election of a trustee has been held in terms of
section forty and no trustee has been elected, and the Master has appointed a provisional
trustee in the estate in question, the Master shall appoint him as trustee on his finding such
additional security as the Master may have required.
18A Trustee to furnish particulars of insolvent
[8.4.2]
Any person appointed as provisional trustee after the commencement of the Insolvency
Amendment Act, 1993, or if no provisional trustee has been appointed, or if the provisional
trustee has failed to perform the duties mentioned below, a trustee appointed after the said
commencement shall as soon as possible after his appointment determine whether the
particulars referred to in section 9(3)(a)(i) and (ii) are correctly reflected in the
sequestration order, and if any of such particulars are not so reflected or are incorrectly
reflected he shall forthwith take all reasonable steps to obtain the correct particulars and
shall transmit a certificate containing such particulars, a copy of the sequestration order and
of his appointment to every officer charged with the registration of title to any immovable
property in the Republic and to the Master.
[S. 18A inserted by s. 3 of Act 122 of 1993.]
18B Trustee may cause caveat to be entered

(1) A trustee may, before or after the rehabilitation of an insolvent, with the written
consent of the Master, by notice to the officer charged with the registration of title to
immovable property in the Republic, in respect of immovable property or a bond registered
in the name of the insolvent or of his spouse contemplated in section 21(13), cause a caveat
to be entered against the transfer of the immovable property or the cancellation or cession
of the bond referred to in the notice.
[11.1]
(2) The notice referred to in subsection (1) shall be accompanied by the written consent of
the Master contemplated in that subsection and shall identify sufficiently the person in
respect of whom and the property or bond in respect of which the caveat is to be entered so
as to enable the officer charged with the registration to enter the caveat as contemplated in
the said subsection.
[11.1]
(3) The caveat shall remain in force until the date indicated by the Master in his consent.
[11.1]
[S. 18B inserted by s. 3 of Act 122 of 1993.]
19 Attachment of property by deputy sheriff

[11.1]
(1) As soon as a deputy-sheriff has received a sequestration order he shall attach, as
hereinafter provided and make an inventory of the movable property of the insolvent estate
which is in his district and is capable of manual delivery and not in the possession of a
person who claims to be entitled to retain it under a right of pledge or a right of retention or
under attachment by a messenger, that is to say-
[8.2]
(a) he shall take into his own custody all books of account, invoices, vouchers,
business correspondence, and any other records relating to the affairs of the
Page 350
insolvent, cash, share certificates, bonds, bills of exchange, promissory notes,

and other securities, and remit all such cash to the Master;
[Para. (a) substituted by s. 5 (a) of Act 99 of 1965.]
(b) he shall leave movable property other than animals in a room or other suitable
place properly sealed up or appoint some suitable person to hold any movable
property in his custody;
(c) he shall hand to the person so appointed a copy of the inventory, with a notice
that the property has been attached by virtue of a sequestration order. That
notice shall contain a statement of the offence constituted by section one
hundred and forty-two and the penalty provided therefor;
(d) he shall make a detailed list of all such books and records and endorse thereon
any explanation offered by the insolvent in respect thereof or in respect of any
books or records relating to his affairs which the insolvent is unable to produce;
[Para. (d) inserted by s. 5 (b) of Act 99 of 1965.]
(e) if the insolvent is present he shall enquire from him whether the list referred to in
paragraph (d) is a complete list of the books and records relating to his affairs
and record his reply thereto.
[Para. (e) inserted by s. 5 (b) of Act 99 of 1965.]
(1)bis If an insolvent has in reply to the deputy sheriff’s enquiry intimated that the list
referred to in paragraph (d) of subsection (1) is a complete list of the books and records
relating to his affairs, the books and records referred to in such list shall, unless the contrary
is proved, in any criminal proceedings against him under this Act, be deemed to be the only
books and records maintained by him.
[8.2]
[Sub-s. (1)bis inserted by s. 5 (c) of Act 99 of 1965.]
(2) Any person interested in the insolvent estate or in the property attached may be
present or may authorize another person to be present when the deputy-sheriff is making
his inventory.
[8.2]
(3) The deputy-sheriff shall -
(a) immediately after effecting the attachment, report to the Master in writing that
the attachment has been effected and mention in his report any property which
to his knowledge is in the lawful possession of a pledgee or of a person who is
entitled to retain such property by virtue of a right of retention and shall submit
with such report a copy of the inventory made by him under subsection (1);
[8.2]
(b) as soon as possible after the appointment of the trustee, submit a copy of such
inventory to him.
[8.2]
[Sub-s. (3) substituted by s. 5 (d) of Act 99 of 1965.]
(4) A messenger shall transmit to the Master without delay an inventory of all property
attached by him which he knows to belong to an insolvent estate.
[8.2]
(5) The deputy-sheriff shall be entitled to fees taxed by the Master according to tariff A in
the Second Schedule to this Act and the rules for the construction of that tariff.
(6) The Minister may by notice in the Gazette amend the said tariff A and rules.
[Sub-s. (6) added by s. 11 of Act 50 of 1956, amended by ss. 46 and 47 of Act 97 of 1986 and
substituted by s. 4 of Act 16 of 2003.]
20 Effect of sequestration on insolvent’s property
[6.1.1, 26.4]
(1) The effect of the sequestration of the estate of an insolvent shall be -
(a) to divest the insolvent of his estate and to vest it in the Master until a trustee has
Page 351
been appointed, and, upon the appointment of a trustee, to vest the estate in
him;
[5.1]
(b) to stay, until the appointment of a trustee, any civil proceedings instituted by or
against the insolvent save such proceedings as may, in terms of section twenty-
three, be instituted by the insolvent for his own benefit or be instituted against
the insolvent: Provided that if any claim which formed the subject of legal
proceedings against the insolvent which were so stayed, has been proved and
admitted against the insolvent’s estate in terms of section forty-four or seventy-
eight, the claimant may also prove against the estate a claim for his taxed costs,
incurred in connection with those proceedings before the sequestration of the
insolvent’s estate;
[7.3]
(c) as soon as any sheriff or messenger, whose duty it is to execute any judgment
given against an insolvent, becomes aware of the sequestration of the insolvent’s
estate, to stay that execution, unless the court otherwise directs;
[7.3, 23.4.2]
(d) to empower the insolvent, if in prison for debt, to apply to the court for his
release, after notice to the creditor at whose suit he is so imprisoned, and to
empower the court to order his release, on such conditions as it may think fit to
impose.
[7.3]
(2) For the purposes of subsection (1) the estate of an insolvent shall include -
[5.2]
(a) all property of the insolvent at the date of the sequestration, including property
or the proceeds thereof which are in the hands of a sheriff or a messenger under
writ of attachment;
[5.2]
(b) all property which the insolvent may acquire or which may accrue to him during
the sequestration, except as otherwise provided in section twenty-three.
[5.2]
21 Effect of sequestration on property of spouse of insolvent
[1.7.3, 5.2, 6.1, 6.1.1, 6.2.1(ii), 8.2]
(1) The additional effect of the sequestration of the separate estate of one of two spouses
who are not living apart under a judicial order of separation shall be to vest in the Master,
until a trustee has been appointed, and, upon the appointment of a trustee, to vest in him all
the property (including property or the proceeds thereof which are in the hands of a sheriff
or a messenger under a writ of attachment) of the spouse whose estate has not been
sequestrated (hereinafter referred to as the solvent spouse) as if it were property of the
sequestrated estate, and to empower the Master or trustee to deal with such property
accordingly, but subject to the following provisions of this section.
[6.1, 15.3, 21.5]
(2) The trustee shall release any property of the solvent spouse which is proved -
[6.1, 15.3]
(a) to have been the property of that spouse immediately before her or his marriage
to the insolvent or before the first day of October, 1926; or
[6.1, 6.2.1(i), 15.3]
(b) to have been acquired by that spouse under a marriage settlement; or
[6.1, 6.2.1(ii), 15.3]
(c) to have been acquired by that spouse during the marriage with the insolvent by a
title valid as against creditors of the insolvent; or
[6.1, 6.2.1(iii), 15.3]
(d) to be safeguarded in favour of that spouse by section twenty-eight of this Act; or
[6.1, 6.2.1(iv), 15.3]
[Para. (d) amended by s. 12 of Act 16 of 1943 and by s. 1 of Act 49 of 1996.]
Page 352
(e) to have been acquired with any such property as aforesaid or with the income or
proceeds thereof.
[6.1, 6.2.1(v), 15.3]
(3) If the solvent spouse is in the Republic and the trustee is able to ascertain his or her
address, the trustee shall not, except with the leave of the court, realize property which
ostensibly belonged to the solvent spouse, until the expiry of six weeks’ written notice of his
intention to do so, given to that spouse. Such notice shall also be published in the Gazette
and in a newspaper circulating in the district in which the solvent spouse resides or carries
on business, and shall invite all separate creditors for value of that spouse to prove their
claims as provided in subsection (5).
[15.3]
(4) The solvent spouse may apply to the court for an order releasing any property vested
in the trustee of the insolvent estate under subsection (1) or for an order staying the sale of
such property or, if it has already been sold, but the proceeds thereof not yet distributed
among creditors, for an order declaring the applicant to be entitled to those proceeds; and
the court may make such order on the application as it thinks just.
[6.3]
(5) Subject to any order made under subsection (4) any property of the solvent spouse
realized by the trustee shall bear a proportionate share of the costs of the sequestration as if
it were property of the insolvent estate but the separate creditors for value of the solvent
spouse having claims which could have been proved against the estate of that spouse if it
had been the estate under sequestration, shall be entitled to prove their claims against the
estate of the insolvent spouse in the same manner and, except as in this Act is otherwise
provided, shall have the same rights and remedies and be subject to the same obligations as
if they were creditors of the insolvent estate; and the creditors who have so proved claims
shall be entitled to share in the proceeds of the property so realized according to their legal
priorities inter se and in priority to the separate creditors of the insolvent estate, but shall
not be entitled to share in the separate assets of the insolvent estate.
[6.4, 9.2.1, 15.3]
(6) If any property of the solvent spouse (other than property mentioned in paragraph (d)
of subsection (2) has been released by virtue of subsection (2) or (4) the separate creditors
of that spouse shall only be entitled to share in the proceeds of any property of the solvent
spouse which has been realized by the trustee, after the property so released and any
property of that spouse acquired by her or him since the sequestration, have been excussed.
[6.4]
(7) Before awarding any such creditor a share in such proceeds, the trustee may require
the creditor to lodge with him, within a period to be determined by the Master, an affidavit,
supported by such evidence as may be available, setting forth the result of such excussion
and disclosing the balance of his claim which remains unpaid. He shall then be entitled to
share as aforesaid in respect of that balance only: Provided that any creditor who has
incurred costs in excussing the separate property of the solvent spouse and has been unable
to recover those costs from the proceeds of that property shall be entitled to add the amount
of those costs to the amount of his claim as proved.
[6.4]
(8) If, during the period determined by the Master, any such creditor has failed either to
lodge with the trustee such an affidavit as aforesaid, or to excuss any separate property of
the solvent spouse still available for the satisfaction of his claim, he shall be debarred from
sharing as aforesaid unless the court otherwise orders.
[6.4]
(9) A creditor of the solvent spouse who has proved a claim as provided in subsection (5)
shall not be liable to make any contribution under section one hundred and six, and shall not
be entitled to vote at any meeting of the creditors of the insolvent estate held in terms of
section forty, forty-one or forty-two; but any direction of the creditors of the insolvent
Page 353
estate which infringes the rights of any first-mentioned creditor may be set aside by the
court on the application of such creditor.
[9.2.1]
(10) If the solvent spouse is carrying on business as a trader, apart from the insolvent
spouse or if it appears to the court that the solvent spouse is likely to suffer serious
prejudice through the immediate vesting of the property of that spouse in the Master of the
trustee, and the court is satisfied in either case that the solvent spouse is willing and able to
make arrangements whereby the interest therein of the insolvent estate in the said property
will be safeguarded without such a vesting, the court, either when making the sequestration
order or at some later date, but subject to the immediate completion of such arrangement
as aforesaid, may exclude that property or any part thereof from the operation of the order,
for such period as it thinks fit. During that period the solvent spouse shall lay before the
trustee the evidence available in support of her or his claim to such property and within that
period the trustees shall notify the solvent spouse in writing whether or not he will release
such property in accordance with subsection (2). If the property has not been so released,
then upon the expiry of the said period that property shall vest in the Master or in the
trustee, but subject to the provisions of this section.
[6.1.3]
(11) If application is made to the court for the sequestration of the estate of the solvent
spouse on the ground of an act of insolvency committed by that spouse since the vesting of
her or his property in the Master or the trustee of the insolvent estate, and the court is
satisfied that the act of insolvency alleged in that application was due to such vesting, then if
it appears-
[6.5]
(a) that an application is being or, if necessary, will be made under subsection (4) for
the release of any property of the solvent spouse; or
[6.5]
(b) that any property of the solvent spouse has been released since the making of
the sequestration order, and that the solvent spouse is now in a position to
discharge her or his liabilities,
[6.5]
the court may postpone the hearing of the said application or may make such interim order
thereon as to it may seem just.
[6.5]
(12) If the trustee has in accordance with the preceding provisions of this section released
any property alleged to belong to the solvent spouse, he shall not be debarred thereby from
proving that it belongs to the insolvent estate and from recovering accordingly.
[6.2.4, 6.3]
(13) In this section the word ‘spouse’ means not only a wife or husband in the legal
sense, but also a wife or husband by virtue of a marriage according to any law or custom,
and also a woman living with a man as his wife or a man living with a woman as her
husband, although not married to one another.
[6.1.1]
22 Payment of debts after sequestration
[7.1, 11.2]
Every satisfaction in whole or in part of any obligation the fulfilment whereof was due or
the cause of which arose before the sequestration of the creditor’s estate shall, if made to
the insolvent after such sequestration, be void, unless the debtor proves that it was made in
good faith and without knowledge of the sequestration.
Page 354
23 Rights and obligations of insolvent during sequestration

[7.3, 26.4]
(1) Subject to the provisions of this section and of section twenty-four, all property
acquired by an insolvent shall belong to his estate.
(2) The fact that a person entering into any contract is an insolvent, shall not affect the
validity of that contract: Provided that the insolvent does not thereby purport to dispose of
any property of his insolvent estate; and provided further that an insolvent shall not, without
the consent in writing of the trustee of his estate, enter into any contract whereby his estate
or any contribution towards his estate which he is obliged to make, is or is likely to be
adversely affected, but in either case subject to the provisions of subsection (1) of section
twenty-four.
[4.1, 4.1.1, 4.1.2]
(3) An insolvent may follow any profession or occupation or enter into any employment,
but he may not, during the sequestration of his estate without the consent in writing of the
trustee of his estate, either carry on, or be employed in any capacity or have any direct or
indirect interest in, the business of a trader who is a general dealer or a manufacturer:
Provided that any one of the creditors of the insolvent’s estate or the insolvent himself may,
if the trustee gives or refuses such consent, appeal to the Master, whose decision shall be
final.
[4.2]
(3)bis Where a trustee has given his consent to an insolvent to enter into a contract, or to
carry on a trade in terms of subsection (2) or subsection (3), as the case may be, he shall
forthwith forward to the Master a copy of such consent. Any trustee who does not so forward
such consent within one week after it has been granted, shall be deemed to have
contravened the provisions of paragraph (b) of section sixty.
[4.2]
[Sub-s. (3)bis inserted by s. 13 of Act 16 of 1943.]
(4) The insolvent shall keep a detailed record of all assets received by him from whatever
source, and of all disbursements made by him in the course of his profession, occupation or
employment, and, if required thereto by the trustee, shall transmit to the trustee in the first
week of every month a statement verified by affidavit of all assets received and of all
disbursements made by him during the preceding month. The trustee may inspect such
record at all reasonable times and may demand the production of reasonable vouchers in
support of any item in such accounts and of the expenditure of the insolvent for the support
of himself and those dependent upon him.
[14.6]
(5) The trustee shall be entitled to any moneys received or to be received by the insolvent
in the course of his profession, occupation or other employment which in the opinion of the
Master are not or will not be necessary for the support of the insolvent and those dependent
upon him, and if the trustee has notified the employer of the insolvent that the trustee is
entitled, in terms of this subsection, to any part of the insolvent’s remuneration due to him
at the same time of such notification, or which will become due to him thereafter, the
employer shall pay over that part to the trustee.
[2.5.1, 3.1.3, 4.1.1, 5.3.2, 14.6, 19.2.5]
(6) The insolvent may sue or may be sued in his own name without reference to the
trustee of his estate in any matter relating to status or any right in so far as it does not
affect his estate or in respect of any claim due to or against him under this section, but no
cession of his earnings after the sequestration of his estate, whether made before or after
the sequestration shall be of any effect so long as his estate is under sequestration.
[4.1.2, 4.3.1]
(7) The insolvent may for his own benefit recover any pension to which he may be entitled
for services rendered by him.
[4.1.2, 4.3.1, 5.3.3]
Page 355
(8) The insolvent may for his own benefit recover any compensation for any loss or
damage which he may have suffered, whether before or after the sequestration of his estate,
by reason of any defamation or personal injury: Provided that he shall not, without the leave
of the court, institute an action against the trustee of his estate on the ground of malicious
prosecution or defamation.
[4.1.2, 4.3.1, 5.3.4]
(9) Subject to the provisions of subsection (5) the insolvent may recover for his own
benefit, the remuneration or reward for work done or for professional services rendered by
or on his behalf after the sequestration of his estate.
[4.1.2, 4.3.1, 5.3.2]
(10) The insolvent may be sued in his own name for any delict committed by him after the
sequestration of his estate, and his insolvent estate shall not be liable therefor.
[4.3.1]
(11) Any property claimable by the trustee from the insolvent under this section may be
recovered from the insolvent by writ of execution to be issued by the registrar upon the
production to him of a certificate by the Master that the property stated therein is so
claimable.
[5.3.2]
(12) The insolvent shall at any time before the second meeting of the creditors of his
estate held in terms of section forty, at the request of the trustee assist the trustee to the
best of his ability in collecting, taking charge of or realising any property belonging to the
estate: Provided that the trustee shall, during the period of such assistance, give to the
insolvent out of the estate such an allowance in money or goods as is, in the opinion of the
Master, necessary to support the insolvent and his or her dependants.
[14.3]
(13) The insolvent shall keep the trustee of his estate informed of his residential and
postal addresses.
[14.5]
(14) Any notice or information which is to be conveyed to an insolvent in terms of this
Act, may be delivered to him personally or may be delivered at or sent in a registered letter
by post to an address given by the insolvent to the trustee in terms of subsection (13).
[14.5]
24 Provisions relating to property in possession of insolvent after sequestration
(1) If an insolvent purports to alienate, for valuable consideration, without the consent of
the trustee of his estate any property which he acquired after the sequestration of his estate
(and which by virtue of such acquisition became part of his sequestrated estate) or any right
to any such property 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 shall
nevertheless be valid.
[4.1.3]
(2) Whenever an insolvent has acquired the possession of any property, such property
shall, if claimed by the trustee of the insolvent’s estate, be deemed to belong to that estate
unless the contrary is proved; but if a person who became the creditor of the insolvent after
the sequestration of his estate, alleges (whether against the trustee or against the insolvent)
that any such property does not belong to the said estate and claims any right thereto, the
property shall be deemed not to belong to the estate, unless the contrary is proved.
[5.2]
Page 356
25 Estate to remain vested in trustee until composition or rehabilitation

(1) The estate of an insolvent shall remain vested in the trustee until the insolvent is
reinvested therewith pursuant to a composition as in section 119 provided, or until the
rehabilitation of the insolvent in terms of section 127 or 127A: Provided that, subject to the
provisions of subsection (3), any property which immediately before the rehabilitation is
vested in the trustee shall remain vested in him after the rehabilitation for the purposes of
realization and distribution.
[19.3]
[Sub-s. (1) substituted by s. 2 of Act 6 of 1972 and by s. 4 (a) of Act 122 of 1993.]
(2) When a trustee has vacated his office or has been removed from office or has resigned
or died the estate shall vest in the remaining trustee, if any; otherwise it shall vest in the
Master until another trustee has been appointed.
[5.1]
(3) After the expiry of every caveat entered in terms of section 17(3), 18B or 127A in
respect of the property of an insolvent any act of registration in respect of such property
brought about by him shall be valid in spite of the fact that the property formed part of his
insolvent estate.
[5.4, 19.3]
(4) If a person who is or was insolvent unlawfully disposes of immovable property or a
right to immovable property which forms part of his insolvent estate, the trustee may,
notwithstanding the provisions of subsection (3), recover the value of the property or right
so disposed of-
[5.4, 19.3]
(a) from the insolvent or former insolvent;
[5.4, 19.3]
(b) from any person who, knowing such property or right to be part of the insolvent
estate, acquired such property or right from the insolvent or former insolvent; or
[5.4, 19.3]
(c) from any person who acquired such property or right from the insolvent or former
insolvent without giving sufficient value in return, in which case the amount so
recovered shall be the difference between the value of the property or right and
any value given in return.
[5.4, 19.3]
26 Disposition without value

[6.2.1(iii), 12.2, 12.2.1(i), 12.3.6, 12.4.4, 12.5]
(1) Every disposition of property not made for value may be set aside by the court if such
disposition was made by an insolvent -
(a) more than two years before the sequestration of his estate, and it is proved that,
immediately after the disposition was made, the liabilities of the insolvent
exceeded his assets;
[12.2.1(i)]
(b) within two years of the sequestration of his estate, and the person claiming under
or benefited by the disposition is unable to prove that, immediately after the
disposition was made, the assets of the insolvent exceeded his liabilities:
[12.2.1(i)]
Provided that if it is proved that the liabilities of the insolvent at any time after the making of
the disposition exceeded his assets by less than the value of the property disposed of, it may
be set aside only to the extent of such excess.
[12.2.1(i)]
(2) A disposition of property not made for value, which was set aside under subsection (1)
or which was uncompleted by the insolvent, shall not give rise to any claim in competition
with the creditors of the insolvent’s estate: Provided that in the
Page 357
case of a disposition of property not made for value, which was uncompleted by the
insolvent, and which-
(a) was made by way of suretyship, guarantee or indemnity; and
(b) has not been set aside under subsection (1),
the beneficiary concerned may compete with the creditors of the insolvent’s estate for an
amount not exceeding the amount by which the value of the insolvent’s assets exceeded his
liabilities immediately before the making of that disposition.
[12.1, 12.2.1(iii)]
27 Antenuptial contracts
[6.2.1(ii), 12.3.6]
(1) No immediate benefit under a duly registered antenuptial contract given in good faith
by a man to his wife or any child to be born of the marriage shall be set aside as a
disposition without value, unless that man’s estate was sequestrated within two years of the
registration of that antenuptial contract.
[12.2.1(ii)]
(2) In subsection (1) the expression ‘immediate benefit’ means a benefit given by a
transfer, delivery, payment, cession, pledge, or special mortgage of property completed
before the expiration of a period of three months as from the date of the marriage.
[12.2.1(ii)]
28 . . .
[12.3.6]
[S. 28 repealed by s. 78 of Act 27 of 1943.]
29 Voidable preferences
[12.2, 12.2.1(i), 12.2.2(i), 12.2.2(ii), 12.2.3(ii), 12.3.6, 12.4.4, 12.5, 25.1.4]
(1) Every disposition of his property made by a debtor not more than six months before
the sequestration of his estate or, if he is deceased and his estate is insolvent, before his
death, which has had the effect of preferring one of his creditors above another, may be set
aside by the Court if immediately after the making of such disposition the liabilities of the
debtor exceeded the value of his assets, unless the person in whose favour the disposition
was made proves that the disposition was made in the ordinary course of business and that
it was not intended thereby to prefer one creditor above another.
[12.2.2(i), 12.2.2(ii), 26.3]
[Sub-s. (1) amended by s. 9 (a) of Act 64 of 1960 and substituted by s. 6 of Act 99 of 1965.]
(2) . . .
[Sub-s. (2) deleted by s. 9 (b) of Act 64 of 1960.]
(3) Every disposition of property made under a power of attorney whether revocable or
irrevocable, shall for the purposes of this section and of section thirty be deemed to be made
at the time at which the transfer or delivery or mortgage of such property takes place.
(4) For the purposes of this section any period during which the provisions of subsection
(1) of section eleven of the Farmers’ Assistance Act, 1935 (Act 48 of 1935), applied in
respect of any debtor as an applicant in terms of the said Act, shall not be taken into
consideration in the calculation of any period of six months.
[Sub-s. (4) added by s. 17 of Act 16 of 1960.]
Page 358
30 Undue preference to creditors

[12.2, 12.2.1(i), 12.2.3(i), 12.2.3(ii), 12.3.6, 12.4.4, 12.5, 25.1.4, 26.3]
(1) If a debtor made a disposition of his property at a time when his liabilities exceeded
his assets, with the intention of preferring one of his creditors above another, and his estate
is thereafter sequestrated, the court may set aside the disposition.
(2) For the purposes of this section and of section twenty-nine a surety for the debtor and
a person in a position by law analogous to that of a surety shall be deemed to be a creditor
of the debtor concerned.
31 Collusive dealings before sequestration
[12.2, 12.3.6, 12.4.4, 12.5, 25.1.4]
(1) After the sequestration of a debtor’s estate the court may set aside any transaction
entered into by the debtor before the sequestration, whereby he, in collusion with another
person, disposed of property belonging to him in a manner which had the effect of
prejudicing his creditors or of preferring one of his creditors above another.
[12.2.4]
(2) Any person who was a party to such collusive disposition shall be liable to make good
any loss thereby caused to the insolvent estate in question and shall pay for the benefit of
the estate, by way of penalty, such sum as the court may adjudge, not exceeding the
amount by which he would have benefited by such dealing if it had not been set aside; and if
he is a creditor he shall also forfeit his claim against the estate.
[12.2.4, 12.4.4]
(3) Such compensation and penalty may be recovered in any action to set aside the
transaction in question.
[12.2.4]
32 Proceedings to set aside improper disposition
[12.3.1, 12.3.3]
(1) (a) Proceedings to recover the value of property or a right in terms of section 25(4),
to set aside any disposition of property under section 26, 29, 30 or 31, or for the recovery of
compensation or a penalty under section 31, may be taken by the trustee.
(b) If the trustee fails to take any such proceedings they may be taken by any creditor
in the name of the trustee upon his indemnifying the trustee against all costs thereof.
[12.3.1, 12.3.3]
(2) In any such proceedings the insolvent may be compelled to give evidence on a
subpoena issued on the application of any party to the proceedings or he may be called by
the court to give evidence. When giving such evidence he may not refuse to answer any
question on the ground that the answer may tend to incriminate him or on the ground that
he is to be tried on a criminal charge and may be prejudiced at such a trial by his answer.
[12.3.5]
(3) When the Court sets aside any disposition of property under any of the said sections,
it shall declare the trustee entitled to recover any property alienated under the said
disposition or in default of such property the value thereof at the date of the disposition or at
the date on which the disposition is set aside, whichever is the higher.
[12.3.6, 12.4.1]
Page 359
33 Improper disposition does not affect certain rights

(1) A person who, in return for any disposition which is liable to be set aside under section
twenty-six, twenty-nine, thirty, or thirty-one, has parted with any property or security which
he held or who has lost any right against another person, shall, if he acted in good faith, not
be obliged to restore any property or other benefit received under such disposition, unless
the trustee has indemnified him for parting with such property or security or for losing such
right.
[12.4.3]
(2) Section twenty-six, twenty-nine, thirty, or thirty-one shall not affect the rights of any
person who acquired property in good faith and for value from any person other than a
person whose estate was subsequently sequestrated.
34 Voidable sale of business
[12.6]
(1) If a trader transfers in terms of a contract any business belonging to him, or the
goodwill of such business, or any goods or property forming part thereof (except in the
ordinary course of that business or for securing the payment of a debt), and such trader has
not published a notice of such intended transfer in the Gazette, and in two issues of an
Afrikaans and two issues of an English newspaper circulating in the district in which that
business is carried on, within a period not less than thirty days and not more than sixty days
before the date of such transfer, the said transfer shall be void as against his creditors for a
period of six months after such transfer, and shall be void against the trustee of his estate, if
his estate is sequestrated at any time within the said period.
[3.1.2(i)(h), 12.6, 12.7]
[Sub-s. (1) substituted by s. 12 of Act 32 of 1952, by s. 2 (a) of Act 27 of 1987 and by s. 1 (a) of
Act 6 of 1991.]
(2) As soon as any such notice is published, every liquidated liability of the said trader in
connection with the said business, which would become due at some future date, shall fall
due forthwith, if the creditor concerned demands payment of such liability: Provided that if
such liability bears no interest, the amount of such liability which would have been payable
at such future date if such demand had not been made, shall be reduced at the rate of eight
per cent per annum of that amount, over the period between the date when payment is
made and that future date.
[3.1.2(i)(h), 12.6]
(3) If any person who has any claim against the said trader in connection with the said
business, has before such transfer, for the purpose of enforcing his claim, instituted
proceedings against the said trader-
[12.7]
(a) in any court of law, and the person to whom the said business was transferred
knew at the time of the transfer that those proceedings had been instituted; or
(b) in a Division of the Supreme Court having jurisdiction in the district in which the
said business is carried on or in the magistrate’s court of that district,
the transfer shall be void as against him for the purpose of such enforcement.
[Sub-s. (3) substituted by s. 2 (b) of Act 27 of 1987 and by s. 1 (b) of Act 6 of 1991.]
(4) For the purposes of this section ‘transfer’, when used as a noun, includes actual or
constructive transfer of possession, and, when used as a verb, has a corresponding
meaning.
[12.6]
[Sub-s. (4) added by s. 1 (c) of Act 6 of 1991.]
Page 360
35 Uncompleted acquisition of immovable property before sequestration

[7.2.3(i)]
If an insolvent, before the sequestration of his estate, entered into a contract for the
acquisition of immovable property which was not transferred to him, the trustee of his
insolvent estate may enforce or abandon the contract. The other party to the contract may
call upon the trustee by notice in writing to elect whether he will enforce or abandon the
contract, and if the trustee has after the expiration of six weeks as from the receipt of the
notice, failed to make his election as aforesaid and inform the other party thereof, the other
party may apply to the court by motion for cancellation of the contract and for an order
directing the trustee to restore to the applicant the possession of any immovable property
under the control of the trustee, of which the insolvent or the trustee gained possession or
control by virtue of the contract, and the court may make such order on the application as it
thinks fit: Provided that this section shall not affect any right which the other party may
have to establish against the insolvent estate, a non-preferent claim for compensation for
any loss suffered by him as a result of the non-fulfilment of the contract.
35A Transactions on an exchange
[7.2.9, 25.1.1(iv)]
(1) In this section -
‘exchange’ means an exchange as defined in section 1 and licensed under section 10
of the Securities Services Act, 2004, and for the purposes of this section includes a central
securities depository as defined in section 1 of that Act and which is also licensed as a
clearing house under section 66 of that Act, or a clearing house as defined in section 1 of
that Act;
[Definition of ‘exchange’ substituted by s. 117 of Act 36 of 2004.]
‘market participant’ means an authorised user, a participant, a client or a settling
party as defined in section 1 of the Securities Services Act, 2004, or any other party to a
transaction;
[Definition of ‘market participant’ substituted by s. 2 of Act 104 of 1996 and by s. 117 of Act 36
of 2004.]
‘exchange rules’ means the exchange rules and depository rules as defined in section
1 of the Securities Services Act, 2004;
[Definition of ‘exchange rules’, previously ‘rules of an exchange’, substituted by s. 117 of Act 36
of 2004.]
‘transaction’ means any transaction to which the rules of an exchange apply.
[7.2.9]
(2) If upon the sequestration of the estate of a market participant the obligations of such
market participant in respect of any transaction entered into prior to sequestration have not
been fulfilled, the exchange in question in respect of any obligation owed to it, or any other
market participant in respect of obligations owed to such market participant, shall in
accordance with the rules of that exchange applicable to any such transaction be entitled to
terminate all such transactions and the trustee of the insolvent estate of the market
participant shall be bound by such termination.
[7.2.9]
(3) No claim as a result of the termination of any transaction as contemplated in
subsection (2) shall exceed the amount due upon termination in terms of the rules of the
exchange in question.
[7.2.9]
Page 361
(4) Any rules of an exchange and the practices thereunder which provide for the netting of
a market participant’s position or for set-off in respect of transactions concluded by the
market participant or for the opening or closing of a market participant’s position shall upon
sequestration of the estate of the market participant be binding on the trustee in respect of
any transaction or contract concluded by the market participant prior to such sequestration,
but which is, in terms of such rules and practices, to be settled on a date occurring after the
sequestration, or settlement of which was overdue on the date of sequestration.
[7.2.9]
(5) Section 341(2) of the Companies Act, 1973 (Act 61 of 1973), and sections 26, 29 and
30 of this Act shall not apply to property disposed of in accordance with the rules of an
exchange.
[12.5]
35B Agreements providing for termination and netting

[7.2.10, 25.1.1(iv)]
(1) Notwithstanding any rule of the common law to the contrary, all unperformed
obligations arising out of one or more master agreements between the parties, or obligations
arising from such agreement or agreements in respect of assets in which ownership has
been transferred as collateral security, shall, upon the sequestration of the estate of a party
to such master agreement, terminate automatically at the date of sequestration, the values
of those obligations shall be calculated at market value as at that date, the values so
calculated shall be netted and the net amount shall be payable.
[7.2.10]
(2) For purposes of this section ‘master agreement’ means -
[7.2.10]
(a) an agreement in accordance with standard terms published by the International
Swaps and Derivatives Association, the International Securities Lenders
Association, the Bond Market Association or the International Securities Market
Association, or any similar agreement, which provides that, upon the
sequestration of one of the parties –
(i) all unperformed obligations of the parties in terms of the agreement –
(aa) terminate or may be terminated; or
(bb) become or may become due immediately; and
(ii) the values of the unperformed obligations are determined or may be
determined; and
(iii) the values are netted or may be netted, so that only a net amount (whether
in the currency of the Republic or any other currency) is payable to or by a
party,
and which may further provide that the values of assets which have been
transferred as collateral security for obligations under that agreement shall be
included in the calculation of the net amount payable upon sequestration; or
[7.2.10]
(b) any agreement declared by the Minister, after consultation with the Minister of
Finance, by notice in the Gazette to be a master agreement for the purposes of
this section.
[7.2.10]
(3) The provisions of this section shall not apply to-
[7.2.10]
(a) a transaction contemplated in section 35A; or
[7.2.10]
(b) a netting arrangement contemplated in the National Payment System Act, 1998
(Act 78 of 1998).
[7.2.10]
(4) Section 341(2) of the Companies Act, 1973 (Act 61 of 1973), and sections
Page 362
26, 29 and 30 of this Act shall not apply to dispositions in terms of a master agreement.
[12.5]
[S. 35B inserted by s. 1 of Act 32 of 1995 and substituted by s. 2 of Act 55 of 2003.]
36 Goods not paid for which debtor purchased not on credit

[7.2.5]
(1) If a person, before the sequestration of his estate, by virtue of a contract of purchase
and sale which provided for the payment of the purchase price upon delivery of the property
in question to the purchaser, received any movable property without paying the purchase
price in full, the seller may, after the sequestration of the purchaser’s estate, reclaim that
property if within ten days after delivery thereof he has given notice in writing to the
purchaser or to the trustee of the purchaser’s insolvent estate or to the Master, that he
reclaims the property: Provided that if the trustee disputes the seller’s right to reclaim the
property, the seller shall not be entitled to reclaim it, unless he institutes, within fourteen
days after having received notice that the trustee so disputes his right, legal proceedings to
enforce his right.
[7.2.5]
(2) For the purposes of subsection (1) a contract of purchase and sale shall be deemed to
provide for the payment of the purchase price upon delivery of the property in question to
the purchaser, unless the seller has agreed that the purchase price or any part thereof shall
not be claimable before or at the time of such delivery.
(3) The trustee of the purchaser’s insolvent estate shall not be obliged to restore any
property reclaimed by the seller in terms of subsection (1) unless the seller refunds to him
every part of the purchase price which he has already received.
(4) Except as in this section provided, a seller shall not be entitled to recover any property
which he sold and delivered to a purchaser whose estate was sequestrated after the sale,
only by reason of the fact that the purchaser failed to pay the purchase price.
[7.2.5]
(5) The owner of the movable property which was in the possession or custody of a
person at the time of the sequestration of that person’s estate, shall not be entitled to
recover that property if it has, in good faith, been sold as part of the said person’s insolvent
estate, unless the owner has, by notice in writing, given, before the sale, to the curator
bonis if one has been appointed or to the trustee of the insolvent estate, or if there is no
such curator bonis or trustee, to the Master, demanded a return of the property.
(6) If any such property has been sold as part of the insolvent estate, the former owner of
that property may recover from the trustee, before the confirmation of any trustee’s account
in the estate in terms of section one hundred and twelve, the net proceeds of the sale of that
property (unless he has recovered the property itself from the purchaser), and thereupon he
shall lose any right which he may have had to recover the property itself in terms of
subsection (5).
37 Effect of sequestration upon a lease
[7.2.3(ii)]
(1) A lease entered into by any person as lessee shall not be determined by the
sequestration of his estate, but the trustee of his insolvent estate may determine the lease
by notice in writing to the lessor: Provided that the lessor may claim from the estate,
compensation for any loss which he may have sustained by reason of the non-performance
of the terms of such lease.
[7.2.3(ii)]
Page 363
(2) If the trustee does not, within three months of his appointment notify the lessor that
he desires to continue the lease on behalf of the estate, he shall be deemed to have
determined the lease at the end of such three months.
[7.2.3(ii)]
(3) The rent due under any such lease, from the date of the sequestration of the estate of
the lessee to the determination or the cession thereof by the trustee, shall be included in the
costs of sequestration.
[7.2.3(ii)]
(4) The determination of the lease by the trustee in terms of this section shall deprive the
insolvent estate of any right to compensation for improvements, other than improvements
made in terms of an agreement with the lessor, made on the leased property during the
period of the lease.
[7.2.3(ii)]
(5) A stipulation in a lease that the lease shall terminate or be varied upon the
sequestration of the estate of either party shall be null and void, but a stipulation in a lease
which restricts or prohibits the transfer of any right under the lease or which provides for the
termination or cancellation of the lease by reason of the death of the lessee or of his
successor in title, shall bind the trustee of the insolvent estate of the lessee or of his
successor in title, as if he were the lessee or the said successor, or the executor in the estate
of the lessee or his said successor, as the case may be.
[7.2.3(ii), 15intro]
38 Effect of sequestration on contract of service

[16.3.2(v)]
(1) The contracts of service of employees whose employer has been sequestrated are
suspended with effect from the date of the granting of a sequestration order.
[7.2.6]
(2) Without limiting subsection (1), during the period of suspension of a contract of
service referred to in subsection (1) -
(a) an employee whose contract is suspended is not required to render services in
terms of the contract and is not entitled to any remuneration in terms of the
contract; and
[7.2.6]
(b) no employment benefit accrues to an employee in terms of the contract of service
which is suspended.
[7.2.6]
(3) An employee whose contract of service is suspended is entitled to unemployment
benefits in terms of section 35 of the Unemployment Insurance Act, 1966 (Act 30 of 1966),
from the date of such suspension, subject to the provisions of that Act.
(4) A trustee appointed in terms of section 56, or a liquidator appointed in terms of
section 375 of the Companies Act, 1973 (Act 61 of 1973), or a liquidator who, in terms of
section 74 of the Close Corporations Act, 1984 (Act 69 of 1984), remains in office after the
first meeting and a co-liquidator, if any, appointed by the Master may terminate the
contracts of service of employees, subject to subsections (5) and (7).
[7.2.6]
(5) A trustee may not terminate a contract of service unless the trustee has consulted
with-
[7.2.6]
(a) any person with whom the insolvent employer was required to consult,
immediately before the sequestration, in terms of a collective agreement defined
in section 213 of the Labour Relations Act, 1995 (Act 66 of 1995);
[7.2.10]
(b) (i) a workplace forum defined in section 213 of the Labour Relations Act,
1995; and
[7.2.10]
(ii) any registered trade union whose members are likely to be affected by the
termination of the contract of service,
[7.2.10]
Page 364
if there is no such collective agreement that existed immediately prior to the

sequestration;
[7.2.10]
(c) a registered trade union representing employees whose contracts of service were
suspended in terms of subsection (1) and who are likely to be affected by the
termination of the contract of service, if there is no such workplace forum; or
[7.2.10]
(d) the employees whose contracts of service were suspended in terms of subsection
(1) and who are likely to be affected by the termination of the contract of service
or their representatives nominated for that purpose, if there is no such trade
union.
[7.2.10]
(6) The consultation referred to in subsection (5) must be aimed at reaching consensus on
appropriate measures to save or rescue the whole or part of the business of the insolvent
employer-
[7.2.6]
(a) by the sale of the whole or part of the business of the insolvent employer; or
[7.2.6]
(b) by a transfer as contemplated in section 197A of the Labour Relations Act, 1995;
or
[7.2.6]
(c) by a scheme or compromise referred to in section 311 of the Companies Act,
1973; or
[7.2.6]
(d) in any other manner.
[7.2.6]
(7) If any party referred to in subsection (5) wishes to make proposals concerning any
matter contemplated in subsection (6), that party must submit written proposals to the
trustee or liquidator within 21 days of the appointment of the trustee in terms of section 56,
or the appointment of the liquidator in terms of section 375 of the Companies Act, 1973, or
the appointment of a co-liquidator in terms of section 74 of the Close Corporations Act,
1984, or if a co-liquidator is not appointed, the date of the conclusion of the first meeting,
unless the trustee or liquidator and an employee agree otherwise.
[7.2.6]
(8) A creditor of the insolvent employer may, with the consent of the trustee, participate
in any consultation contemplated in this section.
[7.2.6(i)]
(9) Unless the trustee or liquidator and an employee have agreed on continued
employment of the employee in view of measures contemplated in subsection (6), all
suspended contracts of service shall terminate 45 days after -
(a) the date of the appointment of a trustee in terms of section 56; or
[7.2.6]
(b) the date of the appointment of a liquidator in terms of section 375 of the
Companies Act, 1973; or
(c)
the date of the appointment of a co-liquidator in terms of section 74 of the Close
Corporations Act, 1984, or if a co-liquidator is not appointed, the date of the
conclusion of the first meeting.
(10) An employee whose contract of service has been-
[7.2.6]
(a) suspended in terms of subsection (1); or
[7.2.6]
(b) terminated in terms of subsection (4) or (9),
[7.2.6]
is entitled to claim compensation from the insolvent estate of his or her former employer for
loss suffered by reason of the suspension or termination of a contract of service prior to its
expiration.
[7.2.6]
(11) An employee whose contract of service terminates or has been terminated in terms
of this section is entitled to claim severance benefits from the estate of the
Page 365
insolvent employer in accordance with section 41 of the Basic Conditions of Employment Act,
1997 (Act 75 of 1997).
[7.2.6]
39 Time and place of meetings of creditors

(1) Whenever the Master convenes any meeting of creditors as hereinafter provided, he
shall appoint it to be held at such time and place as he considers to be most convenient for
all parties concerned and may, if necessary, alter the time and place of any such meeting:
Provided that he shall publish in the Gazette sufficient notice of any such alteration.
[9.1.1]
(2) All meetings of creditors held in the district wherein there is a Master’s office shall be
presided over by the Master or an officer in the public service, designated, either generally
or specially, by the Master for that purpose. Meetings of creditors held in any other district
shall be held in accordance with the direction of the Master and shall be presided over by the
magistrate of the district, or by an officer in the public service, designated, either generally
or specially, by the magistrate for that purpose.
[9.1.5(ii)]
(3) The officer presiding at such a meeting shall keep a record of the proceedings, which
he shall certify at the conclusion of the proceedings, and if he is not the Master, he shall
transmit the record to the Master.
[9.1.5(iii)]
(4) If at a meeting of creditors held in a district where there is no Master, an officer other
than the magistrate presides, the presiding officer shall state in the record of the
proceedings the reason for the magistrate’s absence.
[9.1.5(ii)]
(5) The officer presiding at a meeting of creditors may, if necessary or desirable, adjourn
the meeting from time to time.
[9.1.5(i)]
(6) The place where a meeting of creditors is held shall be accessible to the public and the
publication of any statement made at such a meeting shall be privileged to the same extent
as in the publication of a statement made in a court of law.
[9.1.5(i), 9.1.5(iv)]
40 First and second meetings of creditors
[18.2.1]
(1) On the receipt of an order of the court sequestrating an estate finally, the Master shall
immediately convene by notice in the Gazette, a first meeting of the creditors of the estate
for the proof of their claims against the estate and for the election of a trustee.
[9.1.1]
(2) The Master shall publish such notice on a date not less than ten days before the date
upon which the meeting is to be held and shall in such notice state the time and place at
which the meeting is to be held.
[9.1.1]
(3) (a) After the first meeting of creditors and the appointment of a trustee, the Master
shall appoint a second meeting of creditors for the proof of claims against the estate, and for
the purpose of receiving the report of the trustee on the affairs and condition of the estate
and giving the trustee directions in connection with the administration of the estate.
[9.1.2]
(b) The trustee shall convene the second meeting of creditors by notice in the Gazette
and in one or more newspapers circulating in the district in which the insolvent resides or his
principal place of business is situate.
[9.1.2]
Page 366
(c) Whenever the notice referred to in paragraph (b) is published in any newspaper,
the publication shall take place simultaneously in the Afrikaans language and in the English
language and in the case of each such language in a newspaper circulating in the district
referred to in the said paragraph which appears mainly in that language and the publication
in each such language shall as far as practicable occupy the same amount of space: Provided
that where in the district in question any newspaper appears substantially in both such
languages publication in both such languages may take place in that newspaper.
[9.1.2]
41 General meetings of creditors

[9.1.4, 13.1.1, 18.2.1]
The trustee of an insolvent estate may at any time and shall, whenever he is so required
by the Master or by a creditor or creditors representing one-fourth of the value of all claims
proved against the estate, convene in the manner prescribed by subsection (3) of section
forty, a meeting of creditors (hereinafter called a general meeting of creditors) for the
purpose of giving him directions concerning any matter relating to the administration of the
estate and shall state in such notice the matters to be dealt with at that meeting.
42 Special meetings of creditors

(1) After the second meeting of creditors the trustee shall convene by notice in the
Gazette a special meeting of creditors for the proof of claims against the estate in question
whenever he is thereto required by any interested person who at the same time tenders to
the trustee payment of all expenses to be incurred in connection with such a meeting.
[9.1.3(i)]
(2) The trustee may at any time, and shall whenever he is thereto required by a creditor
who has proved his claim against the estate, provided that the Master consents thereto,
convene by notice in the Gazette a special meeting of creditors for the purpose of
interrogating an insolvent, and at such interrogation the provisions of section 65 shall
mutatis mutandis apply.
[9.1.3(ii)]
43 A creditor may register his name and address with trustee

[9.2.1]
Any person who claims to be a creditor of an insolvent estate may register his name and
address in the Republic, with the trustee of that estate upon payment to the trustee of a fee
of R25. Thereupon the trustee shall send to that address a notice of every meeting of
creditors of that estate, a copy of every account which he is submitting to the Master and a
notice of the date, time and place of the sale of any property over which the creditor has a
preferent right by virtue of a special mortgage, pledge or right of retention or a landlord’s
tacit or legal hypothec. Failure on the part of the trustee to comply with a provision of this
section shall constitute a failure to perform his duties but shall not invalidate anything done
under this Act.
[S. 43 substituted by s. 10 of Act 99 of 1965 and amended by s. 3 of Act 101 of 1983.]
Page 367
44 Proof of liquidated claims against estate
[9.2.3, 15.2.4(ii), 16.3.2(v), 18.3]
(1) Any person or the representative of any person who has a liquidated claim against an
insolvent estate, the cause of which arose before the sequestration of that estate, may, at
any time before the final distribution of that estate in terms of section one hundred and
thirteen, but subject to the provisions of section one hundred and four, prove that claim in
the manner hereinafter provided: Provided that no claim shall be proved against an estate
after the expiration of a period of three months as from the conclusion of the second
meeting of creditors of the estate, except with leave of the Court or the Master, and on
payment of such sum to cover the cost or any part thereof, occasioned by the late proof of
the claim, as the Court or Master may direct.
[9.2.2, 9.2.3]
(2) . . .
[Sub-s. (2) deleted by s. 4 of Act 101 of 1983.]
(3) A claim made against an insolvent estate shall be proved at a meeting of the creditors
of that estate to the satisfaction of the officer presiding at that meeting, who shall admit or
reject the claim: Provided that the rejection of a claim shall not debar the claimant from
proving that claim at a subsequent meeting of creditors or from establishing his claim by an
action at law, but subject to the provisions of section seventy-five: and provided further that
if a creditor has twenty-four or more hours before the time advertised for the
commencement of a meeting of creditors submitted to the officer who is to preside at that
meeting the affidavit and other documents mentioned in subsection (4), he shall be deemed
to have tendered proof of his claim at that meeting.
[9.2.3(iv), 9.2.3(vi), 9.2.3(viii)]
(4) Every such claim shall be proved by affidavit in a form corresponding substantially
with Form C or D in the First Schedule to this Act. That affidavit may be made by the
creditor or by any person fully cognizant of the claim, who shall set forth in the affidavit the
facts upon which his knowledge of the claim is based and the nature and particulars of the
claim, whether it was acquired by cession after the institution of the proceedings by which
the estate was sequestrated, and if the creditor holds security therefor, the nature and
particulars of that security and in the case of security other than movable property which he
has realized in terms of section eighty-three, the amount at which he values the security.
The said affidavit or a copy thereof and any documents submitted in support of the claim
shall be delivered at the office of the officer who is to preside at the meeting of creditors not
later than twenty-four hours before the advertised time of the meeting at which the creditor
concerned intends to prove the claim, failing which the claim shall not be admitted to proof
at that meeting, unless the presiding officer is of opinion that through no fault of the creditor
he has been unable to deliver such evidences of his claim within the prescribed period:
Provided that if a creditor has proved an incorrect claim, he may, with the consent in writing
of the Master given after consultation with the trustee and on such conditions as the Master
may think fit to impose correct his claim or submit a fresh correct claim.
[9.2.3(i), 9.2.3(ii), 15.2.4(iii), 16.1.2]
[Sub-s. (4) amended by s. 15 of Act 16 of 1943 and substituted by s. 11 (b) of Act 99 of 1965.]
Page 368
(5) Any document by this section required to be delivered before a meeting of creditors at
the office of the officer who is to preside at that meeting, shall be open for inspection at such
office during office hours free of charge by any creditor, the trustee or the insolvent or the
representative of any of them.
[9.2.3(iii)]
(6) A claim against an insolvent’s estate for payment of the purchase price of goods sold
and delivered to the insolvent on an open account shall not be admitted to proof unless a
statement is submitted in support of such claim showing the monthly total and a brief
description of the purchases and payments for the full period of trading or for the period of
twelve months immediately before the date of sequestration, whichever is the lesser.
[9.2.3(i)]
[Sub-s. (6) substituted by s. 11 (c) of Act 99 of 1965.]
(7) The officer presiding at any meeting of creditors may of his own motion or at the
request of the trustee or his agent or at the request of any creditor who has proved his
claim, or his agent, call upon any person present at the meeting who wishes to prove or who
has at any time proved a claim against the estate to take an oath, to be administered by the
said officer, and to submit to interrogation by the said officer or by the trustee or his agent
or by a creditor or the agent of a creditor whose claim has been proved, in regard to the said
claim.
[9.2.3(v), 9.2.3(vi)]
(8) If any person who wishes to prove or who has at any time proved a claim against the
estate is absent from a meeting of creditors the officer who presided or who presides
thereat, may summon him in writing to appear before him at a place and time stated in the
summons, for the purpose of being interrogated by the said officer or by the trustee or his
agent or by a creditor or the agent of a creditor whose claim has been proved, and if he
appears in answer to the summons the provisions of subsection (7) shall apply.
[9.2.3(v)]
(9) If any such person fails without reasonable excuse to appear in answer to such
summons or having appeared or when present at any meeting of creditors refuses to take
the oath or to submit to the said interrogation or to answer fully and satisfactorily any lawful
question put to him, his claim, if already proved, may be expunged by the Master, and if not
yet proved, may be rejected.
[9.2.3(v)]
45 Trustee to examine claims
(1) After a meeting of creditors the officer who presided thereat shall deliver to the
trustee every claim proved against the insolvent estate at that meeting and every document
submitted in support of the claim.
[9.2.3(vii)]
(2) The trustee shall examine all available books and documents relating to the insolvent
estate for the purpose of ascertaining whether the estate in fact owes the claimant the
amount claimed.
[9.2.3(vii)]
(3) If the trustee disputes a claim after it has been proved against the estate at a meeting
of creditors, he shall report the fact in writing to the Master and shall state in his report his
reasons for disputing the claim. Thereupon the Master may confirm the claim, or he may,
after having afforded the claimant an opportunity to substantiate his claim, reduce or
disallow the claim, and if he has done so, he shall forthwith notify the claimant in writing:
Provided that such reduction or disallowance shall not debar the claimant from establishing
his claim by an action at law, but subject to the provisions of section seventy-five.
[9.2.3(vii), 17.4]
Page 369
46 Set-off
If two persons have entered into a transaction the result whereof is a set-off, wholly or in
part, of debts which they owe one another and the estate of one of them is sequestrated
within a period of six months after the taking place of the set-off, or if a person who had a
claim against another person (hereinafter in this section referred to as the debtor) has ceded
that claim to a third person against whom the debtor had a claim at the time of the cession,
with the result that the one claim has been set-off, wholly or in part, against the other, and
within a period of one year after the cession the estate of the debtor is sequestrated; then
the trustee of the sequestrated estate may in either case abide by the set-off or he may, if
the set-off was not effected in the ordinary course of business, with the approval of the
Master disregard it and call upon the person concerned to pay to the estate the debt which
he would owe it but for the set-off, and thereupon that person shall be obliged to pay that
debt and may prove his claim against the estate as if no set-off had taken place: Provided
that any set-off shall be effective and binding on the trustee of the insolvent estate if it takes
place between an exchange or a market participant as defined in section 35A and any other
party in accordance with the rules of such an exchange, or if it takes place under an
agreement defined in section 35B.
[S. 46 amended by s. 2 of Act 32 of 1995.]
47 Right of retention and landlord’s legal hypothec

[15.2.4(iii), 15.2.5]
If a creditor of an insolvent estate who is in possession of any property belonging to that
estate, to which he has a right of retention or over which he has a landlord’s legal hypothec,
delivers that property to the trustee of that estate, at the latter’s request, he shall not
thereby lose the security afforded him by his right of retention or lose his legal hypothec, if,
when delivering the property, he notifies the trustee in writing of his rights and in due course
proves his claim against the estate: Provided, that a right to retain any book or document of
account which belongs to the insolvent estate or relates to the insolvent’s affairs shall not
afford any security or preference in connection with any claim against the estate.
48 Proof of conditional claim
[9.2.5]
A creditor whose claim against an insolvent estate is dependent upon a condition, may
prove that claim in the manner set forth in section forty-four but subject to the following
provisions: -
(a) If the condition is of such a nature that it will be fulfilled, if at all, within a year of
the sequestration, the creditor may prove his claim, but he shall have no vote in
respect of that claim at a meeting of creditors. If a dividend is awarded on such a
claim it shall be paid by the trustee to the Master, who shall pay it to the creditor,
if the condition has been fulfilled, and otherwise shall return it to the trustee for
distribution among the other creditors.
[9.2.5, 9.3.1]
(b) If the condition is not such as is described in paragraph (a), the creditor may call
upon the trustee at a meeting of creditors to place a value upon the claim and
the trustee shall thereupon lay before the officer presiding at that meeting a
written valuation of the claim with the reasons therefor, and the presiding officer
shall admit that claim at such value as he may determine, or reject it: Provided
that when the condition has been fulfilled, before the confirmation, by the Master,
in terms of
Page 370
section one hundred and twelve, of a trustee’s account in the liquidation of the
estate, the creditor may prove his claim as if it had been unconditional.
[9.2.5]
49 Claims against partnership distinct from claims against partners
(1) When the estate of a partnership and the estates of the partners in that partnership
are under sequestration simultaneously, the creditors of the partnership shall not be entitled
to prove claims against the estate of a partner and the creditors of a partner shall not be
entitled to prove claims against the estate of the partnership; but the trustee of the estate of
the partnership shall be entitled to any balance of a partner’s estate that may remain over
after satisfying the claims of the creditors of the partner’s estate in so far as that balance is
required to pay the partnership’s debts and the trustee of the estate of a partner shall be
entitled to any balance of the partnership’s estate that may remain over after satisfying the
claims of the creditors of the partnership estate, so far as that partner would have been
entitled thereto, if his estate had not been sequestrated.
[20.5, 20.7]
(2) Nothing in this section shall be construed as preventing the Commissioner for the
South African Revenue Service from proving in the manner provided in this Act a claim
against the estate of a partnership in respect of any sum referred to in paragraph (b) of
section one hundred and one, or any interest due on such sum.
[20.5]
[Sub-s. (2) added by s. 21 of Act 6 of 1963, substituted by s. 12 of Act 99 of 1965, amended by
s. 1 of Act 49 of 1996 and substituted by s. 5 of Act 69 of 2002.]
50 Arrear interest. Debt due after sequestration

(1) When a debt bearing interest became due before the sequestration of the debtor’s
estate, the creditor to whom that debt is owing may include in his claim against the debtor’s
estate in respect of that debt any interest thereon, which is in arrear, to the date of the
sequestration.
[9.2.4]
(2) If a person, before the sequestration of his estate, incurred a debt which is payable
upon a date (hereinafter referred to as the due date) after the date of the sequestration, the
creditor, towards whom the debt was incurred, may claim from the insolvent estate the full
amount of that debt as if it were payable on the date of sequestration: Provided that if the
debt bears no interest and a distribution account in the estate in question is confirmed by
the Master in terms of section 112 before the due date, an amount shall be paid on that
claim equal to the amount which would have been paid thereon under the distribution
account if the debt had been payable on the date of sequestration, less eight per cent of that
amount per annum, reckoned from the date of sequestration to the due date.
[9.2.6]
51 Withdrawal of claim already proved against estate

(1) A creditor who has proved a claim against an insolvent estate may withdraw his claim
by registered letters addressed to the Master and to the trustee and the latter shall in
writing notify the other creditors of the withdrawal: Provided that the creditor so
withdrawing his claim shall remain liable in terms of section one hundred and six for his pro
rata share of the costs of sequestration and all costs lawfully incurred by the trustee
Page 371
in connection with the sequestration up to the time when he received the creditor’s letter of
withdrawal.
(2) A creditor who has so withdrawn his claim may, by registered notice addressed to the
Master and to the trustee, cancel his withdrawal, but if he does so, he shall not become
liable for any costs in connection with the sequestration for which he was not liable at the
time of cancellation and he shall not be entitled to any payment out of the estate in respect
of his claim until all the other creditors who have proved their claims have been paid in full.
52 Voting at meeting of creditors

(1) Save as in this section and in section forty-eight is otherwise provided, every creditor
of an insolvent estate shall be entitled to vote at any meeting of the creditors of that estate
as soon as his claim against the estate has been proved.
[9.3.1]
(2) The vote of any creditor shall be reckoned according to the value of his claim, except
when it is provided in this Act that votes shall be reckoned in number.
[9.3.2]
(3) The vote of a creditor shall in co case be reckoned in number, unless his or her claim
is of the value of at least R1 000.
[9.3.2]
[Sub-s. (3) substituted by s. 6 of Act 101 of 1983 and by s. 21 (1) of Act 20 of 2001.]
(4) A creditor may not vote in respect of any claim which was ceded to him after the
commencement of the proceedings by which the estate was sequestrated.
[9.3.1]
(5) A creditor holding any security for his claim shall, except in the election of a trustee
and upon any matter affecting that security, be entitled to vote only in respect of the
amount by which his claim exceeds the amount at which he valued his security when proving
his claim, or if he did not value his security, in respect of the amount by which his claim
exceeds the amount of the proceeds of the realization of his security in terms of section
eighty-three.
[9.3.1, 18.3]
(6) A creditor may not vote on the question as to whether steps should be taken to
contest his claim or preference.
[9.3.1]
53 Questions upon which creditors may vote

(1) A creditor may vote at a meeting of creditors upon all matters relating to the
administration of the estate, but may not vote in regard to matters relating to the
distribution of the assets of the estate, except for the purpose of directing the trustee to
contest, compromise or admit any claim against the estate.
[9.3.3]
(2) Subject to the provisions of section fifty-four and subsection (7) of section one
hundred and nineteen, every matter upon which a creditor may vote shall be determined by
the majority of votes reckoned in accordance with subsection (2) of section fifty-two, and
every creditor may vote either personally or by an agent specially authorized thereto or
acting under his general power of attorney: Provided that no creditor shall vote by any agent
being-
[9.3.2, 9.3.4]
(a) the trustee or a person nominated for election as trustee in the estate concerned;
[9.3.2, 9.3.4]
(b) the employer or employee of such trustee or person;
[9.3.2, 9.3.4]
Page 372
(c) the employee of any person or association of persons, whether corporate or

unincorporate, by whom or by which such trustee or the person referred to in
paragraph (a) is employed;
[9.3.2, 9.3.4]
(d) the spouse of or a person related to such trustee or the person referred to in
paragraph (a) by consanguinity or affinity within the third degree; or
[9.3.2, 9.3.4]
(e) a person directly or indirectly having a pecuniary interest in the remuneration of
such trustee or the person referred to in paragraph (a).
[9.3.2, 9.3.4]
(3) Every resolution of creditors at a meeting of creditors and the result of the voting on
any matter as declared by the officer presiding at that meeting, shall be recorded upon the
minutes of the meeting and shall be binding upon the trustee in so far as it is a direction to
him; and no other direction of creditors shall be binding upon him.
[9.3.5]
(4) Any direction by creditors which infringes the rights of any creditor may be set aside
by the court on the application of the creditor whose rights are affected or of the trustee
with the consent of the Master.
[9.3.6]
(5) The majority of creditors (reckoned in number and in value) may direct the trustee to
employ or not to employ a particular attorney or auctioneer in connection with the
administration of the estate and if the trustee has reason to believe that it will not be in the
interests of the estate to carry out such direction, he may submit the matter to the Master,
whose decision, after considering any representations in writing by the trustee and the
creditors, shall be final.
[11.8]
54 Election of trustee
(1) At the first meeting of the creditors of an insolvent estate the creditors who have
proved their claims against the estate may elect one or two trustees.
[10.1.1]
(2) Any person who has obtained a majority in number and in value of the votes of the
creditors entitled to vote, who voted at such meeting, shall be elected trustees.
[10.1.1]
(3) If no person has obtained such a majority of votes then -
(a) the person who has obtained a majority of votes in number, when no other
person has obtained a majority of votes in value, or has obtained a majority of
votes in value, when no other person has obtained a majority of votes in number,
shall be deemed to be elected sole trustee;
[10.1.1]
(b) if one person has obtained a majority of votes in value and another a majority of
votes in number, both such persons shall be deemed to be elected trustees, and
if either person declines a joint trusteeship, the other shall be deemed to be
elected sole trustee.
[10.1.1]
(4) For the purposes of this section ‘majority of votes in number’ means a greater number
of votes (apart from the value of the claims which they represent, but subject to the
provisions of subsection (3) of section fifty-two) than has been obtained by any competitor
and ‘majority of votes in value’ means votes representing claims of a greater aggregate
value than the votes obtained by any competitor.
[9.3.2]
(5) If at any meeting of creditors convened for the purpose of electing a trustee, no
trustee is elected and the estate is not vested at the time of that meeting in a provisional
trustee, the Master may, in accordance with policy determined by the Minister, appoint a
Page 373
trustee and if he or she does not so appoint a trustee, the Master or the insolvent with the
Master’s consent, may apply, at the cost of the estate, to the court by petition to set aside
the sequestration and the court may make such order thereon as it thinks fit.
[2.8, 3.6, 5.1]
55 Persons disqualified from being trustees

[10.2.1, 10.2.2]
Any of the following persons shall be disqualified from being elected or appointed a
trustee -
(a) any insolvent;
[4.4]
(b) any person related to the insolvent concerned by consanguinity or affinity within
the third degree;
(c) a minor or any other person under legal disability;
(d) any person who does not reside in the Republic;
[Para. (d) amended by s. 17 of Act 16 of 1943.]
(e) any person who has an interest opposed to the general interest of the creditors of
the insolvent estate;
(f) a former trustee disqualified under section seventy-two;
(g) any person declared under section fifty-nine to be incapacitated for election as
trustee, while any such incapacity lasts, or any person removed by the court, on
account of misconduct, from an office of trust;
(h) a corporate body;
(i) any person who has at any time been convicted (whether in the Republic or
elsewhere) of theft, fraud, forgery or uttering a forged document, or perjury and
has been sentenced to imprisonment without the option of a fine, or to a fine
exceeding R2 000;
[Para. (i) substituted by s. 21 (1) of Act 20 of 2001.]
(j) any person who was, at any time, a party to an agreement or arrangement with
any debtor or creditor whereby he undertook that he would, when performing the
functions of a trustee or assignee, grant or endeavour to grant to, or obtain or
endeavour to obtain for any debtor or creditor any benefit not provided for by
law;
(k) any person who has by means of any misrepresentation or any reward or offer of
any reward, whether direct or indirect, induced or attempted to induce any
person to vote for him as trustee or to effect or assist in effecting his election as
trustee of any insolvent estate;
(l)
any person who at any time during a period of twelve months immediately
preceding the date of sequestration acted as the bookkeeper, accountant or
auditor of the insolvent;
[Para. (l) inserted by s. 15 of Act 99 of 1965.]
(m) any agent authorized specially or under a general power of attorney to vote for or
on behalf of a creditor at a meeting of creditors of the estate concerned and
acting or purporting to act under such special authority or general power of
attorney.
[Para. (m) added by s. 15 of Act 99 of 1965.]
Page 374
56 Appointment of trustee. Security for his administration

(1) If a trustee was elected at a meeting of creditors at which a person other than the
Master presided, the election shall not be valid unless it has been confirmed by the Master.
[10.1.1]
(2) Subject to the provisions of section fifty-seven, the Master shall, when a person so
elected has given security to his satisfaction for the proper performance of his duties as
trustee, confirm his election and appoint him as trustee by delivering to him a certificate of
appointment, which shall be valid throughout the Republic.
[10.1.2]
[Sub-s. (2) amended by s. 18 of Act 16 of 1943 and substituted by s. 16 (a) of Act 99 of 1965.]
(3) On receipt of his certificate of appointment the trustee shall notify his appointment
and address in the Gazette.
[10.1.2]
(4) When two trustees have been appointed or when the Master has appointed a co-
trustee in terms of section 57(5) both or all three trustees shall act jointly in performing
their functions as trustees and each of them shall be jointly and severally liable for every act
performed by them jointly.
[10.1.5]
[NB: Sub-s. (4) has been substituted by s. 1 of the Insolvency Amendment Act 89 of 1989, which
is not yet in operation. See PENDLEX.]
(5) Whenever the trustees in the estate disagree on any matter relating to the estate of
which they are trustees, the matter shall be referred to the Master who shall determine the
question in issue or give directions as to the procedure to be followed for the determination
thereof.
[10.1.5]
(6) Subject to the provisions of subsection (1) of section eighty-nine the cost of giving the
security mentioned in subsection (2), to an amount which the Master considers reasonable,
shall be paid out of the estate in question as part of the costs of sequestration.
(7) When a trustee has, in the course of liquidating an insolvent estate accounted to the
Master, to his satisfaction, for any property in the estate, the Master may consent to a
reduction of the security mentioned in subsection (2) if he is satisfied that the reduced
security will suffice to indemnify the estate or the creditors thereof against any
maladministration by the trustee of the remaining property in the estate.
57 Appointment of trustee or co-trustee by Master
(1) If a person who has been elected as trustee was not properly elected or is disqualified,
under section fifty-five, from being elected or appointed a trustee or is disqualified from
being a trustee of the estate in question or has failed to give within a period of seven days
as from the date upon which he was notified that the Master had confirmed his election, or
within such further period as the Master may allow, the security mentioned in subsection (2)
of section fifty-six or if in the opinion of the Master the person elected as trustee should not
be appointed as trustee to the estate in question, the Master shall give notice in writing to
the person so elected that he declines to confirm his election or to appoint him as trustee
and shall, in that notice, state his reason for declining to confirm his election or to appoint
him: Provided that if the Master declines to confirm the election of a trustee because he is of
the opinion that the person elected should not be appointed as trustee, it shall be sufficient if
the Master states, in
Page 375
that notice, as such reason, that he is of the opinion that the person elected should not be
appointed as trustee to the estate in question.
[10.1.3]
(2) When the Master has declined to confirm the election of a trustee or to appoint a
person elected as a trustee, or the Minister has under subsection (9) set aside the
appointment of a trustee, the Master shall in accordance with the provisions of subsections
(1) and (2) of section forty convene a meeting of creditors of the estate in question for the
purpose of electing another trustee in the place of the person whose election as a trustee the
Master declined to confirm or whom the Master declined to appoint or whose appointment as
trustee has been so set aside. In the notice convening the meeting the Master shall state
that he has declined to confirm the election of the person previously elected as trustee, or to
appoint the person so elected, and the reasons therefor (but subject to the proviso to
subsection (1)), or that the appointment of the person previously appointed as trustee has
been set aside by the Minister, as the case may be, and that the meeting is convened for the
purpose of electing another trustee. The Master shall post a copy of the notice to every
creditor whose claim against the estate was previously proved and admitted.
[10.1.3]
(3) A meeting mentioned in subsection (2) shall be deemed to be the continuation of a
first meeting of creditors held after an adjournment thereof.
(4) If the Master declines, for any reason mentioned in subsection (1), to confirm the
election of a person who was elected as trustee at a meeting mentioned in subsection (2), or
to appoint a person so elected, he or she shall act in accordance with the provisions of
subsection (1) and thereupon, if the person whose election the Master declined to confirm or
whom the Master declined to appoint, was elected as sole trustee, or if two trustees were
elected and the Master did not appoint both or one of them, the Master shall, in accordance
with policy determined by the Minister, appoint as trustee of the estate in question any other
person who is not disqualified from being a trustee of that estate.
(5) Whenever the Master considers it desirable, he or she may, in accordance with policy
determined by the Minister, appoint a person not disqualified from holding the office of
trustee who has given the security mentioned in section 56(2) as a co-trustee with the
trustee or trustees of an insolvent estate.
[10.1.2, 10.1.5]
[NB: Sub-s. (5) has been substituted by s. 2 of the Insolvency Amendment Act 89 of 1989, a
provision which will be put into operation by proclamation. See PENDLEX.]
(6) All the provisions of this Act, relating to a trustee shall apply to a trustee or a co-
trustee appointed by the Master under this section.
[10.1.2]
(7) Any person aggrieved by the appointment of a trustee or the refusal of the Master to
confirm the election of a trustee or to appoint a person elected as a trustee, may within a
period of seven days from the date of such appointment or refusal request the Master in
writing to submit his or her reasons for such appointment or refusal to the Minister.
[10.1.4]
[Sub-s. (7) added by s. 17 (b) of Act 99 of 1965 and substituted by s. 6 (c) of Act 16 of 2003.]
Page 376
(8) The Master shall within seven days of the receipt by him of the request referred to in
subsection (7) submit to the Minister, in writing, his reasons for such appointment or refusal
together with any relevant documents, information or objections received by him.
[10.1.4]
(9) The Minister may after consideration of the reasons referred to in subsection (8) and
any representations made in writing by the person who made the request referred to in
subsection (7) and of all relevant documents, information or objections submitted to him or
the Master by any interested person, confirm, uphold or set aside the appointment or the
refusal by the Master and, in the event of the refusal by the Master being set aside, direct
the Master to confirm the election of the trustee concerned and to appoint him as trustee to
the estate in question.
[10.1.4]
(10) The decision of the Minister under subsection (9) shall be final.
[10.1.4]
58 Vacation of office of trustee

[10.3.1]
A trustee shall vacate his office -
(a) if his estate is sequestrated under this Act; or
[4.4]
(b) if an order is issued under the law relating to mental disorders for his reception
and detention in an institution, or if he is declared by a competent court to be
incapable of managing his own affairs; or
(c) if he is convicted of any offence and sentenced to serve any term of
imprisonment without the option of a fine, or if he is convicted (whether in the
Republic or elsewhere) of theft, fraud, forgery or uttering a forged document, or
perjury.
59 Court may declare a person disqualified from being a trustee, or remove a
trustee
[10.2.1]
On the application of any person interested the court may either before or after the
appointment of a trustee, declare that the person appointed or proposed is disqualified from
holding the office of trustee, and, if he has been appointed, may remove him from office and
may in either case declare him incapable of being elected or appointed trustee under this Act
during the period of his life or such other period as it may determine, if -
(a) he has accepted or expressed his willingness to accept from any person engaged
to perform any work on behalf of the estate in question, any benefit whatever in
connection with any matter relating to that estate; or
(b) in order to induce a creditor to vote for him at the election of a trustee or in
return for his vote at such election, or in order to exercise any influence upon his
election as trustee, he has –
(i) wrongfully omitted or included or been privy to the wrongful omission or
inclusion of the name of a creditor from any record by this Act required; or
(ii) directly or indirectly given or offered or agreed to give to any person any
consideration; or
(iii) offered to or agreed with any person to abstain from investigating any
previous transactions of the insolvent concerned; or
Page 377
(iv) been guilty of or privy to the splitting of claims for the purpose of increasing
the number of votes.
60 Removal of trustee by Master
[10.3.1, 10.3.2, 10.3.3]
The Master may remove a trustee from his office on the ground -
(a) that he was not qualified for election or appointment as trustee or that his
election or appointment was for any other reason illegal, or that he has become
disqualified from election or appointment as a trustee or has been authorized,
specially or under a general power of attorney, to vote for or on behalf of a
creditor at a meeting of creditors of the insolvent estate of which he is the trustee
and has acted or purported to act under such special authority or general power
of attorney; or
(b) that he has failed to perform satisfactorily any duty imposed upon him by this Act
or to comply with a lawful demand of the Master; or
(c) that he is mentally or physically incapable of performing satisfactorily his duties
as trustee; or
(d) that the majority (reckoned in number and in value) of creditors entitled to vote
at a meeting of creditors has requested him in writing to do so; or
(e) that, in his opinion, the trustee is no longer suitable to be the trustee of the
estate concerned.
61 Leave of absence or resignation of trustee

[10.4]
At the request of a trustee the Master may permit him to be absent from the Republic for
a period longer than 60 days or may relieve him of his office, in either case upon such
conditions as the Master may think fit to impose and subject to his giving such notice of his
intention to be so absent from the Republic or to resign as the Master may direct.
62 Election of new trustee

(1) When a Court or the Master has removed one of two joint trustees from office, the
Master may convene a meeting of the creditors of the estate in question for the purpose of
electing a new trustee in the place of the trustee who was removed.
[10.5]
(2) When a sole trustee has vacated his or her office or has been removed from office,
has resigned or died, the Master shall convene a meeting of the creditors of the estate in
question for the purpose of electing a new trustee, and in the meantime the Master may, in
accordance with policy determined by the Minister, appoint a provisional trustee for the
preservation of the estate.
[10.5]
(3) When one of two joint trustees has vacated his office or has resigned or died the
Master may convene a meeting of the creditors of the estate in question for the purpose of
electing a new trustee in the place of the trustee who has vacated his office or has resigned
or died.
Page 378
(4) The provisions of section fifty-four shall apply in connection with the election of a new
trustee in terms of this section.
63 Remuneration of trustee or curator bonis
(1) Every trustee or curator bonis shall be entitled to a reasonable remuneration for his
services, to be taxed by the Master according to tariff B in the Second Schedule to this Act:
Provided that the Master may, for good cause, reduce or increase his remuneration, or may
disallow his remuneration either wholly or in part on account of any failure of or delay in the
discharge of his duties or on account of any improper performance of his duties.
[2.4.2, 8.3, 8.4.2, 10.7, 13intro]
(1)bis The Minister may by notice in the Gazette amend the said tariff B.
[Sub-s. (1)bis inserted by s. 12 of Act 50 of 1956, amended by ss. 46 and 47 of Act 97 of 1986
and substituted by s. 8 of Act 16 of 2003.]
(2) A person who employs or is a fellow employee or is ordinarily in the employment of
the trustee shall not be entitled to any remuneration out of the insolvent estate for services
rendered to the estate, and a trustee or his partner shall not be entitled to any remuneration
out of the estate for services rendered to the estate, except the remuneration to which
under this Act he is entitled as trustee.
[10.7]
64 Insolvent and others to attend meetings of creditors
(1) An insolvent shall attend the first and second meetings of the creditors of his estate
and every adjourned first and second meeting, unless he has previously obtained the written
permission of the officer who is to preside or who presides at such meeting granted after
consultation with the trustee to absent himself. The insolvent shall also attend any
subsequent meeting of creditors if required so to do by written notice of the trustee of his
estate.
[13.1.2]
(2) The officer who is to preside or who presides at any meeting of creditors may summon
any person who is known or upon reasonable ground believed to be or to have been in
possession of any property which belonged to the insolvent before the sequestration of his
estate or which belongs or belonged to the insolvent estate or to the spouse of the insolvent
or to be indebted to the estate, or any person (including the insolvent’s spouse) who in the
opinion of said officer may be able to give any material information concerning the insolvent
or his affairs (whether before or after the sequestration of his estate) or concerning any
property belonging to the estate or concerning the business, affairs or property of the
insolvent’s spouse, to appear at such meeting or adjourned meeting for the purpose of being
interrogated under section sixty-five.
[13.1.2]
(3) The said officer may also summon any person who is known or upon reasonable
grounds believed to have in his possession or custody or under his control any book or
document containing any such information as is mentioned in subsection (2), to produce that
book or document, or an extract therefrom at any such meeting of creditors.
[13.1.2]
65 Interrogation of insolvent and other witnesses
[13.1.5]
(1) At any meeting of the creditors of an insolvent estate the officer presiding thereat may
call and administer the oath to the insolvent and any other person present at
Page 379
the meeting who was or might have been summoned in terms of subsection (2) of section
sixty-four and the said officer, the trustee and any creditor who has proved a claim against
the estate or the agent of any of them may interrogate a person so called and sworn
concerning all matters relating to the insolvent or his business or affairs, whether before or
after the sequestration of his estate, and concerning any property belonging to his estate,
and concerning the business, affairs or property of his or her spouse: Provided that the
presiding officer shall disallow any question which is irrelevant and may disallow any
question which would prolong the interrogation unnecessarily.
[13.1.1, 13.1.3, 13.1.4, 13.1.5]
(2) In connection with the production of any book or document in compliance with a
summons issued under subsection (3) of section sixty-four or at an interrogation of a person
under subsection (1) of this section, the law relating to privilege as applicable to a witness
summoned to produce a book or document or giving evidence in a court of law, shall apply:
Provided that a banker at whose bank the insolvent in question or his or her spouse keeps or
at any time kept an account, shall be obliged to produce, if summoned to do so under
subsection (3) of section sixty-four, any cheque in his possession which was drawn by the
insolvent or his or her spouse within one year before the sequestration of the insolvent’s
estate, or if any cheque so drawn is not available, then any record of the payment, date of
payment and amount of that cheque which may be available to him, or a copy of such record
and if called upon to do so, to give any other information available to him in connection with
such cheque or the account of the insolvent or his or her spouse; and provided further that a
person interrogated under subsection (1) shall not be entitled at such interrogation to refuse
to answer any question upon the ground that the answer would tend to incriminate him or
upon the ground that he is to be tried on a criminal charge and may be prejudiced at such a
trial by his answer.
[13.1.6]
[Sub-s. (2) amended, by s. 3 (a) of Act 89 of 1989.]
(2A) (a) Where any person gives evidence in terms of the provisions of this section and is
obliged to answer questions which may incriminate him or, where he is to be tried on a
criminal charge, may prejudice him at such trial, the presiding officer shall, notwithstanding
the provisions of section 39(6), order that such part of the proceedings be held in camera
and that no information regarding such questions and answers may be published in any
manner whatsoever.
[13.1.6, 22.5.5]
(b) No evidence regarding any questions and answers contemplated in paragraph (a)
shall be admissible in any criminal proceedings, except in criminal proceedings where the
person concerned stands trial on a charge relating to the administering or taking of an oath
or the administering or making of an affirmation or the giving of false evidence or the
making of a false statement in connection with such questions and answers, and in criminal
proceedings contemplated in section 139(1) relating to a failure to answer lawful questions
fully and satisfactorily.
[13.1.6]
(c) Any person who contravenes any provision of an order contemplated in paragraph
(a), shall be guilty of an offence and liable on conviction to the penalty mentioned in
subsection (5) of section 154 of the Criminal Procedure Act, 1977 (Act 51 of 1977).
[13.1.6]
[Sub-s. (2A) inserted by s. 3 (b) of Act 89 of 1989.]
(3) The presiding officer shall record or cause to be recorded in the manner provided by
the rules of court for the recording of evidence in a civil case before a
Page 380
magistrate’s court the statement of any person giving evidence under this section: Provided
that if a person who may be required to give evidence under this section made to the trustee
or his agent a statement which was reduced to writing, or delivered a statement in writing to
the trustee or his agent, that statement may be read by or read over to that person when he
is called as a witness under this section and if then adhered to by him, shall be deemed to
be evidence given under this section.
[13.1.5]
(4) The insolvent shall at such interrogation be required to make a declaration that he has
made a full and true disclosure of all his affairs.
[13.1.5]
(5) Any evidence given under this section shall, subject to the provisions of subsection
(2A), be admissible in any proceedings instituted against the person who gave that
evidence.
[13.1.6, 22.5.5]
(6) Any person called upon to give evidence under this section may be assisted at his
interrogation by counsel, an attorney or agent.
[13.1.5]
(7) Any person summoned to attend a meeting of creditors for the purpose of being
interrogated under this section (other than the insolvent and his or her spouse) shall be
entitled to witness fees to be paid out of the estate, to which he would be entitled if he were
a witness in any civil proceedings in a court of law.
[13.1.2]
(8) If the insolvent or his or her spouse is called upon to attend any meeting of creditors
held after the second meeting or an adjourned second meeting, he or she shall be entitled to
an allowance out of the insolvent estate to defray his or her necessary expenses in
connection with such attendance.
[13.1.2]
66 Enforcing summonses and giving of evidence
(1) If a person summoned under section sixty-four fails to appear at a meeting of
creditors, in answer to the summons, or if an insolvent fails to attend any meeting of
creditors in terms of subsection (1) of section sixty-four, or fails to remain in attendance at
that meeting, the officer presiding at such meeting may issue a warrant, authorizing any
member of the police force to apprehend the person summoned or the insolvent, as the case
may be, and to bring him before the said officer.
[13.1.7]
(2) Unless the person summoned or the insolvent, as the case may be, satisfies the said
officer that he had a reasonable excuse for his failure to appear at or attend such meeting,
or for absenting himself from the meeting, the said officer may commit him to prison to be
detained there until such time as the said officer may appoint, and the officer in charge of
the prison to which the said person or insolvent was committed, shall detain him and
produce him at the time and place appointed by the first-mentioned officer for his
production.
[13.1.7]
(3) If a person summoned as aforesaid, appears in answer to the summons but fails to
produce any book or document which he was summoned to produce, or if any person who
may be interrogated at a meeting of creditors in terms of subsection (1) of section sixty-five
refuses to be sworn by the officer presiding at a meeting of creditors at which he is called
upon to give evidence or refuses to answer any question lawfully put to him under the said
section or does not answer the question fully and satisfactorily, the officer may issue a
warrant committing the said person to prison, where he shall be detained
Page 381
until he has undertaken to do what is required of him, but subject to the provisions of
subsection (5).
[1.7.3, 13.1.4, 13.1.7]
(4) If a person who has been released from prison after having undertaken in terms of
subsection (3) to do what is required of him, fails to fulfil his undertaking, the said officer
may commit him to prison as often as may be necessary to compel him to do what is
required of him.
[13.1.7]
(5) Any person committed to prison under this section may apply to the court for his
discharge from custody and the court may order his discharge if it finds that he was
wrongfully committed to prison or is being wrongfully detained.
[13.1.7]
(6) In connection with the apprehension of a person or with the committal of a person to
prison under this section, the officer who issued the warrant of apprehension or committal to
prison shall enjoy the same immunity which is enjoyed by a judicial officer in connection with
any act performed by him in the exercise of his functions.
[13.1.7]
67 Steps to be taken on suspicion of an offence
(1) If it appears from any statement made at an interrogation under section sixty-five that
there are reasonable grounds for suspecting that any person has committed any offence the
Master shall transmit the said statement, or a certified copy thereof, and all necessary
documents to the Attorney-General in whose area of jurisdiction the interrogation was held
or the offence is suspected to have been committed, to enable him to determine whether
any criminal proceedings shall be instituted in the matter.
[13.1.8]
[Sub-s. (1) amended by s. 19 of Act 16 of 1943 and substituted by s. 22 of Act 99 of 1965.]
(2) When any such statement has been made at a meeting at which an officer other than
the Master presided, the presiding officer, when transmitting the record of the proceedings
to the Master, in terms of subsection (3) of section thirty-nine, shall direct the attention of
the Master to what appears to him to be reasonable grounds for suspecting that the
insolvent has been guilty of a contravention of this Act.
(3) For the purposes of this section and sections sixty-four and sixty-five, a person who
was, before the sequestration of an estate, an executor, curator or administrator of that
estate, shall after the sequestration of that estate, be deemed to be an insolvent in relation
to that estate.
68 Presumption as to record of proceedings and validity of acts at meetings of
creditors
(1) Any record purporting to be a record of any proceedings at a meeting of the creditors
of an insolvent estate held under this Act and purporting to have been signed by a person
describing himself as Master, magistrate or other presiding officer shall, upon its mere
production by any person, be received as prima facie evidence of the proceedings recorded
therein.
[22.5.3]
(2) Unless the contrary is proved, it shall be presumed that any meeting, of the
proceedings whereat there was kept and signed such a record as is mentioned in subsection
(1), was duly convened and held and that all acts performed thereat were validly performed.
[9.1.5(iii)]
Page 382
69 Trustee must take charge of property of estate

[11.1]
(1) A trustee shall, as soon as possible after his appointment, but not before the deputy-
sheriff has made the inventory referred to in subsection (1) of section nineteen, take into his
possession or under his control all movable property, books and documents belonging to the
estate of which he is trustee and shall furnish the Master with a valuation of such movable
property by an appraiser appointed under any law relating to the administration of the
estates of deceased persons or by a person approved of by the Master for the purpose.
[7.2.8, 11.1]
(2) If the trustee has reason to believe that any such property, book or document is
concealed or otherwise unlawfully withheld from him, he may apply to the magistrate having
jurisdiction for a search warrant mentioned in subsection (3).
[11.1]
(3) If it appears to a magistrate to whom such application is made, from a statement
made upon oath, that there are reasonable grounds for suspecting that any property, book
or document belonging to an insolvent estate is concealed upon any person, or at any place
or upon or in any vehicle or vessel or receptacle of whatever nature, or is otherwise
unlawfully withheld from the trustee concerned, within the area of the magistrate’s
jurisdiction, he may issue a warrant to search for and take possession of that property, book
or document.
[11.1]
(4) Such a warrant shall be executed in a like manner as a warrant to search for stolen
property, and the person executing the warrant shall deliver any article seized thereunder to
the trustee.
[11.1]
70 Banking accounts and investments
[2.4.2]
(1) The trustee of an insolvent estate -
(a) shall open an account from which amounts are withdrawable by cheque, in the
name of the estate with a banking institution within the Republic, and shall
deposit therein to the credit of the estate from time to time all sums received by
him on behalf of the estate;
[11.6]
(b) may open a savings account in the name of the estate with a banking institution
or a building society within the Republic, and may transfer thereto moneys
deposited in the account referred to in paragraph (a) and not immediately
required for the payment of any claim against the estate;
[11.6]
(c) may place moneys deposited in the account referred to in paragraph (a) and not
immediately required for the payment of any claim against the estate, on
interest-bearing deposit with a banking institution or building society within the
Republic.
[11.6]
(2) Whenever required by the Master to do so, the trustee shall in writing notify the
Master of the banking institution or building society and the office, branch office or agency
thereof with which he has opened an account referred to in subsection (1) and furnish the
Master with a bank statement or other sufficient evidence of the state of the account.
[11.6]
Page 383
(3) A trustee referred to in subsection (2) shall not transfer any account so referred to
from any such office, branch office or agency to any other such office, branch office or
agency except after written notice to the Master.
[11.6]
(4) All cheques or orders drawn upon any such account shall contain the name of the
payee and the cause of payment and shall be drawn to order and be signed by every trustee
or his duly authorized agent.
[11.6]
(5) The Master and any surety for the trustee, or any person authorized by such surety,
shall have the same right to information in regard to that account as the trustee himself
possesses, and may examine all vouchers in relation thereto, whether in the hands of the
banking institution or building society or of the trustee.
[11.6]
(6) The Master may, after notice to the trustee, in writing direct the manager of any
office, branch office or agency with which an account referred to in subsection (1) has been
opened, to pay over into the Guardians’ Fund all moneys standing to the credit of that
account at the time of the receipt, by the said manager, of that direction, and all moneys
which may thereafter be paid into that account, and the said manager shall carry out that
direction.
[11.6]
71 Record of all receipts

(1) Immediately after his appointment the trustee of an insolvent estate shall open a book
wherein he shall enter as soon as possible a statement of all moneys, goods, books,
accounts and other documents received by him on behalf of the estate.
[11.3]
(2) The Master may at any time direct the trustee in writing to produce the said book for
inspection and every creditor who has proved his claim against the estate, and, if the Master
so orders, every person claiming to be a creditor or a surety for the trustee may inspect the
said book at all reasonable times.
[11.3]
72 Unlawful retention of moneys or use of property by trustee
[10.2.1]
(1) A trustee who, without lawful cause, retains any money exceeding twenty pounds
belonging to the estate of which he is trustee, or knowingly permits his co-trustee to retain
such a sum of money longer than the earliest day after its receipt on which it was possible
for him or his co-trustee to pay that money into a bank, or who uses or knowingly permits
his co-trustee to use any property of the estate except for the benefit of the estate, shall, in
addition to any other penalty to which he may be liable, be liable to pay into the estate an
amount equal to double the amount so retained or double the value of the property so used.
[11.6]
(2) The amount which a trustee is so liable to pay may be deducted from any claim which
the said trustee may have against the estate in question or may be recovered from him by
action in a court of law at the instance of his co-trustee, the Master or any creditor of the
estate who has proved his claim.
(3) A person whose estate is sequestrated while he is, in terms or subsection (1) indebted
to an estate of which he was trustee for any sum of money which he misappropriated from
that estate, shall be for ever incapable of holding the office of trustee, provisional trustee,
liquidator, curator dative, tutor dative, curator bonis, or executor dative.
Page 384
73 Trustee may obtain legal assistance

(1) Subject to the provisions of this section and section 53(4), the trustee of an insolvent
estate may with the prior written authorization of the creditors engage the services of any
attorney or counsel to perform the legal work specified in the authorization on behalf of the
estate: Provided that the trustee-
[11.8]
(a) if he or she is unable to obtain the prior written authorization of the creditors due
to the urgency of the matter or the number of creditors involved, may with the
prior written authorization of the Master engage the services of any attorney or
counsel to perform the legal work specified in the authorization on behalf of the
estate; or
[11.8]
(b) if it is not likely that there will be any surplus after the distribution of the estate,
may at any time before the submission of his or her accounts obtain written
authorization from the creditors for any legal work performed by any attorney or
counsel,
[11.8]
and all costs incurred by the trustee, including any costs awarded against the estate in legal
proceedings instituted on behalf of or against the estate, in so far as such costs result from
any steps taken by the trustee under this subsection, shall be included in the cost of the
sequestration of the estate.
[11.8]
(2) Subject to the provisions of subsection (3), costs incurred under this section, except
costs awarded against the estate in legal proceedings, shall not be subject to taxation by the
taxing master of the court if the trustee has entered into any written agreement in terms of
which the fees of any attorney or counsel will be determined in accordance with a specific
tariff: Provided that no contingency fees agreement referred to in section 2 (1) of the
Contingency Fees Act, 1997 (Act 66 of 1997), shall be entered into without the express prior
written authorization of the creditors.
[11.8]
(3) If -
(a) the trustee has not entered into an agreement under subsection (2); or
(b) there is any dispute as to the fees payable in terms of such an agreement,
the costs shall be taxed by the taxing master of the High Court having jurisdiction or, where
the costs are not subject to taxation by the said taxing master, such costs shall be assessed
by the law society or bar council concerned or, where the counsel concerned is not a
member of any bar council, by the body or person designated under section 5 (1) of the
Contingency Fees Act, 1997.
(4) No bill of costs based upon an agreement entered into under subsection (2) shall be
accepted as cost of the sequestration of the estate, unless such bill is accompanied by a
declaration under oath or affirmation by the trustee stating -
(a) that he or she had been duly authorized by either the creditors or the Master, as
the case may be, to enter into such an agreement;
(b) that any legal work specified in such bill has been performed to the best of his or
her knowledge and belief;
(c) that any disbursements specified in such bill have been made to the best of his or
her knowledge and belief; and
(d) that, to the best of his or her knowledge and belief, the attorney or counsel
concerned has not overreached him or her.
(5) Notwithstanding anything to the contrary contained in this Act, the Master may
disallow any costs incurred under this section if the Master is of the opinion that any
Page 385
such costs are incorrect or improper or that the trustee acted in bad faith, negligently or
unreasonably in incurring any such costs.
[11.8]
[S. 73 amended by s. 20 of Act 16 of 1943, by s. 24 of Act 99 of 1965, by s. 1 of Act 78 of 1980
and substituted by s. 1 of Act 34 of 1998.]
74 Improper advising or conduct of legal proceedings

If it appears to the court that any attorney or counsel has, with intent to benefit himself,
improperly advised the institution, defence or conducting of legal proceedings by or against
an insolvent estate or has incurred any unnecessary expense therein, the court may order
the whole or part of the expense thereby incurred to be borne by that attorney or counsel
personally.
75 Legal proceedings against estate
[26.4]
(1) Any civil legal proceedings instituted against a debtor before the sequestration of his
estate shall lapse upon the expiration of a period of three weeks as from the date of the first
meeting of the creditors of that estate, unless the person who instituted those proceedings
gave notice, within that period, to the trustee of that estate, or if no trustee has been
appointed, to the Master, that he intends to continue those proceedings, and after the
expiration of a period of three weeks as from the date of such notice, prosecutes those
proceedings with reasonable expedition: Provided that the court in which the proceedings
are pending may permit the said person (on such conditions as it may think fit to impose) to
continue those proceedings even though he failed to give such notice within the said period,
if it finds that there was a reasonable excuse for such failure.
[7.3]
(2) After the confirmation, by the Master, of any trustee’s account in an insolvent estate in
terms of section one hundred and twelve, no person shall institute any legal proceedings
against that estate in respect of any liability which arose before its sequestration: Provided
that the court in which it is sought to institute proceedings may, on such conditions as it
may think fit to impose, but subject to the provisions of the said section, permit the
institution of such proceedings after the said confirmation, if it finds that there was a
reasonable excuse for the delay in instituting such proceedings.
[9.2.3(viii)]
76 Continuance of pending legal proceedings by surviving or new trustee
(1) Whenever a trustee of an insolvent estate has vacated his office or has been removed
from office or has resigned or died, no legal proceedings previously instituted, in which the
said estate is involved, shall lapse merely by reason of the vacating, removal, resignation or
death.
(2) The court in which any such proceedings are pending may, upon receiving notice of
the vacating, removal, resignation or death, allow the name of the surviving or new trustee
to be substituted for the name of the former, and the proceedings shall thereupon continue
as if the surviving or new trustee had originally represented the estate in those proceedings.
Page 386
77 Recovery of debts due to estate

[7.1, 11.2]
A trustee shall, in the notification of his appointment in the Gazette, in terms of
subsection (3) of section fifty-six, call upon all persons indebted to the estate of which he is
trustee to pay their debts within a period and at a place mentioned in that notice, and if any
such person fails to do so, the trustee shall forthwith recover payment from him, if need be
by legal proceedings.
78 Extension of time for payment or compounding of debts due to estate, and
arbitration
(1) The trustee may accept from a debtor of the insolvent estate who is unable to pay his
or her debt in full, any reasonable part of the debt in discharge of the whole debt or grant
any debtor of the estate an extension of time for the payment of his or her debt in so far as
this is compatible with section 91: Provided that if the debt exceeds R2 000, the trustee
shall not accept a part of the debt in discharge of the whole debt, unless he or she has been
authorised thereto by the creditors of the estate, or if no creditor has proved a claim against
the estate, by the Master.
[11.2]
[Sub-s. (1) amended by s. 9 of Act 101 of 1983 and substituted by s. 21 (1) of Act 20 of 2001.]
(2) If authorized thereto by the creditors, or if no creditor has proved a claim against the
estate, by the Master, the trustee may submit to the determination of arbitrators any
dispute concerning the estate or any claim or demand upon the estate, when the opposite
party consents to arbitration.
[11.8]
(3) If authorized thereto by the creditors or if no creditor has proved a claim against the
estate, by the Master, the trustee may compromise or admit any claim against the estate,
whether liquidated or unliquidated if proof thereof has been duly tendered at a meeting of
creditors. When a claim has been so compromised or admitted, or when it has been settled
by a judgment of a court, it shall be deemed to have been proved and admitted against the
estate in the manner set forth in section forty-four, unless the creditor informs the trustee in
writing within seven days of the compromise or admission or judgment that he abandons his
claim: Provided that the preceding provisions of this subsection shall not debar the trustee
from appealing against such judgment, if authorized thereto by the creditors.
[9.2.3(viii)]
79 Subsistence allowance for insolvent and family

[11.1]
At any time before the second meeting of creditors the trustee may, with the consent of
the Master, allow the insolvent such moderate sum of money or such moderate quantity of
goods out of the estate as may appear to the trustee to be necessary for the support of the
insolvent and his dependants.
80 Continuation of insolvent’s business
(1) A trustee shall not carry on the business of the insolvent concerned or any part
thereof unless authorized thereto by the creditors of the insolvent’s estate or, in the absence
of instructions from the creditors, by the Master. Such authorization may be given by the
Master at any time, whether before or after the second meeting of creditors.
[11.3]
Page 387

(2) If the trustee is authorized to carry on any such business, he shall, unless the
creditors have otherwise directed him, purchase for cash only and only out of the takings of
that business any goods which he may require for that business.
[11.3]
80bis Sale of movable or immovable property on authorization of Master
(1) At any time before the second meeting of creditors the trustee shall, if satisfied that
any movable or immovable property of the estate ought forthwith to be sold, recommend to
the Master in writing accordingly, stating his reasons for such recommendation.
[15.1.5]
(2) The Master may thereupon authorize the sale of such property, or of any portion
thereof, on such conditions and in such manner as he may direct: Provided that, if the
Master has notice that such property or a portion thereof is subject to a right of preference,
he shall not authorize the sale of such property or such portion, unless the person entitled to
such right of preference has given his consent thereto in writing or the trustee has
guaranteed that person against loss by such sale.
[15.1.5]
[S. 80bis inserted by s. 23 of Act 16 of 1943 and substituted by s. 10 of Act 101 of 1983.]
81 Trustees report to creditors

[7.2.3(i)]
(1) A trustee shall investigate the affairs and transactions of the insolvent concerned
before the sequestration of his estate and shall, at the second meeting or, with the written
permission of the Master obtained before the second meeting, at an adjourned second
meeting of the creditors of that estate, or, if an offer of composition has been accepted by
creditors in terms of section one hundred and nineteen, within one month after the
acceptance of such offer of composition, submit a full written report on those affairs and
transactions and on any matter of importance relating to the insolvent or the estate, and
more especially in regard to -
[11.3, 11.7, 18.4.4]
(a) the assets and liabilities of the estate;
[11.3, 11.7, 18.4.4]
(b) the cause of the debtor’s insolvency;
[11.3, 11.7, 18.4.4]
(c) the books relating to the insolvent’s affairs, and the question whether the
insolvent appears to have kept a proper record of his transactions, and if not, in
what respect the record is insufficient, defective or incorrect;
[11.3, 11.7, 18.4.4]
(d) the question whether the insolvent appears to have contravened this Act or to
have committed any other offence;
[11.3, 11.7, 18.4.4]
(e) any allowance he has made to the insolvent in terms of section seventy-nine and
the reasons therefor;
[11.3, 11.7, 18.4.4]
(f)
any business which he may have been carrying on behalf of the estate, any
goods he may have purchased for that business, and the result of carrying on
that business;
[11.3, 11.7, 18.4.4]
(g) any legal proceedings instituted by or against the insolvent which were
suspended by the sequestration of his estate which may be pending or
threatened against the estate;
[11.3, 11.7, 18.4.4]
(h) any matter mentioned in section thirty-five or thirty-seven;
[11.3, 11.7, 18.4.4]
Page 388
(i) any matter in regard to the administration or realization of the estate requiring
the direction of the creditors.
[11.3, 11.7, 18.4.4]
(1)bis(a) The trustee shall, at least fourteen days before the date specified in the notice in
the Gazette for the holding of the meeting at which the report referred to in subsection (1) is
to be submitted, send by registered post to each creditor of the estate whose name and
address is known to him a copy of such report and of the inventory transmitted to him by
the deputy sheriff under section nineteen and of the valuation furnished by him to the
Master under section sixty-nine and shall submit therewith any recommendation in respect
of any resolution or direction which in his opinion ought to be passed or given at such
meeting.
[11.7]
(b) The trustee shall at least twenty-four hours before the time advertised for the
commencement of the meeting referred to in paragraph (a) submit to the officer who is to
preside at that meeting an affidavit setting out the names and addresses of the creditors to
whom copies of the report, inventory and valuation have been sent in terms of paragraph
(a) and containing full particulars of each resolution and direction recommended by him to
such creditors under the said paragraph.
[11.7]
[Sub-s. (1)bis inserted by s. 25 (b) of Act 99 of 1965.]
(2) For the purpose of any investigation mentioned in subsection (1) the Commissioner for
Inland Revenue and the officers under him shall (notwithstanding the provisions of the law
relating to income tax) permit a trustee to inspect any return rendered to the Commissioner
by or on behalf of the insolvent in question in connection with income tax, and shall permit
the trustee to make copies of any such return. At the request of the trustee the said
Commissioner or any officer under him who is in charge of any such return shall certify as
correct any such copy which is correct, and if any entry in such return is relevant in any
proceedings, whether civil or criminal, in which the insolvent estate or the insolvent is
involved, that return or a copy thereof, purporting to have been certified as aforesaid, shall
be admissible in evidence in those proceedings, on its mere production by any person and
any such certified copy shall have the same force and effect as the original return.
[11.3, 22.5.6]
(3) (a) The creditors may, at the meeting in question, direct what action shall be taken by
the trustee in respect of any matter reported to them under paragraph (e), (f), (g), (h) or (i)
of subsection (1).
[11.7]
(b) If no directions have been given by the creditors at the second meeting of
creditors, any resolution or direction alleged in the affidavit referred to in paragraph (a) of
subsection (1)bis to have been recommended to the creditors of the estate and which could
lawfully have been passed or given by the creditors at such meeting shall, if the Master so
approves, be deemed to have been passed or given, as the case may be, by the creditors at
such meeting.
[11.7]
(c) Subject to the provisions of this Act, the Master may, if no directions have been
given by the creditors at the second meeting of creditors, in addition to any resolution or
direction approved of by him under paragraph (b) or if no such resolution or direction has
been so approved of, give such directions relating to any matter reported to the creditors
under subsection (1) or to the administration or realization of the estate as he thinks fit.
[11.7]
Page 389
(d) Notwithstanding the provisions of subsection (3) of section fifty-three, any

resolution or direction approved under paragraph (b) and any direction given by the Master
under paragraph (c) shall be binding upon the trustee.
(4) The report referred to in subsection (1) shall contain full particulars of all the facts
relating to any alleged contravention of this Act by the insolvent or the alleged commission
by him of any offence reported in terms of paragraph (d) of that subsection and the trustee
shall furnish such further information in regard thereto as the Master or the Attorney-
General may require.
[11.7]
82 Sale of property after second meeting and manner of sale

(1) Subject to the provisions of sections eighty-three and ninety the trustee of an
insolvent estate shall, as soon as he is authorized to do so at the second meeting of the
creditors of that estate, sell all the property in that estate in such manner and upon such
conditions as the creditors may direct: Provided that if any rights acquired from the State
under a lease, licence, purchase, or allotment of land is an asset in that estate, the trustee
shall, in his administration of the estate, act in accordance with those provisions (if any)
which by the law under which the rights were acquired, are expressed to apply in the event
of the sequestration of the estate of the person who acquired those rights: Provided that if
the creditors have not prior to the final closing of the second meeting of creditors of that
estate given any directions the trustee shall sell the property by public auction or public
tender. A sale by public auction or public tender shall be after notice in the Gazette and after
such other notices as the Master may direct and in the absence of directions from creditors
as to the conditions of sale, upon such conditions as the Master may direct.
[15.1.1, 15.1.2, 15.2.2]
(2) When the sale is by public tender, every tenderer shall transmit his tender in duplicate
in a sealed envelope to the Master, or if the Master has so directed, to a magistrate specified
by him. The Master or such magistrate shall keep each tender unopened until the expiry of
the period for the lodging of tenders. He shall then open the sealed envelopes and, in the
case of the Master, file one duplicate of each tender or, in the case of the magistrate,
transmit one duplicate of each tender to the Master. The Master or the magistrate (as the
case may be) shall forthwith transmit the other duplicate of each tender to the trustee. The
Trustee or his representative shall have the right to be present when the Master or the
magistrate opens the tenders.
[15.1.2]
(3) and (4) . . .
[Sub-ss. (3) and (4) deleted by s. 26 (a) of Act 99 of 1965.]
(5) After the opening of the tenders no further offer for the property in question shall be
considered and unless the creditors have otherwise directed, or if they have given no
directions, unless the Master has otherwise directed, the trustee shall accept the best tender
or reject all the tenders and sell the property by public auction.
[15.1.2]
(6) From the sale of the movable property shall be excepted the wearing apparel and
bedding of the insolvent and the whole or such part of his household furniture, and tools and
other essential means of subsistence as the creditors, or if no creditor has proved a claim
against the estate, as the Master may determine and the insolvent shall be
Page 390
allowed to retain, for his own use any property so excepted from the sale.
[3.1.3, 5.3.1, 15intro]
(7) The trustee or an auctioneer employed to sell property of the estate in question, or
the trustee’s or the auctioneer’s spouse, partner, employer, employee or agent shall not
acquire any property of the estate unless the acquisition is confirmed by an order of the
court.
[15.1.4]
(8) If any person other than a person mentioned in subsection (7) has purchased in good
faith from an insolvent estate any property which was sold to him in contravention of this
section, or if any person in good faith and for value acquired from a person mentioned in
subsection (7) any property which the last mentioned person acquired from an insolvent
estate in contravention of that subsection, the purchase or other acquisition shall
nevertheless be valid, but the person who sold or otherwise disposed of the property shall be
liable to make good to the estate twice the amount of the loss which the estate may have
sustained as a result of the dealing with the property in contravention of this section.
[15.1.3, 15.1.4]
83 Realization of securities for claims
[9.2.3(i), 9.3.1, 11.1, 15.2.4, 15.2.4(iv), 21.2]
(1) A creditor of an insolvent estate who holds as security for his claim any movable
property shall, before the second meeting of the creditors of that estate, give notice in
writing of that fact to the Master, and to the trustee if one has been appointed.
[15.2.4(i)]
(2) If such property consists of a marketable security, a bill of exchange or a financial
instrument as defined in section 1 of the Financial Markets Control Act, 1989 (Act 55 of
1989), the creditors may, after giving the notice mentioned in subsection (1) and before the
second meeting of creditors, realize the property in the manner and on the conditions
mentioned in subsection (8).
[15.2.4(ii)]
(3) If such property does not consist of a marketable security or a bill of exchange, the
trustee may, within seven days as from the receipt of the notice mentioned in subsection (1)
or within seven days as from the date upon which the certificate of appointment issued by
the Master in terms of subsection (1) of section eighteen or subsection (2) of section fifty-six
reached him, whichever be the later, take over the property from the creditor at a value
agreed upon between the trustee and the creditor or at the full amount of the creditor’s
claim, and if the trustee does not so take over the property the creditor may, after the
expiration of the said period but before the said meeting, realize the property in the manner
and on the conditions mentioned in subsection (8).
[15.2.4(ii)]
(4) If no trustee has been appointed before the said meeting, the creditor may, with the
permission in writing of the Master and before the said meeting, realize in manner and on
the conditions mentioned in subsection (8) any such property which he is not entitled to
realize in terms of subsection (2).
(5) The creditor shall, as soon as possible after he has realized such property, prove in
terms of section forty-four the claim thereby secured and he shall attach to the affidavit
submitted in proof of his claim a statement of the proceeds of the realization and of the facts
on which he relies for his preference.
[9.2.3(i), 15.2.4(ii)]
(6) If he has not so realized such property before the second meeting of creditors,
Page 391
he shall as soon as possible after the commencement of that meeting deliver the property to
the trustee, for the benefit of the insolvent estate and if the creditor has not delivered the
said property to the trustee within a period of three days as from the commencement of the
said meeting the trustee may demand from him delivery of such property. If the creditor
fails to comply with such demand of the trustee, the Master, at the request of the trustee
and after notice to the creditor shall direct the deputy-sheriff within whose area of
jurisdiction the property is situate to attach the property and to deliver it to the trustee, and
in that case the creditor shall be liable for the deputy-sheriff’s costs, as taxed and allowed by
the Master. If those costs cannot be recovered from the creditor, they shall be paid out of
the estate as part of the costs of the sequestration.
[15.2.4(iii), 15.2.4(iv)]
(7) When the trustee has received the property mentioned in subsection (6), the said
creditor may prove his claim and place a value upon the said property in terms of subsection
(4) of section forty-four.
[15.2.4(iii)]
(8) The creditor may realize such property in the manner and on the conditions following,
that is to say-
[15.2.4(iv)]
(a) if it is –
[15.2.4(ii), 15.2.4(iv)]
(i) any property of a class ordinarily sold through a stockbroker as defined in
section 1 of the Stock Exchanges Control Act, 1985 (Act 1 of 1985), the
creditor may, subject to the provisions of the said Act and (where
applicable) the rules referred to in section 12 thereof, forthwith sell it
through a stockbroker, or if the creditor is a stockbroker, also to another
stockbroker; or
(ii) a financial instrument referred to in subsection (2), the creditor may, subject
to the provisions of the Financial Markets Control Act, 1989, and rules
referred to in section 17 thereof, forthwith sell it through a financial
instrument trader as defined in section 1 of the said Act, or, if the creditor is
a financial instrument trader or financial instrument principal as defined in
section 1 of the said Act, also to another financial instrument trader or
financial instrument principal;
[Para. (a) substituted by s. 30 (b) of Act 54 of 1991.]
(b) if it is a bill of exchange, the creditor may realize it in any manner approved of by
the trustee or by the Master;
[15.2.4(ii), 15.2.4(iv)]
(c) if it consists of a right of action, the creditor shall not realize it except with the
approval of the trustee or of the Master;
[15.2.4(ii), 15.2.4(iv)]
(d) if it is any other property, the creditor may sell it by public auction after affording
the trustee a reasonable opportunity to inspect it and after giving such notice of
the time and place of the sale as the trustee directed.
[15.2.4(ii), 15.2.4(iv)]
(9) As soon as the trustee has directed a creditor in terms of paragraph (d) of subsection
(8) to give notice of a sale by public auction, the trustee shall give notice in writing to all the
other creditors of the estate in question of the time and place of the proposed sale.
[15.2.4(ii), 15.2.4(iv)]
(10) Whenever a creditor has realized his security as hereinbefore provided he shall
forthwith pay the net proceeds of the realization to the trustee, or if there is no trustee, to
the Master and thereafter the creditor shall be entitled to payment, out of such proceeds, of
his preferent claim if such claim was proved and admitted as provided by section forty-four
and the trustee or the Master is satisfied that the claim was in fact secured by the property
so realized. If the trustee disputes the preference, the creditor may either lay
Page 392
before the Master an objection under section one hundred and eleven to the trustee’s
account, or apply to court, after notice or motion to the trustee, for an order compelling the
trustee to pay him forthwith. Upon such application the court may make such order as to it
seems just.
[9.2.3(i), 15.2.4(ii), 15.2.4(iv)]
(11) If a creditor has valued his security when proving his claim, the trustee, if authorized
by the creditors, may, unless the creditor has realized his security in terms of subsection (2)
or (3), within three months as from the date of his appointment or as from the date of the
proof of the claim (whichever is the later) take over the property (whether movable or
immovable) which constitutes the security at the value placed thereon by the creditor when
his claim was proved: Provided that if two or more creditors have a pledge or special
mortgage of the same property, a creditor who has valued his security shall be deemed to
have valued, and the trustee shall be entitled to take over, only the preferent rights of the
creditor in respect of the property, and not the property itself. If the trustee does not, within
that period, take over the said property or security he shall realize it for the benefit of all
creditors whose claims are secured thereby, according to their respective rights.
[15.2.4(iii), 15.2.5]
[Sub-s. (11) amended by s. 24 (a) of Act 16 of 1943 and substituted by s. 27 of Act 99 of 1965.]
(12) If the claim of a secured creditor exceeds the sum payable to him in respect of his
security he shall be entitled to rank against the estate in respect of the excess, as an
unsecured creditor, and if the net proceeds of any such property exceed all claims secured
thereby the balance, after payment of those claims, shall be added to the other free residue
(if any) in the estate in question.
[16.3.2(viii), 17.1.4(i)]
(13) The preceding provisions of this section shall apply mutatis mutandis in respect of
any creditor for value of a solvent spouse mentioned in section twenty-one, who holds as
security for his claim against that spouse any movable property belonging to that spouse.
[15.3]
84 Special provisions in case of goods delivered to a debtor in terms of an

instalment agreement
(1) If any property was delivered to a person (hereinafter referred to as the debtor) under
a transaction that is an instalment agreement contemplated in paragraph (a), (b), and (c) (i)
of the definition of ‘instalment agreement’ set out in section 1 of the National Credit Act,
2005 (Act 34 of 2005), such a transaction shall be regarded on the sequestration of the
debtor’s estate as creating in favour of the other party to the transaction (hereinafter
referred to as the creditor) a hypothec over that property whereby the amount still due to
him under the transaction is secured. The trustee of the debtor’s insolvent estate shall, if
required by the creditor, deliver the property to him, and thereupon the creditor shall be
deemed to be holding that property as security for his claim and the provisions of section 83
shall apply.
[2.3.3(i), 7.2.8, 16.2.5]
[Sub-s. (1) amended by s. 172 (2)of Act 34 of 2005.]
(2) If the debtor returned the property to the creditor within a period of one month prior
to the sequestration of the debtor’s estate, the trustee may demand that the creditor deliver
to him that property or the value thereof at the date when it was so returned to the creditor,
subject to payment to the creditor by the trustee or to deduction from the value (as the case
may be) of the difference between the total amount payable under the said
Page 393
transaction and the total amount actually paid thereunder. If the property is delivered to the
trustee the provisions of subsection (1) shall apply.
[7.2.8]
[S. 84 amended by s. 23 of Act 36 of 1942, substituted by s. 11 of Act 101 of 1983 and amended
by 172 (2) of Act 34 of 2005.]
85 Exclusion or limitation of preference under legal hypothec

(1) A tacit or legal hypothec (other than a landlord’s legal hypothec or the hypothec
mentioned in subsection (1) of section eighty-four) shall not confer any preferent right
against an insolvent estate.
(2) A landlord’s legal hypothec shall confer a preference with regard to any article subject
to that hypothec for any rent calculated in respect of any period immediately prior to and up
to the date of sequestration but not exceeding -
[16.2.2]
(a) three months, if the rent is payable monthly or at shorter intervals than one
month;
[16.2.2]
(b) six months, if the rent is payable at intervals exceeding one month but not
exceeding three months;
[16.2.2]
(c) nine months, if the rent is payable at intervals exceeding three months but not
exceeding six months;
[16.2.2]
(d) fifteen months in any other case.
[16.2.2]
86 Effect of general bond and general clause

No general mortgage bond registered after the thirty-first day of December, 1916, shall
confer any preference in respect of immovable property, and no general clause in a
mortgage bond hypothecating immovable property registered after the said date shall confer
any preference in respect of any property: Provided that the preceding provisions of this
section shall not affect any preference conferred by a general clause in any mortgage bond
passed before the commencement of this Act by a widower or widow in favour of a Master,
for the purpose of securing the payment to his or her child of any sum of money due to the
child from the estate of the widower’s or widow’s deceased spouse.
87 Ranking of mortgages for future debts

Priority under any mortgage bond to secure the payment of future debts shall depend on
the date of the registration of that mortgage bond, and not on the date upon which any such
debt comes into existence.
88 Certain mortgages are invalid
[16.2.1]
A mortgage bond, other than a kustingbrief, whether special or general passed for the
purpose of securing the payment of a debt not previously secured, which was incurred more
than two months prior to the lodging of the bond with the registrar of deeds concerned for
registration or for the purpose of securing the payment of a debt incurred in novation of or
substitution for any such first-mentioned debt, shall not confer any preference if the estate
of the mortgage debtor is sequestrated within a period of six
Page 394
months after such lodging: Provided that a mortgage bond shall be deemed not to have
been lodged as aforesaid, if it was withdrawn from registration.
89 Costs to which securities are subject
[16.3.1(i), 21.2]
(1) The cost of maintaining, conserving and realizing any property shall be paid out of the
proceeds of that property, if sufficient and if insufficient and that property is subject to a
special mortgage, landlord’s legal hypothec, pledge, or right of retention the deficiency shall
be paid by those creditors, pro rata, who have proved their claims and who would have been
entitled, in priority to other persons, to payment of their claims out of those proceeds if they
had been sufficient to cover the said cost and those claims. The trustee’s remuneration in
respect of any such property and a proportionate share of the costs incurred by the trustee
in giving security for his proper administration of the estate, calculated on the proceeds of
the sale of the property, a proportionate share of the Master’s fees, and if the property is
immovable, any tax as defined in subsection (5) which is or will become due thereon in
respect of any period not exceeding two years immediately preceding the date of the
sequestration of the estate in question and in respect of the period from that date to the
date of the transfer of that property by the trustee of that estate, with any interest or
penalty which may be due on the said tax in respect of any such period, shall form part of
the costs of realization.
[7.2.7(ii), 10.7, 16.3.1(i), 17.1.4(i)]
(2) If a secured creditor (other than a secured creditor upon whose petition the estate in
question was sequestrated) states in his affidavit submitted in support of his claim against
the estate that he relies for the satisfaction of his claim solely on the proceeds of the
property which constitutes his security, he shall not be liable for any costs of sequestration
other than the costs specified in subsection (1), and other than costs for which he may be
liable under paragraph (a) or (b) of the proviso to section one hundred and six.
[16.1.2, 16.3.2(viii), 17.1.4(i)]
(3) Any interest due on a secured claim in respect of any period not exceeding two years
immediately preceding the date of sequestration shall be likewise secured as if it were part
of the capital sum.
[9.2.4, 16.3.1(ii)]
(4) Notwithstanding the provisions of any law which prohibits the transfer of any
immovable property unless any tax as defined in subsection (5) due thereon has been paid,
that law shall not debar the trustee of an insolvent estate from transferring any immovable
property in that estate for the purpose of liquidating the estate, if he has paid the tax which
may have been due on that property in respect of the periods mentioned in subsection (1)
and no preference shall be accorded to any claim for such a tax in respect of any other
period.
(5) For the purposes of subsections (1) and (4) ‘tax’ in relation to immovable property
means any amount payable periodically in respect of that property to the State or for the
benefit of a provincial administration or to a body established by or under the authority of
any law in discharge of a liability to make such periodical payments, if that liability is an
incident of the ownership of that property.
[Sub-s. (5) amended by s. 27 of Act 16 of 1943 and by s. 1 of Act 49 of 1996.]
Page 395
90 Land Bank not affected by this Act

The provisions of this Act shall not affect the provisions of any other law which confer
powers and impose duties upon the Land and Agricultural Bank of South Africa in relation to
any property belonging to an insolvent estate.
[S. 90 amended by s. 28 of Act 16 of 1943 and by s. 1 of Act 49 of 1996.]
91 Liquidation account and plan of distribution or contribution

[11.2, 17.1, 17.2.1]
Subject to the provisions of sections one hundred and nine and one hundred and ten, a
trustee shall within a period of six months as from the date of his appointment, submit to
the Master a liquidation account and a plan of distribution of the proceeds of the property in
the estate available for payment to creditors, or, if all realizable property in the estate has
been realized and brought to account and the proceeds are insufficient to cover the costs
and charges mentioned in section ninety-seven, a plan of contribution apportioning the
liability for the deficiency among creditors who are liable to contribute.
92 Manner of framing liquidation account

(1) A liquidation account shall contain an accurate record of all moneys received and of all
moneys disbursed by the trustee otherwise than in the course of a business which he carried
on for the insolvent estate in question.
[17.1.1(i)]
(2) The record of each such receipt and disbursement shall set forth the amount and date
thereof and sufficient particulars to explain its nature.
[17.1.1(i)]
(3) The liquidation account shall be accompanied by the trustee’s bank pass book and by
vouchers in support of the record of receipts and disbursements.
[17.1.1(i)]
(4) If a liquidation account is not the final liquidation account, the trustee shall further set
forth therein -
[17.1.1(i), 17.2.1]
(a) all property still unrealized;
[17.1.1(i), 17.2.1]
(b) all outstanding debts due to the estate;
[17.1.1(i), 17.2.1]
(c) the reasons why that property has not been realized or those debts have not
been collected.
[17.1.1(i), 17.2.1]
In that event the trustee shall, from time to time and as the Master may direct, but at least
once in every six months, unless he has received an extension of time as provided in section
one hundred and nine, frame and submit to the Master periodical accounts in form and in all
other respects similar to the account mentioned in subsections (1) and (2).
[17.1.1(i), 17.2.1]
(5) If the estate of a partnership is under sequestration, separate trustees’ accounts shall
be framed in the estate of the partnership and in the estate of each member of that
partnership whose estate is under sequestration.
[17.1.1(i), 20.6]
93 Trading account
[17.1, 17.1.2]
If the trustee has carried on any business on behalf of the estate, he shall submit to the
Master, in addition to the liquidation account, a trading account containing the following data
and no others, namely -
(a) a record of the value of the stock on hand at the date of sequestration;
Page 396
(b) a record of the value of the stock on hand on the date up to which the account is
made up;
(c) the daily totals of receipts and payments in connection with the business;
(d) the result of his conduct of the business.
94 Form of plan of distribution
[17.1.3]
A plan of distribution shall show in parallel columns under separate headings -
(a) every claim or the part of every claim against the estate in question which is
secured or otherwise preferent;
(b) every claim or the part of every claim against the estate which is unsecured and
otherwise non-preferent;
(c) the amount awarded under that plan and under any previous plan of distribution
to every creditor of the estate;
(d) the deficiency in respect of each claim;
and shall make provision for the division of the proceeds of the property in the insolvent
estate in the order of preference and in the manner set forth in sections ninety-five to one
hundred and four inclusive.
95 Application of proceeds of securities
[16.3.2]
(1) The proceeds of any property which was subject to a special mortgage, landlord’s legal
hypothec, pledge or right of retention, after deduction therefrom of the costs mentioned in
subsection (1) of section eighty-nine, shall be applied in satisfying the claims secured by the
said property, in their order of preference, with interest thereon calculated in manner
provided in subsection (2) of section one hundred and three from the date of sequestration
to the date of payment, but subject to the provisions of subsection (4) of section ninety-six.
[16.3.1(ii)]
(2) If a creditor whose claim is secured by a mortgage over immovable property belonging
to the insolvent estate has not proved his claim and the trustee is not satisfied that the debt
in question has been discharged or abandoned, he shall deposit with the Master for payment
into the Guardians’ Fund the proceeds of the sale of any such property to an amount not
exceeding such capital amount of the said mortgage and such arrears of interest as the
mortgagee would have had a preferent right to claim, after deduction of an amount equal to
the costs which he would have had to pay if he had proved his claim and had stated in the
affidavit submitted in support of his claim that he relied for the satisfaction of his claim
solely on the proceeds of the sale of the said property. The amount so deposited or the part
thereof to which the former mortgagee may be entitled shall be paid to him if, within a
period of one year after confirmation in terms of section one hundred and twelve of the
distribution account under which the money is distributed, he applies therefor to the Master
and the Master is satisfied after proof of his claim, that he is entitled to the amount or part
thereof.
(3) Any amount deposited with the Master in terms of subsection (2) which has not been
paid out to the former mortgagee, as in that subsection provided, shall after the expiry of
the year mentioned in that subsection be distributed among the creditors who have proved
claims against the insolvent estate prior to the confirmation of the said distribution account,
as if the amount had, at the time of such confirmation, been available for distribution among
them.
Page 397
(4) Any creditor claiming to be entitled to share in the said distribution shall make written
application to the Master for payment of his or her share, and the Master may pay out to
such creditor or may hand the money to the trustee, if any, for distribution among the
creditors entitled thereto, or, if there is no trustee, may, in accordance with policy
determined by the Minister, appoint a trustee on such conditions as he or she may think fit
to impose for the purpose of making such distribution.
(5) Any trustee charged with the duty of making such a distribution shall submit to the
Master a supplementary plan of distribution in respect thereof, and the provisions of this Act
relating to a plan of distribution shall apply in respect of such supplementary plan.
96 Funeral and death-bed expenses
[16.1.3, 16.3.2]
(1) Any free residue of an insolvent estate shall be applied in the first place in defraying
the expenses of the funeral of the insolvent, if he died before the trustee’s first plan of
distribution was submitted to the Master in terms of section 91, and the expenses of the
funeral of the insolvent’s wife or minor child, if those expenses were incurred within the
period of three months immediately preceding the sequestration of the insolvent’s estate,
but the amount payable under this subsection shall not exceed R300 in all.
[16.3.2(i)]
[Sub-s. (1) substituted by s. 29 of Act 99 of 1965 and by s. 12 (a) of Act 101 of 1983.]
(2) Thereafter any balance of the free residue shall be applied in defraying the death-bed
expenses of the insolvent if they were incurred before the trustee’s first plan of distribution
was submitted to the Master in terms of section 91, and the death-bed expenses of the
debtor’s wife or minor child, if those expenses were incurred within the period of three
months immediately preceding the sequestration of the insolvent’s estate, but the amount
payable under this subsection shall not exceed R300 in all.
[16.3.2(ii)]
[Sub-s. (2) substituted by s. 29 of Act 99 of 1965 and by s. 12 (b) of Act 101 of 1983.]
(3) In subsection (2) ‘death-bed expenses’ means expenses incurred for medical
attendance, nursing, medicines and medical necessaries, and claims for those expenses shall
rank paripassu and abate in equal proportion, if necessary.
[16.3.2(ii)]
[Sub-s. (3) substituted by s. 29 of Act 99 of 1965 and by s. 1 of Act 122 of 1998.]
(4) If the free residue of the estate is insufficient to defray the expenses mentioned in
subsections (1) and (2), the deficiency shall be defrayed out of the proceeds of any other
assets of the estate in proportion to their value.
[16.3.1(i)]
97 Cost of sequestration
[2.2.2, 16.1.3, 16.3.2, 17.1.4(i)]
(1) Thereafter any balance of the free residue shall be applied in defraying the costs of the
sequestration of the estate in question with the exception of the costs mentioned in
subsection (1) of section eighty-nine.
[16.3.2(iii)]
(2) The costs of the sequestration shall rank according to the following order of priority -
[16.3.2(iii)]
(a) the sheriff’s charges incurred since the sequestration;
[16.3.2(iii)]
(b) fees payable to the Master in connection with the sequestration;
[16.3.2(iii)]
(c) the following costs which shall rank paripassu and abate in equal proportions if
necessary, that is to say: the taxed costs of sequestration (as defined in
subsection
Page 398
(3), the fee mentioned in section 16(5), the remuneration of the curator bonis
and of the trustee and all other costs of administration and liquidation including
such costs incurred by the trustee in giving security for his proper administration
of the estate as the Master considers reasonable, in so far as they are not
payable by a particular creditor in terms of section 89(1), any expenses incurred
by the Master or by a presiding officer in terms of section 53(2) and the salary or
wages of any person who was engaged by the curator bonis or the trustee in
connection with the administration of the insolvent estate.
[2.4.2, 8.3, 8.4.3, 10.7, 11.3, 16.3.2(iii)]
[Para. (c) substituted by s. 2 of Act 84 of 1984.]
(3) In paragraph (c) of subsection (2) the expression ‘taxed costs of sequestration’
means the costs (as taxed by the registrar of the court) incurred in connection with the
petition of the debtor for acceptance of the surrender of his estate or of a creditor for the
sequestration of the debtor’s estate, but it does not include the costs of opposition to such a
petition, unless the court directs that they shall be included.
[2.7, 3.4]
98 Costs of execution
[16.1.3, 16.3.2]
(1) Thereafter any balance of the free residue shall be applied in defraying-
[16.3.2(iv)]
(a) the taxed fees of the sheriff or messenger in connection with any execution upon
any property of the insolvent and in connection with any proceedings which
resulted in that execution; and
[16.3.2(iv)]
(b) any other taxed costs in those proceedings not exceeding a sum of R50,
[16.3.2(iv)]
[Para. (b) substituted by s. 13 of Act 101 of 1983.]
to a total amount not exceeding the proceeds of that property if that property was still under
attachment or if the proceeds of the sale in execution of that property were still in the hands
of the sheriff or messenger at the time of the sequestration of the insolvent’s estate.
[16.3.2(iv)]
(2) The attachment of any property in execution of any judgment shall, after the
sequestration of the estate of the judgment debtor, not have the effect of conferring upon
the judgment creditor, any other preference than the preference provided for in subsection
(1).
[16.3.2(iv)]
98A Salaries or wages of former employees of insolvent
[16.1.3, 16.3.2(v), 25.1.5(i)]
(1) Thereafter any balance of the free residue shall be applied in paying-
[16.3.2(v)]
(a) to any employee who was employed by the insolvent-
[16.3.2(v)]
(i) any salary or wages, for a period not exceeding three months, due to an
employee [1] ;
[16.3.2(v)]
(ii) any payment [2] in respect of any period of leave or holiday due to the
employee which has accrued as a result of his or her employment by the
insolvent in the year of insolvency or the previous year, whether or not
payment thereof is due at the date of sequestration;
[16.3.2(v)]
(iii) any payment [3] due in respect of any other form of paid absence for a
period
Page 399
not exceeding three months prior to the date of the sequestration of the
estate; and
[16.3.2(v)]
(iv) any severance or retrenchment pay due to the employee in terms of any
law, agreement, contract, wage-regulating measure, or as a result of
termination in terms of section 38; and
[16.3.2(v)]
[Sub-para. (iv) substituted by s. 2 of Act 33 of 2002.]
(b) any contributions which were payable [4] by the insolvent, including contributions
which were payable in respect of any of his or her employees, and which were,
immediately prior to the sequestration of the estate, owing by the insolvent, in
his or her capacity as employer, to any pension, provident, medical aid, sick pay,
holiday, unemployment or training scheme or fund, or to any similar scheme or
fund.
[16.3.2(v)]
(2) (a) In order to ensure that the balance of the free residue is applied in an equitable
manner, the Minister may by notice in the Gazette determine maximum amounts which shall
be paid out in terms of subsection (1) in respect of-
[16.3.2(v)]
(i) paragraph(a), any or all the subparagraphs thereof or any single employee; and
(ii) paragraph(b) or any single scheme or fund,
[16.3.2(iv)]
and different maximum amounts may be so determined in respect of different schemes or
funds.
[16.3.2(iv)]
(b) In order to take into account subsequent fluctuations in the value of money, the
Minister may from time to time supplement, amend or withdraw the relevant maximum
amounts by like notice in the Gazette.
[16.3.2(iv)]
[Para. (b) substituted by s. 10 (a) of Act 16 of 2003.]
(c) The Minister may at any time replace a notice referred to in paragraph (a) with a
new notice issued under the said paragraph (a).
[Para. (c) substituted by s. 10 (a) of Act 16 of 2003.]
(d) The Minister shall not exercise the powers conferred upon him or her by paragraph
(a) or (c), unless he or she-
[16.3.2(v)]
(i) has caused to be published in the Gazette a draft of the proposed notice, together
with a notice inviting all interested parties to lodge with the Director-General:
Justice and Constitutional Development in writing within a period of 60 days from
the date of the publication of the notice any representations that they may wish
to make in connection with the proposed notice; and
[16.3.2(v)]
(ii) has caused to be forwarded to the National Economic, Development and Labour
Council established by section 2 (1) of the National Economic, Development and
Labour Council Act, 1994 (Act 35 of 1994), a copy of such draft.
[16.3.2(v)]
[Para. (d) substituted by s. 10 (a) of Act 16 of 2003.]
(3) An employee shall be entitled to salary, wages, leave or other payments in terms of
subsection (1) (a) even though he or she has not proved his or her claim therefor in terms of
section 44, but the trustee may require such employee to submit an affidavit in support of
his or her claim for such salary, wages, leave or payment.
[16.3.2(v)]
(4) (a) The claim referred to in subsection (1) (a) (i) shall be preferred to the claims
referred to in subsections (1) (a) (ii), (iii) and (iv) and (1) (b).
[16.3.2(v)]
Page 400
(b) The claims referred to in subsection (1) (a) (ii), (iii) and (iv) shall be preferred to
the claims referred to in subsection (1) (b) and shall rank equally and abate in equal
proportions, if necessary.
[16.3.2(v)]
(c) The claims referred to in subsection (1) (b) shall rank equally and abate in equal
proportions, if necessary.
[16.3.2(v)]
(5) For the purposes of this section -
(a) ‘employee’ means any person, excluding an independent contractor, who works
for another person and who –
(i) receives, or is entitled to receive, any salary or wages; or
(ii) in any manner assists in carrying on or in conducting the business of an
employer;
(b) ‘salary or wages’ includes all cash earnings received by the employee from the
employer;
(c) ‘unemployment fund’ does not include the unemployment insurance fund
referred to in section 6 of the Unemployment Insurance Act, 1966 (Act 30 of
1966).
(6) The Minister may, after consultation with the National Economic, Development and
Labour Council established by section 2 (1) of the National Economic, Development and
Labour Council Act, 1994, by notice in the Gazette exclude from the operation of the
provisions of this section a category of employees, schemes or funds specified in the notice-
[16.3.2(v)]
(a) in the case of employees, by reason of the particular nature of the employment
relationship between the employer and the employees [5] ;
[16.3.2(v)]
(b) in the case of employees, schemes or funds, by reason of the fact that there
exists any other type of guarantee which affords the employees, schemes or
funds protection which is equivalent to the protection as provided in this section;
or
[16.3.2(v)]
(c) in the case of schemes or funds, by reason of the fact that the sequestration of
the employer’s estate will make it impossible to achieve the objects of the
schemes or funds.
[16.3.2(v)]
[Sub-s. (6) amended by s. 10 (b) of Act 16 of 2003.]
99 Preference in regard to certain statutory obligations

[16.1.3, 16.3.2]
(1) Thereafter any balance of the free residue shall be applied in defraying -
[16.3.2(vi)]
(a) any amount which in terms of the Workmen’s Compensation Act, 1941 (Act 30 of
1941), was, immediately prior to the sequestration of the estate, due to the
Workmen’s Compensation Commissioner by the insolvent in his capacity as an
employer, in respect of any assessment, penalty or other payment, or the
compensation then due in respect of any workman, including the cost of medical
aid and any amount paid or payable in terms of section 40 (2), 44, 76 (2) or 86
(2) of that Act, and in the case of a continuing liability, also the capitalized value,
as determined by the Workmen’s Compensation Commissioner, of the pension
(irrespective of whether a lump sum is at any time paid in lieu of the whole or a
Page 401
portion of such pension in terms of section 49 of that Act), periodical payment or

allowance, as the case may be, which constitutes the liability;
[16.3.2(vi)]
(b) any amount which the insolvent –
[16.3.2(vi)]
(i) has under the provisions of section 35 (2) of the Income Tax Act, 1962 (Act
58 of 1962), deducted or withheld from any amount referred to in
section 9 (1) (b) of that Act in respect of any other person’s obligation to
pay normal tax;
[16.3.2(vi)]
(ii) has under the provisions of section 64E of that Act deducted or withheld
from any amount of interest referred to in section 64A of that Act in respect
of the non-residents tax on interest payable in respect of such amount of
interest;
[16.3.2(vi)]
(iii) is under the provisions of section 99 of the said Act required to pay in
respect of any tax due by any other person and has deducted or withheld
from any moneys, including pensions, salary, wages, remuneration and
amounts of any other nature, held by him for or due by him to such person;
[16.3.2(vi)]
[Sub-para. (iii) substituted by s. 69 of Act 85 of 1974 and by s. 3 (a) of Act 139 of 1992.]
(iv) has under the provisions of the Fourth Schedule to the said Act deducted or
withheld by way of employees’ tax from remuneration or any other amount
paid or payable by him to any other person; or
[16.3.2(vi)]
[Sub-para. (iv) substituted by s. 30 (b) of Act 90 of 1972, by s. 69 of Act 85 of 1974 and by s. 3
(a) of Act 139 of 1992.]
(v) has under the provisions of the Sixth Schedule to the said Act deducted or
withheld from any insurance benefit under any insurance policy, in respect of
the liability of any person for normal tax,
[16.3.2(vi)]
[Sub-para. (v) inserted by s. 30 (c) of Act 90 of 1972 and substituted by s. 69 of Act 85 of 1974.]
but did not pay to the Commissioner for the South African Revenue Service prior
to the sequestration of the estate, and any interest payable under that Act in
respect of such amount in respect of any period prior to the date of sequestration
of the estate;
[16.3.2(vi)]
[Para. (b) amended by s. 6 (a) of Act 69 of 2002.]
(c) any amount which in terms of the Pneumoconiosis Compensation Act, 1962 (Act
64 of 1962), was, immediately prior to the sequestration of the estate, due to the
General Council for Pneumoconiosis Compensation by the insolvent in his capacity
as an owner or a former owner of a mine, and any interest due thereon in respect
of any period prior to the date of sequestration of the estate;
[16.3.2(vi)]
(cA)
the amount of any customs, excise or sales duty or interest, fine or penalty which
in terms of the Customs and Excise Act, 1964 (Act 91 of 1964), was, immediately
prior to the sequestration of the estate, due by the insolvent;
[16.3.2(vi)]
[Para. (cA) inserted by s. 6 of Act 62 of 1973.]
(cB) any amount provided to the insolvent by the State from the National Supplies
Procurement Fund for any purpose contemplated in the National Supplies
Procurement Act, 1970 (Act 89 of 1970);
[16.3.2(vi)]
[Para. (cB) inserted by s. 9 of Act 29 of 1974.]
Page 402
(cC) the amount of any sales tax, interest, fine or penalty which in terms of the Sales
Tax Act, 1978, was, immediately prior to the sequestration of the estate, due by
the insolvent.
[16.3.2(vi)]
[Para. (cC) inserted by s. 50 of Act 103 of 1978.]
(cD) the amount of value-added tax, interest, fine or penalty which in terms of the
Value-Added Tax Act, 1991 (Act 89 of 1991), was due by the insolvent
immediately prior to the sequestration of the estate.
[16.3.2(vi)]
[Para. (cD) inserted by s. 3 (b) of Act 139 of 1992.]
(d) the amount of any appreciation contribution which in terms of the Community
Development Act, 1966 (Act 3 of 1966), was, immediately prior to the
sequestration of the estate, due to the Community Development Board by the
insolvent;
[16.3.2(vi)]
(e) any amount which in terms of the Unemployment Insurance Contributions Act,
2002 (Act 4 of 2002), was, immediately prior to the sequestration of the estate,
due to the Unemployment Insurance Fund by the insolvent in his capacity as an
employer, in respect of any contribution, penalty or other payment; and
[16.3.2(vi)]
[Para. (e) substituted by s. 6 (b) of Act 69 of 2002.]
(f) ...
[Para. (f) deleted by s. 3 of Act 122 of 1998.]
(2) The claims referred to in subsection (1) shall rank paripassu and abate in equal
proportion, if necessary.
[16.3.2(vi)]
[S. 99 amended by s. 29 of Act 16 of 1943 and substituted by s. 30 of Act 99 of 1965 and by s. 5
of Act 6 of 1972.]
100 . . .
[16.3.2]
[S. 100 amended by s. 13 of Act 32 of 1952, by s. 31 of Act 99 of 1965, by s. 14 of Act 101 of
1983 and by s. 4 of Act 139 of 1992 and repealed by s. 4 of Act 122 of 1998.]
101 Preference in regard to taxes on persons or the incomes or profits of persons

[16.1.3, 16.3.2, 16.3.2(vii)]
Thereafter any balance of the free residue shall be applied in paying -
(a) any tax on persons or the incomes or profits of persons for which the insolvent
was liable under any Act of Parliament or Ordinance of a Provincial Council in
respect of any period prior to the date of sequestration of his estate, whether or
not that tax has become payable after that date;
[Para. (a) amended by s. 1 of Act 49 of 1996.]
(a) any amount payable by the insolvent under any Act of Parliament by way of
bis interest in respect of any period prior to the date of sequestration of his estate in
respect of any tax referred to in paragraph (a);
[Para. (a)bis inserted by s. 22 of Act 6 of 1963.]
(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, the amount so referable being deemed to be a sum which bears to
the total amount due by him as tax the same ratio as his taxable income derived
from the partnership bears to his total taxable income from all sources within the
Republic.
[S. 101 substituted by s. 23 of Act 25 of 1940 and by s. 87 of Act 31 of 1941, amended by s. 30
of Act 16 of 1943 and substituted by s. 32 of Act 80 of 1961.]
Page 403
102 Preference under a general bond

[16.1.3, 16.3.2, 16.3.2(viii)]
Thereafter any balance of the free residue shall be applied in the payment of any claims
proved against the estate in question which were secured by a general mortgage bond, in
their order of preference with interest thereon calculated in manner provided in subsection
(2) of section one hundred and three.
103 Non-preferent claims
[16.3.2]
(1) Any balance of the free residue after making provision for the expenditure mentioned
in sections ninety-six to one hundred and two inclusive, shall be applied -
(a) in the payment of the unsecured or otherwise non-preferent claims proved
against the estate in question in proportion to the amount of each such claim;
[16.3.2(viii)]
(b) if the unsecured or otherwise non-preferent claims have been paid in full, in the
payment, thereafter, of interest on such claims from the date of sequestration to
the date of payment, in proportion to the amount of each such claim.
[16.3.2(viii)]
(2) The interest mentioned in subsection (1) shall be calculated at the rate of eight per
cent per annum, unless the amount of any claim bears a higher rate of interest by virtue of a
lawful stipulation in writing, when the interest on that amount shall be calculated at the
stipulated rate of interest.
[16.3.1(ii), 16.3.2(viii)]
104 Late proof of claims

[16.3.2]
(1) Subject to the provisions of section 95(2) and section 98A(3), a creditor of an
insolvent estate who has not proved a claim against that estate before the date upon which
the trustee of that estate submitted to the Master a plan of distribution in that estate, shall
not be entitled to share in the distribution of assets brought up for distribution in that plan:
Provided that the Master may, at any time before the confirmation of the said plan permit
any such creditor who has proved his claim after the said date to share in the distribution of
the said assets, if the Master is satisfied that the creditor has a reasonable excuse for the
delay in proving his claim.
[9.2.2]
(2) A creditor of an insolvent estate who proved a claim against that estate after the date
upon which the trustee submitted to the Master a plan of distribution in that estate and who
was not permitted to share in the distribution of assets under that plan, in terms of
subsection (1), shall be entitled to be awarded under any further plan of distribution
submitted to the Master after the proof of his claim, the amount which would have been
awarded to him under the previous plan of distribution, if he had proved his claim prior to
the submission of that plan to the Master: Provided that the Master is satisfied that the
creditor had a reasonable excuse for the delay in proving his claim; and provided further
that any creditor who was aware that proceedings had been instituted under section twenty-
six, twenty-nine, thirty or thirty-one and who delayed proving his claim until the court had
given judgment in those proceedings, shall not be entitled to share in the distribution of any
money or the proceeds of any property recovered as a result of such proceedings.
[9.2.2, 12.3.1]
(3) If any creditor has under subsection (1) of section 32 taken proceedings to recover the
value of property or a right under section 25(4), to set aside any disposition of or dealing
with property under section 26, 29, 30 or 31 or for the recovery of damages
Page 404
or a penalty under section 31, no creditor who was not a party to the proceedings shall
derive any benefit from any moneys or from the proceeds of any property recovered as a
result of such proceedings before the claim and costs of every creditor who was a party to
such proceedings have been paid in full.
[12.3.1]
105 Form of plan of contribution

[17.1.4(ii)]
A plan of contribution shall show in parallel columns -
(a) each claim in respect of which the claiming creditor is liable to contribute; and
(b) the amount which he is liable to contribute,
and shall make provision for all such contributions in accordance with the provisions of
section one hundred and six.
106 Contributions by creditors towards cost of sequestration when free residue
insufficient
[9.2.1, 17.1.4(i)]
Where there is no free residue in an insolvent estate or when the free residue is
insufficient to meet all the expenses, costs and charges mentioned in section ninety-seven,
all creditors who have proved claims against the estate shall be liable to make good any
deficiency, the non-preferent 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 -
(a) if 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;
[17.1.4(i)]
(b) if 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 fifty-one, and if a creditor has
withdrawn his claim within five days after the date of any resolution of creditors
he shall be deemed to have withdrawn the claim before anything was done in
pursuance of that resolution;
[9.3.5, 17.1.4(i)]
(c) if 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 paragraph (b) 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.
107 Trustee’s account to be signed and verified

A trustee shall sign every account which he submits to the Master and he shall verify by
his affidavit (which shall be free from stamp duty) that the account is a full and true account
of the administration of the estate in question up to the date of the account and that, so far
as he is aware, all the assets of the estate have been disclosed in the account.
[17.1.1(i)]
Page 405
108 Inspection of trustee’s accounts by creditors

(1) If an insolvent resided or carried on business, before the sequestration of his estate, in
a district (other than the district of Wynberg, Simonstown or Bellville in the Province of the
Cape of Good Hope) in which there is no Master’s office, the trustee of that estate shall
transmit to the magistrate of that district or, if the insolvent resided or carried on business in
a portion of that district in respect of which an additional or assistant magistrate
permanently carries out the functions of the magistrate of that district at a place other than
the seat of magistracy of that district, to such additional or assistant magistrate, a duplicate
of every account which he submitted to the Master as hereinbefore provided.
[17.5]
(2) The trustee shall, as soon as possible after he has submitted an account to the Master,
give notice in the manner prescribed by paragraphs (b) and (c) of subsection (3) of section
forty that he has so submitted such account and that the account will lie open for inspection
by the creditors of the estate at the place or places and during the period stated in the
notice.
[17.5]
(3) Every such account and every duplicate thereof transmitted to a magistrate shall be
open for the inspection by creditors of the estate in question at the office of the Master and
of such magistrate during a period of fourteen days as from the date of publication of the
said notice in the Gazette.
[17.5]
(4) A magistrate who has received a trustee’s account shall cause to be affixed in a public
place in or about his office a notice that he has received the account and that it will lie open
for inspection in his office during a period stated in that notice.
[17.5]
(5) After the expiration of the said period the magistrate shall endorse upon the account a
certificate (which shall be free from stamp duty) that the account was open in his office for
inspection as hereinbefore provided, and shall transmit the account to the Master.
[17.5]
109 Extension of period for submission of account by trustee
(1) If a trustee is unable to submit an account to the Master within the period prescribed
therefor by section 91, he shall before the expiration of such period or within the further
period as the Master may allow -
(a) submit to the Master an affidavit in which he shall state-
[17.2.3]
(i) the reasons for his inability so to submit the account concerned;
[17.2.3]
(ii) those affairs, transactions or matters of importance relating to the insolvent
or the estate as the Master may require;
[17.2.3]
(iii) the amount of money available for payment to creditors or, if there is no
free residue or the free residue is insufficient to meet all the costs referred
to in section 97, the deficiency the creditors are liable to make good;
[17.2.3]
(b) send to each creditor of the estate who proved a claim against the estate, by
registered post a copy of the affidavit referred to in paragraph (a),
[17.2.3]
and the Master may thereupon extend such period to a date determined by him.
[17.2.3, 17.3]
(2) If a trustee fails to submit an account to the Master within the period prescribed
therefor by section 91 or before the date determined under subsection (1), the Master,
Page 406
subject to the provisions of section 110, or any person having an interest in the insolvent
estate may serve a notice on the trustee in which he is required -
(a) to submit the account concerned to the Master; or
(b) if he is unable to submit such account, to submit an affidavit as contemplated in
subsection (1) to the Master and to send a copy thereof to each creditor of the
estate who proved a claim against that estate,
within a period of 14 days from the date of the notice and the Master may, if the account
concerned is not submitted and the said affidavit is submitted to him, after the expiration of
the said period of 14 days extend such period to a date determined by him.
[17.3]
(3) If the Master refuses to extend the said period under subsection (1) or (2) or does not
so extend such period within a period of 14 days as from the date on which the affidavit
referred to in subsection (1) has been submitted to him, the trustee may apply by motion to
the court (after having given the Master notice of his intention to make the application) for
an order extending the said period and the court may thereupon make such order as it
thinks fit.
[17.2.3, 17.3]
110 Compelling trustee to submit accounts

(1) If a trustee has funds in hand which, in the opinion of the Master, ought to be
distributed among the creditors of the estate in question and the trustee has not submitted
to the Master a plan for the distribution of those funds, the Master may direct him in writing
to submit to him a plan for the distribution of those funds, although the period prescribed in
section ninety-one may not have elapsed.
[17.2.2]
(2) If a trustee has failed to submit an account to the Master within the period and in the
manner hereinbefore prescribed, the Master may direct the trustee in writing to submit his
account.
(3) . . .
111 Objections to trustee’s account

(1) The insolvent or any person interested in the estate may, at any time before the
confirmation of the trustee’s account, in terms of section one hundred and twelve, lay before
the Master in writing any objection, with the reasons therefor, to that account.
[17.6]
(2) If the Master is of the opinion that any such objection is well founded or if, apart from
any objection, he is of the opinion that the account is in any respect incorrect or contains
any improper charge or that the trustee acted mala fide, negligently or unreasonably in
incurring any costs included in the account and that the account should be amended, he may
direct the trustee to amend the account or may give such other direction in connection
therewith as he may think fit: Provided that-
[17.6]
(a) any person aggrieved by any such direction of the Master or by the refusal of the
Master to sustain an objection so lodged, may apply by motion to the court within
fourteen days as from the date of the Master’s direction, or as from the date of
intimation to the objector of the Master’s refusal to sustain his objection, after
notice to the trustee, for an order to set aside the Master’s decision and the court
may thereupon confirm the account or make such order as it thinks fit; and
[17.6]
Page 407
(b) when any such direction affects the interests of a person who has not lodged an
objection with the Master, the account so amended shall again lie open for
inspection by the creditors in the manner and with the notice hereinbefore
prescribed, unless the person affected as aforesaid consents in writing to the
immediate confirmation of the account.
[17.6]
112 Confirmation of trustee’s accounts

[9.2.3(viii), 12.3.3, 17.7]
When a trustee’s account has been open to inspection by creditors as hereinbefore
prescribed and -
(a) no objection has been lodged; or
(b) an objection has been lodged and the account has been amended in accordance
with the direction of the Master and has again been open for inspection if
necessary as in paragraph (b) of subsection (2) of section one hundred and
eleven prescribed and no application has been made to the court in terms of
paragraph (a) of the said subsection (2) to set aside the Master’s decision; or
(c) an objection has been lodged but withdrawn or has not been sustained and the
objector has not applied to the court in terms of the said paragraph (a),
the Master shall confirm the account and his confirmation shall be final save as against a
person who may have been permitted by the court before any dividend has been paid under
the account, to reopen it.
113 Distribution of estate and collection of contributions from creditors
(1) Immediately after the confirmation of a trustee’s account, the trustee shall give notice
of the confirmation in the Gazette and shall state in that notice according to the
circumstances, that a dividend to creditors is in course of payment or that a contribution is
in course of collection from the creditors and that every creditor liable to contribute is
required to pay to the trustee the amount for which he is so liable.
[17.8, 17.8.2]
(2) If any contribution is payable, the trustee shall specify fully in that notice the address
at which the payment of the contribution is to be made, and shall deliver or post a copy of
the notice to every creditor liable to contribute.
[17.8.2]
(3) Immediately after the confirmation of a trustee’s account the trustee shall in
accordance therewith distribute the estate or collect from each creditor liable to contribute
the amount for which he is liable.
[17.8]
114 Trustee to produce acquittances for dividends or to pay over unpaid dividends
to Master
(1) The trustee shall without delay lodge with the Master the receipts for dividends paid to
creditors and if there is a contribution account the vouchers necessary to complete the
account: Provided that a cheque purporting to be drawn payable to a creditor in respect of
any dividend due to him and paid by the banker on whom it is drawn, may be accepted by
the Master in lieu of any such receipt.
[17.8.1]
(2) If any such dividend has at the expiration of a period of two months as from the
confirmation of the account under which it is payable, not been paid out to the creditor
Page 408
entitled thereto, the trustee shall immediately pay in the dividend to the Master who shall
deposit it in the Guardians’ Fund for account of the creditor.
[17.8.1]
(3)
[Sub-s. (3) deleted by s. 36 (b) of Act 99 of 1965.]
115 . . .
116 Surplus to be paid into Guardians’ Fund until rehabilitation of insolvent

[21.5]
(1) If after the confirmation of a final plan of distribution there is any surplus in an
insolvent estate which is not required for the payment of claims, costs, charges or interest,
the trustee shall, immediately after the confirmation of that account, pay that surplus over
to the Master, who shall deposit it in the Guardians’ Fund and after the rehabilitation of the
insolvent shall pay it out to him at his request.
(2) . . .
116bis Failure by trustee to submit account or to perform duties

[11.6]
(1) If any trustee fails to submit any account to the Master as and when required by or
under this Act, or to submit any vouchers in support of such account or to perform any other
duty imposed upon him by this Act or to comply with any reasonable demand of the Master
for information or proof required by him in connection with the liquidation or distribution of
an estate, the Master or any person having an interest in the liquidation or distribution of the
estate may, after giving the trustee not less than fourteen days’ notice, apply to the court
for an order directing the trustee to submit such account or any vouchers in support thereof
or to perform such duty or to comply with such demand.
[11intro, 17.3]
(2) The costs adjudged to the Master or to such person shall, unless otherwise ordered by
the Court, be payable by the trustee de bonispropriis.
[11intro, 17.3]
[S. 116bis inserted by s. 39 of Act 99 of 1965.]
117 Enforcement of order of court

[11.6]
(1) If a trustee has failed to comply with any order of the Court made under section one
hundred and sixteen bis, the Court may direct that any sum of money which that trustee
was ordered to pay be recovered by attachment and sale of the goods of the trustee and
may further commit him to prison for contempt of the Court.
(2) If the court has ordered a trustee to pay out of his own means the costs of any
proceedings instituted under any provision of this Act, and the person in whose favour the
order was made is unable to recover those costs from the trustee, those costs shall be paid
as part of the costs of the sequestration out of any assets of the estate in question, which
have not yet been distributed among the creditors.
118 Enforcing payment of contributions
(1) After the expiration of a period of thirty days as from the delivery or posting in
Page 409
a registered letter to any creditor of the notice mentioned in subsection (2) of section one
hundred and thirteen, the trustee may take out a writ of execution in the magistrate’s court
in which the creditor could be sued for the contribution in question against any such creditor
who, being liable to contribute under the plan of contribution, has failed to pay the amount
of his liability.
[17.8.2]
(2) Whenever a creditor liable to contribute under a plan of contribution is in the opinion
of the Master and of the trustee unable to pay the contribution for which he is liable or
whenever the trustee has incurred in connection with the recovery of any contribution any
expenses which are in the opinion of the Master and of the trustee irrecoverable, the trustee
shall as soon as practicable and in any event within such period as the Master may prescribe
therefor, frame and submit to the Master a supplementary plan of contribution wherein he
shall apportion the share of the creditor who is unable to pay or the expenses in question
among the other creditors who are in the opinion of the Master and of the trustee able to
pay.
(3) The provisions of subsection (2) shall mutatis mutandis apply whenever a creditor
liable to contribute under a first or further supplementary plan of distribution is, in the
opinion of the Master and of the trustee, unable to pay the contribution for which he is liable,
or whenever the trustee has incurred expenses in connection with the recovery of a
contribution under a first or further supplementary plan of distribution which are, in the
opinion of the Master and the trustee, irrecoverable by the trustee.
(4) A trustee may, in lieu of complying with the requirements of section one hundred and
eight in connection with any supplementary plan of contribution, furnish a copy of that plan
to every creditor liable to contribute thereunder and thereupon the provisions of subsection
(1) shall mutatis mutandis apply.
119 Composition
[18intro, 18.2, 18.3, 18.4]
(1) At any time after the first meeting of the creditors of an insolvent estate, the insolvent
may submit to the trustee of his estate a written offer of composition.
[18.2.1]
(2) If the trustee is of the opinion that the creditors will probably accept the offer of
composition, he shall as soon as possible after receipt of the offer post in a registered letter
or deliver to every creditor who has proved his claim, a copy of the offer with his report
thereon.
[18.2.1]
(3) If the trustee is of the opinion that there is no likelihood that the creditors will accept
the offer of composition, he shall inform the insolvent that the offer is unacceptable and that
he does not propose to send a copy thereof to the creditors.
[18.2.1]
(4) The insolvent may thereupon appeal to the Master who, after having considered a
report from the trustee, may, if he considers the offer of composition sufficient for
submission to the creditors, direct the trustee to post or deliver a copy of the offer to every
creditor who has proved his claim.
[18.2.1]
(5) Whenever the trustee posts or delivers to the creditors a copy of an offer of
composition in terms of the preceding provisions of this section, he shall simultaneously
convene and give notice to the creditors of a meeting for the purpose of considering the said
offer and any other matter mentioned in the notice.
[9.1.4, 18.2.1]
(6) The said meeting shall be convened for a date not earlier than fourteen days and not
later than twenty-eight days after the date upon which the said notice is posted or delivered
to any creditor.
[18.2.1]
Page 410
(7) If the offer of composition has been accepted by creditors whose votes amount to not
less than three-fourths in value and three-fourths in number (calculated in accordance with
the provisions of section fifty-two) of the votes of all the creditors who proved claims against
the estate, and payment under the composition has been made or security for such payment
has been given as specified in the composition, the insolvent shall be entitled to a certificate
under the hand of the Master of the acceptance of the offer: Provided that no offer may be
so accepted if it contains any condition whereby any creditor would obtain as against
another creditor any benefit to which he would not have been entitled upon the distribution
of the estate in the ordinary way; and provided further that any condition which makes the
offer of composition or the fulfilment thereof or of any part thereof subject to the
rehabilitation or to the consent of the creditors to the rehabilitation of the insolvent shall be
of no effect, and provided also that if the composition provides for the giving of any security,
the nature of that security shall be fully specified, and if it is to consist of a surety bond or
guarantee, every surety shall be named.
[9.3.2, 18.2.2, 18.3]
(8) In subsection (7) the word ‘creditor’ includes a creditor who has not proved a claim
against the insolvent estate in question.
[18.2.2]
120 Effect of composition
(1) An offer of composition which has been accepted as aforesaid shall be binding upon
the insolvent and upon all the creditors of the insolvent estate in so far as their claims are
not secured or otherwise preferent but the right of any preferent creditor shall not be
prejudiced thereby, except, in so far as he has expressly and in writing waived his
preference.
[18.4.1]
(2) If it be a condition of the composition that any property in the insolvent estate shall be
restored to the insolvent, the acceptance of the composition shall divest the trustee of such
property and re-invest the insolvent therewith as from the date upon which such property is
in pursuance of the composition to be restored to the insolvent, but subject to any condition
provided for in the composition.
[18.4.1, 18.4.2, 19.3]
(3) A composition shall not affect the liability of a surety for the insolvent.
[18.4.1]
121 If insolvent partner enters into composition, trustee of partnership estate
may take over his estate
(1) When the estate of a partnership and the estate of a partner in that partnership are
simultaneously under sequestration, the acceptance of an offer of composition by the
separate creditors of the partner shall not take effect until the expiration of a period of six
weeks as from the date of a notice in writing of that acceptance given by the trustee of the
partner’s separate estate to the trustee of the partnership estate, or if the trustee of the
partner’s estate is also the trustee of the partnership estate, as from the date of the
acceptance. The said notice shall be accompanied by a copy of the deed embodying the
composition.
[20.4.2]
(2) At any time during the said period of six weeks the trustee of the partnership estate
may take over the assets of the estate of the insolvent partner if he fulfils the obligations of
the insolvent partner in terms of the composition except obligations to render any service or
obligations which only the insolvent partner can fulfil: Provided
Page 411
that if the composition provides for the giving of any specific security, the Master shall
determine what other security the trustee of the partnership estate may give in lieu thereof.
[20.4.2]
122 Effect of composition on spouse of the insolvent
[18.4.3]
A composition shall not be binding on the separate creditors of the spouse of the insolvent
concerned; but upon the acceptance of the offer of composition the property or, if it has
been realized, the proceeds of the property of that spouse shall be restored to her or him,
without prejudice to the claims of the creditors of that spouse or to any right of preference of
any of them at the time when the property was vested in the trustee: Provided that any
movable property held as security by any such creditor when the property was vested in the
trustee shall be restored to that creditor; and provided further that the proceeds of any
security whatsoever which has been realized shall be paid to the person or persons entitled
thereto, according to their rights.
123 Functions of trustee under composition
(1) Any moneys to be paid and anything to be done for the benefit of creditors in
pursuance of a composition shall be paid and shall be done, as far as practicable, through
the trustee: Provided that any creditor who has failed to prove his claim before the trustee
has made a final distribution among those creditors who have proved their claims, shall be
entitled to recover direct from the insolvent within six months as from the confirmation by
the Master, of the account under which the distribution was made, any payments to which
he may be entitled under the composition and the trustee shall have no duty in regard
thereto and after the said distribution the creditor shall have no claim against the insolvent
estate.
[18.4.4]
(2) When a composition has been entered into between an insolvent and the creditors of
his estate, the trustee of that estate shall frame a liquidation account and plan of distribution
of the assets which are or will become available for distribution among the creditors under
the composition, and all the provisions of this Act which relate to a liquidation account and
plan of distribution and to the distribution of assets among creditors shall apply in
connection with the first-mentioned liquidation account and plan of distribution, and with the
first-mentioned assets.
[18.4.4]
124 Application for rehabilitation
(1) An insolvent who has obtained from the Master the certificate mentioned in subsection
(7) of section one hundred and nineteen may apply to the court for an order for his
rehabilitation: Provided that he has not less than three weeks before making the application,
given, by advertisement in the Gazette notice of his intention to make the application and
delivered or posted in a registered letter to the trustee of his estate a copy of that notice:
and provided further that the said certificate shows that payment has been made or the
security prescribed by subsection (7) of section one hundred and nineteen has been given
for the payment of not less than ten shillings for every pound of every claim proved or to be
proved against the estate of the insolvent.
[18.4.5, 19.2.1(i), 19.2.2(i)]
Page 412
(2) An insolvent who is not entitled under subsection (1) to apply to the court for his
rehabilitation and who has previously given to the Master and to the trustee of his estate in
writing and by advertisement in the Gazette not less than six weeks’ notice of his intention
to apply to the court for his rehabilitation may so apply -
[19.2.1(ii), 19.2.2(i)]
(a) after twelve months have elapsed from the confirmation by the Master, of the
first trustee’s account in his estate, unless he falls within the provisions of
paragraph (b) or (c); or
[19.2.1(ii), 19.2.2(i)]
(b) after three years have elapsed from such confirmation if his estate has either
under this Act or a prior law been sequestrated prior to the sequestration to
which he desires to put an end and if he does not fall within the provisions of
paragraph (c); or
[19.2.1(ii), 19.2.2(i)]
(c) after five years have elapsed from the date of his conviction of any fraudulent act
in relation to his existing or any previous insolvency or of any offence under
section one hundred and thirty-two, one hundred and thirty-three or one hundred
and thirty-four of this Act or under any corresponding provision of the Insolvency
Act, 1916 (Act 32 of 1916):
[19.2.1(ii), 19.2.2(i)]
[Para. (c) amended by s. 32 (b) of Act 16 of 1943 and by s. 1 of Act 49 of 1996.]
Provided that no application for rehabilitation under this subsection shall be granted before
the expiration of a period of four years from the date of sequestration of the estate of the
applicant, except upon the recommendation of the Master.
[19.2.1(ii), 19.2.2(i)]
(3) After the expiration of a period of six months as from the sequestration of an estate,
the insolvent concerned may apply to the court for his rehabilitation -
[5.1, 19.2.1(iii)]
(a) if he has, not less than six weeks before making the application, given to the
Master and to the trustee, if any, of his estate notice in writing, and published in
the Gazette a notice of his intention to make the application; and
[19.2.2(i)]
(b) if, at the time of making the application, no claim has been proved against his
estate; and
(c) if he has not been convicted of an offence mentioned in paragraph (c) of
subsection (2); and
(d) if his estate was not sequestrated under any law prior to the sequestration which
he desires to end.
(4) A trustee who has received a notice mentioned in subsection (1), (2), or (3) shall
report to the Master any facts which in his opinion would justify the court in refusing,
postponing, or qualifying the insolvent’s rehabilitation.
[19.2.3]
(5) At any time after the confirmation by the Master, of a plan of distribution providing for
the payment in full of all claims proved against an insolvent estate, with interest thereon
from the date of sequestration, calculated in terms of subsection (2) of section one hundred
and three and of all the costs of sequestration, the insolvent concerned may apply to the
court for his rehabilitation: Provided that he has not less than three weeks before making
the application given notice in writing to the Master and to the trustee of his estate of his
intention to make the application.
[19.2.1(iv), 19.2.2(i)]
Page 413
125 Security to be furnished prior to application for rehabilitation

[19.2.2(ii)]
Not less than three weeks before applying to the court for his rehabilitation an insolvent
shall furnish to the registrar of the court security, to the amount or value of R500, for the
payment of the costs of any person who may oppose the rehabilitation and be awarded costs
by the court.
126 Facts to be averred on application for rehabilitation

[19.2.4]
In support of an application for his rehabilitation, an insolvent shall submit his affidavit
that he has made a complete surrender of his estate and has not granted or promised any
benefit whatever to any person or entered into any secret agreement with intent to induce
his trustee or any creditor not to oppose the rehabilitation. Such affidavit shall include a
statement of his assets and liabilities and of his earnings at the date of the application.
Information shall also be laid before the court as to what dividend was paid to his creditors,
what further assets in his estate are available for realization and the estimated value
thereof, the total amount of all claims proved against his estate, and the total amount of his
liabilities at the date of the sequestration of his estate. If application for rehabilitation is
made pursuant to subsection (1) of section one hundred and twenty-four the insolvent shall
set out the particulars of the composition and shall state whether there are or are not
creditors whose claims against his estate have not been proved, and if there are such
creditors, he shall state their names and addresses and particulars of their claims.
127 Opposition to or refusal by court of rehabilitation
(1) Upon the day fixed for the hearing of an application for rehabilitation the Master shall
report thereon to the court, and the Master, the trustee or any creditor or other person
interested in the estate of the applicant may appear in person or by counsel to oppose the
grant of the application.
[19.2.2(ii)]
(2) Whether the application be opposed or not, the court may refuse an application for
rehabilitation or may postpone the hearing of the application or may rehabilitate the
insolvent upon such conditions as it may think fit to impose and may order the applicant to
pay the costs of any opposition to the application if it is satisfied that the opposition was not
vexatious.
[19.2.2(ii)]
(3) Among the conditions referred to in subsection (2), the court may require the
insolvent to consent to judgment being entered against him for the payment of any
unsatisfied balance of any debt which was or could have been proved against his estate, or
of such lesser sum as the court may determine, but in such case execution shall not be
issued on the judgment except with leave of the court and on proof that the insolvent has
since the date of sequestration of his estate acquired property or income available for the
payment of his debts; or apart from any such judgment the court may impose any other
condition with respect to any property, or income which may accrue to the insolvent in the
future.
[19.2.5(ii)]
(4) In granting an application for rehabilitation made under subsection (1) of section one
hundred and twenty-four the court may order that any obligation incurred by the applicant
before the sequestration of his estate which, but for that order, would be
Page 414
discharged as a result of the applicant’s rehabilitation, shall remain of full force and affect,
notwithstanding the rehabilitation.
[19.2.5(ii)]
(5) The registrar of the court shall forthwith give notice to the Master of every
rehabilitation of an insolvent granted by the court.
127A Rehabilitation by effluxion of time
(1) Any insolvent not rehabilitated by the court within a period of ten years from the date
of sequestration of his estate, shall be deemed to be rehabilitated after the expiry of that
period unless a court upon application by an interested person after notice to the insolvent
orders otherwise prior to the expiration of the said period of ten years.
[19.1]
(2) If a court issues an order contemplated in subsection (1), the registrar shall transmit a
copy of the order to every officer charged with the registration of title to any immovable
property in the Republic.
[19.1]
(3) Upon receipt of the order by such officer he shall enter a caveat against the transfer of
all immovable property or the cancellation or cession of any bond registered in the name of
or belonging to the insolvent.
[19.1]
(4) The caveat shall remain in force until the date upon which the insolvent is
rehabilitated.
[19.1]
[S. 127A inserted by s. 6 of Act 6 of 1972 and substituted by s. 7 of Act 122 of 1993.]
128 Partnership cannot be rehabilitated

[20.8]
A partnership whose estate has been sequestrated shall not be rehabilitated.
129 Effect of rehabilitation
(1) Subject to the provisions of subsection (3) and subject to such conditions as the court
may have imposed in granting a rehabilitation, the rehabilitation of an insolvent shall have
the effect -
[19.3]
(a) of putting an end to the sequestration;
[19.3]
(b) of discharging all debts of the insolvent, which were due, or the cause of which
had arisen, before the sequestration, and which did not arise out of any fraud on
his part;
[1.2, 19.3]
(c) of relieving the insolvent of every disability resulting from the sequestration.
[19.3]
(2) A rehabilitation granted on an application made in circumstances described in
subsection (3) of section one hundred and twenty-four shall have the effect of reinvesting
the insolvent with his estate.
[19.3]
(3) A rehabilitation shall not effect-
[19.3]
(a) the rights of the trustee or creditors under a composition;
[19.3]
(b) the powers or duties of the Master or the duties of the trustee in connection with
a composition;
[19.3]
(c) the right of the trustee or creditors to any part of the insolvent’s estate which is
vested in but has not yet been distributed by the trustee, but subject to the
provisions of subsection (2);
[19.3]
(d) the liability of a surety for the insolvent;
[19.3]
(e) the liability of any person to pay any penalty or suffer any punishment under any
provision of this Act.
[19.3]
Page 415
130 Illegal inducements to vote for composition or not to oppose rehabilitation

[18.5, 19.2.6]
Any undertaking to grant any benefit to any person in order to induce him or any other
person to accept an offer of composition or to agree to, or refrain from opposing the
rehabilitation of an insolvent, or as a consideration for the acceptance of an offer of
composition or for the agreement to or non-opposition of the rehabilitation of an insolvent
(whether by the person for whom the benefit is intended or by any other person), shall be
void and any person who has accepted any such benefit or who has stipulated for any such
benefit, whether for himself or any other person shall be liable to pay by way of penalty for
the benefit of the creditors of the insolvent estate in question -
(a) a sum equal to the amount of the claim (if any) which he originally proved
against the estate; and
(b) the amount or value of any benefit given or promised; and
(c) in case of a composition, the amount paid or to be paid to him under the
composition.
131 Recovery of penalty
[18.5, 19.2.6]
The trustee may enforce and recover any penalty mentioned in section one hundred and
thirty and if he fails to do so any creditor may do so in the name of the trustee, upon his
indemnifying the trustee against all costs in connection with such action.
132 Concealing or destroying books or assets
[19.2.1(iii), 22.6, 22.7]
An insolvent shall be guilty of an offence and liable to imprisonment for a period not
exceeding three years if at any time before or after the sequestration of his estate he does
any of the following acts, unless it is proved that he had no intention to defraud; that is to
say, if he -
(a) conceals, parts with, destroys, mutilates, falsifies or makes any false entry or
erasure in any book or document relating to his business, property or affairs or
permits any other person to commit any such act in regard to any such book or
document; or
[22.7.1]
(b) conceals or permits the concealment of any assets which ought to be placed at
the disposal of the trustee; or
[22.7.1]
(c) otherwise than in the ordinary course of business makes, or permits the making
of a disposition of any property which he has obtained on credit and has not paid
for; or
(d) otherwise than in the ordinary course of business destroys, damages, removes or
makes a disposition of, or permits the destruction, damage, removal or the
making of a disposition of, any assets in his estate if such destruction, damage,
removal or disposition has prejudiced or is calculated to prejudice his creditors:
Provided that -
(i) whenever in any proceedings for a contravention of paragraph (a) any act
described in that paragraph is proved to have been committed in regard to any
book or other document relating to the business, property or affairs of the
insolvent, he shall be deemed to have committed or permitted such act unless
Page 416
it is proved that he neither committed it nor could have prevented the

commission;
(ii) in any proceedings for a contravention of paragraph (c) or paragraph (d) any
disposition, destruction, damage or removal of assets proved to have been
committed shall, unless the contrary is proved, be deemed to have been
otherwise than in the ordinary course of business;
(iii) if it appears from any book or document relating to the business, property or
affairs of the insolvent or if it is proved in any other manner whatsoever that
there ought to be available to the trustee at least ten per cent more assets of the
estate than the assets actually available to him, such insolvent shall be deemed
to have removed or made a disposition of assets of a value equal to the
difference between the value of the assets which ought to be available, and the
value of the assets actually so available, in contravention of paragraph (d), unless
he fully and accurately accounts for or explains the deficiency and proves that the
deficiency was not caused by his action and that he could not have prevented it.
133 Concealment of liabilities or pretext to existence of assets
[19.2.1(iii), 22.6, 22.7, 22.7.1]
exceeding three years if, within two years immediately preceding the sequestration of his
estate, when making any statement either verbally or in writing in regard to his business,
property or affairs to any person who was then his creditor or to any person who became his
creditor on the faith of such a statement, he concealed any liability, present or future,
certain or contingent, which he may then have contracted, or failed to disclose the full
extent of his liability or mentioned, as if it were an asset, any right or property which at the
time was not an asset, or represented that he had more assets than he in fact had or made
any false statement in regard to the amount, quality or value of his assets, or in any way
concealed or disguised or attempted to conceal or disguise any loss which he had sustained,
or gave any incorrect amount thereof, unless it is proved that he had good reason to believe
that the said statement was correct in every respect and that he was not concealing or
failing to disclose or disguising any relevant fact.
134 Failure to keep proper records
[19.2.1(iii), 22.7, 22.7.1]
(1) An insolvent shall be guilty of an offence and liable to imprisonment for a period not
exceeding one year if his occupation or transactions prior to the sequestration of his estate
were such that he might reasonable be expected to keep a record of his transactions, and he
failed to keep a proper record of his transactions in the English or the Dutch language and to
preserve that record during a period of not less than three years.
[22.6]
(2) For the purposes of this section a proper record of transactions includes all such
records, wherein is set forth clearly the nature of all such person’s transactions, as (regard
being had to his occupation) he can reasonably be expected to have kept. A trader shall be
deemed not to have kept a proper record of his transactions unless he kept a record which
includes -
Page 417
(a)
detailed stock sheets (which shall disclose the cost price of every article on hand
at the date of stocktaking which has been purchased by the trader for the
purpose of his business) and balance sheets completed for each of his three
financial or business years immediately preceding the sequestration of his estate,
or if he commenced business less than three years before the sequestration,
completed at the commencement of his business and thereafter for each financial
or business year preceding the sequestration;
(b) records exhibiting for the period since the commencement of his business or
since the commencement of his financial or business year next but one before the
financial or business year in which his estate was sequestrated (whichever period
is the less) the following particulars –
(i) all property purchased in the course of the business, duly supported by the
original invoices;
(ii) all cash receipts and disbursements and the dates thereof;
(iii) a daily record of all property sold on credit, and such a continuous record of
all transactions as a trader may be expected to keep in the ordinary course
of his business;
(iv) the name of every person indebted to the trader and of every person to
whom the trader is indebted and the address of every such person at the
time when the indebtedness arose or at any time thereafter;
[Para. (b) amended by s. 7(b) of Act 6 of 1972.]
(c) a record of all cheques drawn during the period mentioned in paragraph (b) and
the counterfoils of such cheques, showing clearly, in the case of each cheque and
on each counterfoil, the name of the payee, the amount of the cheque, and the
date of the cheque:
Provided that a trader who proves that his turnover for the two years immediately preceding
the sequestration of his estate or since the commencement of the business (whichever
period is the less), was at the rate of less than R10 000 per annum shall be deemed to have
kept a proper record, if the court dealing with the matter in question, having regard to the
nature and circumstances of the business, is satisfied that he has kept a sufficient record of
his transactions and that the record complies with the requirements of subparagraph (iv) of
paragraph (b).
135 Undue preferences, contracting debts without expectation of ability to pay,

etc
[22.7, 22.7.1]
(1) An insolvent shall be guilty of an offence and liable to imprisonment not exceeding one
year, if, prior to the sequestration of his estate, he made a disposition of any part of his
property with the intention of preferring one or more of his creditors above the others or any
other if at the time when he made that disposition his liabilities exceeded the value of his
assets: Provided that any such disposition which had the effect of preferring, or was
calculated to prefer, one or more creditors above the others or any other shall, unless the
contrary is proved, be deemed to have been made with the intention of preferring such
creditor or creditors above the others or any other. Provided, further, that if the insolvent’s
estate was sequestrated within a period of six months as from the date of making such a
disposition, his liabilities shall be deemed to have
Page 418
exceeded the value of his assets at that date, unless the contrary is proved.
[22.6, 22.7.1]
(2) In subsection (1) the expression ‘creditor’ includes a surety for the insolvent as well
as a person who in law is in a position analogous to that of a surety.
(3) An insolvent shall be guilty of an offence and liable to imprisonment for a period not
exceeding two years if, prior to the sequestration of his estate-
[22.7.1]
(a) he contracted any debt of fifteen pounds or more or debts to the aggregate of
fifty pounds or more, without any reasonable expectation of being able to
discharge such debt or debts; or
(b) at a time when his liabilities exceeded his assets or during the period of six
months immediately preceding the sequestration of his estate, he diminished his
assets by gambling, betting, hazardous speculations or expenditure, not
reasonably necessary in connection with his business or vocation or for the
maintenance of himself and his dependants, or being a trader, alienated any
business belonging to him, or the goodwill of such business or any goods or
property forming part thereof not in the ordinary course of that business, without
publishing a notification of his intention so to alienate in the Gazette and in a
newspaper, in terms of the provisions of subsection (1) of section thirty-four:
[Para. (b) amended by s. 14 of Act 32 of 1952.]
Provided that in any proceedings for a contravention of paragraph (a) the insolvent shall,
unless the contrary is proved, be deemed to have contracted the debt or debts without
having had a reasonable expectation of discharging it or them, if the debt was or the debts
were contracted -
(i) at a time when his liabilities exceeded his assets; or
(ii) within the period of six months immediately preceding the sequestration of his
estate.
136 Failure to give information or to deliver assets, books, etc
[22.6, 22.7, 22.7.1]
exceeding three years -
(a) if at any time during the sequestration of his estate he, knowing or suspecting
that any person has proved or intends to prove a false claim against his estate,
fails to inform the Master and the trustee of his estate in writing of that
knowledge or suspicion, within seven days as from the date upon which he
acquired that knowledge or upon which his suspicion was aroused;
[14.4]
(b) if he fails within fourteen days as from the appointment of the trustee of his
estate –
(i) to deliver to the trustee or as the trustee may in writing direct any property
of whatever nature belonging to the estate which may be in his possession
or custody or under his control; or
[14.2, 14.4]
(ii) to inform the trustee of the existence and whereabouts of any property
belonging to the estate (other than property mentioned in subparagraph (i)),
which is not fully disclosed in the statement of his affairs mentioned in
section four or sixteen or which is not already in the possession of the
trustee; or
Page 419
(iii) to deliver to the trustee or deputy sheriff, or as either of them may direct all
books and documents in his possession or custody or under his control,
relating to his affairs; or
(iv) to inform the trustee of the existence or whereabouts of any such book or
document not in his possession or custody or under his control, if it is not
already in the possession of the trustee;
[14.4]
unless, in any such case, he proves that he had a reasonable excuse for such
failure;
(c) if, at any time after the sequestration of his estate, he fails to furnish at the
request of the trustee complete and truthful information regarding any property
which was at any time in his possession or custody or under his control, or
regarding the time when or the manner or circumstances in which he disposed of
such property or ceased to be in possession, custody or control thereof, unless he
proves that he had a reasonable excuse for such failure.
[14.4]
137 Obtaining credit during insolvency, offering inducements, etc
[22.7]
Any person shall be guilty of an offence and liable to imprisonment for a period not
exceeding one year -
(a) if, during the sequestration of his estate, he obtains credit to an amount
exceeding ten pounds without previously informing the person from whom he
obtains credit that his is an insolvent, unless he proves that such person had
knowledge of that fact; or
[22.7, 22.7.1]
(b) if he grants, promises, or offers any consideration whatever in order to procure
the acceptance by any creditor of an offer of composition or to prevent opposition
to a rehabilitation or, during the sequestration of any estate, to induce any
person to refrain from investigating any matter relating to that estate or from
disclosing any information in regard thereto; or
[22.7, 22.7.3]
(c) if he contravenes or fails to comply with the provisions of section sixteen, or of
subsection (3), (4) or (12) of section twenty-three unless he proves that he had a
reasonable excuse for such contravention or failure; or
[4.2, 22.7, 22.7.1]
(d) if he makes any false statement in the statement of his affairs mentioned in
section four or sixteen, or in the statement mentioned in subsection (4) of section
twenty-three.
[22.7]
138 Failure to attend meetings of creditors or give certain information
[22.6, 22.7, 22.7.1]
exceeding six months -
(a) . . .
[Para. (a) deleted by s. 42 of Act 99 of 1965.]
(b) if he fails, when thereto required in writing by the trustee of his estate, to give a
true, clear and detailed explanation of his insolvency or fails to account correctly
and in detail for the excess of his liabilities over his assets; or
[11.3, 14.4]
(c) if, at a meeting of the creditors of his estate, when thereto required by the
trustee or the officer presiding or any creditor or by the agent of any of them, he
fails to account for or to disclose what has become of any property which was in
his
Page 420
possession so recently that in the ordinary course he ought to be able to account

therefor; or
[14.4]
(d) if he fails to comply with the requirements of subsection (13) of section twenty-
three.
138bis Presumption in case of prosecution for failure to notify change of address
If in any prosecution for a contravention of paragraph (d) of section one hundred and
thirty-eight it is proved that the insolvent has changed his residential or postal address it
shall, unless the contrary is proved, be presumed that he has failed to notify the trustee of
such change.
139 Failure to appear or to give evidence or giving false evidence

[13.1, 22.7, 22.7.3]
(1) Any person shall be guilty of an offence and liable to a fine not exceeding R500 or to
imprisonment without the option of a fine for a period not exceeding six months if he is
guilty of an act or omission for which he has been or might have been lawfully committed to
prison in terms of subsection (2) or (3) of section 66.
[13.1.4, 22.6]
(2) Any person shall be guilty of an offence and liable to the punishment provided by law
for the crime of perjury, if, when being interrogated on oath under this Act, he wilfully
makes, relative to the subject in connection wherewith he is interrogated, any statement
whatever which he knows to be false or which he does not know or believe to be true.
140 Failure of insolvent or spouse to appear to give evidence
[14.7, 22.6, 22.7, 22.7.1]
An insolvent or the spouse of an insolvent shall be guilty of an offence and liable to
imprisonment for a period not exceeding six months if, when summoned to give evidence in
any proceedings instituted by or against the trustee of the insolvent estate he or she
conceals himself or herself or quits the Republic or without reasonable excuse fails to attend
those proceedings or refuses to answer any question which may be lawfully put to him or
her in the course of those proceedings.
141 Acceptance of consideration for certain illegal acts or omissions
[18.5, 19.2.6, 22.6, 22.7, 22.7.3]
Any person shall be guilty of an offence and liable to a fine not exceeding R500 or to
imprisonment without the option of a fine for a period not exceeding six months if he accepts
any benefit or the promise or offer of any benefit as a consideration for having refrained
from or discontinued, or for his undertaking to refrain from or to discontinue any
proceedings for the sequestration of an estate or for having agreed to, or not opposed, or for
his undertaking to agree to or not to oppose a composition in an insolvent estate or the
rehabilitation of an insolvent, or for having refrained or undertaken to refrain from
investigating any matter relating to an insolvent or an
Page 421
insolvent estate or from disclosing any information in regard to an insolvent or an insolvent

estate.
142 Removing or concealing property to defeat an attachment or failure to

disclose property
[8.2, 22.7, 22.7.3]
(1) Any person shall be guilty of an offence and liable to imprisonment for a period not
exceeding three years if, either before or after the sequestration of an estate, he removes,
conceals, disposes of, deals with or receives any asset belonging to that estate with intent to
defeat an attachment by virtue of a sequestration order, or with intent to prejudice the
creditors in that estate: Provided that in any proceedings for an offence under this
subsection, any such removal, concealment, disposal of, dealing with or receipt of assets
which had the effect of defeating or was calculated to defeat such attachment or which
prejudiced or was calculated to prejudice the creditors of that estate, shall, unless the
contrary is proved, be deemed to have been committed with intent to defeat the attachment
or (as the case may be) to prejudice those creditors.
(2) Any person who has in his possession or custody or under his control any property
belonging to an insolvent estate and who knows of the sequestration of the estate and that
the property belongs to it, shall be guilty of an offence and liable to a fine not exceeding
R1 000 or to imprisonment without the option of a fine for a period not exceeding one year if
he fails to inform the trustee of the estate as soon as possible of the existence and
whereabouts of the property and (subject to the provisions of section 83) to deliver it to, or
place it at the disposal of, the trustee.
(3) The provisions of subsections (1) and (2) shall not apply to an insolvent in respect of
any property belonging to his own insolvent estate.
(4) A secured creditor of an insolvent estate who has realized his security in terms of
section eighty-three and who has failed after written demand to pay over the proceeds of
the realization in accordance with the provisions of subsection (10) of that section, shall,
apart from any other offence which he may have committed in connection with those
proceeds, be guilty of an offence and liable to the penalties mentioned in subsection (2).
143 Criminal liability of partners, administrators, servants or agents
[22.7]
(1) A person who -
(a) is or was a member of a partnership and who does or omits to do in relation to
any property or to the affairs of that partnership or of the insolvent estate of that
partnership; or
[22.2]
(b) is or was charged with the administration of an estate and who does or omits to
do in relation to any property or to the affairs of that estate; or
[22.3]
(c) as a servant or agent has or had the sole or practical control of any property or of
the affairs of his employer or principal and who does or omits to do in relation to
that property or to the affairs of his employer or principal or of the insolvent
estate of his former employer or principal,
[22.4]
Page 422
any act which, if done or omitted by him in the like circumstances in relation to his own
property or affairs or to any property belonging to, or the affairs of his insolvent estate,
would have constituted an offence under this Act, shall be deemed to have committed that
offence.
(2) The liability under subsection (1) of a partner, servant or agent shall not affect the
liability under that subsection or under any other provision of this Act, of another partner or
of a servant or agent of the same partnership, or of the employer or principal of the
employee or agent who is so liable.
[22.2, 22.4]
144 Criminal liability of trustee for neglect of certain duties
[22.6, 22.7, 22.7.2]
If it was the duty of a trustee to submit an account to the Master or to pay a sum of
money to the Master or to a creditor, and he failed to submit that account or to pay that
sum of money within a period of two months as from the time when that duty arose, he shall
(apart from any other offence which he may have committed in connection with such sum of
money) be guilty of an offence and liable to a fine not exceeding R500.
145 Obstructing trustee

[22.6, 22.7, 22.7.3]
Any person who obstructs or hinders a curator bonis appointed under this Act or a trustee
or a representative of either in the performance of his functions as such shall be guilty of an
offence and liable to a fine not exceeding R500, or to imprisonment without the option of a
fine for a period not exceeding six months.
146 Evidence of liability incurred by insolvent

[22.5.4]
Whenever in any criminal proceedings under this Act any liability incurred by an insolvent
or the date or time when the liability was incurred, is in issue or relevant to the issue, proof
that a claim in respect of that liability has been admitted against the estate of the insolvent
in accordance with any provision of this Act shall be sufficient evidence of the existence of
the liability and any such liability shall be deemed to have been incurred upon the date or at
the time alleged in any document submitted in accordance with any provision of this Act in
support of that claim: Provided that the accused or the prosecutor in those proceedings may
prove that no such liability or that a lesser or a greater liability was incurred or that it was
incurred on a date or at a time other than the date or time so alleged.
147 Offences committed by insolvent in different provinces may be tried at his
place of business or residence
(1) Any court of law which has jurisdiction to try an insolvent in respect of an offence
under this Act committed at the place where the insolvent mainly carried on business or
resided at the time of the commission of the offence, shall have jurisdiction to try the
insolvent in respect of such an offence committed anywhere in the Republic.
[22.1]
(2) In subsection (1) ‘insolvent’ includes a person who is liable under subsection (1) of
section one hundred and forty-three.
[22.1]
Page 423
148 . . .
[S. 148 amended by s. 34 of Act 16 of 1943 and repealed by s. 24 of Act 101 of 1983.]
149 Jurisdiction of the court

[1.4.3]
(1) The court shall have jurisdiction under this Act over every debtor and in regard to the
estate of every debtor who -
(a) on the date on which a petition for the acceptance of the surrender or for the
sequestration of his estate is lodged with the registrar of the court, is domiciled
or owns or is entitled to property situate within the jurisdiction of the court; or
[1.4.2, 2.3.1]
(b) at any time within twelve months immediately preceding the lodging of the
petition ordinarily resided or carried on business within the jurisdiction of the
court:
[1.4.2]
Provided that when it appears to the court equitable or convenient that the estate of a
person domiciled in a State which has not been designated in terms of section 2 of the
Cross-Border Insolvency Act, 2000 (Act 42 of 2000), should be sequestrated by a court
outside the Republic, or that the estate of a person over whom it has jurisdiction be
sequestrated by another court within the Republic, the court may refuse or postpone the
acceptance of the surrender or the sequestration.
[1.4.2, 1.4.4]
(2) The court may rescind or vary any order made by it under the provisions of this Act.
[2.8, 3.6]
150 Appeal
[3.6]
(1) Any person aggrieved by a final order of sequestration or by an order setting aside an
order of provisional sequestration may, subject to the provisions of section 20 (4) and (5) of
the Supreme Court Act, 1959 (Act 59 of 1959), appeal against such order.
[2.8, 3.6]
(2) Such appeal shall be noted and prosecuted as if it were an appeal from a judgment or
order in a civil suit given by the court which made such final order or set aside such
provisional order, and all rules applicable to such last-mentioned appeal shall mutatis
mutandis but subject to the provisions of subsection (3), apply to an appeal under this
section.
(3) When an appeal has been noted (whether under this section or under any other law),
against a final order of sequestration, the provisions of this Act shall nevertheless apply as if
no appeal had been noted: Provided that no property belonging to the sequestrated estate
shall be realized without the written consent of the insolvent concerned.
[2.8]
(4) If an appeal against a final order of sequestration is allowed, the court allowing such
appeal may order the respondent to pay the costs of sequestrating and administering the
estate.
(5) There shall be no appeal against any Order made by the court in terms of this Act,
except as provided in this section.
[2.8]
Page 424
151 Review
[1.5, 5.3.2, 8.4.1, 9.2.3(viii), 10.7, 13.2, 23.9.2]
Subject to the provisions of section fifty-seven any person aggrieved by any decision, ruling,
order or taxation of the Master or by a decision, ruling or order of an officer presiding at a
meeting of creditors may bring it under review by the court and to that end may apply to the
court by motion, after notice to the Master or to the presiding officer, as the case may be,
and to any person whose interests are affected: Provided that if all or most of the creditors
are affected, notice to the trustee shall be deemed to be notice to all such creditors; and
provided further that the court shall not re-open any duly confirmed trustee’s account
otherwise than as is provided in section one hundred and twelve.
151bis Costs of review

If the court reviewing any matter referred to in section one hundred and fifty-one confirms
any decision, ruling, order or taxation of the Master or officer referred to in that section the
costs of the applicant for the review of that matter shall not be paid out of the assets of the
estate concerned unless the Court otherwise directs.
152 Master may direct trustee to deliver documents or property or call upon any
person to furnish certain information
[13.2]
(1) The Master may at any time direct a trustee to deliver to him any book or document
relating or any property belonging to the insolvent estate of which he is trustee.
(2) If at any time after the sequestration of the estate of a debtor and before his
rehabilitation, the Master is of the opinion that the insolvent or the trustee of that estate or
any other person is able to give any information which the Master considers desirable to
obtain, concerning the insolvent, or concerning his estate or the administration of the estate
or concerning any claim or demand made against the estate, he may by notice in writing
delivered to the insolvent or the trustee or such other person summon him to appear before
the Master or before a magistrate or an officer in the public service mentioned in such
notice, at the place and on the date and hour stated in such notice, and to furnish the
Master or other officer before whom he is summoned to appear with all the information
within his knowledge concerning the insolvent or concerning the insolvent’s estate or the
administration of the estate.
[13.2, 22.5.1]
(3) After having interrogated the person summoned as aforesaid the Master or other
officer concerned may deliver to him a written notice to appear again before the Master or
other officer at a place and upon a date and hour stated in such notice and to submit to the
Master or such other officer any further information or any book or document specified in
such notice.
[13.2]
(4) When any person summoned as aforesaid appears before the Master or other officer in
question in compliance with a notice issued under subsection (2) or (3) the Master or such
other officer may administer the oath to him and the Master or such other officer and if a
person other than the trustee was summoned, also the trustee (or his
Page 425
agent) may interrogate the person summoned in regard to any matter relating to the
insolvent or his estate or the administration of the estate.
[13.2]
(5) The provisions of subsection (2) of section 65 shall, subject to subsection (2A) of that
section, mutatis mutandis apply in connection with the production of any book or document
or with the interrogation of any person under the preceding provisions of this section.
[13.2]
(6) The provisions of section sixty-six shall mutatis mutandis apply in connection with a
person summoned, and with his interrogation, under this section and the Master or other
officer concerned shall, with reference to a person so summoned or with reference to such
interrogation, have the powers and immunity conferred upon an officer mentioned in section
sixty-six.
[13.2]
(7) The provisions of subsection (7) of section sixty-five shall mutatis mutandis apply in
connection with any person (other than a trustee) who has been summoned under this
section for the purpose of furnishing any information: Provided that if there are no assets in
the estate in question sufficient to pay the witness fees in question, those fees shall be paid
by the State.
[13.2]
153 Fees of office and certain costs
(1) The Master shall recover in respect of the several matters and in the manner
mentioned in the Third Schedule to this Act the fees [6] therein specified.
[1.5]
(1)bis The Minister may from time to time by notice in the Gazette amend the said Third
Schedule.
[Sub-s. (1)bis inserted by s. 21 (b) of Act 62 of 1955, amended by ss. 46 and 47 of Act 97 of
1986 and substituted by s. 11 of Act 16 of 2003.]
(2) Any expenses incurred by the Master or by an officer who is to preside or presides or
has presided at a meeting of the creditors of an insolvent estate in the protection of the
assets of an insolvent estate or in carrying out any provision of this Act shall, unless the
court otherwise orders, be regarded as part of the costs of the sequestration of that estate.
154 Custody of documents. Admissibility of copies or certificates
(1) The Master shall have the custody of all documents relating to insolvent estates.
[1.5]
(2) If there is endorsed upon or attached to any document or record a certificate
purporting to have been signed by a person describing himself as Master, wherein he
describes the nature of the document or record and states that it relates to a specified
insolvent or insolvent estate, that document or record shall on its mere production by any
person prima facie be deemed to be what the certificate describes it to be.
[22.5.1]
(3) Any document or record upon which there is endorsed or to which there is attached a
statement purporting to have been signed by a person describing himself as Master, wherein
he certifies that the document or record is a true copy of or extract from a document or
record relating to a specified insolvent or insolvent estate, and wherein he describes the
nature of the original document or record, shall on its mere production by
Page 426
any person be as admissible in evidence in any court of law and be of the same force and
effect as the original document or record would be if it bore or had attached to it the
certificate mentioned in subsection (2).
[22.5.1]
(4) A certificate, purporting to have been signed by a person describing himself as Master,
stating that the estate of a person or partnership mentioned therein was sequestrated on a
date therein specified, or that an insolvent named therein has or has not been rehabilitated,
or that any person named therein has or has not complied with any particular requirement of
this Act, shall upon its mere production by any person be received as prima facie evidence of
the facts therein stated.
[22.5.2]
155 Destruction of documents
(1) After six months have elapsed as from the confirmation by the Master of the final
trustees’ account in any insolvent estate, the trustee may, with the consent in writing of the
Master, destroy all books and documents in his possession relating to the estate.
(2) After five years have elapsed as from the rehabilitation of an insolvent the Master may
destroy all records in his office relating to the estate of that insolvent.
(3) This section shall apply to all insolvent estates which have been finally liquidated or
are in course of liquidation at the commencement of this Act.
156 Insurer obliged to pay third party’s claim against insolvent ter
[5.3.8(i), 7.1]
Whenever any person (hereinafter called the insurer) is obliged to indemnify another
person (hereinafter called the insured) in respect of any liability incurred by the insured
towards a third party, the latter shall, on the sequestration of the estate of the insured, be
entitled to recover from the insurer the amount of the insured’s liability towards the third
party but not exceeding the maximum amount for which the insurer has bound himself to
indemnify the insured.
157 Formal defects
[1.6]
(1) Nothing done under this Act shall be invalid by reason of a formal defect or
irregularity, unless a substantial injustice has been thereby done, which in the opinion of the
court cannot be remedied by any order of the court.
[1.6, 2.3.1]
(2) No defect or irregularity in the election or appointment of a trustee shall vitiate
anything done by him in good faith.
158 Regulations and policy
(1) The Minister may from time to time make regulations not inconsistent with the
provisions of this Act, prescribing -
(a) the procedure to be observed in any Master’s office in connection with insolvent
estates;
(b) the form of, and manner of conducting proceedings under this Act;
(c) the manner in which fees payable under this Act shall be paid and brought to
account.
(2) The Minister may determine policy for the appointment of a curator bonis, trustee,
provisional trustee or co-trustee by the Master in order to promote consistency,
Page 427
fairness, transparency and the achievement of equality for persons previously disadvantaged
by unfair discrimination.
(3) Any policy determined in accordance with the provisions of subsection (2) must be
tabled in Parliament before publication in the Gazette.
[S. 158 amended by s. 46 of Act 97 of 1986 and substituted by s. 12 of Act 16 of 2003.]
158bis Minister may amend First Schedule

The Minister may by notice in the Gazette amend the First Schedule.
[S. 158bis inserted by s. 13 of Act 50 of 1956, amended by ss. 46 and 47 of Act 97 of 1986 and
substituted by s. 13 of Act 16 of 2003.]
158ter ...
[S. 158ter inserted by s. 47 of Act 99 of 1965 and repealed by s. 1 of Act 49 of 1996.]
159 Short title and date of commencement

This Act shall be called the Insolvency Act, 1936, and shall come into operation on the first
day of July, 1936.
Page 428
First Schedule
FORMS
FORM A [2.3.1]
NOTICE OF SURRENDER OF A DEBTOR'S ESTATE (SECTION 4 (1))
Notice is hereby given that application will be made to the ................................... Division of the
Supreme court on ...........the ............. day of ........................... 19...... at ......... o'clock in the
forenoon or as soon thereafter as the matter can be heard, for the acceptance of the surrender of the
estate of *.................. of ......................... and that a statement of his affairs will lie for inspection at
the office of the Master of the Supreme Court at **..................... (and at the office of.........) for a
period of fourteen days as from the ............ day of ......... 19 .......
..............................................................
Attorney for............................................
............................................................
......................................19..................
* Here insert the name in full of the debtor and his occupation and address, and if the debtor is a
partnership, its style or firm and the name in full and address of every partner, other than a partner en
commandite or a special partner as defined in the Cape Act 24 of 1861 or the Natal Law 1 of 1865.
** If the statement of the debtor's affairs is to lie for inspection only in a Master's office delete the
words in brackets.
FORM B [2.3.3(i), 6.1.2, 14.1]

STATEMENT OF DEBTOR'S AFFAIRS (SECTIONS 4 (3) AND 16)
Balance sheet of ................................ †

Liabilities Assets
£.s.d. £.s.d.
Debts due as per Annexure IV Immovable property as per
Annexure I. Movable property,
furniture, stock-in-trade etc. as per
Annexure II
Outstanding claims, etc., as per
Annexure III
Deficiency.
TOTAL TOTAL
† Here insert the name in full of the debtor.
Page 429
ANNEXURE I [2.3.3(i)]
IMMOVABLE PROPERTY
Description of Situation and Mortgages thereon Estimated values
property extent
£.s.d.
Property situate in
the Republic
Property situate
elsewhere
Total
ANNEXURE II [2.3.3(i)]
ANY MOVABLE PROPERTY WHATSOEVER WHICH IS NOT INCLUDED IN ANNEXURE
III OR ANNEXURE V
Description of property Estimated values
£.s.d.
Property situate in the Republic
Property situate elsewhere
Total
NOTE: Any merchandise mentioned in the foregoing statement shall be valued at its cost price or at its
market value at the time of the making of the affidavit verifying this statement, whichever is the lower,
and the statement shall be supported by detailed stock sheets relating to such merchandise.
ANNEXURE III [2.3.3(i)]

OUTSTANDING CLAIMS, BILLS, BONDS AND OTHER SECURITIES
Name and Particulars Estimated Estimated
residential of claim amount amount
and postal good bad or
address of doubtful
the debtor
£.s.d. £. s. d.
In the Republic ...................................
Elsewhere ..........................................
Total
Page 430
ANNEXURE IV [2.3.3(i)]
LIST OF CREDITORS
Name and address of Nature and value of Nature of claim Amount of Claim
creditor security for claim
£. s. d.
Total
ANNEXURE V [2.3.3(i)]
MOVABLE ASSETS PLEDGED, HYPOTHECATED, SUBJECT TO A RIGHT OF RETENTION
OR UNDER ATTACHMENT IN EXECUTION OF A JUDGMENT
Description of Estimated value of Nature of charge Amount of debt to Name of creditor
asset asset on asset which charge in whose favour
relates charge is
ANNEXURE VI [2.3.3(i)]
ENUMERATION AND DESCRIPTION OF EVERY BOOK IN USE BY THE DEBTOR AT TIME
OF NOTICE OF SURRENDER OR SEQUESTRATION, OR AT THE TIME WHEN HE CEASED
CARRYING ON BUSINESS
......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
ANNEXURE VII
DETAILED STATEMENT OF CAUSES OF DEBTOR'S INSOLVENCY
......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
Page 431
ANNEXURE VIII [2.3.3(i)]

PERSONAL INFORMATION
[Annexure VIII substituted by s. 8 of Act 122 of 1993.]
State whether the debtor is married, widowed or divorced ...............................................
If the debtor is or was married, state-
(a) name or names of spouse or spouses (a 'spouse' means not only a wife or husband in the legal sense,
but also a wife or husband by virtue of a marriage according to any law or custom, and also a woman
living with a man as his wife or a man living with a woman as her husband, although not married to
one another) ........................................................................................................................
(b) whether the debtor is or was married in or without community of property and whether the accrual
system
applies ....................................................................................................................................
(c) date of
marriage ..................................................................................................................................
(d) whether the matrimonial property system has been changed since entering into the marriage and, if
so, the nature of the
change .............................................................................................................
(e) full names and date of birth of the spouse and, if an identity number has been assigned, the identity
number of the spouse ..............................................................................................................
State the debtor's nationality ..........................................................................................
........................................................................................................................................
State the debtor's place of birth, date of birth and, if an identity number has been assigned, the identity
number
.........................................................................................................................................
Was the debtor's estate or the estate of a partnership in which the debtor is or was a partner previously
sequestrated or placed in bankruptcy, whether in the Republic or elsewhere?
................................................................................................................
................................................................................................................
................................................................................................................
If the preceding answer is in the affirmative, state-
(a) whether debtor's own estate or his partnership's estate was (i) sequestrated; or (ii) placed in
bankruptcy
..................................................................................................................................
(b) the place where and the date when that estate was sequestrated or placed in bankruptcy
..................................................................................................................................
(c) whether the debtor has been rehabilitated or his estate released; if so, when
..................................................................................................................................
The foregoing balance sheet and statements shall be verified by an affidavit in the subjoined form, made by
the debtor or by the person who on behalf of the debtor presented the petition tendering the surrender of
the debtor's estate, or who is the representative of the debtor or his estate.
Page 432
AFFIDAVIT
I, ...................................declare under oath/solemnly and sincerely declare * that to the best of my
knowledge and belief the statements contained in the foregoing balance sheet and the Annexures thereto
are true and complete, and that every estimated amount therein contained is fairly and correctly estimated.
Signature of declarant..............................................................
Sworn/Solemnly declared*............................before me on the ....................day

of ......................................
at ..........................................................................................................................................
................................................................
Commissioner of Oaths
* Delete inappropriate words.
Page 433
FORM C [9.2.3(i)]
AFFIDAVIT FOR THE PROOF OF ANY CLAIM OTHER THAN A CLAIM BASED ON A PRO-
MISSORY NOTE OR OTHER BILL OF EXCHANGE (SECTION 44 (4)).
In the Insolvent Estate of ............................................................................................
Name in full of creditor.................................................................................................
Address in full ............................................................................................................
Total amount of claim .............................................................. £ ............................
I, .............................................................................................................................
declare under oath / solemnly and sincerely declare *
(1) That ...................................................................................., whose estate has been
sequestrate was at the date of sequestration, and still is, indebted
to .....................................................in the sum of ...............................................
for ...............................................................................
(2) That the said debt arose in the manner and at the time set forth in the account hereunto
annexed.
(3) That no other person besides the said .............................................................................is
liable (otherwise than as surety) for the said debt or any part thereof.
(4) That I have/the said.................................has * not, nor has any other person, to my
knowledge on my/his * behalf received any security for the said debt or any part thereof, save
and
except ** ........................................................................................................................
...................................................................
Signature of declarant
Sworn/Solemnly declared * before me on the ............................... day of ...........................................
at .............................
...................................................................
* Strike out inappropriate words according to the facts of the case.

** Here insert nature, particulars and value of mortgage, pledge or other security.
Page 434
FORM D [9.2.3(i)]
AFFIDAVIT FOR THE PROOF OF A CLAIM BASED ON A PROMISSORY NOTE OR
OTHER BILL OF EXCHANGE. (SECTION 44(4))
In the Insolvent Estate
of ................................................................................................
Name in full of
creditor ..................................................................................................
Address in
full ................................................................................................................
Total amount of
claim ....................................................................................................
I, ................................................................................................. declare under
oath/solemnly and sincerely declare *
(1) That ......................................................................., whose estate has
been sequestrated, was on the date of sequestration, and still is, indebted
to ............................................. in the sum
of ...................................................................... by virtue of the following
promissory note/bill of exchange *
Date of Name of Name of Name of person Date when Name of Amount
note or bill maker or accepter to whom payable endorser
drawer payable
(2) That the said debt arose in the manner and at the time set forth in the
account hereunto annexed.
(3) That I have/the said ................has * not, nor has any other person to my
knowledge on his * behalf received any security for the said debt or any part
thereof, save and except **..............................................................
(4) That besides the said .................................
one ...............................................mentioned above, is liable to me/the
said ........................... * as ............................. of the said bill, * as
aforesaid.
(5) That the said note/bill * is in all respects genuine and valid.
...................................................................
Signature of declarant
Sworn/Solemnly declared * before me on the ........................ day of ............................
at .............................
...................................................................
* Strike out inappropriate words according to the facts of the case.
Page 435
Second Schedule
TARIFF A
[Tariff A amended by s. 36 of Act 16 of 1943, substituted by Proc R210 of 1960 (GG 6479 of 1
July 1960) and by Proc R282 of 1972 (GG 3695 of 3 November 1972), amended by Proc R120 of
1980 (GG 7119 of 11 July 1980), substituted by Proc R9 of 1985 (GG 9575 of 1 February 1985),
amended by Proc R74 of 1986 (GG 10212 of 2 May 1986), by GN R410 of 1990 (GG 12310 of 2
March 1990) and by GN R714 of 1995 (GG 16418 of 19 May 1995).]
DEPUTY SHERIFF'S FEES (SECTION 19 (5))

R
1. For each separate attachment of movable property 50,00
2. For the attachment of moneys, 7,5% to a maximum of R200,00.
3. For any abortive attempt at attachment, including one hour's search and enquiry 22,00
4. For making an inventory and the list of books and records referred to in section 19 37,50
(1)(d) of the Act, including all necessary copies and time spent in stocktaking, per
hour or part thereof
5. For assistance, where necessary in the opinion of the Master, in taking inventory, 37,50
a reasonable and inclusive fee not exceeding, per day or part thereof
6. For notice of attachment of movable property, if necessary, to a single person 4,00
7. For identical notices when there is more than one person to be given notice, for 2,50
each after the first
8. For each separate possession (as defined in the rules for the construction of this 37,50
tariff), a fee which is reasonable in the opinion of the Master, not exceeding, per
day or part thereof
9. For an additional officer, where necessary, limited to one, per day or part thereof 22,50
10. When no officer is left in possession, but movable property attached remains 0,60
under supervision of the deputy sheriff, per day or part thereof
11. For removal and storage: The necessary costs thereof.
12. For insuring movable property attached when it is considered necessary by the 6,00
deputy sheriff, in addition to the amount of the premium paid, an inclusive fee of
13. For the herding and tending of livestock: The necessary costs thereof.
14. Travelling allowance, per kilometre or fraction thereof 1,25
15. For each necessary letter 4,00
16. For any work necessarily done by or on behalf of the deputy sheriff in performing
the duties under section 19 of the Act, for which no provision is made in this tariff:
An amount to be determined by the Master.
Page 436
RULES FOR THE CONSTRUCTION OF THE TARIFF AND THE GUIDANCE OF THE
DEPUTY SHERIFF
(1) In the Tariff 'possession' means the continuous and necessary presence on the
premises in question for the period in respect of which possession is charged of a person
employed and paid by the deputy-sheriff for the sole purpose of retaining possession.
(2) When a charge is made for possession of any property, no charge shall be allowed for
herding and tending of livestock if one and the same person could render both services.
(3) If there are more ways than one of doing any particular act, the least expensive way
shall be adopted unless there is some reasonable objection thereto.
(4) No travelling allowance shall be charged unless it was necessary for the deputy-sheriff
to go beyond a distance of one kilometre from his office; but when any such allowance is
payable, it shall be paid for the actual distance travelled in going from and returning to the
office.
(5) No charge shall be made for the cost of any transport, railway fare, etc., in addition to
a charge for travelling allowance.
(6) If more services than one can be performed on the same journey, the distance to the
first place of service may be brought into account only once, and shall be apportioned
equally to the respective services; and the distance from the first place of service to the next
place of service shall similarly be apportioned equally to the remaining services, and so
forth.
(7) If the execution of a judgment has been stayed by publication of notice of surrender or
by sequestration after an inventory has been made, for the purpose of the execution, no
charge shall be made for a second inventory of the same goods. The deputy-sheriff's fees for
making the inventory shall be charged to the insolvent estate in question, according to the
tariff, and not to the execution creditor, unless the estate is unable to pay those fees.
(8) The deputy-sheriff may pay rent, if necessary for premises required for the storage of
goods attached, for a period of one month or such longer period as the Master shall
authorize.
(9) Every question arising under or relative to the tariff shall be determined by the Master.
Page 437
TARIFF B [10.7, 16.3.1(i)]

[Tariff B amended by s. 36 of Act 16 of 1943 and by Proclamation 229 of 1956, substituted by
Proclamation R159 of 1961 and by Proclamation R87 of 1973 and amended by Proclamation R41
of 1985, by Government Notice R1685 of 1987, by Government Notice R1842 of 1992 and by
Government Notice 323 of 1995.]
REMUNERATION OF TRUSTEE (SECTION 63)

1. On the gross proceeds of movable property (other than shares or similar securities) 10 per
sold, or on the gross amount collected under promissory notes or book debts, or as cent.
rent, interest or other income.
2. On the gross proceeds of immovable property, shares or similar securities sold, life 3 per cent.
insurance policies and mortgage bonds recovered and the balance recovered in
respect of immovable property sold prior to sequestration.
3. On- 1 per cent.
(i) money found in the estate;
(ii) The gross proceeds of cheques and postal orders payable to the insolvent, found
in the estate; and
(iii)
the gross proceeds of amounts standing to the credit of the insolvent in current,
savings and other accounts and of fixed deposits and other deposits at banking
institutions, building societies or other financial institutions.
4. On sales by the trustee in carrying on the business of the insolvent, or any part 6 per cent.
thereof, in terms of section 80.
5. On the amount distributed in terms of a composition, excluding any amount on which 2 per cent.
remuneration is payable under any other item of this tariff.
6. On the value at which movable property in respect of which a creditor has a preferent 5 per cent
right, has been taken over by such creditor provided that the total remuneration of a
trustee in terms of this tariff shall not be less than two thousand five hundred rand.
REMUNERATION OF CURATOR BONIS AND PROVISIONAL TRUSTEE

A reasonable remuneration to be determined by the Master, not to exceed the rate of
remuneration of a trustee under this tariff.
Page 438
Third Schedule [16.3.1(i)]

MASTER'S FEES OF OFFICE
(Section 153)
[Third Schedule amended by s. 31 of Act 17 of 1938, substituted by s. 22 of Act 62 of 1955 and
by Proclamation R155 of 1971, amended by Proc R118 of 1980, substituted by Proc R41 of 1985
and amended by GN R611 of 31 March 1989, by GN R1923 of 17 August 1990, by GN R1541 of
13 August 1993 and by GN R1055 of 5 November 2009.]
1. On all insolvent estates under final sequestration the total gross value of the assets
according to the trustee's liquidation and distribution account and/or contribution account of
which-
R
(a) is R5 000 or more, but less than R15 000 100,00

(b) is R15 000 or more, for each complete further R5 000
when the gross value exceeds R15 000, a further 25,00
subject to a maximum fee of 25 000,00
2. (a) For a copy of or an extract from any document preserved in the office of a Master,
when made in such office (including the certification of such copy or extract), a fee of R4,50
shall be paid.
(b) For the certification of such copy or extract not made in such office a fee of R9,00
shall be paid.
[Item 2 substituted by GN R611 of 31 March 1989 and by GN R1923 of 17 August 1990.]
3. On any amount paid by the trustee into the Guardians' Fund for account of creditors, a
commission of five per cent shall be payable, to be deducted by the Master from the moneys
so paid into the Guardians' Fund.
4. (a) The fees referred to in item 1 shall be assessed by the Master and shall be payable
on or before a date determined by the Master in the manner as determined administratively
by the Director-General: Justice and Constitutional Development. Proof of such payment
shall be submitted by the trustee to the Master.
[Subitem(a) substituted by GN R1055 of 5 November 2009.]
(b) The fees referred to in item 2 shall be payable in the manner as determined
administratively by the Director-General: Justice and Constitutional Development and proof
of such payment shall be submitted to the Master together with the written request for the
rendering by the Master of the service in question.
[Subitem(b) substituted by GN R1541 of 13 August 1993 and by GN R1055 of 5 November 2009.]
(c) The fees referred to in items 1, 2 and 3 shall apply to all insolvent estates which
are placed under final sequestration on or after the date of this proclamation.
PENDLEX: Insolvency Act 24 of 1936 after amendment by the Insolvency

Amendment Act 89 of 1989
Page 439
Section 56 (4)
When two trustees have been appointed or when the Master has appointed one or more
co-trustees in terms of section 57(5) all the trustees shall act jointly in performing their
functions as trustees and each of them shall be jointly and severally liable for every act
performed by them jointly.
Section 57 (5)
Whenever the Master considers it desirable, he may appoint one or more persons not
disqualified from holding the office of trustee who has given the security mentioned in
section 56(2) as a co-trustee or co-trustees, as the case may be, with the trustee or trustees
of an insolvent estate.
[1] Maximum amount payable: R12 000 – GN R865 in GG 21519 of 1 September 2000
[5] A director of the company or a member of the close corporation which is the insolvent is excluded – GN R865
in GG 21519 of 1 September 2000
[6] See GenN 1478 in GG 32691 of 6 November 2009
Page 440
Appendix 4
Companies Act 61 of 1973
Chapter XIV
WINDING-UP OF COMPANIES (ss 337-426)
General (ss 337-343)

337 Definitions
[1.3.2, 23intro]
In this Chapter, unless the context otherwise indicates -
‘company’ includes a company, external company and any other body corporate;
[1.3.2]
‘contributory’, in relation to a company limited by guarantee, means any person who
has undertaken to contribute to the assets of the company in terms of section 52 (3) (b)
in the event of its being wound up and, in relation to any company which is unable to pay
its debts and is being wound up by the Court or by a creditors’ voluntary winding-up,
includes any person who is liable to contribute to the costs, charges and expenses of the
338 Application of repealed Act where winding-up has already commenced
[1.3.2, 23intro]
(1) The provisions of this Act relating to the winding-up of a company shall not apply to
any company if its winding-up was commenced before the commencement of this Act, and
the winding-up of any such company shall be continued as if this Act had not been passed.
(2) When a company having shares which are not fully paid-up, is wound up under this
Act, the provisions of the repealed Act in respect of such shares and the contributories in
relation thereto shall continue to apply in respect of such a company, notwithstanding the
repeal of that Act.
339 Law of insolvency to be applied mutatis mutandis
[1.3.2, 23intro, 23.4.2]
In the winding-up of a company unable to pay its debts the provisions of the law relating
to insolvency shall, in so far as they are applicable, be applied mutatis mutandis in respect
of any matter not specially provided for by this Act.
340 Voidable and undue preferences
[1.3.2, 23intro, 26.3]
(1) Every disposition by a company of its property which, if made by an individual, could,
for any reason, be set aside in the event of his insolvency, may, if made by a company, be
set aside in the event of the company being wound up and unable to pay all its debts, and
the provisions of the law relating to insolvency shall mutatis mutandis be applied to any such
disposition.
[23.10, 26.3]
Page 441
(2) For the purpose of this section the event which shall be deemed to correspond with
the sequestration order in the case of an individual shall be -
(a) in the case of a winding-up by the Court, the presentation of the application,
unless that winding-up has superseded a voluntary winding-up, when it shall be
the registration in terms of section 200 of the special resolution to wind up the
company;
(b) in the case of a voluntary winding-up, the registration in terms of section 200 of
the special resolution to wind up the company;
[Para. (b) substituted by s. 17 (b) of Act 83 of 1981.]
(c) in the case of a winding-up of any company unable to pay its debts by the Court
superseding a judicial management order, the presentation of the application to
the Court in terms of section 433 (l) or 440.
(3) Any cession or assignment by a company of all its property to trustees for the benefit
of all its creditors shall be void.
341 Dispositions and share transfers after winding-up void
[1.3.2, 23intro, 26.4]
(1) Every transfer of shares of a company being wound up or alteration in the status of its
members effected after the commencement of the winding-up without the sanction of the
liquidator, shall be void.
[23.4.3]
(2) Every disposition of its property (including rights of action) by any company being
wound-up and unable to pay its debts made after the commencement of the winding-up,
shall be void unless the Court otherwise orders.
[23.4.3]
342 Application of assets and costs of winding-up
[1.3.2, 23intro, 23.7.7(i), 23.7.8]
(1) In every winding-up of a company the assets shall be applied in payment of the costs,
charges and expenses incurred in the winding-up and, subject to the provisions of section
435 (1) (b), the claims of creditors as nearly as possible as they would be applied in
payment of the costs of sequestration and the claims of creditors under the law relating to
insolvency and, unless the memorandum or articles otherwise provide, shall be distributed
among the members according to their rights and interests in the company.
(2) The provisions of the law relating to insolvency in respect of contributions by creditors
towards any costs shall apply to every winding-up of a company.
343 Modes of winding-up [1]
[1.3.2, 23intro]
(1) A company may be wound up-
[23.1]
(a) by the Court; or
[23.1]
(b) voluntarily.
[23.1]
(2) A voluntary winding-up of a company may be-
[23.1]
(a) a creditors’ voluntary winding-up; or
[23.3.2]
(b) a members’ voluntary winding-up.
[23.1]
Page 442
Winding-up by the Court (ss 344-348)

344 Circumstances in which company may be wound up by Court [2]
[1.3.2, 23intro, 23.2.2, 23.2.2(viii), 23.2.3(iii)]

A company may be wound up by the Court if -
(a) the company has by special resolution resolved that it be wound up by the Court;
[23.2.2(i), 25.1.1(iii)]
(b) the company commenced business before the Registrar certified that it was
entitled to commence business;
(c) the company has not commenced its business within a year from its
incorporation, or has suspended its business for a whole year;
[23.2.2(ii)]
(d) in the case of a public company, the number of members has been reduced below
seven;
(e) seventy-five per cent of the issued share capital of the company has been lost or
has become useless for the business of the company;
[23.2.2(iii)]
(f) the company is unable to pay its debts as described in section 345;
[23.2.2(iv)]
(g) in the case of an external company, that company is dissolved in the country in
which it has been incorporated, or has ceased to carry on business or is carrying
on business only for the purpose of winding up its affairs;
[23.2.2(v)]
(h) it appears to the Court that it is just and equitable that the company should be
wound up.
[23.2.2(vi)]
345 When company deemed unable to pay its debts
[1.3.2, 23intro, 23.2.2(iv), 24.2.2]
(1) A company or body corporate shall be deemed to be unable to pay its debts if -
(a) a creditor, by cession or otherwise, to whom the company is indebted in a sum
not less than one hundred rand then due –
[23.2.2(iv), 23.2.3(ii)]
(i) has served on the company, by leaving the same at its registered office, a
demand requiring the company to pay the sum so due; or
(ii) in the case of any body corporate not incorporated under this Act, has
served such demand by leaving it at its main office or delivering it to the
secretary or some director, manager or principal officer of such body
corporate or in such other manner as the Court may direct,
and the company or body corporate has for three weeks thereafter neglected to
pay the sum, or to secure or compound for it to the reasonable satisfaction of the
creditor; or
(b) any process issued on a judgment, decree or order of any court in favour of a
creditor of the company is returned by the sheriff or the messenger with an
endorsement that he has not found sufficient disposable property to satisfy the
judgment, decree or order or that any disposable property found did not upon
sale satisfy such process; or
[23.2.2(iv)]
(c) it is proved to the satisfaction of the Court that the company is unable to pay its
debts.
[23.2.2(iv)]
Page 443
(2) In determining for the purpose of subsection (1) whether a company is unable to pay
its debts, the Court shall also take into account the contingent and prospective liabilities of
the company.
[23.2.2(iv)]
346 Application for winding-up of company [3]
[1.3.2, 23intro, 23.2.3, 23.2.5]

(1) An application to the Court for the winding-up of a company may, subject to the
provisions of this section, be made-
[23.2.3(i)]
(a) by the company;
[23.2.3(i)]
(b) by one or more of its creditors (including contingent or prospective creditors);
[23.2.3(i)]
(c) by one or more of its members, or any person referred to in section 103 (3),
irrespective of whether his name has been entered in the register of members or
not;
[23.2.3(iii)]
[Para. (c) substituted by s. 11(a) of Act 70 of 1984.]
(d) jointly by any or all of the parties mentioned in paragraphs (a), (b) and (c);
[23.2.3(iv)]
(e) in the case of any company being wound up voluntarily, by the Master or any
creditor or member of that company; or
[23.2.3(v), 23.9.2]
(f) in the case of the discharge of a provisional judicial management order under
section 428 (3) or 432 (2), by the provisional judicial manager of the company.
[23.2.3(vi)]
[Para. (f) added by s. 11 (c) of Act 70 of 1984.]
(2) A member of a company shall not be entitled to present an application for the
winding-up of that company unless he has been registered as a member in the register of
members for a period of at least six months immediately prior to the date of the application
or the shares he holds have devolved upon him through the death of a former holder and
unless the application is on the grounds referred to in section 344 (b), (c), (d), (e) or (h).
[23.2.3(iii)]
(3) Every application to the Court referred to in subsection (1), except an application by
the Master in terms of paragraph (e) of that subsection, shall be accompanied by a
certificate by the Master, issued not more than ten days before the date of the application,
to the effect that sufficient security has been given for the payment of all fees and charges
necessary for the prosecution of all winding-up proceedings and of all costs of administering
the company in liquidation until a provisional liquidator has been appointed, or, if no
provisional liquidator is appointed, of all fees and charges necessary for the discharge of the
company from the winding-up.
[23.2.5, 23.2.5(i)]
[4] (4) (a) Before an application for the winding-up of a company is presented to the
Court, a copy of the application and of every affidavit confirming the facts stated therein
Page 444
shall be lodged with the Master, or, if there is no Master at the seat of the Court, with an
officer in the public service designated for that purpose by the Master by notice in the
Gazette.
[23.2.5(ii)]
(b) The Master or any such officer may report to the Court any facts ascertained by
him which appear to him to justify the Court in postponing the hearing or dismissing the
application and shall transmit a copy of that report to the applicant or his agent and to the
company.
[23.2.5(ii)]
(4A) (a) When an application is presented to the court in terms of this section, the
applicant must furnish a copy of the application-
[3.2.2(v), 23.2.5]
(i) to every registered trade union that, as far as the applicant can reasonably
ascertain, represents any of the employees of the company; and
[23.2.5(iii)]
(ii) to the employees themselves-
[23.2.5(iii)]
(aa) by affixing a copy of the application to any notice board to which the
applicant and the employees have access inside the premises of the
company; or
[23.2.5(iii)]
(bb) if there is no access to the premises by the applicant and the employees,
by affixing a copy of the application to the front gate of the premises,
where applicable, failing which to the front door of the premises from
which the company conducted any business at the time of the application;
[23.2.5(iii)]
(iii) to the South African Revenue Service; and
[23.2.5(iii)]
(iv) to the company, unless the application is made by the company, or the court, at
its discretion, dispenses with the furnishing of a copy where the court is satisfied
that it would be in the interests of the company or of the creditors to dispense
with it.
[23.2.5(iii)]
(b) The applicant must, before or during the hearing, file an affidavit by the person
who furnished a copy of the application which sets out the manner in which paragraph (a)
was complied with.
[23.2.5(iii)]
[Sub-s. (4A) added by s. 7 of Act 69 of 2002.]
346A Service of winding-up order

[1.3.2, 23intro, 3.2.2(v)]
(1) A copy of a winding-up order must be served on -
[23.4.5]
(a) every trade union referred to in subsection (2);
[23.4.5]
(b)
the employees of the company by affixing a copy of the application to any notice
board to which the employees have access inside the debtor’s premises, or if
there is no access to the premises by the employees, by affixing a copy to the
front gate, where applicable, failing which to the front door of the premises from
which the debtor conducted any business at the time of the presentation of the
application;
(c) the South African Revenue Service; and
[23.4.5]
(d) the company, unless the application was made by the company.
[23.4.5]
(2) For the purposes of serving the winding-up order in terms of subsection (1), the
sheriff must establish whether the employees of the company are represented by a
registered trade union and determine whether there is a notice board inside the premises of
the company to which the employees have access.
[23.4.5]
Page 445
347 Power of Court in hearing application

[1.3.2, 23intro]
(1) The Court may grant or dismiss any application under section 346, or adjourn the
hearing thereof, conditionally or unconditionally, or make any interim order or any other
order it may deem just, but the Court shall not refuse to make a winding-up order on the
ground only that the assets of the company have been mortgaged to an amount equal to or
in excess of those assets or that the company has no assets.
[23.2.6]
(1A) Whenever the court is satisfied that an application for the winding-up of a company
is an abuse of the court’s procedure or is malicious or vexatious, the court may allow the
company forthwith to prove any damages which it may have sustained by reason of the
application and award it such compensation as the court may deem fit.
(2) Where the application is presented by members of the company and it appears to the
Court that the applicants are entitled to relief, the Court shall make a winding-up order,
unless it is satisfied that some other remedy is available to the applicants and that they are
acting unreasonably in seeking to have the company wound up instead of pursuing that
other remedy.
[23.2.6]
(3) Where the application is presented on the ground that the company commenced
business before the Registrar had certified that it was entitled to commence business, the
Court may, instead of granting a winding-up order, give directions that the company shall
obtain such certificate from the Registrar or make such other order as it thinks fit and the
Court may order the costs or any part thereof to be paid by any person who in the opinion of
the Court is responsible for the default.
(4) Where the application is presented to the Court by -
(a) any applicant under section 346(1)(e), the Court may in the winding-up order or
by any subsequent order confirm all or any of the proceedings in the voluntary
winding-up; or
(b) any member under that section, the Court shall satisfy itself that the rights of the
member will be prejudiced by the continuation of a voluntary winding-up.
(5) The Court shall not grant a final winding-up order in the case of a company or other
body corporate which is already being wound up by order of Court within the Republic.
348 Commencement of winding-up by Court [5]
[1.3.2, 23intro, 23.4.1]

A winding-up of a company by the Court shall be deemed to commence at the time of the
presentation to the Court of the application for the winding-up.
Voluntary Winding-up (ss 349-353) [6]
349 Circumstances under which company may be wound up voluntarily [7]
[1.3.2, 23intro, 23.1, 23.3]

A company, not being an external company, may be wound up
Page 446
350 Members’ voluntary winding-up and security [8]
[1.3.2, 23intro]
(1) A voluntary winding-up of a company shall be a members’ voluntary winding-up if the
resolution contemplated in section 349 so states, but such a resolution shall be of no force
and effect unless -
[23.3, 23.3.1]
(a) it has been registered in terms of section 200; and
[23.3, 23.3.1]
(b) prior to the registration thereof –
[23.3, 23.3.1]
(i) security has been furnished to the satisfaction of the Master for the payment
of the debts of the company within a period not exceeding twelve months
from the commencement of the winding-up of the company; or
[23.3, 23.3.1]
(ii) the Master has dispensed with the furnishing of such security on production
to him of –
[23.3, 23.3.1]
(aa) a sworn statement by the directors of the company that it has no
debts; and
[23.3, 23.3.1]
(bb) a certificate by the auditor of the company that to the best of his
knowledge and belief and according to the records of the company, it
has no debts.
[23.3, 23.3.1]
(2) The costs incurred in furnishing the security referred to in paragraph (b) of subsection
(1) may be recovered from the company concerned.
(3) Unless otherwise provided, in a members’ voluntary winding-up the liquidator may
without the sanction of the Court exercise all powers by this Act given to the liquidator in a
winding-up by the Court, subject to such directions as may be given by the company in
general meeting.
351 Creditors’ voluntary winding-up [9]
[1.3.2, 23intro, 23.3.2]

(1) A voluntary winding-up of a company shall be a creditors’ voluntary winding-up if the
resolution contemplated in section 349 so states, but such a resolution shall be of no force
and effect unless it has been registered in terms of section 200.
[23.3, 23.4.2]
(2) Unless otherwise provided, in a creditors’ voluntary winding-up the liquidator may
without the sanction of the Court exercise all powers by this Act given to the liquidator in a
winding-up by the Court subject to such directions as may be given by the creditors.
[23.7.1]
352 Commencement of voluntary winding-up [10]
[1.3.2, 23intro]
(1) A voluntary winding-up of a company shall commence at the time of the registration in
terms of section 200 of the special resolution authorising the winding-up.
[23.4.1]
(2) The Registrar shall forthwith after the registration by him of a special resolution
referred to in subsection (1), transmit a copy thereof to the Master.
Page 447
353 Effect of voluntary winding-up on status of company and on directors [11]
[1.3.2, 23intro]
(1) A company which is being wound up voluntarily shall, notwithstanding anything
contained in its articles, remain a corporate body and retain all its powers as such, but shall
from the commencement of the winding-up cease to carry on its business except in so far as
may be required for the beneficial winding-up thereof.
[23.4.2]
(2) As from the commencement of a voluntary winding-up all the powers of the directors
of the company concerned shall cease except in so far as their continuance is sanctioned
[23.4.2]
(a) by the liquidator or the creditors in a creditors’ voluntary winding-up; or
[23.4.2]
(b) by the liquidator or the company in general meeting in a members’ voluntary
winding-up.
[23.4.2]
General Provisions Affecting all Windings-up (ss 354-366)

354 Court may stay or set aside winding-up
[1.3.2, 23intro]
(1) The Court may at any time after the commencement of a winding-up, on the
application of any liquidator, creditor or member, and on proof to the satisfaction of the
Court that all proceedings in relation to the winding-up ought to be stayed or set aside,
make an order staying or setting aside the proceedings or for the continuance of any
voluntary winding-up on such terms and conditions as the Court may deem fit.
[23.1, 23.13]
(2) The Court may, as to all matters relating to a winding-up, have regard to the wishes
of the creditors or members as proved to it by any sufficient evidence.
[23.13]
355 Notice to creditors or members in review by Court in winding-up, and no re-
opening of confirmed account
[1.3.2, 23intro]
(1) In any review by the Court of any matter under the winding-up of a company where
the general body of creditors, members or contributories is affected, notice to the liquidator
shall be notice to them.
(2) The Court shall not authorise the re-opening of any duly confirmed account or plan of
distribution or of contribution otherwise than as is provided in section 408.
356 Notice of winding-up of company
[1.3.2, 23intro]
(1) The Master shall upon receipt of a copy of any winding-up order of any company
lodged with him give notice of such winding-up in the Gazette.
[23.4.5]
(2) Any company which has passed a special resolution under section 349 for its voluntary
winding-up, shall within 28 days after the registration of that resolution in terms of section
200 -
(a) lodge with the Master a certified copy of the resolution concerned, together with
–
(i) in the case of a members’ voluntary winding-up if any further resolution
nominating a person or persons for appointment as liquidator or liquidators
of the company has been passed, a certified copy of that resolution; or
[23.4.5]
(ii) in the case of a creditors’ voluntary winding-up, two certified copies of the
statement referred to in section 363(1); and
[23.4.5]
Page 448
(b) give notice of the voluntary winding-up of the company in the Gazette.
[23.4.5]
[Sub-s. (2) substituted by s. 22 of Act 83 of 1981 and amended by s. 12 of Act 70 of 1984.]
(3) Any company which fails to comply with any provision of subsection (2) and every
director or officer thereof who knowingly authorised or permitted such failure, shall be guilty
of an offence.
357 Notice of winding-up to certain officials and their duties thereanent
[1.3.2, 23intro]
(1) A copy of every winding-up order, whether provisional or final and of any order
staying, amending or setting such order aside, made by the Court, shall forthwith be
transmitted by the Registrar of the Court to -
[23.4.5]
(a) the sheriff of the province in which the registered office of the company or main
office of the body corporate is situate and to the sheriff of every province in which
it appears that the company or such body corporate owns property;
[23.4.5]
(b) every registrar or other officer charged with the maintenance of any register
under any Act in respect of any property within the Republic which appears to be
an asset of such company;
[23.4.5]
(c) the messenger of every magistrate’s court by the order whereof it appears that
property of such company is under attachment.
[23.4.5]
(2) Where the assets of any such company are under four hundred rand in value, the
Court may direct that its movable assets may, upon such terms as to security as it may
determine, remain in the custody of such person as may be specified in the directions, and
in that event it shall not be necessary to transmit a copy of any order to any sheriff or
messenger.
(3) A copy of every special resolution for the voluntary winding-up of any company passed
under section 349 and of every order of court amending or setting aside the proceedings in
relation to the winding-up shall, within fourteen days after the registration of the resolution
in terms of section 200 or the making of the order, be transmitted by that company to the
officers and registrars referred to in paragraphs (a), (b) and (c) of subsection (1).
[23.4.5]
(4)(a) Any officer and registrar to whom a copy of any such order or resolution is
transmitted in terms of subsection (1) or (3) shall record such copy and note thereon the
day and hour of receipt thereof.
(b) Any registrar and officer referred to in paragraph (b) of subsection (1) shall upon
receipt of a copy of any order or resolution referred to in subsection (1) or (3), enter a
caveat in his register accordingly.
(5) Any company which fails to comply with any of the requirements of subsection (3) and
every director or officer of such a company who knowingly is a party to such failure, shall be
guilty of an offence.
Page 449
358 Stay of legal proceedings before winding-up order granted
[1.3.2, 23intro]
At any time after the presentation of an application for winding-up and before a winding-
up order has been made, the company concerned or any creditor or member thereof may -
(a) where any action or proceeding by or against the company is pending in any
court in the Republic, apply to such court for a stay of the proceedings; and
(b) where any other action or proceeding is being or about to be instituted against
the company, apply to the Court to which the application for winding-up has been
presented, for an order restraining further proceedings in the action or
proceeding,
and the court may stay or restrain the proceedings accordingly on such terms as it thinks fit.
359 Legal proceedings suspended and attachments void
[1.3.2, 23intro, 26.4]
(1) When the Court has made an order for the winding-up of a company or a special
resolution for the voluntary winding-up of a company has been registered in terms of section
200-
(a) all civil proceedings by or against the company concerned shall be suspended
until the appointment of a liquidator; and
[23.4.4]
(b) any attachment or execution put in force against the estate or assets of the
company after the commencement of the winding-up shall be void.
[23.4.4]
(2)(a) Every person who, having instituted legal proceedings against a company which
were suspended by a winding-up, intends to continue the same, and every person who
intends to institute legal proceedings for the purpose of enforcing any claim against the
company which arose before the commencement of the winding-up, shall within four weeks
after the appointment of the liquidator give the liquidator not less than three weeks’ notice
in writing before continuing or commencing the proceedings.
[23.4.4]
(b) If notice is not so given the proceedings shall be considered to be abandoned
unless the Court otherwise directs.
[23.4.4]
360 Inspection of records of company being wound up
[1.3.2, 23intro]
(1) Any member or creditor of any company unable to pay its debts and being wound up
by the Court or by a creditors’ voluntary winding-up may apply to the Court for an order
authorising him to inspect any or all of the books and papers of that company, whether in
possession of the company or the liquidator, and the Court may impose any condition it
thinks fit in granting that authority.
(2) The provisions of subsection (1) shall not be construed as affecting any powers or
rights conferred by any law upon any department of State or any person acting under its
authority at all times to inspect or cause to be inspected, the books and papers of any
company being wound up.
361 Custody of or control over, and vesting of property of, company
[1.3.2, 23intro]
(1) In any winding-up by the Court all the property of the company concerned shall
Page 450
be deemed to be in the custody and under the control of the Master until a provisional
liquidator has been appointed and has assumed office.
[23.4.2]
(2) In any winding-up of any company, at all times while the office of the liquidator is
vacant or he is unable to perform his duties, the property of the company shall be deemed
to be in the custody and under the control of the Master.
[23.4.2]
(3) If for any reason it appears expedient, the Court may by the winding-up order or by
any subsequent order direct that all or any part of the property, immovable and movable
(including rights of action), belonging to the company, or to trustees on its behalf, shall vest
in the liquidator in his official capacity, and thereupon the property or the part thereof
specified in the order shall vest accordingly, and the liquidator may, after giving such
indemnity (if any) as the Court may direct, bring or defend in his official capacity any action
or other legal proceedings relating to that property, or necessary to be brought or defended
for the purpose of effectually winding-up the company and recovering its property.
362 Court may order directors, officers and others to deliver property to liquidator
or to pay into bank
[1.3.2, 23intro]
(1) The Court may at any time after making a winding-up order or after a special
resolution for the voluntary winding-up of a company has been registered in terms of section
200, order any director, member, trustee, banker, agent or officer of the company
concerned to pay, deliver, convey, surrender or transfer to the liquidator of the company
forthwith, or within such time as the Court directs, any money, property or books and
papers in his hands to which the company is prima facie entitled.
(2) The Court may order any director, member, purchaser or other person from whom
money is due to any company which is being wound up, to pay the same into a banking
institution registered under the Banks Act, 1965 (Act 23 of 1965), to be named by the Court
for the account of the liquidator instead of to the liquidator, and such order may be enforced
in the same manner as if it had ordered payment to the liquidator.
(3) All moneys paid into a banking institution as aforesaid in the event of a winding-up by
the Court shall be subject in all respects to the orders of the Court.
363 Directors and others to submit statement of affairs
[1.3.2, 23intro]
(1) Where it is intended to pass a resolution for a creditors’ voluntary winding-up of a
company, the directors of that company shall make out or cause to be made out, in the
prescribed form, a statement as to the affairs of the company and lay it before the meeting
convened for the purpose of passing such a resolution.
[23.3.2]
(2) Where an order for the winding-up of a company has been made by the Court -
(a) the persons who at the time of the winding-up order were directors and officers
of the company; and
[23.4.6]
(b)
such persons who have been directors or officers of the company or who
participated in its formation, at any time within one year before the winding-up
order, as may be required to do so by the Master,
[23.4.6]
shall make out or cause to be made out, in the prescribed form, such statement as to the
affairs of the company and lodge two certified copies thereof with the Master within
Page 451
fourteen days from the date of the winding-up order in question or within such extended
time as the Master or the Court may for special reasons appoint.
[23.4.6]
(3) The Master may exempt any person referred to in subsection (2) from the obligation
to comply with the requirements of that subsection if such person satisfies him by affidavit
that he is unable to make out or cause to be made out or to verify such statement as to the
affairs of the company concerned.
(4) The statement as to the affairs of a company referred to in subsection (1) or (2) -
(a) shall contain such matter and be in such form as prescribed including particulars
of the company’s assets, debts, liabilities (including contingent and prospective
liabilities), any pending legal proceedings by or against it, the names, addresses
and nature of the businesses of its creditors, the security held by each of them,
the dates when each of the securities was given and, in the case of such a
statement under subsection (2), such further information as the Master may
require; and
(b) shall be verified by affidavit by each of the persons referred to in subsection (1)
or (2) and such verifying affidavit shall be annexed to the said statement.
(5) The Master shall transmit a copy of any statement as to the affairs of a company
lodged with him in terms of this section to the liquidator on his appointment.
[23.4.6]
(6) Any person shall be entitled by himself or his agent, on payment of the prescribed fee,
to inspect or apply for a copy of or an extract from any statement as to the affairs of a
company lodged with the Master in pursuance of this section.
(7) Any person who is required to make or cause to be made any statement as to the
affairs of a company in terms of this section, shall be paid by the Master, out of the assets of
the company, such costs and expenses incurred by him in respect of the preparation and
making of such statement as the Master may consider reasonable.
(8) Any person who fails to comply with any requirement of subsection (1), (2) or (4)
shall be guilty of an offence.
363A Change of address by directors and secretaries and certain former directors
and secretaries
[1.3.2, 23intro]
(1) Any person who is a director or secretary of a company which is being wound up and
who, after the winding-up of such company has commenced but before the liquidator’s final
account has in terms of section 408 been confirmed, changes his residential or postal
address, shall notify the liquidator by registered post of his new residential or postal address
within fourteen days after such change, or, if the liquidator has not been appointed on the
date of such change, within fourteen days after the appointment of the liquidator.
(2) Any person who fails to comply with any requirement of subsection (1) shall be guilty
of an offence.
(3) Whenever at the trial of any person charged with an offence referred to in subsection
(2) it is proved that such person is a director or secretary of a company which is being
wound up and that he has changed his residential or postal address after the winding-up of
that company has commenced and that the liquidator has no written record of such change,
it shall be presumed, unless the contrary is proved, that he did not notify the liquidator of
such change.
Page 452
364 Master to summon first meetings of creditors and members and purpose
thereof
[1.3.2, 23intro]
(1) As soon as may be after a final winding-up order has been made by the Court or a
special resolution for a creditors’ voluntary winding-up of a company has been registered in
terms of section 200, the Master shall summon-
[23.5.1, 23.5.2]
(a) a meeting of the creditors of the company for the purpose of –
(i) considering the statement as to the affairs of the company lodged with the
Master under section 363;
(ii) the proof of claims against the company; and
(iii) nominating a person or persons for appointment as liquidator or liquidators;
and
(b) a meeting of the members of the company or, in the case where the winding-up
concerns a company limited by guarantee, a meeting of the contributories in
respect of that company, for the purpose of –
(i) considering the said statement as to the affairs of the company; and
(ii) nominating a person or persons for appointment as liquidator or liquidators,
unless the company in general meeting, when passing a resolution provided for in section
349, has already disposed of the matters referred to in subparagraphs (i) and (ii).
(2) Meetings of creditors under this section shall be summoned and held as nearly as may
be in the manner provided by the law relating to insolvency, and meetings of members or
contributories in the manner prescribed by regulation: Provided that, in the case of a
meeting of creditors, the Master may direct the company concerned or the provisional
liquidator to send a notice of such meeting by post to every creditor of the company.
[23.5.2]
365 Offences in securing nomination as liquidator and restriction on voting at
meetings
[1.3.2, 23intro]
(1) Any person who gives or agrees or offers to give to any member, creditor or
contributory of a company any reward with a view to securing his own nomination or
appointment or to securing or preventing the nomination or appointment of any person as
the company’s liquidator, shall be guilty of an offence.
(2) (a) The provisions of the law relating to insolvency in respect of voting, the manner of
voting and voting by an agent at meetings of creditors, shall apply mutatis mutandis to any
meeting referred to in sections 351 and 364: Provided that in any winding-up by the court a
director or former director of a company shall have no voting right in respect of the
nomination of a liquidator on the ground of his loan account with the company or claims for
arrear salary, travelling expenses or allowances due by the company or claims paid by such
director or former director on behalf of the company.
(b) The provisions of paragraph (a) shall mutatis mutandis apply to a person to whom
a right contemplated in the said paragraph has been ceded.
Page 453
366 Claims and proof of claims

[1.3.2, 23intro]
(1) In the winding-up of a company by the Court and by a creditors’ voluntary winding-up
-
[23.5.3]
(a) the claims against the company shall be proved at a meeting of creditors mutatis
mutandis in accordance with the provisions relating to the proof of claims against
an insolvent estate under the law relating to insolvency;
(b) a secured creditor shall be under the same obligation to set a value upon his
security as if he were proving his claim against an insolvent estate under the law
relating to insolvency, and the value of his vote shall be determined in the same
manner as is prescribed under that law;
(c) a secured creditor and the liquidator shall, where the company is unable to pay
its debts, have the same right respectively to take over the security as a secured
creditor and a trustee would have under the law relating to insolvency.
(2) The Master may, on the application of the liquidator, fix a time or times within which
creditors of the company are to prove their claims or otherwise be excluded from the benefit
of any distribution under any account lodged with the Master before those debts are proved.
[23.5.3]
Liquidators (ss 367-385)

367 Appointment of liquidator
[1.3.2, 23intro]
For the purpose of conducting the proceedings in a winding-up of a company the Master
shall appoint a liquidator or liquidators as hereinafter provided.
368 Appointment of provisional liquidator
[1.3.2, 23intro, 23.6.1]
As soon as a winding-up order has been made in relation to a company, or a special
resolution for a voluntary winding-up of a company has been registered in terms of section
200, the Master may, in accordance with policy determined by the Minister, appoint any
suitable person as provisional liquidator of the company concerned, who shall give security
to the satisfaction of the Master for the proper performance of his or her duties as
provisional liquidator and who shall hold office until the appointment of a liquidator.
[S. 368 substituted by s. 28 of Act 83 of 1981 and by s. 16 of Act 16 of 2003.]
369 Determination of person to be appointed liquidator

[1.3.2, 23intro]
(1) In the case of a members’ voluntary winding-up of a company, the Master shall,
subject to the provisions of section 370, appoint the person or persons nominated by the
company in the resolution referred to in section 356(2)(a)(i) as liquidator or liquidators of
the company concerned.
[23.6.2]
(2)(a) In the case of a creditors’ voluntary winding-up and a winding-up by the Court of a
company, the Master shall, subject to the provisions of section 370, appoint the person or
persons nominated by any meetings referred to in section 364 as liquidator or liquidators of
the company concerned, if the same person or persons have been nominated by the said
meetings.
[23.6.2]
[Para. (a) amended by s. 29 (b) of Act 83 of 1981.]
Page 454
(b) If the said meetings have nominated different persons, the Master shall, subject to
the provisions of section 370, decide the difference and appoint all or any of the persons so
nominated, as he thinks fit, as liquidator or liquidators of the company concerned.
[23.6.2]
370 Master may decline to appoint nominated person as liquidator
[1.3.2, 23intro]
(1) If a person who has been nominated as liquidator by meetings of creditors and
members or contributories of a company was not properly nominated or is disqualified from
being nominated or appointed as liquidator under section 372 or 373 or has failed to give
within a period of seven days as from the date upon which he was notified that the Master
had accepted his nomination or within such further period as the Master may allow, the
security mentioned in section 375(1) or, if in the opinion of the Master the person nominated
as liquidator should not be appointed as liquidator of the company concerned, the Master
shall give notice in writing to the person so nominated that he declines to accept his
nomination or to appoint him as liquidator and shall in that notice state his reason for
declining to accept his nomination or to appoint him: Provided that if the Master declines to
accept the nomination for appointment as liquidator because he is of the opinion that the
person nominated should not be appointed as liquidator, it shall be sufficient if the Master
states, in that notice, as such reason, that he is of the opinion that the person nominated
should not be appointed as liquidator of the company concerned.
[23.6.2]
(2) (a) When the Master has so declined to accept the nomination of any person or to
appoint him as liquidator or the Minister has under section 371(3) set aside the appointment
of a liquidator, the Master shall convene meetings of creditors and members or
contributories of the company concerned for the purpose of nominating another person for
appointment as liquidator in the place of the person whose nomination as liquidator the
Master has declined to accept or whom the Master has declined to appoint or whose
appointment has been so set aside.
(b) In the notice convening the said meetings the Master shall state that he has
declined to accept the nomination for appointment as liquidator of the person previously
nominated or to appoint the person so nominated and the reasons therefor, subject to the
proviso to subsection (1), or that the appointment of the person previously appointed as
liquidator has been set aside by the Minister, as the case may be, and that the meetings are
convened for the purpose of nominating another person for appointment as liquidator.
(c) The Master shall post a copy of such notice to every creditor whose claim against
the company was previously proved and admitted.
(d) The meetings referred to in paragraph (a) shall be deemed to be continuations of
the first meetings of creditors, members or contributories or of the meetings referred to in
sections 350 and 364.
(3) If the Master again declines for any reason mentioned in subsection (1) to accept the
nomination for appointment as liquidator by the meetings mentioned in subsection (2), or to
appoint a person so nominated, he shall -
(a) act in accordance with the provisions of subsection (1); and
(b) if the person so nominated was nominated as sole liquidator or if all the persons
so nominated have not been appointed by him or her, appoint, in accordance with
the
Page 455
policy determined by the Minister, as liquidator or liquidators of the company
concerned any other person or persons not disqualified from being liquidator of
that company.
371 Remedy of aggrieved persons

[1.3.2, 23intro, 23.6.2, 24.3]
(1) Any person aggrieved by the appointment of a liquidator or the refusal of the Master
to accept the nomination of a liquidator or to appoint a person nominated as a liquidator,
may within a period of seven days from the date of such appointment or refusal request the
Master in writing to submit his reasons for such appointment or refusal to the Minister.
[23.6.2]
(2) The Master shall within seven days of the receipt by him of the request referred to in
subsection (1) submit to the Minister, in writing, his reasons for such appointment or refusal
together with any relevant documents, information or objections received by him.
[23.6.2]
(3) The Minister may, after consideration of the reasons referred to in subsection (2) and
any representations made in writing by the person who made the request referred to in
subsection (1) and of all relevant documents, information or objections submitted to him or
the Master by any interested person, confirm, uphold or set aside the appointment or the
refusal by the Master and, in the event of the refusal by the Master being set aside, direct
the Master to accept the nomination of the liquidator concerned and to appoint him as
liquidator of the company concerned.
[23.6.2]
(4) . . .
372 Persons disqualified from appointment as liquidator

[1.3.2, 23intro]
No person shall be qualified for nomination or appointment as the liquidator of a company,
if he is -
(a) an insolvent;
[23.6.3]
(b) a minor or any other person under legal disability;
[23.6.3]
(c) a person declared under section 373 to be incapable of being appointed as a
liquidator, while he remains so incapable;
[23.6.3]
(d) a person removed from an office of trust by the Court on account of misconduct
or a person who is the subject of any order under this Act disqualifying him from
being a director;
[23.6.3]
(e) a corporate body;
[23.6.3]
(f) any person who has at any time been convicted (whether in the Republic or
elsewhere) of theft, fraud, forgery or uttering a forged document or perjury and
has been sentenced therefor to imprisonment without the option of a fine or to a
fine exceeding twenty rand;
[23.6.3]
(g) any person who has by means of any misrepresentation or any reward, whether
directly or indirectly induced or attempted to induce any person to vote for him in
the nomination of a liquidator or to effect or assist in effecting his nomination or
appointment as liquidator of any company;
[23.6.3]
(h) a person who does not reside in the Republic;
[23.6.3]
Page 456
(i) any person who at any time during a period of twelve months immediately
preceding the winding-up of a company acted as a director, officer or auditor of
that company; and
[23.6.3]
(j) any agent authorised specially or under a general power of attorney to vote for or
on behalf of a creditor at a meeting of creditors of the company concerned and
acting or purporting to act under such special authority or general power of
attorney:
[23.6.3]
Provided that the provisions of paragraph (i) shall not apply to an auditor in the case of the
voluntary winding-up of the company concerned by the members as contemplated in section
350.
373 Persons disqualified by Court from being appointed or acting as liquidators

[1.3.2, 23intro]
The Court may, on the application of any interested person, declare any person proposed
to be appointed or appointed as liquidator, to be disqualified from holding office, and, if he
has been appointed, may remove him from office, and may, if it thinks fit, declare him
incapable for life or for such period as it may determine of being appointed as a liquidator
under this Act -
(a) if he has accepted or offered or agreed to accept or solicited from any auctioneer,
agent or other person employed on behalf of a company in liquidation, any share
of the commission or remuneration of such auctioneer, agent or person or any
other benefit; or
(b) if he has, in order to obtain or in return for the vote of any creditor, member or
contributory, or in order to exercise any influence upon his nomination or
appointment as liquidator –
(i) procured or been privy to the wrongful insertion or omission of the name of
any person in or from any list or schedule required by this Act; or
(ii) directly or indirectly given or agreed to give any consideration to any
person; or
(iii) offered or agreed with any person to abstain from investigating any
transactions of or relating to the company or of any of its directors or
officers; or
(iv) been guilty of or privy to the splitting of claims for the purpose of increasing
the number of votes.
374 Master may appoint co-liquidator at any time
[1.3.2, 23intro, 23.6.2]
Whenever the Master considers it desirable he or she may, in accordance with policy
determined by the Minister, appoint any person not disqualified from holding the office of
liquidator and who has given security to his or her satisfaction, as a co-liquidator with the
liquidator or liquidators of the company concerned.
375 Appointment, commencement of office and validity of acts of liquidator

[1.3.2, 23intro]
(1) When the person to be appointed to the office of liquidator of a company has been
determined and when such person has given security to the satisfaction of the
Page 457
Master for the proper performance of his duties as liquidator, except where in the case of a
members’ voluntary winding-up the company concerned has resolved that no security shall
be required, the Master shall appoint him as liquidator of the company by issuing to him a
certificate of appointment.
(2) The said certificate of appointment shall be valid throughout the Republic.
(3) A liquidator shall be entitled to act as such from the date of his certificate of
appointment.
(4) The acts of a liquidator shall be valid notwithstanding any defects that may afterwards
be discovered in his appointment or qualification.
(5) Upon receipt of such certificate of appointment the liquidator shall -
(a) within seven days after receipt thereof send a copy thereof to the Registrar under
cover of the prescribed form; and
(b) give notice of his appointment in the Gazette.
376 Title of liquidator
[1.3.2, 23intro]
A liquidator shall be described as the liquidator of the particular company in respect of
which he has been appointed, and not by his individual name.
377 Filling of vacancies
[1.3.2, 23intro]
(1) When a vacancy occurs in the office of liquidator, the Master shall -
(a) in the case of a winding-up by the Court or a creditors’ voluntary winding-up,
convene meetings of creditors and members or contributories of the company
concerned; and
(b) in the case of a members’ voluntary winding-up, convene or direct the company
concerned to convene a meeting of members; or
(c) if there is a remaining liquidator or liquidators, direct him or them to convene the
meetings referred to in paragraph (a) or (b),
for the purpose of nominating a person or persons for appointment as liquidator to fill the
vacancy: Provided that if the Master is of the opinion that the remaining liquidator or
liquidators will be able to complete the winding-up, he may dispense with the appointment
of a liquidator to fill the vacancy and may direct the remaining liquidator or liquidators to
complete the winding-up.
(2) All the provisions of this Act relating to the convening and conduct of the said
meetings and the nomination and appointment of a liquidator shall apply to the filling of a
vacancy in the office of liquidator.
(3) Subject to the proviso to subsection (1), if for any reason a vacancy is not filled as
provided in this section, the Master may, in accordance with policy determined by the
Minister, appoint any person as provisional liquidator or as liquidator to fill such vacancy.
378 Leave of absence or resignation of liquidator

[1.3.2, 23intro]
(1) A liquidator shall not be absent from the Republic for a period exceeding 60 days
unless -
(a) the Master has before his departure from the Republic granted him permission in
writing to be absent; and
Page 458
(b) he complies with such conditions as the Master may think fit to impose.
(2) At the request of a liquidator the Master may relieve him of his office or direct him to
resign, upon such conditions as the Master may think fit.
(3) Every liquidator who is permitted to absent himself from the Republic for a period
exceeding 60 days or who is relieved of his office by the Master or so resigns therefrom,
shall give notice thereof in the Gazette.
379 Removal of liquidator by Master and by the Court

[1.3.2, 23intro]
(1) The Master may remove a liquidator from his office on the ground -
(a) that he was not qualified for nomination or appointment as liquidator or that his
nomination or appointment was for any other reason illegal or that he has
become disqualified from being nominated or appointed as a liquidator or has
been authorised, specially or under a general power of attorney, to vote for or on
behalf of a creditor, member or contributory at a meeting of creditors, members
or contributories of the company of which he is the liquidator and has acted or
purported to act under such special authority or general power of attorney; or
[23.6.4]
(b) that he has failed to perform satisfactorily any duty imposed upon him by this Act
or to comply with a lawful demand of the Master or a commissioner appointed by
the Court under this Act; or
[23.6.4]
(c) that his estate has become insolvent or that he has become mentally or
physically incapable of performing satisfactorily his duties as liquidator; or
[23.6.4]
(d) that the majority (reckoned in number and in value) of creditors entitled to vote
at a meeting of creditors or, in the case of a members’ voluntary winding-up, a
majority of the members of the company, or, in the case of a winding-up of a
company limited by guarantee, the majority of the contributories, has requested
him in writing to do so; or
[23.6.4]
(e) that in his opinion the liquidator is no longer suitable to be the liquidator of the
company concerned.
[23.6.4]
(2) The Court may, on application by the Master or any interested person, remove a
liquidator from office if the Master fails to do so in any of the circumstances mentioned in
subsection (1) or for any other good cause.
[23.6.4, 23.7.1]
380 Notice of removal of liquidator
[1.3.2, 23intro]
The Master shall give notice in the Gazette of the removal of any liquidator.
381 Control of Master over liquidators
[1.3.2, 23intro]
(1) The Master shall take cognisance of the conduct of liquidators and shall, if he has
reason to believe that a liquidator is not faithfully performing his duties and duly observing
all the requirements imposed on him by any law or otherwise with respect to the
performance of his duties, or if any complaint is made to him by any creditor, member or
contributory in regard thereto, enquire into the matter and take such action thereanent as
he may think expedient.
(2) The Master may at any time require any liquidator to answer any enquiry in
Page 459
relation to any winding-up in which such liquidator is engaged, and may, if he thinks fit,
examine such liquidator or any other person on oath concerning the winding-up.
(3) The Master may at any time appoint a person to investigate the books and vouchers of
a liquidator.
(4) The Court may, upon the application of the Master, order that any costs reasonably
incurred by him in performing his duties under this section be paid out of the assets of the
company or by the liquidator de bonispropriis.
(5) Any expenses incurred by the Master in carrying out any provision of this section shall,
unless the Court otherwise orders, be regarded as part of the costs of the winding-up of that
company.
382 Plurality of liquidators, liability and disagreement
[1.3.2, 23intro]
(1) When two or more liquidators have been appointed they shall act jointly in performing
their functions as liquidators and shall be jointly and severally liable for every act performed
by them jointly.
(2) Whenever two or more liquidators disagree on any matter relating to the company of
which they are liquidators, one or more of them may refer the matter to the Master who
may thereupon determine the question in issue or give directions as to the procedure to be
followed for the determination thereof.
383 Cost and reduction of security by liquidator
[1.3.2, 23intro]
(1) The cost of giving security by a person appointed as liquidator to an amount which the
Master considers reasonable shall, subject to the provisions of section 89(1) of the
Insolvency Act, 1936 (Act 24 of 1936), be paid out of the assets of the company concerned
as part of the costs of liquidation thereof.
(2) When a liquidator has in the course of the winding-up of a company accounted to the
satisfaction of the Master for any property belonging to the company, he may in writing
apply for the consent of the Master to a reduction of the security given by him and the
Master, if he is satisfied that the reduced security will suffice to indemnify the company and
the creditors and contributories thereof against any maladministration on the part of the
liquidator in respect of the remaining property belonging to the company, may consent
wholly or in part to such reduction.
384 Remuneration of liquidator
[1.3.2, 23intro]
(1) In any winding-up a liquidator shall be entitled to a reasonable remuneration for his
services to be taxed by the Master in accordance with the prescribed tariff of remuneration:
Provided that, in the case of a members’ voluntary winding-up, the liquidator’s remuneration
may be determined by the company in general meeting.
(2) The Master may reduce or increase such remuneration if in his opinion there is good
cause for doing so, and may disallow such remuneration either wholly or in part on account
of any failure or delay by the liquidator in the discharge of his duties.
(3) No person who employs or is a fellow employee or in the ordinary employment of the
liquidator, shall be entitled to receive any remuneration out of the assets of the company
concerned for services rendered in the winding-up thereof and no liquidator shall be entitled
either by himself or his partner to receive out of the assets of the
Page 460
company any remuneration for his services except the remuneration to which he is entitled
under this Act.
385 Certificate of completion of duties by liquidator and cancellation of security
[1.3.2, 23intro, 23.10]
(1) When a liquidator of a company has performed all the duties prescribed by this Act
and complied with all the requirements of the Master, he may apply in writing to the Master
for a certificate to that effect.
(2) The Master shall, when he issues the said certificate, additionally state therein that he
consents to the reduction of the security given by the liquidator to a stated amount or to its
cancellation.
Powers of Liquidators (ss 386-390)

386 General powers
[1.3.2, 23intro]
(1) The liquidator in any winding-up shall have power-
(a) to execute in the name and on behalf of the company all deeds, receipts and
other documents, and for that purpose to use the company’s seal;
[23.8.1]
(b) to prove a claim in the estate of any debtor or contributory of the company and
receive payment in full or a dividend in respect thereof;
[23.8.1]
(c) to draw, accept, make and endorse any bill of exchange or promissory note in the
name and on behalf of the company: Provided that no liquidator shall, except
with the leave of the Court or the authority referred to in subsection (3) or (4), or
for the purposes of carrying on the business of the company in terms of
subsection (4) (f) have power to impose any additional liabilities upon the
company;
[23.8.1]
(d) to summon any general meeting of the company or the creditors or contributories
of the company for the purpose of obtaining its or their authority or sanction with
respect to any matter or for such other purposes as he may consider necessary;
[23.8.1]
(e) subject to the provisions of subsections (3), (4) and (5), to take such measures
for the protection and better administration of the affairs and property of the
company as the trustee of an insolvent estate may take in the ordinary course of
his duties and without the authority of a resolution of creditors.
[23.8.1]
(2) Subject to the consent of the Master, a liquidator may, at any time before a general
meeting contemplated in subsection (1) (d) is convened for the first time, terminate any
lease in terms of which the company is the lessee of movable or immovable property.
[23.8.2]
(2A) At any time before a general meeting contemplated in subsection 1 (d) is convened
for the first time the liquidator shall, if satisfied that any movable or immovable property of
the company ought forthwith to be sold, recommend to the Master in writing accordingly,
stating his reasons for such recommendation.
[23.8.2]
(2B) The Master may thereupon authorise the sale of such property or any portion thereof
on such conditions and in such manner as he may determine: Provided that if such property
or a portion thereof is subject to a preferential right, the Master shall not
Page 461
authorise the sale of such property or portion unless the person entitled to such preferential
right has given his consent thereto in writing.
[23.8.2]
[Sub-s. (2B) inserted by s. 9 (b) of Act 84 of 1980.]
(3) The liquidator of a company -
(a) in a winding-up by the Court, with the authority granted by meetings of creditors
and members or contributories or on the directions of the Master given under
section 387;
[23.8.3]
(b) in a creditors’ voluntary winding-up, with the authority granted by a meeting of
creditors; and
(c) in a members’ voluntary winding-up, with the authority granted by a meeting of
members,
shall have the powers mentioned in subsection (4).
(4) The powers referred to in subsection (3) are -
[23.8.3]
(a) to bring or defend in the name and on behalf of the company any action or other
legal proceedings of a civil nature, and, subject to the provisions of any law
relating to criminal procedure, any criminal proceedings: Provided that
immediately upon the appointment of a liquidator and in the absence of the
authority referred to in subsection (3), the Master may authorise, upon such
terms as he thinks fit, any urgent legal proceedings for the recovery of
outstanding accounts;
[23.8.2, 23.8.3]
(b) to agree to any reasonable offer of composition made to the company by any
debtor and to accept payment of any part of a debt due to the company in
settlement thereof or to grant an extension of time for the payment of any such
debt;
[23.8.3]
(c) to compromise or admit any claim or demand against the company, including an
unliquidated claim;
[23.8.3]
(d) except where the company being wound up is unable to pay its debts, to make
any arrangement with creditors, including creditors in respect of unliquidated
claims;
[23.8.3]
(e) to submit to the determination of arbitrators any dispute concerning the company
or any claim or demand by or upon the company;
[23.8.3]
(f) to carry on or discontinue any part of the business of the company in so far as
may be necessary for the beneficial winding-up thereof: Provided that, if he
considers it necessary, the liquidator may carry on or discontinue any part of the
business of the company concerned before he has obtained the leave of the Court
or the authority referred to in subsection (3), but shall not in that event be
entitled, as between himself and the creditors or contributories of the company,
to include the cost of any goods purchased by him in the costs of the winding-up
of the company unless such goods were necessary for the immediate purpose of
carrying on the business of the company and there are funds available for
payment of the cost of such goods after providing for the costs of winding-up;
[23.8.3]
(g) to exercise mutatis mutandis the same powers as are by sections 35 and 37 of
the Insolvency Act, 1936, (Act 24 of 1936), conferred upon a trustee under that
Act, on the like terms and conditions as are therein mentioned: Provided that the
powers conferred by section 35 aforesaid, shall not be exercised unless the
company is unable to pay its debts;
[23.8.3]
(h) to sell any movable and immovable property of the company by public auction,
public tender or private contract and to give delivery thereof;
[23.8.3]
Page 462
(i) to perform any act or exercise any power for which he is not expressly required
by this Act to obtain the leave of the Court.
[23.8.3]
(5) In a winding-up by the Court, the Court may, if it deems fit, grant leave to a liquidator
to raise money on the security of the assets of the company concerned or to do any other
thing which the Court may consider necessary for winding up the affairs of the company and
distributing its assets.
[23.8, 23.8.3]
(6) The Master may restrict the powers of a provisional liquidator.
[23.6.1]
387 Exercise of liquidator’s powers in winding-up by Court
[1.3.2, 23intro]
(1) Subject to the provisions of this Act, the liquidator of a company which is being wound
up by the Court, shall, in the administration of the assets of the company, have regard to
any directions that may be given by resolution of the creditors or members or contributories
of the company at any general meeting.
[23.7.1]
(2) In regard to any matter which has been submitted by the liquidator for the directions
of creditors and members or contributories in general meeting, but as to which no directions
have been given or as to which there is a difference between the directions of creditors and
members or contributories, the liquidator may apply to the Master for directions and the
Master may give or refuse to give directions as he may deem fit.
[23.7.1]
(3) Where the Master has refused to give directions as aforesaid or in regard to any other
particular matter arising under the winding-up, the liquidator may apply to the Court for
directions.
[23.7.1]
(4) Any person aggrieved by any act or decision of the liquidator may apply to the Court
after notice to the liquidator and thereupon the Court may make such order as it thinks just.
388 Court may determine questions in voluntary winding-up
[1.3.2, 23intro]
(1) Where a company is being wound up voluntarily, the liquidator or any member or
creditor or contributory of the company may apply to the Court to determine any question
arising in the winding-up or to exercise any of the powers which the Court might exercise if
the company were being wound up by the Court.
[23.8.3]
(2) The Court may, if satisfied that the determination of any such question or the exercise
of any such power will be just and beneficial, accede wholly or partly to the application on
such terms and conditions as it may determine, or make such other order on the application
as it thinks fit.
389 Exercise of power to make arrangement and the binding of dissentient
creditors
[1.3.2, 23intro]
(1) Any arrangement entered into between a company able to pay its debts and about to
be or in the course of being wound up and its creditors shall, subject to the provisions of
subsection (2), be binding on the company if sanctioned by a special resolution of members
and on the creditors of the company if acceded to by three-fourths in number and value of
such creditors.
Page 463
(2) Any such creditor or member may, within three weeks from the completion of the
arrangement, bring the same under review by the Court, and the Court may amend, vary,
set aside or confirm the arrangement as it thinks just.
390 Exercise of power of liquidator in voluntary winding-up to accept shares for
assets of company
[1.3.2, 23intro]
(1) Where a company is proposed to be or is being wound up voluntarily and the whole or
part of its business or property is proposed to be transferred or sold to another company,
whether registered under this Act or not (in this section called the transferee company), the
liquidator of the first-mentioned company (in this section called the transferor company)
may, with the sanction of a special resolution of that company, conferring either a general
authority on the liquidator or an authority in respect of any particular arrangement, receive
in compensation or part compensation for the transfer or sale, shares, policies or other like
interests in the transferee company, for distribution among the members of the transferor
company, or may enter into any other arrangement, whereby the members of the transferor
company may, in lieu of receiving cash, shares, policies or other like interests, or in addition
thereto, participate in the profits of or receive any other benefit from the transferee
company: Provided that, in the case of a creditors’ voluntary winding-up, the powers of the
liquidator conferred by this section shall not be exercised save with the consent of three-
fourths in number and value of the creditors present or represented at a meeting called by
him for that purpose and of which not less than fourteen days’ notice has been given, or with
the sanction of the Court.
(2) Any sale or arrangement in pursuance of this section shall be binding on the members
of the transferor company.
(3) If any member of the transferor company who did not vote in favour of the special
resolution, expresses his dissent therefrom in writing addressed and delivered to the
liquidator or left at the registered office of the company within seven days after the passing
of the resolution, he may require the liquidator either to abstain from carrying the resolution
into effect or to purchase his interest at a price to be determined by agreement or by
arbitration in the manner provided by this section.
(4) If the liquidator elects to purchase such member’s interest, the purchase money shall
be paid before the company is dissolved and be raised by the liquidator in such manner as
may be determined by special resolution of the company concerned.
(5) A special resolution shall not be invalid for the purposes of this section by reason that
it is passed before or concurrently with a resolution for winding-up the company or for
nominating liquidators, but if an order is made within a year of such resolution for winding-
up the company by the Court, the special resolution shall not be valid unless sanctioned by
the Court.
(6) For the purposes of an arbitration under this section, the provisions of the Arbitration
Act, 1965 (Act 42 of 1965), shall apply.
Duties of Liquidators (ss 391-411)

391 General duties
[1.3.2, 23intro, 23.7.1, 26.3]
A liquidator in any winding-up shall proceed forthwith to recover and reduce into
possession all the assets and property of the company, movable and immovable, shall
Page 464
apply the same so far as they extend in satisfaction of the costs of the winding-up and the
claims of creditors, and shall distribute the balance among those who are entitled thereto.
392 Liquidator’s duty to give information to Master
[1.3.2, 23intro, 23.7.2]
Every liquidator shall give the Master such information and such access to and facilities for
inspecting the books and documents of the company and generally such aid as may be
requisite for enabling that officer to perform his duties under this Act.
393 Liquidator’s duty to keep records and inspection thereof
[1.3.2, 23intro]
(1) Immediately after his appointment a liquidator shall open a book or other record
wherein he shall enter from time to time a statement of all moneys, goods, books, accounts
and other documents received by him on behalf of the company.
[23.7.3]
(2) The Master may at any time in writing require the liquidator to produce any such book
or record for inspection.
[23.7.3]
Page 465
(3) Any creditor or contributory may, subject to the control of the Master, at all
reasonable times personally or by his agent inspect any such book or record.
[23.7.3]
394 Banking accounts and investments
[1.3.2, 23intro]
(1) The liquidator of a company -
[23.7.3]
(a) shall open a current account from which amounts are withdrawable by cheque in
the name of the company in liquidation with a banking institution registered
under the Banks Act, 1965 (Act 23 of 1965), within the Republic, and shall from
time to time deposit therein to the credit of the company all moneys received by
him on its behalf;
(b) may open a savings account in the name of such company with such a banking
institution, a mutual building society registered under the Mutual Building
Societies Act, 1965 (Act 24 of 1965), or a building society registered under the
Building Societies Act, 1986 (Act 82 of 1986), within the Republic, and may
transfer thereto moneys deposited in the account referred to in paragraph (a)
and not immediately required for the payment of any claim against such
company;
(c) may place moneys deposited in the account referred to in paragraph (a) and not
immediately required for the payment of any claim against such company, on
interest-bearing deposit with such banking institution, mutual building society or
building society within the Republic;
(d) shall not withdraw any money from any account referred to in paragraph (b) or
(c) otherwise than by way of a transfer to the said current account.
(2) Whenever required by the Master to do so, the liquidator shall in writing notify the
Master of the banking institution or building society and the office, branch office or agency
thereof with which he has opened an account referred to in subsection (1), and furnish the
Master with a bank statement or other sufficient evidence of the state of the account.
(3) A liquidator shall not transfer any such account from any such office, branch office or
agency to any other such office, branch office or agency except after written notice to the
Master.
(4) All cheques or orders drawn upon any such account shall contain the name of the
payee and the cause of payment and shall be drawn to order and be signed by the liquidator
or his duly authorised agent.
(5) The Master and any surety for the liquidator or any person authorised by such surety
shall have the same right to information in regard to that account as the liquidator himself
possesses, and may examine all vouchers in relation thereto, whether in the possession of
the banking institution or building society or of the liquidator.
(6) The Master may, after notice to the liquidator, in writing direct the manager of any
office, branch office or agency with which an account referred to in subsection (1) has been
opened, to pay over into the Guardians’ Fund all moneys standing to the credit of that
account at the time of the receipt, by the said manager, of that direction, and all moneys
which may thereafter be paid into that account, and the said manager shall carry out that
direction.
(7) (a) Any liquidator who without lawful excuse, retains or knowingly permits his co-
liquidator to retain any sum of money exceeding forty rand belonging to the company
concerned longer than the earliest day after its receipt on which it was possible for him or
his co-liquidator to pay the money into the bank, or uses or knowingly permits his co-
liquidator to use any assets of the company except for its benefit, shall, in addition to any
other penalty to which he may be liable, be liable to pay to the company an amount not
exceeding double the sum so retained or double the value of the assets so used.
(b) The amount which the liquidator is so liable to pay, may be recovered by action in
any competent court at the instance of the co-liquidator, the Master or any creditor or
contributory.
395 Liquidator’s duties as to contributories
[1.3.2, 23intro]
(1) In the case of a winding-up by the Court or of a creditors’ voluntary winding-up of a
company, the liquidator shall, if necessary, settle a list of contributories.
(2) A past member of a company limited by guarantee shall not be liable to contribute to
its assets unless -
(a) at the commencement of the winding-up there is unsatisfied debt or liability of
the company contracted before he ceased to be a member; and
(b) it appears to the liquidator that the present members are unable to satisfy the
contributions required to be made by them in pursuance of this Act.
396 Notices to contributories and objections
[1.3.2, 23intro]
(1) As soon as the liquidator has settled the list of contributories, he shall send a notice to
every person included in the list, stating that fact and the extent of the liability of that
person.
(2) Any person who objects to his inclusion in the list, shall be entitled within fourteen
days from the date of the notice to file an objection with the liquidator in the form of an
affidavit giving full reasons why he should not be included in the list.
Page 466
(3) The liquidator may accept the objection and amend the list of contributories or he may
reject such objection and shall, if the objection is rejected, notify the person concerned
accordingly by registered post.
(4) A person whose objection has been rejected, shall be entitled, within fourteen days
from the date of the notice provided for in subsection (3), to apply to the Master for a ruling
as to whether his name should be included in the list, and the Master shall direct the
liquidator to include his name in or to exclude it from the said list.
397 Recovery of contributions and nature of liability
[1.3.2, 23intro]
(1)(a) A liquidator shall proceed to recover from the contributories a proportion of or the
full amount of their liability as may be required from time to time, taking into consideration
the probability that some of the contributories may partly or wholly fail to pay the amount
demanded from them.
(b) In the event of the death of any contributory or the insolvency of his estate, the
liquidator may recover the contribution from the estate concerned.
(2) (a) The liability for the payment of any amount by a contributory to the company shall
be a debt due by him to the company as from the date on which the amount was demanded
from him by the liquidator.
(b) A contributory shall not be entitled to set off against his liability any amount due to
him by the company in respect of dividends, profits or directors’ remuneration.
398 Adjustment of rights of contributories inter se
[1.3.2, 23intro]
The liquidator shall adjust the rights of the contributories among themselves, and
distribute any surplus among the persons entitled thereto.
399 Evidence as to contributions and contributories
[1.3.2, 23intro]
(1) A letter of demand by the liquidator to a contributory for the payment of a contribution
shall be prima facie evidence that the amount thereby appearing to be due, is due.
(2) All books and papers of the company and of the liquidator shall, as between the
contributories and the company, be prima facie evidence of the truth of all matters therein
recorded.
400 Liquidator’s duty to expose offences and to report thereon
[1.3.2, 23intro]
(1) A liquidator shall examine the affairs and transactions of the company before its
winding-up in order to ascertain -
[23.7.5]
(a) whether any of the directors and officers or past directors and officers of the
company have contravened or appear to have contravened any provision of this
Act or have committed or appear to have committed any other offence; and
(b) in respect of any of the persons referred to in paragraph (a), whether there are
or appear to be any grounds for an order by the Court under section 219
disqualifying a director from office as such.
(2) A liquidator shall, before lodging his final account with the Master, submit to him a
report containing full particulars of any such contraventions or offences, suspected
contraventions or offences and any such ground which he has ascertained.
[23.7.5]
Page 467
(3) (a) Any report submitted to the Master under subsection (2) shall be confidential and
shall not be available for inspection by any person.
[23.7.5]
(b) If any such report contains particulars of contraventions or offences committed or
suspected to have been committed or of any of the said grounds, the Master shall forthwith
transmit a copy thereof to the Director of Public Prosecutions concerned.
[23.7.5]
(4) A liquidator shall conduct such further investigation and shall render such assistance in
connection with any prosecution or contemplated prosecution as the Master or the Director
of Public Prosecutions may require.
401 Director of Public Prosecutions may make application to Court for

disqualification of director
[1.3.2, 23intro, 23.7.5]
When a Director of Public Prosecutions, upon receipt of the report referred to in section
400(3)(b) and after such further enquiry as he may deem fit, is satisfied that there are
grounds for an application to the Court for an order in terms of section 219, he may make
such application to the Court.
[S. 401 amended by s. 5 (a) of Act 20 of 2004.]
402 Liquidator’s duty to present report to creditors and contributories

[1.3.2, 23intro, 23.7.6]
Except in the case of a members’ voluntary winding-up, a liquidator shall, as soon as
practicable and, except with the consent of the Master, not later than three months after the
date of his appointment, submit to a general meeting of creditors and contributories of the
company concerned a report as to the following matters:
(a) the amount of capital issued by the company and the estimated amount of its
assets and liabilities;
[23.7.6]
(b) if the company has failed, the causes of the failure;
[23.7.6]
(c) whether or not he has submitted or intends to submit to the Master a report
under section 400(2);
[23.7.6]
(d) whether or not any director or officer or former director or officer appears to be
personally liable for damages or compensation to the company or for any debts
or liabilities of the company as provided in this Act;
[23.7.6]
(e) any legal proceedings by or against the company which may have been pending
at the date of the commencement of winding-up or which may have been or may
be instituted;
[23.7.6]
(f) whether or not further enquiry is in his opinion desirable in regard to any matter
relating to the promotion, formation or failure of the company or the conduct of
its business;
[23.7.6]
(g) whether or not the company has kept the accounting records required by section
284, and, if not, in what respects the requirements of that section have not been
complied with;
[23.7.6]
(h) the progress and prospects of the winding-up; and
[23.7.6]
(i) any other matter which he may think fit or in regard to which he may desire the
directions of the creditors or the contributories.
[23.7.6]
Page 468
403 Liquidator’s duty to file liquidation and distribution account

[1.3.2, 23intro]
(1)(a) Every liquidator shall, unless he receives an extension of time as hereinafter
provided, frame and lodge with the Master not later than six months after his appointment
an account of his receipts and payments and a plan of distribution or, if there is a liability
among creditors and contributories to contribute towards the costs of the winding-up, a plan
of contribution apportioning their liability.
[23.7.7(i)]
(b) If the final account lodged under paragraph (a) is not a final account, the liquidator
shall from time to time and as the Master may direct, but at least once in every period of six
months (unless he receives an extension of time), frame and lodge with the Master a further
account and plan of distribution: Provided that the Master may at any time and in any case
where the liquidator has funds in hand, which ought in the opinion of the Master to be
distributed or applied towards the payment of debts, direct the liquidator in writing to frame
and lodge with him an account and plan of distribution in respect of such funds within a
period specified.
[23.7.7(i)]
(2) Any account shall be lodged in duplicate in the prescribed form, shall be fully
supported by vouchers, including the liquidator’s bank statements or certified extracts from
his bank and building society accounts showing all deposits and withdrawals, and shall be
verified by an affidavit in the prescribed form.
404 Master may grant extension of time for lodging account
[1.3.2, 23intro, 23.7.7(i)]
(1) If any liquidator is unable to lodge an account with the Master under section 403 he
shall before the expiration of any relevant period prescribed under that section -
(a) make and lodge with the Master an affidavit stating the reasons why he is not
able to lodge an account, the amount of funds in hand available for distribution, a
summary of the position in respect of the winding-up, and whether he has applied
for an extension of time, and shall send a copy thereof to each creditor of the
company; and
(b) lodge with the Master written reasons for his inability to lodge the account in
question together with a statement of the grounds, if any, upon which he claims
an extension of time within which to lodge such account,
and the Master may thereupon grant such an extension of time as he may in the
circumstances think necessary.
(2) If any liquidator fails to lodge an account with the Master as required by section 403
and to comply with paragraphs (a) and (b) of subsection (1) of this section, the Master or
any person having an interest in the company may serve a notice on the liquidator requiring
him within two weeks after the date of the notice -
(a) to lodge the account in question with the Master; or
(b) to comply with the requirements of the said paragraphs (a) and (b) of the said
subsection,
and the Master may, if the account has not been lodged but paragraphs (a) and (b) of the
said subsection have been complied with, grant such an extension of time as he may in the
circumstances think necessary.
(3) Any liquidator who fails to satisfy the Master that he ought to receive an extension of
time for the lodging of any account, may, after notice to the Master and to
Page 469
the person referred to in subsection (2), apply to the Court for an order granting such an
extension of time within which to lodge that account.
405 Failure of liquidator to lodge account or to perform duties
[1.3.2, 23intro]
(1) If any liquidator fails to lodge an account with the Master as and when required by or
under this Chapter or to lodge any vouchers in support of such account or to perform any
other duty imposed upon him by this Chapter or to comply with any reasonable demand of
the Master for information or proof required by him in connection with the liquidation of the
company, the Master or any person having an interest in the company may, after giving the
liquidator not less than two weeks’ notice, apply to the Court for an order directing the
liquidator to lodge such account or vouchers in support thereof or to perform such duty or to
comply with such demand.
(2) The costs adjudged to the Master or to such person shall, unless ordered otherwise by
the Court, be paid by the liquidator de bonispropriis.
406 Places for and periods of inspection of account
[1.3.2, 23intro]
(1) Every liquidator’s account shall lie open for inspection for such period, not being less
than fourteen days, as the Master may determine-
[23.7.7(ii)]
(a) at the office of the Master; and
(b) if the office of the Master and the registered office of the company are not
situated in the same district –
(i) at the office of the magistrate of the district in which such registered office is
situated; or
(ii) if such registered office is situated in a portion of such district in respect of
which an additional or assistant magistrate permanently performs the
functions of the magistrate of the district at a place other than the seat of
magistracy of that district, at the office of such additional or assistant
magistrate; and
(c) if the company also carried on business at any other place, then also at the office
of the magistrate (including any additional or assistant magistrate) of the district
or the portion thereof in which any such other place is situate, as may be
determined by the liquidator with the approval of the Master.
(2) The liquidator shall lodge a copy of the account with every magistrate, additional
magistrate or assistant magistrate in whose offices the account is to lie open for inspection.
(3) The liquidator shall give due notice in the Gazette of the places at which any such
account will lie open for inspection and shall in that notice state the period during which the
account will lie open for inspection and shall transmit by post or deliver a similar notice to
every creditor who has proved a claim against the company.
(4) The magistrate shall cause to be affixed in some public place in or about his office a
list of all such accounts as have been lodged in his office, showing the respective periods
during which they will lie open for inspection, and shall upon the expiry of any such period
endorse on the account in question his certificate that the account has lain open at his office
for inspection in terms of this section and transmit the account to the Master.
Page 470
407 Objections to account

[1.3.2, 23intro]
(1) Any person having an interest in the company being wound up may, at any time
before the confirmation of an account, lodge with the Master an objection to such account
stating the reasons for the objection.
[23.7.7(ii)]
(2) If the Master is of opinion that any such objection ought to be sustained, he shall
direct the liquidator to amend the account or give such other directions as he may think fit.
[23.7.7(ii)]
(3) If in respect of any account the Master is of the opinion that any improper charge has
been made against the assets of a company or that the account is in any respect incorrect
and should be amended, he may, whether or not any objection to the account has been
lodged with him, direct the liquidator to amend the account, or he may give such other
directions as he may think fit.
(4) (a) The liquidator or any person aggrieved by any direction of the Master under this
section, or by the refusal of the Master to sustain an objection lodged thereunder, may
within fourteen days after the date of the Master’s direction and after notice to the liquidator
apply to the Court for an order setting aside the Master’s decision, and the Court may on any
such application confirm the account in question or make such order as it thinks fit.
[23.7.7(ii)]
(b) If any such direction given by the Master under this section affects the interests of
a person who has not lodged an objection with the Master, such account as amended shall
again lie open for inspection in the manner and with the notice as prescribed in section 406,
unless the person affected consents in writing to the immediate confirmation of the
account.
[23.7.7(ii)]
408 Confirmation of account
[1.3.2, 23intro, 23.7.7(iii)]
When an account has lain open for inspection as prescribed in section 406 and -
(a) no objection has been lodged; or
(b) an objection has been lodged and the account has been amended in accordance
with the direction of the Master and has again lain open for inspection, if
necessary, as in section 407(4)(b) prescribed, and no application has been made
to the Court within the prescribed time to set aside the Master’s decision; or
(c) an objection has been lodged but has been withdrawn or has not been sustained
and the objector has not applied to the Court within the prescribed time,
the Master shall confirm the account and his confirmation shall have the effect of a final
judgment, save as against such persons as may be permitted by the Court to re-open the
account after such confirmation but before the liquidator commences with the distribution.
409 Distribution of estate
[1.3.2, 23intro]
(1) Immediately after the confirmation of any account the liquidator shall proceed to
distribute the assets in accordance therewith or to collect from the creditors and
contributories liable to contribute thereunder the amounts for which they may respectively
be liable.
(2) The liquidator shall give notice of the confirmation of the account in the Gazette and
shall in such notice state, according to the circumstances, that a dividend is being paid or
that a contribution is to be collected and that every creditor and contributory
Page 471
liable to contribute is required to pay to the liquidator the amount for which he is liable and
the address at which the contribution is to be paid.
410 Liquidator’s duty as to receipts and unpaid dividends
[1.3.2, 23intro]
(1) The liquidator shall without delay lodge with the Master the receipts for any dividends
paid or other proof of payment thereof.
(2) If any dividend remains unpaid for a period of two months (or such longer period as
the Master may approve) after the confirmation of the relevant account, the liquidator shall
immediately pay the amount to the Master for deposit in the Guardians’ Fund for the account
of the creditor or member concerned.
(3) (a) Any failure by a liquidator to furnish the Master within the said period of two
months with a proper receipt or other proof of payment in respect of any dividend which has
not been deposited as aforesaid, shall be prima facie evidence that such dividend has been
retained by him and has not been dealt with as prescribed in this section, and the Master
may thereafter institute proceedings against the liquidator under section 405.
(b) The Court may at the hearing of such proceedings order the liquidator to pay any
such dividend which has not been paid or deposited and in addition to pay to the Master for
the benefit of the Consolidated Revenue Fund an amount equal to the amount of such
dividend.
(4) Any creditor or member of a company entitled to any dividend may, if payment
thereof is delayed, after notice to the liquidator, apply to the Court for an order compelling
the liquidator to pay that dividend to such creditor or member.
411 Payment of money deposited with Master
[1.3.2, 23intro]
Any person claiming to be entitled to any money deposited with the Master by a liquidator
under the provisions of this Act may apply to the Master for payment thereof, and the
Master may, on a certificate by the liquidator or on other sufficient evidence that the person
claiming such payment is entitled thereto, pay the amount in question to the person
concerned.
Provisions as to Meetings in Winding-up (ss 412-416)

412 Meetings of creditors and members and voting at meetings of creditors
[1.3.2, 23intro]
(1) In any winding-up of a company, meetings of creditors and members or contributories
shall, save as otherwise provided in this Act, be convened and held in the following manner:
[23.5.1, 23.5.2]
(a) In the case of meetings of creditors, as nearly as may be in the manner
prescribed for the holding of meetings of creditors under the law relating to
insolvency; and
[23.5.1, 23.5.2]
(b) in the case of meetings of members or contributories, in the manner prescribed
by regulation.
[23.5.1, 23.5.2]
(2) The provisions of section 52 of the Insolvency Act, 1936 (Act 24 of 1936), shall
mutatis mutandis apply to the right of any creditor to vote at a meeting of creditors in a
winding-up of a company.
Page 472
413 Meetings to ascertain wishes of creditors and others

[1.3.2, 23intro, 23.5.1, 23.5.2]
Where by this Act the Court is authorised, in relation to a winding-up, to have regard to
the wishes of creditors, members or contributories -
(a) the value of the respective creditors’ claims and the voting rights of the various
members or contributories of the company in terms of its memorandum or
articles shall also be taken into consideration; and
(b) the Court may, if it thinks fit, for the purpose of ascertaining the wishes of such
creditors, members or contributories direct meetings of the creditors, members or
contributories to be called, held and conducted in such manner as it directs, and
may appoint a person to act as chairman of any such meeting and to report the
result thereof to the Court.
414 Duty of directors and officers to attend meetings
[1.3.2, 23intro]
(1) In any winding-up of a company unable to pay its debts, every director and officer of
the company shall -
[23.5.1]
(a) attend the first and second meetings of creditors of the company, including any
such meeting which is adjourned, unless the Master or the officer presiding or to
preside at any such meeting has, after consultation with the liquidator, authorised
him in writing to absent himself from that meeting;
[23.5.1]
(b) attend any subsequent meeting or adjourned meeting of creditors of the
company which the liquidator has in writing required him to attend.
[23.5.1]
(2) The Master or officer who is to preside or presides at any meeting of creditors, may
subpoena any person -
[23.5.1]
(a) who is known or on reasonable grounds believed to be or to have been in
possession of any property which belongs or belonged to the company or to be
indebted to the company, or who in the opinion of the Master or such other
officer may be able to give material information concerning the company or its
affairs, in respect of any time before or after the commencement of the winding-
up, to appear at such meeting, including any such meeting which has been
adjourned, for the purpose of being interrogated; or
[23.5.1]
(b) who is known or on reasonable grounds believed to have in his possession or
custody or under his control any book or document containing any such
information as is referred to in paragraph (a), to produce that book or document
or an extract therefrom at any such meeting or adjourned meeting.
[23.5.1]
(3) Any director or officer of a company who fails to comply with any provision of this
section, shall be guilty of an offence.
415 Examination of directors and others at meetings
[1.3.2, 23intro, 13.1.6, 23.9.2]
(1) The Master or officer presiding at any meeting of creditors of a company which is
being wound-up and is unable to pay its debts, may call and administer an oath to or accept
an affirmation from any director of the company or any other person present at the meeting
who was or might have been subpoenaed in terms of section 414(2)(a), and the Master or
such officer and any liquidator of the company and any creditor thereof who has proved a
claim against the company, or the agent of such liquidator or creditor,
Page 473
may interrogate the director or person so called and sworn concerning all matters relating to
the company or its business or affairs in respect of any time, either before or after the
commencement of the winding-up, and concerning any property belonging to the company:
Provided that the Master or such officer shall disallow any question which is irrelevant or
would in his opinion prolong the interrogation unnecessarily.
[12.3.5, 13.1.6, 23.9.1]
(2) In connection with the production of any book or document in compliance with a
subpoena issued under section 414(2)(b) or the interrogation of a person under subsection
(1) of this section, the law relating to privilege as applicable to a witness subpoenaed to
produce a book or document or give evidence in a magistrate’s court shall apply: Provided
that a banker at whose bank the company concerned keeps or at any time kept an account,
shall be obliged, if subpoenaed to do so under section 414(2)(b), to produce -
(a) any cheque in his possession which was drawn by the company within one year
before the commencement of the winding-up; or
(b) if any cheque so drawn is not available, any record of the payment, the date of
payment and the amount of the cheque which may be available to him, or a copy
of such record, and shall, if called upon to do so, give any other information
available to him in connection with any such cheque or the account of the
company.
(3) No person interrogated under subsection (1) shall be entitled at such interrogation to
refuse to answer any question upon the ground that the answer would tend to incriminate
him or her and shall, if he or she does so refuse on that ground, be obliged to so answer at
the instance of the Master or officer presiding at such meeting: Provided that the Master or
officer presiding at such meeting may only oblige the person in question to so answer after
the Master or officer presiding at such meeting has consulted with the Director of Public
Prosecutions who has jurisdiction.
[23.9.1]
(4) The Master or officer presiding at any meeting aforesaid shall record or cause to be
recorded in the manner provided by the rules of court for the recording of evidence in a civil
case before a magistrate’s court the statement of any person giving evidence under this
section: Provided that if a person who may be required to give evidence under this section,
has made to the liquidator or his agent a statement which has been reduced to writing, or
has delivered a statement in writing to the liquidator or his agent, that statement may be
read by or read over to that person when he is called as a witness under this section and, if
then adhered to by him, shall be deemed to be evidence given under this section.
(5) Any incriminating answer or information directly obtained, or incriminating evidence
directly derived from, an interrogation in terms of subsection (1) shall not be admissible as
evidence in criminal proceedings in a court of law against the person concerned or the body
corporate of which he or she is or was an officer, except in criminal proceedings where the
person concerned is charged with an offence relating to -
[12.3.5, 13.1.6, 23.9.1]
(a)
the administering or taking of an oath or the administering or making of an
affirmation;
[12.3.5, 13.1.6, 23.9.1]
(b) the giving of false evidence;
[12.3.5, 13.1.6, 23.9.1]
(c) the making of a false statement; or
[12.3.5, 13.1.6, 23.9.1]
Page 474
(d) a failure to answer lawful questions fully or satisfactorily.

[12.3.5, 13.1.6, 23.9.1]
(6) Any person called upon to give evidence under this section may be represented at his
interrogation by an attorney with or without counsel.
(7) Any person other than a director or officer of the company concerned subpoenaed to
attend a meeting of creditors for the purpose of being interrogated under this section shall
be entitled to such witness fees, to be paid out of the funds of the company, as he would be
entitled to if he were a witness in civil proceedings in a magistrate’s court.
(8) Any director or other officer of a company who is called upon to attend any meeting of
creditors held after the second meeting or an adjourned second meeting, shall be entitled to
an allowance out of the funds of the company to defray his necessary expenses in
connection with such attendance.
416 Application of provisions of Insolvency Act, 1936
[1.3.2, 23intro]
(1) The provisions of sections 66, 67 and 68 of the Insolvency Act, 1936 (Act 24 of 1936),
shall, in so far as they can be applied and are not inconsistent with the provisions of this Act,
mutatis mutandis apply in relation to -
(a) any person who is in terms of section 414(1) of this Act required to attend any
meeting of a company being wound up and which is unable to pay its debts, as if
such person were an insolvent required to attend any meeting referred to in
section 64 of the Insolvency Act, 1936; and
(b) any person subpoenaed in terms of section 414(2) of this Act to attend any
meeting of the creditors of such a company or to produce any book or document
at any such meeting,
and the provisions of section 65 of the Insolvency Act, 1936, shall, in so far as they can be
applied and are not inconsistent with the provisions of this Act, mutatis mutandis apply in
relation to the production of any book or document or the interrogation of any person under
section 415 of this Act, as if such person had been subpoenaed to produce any book or
document or were being interrogated under the said section 65 of the Insolvency Act, 1936.
(2) In applying the said sections 66, 67 and 68 of the Insolvency Act, 1936, in terms of
subsection (1) of this section, any reference in any of the said sections or in section 64 or 65
of that Act -
(a) to the estate of an insolvent, shall be construed as a reference to the estate of
the company concerned;
(b) to the trustee of an insolvent estate, shall be construed as a reference to the
liquidator of such company;
(c) to a meeting of the creditors of an insolvent, shall be construed as a reference to
a meeting of the creditors of such company;
(d) to a creditor who has proved a claim against an insolvent estate, shall be
construed as a reference to a person who has proved a claim against such
company;
(e) to the business or affairs or property of an insolvent, shall be construed as a
reference to the business or affairs or property of such company;
(f) to any person indebted to an insolvent estate, shall be construed as a reference
to a person indebted to such company;
Page 475
(g) to the sequestration of an insolvent estate, shall be construed as a reference to
the commencement of the winding-up of such company.
Examination of Persons in Winding-up (ss 417-418)

417 Summoning and examination of persons as to affairs of company
[1.3.2, 23intro, 23.2.3(v), 23.9.2]
(1) In any winding-up of a company unable to pay its debts, the Master or the Court may,
at any time after a winding-up order has been made, summon before him or it any director
or officer of the company or person known or suspected to have in his possession any
property of the company or believed to be indebted to the company, or any person whom
the Master or the Court deems capable of giving information concerning the trade, dealings,
affairs or property of the company.
[23.9.2]
(1A) Any person summoned under subsection (1) may be represented at his attendance
before the Master or the Court by an attorney with or without counsel.
(2)(a) The Master or the Court may examine any person summoned under subsection (1)
on oath or affirmation concerning any matter referred to in that subsection, either orally or
on written interrogatories, and may reduce his answers to writing and require him to sign
them.
[Para. (a) substituted by s. 9 (c) of Act 29 of 1985.]
(b) Any such person may be required to answer any question put to him or her at the
examination, notwithstanding that the answer might tend to incriminate him or her and
shall, if he or she does so refuse on that ground, be obliged to so answer at the instance of
the Master or the Court: Provided that the Master or the Court may only oblige the person in
question to so answer after the Master or the Court has consulted with the Director of Public
Prosecutions who has jurisdiction.
[23.9.2]
(c) Any incriminating answer or information directly obtained, or incriminating evidence
directly derived from, an examination in terms of this section shall not be admissible as
evidence in criminal proceedings in a court of law against the person concerned or the body
corporate of which he or she is or was an officer, except in criminal proceedings where the
person concerned is charged with an offence relating to -
[23.9.2]
(i) the administering or taking of an oath or the administering or making of an
affirmation;
(ii) the giving of false evidence;
(iii) the making of a false statement; or
(iv) a failure to answer lawful questions fully and satisfactorily.
[Para. (c) added by s. 11 (b) of Act 55 of 2002.]
(3) The Master or the Court may require any such person to produce any books or papers
in his custody or under his control relating to the company but without prejudice to any lien
claimed with regard to any such books or papers, and the Court shall have power to
determine all questions relating to any such lien.
(4) If any person who has been duly summoned under subsection (1) and to whom
Page 476
a reasonable sum for his expenses has been tendered, fails to attend before the Master or
the Court at the time appointed by the summons without lawful excuse made known to the
Master or the Court at the time of the sitting and accepted by the Master or the Court, the
Master or the Court may cause him to be apprehended and brought before him or it for
examination.
(5) Any person summoned by the Master under subsection (1) shall be entitled to such
witness fees as he would have been entitled to if he were a witness in civil proceedings in a
magistrate’s court.
[Sub-s. (5) added by s. 9 (e) of Act 29 of 1985.]
(6) Any person who applies for an examination or enquiry in terms of this section or
section 418 shall be liable for the payment of the costs and expenses incidental thereto,
unless the Master or the Court directs that the whole or any part of such costs and expenses
shall be paid out of the assets of the company concerned.
(7) Any examination or enquiry under this section or section 418 and any application
therefor shall be private and confidential, unless the Master or the Court, either generally or
in respect of any particular person, directs otherwise.
418 Examination by commissioners

[1.3.2, 23intro, 23.2.3(v), 23.9.2]
(1)(a) Every magistrate and every other person appointed for the purpose by the Master
or the Court shall be a commissioner for the purpose of taking evidence or holding any
enquiry under this Act in connection with the winding-up of any company.
(b) The Master or the Court may refer the whole or any part of the examination of any
witness or of any enquiry under this Act to any such commissioner, whether or not he is
within the jurisdiction of the Court which issued the winding-up order.
(c) The Master, if he has not himself been appointed under paragraph (a), the
liquidator or any creditor, member or contributory of the company may be represented at
such an examination or enquiry by an attorney, with or without counsel, who shall be
entitled to interrogate any witness: Provided that a commissioner shall disallow any question
which is irrelevant or would in his opinion prolong the interrogation unnecessarily.
[23.9.2]
(d) The provisions of section 417(1A), (2)(b) and (5) shall apply mutatis mutandis in
respect of such an examination or enquiry.
(2) A commissioner shall in any matter referred to him have the same powers of
summoning and examining witnesses and of requiring the production of documents, as the
Master who or the Court which appointed him, and, if the commissioner is a magistrate, of
punishing defaulting or recalcitrant witnesses, or causing defaulting witnesses to be
apprehended, and of determining questions relating to any lien with regard to documents, as
the Court referred to in section 417.
(3) If a commissioner -
(a) has been appointed by the Master, he shall, in such manner as the Master may
direct, report to the Master; or
(b) has been appointed by the Court, he shall, in such manner as the Court may
direct, report to the Master and the Court,
on any examination or enquiry referred to him.
Page 477
(4) Any witness who has given evidence before the Master or the Court under section 417
or before a commissioner under this section, shall be entitled, at his cost, to a copy of the
record of his evidence.
(5) Any person who -
(a) has been duly summoned under this section by a commissioner who is not a
magistrate and who fails, without sufficient cause, to attend at the time and place
specified in the summons; or
(b) has been duly summoned under section 417(1) by the Master or under this
section by a commissioner who is not a magistrate and who –
(i) fails, without sufficient cause, to remain in attendance until excused by the
Master or such commissioner, as the case may be, from further attendance;
(ii) refuses to be sworn or to affirm as a witness; or
(iii) fails, without sufficient cause –
(aa) to answer fully and satisfactorily any question lawfully put to him in
terms of section 417(2) or this section; or
(bb) to produce books or papers in his custody or under his control which he
was required to produce in terms of section 417(3) or this section,
shall be guilty of an offence.
Dissolution of Companies and other Bodies Corporate (ss 419-422)

419 Dissolution of companies and other bodies corporate
[1.3.2, 23intro, 23.14]
(1) In any winding-up, when the affairs of a company have been completely wound up,
the Master shall transmit to the Registrar a certificate to that effect and send a copy thereof
to the liquidator.
(2) The Registrar shall record the dissolution of the company and shall publish notice
thereof in the prescribed manner.
[23.14]
(3) The date of dissolution of the company shall be the date of recording referred to in
subsection (2).
(4) In the case of any other body corporate the certificate of the Master under subsection
(1) shall constitute its dissolution.
420 Court may declare dissolution void
[1.3.2, 23intro]
When a company has been dissolved, the Court may at any time on an application by the
liquidator of the company, or by any other person who appears to the Court to have an
interest, make an order, upon such terms as the Court thinks fit, declaring the dissolution to
have been void, and thereupon any proceedings may be taken against the company as
might have been taken if the company had not been dissolved.
421 Registrar to keep a register of directors of dissolved companies

[1.3.2, 23intro]
(1) The Registrar shall establish and maintain a register of directors of companies
Page 478
which have been dissolved and were unable to pay their debts, and cause to be entered
therein, in respect of each such director -
(a) his full forenames and surname, and any former forenames and surname, his
nationality, if not South African, his occupation, his date of birth and his last
known residential and postal addresses;
(b) the name of the company of which he was a director when such company was
dissolved for the reason that it was unable to pay its debts and, where more than
one company was dissolved at the same time, the names of those companies;
(c) the date of his appointment as director;
(d) the date of dissolution of the company or companies.
(2) The liquidator shall, within fourteen days after the date of the certificate referred to in
section 419(1), send to the Registrar on a prescribed form, in duplicate, in respect of each
director of the company who was a director thereof at a date within two years before the
commencement of the winding-up, the particulars referred to in subsection (1) (a) to (d) of
this section, together with a statement as to which director, in his opinion, was the effective
cause of the company being unable to pay its debts.
(3) The Registrar shall, under cover of a prescribed form, send to each director one copy
of the particulars furnished under subsection (2) in respect of that director, and where the
liquidator has in a statement furnished under the said subsection expressed any opinion as
to which director was the effective cause of the company being unable to pay its debts, the
Registrar shall at the same time send a copy of such statement to the director named
therein.
(4) A director may, within one month of the date of the form referred to in subsection (3),
object, by affidavit or otherwise, to his name being entered in the register referred to in
subsection (1).
(5) If after considering the objections made by or on behalf of a director or if a director
fails to object and the Registrar is of opinion that the name of the director should be entered
in the register, he shall inform such director accordingly.
(6) The Registrar shall, on the expiration of one month after the date of his decision under
subsection (5) or, if an application under subsection (7) is then pending, after the application
has been disposed of and the Court has not ordered otherwise, enter the name of the
director in the register.
(7) Any person aggrieved by the decision of the Registrar to make an entry or not to
make an entry in the register, shall be entitled, within one month of the date of such
decision, to apply to the Court for relief, and the Court shall have power to consider the
merits of the matter, to receive further evidence and to make any order it deems fit.
(8) Any liquidator who fails to comply with the provisions of subsection (2), shall be guilty
of an offence.
(9) The provisions of section 9 as to the inspection of documents kept by the Registrar
and extracts therefrom certified by the Registrar shall mutatis mutandis apply to the register
to be maintained by him under this section.
422 Disposal of records of dissolved company
[1.3.2, 23intro]
(1) When any company has been wound up and is about to be dissolved, the books and
papers of the company and of the liquidator may be disposed of -
(a) in the case of a winding-up by the Court, in such way as the Master may direct;
Page 479
(b) in the case of a members’ voluntary winding-up, in such way as the company by
special resolution may direct;
(c) in the case of a creditors’ voluntary winding-up, in such way as the creditors may
direct.
(2) After five years from the dissolution of the company, no responsibility shall rest on the
liquidator, or any person to whom the custody of the books and papers has been committed,
by reason of the same not being forthcoming to a person claiming to be interested therein.
Personal Liability of Delinquent Directors and Others and Offences (ss 423-426)
423 Delinquent directors and others to restore property and to compensate the
company
[1.3.2, 23intro, 24.7]
(1) Where in the course of the winding-up or judicial management of a company it
appears that any person who has taken part in the formation or promotion of the company,
or any past or present director or any officer of the company has misapplied or retained or
become liable or accountable for any money or property of the company or has been guilty
of any breach of faith or trust in relation to the company the Court may, on the application
of the Master or of the liquidator or of any creditor or member or contributory of the
company, enquire into the conduct of the promoter, director or officer concerned and may
order him to repay or restore the money or property or any part thereof, with interest at
such rate as the Court thinks just, or to contribute such sum to the assets of the company
by way of compensation in respect of the misapplication, retention, breach of faith or trust
as the Court thinks just.
[23.10]
(2) This section shall apply notwithstanding that the offence is one for which the offender
may be criminally responsible.
424 Liability of directors and others for fraudulent conduct of business
[1.3.2, 23intro, 23.10, 23.12]
(1) When it appears, whether it be in a winding-up, judicial management or otherwise,
that any business of the company was or is being carried on recklessly or with intent to
defraud creditors of the company or creditors of any other person or for any fraudulent
purpose, the Court may, on the application of the Master, the liquidator, the judicial
manager, any creditor or member or contributory of the company, declare that any person
who was knowingly a party to the carrying on of the business in the manner aforesaid, shall
be personally responsible, without any limitation of liability, for all or any of the debts or
other liabilities of the company as the Court may direct.
(2) (a) Where the Court makes any such declaration, it may give such further directions
as it thinks proper for the purpose of giving effect to the declaration, and in particular may
make provision for making the liability of any such person under the declaration a charge on
any debt or obligation due from the company to him, or on any mortgage or charge or any
interest in any mortgage or charge on any assets of the company held by or vested in him or
any company or person on his behalf or any person claiming as assignee from or through the
person liable or any company or person acting
Page 480
|
on his behalf, and may from time to time make such further orders as may be necessary for
the purpose of enforcing any charge imposed under this subsection.
(b) For the purposes of this subsection, the expression ‘assignee’ includes any person
to whom or in whose favour, by the directions of the person liable, the debt, obligation,
mortgage or charge was created, issued or transferred or the interest was created, but does
not include an assignee for valuable consideration given in good faith and without notice of
any of the matters on the ground of which the declaration is made.
(3) Without prejudice to any other criminal liability incurred, where any business of a
company is carried on recklessly or with such intent or for such purpose as is mentioned in
subsection (1), every person who was knowingly a party to the carrying on of the business
in the manner aforesaid, shall be guilty of an offence.
(4) The provisions of this section shall have effect notwithstanding that the person
concerned may be criminally liable in respect of the matters on the ground of which the
declaration is made.
425 Application of criminal provisions of the law relating to insolvency
[1.3.2, 23intro, 23.3.2]
If any person who is or was a director or officer of a company in respect of which a
winding-up order has been granted, whether or not such order has been discharged or
confirmed under the provisions of this Act, and which is or was unable to pay its debts, has
committed any act or made any omission in relation to any assets, books, records,
documents, business or the affairs of such company, which act or omission, if such act had
been committed or such omission had been made by a person whose estate was
sequestrated on the date upon which the winding-up of such company commenced, in
relation to his assets, books, documents, business or affairs, or those of his estate, would
have constituted an offence under the law relating to insolvency, such past or present
director or officer shall be guilty of such offence and liable on conviction to the penalties
provided therefor in the said law relating to insolvency, and all the provisions of the said law
relating to insolvency shall mutatis mutandis apply in respect of such act or omission, the
method of establishing the same, and such past or present director or officer charged with
the same.
426 Private prosecution of directors and others
[1.3.2, 23intro]
(1) If it appears in the course of the winding-up of a company that any past or present
director, member or officer of the company has been guilty of an offence for which he is
criminally liable under this Act or, in relation to the company or the creditors of the
company, under the common law, the liquidator shall cause all the facts known to him which
appear to constitute the offence, to be laid before the Director of Public Prosecutions
concerned and, if the said Director of Public Prosecutions certifies that he declines to
prosecute, the liquidator may, subject to the provisions of section 386(3) and (4), institute
and conduct a private prosecution in respect of such offence.
(2) The Court may, upon application by the liquidator, order the whole or any portion of
the costs and expenses incidental to such private prosecution to be paid out of the assets of
the company in priority to all other liabilities.
[S. 426 amended by s. 5 (a) of Act 20 of 2004.]
[1] See Schedule 5, paragraph 9 (2) of the Companies Act 71 of 2008

[4] In terms of s. 68 (3) (a) of the Banks Act 94 of 1990 as substituted by the Banks Amendment Act 19 of 2003
sub-s. (4) shall be deemed to have been amended to read as follows: ‘(4) (a) Before an application for the winding-
up of a company which is a bank is presented to the Court, a copy of the application and of every affidavit confirming
the facts stated therein shall be lodged with the Registrar of Banks and with the Master, or if there is no Master at
the seat of the Court, with an officer in the public service designated for that purpose by the Master by notice in the
Gazette. (b) The Registrar of Banks or the Master or any such officer may report to the court any facts ascertained
by such Registrar, Master or officer which appear to such Registrar, Master or officer to justify the Court in
postponing the hearing or dismissing the application, and shall transmit a copy of that report to the applicant or the
agent of such applicant and to the said company.’.
Page 481
Appendix 5
Chapter 2
Part G
Winding-up of solvent companies and deregistering companies (ss 79-83)

79 Winding-up of solvent companies
[23intro, 23.2.5]
(1) A solvent company may be dissolved by -
[23.1, 23.3]
(a) voluntary winding-up initiated by the company as contemplated in section 80,
and conducted either –
(i) by the company; or
(ii) by the company’s creditors, as determined by the resolution of the
company; or
[23.3.2]
(b) winding-up and liquidation by court order, as contemplated in section 81.
Page 482
(2) The procedures for winding-up and liquidation of a solvent company, whether
voluntary or by court order, are governed by this Part and, to the extent applicable, by the
laws referred to or contemplated in item 9 of Schedule 5.
[23.2.5, 23.3]
(3) If, at any time after a company has adopted a resolution contemplated in section 80,
or after an application has been made to a court as contemplated in section 81, it is
determined that the company to be wound up is or may be insolvent, a court, on application
by any interested person, may order that the company be wound up as an insolvent
company in terms of the laws referred to or contemplated in item 9 of Schedule 5.
[23.1, 23.2.2, 23.3.1]
80 Voluntary winding-up of solvent company
[23intro, 23.2.5]
(1) A solvent company may be wound up voluntarily if the company has adopted a special
resolution to do so, which may provide for the winding-up to be by the company, or by its
creditors.
[23.3]
(2) A resolution providing for the voluntary winding-up of a company must be filed,
together with the prescribed notice and filing fee.
[23.3]
(3) If a resolution contemplated in this section provides for winding-up by the company,
before the resolution and notice are filed the company must -
[23.3.1]
(a) arrange for security, satisfactory to the Master, for the payment of the company’s
debts within no more than 12 months after the start of the winding-up of the
company; or
(b) obtain the consent of the Master to dispense with security, which the Master may
do only if the company has submitted to the Master –
(i) a sworn statement by a director authorised by the board of the company,
stating that the company has no debts; and
(ii) a certificate by the company’s auditor, or if it does not have an auditor, a
person who meets the requirements for appointment as an auditor, and
appointed for the purpose, stating that to the best of the auditor’s
knowledge and belief and according to the financial records of the company,
the company appears to have no debts.
(4) Any costs incurred in furnishing the security referred to in subsection (3) may be paid
by the company.
(5) A liquidator appointed in a voluntary winding-up may exercise all powers given by this
Act, or a law contemplated in item 9 of Schedule 5, to a liquidator in a winding-up by the
court -
(a) without requiring specific order or sanction of the court; and
(b) subject to any directions given by –
(i) the shareholders of the company in a general meeting, in the case of a
winding-up by the company; or
(ii) the creditors, in the case of a winding-up by creditors.
(6) A voluntary winding-up of a company begins when the resolution of the company has
been filed in terms of subsection (2).
[23.4.1]
(7) When a resolution has been filed in terms of subsection (2), the Commission must
promptly deliver a copy of it to the Master.
[23.4.5]
(8) Despite any provision to the contrary in a company’s Memorandum of Incorporation -
(a) the company remains a juristic person and retains all of its powers as such while
it is being wound up voluntarily; but
[23.4.2]
(b) from the beginning of the company’s winding-up –
(i) it must stop carrying on its business except to the extent required for the
beneficial winding-up of the company; and
[23.4.2]
(ii) all of the powers of the company’s directors cease, except to the extent
specifically authorised –
[23.4.2]
(aa) in the case of a winding-up by the company, by the liquidator or the
shareholders in a general meeting; or
(bb) in the case of a winding-up by creditors, the liquidator or the creditors.
81 Winding-up of solvent companies by court order
[23intro, 23.2.5]
(1) A court may order a solvent company to be wound up if -
[23.1, 23.2.2, 23.2.2(i)]
(a) the company has –
[23.4.1]
(i) resolved, by special resolution, that it be wound up by the court; or
[23.2.2(i), 23.2.2(vii)]
(ii) applied to the court to have its voluntary winding-up continued by the court;
[23.1, 23.2.4]
(b) the practitioner of a company appointed during business rescue proceedings has
applied for liquidation in terms of section 141(2)(a), on the grounds that there is
no reasonable prospect of the company being rescued; or
[23.2.2(viii), 23.2.4, 23.4.1]
Page 483
(c) one or more of the company’s creditors have applied to the court for an order to
wind up the company on the grounds that –
[23.2.4]
(i) the company’s business rescue proceedings have ended in the manner
contemplated in section 132(2)(b) or (c)(i) and it appears to the court that it
is just and equitable in the circumstances for the company to be wound up;
or
[23.2.2(vi), 23.2.2(ix)]
(ii) it is otherwise just and equitable for the company to be wound up;
[23.2.2(vi), 23.2.4]
(d) the company, one or more directors or one or more shareholders have applied to
the court for an order to wind up the company on the grounds that-
[23.2.4]
(i) the directors are deadlocked in the management of the company, and the
shareholders are unable to break the deadlock, and –
[23.2.2(vi), 23.2.2(x)]
(aa) irreparable injury to the company is resulting, or may result, from the
deadlock; or
(bb) the company’s business cannot be conducted to the advantage of
shareholders generally, as a result of the deadlock;
(ii) the shareholders are deadlocked in voting power, and have failed for a
period that includes at least two consecutive annual general meeting dates,
to elect successors to directors whose terms have expired; or
[23.2.2(vi), 23.2.2(x)]
(iii) it is otherwise just and equitable for the company to be wound up;
[23.2.2(vi)]
(e) a shareholder has applied, with leave of the court, for an order to wind up the
company on the grounds that –
[23.2.4, 23.2.6]
(i) the directors, prescribed officers or other persons in control of the company
are acting in a manner that is fraudulent or otherwise illegal; or
[23.2.2(xi)]
(ii) the company’s assets are being misapplied or wasted; or
[23.2.2(xi)]
(f) the Commission or Panel has applied to the court for an order to wind up the
company on the grounds that –
[23.2.4, 23.2.6]
(i) the company, its directors or prescribed officers or other persons in control
of the company are acting or have acted in a manner that is fraudulent or
otherwise illegal, the Commission or Panel, as the case may be, has issued a
compliance notice in respect of that conduct, and the company has failed to
comply with that compliance notice; and
[23.2.2(xii)]
(ii) within the previous five years, enforcement procedures in terms of this Act
or the Close Corporations Act, 1984 (Act 69 or 1984), were taken against
the company, its directors or prescribed officers, or other persons in control
of the company for substantially the same conduct, resulting in an
administrative fine, or conviction for an offence.
[23.2.2(xii)]
(2) A shareholder may not apply to a court as contemplated in subsection (1) (d) or (e)
unless the shareholder -
[23.2.4]
(a) has been a shareholder continuously for at least six months immediately before
the date of the application; or
(b) became a shareholder as a result of –
(i) acquiring another shareholder; or
(ii) the distribution of the estate of a former shareholder,
Page 484
and the present shareholder, and other or former shareholder, in aggregate, satisfied the
requirements of paragraph (a).
(3) A court may not make an order applied for in terms of subsection (1) (e) or (f) if,
before the conclusion of the court proceedings -
[23.2.6]
(a) any of the directors have resigned, or have been removed in terms of section 71,
and the court concludes that the remaining directors were not materially
implicated in the conduct on which the application was based; or
(b) one or more shareholders have applied to the court for a declaration in terms of
section 162 to declare delinquent the directors, if any, responsible for the alleged
misconduct, and the court is satisfied that the removal of those directors would
bring the misconduct to an end.
(4) A winding-up of a company by a court begins when -
(a) an application has been made to the court in terms of subsection (1) (a) or (b);
or
[23.4.1]
(b) the court has made an order applied for in terms of subsection (1) (c), (d), (e) or
(f).
[23.4.1]
82 Dissolution of companies and removal from register
[23intro, 23.14]
(1) The Master must file a certificate of winding up of a company in the prescribed form
when the affairs of the company have been completely wound up.
[23.14]
(2) Upon receiving a certificate in terms of subsection (1), the Commission must -
[23.14]
(a) record the dissolution of the company in the prescribed manner; and
(b) remove the company’s name from the companies register.
(3) In addition to the duty to deregister a company contemplated in subsection (2) (b),
the Commission may otherwise remove a company from the companies register only if -
(a) the company has transferred its registration to a foreign jurisdiction in terms of
subsection (5), or –
(i) has failed to file an annual return in terms of section 33 for two or more
years in succession; and
(ii) on demand by the Commission, has failed to –
(aa) give satisfactory reasons for the failure to file the required annual
returns; or
(bb) show satisfactory cause for the company to remain registered; or
[Para. (a) amended by s. 51 (b) of Act 3 of 2011.]
(b) the Commission –
(i) has determined in the prescribed manner that the company appears to have
been inactive for at least seven years, and no person has demonstrated a
reasonable interest in, or reason for, its continued existence; or
[Sub-para. (i) substituted by s. 51 (c) of Act 3 of 2011.]
(ii) has received a request in the prescribed manner and form and has
determined that the company –
[23.14]
(aa) has ceased to carry on business; and
(bb) has no assets or, because of the inadequacy of its assets, there is no
reasonable probability of the company being liquidated.
Page 485
(4) If the Commission deregisters a company as contemplated in subsection (3), any

interested person may apply in the prescribed manner and form to the Commission, to
reinstate the registration of the company.
(5) A company may apply to be deregistered upon the transfer of its registration to a
foreign jurisdiction, if -
(a) the shareholders have adopted a special resolution approving such an application
and transfer of registration; and
(b) the company has satisfied the prescribed requirements for doing so.
[Sub-s. (5) added by s. 51 (d) of Act 3 of 2011.]
(6) The Minister may prescribe criteria and procedural requirements that must be satisfied
by a company before it may be de-registered in terms of subsection (5).
[Sub-s. (6) added by s. 51 (d) of Act 3 of 2011.]
83 Effect of removal of company from register

[23intro, 23.14]
(1) A company is dissolved as of the date its name is removed from the companies
register unless the reason for the removal is that the company’s registration has been
transferred to a foreign jurisdiction, as contemplated in section 82(5).
[23.14]
(2) The removal of a company’s name from the companies register does not affect the
liability of any former director or shareholder of the company or any other person in respect
of any act or omission that took place before the company was removed from the register.
(3) Any liability contemplated in subsection (2) continues and may be enforced as if the
company had not been removed from the register.
(4) At any time after a company has been dissolved -
(a) the liquidator of the company, or other person with an interest in the company,
may apply to a court for an order declaring the dissolution to have been void, or
any other order that is just and equitable in the circumstances; and
(b) if the court declares the dissolution to have been void, any proceedings may be
taken against the company as might have been taken if the company had not
been dissolved.
Page 486
Appendix 6
Chapter 6
BUSINESS RESCUE AND COMPROMISE WITH CREDITORS (ss 128-155)
Part A
Business rescue proceedings (ss 128-137)

[Heading substituted by s. 80 of Act 3 of 2011.]
128 Application and definitions applicable to Chapter

(1) In this Chapter -
(a) ‘affected person’, in relation to a company, means –
[25.1.1(ii)]
(i) a shareholder or creditor of the company;
(ii) any registered trade union representing employees of the company; and
(iii) if any of the employees of the company are not represented by a registered
trade union, each of those employees or their respective representatives;
(b) ‘business rescue’ means proceedings to facilitate the rehabilitation of a
company that is financially distressed by providing for –
[25.1]
(i) the temporary supervision of the company, and of the management of its
affairs, business and property;
(ii) a temporary moratorium on the rights of claimants against the company or
in respect of property in its possession; and
(iii) the development and implementation, if approved, of a plan to rescue the
company by restructuring its affairs, business, property, debt and other
liabilities, and equity in a manner that maximises the likelihood of the
company continuing in existence on a solvent basis or, if it is not possible for
the company to so continue in existence, results in a better return for the
company’s creditors or shareholders than would result from the immediate
liquidation of the company;
(c) ‘business rescue plan’ means a plan contemplated in section 150;
(d) ‘business rescue practitioner’ means a person appointed, or two or more
persons appointed jointly, in terms of this Chapter to oversee a company during
business rescue proceedings and ‘practitioner’ has a corresponding meaning;
(e) ‘court’, depending on the context, means either –
(i) the High Court that has jurisdiction over the matter; or
(ii) either –
(aa)
a designated judge of the High Court that has jurisdiction over the
matter, if the Judge President has designated any judges in terms of
subsection (3); or
Page 487
(bb) a judge of the High Court that has jurisdiction over the matter, as
assigned by the Judge President to hear the particular matter, if the
Judge President has not designated any judges in terms of subsection
(3);
(f) ‘financially distressed’, in reference to a particular company at any particular
time, means that –
[25.1.1(i)]
(i) it appears to be reasonably unlikely that the company will be able to pay all
of its debts as they become due and payable within the immediately ensuing
six months; or
[Sub-para. (i) substituted by s. 81 (a) of Act 3 of 2011.]
(ii) it appears to be reasonably likely that the company will become insolvent
within the immediately ensuing six months;
(g) ‘independent creditor’ means a person who –
[25.1.5(ii)]
(i) is a creditor of the company, including an employee of the company who is a
creditor in terms of section 144(2); and
(ii) is not related to the company, a director, or the practitioner, subject to
subsection (2);
(h) ‘rescuing the company’ means achieving the goals set out in the definition of
‘business rescue’ in paragraph (b);
[25.1]
(i) ‘supervision’ means the oversight imposed on a company during its business
rescue proceedings; and
(j) ‘voting interest’ means an interest as recognised, appraised and valued in
terms of section 145(4)-(6).
(2) For the purpose of subsection (1) (g), an employee of a company is not related to that
company solely as a result of being a member of a trade union that holds securities of that
company.
(3) For the purposes contemplated in subsection (1) (e) or in any other law, the Judge
President of a High Court may designate any judge of that court generally as a specialist to
determine issues relating to commercial matters, commercial insolvencies and business
rescue.
129 Company resolution to begin business rescue proceedings
[23.2.2(viii)]
(1) Subject to subsection (2) (a), the board of a company may resolve that the company
voluntarily begin business rescue proceedings and place the company under supervision, if
the board has reasonable grounds to believe that -
(a) the company is financially distressed; and
[25.1.1(i)]
(b) there appears to be a reasonable prospect of rescuing the company.
[25.1.1(i)]
(2) A resolution contemplated in subsection (1) -
(a) may not be adopted if liquidation proceedings have been initiated by or against
the company; and
[25.1.1(i)]
(b) has no force or effect until it has been filed.
[25.1.1(i)]
(3) Within five business days after a company has adopted and filed a resolution, as
contemplated in subsection (1), or such longer time as the Commission, on application by
the company, may allow, the company must -
Page 488
(a) publish a notice of the resolution, and its effective date, in the prescribed manner
to every affected person, including with the notice a sworn statement of the facts
relevant to the grounds on which the board resolution was founded; and
[25.1.1(i)]
(b) appoint a business rescue practitioner who satisfies the requirements of section
138, and who has consented in writing to accept the appointment.
[25.1.1(i), 25.1.3(ii)]
(4) After appointing a practitioner as required by subsection (3) (b), a company must -
(a) file a notice of the appointment of a practitioner within two business days after
making the appointment; and
[25.1.1(i)]
(b) publish a copy of the notice of appointment to each affected person within five
business days after the notice was filed.
[25.1.1(i)]
(5) If a company fails to comply with any provision of subsection (3) or (4) -
(a) its resolution to begin business rescue proceedings and place the company under
supervision lapses and is a nullity; and
[25.1.1(i), 25.1.1(ii)]
(b) the company may not file a further resolution contemplated in subsection (1) for
a period of three months after the date on which the lapsed resolution was
adopted, unless a court, on good cause shown on an ex parte application,
approves the company filing a further resolution.
[25.1.1(i), 25.1.1(iv)]
(6) A company that has adopted a resolution contemplated in this section may not adopt a
resolution to begin liquidation proceedings, unless the resolution has lapsed in terms of
subsection (5), or until the business rescue proceedings have ended as determined in
accordance with section 132(2).
[25.1.1(i), 25.1.1(iii)]
(7) If the board of a company has reasonable grounds to believe that the company is
financially distressed, but the board has not adopted a resolution contemplated in this
section, the board must deliver a written notice to each affected person, setting out the
criteria referred to in section 128(1)(f) that are applicable to the company, and its reasons
for not adopting a resolution contemplated in this section.
[25.1.1(i)]
130 Objections to company resolution

(1) Subject to subsection (2), at any time after the adoption of a resolution in terms of
section 129, until the adoption of a business rescue plan in terms of section 152, an affected
person may apply to a court for an order -
(a) setting aside the resolution, on the grounds that –
[25.1.1(ii)]
(i) there is no reasonable basis for believing that the company is financially
distressed;
(ii) there is no reasonable prospect for rescuing the company; or
(iii) the company has failed to satisfy the procedural requirements set out in
section 129;
(b) setting aside the appointment of the practitioner, on the grounds that the
practitioner –
[25.1.1(ii)]
(i) does not satisfy the requirements of section 138;
(ii) is not independent of the company or its management; or
(iii) lacks the necessary skills, having regard to the company’s circumstances; or
(c) requiring the practitioner to provide security in an amount and on terms and
Page 489
conditions that the court considers necessary to secure the interests of the
company and any affected persons.
[25.1.1(ii)]
(2) An affected person who, as a director of a company, voted in favour of a resolution
contemplated in section 129 may not apply to a court in terms of -
[25.1.1(ii)]
(a) subsection (1) (a) to set aside that resolution; or
(b) subsection (1) (b) to set aside the appointment of the practitioner appointed by
the company,
unless that person satisfies the court that the person, in supporting the resolution, acted in
good faith on the basis of information that has subsequently been found to be false or
misleading.
(3) An applicant in terms of subsection (1) must -
[25.1.1(ii)]
(a) serve a copy of the application on the company and the Commission; and
(b) notify each affected person of the application in the prescribed manner.
(4) Each affected person has a right to participate in the hearing of an application in terms
of this section.
[25.1.1(ii)]
(5) When considering an application in terms of subsection (1) (a) to set aside the
company’s resolution, the court may -
(a) set aside the resolution –
[25.1.1(ii)]
(i) on any grounds set out in subsection (1); or
(ii) if, having regard to all of the evidence, the court considers that it is
otherwise just and equitable to do so;
(b) afford the practitioner sufficient time to form an opinion whether or not –
[25.1.1(ii)]
(i) the company appears to be financially distressed; or
(ii) there is a reasonable prospect of rescuing the company, and after receiving
a report from the practitioner, may set aside the company’s resolution if the
court concludes that the company is not financially distressed, or there is no
reasonable prospect of rescuing the company; and
(c) if it makes an order under paragraph (a) or (b) setting aside the company’s
resolution, may make any further necessary and appropriate order, including –
[25.1.1(ii)]
(i) an order placing the company under liquidation; or
(ii) if the court has found that there were no reasonable grounds for believing
that the company would be unlikely to pay all of its debts as they became
due and payable, an order of costs against any director who voted in favour
of the resolution to commence business rescue proceedings, unless the court
is satisfied that the director acted in good faith and on the basis of
information that the director was entitled to rely upon in terms of section 76
(4) and (5).
(6) If, after considering an application in terms of subsection (1) (b), the court makes an
order setting aside the appointment of a practitioner -
(a) the court must appoint an alternate practitioner who satisfies the requirements of
section 138, recommended by, or acceptable to, the holders of a majority of the
independent creditors’ voting interests who were represented in the hearing
before the court; and
[25.1.3(ii)]
(b) the provisions of subsection (5) (b), if relevant, apply to the practitioner
appointed in terms of paragraph (a).
Page 490
131 Court order to begin business rescue proceedings

(1) Unless a company has adopted a resolution contemplated in section 129, an affected
person may apply to a court at any time for an order placing the company under supervision
and commencing business rescue proceedings.
[25.1.1(iii)]
(2) An applicant in terms of subsection (1) must -
(a) serve a copy of the application on the company and the Commission; and
[25.1.1(iii)]
(b) notify each affected person of the application in the prescribed manner.
[25.1.1(iii)]
(3) Each affected person has a right to participate in the hearing of an application in terms
of this section.
[25.1.1(iii)]
(4) After considering an application in terms of subsection (1), the court may -
[25.1, 25.1.1(iii)]
(a) make an order placing the company under supervision and commencing business
rescue proceedings, if the court is satisfied that –
(i) the company is financially distressed;
(ii) the company has failed to pay over any amount in terms of an obligation
under or in terms of a public regulation, or contract, with respect to
employment-related matters; or
(iii) it is otherwise just and equitable to do so for financial reasons,
and there is a reasonable prospect for rescuing the company; or
(b) dismissing the application, together with any further necessary and appropriate
order, including an order placing the company under liquidation.
[23.1, 25.1.1(iii)]
(5) If the court makes an order in terms of subsection (4) (a), the court may make a
further order appointing as interim practitioner a person who satisfies the requirements of
section 138, and who has been nominated by the affected person who applied in terms of
subsection (1), subject to ratification by the holders of a majority of the independent
creditors’ voting interests at the first meeting of creditors, as contemplated in section 147.
[25.1.1(iii), 25.1.3(ii)]
(6) If liquidation proceedings have already been commenced by or against the company at
the time an application is made in terms of subsection (1), the application will suspend those
liquidation proceedings until -
[23.1, 25.1.1(iii)]
(a) the court has adjudicated upon the application; or
(b) the business rescue proceedings end, if the court makes the order applied for.
(7) In addition to the powers of a court on an application contemplated in this section, a
court may make an order contemplated in subsection (4), or (5) if applicable, at any time
during the course of any liquidation proceedings or proceedings to enforce any security
against the company.
[23.1, 25.1.1(iii)]
(8) A company that has been placed under supervision in terms of this section -
[25.1.1(iii)]
(a) may not adopt a resolution placing itself in liquidation until the business rescue
proceedings have ended as determined in accordance with section 132(2); and
[25.1.1(iii)]
(b) must notify each affected person of the order within five business days after the
date of the order.
[25.1.1(iii)]
Page 491
132 Duration of business rescue proceedings

(1) Business rescue proceedings begin when -
[25.1.1(iv)]
(a) the company –
(i) files a resolution to place itself under supervision in terms of section 129(3);
or
(ii) applies to the court for consent to file a resolution in terms of section 129(5)
(b);
(b) an affected person applies to the court for an order placing the company under
supervision in terms of section 131(1); or
(c) a court makes an order placing a company under supervision during the course of
liquidation proceedings, or proceedings to enforce a security interest, as
contemplated in section 131(7).
[Para. (c) substituted by s. 83 (b) of Act 3 of 2011.]
(2) Business rescue proceedings end when -
[25.1.1(iv)]
(a) the court –
(i) sets aside the resolution or order that began those proceedings; or
(ii) has converted the proceedings to liquidation proceedings;
(b) the practitioner has filed with the Commission a notice of the termination of
business rescue proceedings; or
[23.2.2(ix)]
(c) a business rescue plan has been –
(i) proposed and rejected in terms of Part D of this Chapter, and no affected
person has acted to extend the proceedings in any manner contemplated in
section 153; or
[23.2.2(ix)]
(ii) adopted in terms of Part D of this Chapter, and the practitioner has
subsequently filed a notice of substantial implementation of that plan.
[25.1.8(iv)]
(3) If a company’s business rescue proceedings have not ended within three months after
the start of those proceedings, or such longer time as the court, on application by the
practitioner, may allow, the practitioner must -
[25.1.3(iv)]
(a) prepare a report on the progress of the business rescue proceedings, and update
it at the end of each subsequent month until the end of those proceedings; and
(b) deliver the report and each update in the prescribed manner to each affected
person, and to the –
(i) court, if the proceedings have been the subject of a court order; or
(ii) Commission, in any other case.
133 General moratorium on legal proceedings against company
(1) During business rescue proceedings, no legal proceeding, including enforcement
action, against the company, or in relation to any property belonging to the company, or
lawfully in its possession, may be commenced or proceeded with in any forum, except -
[25.1.2(ii)]
(a) with the written consent of the practitioner;
[25.1.2(i)]
(b) with the leave of the court and in accordance with any terms the court considers
suitable;
[25.1.2(i)]
Page 492
(c) as a set-off against any claim made by the company in any legal proceedings,
irrespective of whether those proceedings commenced before or after the
business rescue proceedings began;
[25.1.2(i)]
[Para. (c) substituted by s. 84 (a) of Act 3 of 2011.]
(d) criminal proceedings against the company or any of its directors or officers;
[25.1.2(i)]
[Para. (d) substituted by s. 84 (b) of Act 3 of 2011.]
(e) proceedings concerning any property or right over which the company exercises
the powers of a trustee; or
[25.1.2(i)]
[Para. (e) substituted by s. 84 (b) of Act 3 of 2011.]
(f) proceedings by a regulatory authority in the execution of its duties after written
notification to the business rescue practitioner.
[25.1.2(i)]
[Para. (f) added by s. 84 (c) of Act 3 of 2011.]
(2) During business rescue proceedings, a guarantee or surety by a company in favour of
any other person may not be enforced by any person against the company except with leave
of the court and in accordance with any terms the court considers just and equitable in the
circumstances.
[25.1.2(i)]
(3) If any right to commence proceedings or otherwise assert a claim against a company
is subject to a time limit, the measurement of that time must be suspended during the
company’s business rescue proceedings.
[25.1.2(i)]
134 Protection of property interests
(1) Subject to subsections (2) and (3), during a company’s business rescue proceedings -
(a) the company may dispose, or agree to dispose, of property only –
[25.1.2(ii)]
(i) in the ordinary course of its business;
(ii) in a bona fide transaction at arm’s length for fair value approved in advance
and in writing by the practitioner; or
(iii) in a transaction contemplated within, and undertaken as part of the
implementation of, a business rescue plan that has been approved in terms
of section 152;
(b) any person who, as a result of an agreement made in the ordinary course of the
company’s business before the business rescue proceedings began, is in lawful
possession of any property owned by the company may continue to exercise any
right in respect of that property as contemplated in that agreement, subject to
section 136; and
[25.1.2(ii)]
(c) despite any provision of an agreement to the contrary, no person may exercise
any right in respect of any property in the lawful possession of the company,
irrespective of whether the property is owned by the company, except to the
extent that the practitioner consents in writing.
[25.1.2(ii)]
[Para. (c) substituted by s. 85 (b) of Act 3 of 2011.]
[Sub-s. (1) numbered by s. 85 (a) of Act 3 of 2011.]
(2) The practitioner may not unreasonably withhold consent in terms of subsection (1)
(c), having regard to -
[25.1.2(ii)]
(a) the purposes of this Chapter;
(b) the circumstances of the company; and
Page 493
(c) the nature of the property, and the rights claimed in respect of it.
(3) If, during a company’s business rescue proceedings, the company wishes to dispose of
any property over which another person has any security or title interest, the company must
-
(a) obtain the prior consent of that other person, unless the proceeds of the disposal
would be sufficient to fully discharge the indebtedness protected by that person’s
security or title interest; and
[25.1.2(ii)]
(b) promptly –
[25.1.2(ii)]
(i) pay to that other person the sale proceeds attributable to that property up
to the amount of the company’s indebtedness to that other person; or
(ii) provide security for the amount of those proceeds, to the reasonable
satisfaction of that other person.
135 Post-commencement finance
(1) To the extent that any remuneration, reimbursement for expenses or other amount of
money relating to employment becomes due and payable by a company to an employee
during the company’s business rescue proceedings, but is not paid to the employee -
[25.1.7]
(a) the money is regarded to be post-commencement financing; and
(b) will be paid in the order of preference set out in subsection (3) (a).
(2) During its business rescue proceedings, the company may obtain financing other than
as contemplated is subsection (1), and any such financing -
[25.1.7]
(a) may be secured to the lender by utilising any asset of the company to the extent
that it is not otherwise encumbered; and
(b) will be paid in the order of preference set out in subsection (3) (b).
(3) After payment of the practitioner’s remuneration and expenses referred to in section
143, and other claims arising out of the costs of the business rescue proceedings, all claims
contemplated -
[25.1.3(v)]
(a) in subsection (1) will be treated equally, but will have preference over –
[25.1.7]
(i) all claims contemplated in subsection (2), irrespective of whether or not they
are secured; and
[Sub-para. (i) substituted by s. 86 (b) of Act 3 of 2011.]
(ii) all unsecured claims against the company; or
(b) in subsection (2) will have preference in the order in which they were incurred
over all unsecured claims against the company.
[25.1.7]
(4) If business rescue proceedings are superseded by a liquidation order, the preference
conferred in terms of this section will remain in force, except to the extent of any claims
arising out of the costs of liquidation.
[25.1.3(v), 25.1.7]
Page 494
136 Effect of business rescue on employees and contracts

[25.1.2(iv)]
(1) Despite any provision of an agreement to the contrary -
(a) during a company’s business rescue proceedings, employees of the company
immediately before the beginning of those proceedings continue to be so
employed on the same terms and conditions, except to the extent that –
[25.1.2(iii)]
(i) changes occur in the ordinary course of attrition; or
(ii) the employees and the company, in accordance with applicable labour laws,
agree different terms and conditions; and
[Para. (a) amended by s. 87 (a) of Act 3 of 2011.]
(b) any retrenchment of any such employees contemplated in the company’s
business rescue plan is subject to section 189 and 189A of the Labour Relations
Act, 1995 (Act 66 of 1995), and other applicable employment related legislation.
[25.1.2(iii)]
(2) Subject to subsection (2A), and despite any provision of an agreement to the
contrary, during business rescue proceedings, the practitioner may -
(a) entirely, partially or conditionally suspend, for the duration of the business rescue
proceedings, any obligation of the company that –
[25.1.2(iv)]
(i) arises under an agreement to which the company was a party at the
commencement of the business rescue proceedings; and
(ii) would otherwise become due during those proceedings; or
(b) apply urgently to a court to entirely, partially or conditionally cancel, on any
terms that are just and reasonable in the circumstances, any obligation of the
company contemplated in paragraph (a).
[25.1.2(iv)]
(2A) When acting in terms of subsection (2) -
(a) a business rescue practitioner must not suspend any provision of –
(i) an employment contract; or
(ii) an agreement to which section 35A or 35B of the Insolvency Act, 1936 (Act
24 or 1936), would have applied had the company been liquidated;
(b) a court may not cancel any provision of –
(i) an employment contract, except as contemplated in subsection (1); or
(ii) an agreement to which section 35A or 35B of the Insolvency Act, 1936 (Act
24 of 1936), would have applied had the company been liquidated; and
(c) if a business practitioner suspends a provision of an agreement relating to
security granted by the company, that provision nevertheless continues to apply
for the purpose of section 134, with respect to any proposed disposal of property
by the company.
[25.1.2(iv)]
[Sub-s. (2A) inserted by s. 87 (c) of Act 3 of 2011.]
(3) Any party to an agreement that has been suspended or cancelled, or any provision
which has been suspended or cancelled, in terms of subsection (2), may assert a claim
against the company only for damages.
[25.1.2(iv)]
(4) If liquidation proceedings have been converted into business rescue proceedings, the
liquidator is a creditor of the company to the extent of any outstanding claim by the
liquidator for any remuneration due for work performed, or compensation for expenses
incurred, before the business rescue proceedings began.
Page 495
137 Effect on shareholders and directors

(1) During business rescue proceedings an alteration in the classification or status of any
issued securities of a company, other than by way of a transfer of securities in the ordinary
course of business, is invalid except to the extent -
[25.1.2(v)]
(a) that the court otherwise directs; or
(b) contemplated in an approved business rescue plan.
(2) During a company’s business rescue proceedings, each director of the company -
[25.1.2(vi)]
(a) must continue to exercise the functions of director, subject to the authority of the
practitioner;
(b) has a duty to the company to exercise any management function within the
company in accordance with the express instructions or direction of the
practitioner, to the extent that it is reasonable to do so;
(c) remains bound by the requirements of section 75 concerning personal financial
interests of the director or a related person; and
[25.1.2(vi)]
(d) to the extent that the director acts in accordance with paragraphs (b) and (c), is
relieved from the duties of a director as set out in section 76, and the liabilities
set out in section 77, other than section 77(3)(a), (b) and (c).
[25.1.2(vi)]
(3) During a company’s business rescue proceedings, each director of the company must
attend to the requests of the practitioner at all times, and provide the practitioner with any
information about the company’s affairs as may reasonably be required.
[25.1.2(vi)]
(4) If, during a company’s business rescue proceedings, the board, or one or more
directors of the company, purports to take any action on behalf of the company that requires
the approval of the practitioner, that action is void unless approved by the practitioner.
[25.1.2(vi)]
(5) At any time during the business rescue proceedings, the practitioner may apply to a
court for an order removing a director from office on the grounds that the director has -
[25.1.2(vi)]
(a) failed to comply with a requirement of this Chapter; or
(b) by act or omission, has impeded, or is impeding –
(i) the practitioner in the performance of the powers and functions of
practitioner;
(ii) the management of the company by the practitioner; or
(iii) the development or implementation of a business rescue plan in accordance
with this Chapter.
(6) Subsection (5) is in addition to any right of a person to apply to a court for an order
contemplated in section 162.
Part B
Practitioner’s functions and terms of appointment (ss 138-143)
138 Qualifications of practitioners
[25.1.1(i)]
(1) A person may be appointed as the business rescue practitioner of a company only if
the person -
(a) is a member in good standing of a legal, accounting or business management
profession accredited by the Commission;
[25.1.3(i)]
Page 496
(b) has been licensed as such by the Commission in terms of subsection (2);
[25.1.3(i)]
(c) is not subject to an order of probation in terms of section 162 (7);
[25.1.3(i)]
(d) would not be disqualified from acting as a director of the company in terms of
section 69 (8);
[4.4, 25.1.3(i)]
(e) does not have any other relationship with the company such as would lead a
reasonable and informed third party to conclude that the integrity, impartiality or
objectivity of that person is compromised by that relationship; and
[25.1.3(i)]
(f) is not related to a person who has a relationship contemplated in paragraph (d).
[25.1.3(i)]
(2) For the purposes of subsection (1) (a) (ii), [1] the Commission may license any
qualified person to practise in terms of this Chapter and may suspend or withdraw any such
licence in the prescribed manner.
(3) The Minister may make regulations prescribing -
[25.1.3(i)]
(a) standards and procedures to be followed by the Commission in carrying out its
licensing functions and powers in terms of this section; and
(b) minimum qualifications for a person to practise as a business rescue practitioner,
including different minimum qualifications for different categories of companies.
139 Removal and replacement of practitioner

(1) A practitioner may be removed only -
[25.1.3(iii)]
(a) by a court order in terms of section 130; or
(b) as provided for in this section.
(2) Upon request of an affected person, or on its own motion, the court may remove a
practitioner from office on any of the following grounds:
[25.1.3(iii)]
(a) Incompetence or failure to perform the duties of a business rescue practitioner of
the particular company;
[Para. (a) substituted by s. 89 of Act 3 of 2011.]
(b) failure to exercise the proper degree of care in the performance of the
practitioner’s functions;
(c) engaging in illegal acts or conduct;
(d) if the practitioner no longer satisfies the requirements set out in section 138(1);
(e) conflict of interest or lack of independence; or
(f) the practitioner is incapacitated and unable to perform the functions of that
office, and is unlikely to regain that capacity within a reasonable time.
(3) The company, or the creditor who nominated the practitioner, as the case may be,
must appoint a new practitioner if a practitioner dies, resigns or is removed from office,
subject to the right of an affected person to bring a fresh application in terms of section 130
(1)(b) to set aside that new appointment.
[25.1.3(iii)]
140 General powers and duties of practitioners
(1) During a company’s business rescue proceedings, the practitioner, in addition to any
other powers and duties set out in this Chapter -
Page 497
(a) has full management control of the company in substitution for its board and pre-
existing management;
[25.1.2(vi), 25.1.3(iv)]
(b) may delegate any power or function of the practitioner to a person who was part
of the board or pre-existing management of the company;
[25.1.3(iv)]
(c) may –
(i) remove from office any person who forms part of the pre-existing
management of the company; or
(ii) appoint a person as part of the management of a company, whether to fill a
vacancy or not, subject to subsection (2); and
(d) is responsible to –
(i) develop a business rescue plan to be considered by affected persons, in
accordance with Part D of this Chapter; and
(ii) implement any business rescue plan that has been adopted in accordance
with Part D of this Chapter.
(1A) The practitioner must, as soon as practicable after appointment, inform all relevant
regulatory authorities having authority in respect of the activities of the company, of the fact
that the company has been placed under business rescue proceedings and of his or her
appointment.
(2) Except with the approval of the court on application by the practitioner, a practitioner
may not appoint a person as part of the management of the company, or an advisor to the
company or to the practitioner, if that person -
[25.1.3(iv)]
(a) has any other relationship with the company such as would lead a reasonable and
informed third party to conclude that the integrity, impartiality or objectivity of
that person is compromised by that relationship; or
(b) is related to a person who has a relationship contemplated in paragraph (a).
(3) During a company’s business rescue proceedings, the practitioner -
(a) is an officer of the court, and must report to the court in accordance with any
applicable rules of, or orders made by, the court;
[25.1.3(iv)]
(b) has the responsibilities, duties and liabilities of a director of the company, as set
out in sections 75 to 77; and
[25.1.3(iv)]
(c) other than as contemplated in paragraph (b) –
[25.1.3(iv)]
(i) is not liable for any act or omission in good faith in the course of the
exercise of the powers and performance of the functions of practitioner; but
(ii) may be held liable in accordance with any relevant law for the consequences
of any act or omission amounting to gross negligence in the exercise of the
powers and performance of the functions of practitioner.
(4) If the business rescue process concludes with an order placing the company in
liquidation, any person who has acted as practitioner during the business rescue process
may not be appointed as liquidator of the company.
[23.6.3, 25.1.3(iv)]
141 Investigation of affairs of company
(1) As soon as practicable after being appointed, a practitioner must investigate the
company’s affairs, business, property, and financial situation, and after having done so,
consider whether there is any reasonable prospect of the company being rescued.
[25.1.4]
Page 498
(2) If, at any time during business rescue proceedings, the practitioner concludes that -
(a) there is no reasonable prospect for the company to be rescued, the practitioner
must –
[25.1.4]
(i) so inform the court, the company, and all affected persons in the prescribed
manner; and
(ii) apply to the court for an order discontinuing the business rescue
proceedings and placing the company into liquidation;
(b) there no longer are reasonable grounds to believe that the company is financially
distressed, the practitioner must so inform the court, the company, and all
affected persons in the prescribed manner, and –
[25.1.4]
(i) if the business rescue process was confirmed by a court order in terms of
section 130, or initiated by an application to the court in terms of section
131, apply to a court for an order terminating the business rescue
proceedings; or
(ii) otherwise, file a notice of termination of the business rescue proceedings; or
(c) there is evidence, in the dealings of the company before the business rescue
proceedings began, of –
[25.1.4]
(i) voidable transactions, or the failure by the company or any director to
perform any material obligation relating to the company, the practitioner
must take any necessary steps to rectify the matter and may direct the
management to take appropriate steps;
[Sub-para. (i) substituted by s. 91 of Act 3 of 2011.]
(ii) reckless trading, fraud or other contravention of any law relating to the
company, the practitioner must –
(aa) forward the evidence to the appropriate authority for further
investigation and possible prosecution; and
(bb) direct the management to take any necessary steps to rectify the
matter, including recovering any misappropriated assets of the
company.
(3) A court to which an application has been made in terms of subsection (2) (a) (ii) may
make the order applied for, or any other order that the court considers appropriate in the
circumstances.
142 Directors of company to co-operate with and assist practitioner
(1) As soon as practicable after business rescue proceedings begin, each director of a
company must deliver to the practitioner all books and records that relate to the affairs of
the company and are in the director’s possession.
[25.1.2(vi)]
(2) Any director of a company who knows where other books and records relating to the
company are being kept, must inform the practitioner as to the whereabouts of those books
and records.
[25.1.2(vi)]
(3) Within five business days after business rescue proceedings begin, or such longer
period as the practitioner allows, the directors of a company must provide the practitioner
with a statement of affairs containing, at a minimum, particulars of the following:
[25.1.2(vi)]
(a) Any material transactions involving the company or the assets of the company,
and occurring within 12 months immediately before the business rescue
proceedings began;
Page 499
(b) any court, arbitration or administrative proceedings, including pending

enforcement proceedings, involving the company;
(c) the assets and liabilities of the company, and its income and disbursements
within the immediately preceding 12 months;
(d) the number of employees, and any collective agreements or other agreements
relating to the rights of employees;
(e) any debtors and their obligations to the company; and
(f) any creditors and their rights or claims against the company.
(4) No person is entitled, as against the practitioner of a company, to retain possession of
any books or records of the company, or to claim or enforce a lien over any such books or
records, unless such books or records are in the lawful possession of such person and he or
she has made copies available to the practitioner or has afforded the practitioner a
reasonable opportunity to inspect the books or records concerned.
[25.1.3(iv)]
143 Remuneration of practitioner

(1) The practitioner is entitled to charge an amount to the company for the remuneration
and expenses of the practitioner in accordance with the tariff prescribed in terms of
subsection (6).
[25.1.3(v)]
(2) The practitioner may propose an agreement with the company providing for further
remuneration, additional to that contemplated in subsection (1), to be calculated on the
basis of a contingency related to -
[25.1.3(v)]
(a) the adoption of a business rescue plan at all, or within a particular time, or the
inclusion of any particular matter within such a plan; or
(b) the attainment of any particular result or combination of results relating to the
business rescue proceedings.
(3) Subject to subsection (4), an agreement contemplated in subsection (2) is final and
binding on the company if it is approved by -
[25.1.3(v)]
(a) the holders of a majority of the creditors’ voting interests, as determined in
accordance with section 145(4)-(6), present and voting at a meeting called for
the purpose of considering the proposed agreement; and
(b) the holders of a majority of the voting rights attached to any shares of the
company that entitle the shareholder to a portion of the residual value of the
company on winding-up, present and voting at a meeting called for the purpose
of considering the proposed agreement.
(4) A creditor or shareholder who voted against a proposal contemplated in this section
may apply to a court within 10 business days after the date of voting on that proposal, for
an order setting aside the agreement on the grounds that -
[25.1.3(v)]
(a) the agreement is not just and equitable; or
(b) the remuneration provided for in the agreement is unreasonable having regard to
the financial circumstances of the company.
(5) To the extent that the practitioner’s remuneration and expenses are not fully paid, the
practitioner’s claim for those amounts will rank in priority before the claims of all other
secured and unsecured creditors.
[25.1.3(v)]
Page 500
(6) The Minister may make regulations prescribing a tariff of fees and expenses for the
purpose of subsection (1).
Part C
Rights of affected persons during business rescue proceedings (ss 144-149)

144 Rights of employees
(1) During a company’s business rescue proceedings any employees of the company who
are -
[25.1.5(ii)]
(a) represented by a registered trade union may exercise any rights set out in this
Chapter –
[25.1.5(i)]
(i) collectively through their trade union; and
(ii) in accordance with applicable labour law; or
(b) not represented by a registered trade union may elect to exercise any rights set
out in this Chapter either directly, or by proxy through an employee organisation
or representative.
[25.1.5(i)]
(2) To the extent that any remuneration, reimbursement for expenses or other amount of
money relating to employment became due and payable by a company to an employee at
any time before the beginning of the company’s business rescue proceedings, and had not
been paid to that employee immediately before the beginning of those proceedings, the
employee is a preferred unsecured creditor of the company for the purposes of this
Chapter.
[25.1.5(i), 25.1.5(ii)]
(3) During a company’s business rescue process, every registered trade union
representing any employees of the company, and any employee who is not so represented,
is entitled to -
[25.1.5(i)]
(a) notice, which must be given in the prescribed manner and form to employees at
their workplace, and served at the head office of the relevant trade union, of each
court proceeding, decision, meeting or other relevant event concerning the
business rescue proceedings;
(b) participate in any court proceedings arising during the business rescue
proceedings;
(c) form a committee of employees’ representatives;
[25.1.5(i)]
(d) be consulted by the practitioner during the development of the business rescue
plan, and afforded sufficient opportunity to review any such plan and prepare a
submission contemplated in section 152(1)(c);
(e) be present and make a submission to the meeting of the holders of voting
interests before a vote is taken on any proposed business rescue plan, as
contemplated in section 152(1)(c);
(f) vote with creditors on a motion to approve a proposed business plan, to the
extent that the employee is a creditor, as contemplated in subsection (2); and
[Para. (f) substituted by s. 94 (b) of Act 3 of 2011.]
(g) if the proposed business rescue plan is rejected, to –
(i) propose the development of an alternative plan, in the manner contemplated
in section 153; or
(ii) present an offer to acquire the interests of one or more affected persons, in
the manner contemplated in section 153.
Page 501
(4) A medical scheme, or a pension scheme including a provident scheme, for the benefit
of the past or present employees of a company is an unsecured creditor of the company for
the purposes of this Chapter to the extent of -
(a) any amount that was due and payable by the company to the trustees of the
scheme at any time before the beginning of the company’s business rescue
proceedings, and that had not been paid immediately before the beginning of
those proceedings; and
[25.1.5(i)]
(b) in the case of a defined benefit pension scheme, the present value at the
commencement of the business rescue proceedings of any unfunded liability
under that scheme.
[25.1.5(i)]
(5) The rights set out in this section are in addition to any other rights arising or accruing
in terms of any law, contract, collective agreement, shareholding, security or court order.
145 Participation by creditors
(1) Each creditor is entitled to -
(a) notice of each court proceeding, decision, meeting or other relevant event
proceedings;
(c) formally participate in a company’s business rescue proceedings to the extent
provided for in this Chapter; and
(d) informally participate in those proceedings by making proposals for a business
rescue plan to the practitioner.
(2) In addition to the rights set out in subsection (1), each creditor has -
(a) the right to vote to amend, approve or reject a proposed business rescue plan, in
the manner contemplated in section 152; and
(b) if the proposed business rescue plan is rejected, a further right to –
in section 153; or
(ii) present an offer to acquire the interests of any or all of the other creditors in
the manner contemplated in section 153.
(3) The creditors of a company are entitled to form a creditors’ committee, and through
that committee are entitled to be consulted by the practitioner during the development of
the business rescue plan.
[25.1.5(ii)]
(4) In respect of any decision contemplated in this Chapter that requires the support of
the holders of creditors’ voting interests -
(a) a secured or unsecured creditor has a voting interest equal to the value of the
amount owed to that creditor by the company; and
[25.1.5(ii)]
(b)
a concurrent creditor who would be subordinated in a liquidation has a voting
interest, as independently and expertly appraised and valued at the request of
the practitioner, equal to the amount, if any, that the creditor could reasonably
expect to receive in such a liquidation of the company.
[25.1.5(ii)]
(5) The practitioner of a company must -
(a) determine whether a creditor is independent for the purposes of this Chapter;
[25.1.5(ii)]
(b) request a suitably qualified person to independently and expertly appraise and
value an interest contemplated in subsection (4) (b); and
[25.1.5(ii)]
Page 502
(c) give a written notice of the determination, or appraisal and valuation, to the
person concerned at least 15 business days before the date of the meeting to be
convened in terms of section 151.
[25.1.5(ii)]
(6) Within five business days after receiving a notice of a determination contemplated in
subsection (5), a person may apply to a court to -
[25.1.5(ii)]
(a) review the practitioner’s determination that the person is, or is not, an
independent creditor; or
(b) review, re-appraise and re-value that person’s voting interest, as determined in
terms of subsection (5) (b).
146 Participation by holders of company’s securities
[25.1.5(iii)]
During a company’s business rescue proceedings, each holder of any issued security of
the company is entitled to -
(a) notice of each court proceeding, decision, meeting or other relevant event
proceedings;
(c) formally participate in a company’s business rescue proceedings to the extent
provided for in this Chapter;
(d) vote to approve or reject a proposed business rescue plan in the manner
contemplated in section 152, if the plan would alter the rights associated with the
class of securities held by that person; and
(e) if the business rescue plan is rejected, to –
in section 153; or
(ii) present an offer to acquire the interests of any or all of the creditors or other
holders of the company’s securities in the manner contemplated in section
153.
147 First meeting of creditors
(1) Within 10 business days after being appointed, the practitioner must convene, and
preside over, a first meeting of creditors, at which -
[25.1.6(i)]
(a) the practitioner –
(i) must inform the creditors whether the practitioner believes that there is a
reasonable prospect of rescuing the company; and
(ii) may receive proof of claims by creditors; and
(b) the creditors may determine whether or not a committee of creditors should be
appointed and, if so, may appoint the members of the committee.
(2) The practitioner must give notice of the first meeting of creditors to every creditor of
the company whose name and address is known to, or can reasonably be obtained by, the
practitioner, setting out the -
(a) date, time and place of the meeting; and
(b) agenda for the meeting.
(3) At any meeting of creditors, other than the meeting contemplated in section 151, a
decision supported by the holders of a simple majority of the independent creditors’ voting
interests voted on a matter, is the decision of the meeting on that matter.
[25.1.6(i)]
Page 503
148 First meeting of employees’ representatives

(1) Within 10 business days after being appointed, the practitioner must convene, and
preside over, a first meeting of employees’ representatives, at which -
[25.1.6(ii)]
(a) the practitioner must inform the employees’ representatives whether the
practitioner believes that there is a reasonable prospect of rescuing the company;
and
(b) the employees’ representatives may determine whether or not an employees’
committee should be appointed and, if so, may appoint the members of the
committee.
(2) The practitioner must give notice of the meeting to every registered trade union
representing employees of the company and, if there are any employees who are not
represented by such a registered trade union, to those employees, or their representatives,
setting out the -
[25.1.6(ii)]
(a) date, time and place of the meeting; and
(b) agenda for the meeting.
149 Functions, duties and membership of committees of affected persons
(1) A committee of employees, or of creditors, appointed in terms of section 147 or 148,
respectively -
(a) may consult with the practitioner about any matter relating to the business
rescue proceedings, but may not direct or instruct the practitioner;
[25.1.6(iii)]
(b) may, on behalf of the general body of creditors or employees, respectively,
receive and consider reports relating to the business rescue proceedings; and
[25.1.6(iii)]
(c) must act independently of the practitioner to ensure fair and unbiased
representation of creditors’ or employees’ interests.
[25.1.6(iii)]
(2) A person may be a member of a committee of creditors or employees, respectively,
only if the person is -
[25.1.6(iii)]
(a) an independent creditor, or an employee, of the company;
(b) an agent, proxy or attorney of an independent creditor or employee, or other
person acting under a general power of attorney; or
(c) authorised in writing by an independent creditor or employee to be a member.
Part D
Development and approval of business rescue plan (ss 150-154)

150 Proposal of business rescue plan
(1) The practitioner, after consulting the creditors, other affected persons, and the
management of the company, must prepare a business rescue plan for consideration and
possible adoption at a meeting held in terms of section 151.
[25.1.8]
(2) The business rescue plan must contain all the information reasonably required to
facilitate affected persons in deciding whether or not to accept or reject the plan, and must
be divided into three Parts, as follows:
[25.1.8(i)]
(a) Part A – Background, which must include at least –
(i) a complete list of all the material assets of the company, as well as an
indication as to which assets were held as security by creditors when the
business rescue proceedings began;
Page 504
(ii) a complete list of the creditors of the company when the business rescue
proceedings began, as well as an indication as to which creditors would
qualify as secured, statutory preferent and concurrent in terms of the laws
of insolvency, and an indication of which of the creditors have proved their
claims;
[25.1.5(i)]
(iii) the probable dividend that would be received by creditors, in their specific
classes, if the company were to be placed in liquidation;
(iv) a complete list of the holders of the company’s issued securities;
(v) a copy of the written agreement concerning the practitioner’s remuneration;
and
(vi) a statement whether the business rescue plan includes a proposal made
informally by a creditor of the company.
(b) Part B – Proposals, which must include at least –
(i) the nature and duration of any moratorium for which the business rescue
plan makes provision;
(ii) the extent to which the company is to be released from the payment of its
debts, and the extent to which any debt is proposed to be converted to
equity in the company, or another company;
(iii) the ongoing role of the company, and the treatment of any existing
agreements;
(iv) the property of the company that is to be available to pay creditors’ claims in
terms of the business rescue plan;
(v) the order of preference in which the proceeds of property will be applied to
pay creditors if the business rescue plan is adopted;
[25.1.5(i)]
(vi) the benefits of adopting the business rescue plan as opposed to the benefits
that would be received by creditors if the company were to be placed in
liquidation; and
(vii) the effect that the business rescue plan will have on the holders of each
class of the company’s issued securities.
(c) Part C – Assumptions and conditions, which must include at least –
(i) a statement of the conditions that must be satisfied, if any, for the business
rescue plan to –
(aa) come into operation; and
(bb) be fully implemented;
(ii) the effect, if any, that the business rescue plan contemplates on the number
of employees, and their terms and conditions of employment;
(iii) the circumstances in which the business rescue plan will end; and
(iv) a projected –
[25.1.8(i)]
(aa) balance sheet for the company; and
(bb) statement of income and expenses for the ensuing three years,
prepared on the assumption that the proposed business plan is adopted.
(3) The projected balance sheet and statement required by subsection (2) (c) (iv) -
[25.1.8(i), 25.1.8(iii)]
(a) must include a notice of any material assumptions on which the projections are
based; and
(b)
may include alternative projections based on varying assumptions and
contingencies.
Page 505
(4) A proposed business rescue plan must conclude with a certificate by the practitioner
stating that any -
[25.1.8(i)]
(a) actual information provided appears to be accurate, complete, and up to date;
and
(b) projections provided are estimates made in good faith on the basis of factual
information and assumptions as set out in the statement.
(5) The business rescue plan must be published by the company within 25 business days
after the date on which the practitioner was appointed, or such longer time as may be
allowed by -
[25.1.8(ii)]
(a) the court, on application by the company; or
(b) the holders of a majority of the creditors’ voting interests.
151 Meeting to determine future of company
(1) Within 10 business days after publishing a business rescue plan in terms of section
150, the practitioner must convene and preside over a meeting of creditors and any other
holders of a voting interest, called for the purpose of considering the plan.
[25.1.8(iii)]
(2) At least five business days before the meeting contemplated in subsection (1), the
practitioner must deliver a notice of the meeting to all affected persons, setting out -
[25.1.8(iii)]
(a) the date, time and place of the meeting;
(b) the agenda of the meeting; and
(c) a summary of the rights of affected persons to participate in and vote at the
meeting.
(3) The meeting contemplated in this section may be adjourned from time to time, as
necessary or expedient, until a decision regarding the company’s future has been taken in
accordance with sections 152 and 153.
152 Consideration of business rescue plan
(1) At a meeting convened in terms of section 151, the practitioner must -
(a) introduce the proposed business plan for consideration by the creditors and, if
applicable, by the shareholders;
[25.1.8(iii)]
(b) inform the meeting whether the practitioner continues to believe that there is a
reasonable prospect of the company being rescued;
[25.1.8(iii)]
(c) provide an opportunity for the employees’ representatives to address the
meeting;
[25.1.8(iii)]
(d) invite discussion, and entertain and conduct a vote, on any motions to –
[25.1.8(iii)]
(i)
amend the proposed plan, in any manner moved and seconded by holders of
creditors’ voting interests, and satisfactory to the practitioner; or
(ii) direct the practitioner to adjourn the meeting in order to revise the plan for
further consideration; and
(e) call for a vote for preliminary approval of the proposed plan, as amended if
applicable, unless the meeting has first been adjourned in accordance with
paragraph (d) (ii).
Page 506
(2) In a vote called in terms of subsection (1) (e), the proposed business rescue plan will
be approved on a preliminary basis if -
[25.1.8(iii), 25.1.8(v)]
(a) it was supported by the holders of more than 75% of the creditors’ voting
interests that were voted; and
(b) the votes in support of the proposed plan included at least 50% of the
independent creditors’ voting interests, if any, that were voted.
(3) If a proposed business rescue plan -
(a) is not approved on a preliminary basis, as contemplated in subsection (2), the
plan is rejected, and may be considered further only in terms of section 153;
[25.1.8(iii)]
(b) does not alter the rights of the holders of any class of the company’s securities,
approval of that plan on a preliminary basis in terms of subsection (2) constitutes
also the final adoption of that plan, subject to satisfaction of any conditions on
which that plan is contingent; or
[25.1.8(iii)]
(c) does alter the rights of any class of holders of the company’s securities –
[25.1.8(iii)]
(i) the practitioner must immediately hold a meeting of holders of the class, or
classes of securities who rights would be altered by the plan, and call for a
vote by them to approve the adoption of the proposed business rescue plan;
and
(ii) if, in a vote contemplated in subparagraph (i), a majority of the voting rights
that were exercised –
(aa) support adoption of the plan, it will have been finally adopted, subject
only to satisfaction of any conditions on which it is contingent; or
(bb) oppose adoption of the plan, the plan is rejected, and may be
considered further only in terms of section 153.
(4) A business rescue plan that has been adopted is binding on the company, and on each
of the creditors of the company and every holder of the company’s securities, whether or not
such a person -
[25.1.8(iv)]
(a) was present at the meeting;
(b) voted in favour of adoption of the plan; or
(c) in the case of creditors, had proven their claims against the company.
(5) The company, under the direction of the practitioner, must take all necessary steps to
-
[25.1.8(iv)]
(a) attempt to satisfy any conditions on which the business rescue plan is contingent;
and
(b) implement the plan as adopted.
(6) To the extent necessary to implement an adopted business rescue plan -
(a) the practitioner may, in accordance with that plan, determine the consideration
for, and issue, any authorised securities of the company, despite section 38 or 40
to the contrary; and
[25.1.8(iv)]
(b)
if the business rescue plan was approved by the shareholders of the company, as
contemplated in subsection (3) (c), the practitioner may amend the company’s
Memorandum of Incorporation to authorise, and determine the preferences,
rights, limitations and other terms of, any securities that are not otherwise
authorised, but
Page 507
are contemplated to be issued in terms of the business rescue plan, despite any
provision of section 16, 36 or 37 to the contrary.
[25.1.8(iv)]
[Para. (b) substituted by s. 96 (b) of Act 3 of 2011.]
(7) Except to the extent that an approved business rescue plan provides otherwise, a pre-
emptive right of any shareholder of the company, as contemplated in section 39, does not
apply with respect to an issue of shares by the company in terms of the business rescue
plan.
[25.1.8(iv)]
(8) When the business rescue plan has been substantially implemented, the practitioner
must file a notice of the substantial implementation of the business rescue plan.
[25.1.8(iv)]
153 Failure to adopt business rescue plan
(1) (a) If a business rescue plan has been rejected as contemplated in section 152(3)(a)
or (c)(ii)(bb) the practitioner may -
[25.1.8(v)]
(i) seek a vote of approval from the holders of voting interests to prepare and
publish a revised plan; or
(ii) advise the meeting that the company will apply to a court to set aside the result
of the vote by the holders of voting interests or shareholders, as the case may
be, on the grounds that it was inappropriate.
(b) If the practitioner does not take any action contemplated in paragraph (a) -
(i) any affected person present at the meeting may –
[25.1.8(v)]
(aa) call for a vote of approval from the holders of voting interests requiring the
practitioner to prepare and publish a revised plan; or
(bb) apply to the court to set aside the result of the vote by the holders of
voting interests or shareholders, as the case may be, on the grounds that
it was inappropriate; or
(ii) any affected person, or combination of affected persons, may make a binding
offer to purchase the voting interests of one or more persons who opposed
adoption of the business rescue plan, at a value independently and expertly
determined, on the request of the practitioner, to be a fair and reasonable
estimate of the return to that person, or those persons, if the company were to
be liquidated.
[25.1.5(i), 25.1.5(ii), 25.1.5(iii), 25.1.8(v)]
(2) If the practitioner, acting in terms of subsection (1) (a) (ii), or an affected person,
acting in terms of subsection (1) (b) (i) (bb), informs the meeting that an application will be
made to the court as contemplated in those provisions, the practitioner must adjourn the
meeting -
(a) for five business days, unless the contemplated application is made to the court
during that time; or
(b) until the court has disposed of the contemplated application.
(3) If, on the request of the practitioner in terms of subsection (1) (a) (i), or a call by an
affected person in terms of subsection (1) (b) (i) (aa), the meeting directs the practitioner to
prepare and publish a revised business rescue plan -
[25.1.8(v)]
(a) the practitioner must –
(i) conclude the meeting after that vote; and
(ii) prepare and publish a new or revised business rescue plan within 10
business days; and
Page 508
(b) the provisions of this Part apply afresh to the publishing and consideration of that
new or revised plan.
(4) If an affected person makes an offer contemplated in subsection (1) (b) (ii), the
practitioner must -
[25.1.8(v)]
(a) adjourn the meeting for no more than five business days, as necessary to afford
the practitioner an opportunity to make any necessary revisions to the business
rescue plan to appropriately reflect the results of the offer; and
(b) set a date for resumption of the meeting, without further notice, at which the
provisions of section 152 and this section will apply afresh.
(5) If no person takes any action contemplated in subsection (1), the practitioner must
promptly file a notice of the termination of the business rescue proceedings.
[25.1.8(v)]
(6) A holder of a voting interest, or a person acquiring that interest in terms of a binding
offer, may apply to a court to review, re-appraise and re-value a determination by an
independent expert in terms of subsection (1) (b) (ii).
(7) On an application contemplated in subsection (1) (a) (ii), or (1) (b) (i) (bb), a court
may order that the vote on a business rescue plan be set aside if the court is satisfied that it
is reasonable and just to do so, having regard to -
(a) the interests represented by the person or persons who voted against the
proposed business rescue plan;
(b) the provision, if any, made in the proposed business rescue plan with respect to
the interests of that person or those persons; and
(c) a fair and reasonable estimate of the return to that person, or those persons, if
the company were to be liquidated.
154 Discharge of debts and claims

(1) A business rescue plan may provide that, if it is implemented in accordance with its
terms and conditions, a creditor who has acceded to the discharge of the whole or part of a
debt owing to that creditor will lose the right to enforce the relevant debt or part of it.
[25.1.8(iv)]
(2) If a business rescue plan has been approved and implemented in accordance with this
Chapter, a creditor is not entitled to enforce any debt owed by the company immediately
before the beginning of the business rescue process, except to the extent provided for in the
business rescue plan.
[25.1.8(iv)]
Part E
Compromise with creditors (s 155)

155 Compromise between company and creditors
(1) This section applies to a company, irrespective of whether or not it is financially
distressed as defined in section 128(1)(f), unless it is engaged in business rescue
proceedings in terms of this Chapter.
[25.2]
(2) The board of a company, or the liquidator of such a company if it is being wound up,
may propose an arrangement or a compromise of its financial obligations to
Page 509
all of its creditors, or to all of the members of any class of its creditors, by delivering a copy
of the proposal, and notice of meeting to consider the proposal, to -
[25.2]
(a) every creditor of the company, or every member of the relevant class of creditors
whose name or address is known to, or can reasonably be obtained by, the
company; and
(b) the Commission.
(3) A proposal contemplated in subsection (2) must contain all information reasonably
required to facilitate creditors in deciding whether or not to accept or reject the proposal,
and must be divided into three Parts, as follows:
[25.2]
(a) Part A – Background, which must include at least –
(i) a complete list of all the material assets of the company, as well as an
indication as to which assets are held as security by creditors as of the date
of the proposal;
(ii) a complete list of the creditors of the company as of the date of the
proposal, as well as an indication as to which creditors would qualify as
secured, statutory preferent and concurrent in terms of the laws of
insolvency, and an indication of which of the creditors have proved their
claims;
(iii) the probable dividend that would be received by creditors, in their specific
classes, if the company were to be placed in liquidation;
(iv) a complete list of the holders of the company issued securities, and the
effect that the proposal would have on them, if any; and
(v) whether the proposal includes a proposal made informally by a creditor of
the company.
(b) Part B – Proposals, which must include at least –
(i) the nature and duration of any proposed debt moratorium;
(ii) the extent to which the company is to be released from the payment of its
debts, and the extent to which any debt is proposed to be converted to
equity in the company, or another company;
(iii) the treatment of contracts and ongoing role of the company;
(iv) the property of the company that is proposed to be available to pay
creditors’ claims;
(v) the order of preference in which the proceeds of property of the company
will be applied to pay creditors if the proposal is adopted; and
(vi) the benefits of adopting the proposal as opposed to the benefits that would
be received by creditors if the company were to be placed in liquidation.
(c) Part C – Assumptions and conditions, which must include at least –
(i) a statement of the conditions that must be satisfied, if any, for the proposal
to –
(aa) come into operation; and
(bb) be fully implemented;
(ii) the effect, if any, that the plan contemplates on the number of employees,
and their terms and conditions of employment; and
(iii) a projected –
(aa) balance sheet for the company; and
(bb) statement of income and expenses for the ensuing three years,
prepared on the assumption that the proposal is accepted.
Page 510
(4) The projected balance sheet and statement required by subsection (3) (c) (iii) -
[25.2]
(a) must include a notice of any significant assumptions on which the projections are
based; and
(b) may include alternative projections based on varying assumptions and
contingencies.
(5) A proposal must conclude with a certificate by an authorised director or prescribed
officer of the company stating that any -
[25.2]
(a) factual information provided appears to be accurate, complete, and up to the
date; and
(b) projections provided are estimates made in good faith on the basis of factual
information and assumptions as set out in the statement.
(6) A proposal contemplated in this section will have been adopted by the creditors of the
company, or the members of a relevant class of creditors, if it is supported by a majority in
number, representing at least 75% in value of the creditors or class, as the case may be,
present and voting in person or by proxy, at a meeting called for that purpose.
[25.2]
(7) If a proposal is adopted as contemplated in subsection (6) -
(a) the company may apply to the court for an order approving the proposal; and
[25.2]
(b) the court, on an application in terms of paragraph (a) may sanction the
compromise as set out in the adopted proposal, if it considers it just and
equitable to do so, having regard to –
[25.2]
(i) the number of creditors of any affected class of creditors, who were present
or represented at the meeting, and who voted in favour of the proposal; and
(ii) in the case of a compromise in respect of a company being wound up, the
report of the Master required in terms of the laws contemplated in item 9 of
Schedule 5.
(8) A copy of an order of the court sanctioning a compromise -
(a) must be filed by the company within five business days;
[25.2]
(b) must be attached to each copy of the company’s Memorandum of Incorporation
that is kept at the company’s registered office, or elsewhere as contemplated in
section 25; and
[25.2]
(c) is final and binding on all of the company’s creditors or all of members of the
relevant class of creditors, as the case may be, as of the date on which it is filed.
[25.2]
(9) An arrangement or a compromise contemplated in this section does not affect the
liability of any person who is a surety of the company.
[25.2]
[1] Actually subsection (1) (b) – see Companies Amendment Bill [B40B–2010] in comparison to Companies
Amendment Act 3 of 2011.
Page 511
Appendix 7
Close Corporations Act 69 of 1984
Part IX
WINDING-UP (ss 66-81)

66 Application of Companies Act, 1973
[24.3]
(1) The laws mentioned or contemplated in item 9 of Schedule 5 of the Companies Act,
read with the changes required by the context, apply to the liquidation of a corporation in
respect of any matter not specifically provided for in this Part or in any other provision of
this Act.
[24intro]
[Sub-s. (1) substituted by s. 16 of Act 26 of 1997 and by s. 224 (2) of Act 71 of 2008.]
(1A) The provisions of Chapter 6 of the Companies Act, read with the changes required
by the context, apply to a corporation, but any reference in that Chapter to -
[24intro, 25intro]
(a) a company must be regarded as a reference to a corporation; or
(b) a shareholder of a company, or the holder of securities issued by a company,
must be read as a reference to a member of a corporation.
[Sub-s. (1A) inserted by s. 224 (2) of Act 71 of 2008.]
(2) For the purposes of subsection (1) -
[24intro]
(a) any reference in a relevant provision of the Companies Act, and in any provision
of the Insolvency Act, 1936 (Act 24 of 1936), made applicable by any such
provision –
(i) to a company, shall be construed as a reference to a corporation;
(ii) to a share in a company, shall be construed as a reference to a member’s
interest in a corporation;
(iii) to a member, director, shareholder or contributory of a company, shall be
construed as a reference to a member of a corporation;
(iv) to an auditor of a company, shall be construed as a reference to an
accounting officer of a corporation;
(v) to an officer or a secretary of a company, shall be construed as a reference
to a manager or a secretary who is an officer of a corporation;
(vi) to a registered office of a company, shall be construed as a reference to a
registered office of a corporation;
(vii) to a memorandum or articles of association of a company, shall be construed
as a reference to a founding statement and an association agreement of a
corporation, respectively;
(viii) to the Registrar of Companies, shall be construed as a reference to the
Registrar;
Page 512
(ix) to the Companies Act or the regulations made thereunder, or to any

provision thereof, shall be construed as including a reference to this Act or
the regulations made thereunder, or to any corresponding provision thereof,
as the case may be;
(x) to an insolvent estate, shall be construed as a reference to a corporation;
(xi) to a provisional liquidator of a company, or to a liquidator of a company or a
trustee of an insolvent estate, shall be construed as a reference to a
provisional liquidator and to a liquidator of a corporation, respectively;
(xii) to a sheriff of a province, shall be construed as including a reference to a
messenger of a magistrate’s court;
(xiii) to a Registrar of a Court, shall be construed as including a reference to a
clerk of a magistrate’s court;
(xiv) to a Court, shall be construed as a reference to a Court having jurisdiction
under this Act; and
[24.2.1]
(xv) to a Master, shall be construed as a reference to a Master having jurisdiction
under this Act;
(b) a reference to a special resolution –
(i) referred to in sections 340 (2), 350 (1), 351 (1), 352, 356 (2), 357 (3) and
(4), 359 (1), 362 (1) and 363 (1) of the Companies Act, shall be construed
as a reference to a written resolution for the voluntary winding-up of a
corporation in terms of section 67 of this Act; and
[24.1]
(ii) referred to in section 422 (1) (b) of the Companies Act, shall be construed
as a reference to a written resolution signed by or on behalf of all the
members of a corporation; and
(c) it shall be deemed that the following paragraph has been substituted for
paragraph (b) of section 358 of the Companies Act:
“(b) where any other action or proceeding is being or about to be instituted
against the company in any court in the Republic, apply to such court for an
order restraining further proceedings in the action or proceeding,’.
67 Dissolution of corporations
(1) Part G of Chapter 2 of the Companies Act, read with the changes required by the
context, applies to a solvent corporation.
(2) This Part of this Act must be administered in accordance with the laws mentioned or
contemplated in item 9 of Schedule 5 of the Companies Act.
[24intro]
[S. 67 substituted by s. 224 (2) of Act 71 of 2008.]
68 . . .
[24.2.2]
[S. 68 repealed by s. 224 (2) of Act 71 of 2008.]
69 Circumstances under which corporation deemed unable to pay debts

[24.2.2]
(1) For the purposes of section 68 (c) a corporation shall be deemed to be unable to pay
its debts, if -
(a) a creditor, by cession or otherwise, to whom the corporation is indebted in a sum
of not less than two hundred rand then due has served on the corporation, by
Page 513
delivering it at its registered office, a demand requiring the corporation to pay the
sum so due, and the corporation has for 21 days thereafter neglected to pay the
sum or to secure or compound for it to the reasonable satisfaction of the creditor;
or
(b) any process issued on a judgment, decree or order of any court in favour of a
creditor of the corporation is returned by a sheriff, or a messenger of a
magistrate’s court, with an endorsement that he or she has not found sufficient
disposable property to satisfy the judgment, decree or order, or that any
disposable property found did not upon sale satisfy such process; or
(c) it is proved to the satisfaction of the Court that the corporation is unable to pay
its debts.
(2) In determining for the purposes of subsection (1) whether a corporation is unable to
pay its debts, the Court shall also take into account the contingent and prospective liabilities
of the corporation.
70 Repayments by members
(1) Subject to the provisions of this section, no member of a corporation shall in the
winding-up of the corporation be liable for the repayment of any payment made by the
corporation to him or her by reason only of his or her membership, if such payment complies
with the requirements of section 51 (1).
(2) In the winding-up of a corporation unable to pay its debts, any such payment made to
a member by reason only of his or her membership within a period of two years before the
commencement of the winding-up of the corporation, shall be repaid to the corporation by
the member, unless such member can prove that -
[24.6.1]
(a) after such payment was made, the corporation’s assets, fairly valued, exceeded
all its liabilities; and
[24.6.1]
(b) such payment was made while the corporation was able to pay its debts as they
became due in the ordinary course of its business; and
[24.6.1]
(c) such payment, in the particular circumstances, did not in fact render the
corporation unable to pay its debts as they became due in the ordinary course of
its business.
[24.6.1]
(3) A person who has ceased to be a member of the corporation concerned within the said
period of two years, shall also be liable for any repayment provided for in subsection (2) if,
and to the extent that, repayments by present members, together with all other available
assets, are insufficient for paying all the debts of the corporation.
[24.6.1]
(4) A certificate given by the Master as to the amount payable by any member or former
member in terms of subsection (2) or (3) to the corporation, may be forwarded by the
liquidator to the clerk of the magistrate’s court in whose area of jurisdiction the registered
office of the corporation is situated, who shall record it, and thereupon such notice shall
have the effect of a civil judgment of that magistrate’s court against the member or former
member concerned.
[24.6.1]
(5) The court in question may, on application by a member or former member referred to
in subsection (3), make any order that it deems fit in regard to any certificate referred to in
subsection (4).
Page 514
71 Repayment of salary or remuneration by members

(1) If a corporation being wound up is unable to pay its debts, and -
[24.6.2]
(a) any direct or indirect payment of a salary or other remuneration was made by the
corporation within a period of two years before the commencement of its
winding-up to a member in his or her capacity as an officer or employee of the
corporation; and
[24.6.2]
(b) such payment was, in the opinion of the Master, not bona fide or reasonable in
the circumstances,
[24.6.2]
the Master shall direct that such payment, or such part thereof as he or she may determine,
be repaid by such member to the corporation.
[24.6.2]
(2) A person who has within a period of two years referred to in subsection (1) (a) ceased
to be a member of a corporation referred to in that subsection may, under the circumstances
referred to therein, be directed by the Master to make a repayment provided for in
subsection (1), if, and to the extent that, any such repayments by present members are,
together with all other available assets, insufficient for paying all the debts of the
corporation.
[24.6.2]
(3) The provisions of subsections (4) and (5) of section 70 shall mutatis mutandis apply in
respect of any repayment to a corporation in terms of subsection (1) or (2).
[24.6.2]
72 Composition
[24intro]
(1) Any person, in this section referred to as ‘the offeror’, may at any time after the
commencement of the liquidation of a corporation which is unable to pay its debts, submit to
the liquidator a written offer of composition.
[24.8]
(2) If the liquidator is of the opinion that the creditors will probably accept the offer of
composition, the liquidator shall send by registered post or deliver to every known creditor
as well as the Master, a copy of the offer referred to in subsection (1) with the liquidator’s
report thereon, and an explanation of the effect of the composition.
[24.8]
(3) If the liquidator is of the opinion that there is no likelihood that the creditors will
accept the composition or that he or she has insufficient information at his or her disposal to
make a recommendation, the liquidator shall inform the offeror in writing that the offer is
unacceptable and that he or she does not propose to send a copy thereof to the creditors
and the Master.
[24.8]
(4) The offeror may, within 30 days from the date on which the liquidator advised that
offeror of the rejection of the offer, submit representations in writing to the Master who,
after having allowed the liquidator 14 days to comment in writing, shall consider the
representations and comment and may thereafter direct the liquidator to send by registered
post or deliver a copy of the offer to every known creditor of the corporation together with
the liquidator’s report thereon, and an explanation of the effect of the composition.
[24.8]
(5) Whenever the liquidator posts or delivers to the creditors and the Master an offer of
composition in terms of the provisions of this section, he or she shall simultaneously give
notice to the creditors of the meeting at which the offer and any other matter mentioned in
the notice, are to be considered.
[24.8]
Page 515
(6) An offer of composition may be considered at a general meeting of creditors of the

corporation in terms of this Act, provided that notice was given to creditors and the Master
not less than 10 days and not more than 28 days before the date of such a meeting.
[24.8]
(7) An offer of composition which has been accepted by creditors whose votes amount to
not less than two-thirds in value and two-thirds in number, calculated in accordance with the
provisions of section 52 of the Insolvency Act, 1936 (Act 24 of 1936), of the votes of all the
creditors who proved claims against the corporation, shall be binding upon every person who
had notice of and was entitled to vote at that meeting, whether or not that person was
present or represented at the meeting, as if that person were a party to the composition:
Provided that -
[24.8]
(a) no offer may be so accepted if it contains any condition whereby any creditor
would obtain any benefit to which that creditor would not have been entitled upon
the distribution of the estate in the ordinary way;
[24.8]
(b) payment under the composition has been made or security for such payment has
been given as specified in the offer of composition; and
[24.8]
(c) the right of any secured or preferent creditor shall not be prejudiced thereby,
except insofar as that creditor has expressly and in writing waived the
preference.
[24.8]
(8) A composition shall not affect the liability of a surety of the corporation.
[24.8]
(9) Any money to be paid and anything to be done for the benefit of creditors in
pursuance of a composition shall be paid and done through the liquidator: Provided that any
creditor who has failed to prove a claim before the liquidator has made a final distribution
amongst those creditors who have proved their claims, shall be entitled to prove a claim and
share in such final distribution up to the amount to which that creditor may have been
entitled to under the composition: Provided further, that no claim shall be proved against the
corporation after the expiration of six months as from the date of the meeting at which the
composition was accepted, except with leave of the Court or Master and on payment of such
sum to cover the costs or any part thereof, occasioned by the late proof of the claim, as the
Court or Master may direct.
[24.8]
(10) When a composition has been entered into between a corporation and its creditors,
the liquidator shall, in terms of this Act, frame an account and plan of distribution of all the
assets which are or will become available for creditors under the composition.
[24.8]
(11) If an accepted offer of composition so provides, the offeror may apply to the Court
for the setting aside of the winding-up of the corporation and the Court may make such an
order provided that the offeror has, not less than three weeks before making the application,
given notice by advertisement in the Gazette, of the intention to make the application and
has served a copy of the application on the Master, the Registrar and the liquidator.
[24.8]
(12) The application for the setting aside of the liquidation of the corporation may be
opposed by any creditor or other interested person on the following grounds:
[24.8]
(a) That the composition approved under this section unfairly prejudices the interests
of a creditor of the corporation;
[24.8]
(b) that there has been some material irregularity at or in the relation to the
meetings held for the consideration of the composition;
[24.8]
(c) that insufficient or materially inaccurate information on the composition was
disclosed; or
[24.8]
Page 516
(d) any other grounds that the Court may deem sufficient.
[24.8]
73 Repayments, payments of damages and restoration of property by members

and others
(1) Where in the course of the winding-up of a corporation it appears that any person who
has taken part in the formation of the corporation, or any former or present member, officer
or accounting officer of the corporation has misapplied or retained or become liable or
accountable for any money or property of the corporation, or has been guilty of any breach
of trust in relation to the corporation, a Court may, on the application of the Master or of the
liquidator or of any creditor or member of the corporation, inquire into the conduct of such
person, member, officer or accounting officer and may order him or her to repay or restore
the money or property, or any part thereof, with interest at such rate as the Court considers
just, or to contribute such sum to the assets of the corporation by way of compensation or
damages in respect of the misapplication, retention or breach of trust, as the Court considers
just.
[24.7]
(2) The provisions of subsection (1) shall apply in respect of any person, member, officer
or accounting officer referred to therein, notwithstanding the fact that such person may also
be criminally responsible in respect of any conduct contemplated therein.
[24.7]
74 Appointment of liquidator
(1) For the purposes of conducting the proceedings in a winding-up of a corporation, the
Master shall, in accordance with policy determined by the Minister, appoint a suitable natural
person as liquidator.
[24.3]
(2) The Master shall make an appointment as soon as is practicable after a provisional
winding-up order has been made, or a copy of a resolution for a voluntary winding-up has
been registered in terms of section 67(2).
[24.3]
(3) When the Master in the case of a voluntary winding-up by members makes an
appointment, he or she shall take into consideration any further resolution at a meeting of
members nominating a person as liquidator.
[24.3]
(4) In the case of a creditors’ voluntary winding-up and a winding-up by the Court, the
Master shall, subject to the provisions of section 76, if a person is nominated as co-liquidator
at the first meeting of creditors, appoint such person as co-liquidator as soon as he or she
has given security to the satisfaction of the Master for the proper performance of his or her
duties.
[24.3]
75 Vacancies in office of liquidators

(1) When a vacancy occurs in the office of a liquidator of a corporation, the Master may -
Page 517
(a) where the vacancy occurs in the office of a liquidator nominated by members or
creditors, direct any remaining liquidator to convene a meeting of creditors or
members, as the case may be, to nominate a liquidator to fill the vacancy;
(b) in a case other than a case contemplated in paragraph (a), if he or she is of
opinion that any remaining liquidator will be able to complete the winding-up,
dispense with the appointment of a liquidator to fill the vacancy, and direct the
remaining liquidator to complete the winding-up; or
(c) in any other case, appoint a liquidator to fill the vacancy.
(2) The provisions of the Companies Act relating to the nomination or appointment of a
liquidator, as applied by section 66 of this Act, and of this Act, shall apply to the nomination
or appointment of a liquidator to fill a vacancy in the office of liquidator.
76 Refusal by Master to appoint nominated person as liquidator
(1) If a person who has been nominated as liquidator by any meeting of creditors or of
members of a corporation was not properly nominated, or is disqualified from being
nominated or appointed as liquidator pursuant to section 372 or 373 of the Companies Act,
as applied by section 66 of this Act, or has failed to give within a period of 21 days as from
the date upon which he or she was notified that the Master had accepted his or her
nomination or within such further period as the Master may allow, the security mentioned in
section 375 (1) of the Companies Act, as so applied, or, if in the opinion of the Master the
person nominated as liquidator should not be appointed as liquidator of the corporation
concerned, the Master shall give notice in writing to the person so nominated that he or she
declines to accept his or her nomination or to appoint him or her as liquidator, and shall in
such notice state his or her reasons for declining to accept his or her nomination or to
appoint him or her: Provided that if the Master declines to accept the nomination for
appointment as liquidator because he or she is of the opinion that the person nominated
should not be appointed as liquidator, it shall be sufficient if the Master states in that notice,
as such reason, that he or she is of the opinion that the person nominated should not be
appointed as liquidator of the corporation concerned.
[24.3]
(2) (a) When the Master has so declined to accept the nomination of any person or to
appoint him or her as liquidator, or when the Minister has under section 371 (3) of the
Companies Act, as applied by section 66 of this Act, set aside the appointment of a
liquidator, the Master shall convene a meeting of creditors or members, as the case may be,
of the corporation concerned for the purpose of nominating another person for appointment
as liquidator.
(b) In the notice convening any said meeting the Master shall state that he or she has
declined to accept the nomination for appointment as liquidator of the person previously
nominated, or to appoint the person so nominated and, subject to the proviso to subsection
(1), the reasons therefor, or that the appointment of the person previously appointed as
liquidator has so been set aside by the Minister, as the case may be, and that the meetings
are convened for the purpose of nominating another person for appointment as liquidator.
Page 518
(c) The Master shall post a copy of such notice to every creditor whose claim against
the company was previously proved and admitted.
(d) Any meeting referred to in paragraph (a) shall be deemed to be a continuation of
the relevant first meeting of creditors or of members, or of any such meeting referred to in
section 75, as the case may be.
(3) If the Master again so declines for any reason mentioned in subsection (1) to accept
the nomination for appointment as liquidator by any meeting referred to in subsection (2),
or to appoint a person so nominated -
(a) he or she shall act in accordance with the provisions of subsection (1); and
(b) if the person so nominated as sole liquidator has not or if all the persons so
nominated have not been appointed by him or her, he or she shall, in accordance
with policy determined by the Minister, appoint as liquidator or liquidators of the
corporation concerned any other person or persons not disqualified from being
liquidator of that corporation.
77 Resignation and absence of liquidator

(1) At the request of a liquidator the Master may relieve him or her of his or her office
upon such conditions as the Master may think fit.
(2) A liquidator shall not be absent from the Republic for a period exceeding 60 days,
unless -
(a) the Master has before his or her departure from the Republic granted him or her
permission in writing to be absent; and
(b) he or she complies with such conditions as the Master may think fit to impose.
(3) Every liquidator who is relieved of his or her office by the Master, or who is permitted
to absent himself or herself for a period exceeding 60 days from the Republic, shall give
notice thereof in the Gazette.
[s. 77 amended by s. 4 of Act 25 of 2005.]
78 First meeting of creditors and members

(1) A liquidator shall as soon as may be and, except with the consent of the Master, not
later than one month after a final winding-up order has been made by a Court or a
resolution of a creditors’ voluntary winding-up has been registered -
[24.4]
(a) summon a meeting of the creditors of the corporation for the purpose of –
[24.4]
(i) considering the statement as to the affairs of the corporation lodged with the
Master;
[24.4]
(ii) the proving of claims against the corporation;
[24.4]
(iii) deciding whether a co-liquidator should be appointed and, if so, nominating
a person for appointment; and
[24.4]
(iv) receiving or obtaining, in a winding-up by the Court or a creditors’ voluntary
winding-up, directions or authorization in respect of any matter regarding
the liquidation; and
[24.4]
(b) summon a meeting of members of the corporation for the purpose of –
[24.4]
Page 519
(i) considering the said statement as to the affairs of the corporation, unless
the meeting of members when passing a resolution for the voluntary
winding-up of the corporation has already considered the said statement;
and
(ii) receiving or obtaining directions or authorization in respect of any matter
regarding the liquidation.
[24.4]
(2) (a) The provisions of the law relating to insolvency in respect of voting, the manner of
voting and voting by an agent at meetings of creditors, shall apply mutatis mutandis in
respect of any meeting referred to in this section: Provided that in a winding-up by the Court
a member or former member of a corporation shall have no voting right in respect of the
nomination of a liquidator based on his or her loan account with the corporation or claims for
arrear salary, travelling expenses or allowances due by the corporation, or claims paid by
such member or former member on behalf of the corporation.
(b) The provisions of paragraph (a) shall mutatis mutandis apply in respect of a person
to whom a right contemplated in that paragraph has been ceded.
79 Report to creditors and members
Except in the case of a members’ voluntary winding-up, a liquidator shall, as soon as
practicable and, except with the consent of the Master, not later than three months after the
date of his or her appointment, submit to a general meeting of creditors and members of the
corporation concerned a report as to the following matters:
(a) The estimated amounts of the corporation’s assets and liabilities;
[24.5]
(b) if the corporation has failed, the causes of the failure;
[24.5]
(c) whether or not he or she has submitted or intends to submit to the Master a
report under section 400 (2) of the Companies Act, as applied by section 66 of
this Act;
[24.5]
(d) whether or not any member or former member appears to be liable –
[24.5]
(i) to the corporation on the ground of breach of trust or negligence;
(ii) to make repayments to the corporation in terms of section 70(2) or (3) or
section 71(1) or (2);
(iii) to either a creditor of the corporation or the corporation itself, as the case
may be, by virtue of any provision of Part VIII of this Act;
(e) any legal proceedings by or against the corporation which may have been
pending at the date of the commencement of the winding-up, or which may have
been or may be instituted;
[24.5]
(f) whether or not further enquiry is in his or her opinion desirable in regard to any
matter relating to the formation or failure of the corporation or the conduct of its
business;
[24.5]
(g)
whether or not the corporation has kept the accounting records required by
section 56 and, if not, in what respects the requirements of that section have not
been complied with;
[24.5]
(h) the progress and prospects in respect of the winding-up; and
[24.5]
(i) any other matter which he or she may consider fit, or in connection with which he
or she may require the directions of the creditors.
[24.5]
Page 520
80 Repayments by members or former members

The liquidator of a corporation unable to pay its debts -
(a) shall ascertain whether members or former members of the corporation are liable
in terms of section 70(2) or (3) to make repayments;
[24.6.3]
(b) shall ascertain whether circumstances justify an approach to the Master for a
direction that members or former members of the corporation make repayments
in terms of section 71(1) or (2);
[24.6.3]
(c) may, if necessary, enforce such repayments; and
[24.6.3]
(d) may, in the event of the death of such member or former member liable for or
directed to make a repayment, or of the insolvency of his or her estate, claim the
amount due from the estate concerned.
[24.6.3]
[Para. (d) amended by s. 4 of Act 25 of 2005.]
81 Duties of liquidator regarding liability of members to creditors or corporation

(1) The liquidator of a corporation unable to pay its debts shall ascertain whether, on the
facts reasonably available to him or her, there is reason to believe that any member or
former member of the corporation, or any other person, has by virtue of any provision of
Part VIII of this Act incurred any liability to a creditor of the corporation or to the corporation
itself, as the case may be.
[24.6.3]
(2) If the liquidator finds that there is such reason in respect of any creditor who has
proved a claim, he or she shall in writing inform such creditor accordingly, and if the creditor
recovers the amount of his or her claim or part thereof from such member or former
member, or from such other person, the liquidator shall take such recovery into account in
determining the dividend payable to that creditor.
(3) In particular the liquidator shall determine whether an application to the Court in
terms of section 64(1) is justified and advisable.
Page 521
Appendix 8

[ASSENTED TO 8 DECEMBER 2000] [DATE OF COMMENCEMENT: 28 NOVEMBER 2003]
(English text signed by the President)
as amended by
ACT
To provide effective mechanisms for dealing with cases of cross-border
insolvency; and to amend the Insolvency Act, 1936, so as to further regulate the
jurisdiction of the High Courts; and to provide for matters connected therewith.
Preamble
WHEREAS the General Assembly of the United Nations on 15 December 1997 adopted a
resolution, co-sponsored by the Republic of South Africa, recommending that States review
their legislation on cross-border insolvency and, in that review, give favourable consideration
to the Model Law on Cross-Border Insolvency of the United Nations Commission on
International Trade Law;
AND WHEREAS the Republic of South Africa acknowledges the need to create effective
mechanisms for dealing with cases of cross-border insolvency in accordance with the
provisions of the Model Law, bearing in mind the need for internationally harmonised
legislation governing instances of cross-border insolvency;
AND WHEREAS there is a need -
*to strengthen cooperation between the courts and other competent authorities of the
Republic of South Africa and those of foreign states involved in cases of cross-border
insolvency;
*for greater legal certainty for trade and investment;
*for fair and efficient administration of cross-border insolvencies that protects the
interests of all creditors and other interested persons, including the debtor;
*for protection and maximisation of the value of the debtor’s assets;
*for the facilitation of the rescue of financially troubled businesses, thereby protecting
investment and preserving employment,
BE IT THEREFORE ENACTED by the Parliament of the Republic of South Africa, as follows:
-
Page 522
ARRANGEMENT OF SECTIONS
Section
CHAPTER 1
INTERPRETATION AND FUNDAMENTAL PRINCIPLES
1 Definitions
2 Scope of application
3 International obligations of Republic
4 Competent court
5 Authorisation of trustee, liquidator, judicial manager, curator of institution, or
receiver to act in foreign State
6 Public policy exception
7 Additional assistance under other laws
8 Interpretation
CHAPTER 2
ACCESS OF FOREIGN REPRESENTATIVES AND CREDITORS TO COURTS IN REPUBLIC
9 Right of direct access
10 Limited jurisdiction
11 Application by foreign representative to commence proceedings under laws of
Republic relating to insolvency
12 Participation of foreign representative in proceedings under laws of Republic
relating to insolvency
13 Access of foreign creditors to proceedings under laws of Republic relating to
insolvency
14 Notification to foreign creditors of proceedings under laws of Republic relating to
insolvency
CHAPTER 3
RECOGNITION OF FOREIGN PROCEEDINGS AND RELIEF
15 Application for recognition of foreign proceedings
16 Presumptions concerning recognition
17 Decision to recognise foreign proceedings
18 Subsequent information
19 Relief that may be granted upon application for recognition of foreign proceedings
20 Effects of recognition of foreign main proceedings
21 Relief that may be granted upon recognition of foreign proceedings
22 Protection of creditors and other interested persons
23 Actions to avoid acts detrimental to creditors
24 Intervention by foreign representative in proceedings in Republic
CHAPTER 4
COOPERATION WITH FOREIGN COURTS AND FOREIGN REPRESENTATIVES
25 Cooperation and direct communication between court of Republic and foreign
courts or foreign representatives
26 Cooperation and direct communication between trustee, liquidator, judicial
Page 523
manager, curator of institution, or receiver and foreign courts or foreign

representatives
27 Forms of cooperation
CHAPTER 5
CONCURRENT PROCEEDINGS
28 Commencement of proceedings under laws of Republic relating to insolvency after
recognition of foreign main proceedings
29 Coordination of proceedings under laws of Republic relating to insolvency and
foreign proceedings
30 Coordination of foreign proceedings
31 Presumption of insolvency based on recognition of foreign main proceedings
32 Rule of payment in concurrent proceedings
CHAPTER 6
GENERAL PROVISIONS
33 Amendment of section 149 of Act 24 of 1936
34 Short title
CHAPTER 1
INTERPRETATION AND FUNDAMENTAL PRINCIPLES (ss 1-8)
1 Definitions
For the purposes of this Act -
(a) ‘court’ means a High Court referred to in section 4;
(b) ‘curator of an institution’ means a curator appointed in terms of section 6 of
the Financial Institutions (Investment of Funds) Act, 1984 (Act 39 of 1984), or
section 69 of the Banks Act, 1990 (Act 94 of 1990), or section 81 of the Mutual
Banks Act, 1993 (Act 124 of 1993);
(c) ‘establishment’ means any place of operations where the debtor carries out a
non-transitory economic activity with human means and goods or services;
[26.4]
(d) ‘foreign court’ means a judicial or other authority competent to control or
supervise foreign proceedings;
(e) ‘foreign main proceedings’ means foreign proceedings taking place in the
State where the debtor has the centre of his or her or its main interests;
(f) ‘foreign non-main proceedings’ means foreign proceedings, other than foreign
main proceedings, taking place in a State where the debtor has an establishment
within the meaning of paragraph (c) of this section;
(g) ‘foreign proceedings’ means collective judicial or administrative proceedings in
a foreign State, including interim proceedings, pursuant to a law relating to
insolvency in which proceedings the assets and affairs of the debtor are subject
to control or supervision by a foreign court, for the purpose of reorganisation or
liquidation;
[26.4]
(h) ‘foreign representative’ means a person or body, including one appointed on
an interim basis, authorised in foreign proceedings to administer the
reorganisation or the liquidation of the debtor’s assets or affairs or to act as a
representative of the foreign proceedings;
[26.4]
Page 524
(i) ‘foreign State’ means a State designated under section 2(2);

(j) ‘Minister’ means the Cabinet member responsible for the administration of
justice;
(k) ‘receiver’ means a receiver or other person appointed by a court to administer a
compromise or arrangement under section 311 of the Companies Act, 1973 (Act
61 of 1973);
(l) ‘Republic’ means the Republic of South Africa.
2 Scope of application
(1) This Act applies where -
[26.4]
(a) assistance is sought in the Republic by a foreign court or a foreign representative
in connection with foreign proceedings; or
(b) assistance is sought in a foreign State in connection with proceedings under the
laws of the Republic relating to insolvency; or
(c) foreign proceedings and proceedings under the laws of the Republic relating to
insolvency in respect of the same debtor are taking place concurrently; or
(d) creditors or other interested persons in a foreign State have an interest in
requesting the commencement of, or participating in, proceedings under the laws
of the Republic relating to insolvency.
(2) (a) Subject to paragraph (b), this Act applies in respect of any State designated by the
Minister by notice in the Gazette.
[26.2, 26.4, 26.5]
(b) The Minister may only designate a State as contemplated in paragraph (a) if he or
she is satisfied that the recognition accorded by the law of such a State to proceedings under
the laws of the Republic relating to insolvency justifies the application of this Act to foreign
proceedings in such State.
[26.2, 26.4, 26.5]
(3) The Minister may at any time by subsequent notice in the Gazette withdraw any notice
under subsection (2) (a), and thereupon any State referred to in such last-mentioned notice
ceases to be a foreign State for the purposes of this Act.
[26.2, 26.4, 26.5]
(4) Any notice referred to in subsection (2) (a) or (3) must, before publication in the
Gazette, be approved by Parliament.
[26.2, 26.4, 26.5]
(5) Where the Minister withdraws a notice in terms of subsection (3), such withdrawal
does not affect any pending legal proceedings and such proceedings must continue as if the
notice had not been withdrawn.
[26.2, 26.4, 26.5]
3 International obligations of Republic

[26.4]
To the extent that this Act conflicts with an obligation of the Republic arising out of any
treaty or other form of agreement to which it is a party with one or more other States and
which treaty or agreement has been enacted into law in terms of section 231 (4) of the
Constitution of the Republic of South Africa, 1996 (Act 108 of 1996), the requirements of the
treaty or agreement prevail.
Page 525
4 Competent court
[26.4]
The functions referred to in this Act relating to recognition of foreign proceedings and
cooperation with foreign courts must be performed by a High Court referred to in section
166 (c) of the Constitution of the Republic of South Africa, 1996 (Act 108 of 1996).
5 Authorisation of trustee, liquidator, judicial manager, curator of institution, or
receiver to act in foreign State
[26.4]
A trustee, liquidator, judicial manager, curator of an institution, or receiver is authorised
to act in a foreign State in respect of proceedings under the laws of the Republic relating to
insolvency, as permitted by the applicable foreign law.
6 Public policy exception
[26.4]
Nothing in this Act prevents the court from refusing to take an action governed by this Act
if the action would be manifestly contrary to the public policy of the Republic.
7 Additional assistance under other laws
Nothing in this Act limits the power of a court or a trustee, liquidator, judicial manager,
curator of an institution, or receiver to provide additional assistance to a foreign
representative under other laws of the Republic.
8 Interpretation
[26.4]
In the interpretation of this Act, regard is to be had to its international origin and to the
need to promote uniformity in its application and the observance of good faith.
CHAPTER 2
ACCESS OF FOREIGN REPRESENTATIVES AND CREDITORS TO COURTS IN REPUBLIC
(ss 9-14)
9 Right of direct access
[26.4]
A foreign representative may apply directly to a court in the Republic for relief.
10 Limited jurisdiction
[26.4]
The sole fact that an application pursuant to this Act is made to a court in the Republic by
a foreign representative does not subject the foreign representative or the foreign assets
and affairs of the debtor to the jurisdiction of the courts of the Republic for any purpose
other than the application.
11 Application by foreign representative to commence proceedings under laws of
Republic relating to insolvency
[26.4]
A foreign representative may apply to commence proceedings under the laws of the
Republic relating to insolvency if the conditions for commencing such proceedings are
otherwise met.
Page 526
12 Participation of foreign representative in proceedings under laws of Republic

relating to insolvency
[26.4]
Upon recognition of foreign proceedings, the foreign representative may participate in
proceedings regarding the debtor under the laws of the Republic relating to insolvency.
13 Access of foreign creditors to proceedings under laws of Republic relating to
insolvency
(1) Subject to subsection (2), foreign creditors have the same rights regarding the
commencement of, and participation in, proceedings under the laws of the Republic relating
to insolvency as creditors in the Republic.
[26.4]
(2) Subsection (1) does not affect the ranking of claims in proceedings under the laws of
the Republic relating to insolvency, except that the claims of foreign creditors may not be
ranked lower than non-preferent claims.
[26.4]
(3) Without derogating from the application of the law and practice of the Republic
generally, the ranking of claims in respect of assets in the Republic is regulated by the law
and practice of the Republic on the ranking of claims.
14 Notification to foreign creditors of proceedings under laws of Republic relating
to insolvency
[26.4]
(1) (a) Whenever under the laws of the Republic relating to insolvency notification is to be
given to creditors in the Republic, such notification must also be given to the known
creditors that do not have addresses in the Republic.
(b) The court may order that appropriate steps be taken with a view to notifying any
creditor whose address is not yet known.
(2) (a) Such notification must be made to the foreign creditors individually, unless the
court considers that, under the circumstances, some other form of notification would be
more appropriate.
(b) No letters rogatory or other similar formality is required.
(3) When a notification of commencement of proceedings is to be given to foreign
creditors, the notification must -
(a) indicate a reasonable time period for filing claims and specify the place for their
filing;
(b) indicate whether secured creditors need to file their secured claims; and
(c) contain any other information required to be included in such a notification to
creditors pursuant to the law of the Republic and the orders of the court.
CHAPTER 3
RECOGNITION OF FOREIGN PROCEEDINGS AND RELIEF (ss 15-24)
15 Application for recognition of foreign proceedings
[26.4]
(1) A foreign representative may apply to the court for recognition of the foreign
proceedings in which the foreign representative has been appointed.
(2) An application for recognition must be accompanied by -
(a) a certified copy of the decision commencing the foreign proceedings and
appointing the foreign representative; or
Page 527
(b) a certificate from the foreign court affirming the existence of the foreign
proceedings and of the appointment of the foreign representative; or
(c) in the absence of evidence referred to in paragraphs (a) and (b), any other
evidence acceptable to the court of the existence of the foreign proceedings and
of the appointment of the foreign representative.
(3) An application for recognition must also be accompanied by a statement identifying all
foreign proceedings in respect of the debtor that are known to the foreign representative.
(4) The court may require a translation of documents supplied in support of the
application for recognition into an official language of the Republic.
16 Presumptions concerning recognition
(1) If the decision or certificate referred to in section 15(2) indicates that the foreign
proceedings are proceedings within the meaning of section 1 (g) and that the foreign
representative is a person or body within the meaning of section 1 (h), the court may so
presume.
(2) The court may presume that documents submitted in support of the application for
recognition are authentic, whether or not they have been legalised.
(3) In the absence of proof to the contrary, the debtor’s registered office, or habitual
residence in the case of an individual, is presumed to be the centre of the debtor’s main
interests.
[26.4]
17 Decision to recognise foreign proceedings
[26.4]
(1) Subject to section 6, foreign proceedings must be recognised if -
(a) the foreign proceedings are proceedings within the meaning of section 1 (g);
(b) the foreign representative applying for recognition is a person or body within the
meaning of section 1 (h);
(c) the application meets the requirements of section 15(2); and
(d) the application has been submitted to a court.
(2) The foreign proceedings must be recognised -
(a) as foreign main proceedings if they are taking place in the State where the debtor
has the centre of his or her or its main interests; or
(b) as foreign non-main proceedings if the debtor has an establishment within the
meaning of section 1 (c) in the foreign State.
(3) An application for recognition of foreign proceedings must be decided upon at the
earliest possible time.
(4) The provisions of this section and of sections 15, 16 and 18 do not prevent
modification or termination of recognition if it is shown that the grounds for granting it were
fully or partially lacking or have ceased to exist.
18 Subsequent information
From the time of filing the application for recognition of the foreign proceedings, the
foreign representative must inform the court promptly of -
(a) any change in the status of the recognised foreign proceedings or the status of
the foreign representative’s appointment; and
Page 528
(b) any other foreign proceedings regarding the same debtor that become known to
the foreign representative.
19 Relief that may be granted upon application for recognition of foreign
proceedings
[26.4]
(1) From the time of filing an application for recognition until the application is decided
upon, the court may, at the request of the foreign representative, where relief is urgently
needed to protect the assets of the debtor or the interests of the creditors, grant relief of a
provisional nature, including -
[26.4]
(a) staying execution against the debtor’s assets;
(b) entrusting the administration or realisation of all or part of the debtor’s assets
located in the Republic to the foreign representative or another person designated
by the court, in order to protect and preserve the value of assets that, by their
nature or because of other circumstances, are perishable, susceptible to
devaluation or otherwise in jeopardy;
(c) any relief mentioned in section 21(1)(c), (d) and (g).
(2) An order issued under subsection (1) must be dealt with as contemplated in section 17
of the Insolvency Act, 1936 (Act 24 of 1936), or section 357(1) and (4) of the Companies
Act, 1973 (Act 61 of 1973), as the case may be.
(3) Unless extended under section 21(1)(f), the relief granted under this section
terminates when the application for recognition is decided upon.
(4) The court may refuse to grant relief under this section if such relief would interfere
with the administration of foreign main proceedings.
[26.4]
20 Effects of recognition of foreign main proceedings
(1) Upon recognition of foreign proceedings that are foreign main proceedings-
[26.4]
(a) commencement or continuation of individual legal actions or individual legal
proceedings concerning the debtor’s assets, rights, obligations or liabilities is
stayed;
[26.4]
(b) execution against the debtor’s assets is stayed;
[26.4]
(c) the right to transfer, encumber or otherwise dispose of any assets of the debtor is
suspended; and
[26.4]
(d) section 21 of the Insolvency Act, 1936 (Act 24 of 1936), applies with regard to
assets situated in the Republic to the same extent as it would have if the debtor
had been sequestrated by a court.
[26.4]
(2) The scope, and the modification or termination, of the stay and suspension referred to
in subsection (1) are subject to sections 20, 23 and 75 of the Insolvency Act, 1936, and
sections 341 and 359 of the Companies Act, 1973 (Act 61 of 1973), and the court may, at
the request of the foreign representative or a person affected by subsection (1), modify or
terminate the scope of the stay and suspension.
[26.4]
(3) Subsection (1) (a) does not affect the right to commence individual actions or
proceedings to the extent necessary to preserve a claim against the debtor.
[26.4]
(4) Subsection (1) does not affect the right to request the commencement of proceedings
under the laws of the Republic relating to insolvency or the right to file claims in such
proceedings.
[26.4]
Page 529
21 Relief that may be granted upon recognition of foreign proceedings

[26.4]
(1) Upon recognition of foreign proceedings, whether main or non-main, where necessary
to protect the assets of the debtor or the interests of the creditors, the court may, at the
request of the foreign representative, grant any appropriate relief, including -
(a) staying the commencement or continuation of individual legal actions or
individual legal proceedings concerning the debtor’s assets, rights, obligations or
liabilities, to the extent that they have not been stayed under section 20(1)(a);
(b) staying execution against the debtor’s assets to the extent that it has not been
stayed under section 20(1)(b);
(c) suspending the right to transfer, encumber or otherwise dispose of any assets of
the debtor to the extent that this right has not been suspended under section 20
(1)(c);
(d) providing for the examination of witnesses, the taking of evidence or the delivery
of information concerning the debtor’s assets, affairs, rights, obligations or
liabilities;
(e) entrusting the administration or realisation of all or part of the debtor’s assets
located in the Republic to the foreign representative or another person designated
by the court;
(f) extending relief granted under section 19(1);
(g) granting any additional relief that may be available to a trustee, liquidator,
judicial manager, curator of an institution, or receiver under the laws of the
Republic.
(2) Upon recognition of foreign proceedings, whether main or non-main, the court may, at
the request of the foreign representative, entrust the distribution of all or part of the
debtor’s assets located in the Republic to the foreign representative or another person
designated by the court, provided that the court is satisfied that the interests of creditors in
the Republic are adequately protected.
[26.4]
(3) In granting relief under this section to a representative of foreign non-main
proceedings, the court must be satisfied that the relief relates to assets that, under the law
of the Republic, should be administered in the foreign non-main proceedings or concerns
information required in those proceedings.
[26.4]
(4) Without derogating from the application of the laws of the Republic generally, in
granting relief under this section the court must indicate the laws of the Republic relating to
the administration, realisation or distribution of a debtor’s estate in the Republic that will
apply.
22 Protection of creditors and other interested persons
[26.4]
(1) In granting or denying relief under section 19 or 21, or in modifying or terminating
relief under subsection (3), the court must be satisfied that the interests of the creditors and
other interested persons, including the debtor, are adequately protected.
(2) The court may subject relief granted under section 19 or 21 to conditions it considers
appropriate.
(3) The court may, at the request of the foreign representative or a person affected by
relief granted under section 19 or 21, or of its own motion, modify or terminate such relief.
Page 530
23 Actions to avoid acts detrimental to creditors

[26.4]
(1) Upon recognition of foreign proceedings, the foreign representative has standing to
initiate any legal action to set aside a disposition that is available to a trustee or liquidator
under the laws of the Republic relating to insolvency.
(2) When the foreign proceedings are foreign non-main proceedings, the court must be
satisfied that the legal action relates to assets that, under the law of the Republic, should be
administered in the foreign non-main proceedings.
[26.4]
24 Intervention by foreign representative in proceedings in Republic
[26.4]
Upon recognition of foreign proceedings, the foreign representative may, provided the
requirements of the law of the Republic are met, intervene in any proceedings in which the
debtor is a party.
CHAPTER 4
COOPERATION WITH FOREIGN COURTS AND FOREIGN REPRESENTATIVES (ss 25-
27)
25 Cooperation and direct communication between court of Republic and foreign
courts or foreign representatives
[26.4]
(1) In matters referred to in section 2(1), the court shall cooperate to the maximum
extent possible with foreign courts or foreign representatives, either directly or through a
trustee, liquidator, judicial manager, curator of an institution, or receiver.
[26.4]
(2) The court may communicate directly with, or request information or assistance directly
from, foreign courts or foreign representatives.
[26.4]
26 Cooperation and direct communication between trustee, liquidator, judicial
manager, curator of institution, or receiver and foreign courts or foreign
representatives
[26.4]
(1) In matters referred to in section 2(1), a trustee, liquidator, judicial manager, curator
of an institution, or receiver must, in the performance of his or her or its functions and
subject to the supervision of the court, cooperate to the maximum extent possible with
foreign courts or foreign representatives.
(2) The trustee, liquidator, judicial manager, curator of an institution, or receiver may, in
the performance of his or her or its functions and subject to the supervision of the court,
communicate directly with foreign courts or foreign representatives.
27 Forms of cooperation
[26.4]
Cooperation referred to in sections 25 and 26 may be implemented by any appropriate
means, including -
(a) appointment of a person or body to act at the direction of the court;
(b) communication of information by any means considered appropriate by the court;
(c) coordination of the administration and supervision of the debtor’s assets and
affairs;
(d) approval or implementation by courts of agreements concerning the coordination
of proceedings;
(e) coordination of concurrent proceedings regarding the same debtor.
Page 531
CHAPTER 5
CONCURRENT PROCEEDINGS (ss 28-32)
28 Commencement of proceedings under laws of Republic relating to insolvency
after recognition of foreign main proceedings
(1) After recognition of foreign main proceedings, proceedings under the laws of the
Republic relating to insolvency may be commenced only if the debtor has assets in the
Republic.
[26.4]
(2) The effects of such proceedings are restricted to the assets of the debtor that are
located in the Republic and, to the extent necessary to implement cooperation and
coordination under sections 25, 26 and 27, to other assets of the debtor that, under the law
of the Republic, should be administered in those proceedings.
[26.4]
29 Coordination of proceedings under laws of Republic relating to insolvency and
foreign proceedings
[26.4]
Where foreign proceedings and proceedings under the laws of the Republic relating to
insolvency are taking place concurrently regarding the same debtor, the court must seek
cooperation and coordination under sections 25, 26 and 27, and -
(a) when the proceedings in the Republic are taking place at the time that the
application for recognition of the foreign proceedings is filed –
[26.4]
(i) any relief granted under section 19 or 21 must be consistent with the
proceedings in the Republic; and
[26.4]
(ii) if the foreign proceedings are recognised in the Republic as foreign main
proceedings, section 20 does not apply;
[26.4]
(b) when the proceedings in the Republic commence after recognition, or after the
filing of the application for recognition, of the foreign proceedings –
[26.4]
(i) any relief in effect under section 19 or 21 must be reviewed by the court and
must be modified or terminated if inconsistent with the proceedings in the
Republic; and
[26.4]
(ii) if the foreign proceedings are foreign main proceedings, the stay and
suspension referred to in section 20(1) must be modified or terminated
pursuant to section 20(2) if inconsistent with the proceedings in the
Republic;
[26.4]
(c) in granting relief or in extending or modifying relief granted to a representative of
foreign non-main proceedings, the court must be satisfied that the relief relates
to assets that, under the law of the Republic, should be administered in the
foreign non-main proceedings or concerns information required in those
proceedings.
[26.4]
30 Coordination of foreign proceedings
[26.4]
In matters referred to in section 2(1), in respect of more than one set of foreign
proceedings regarding the same debtor, the court must seek cooperation and coordination
under sections 25, 26 and 27, and -
(a) any relief granted under section 19 or 21 to a representative of foreign non-main
proceedings after recognition of foreign main proceedings must be consistent with
the foreign main proceedings;
Page 532
(b) if foreign main proceedings are recognised after recognition, or after the filing of
an application for recognition, of foreign non-main proceedings, any relief in
effect under section 19 or 21 must be reviewed by the court and must be
modified or terminated if inconsistent with the foreign main proceedings;
(c) if, after recognition of foreign non-main proceedings, other foreign non-main
proceedings are recognised, the court must grant, modify or terminate relief for
the purpose of facilitating coordination of the proceedings.
31 Presumption of insolvency based on recognition of foreign main proceedings
[26.4]
In the absence of proof to the contrary, recognition of foreign main proceedings is, for the
purpose of commencing proceedings under the laws of the Republic relating to insolvency,
proof that the debtor is insolvent.
32 Rule of payment in concurrent proceedings
[26.4]
Without prejudice to secured claims or rights in rem, a creditor who has received part
payment in respect of his or her or its claim in proceedings pursuant to a law relating to
insolvency in a foreign State may not receive a payment for the same claim in proceedings
under the laws of the Republic relating to insolvency regarding the same debtor, so long as
the payment to the other creditors of the same class is proportionately less than the
payment the creditor has already received.
CHAPTER 6
GENERAL PROVISIONS (ss 33-34)
33 . . .
34 Short title
This Act is called the Cross-Border Insolvency Act, 2000, and comes into operation on a
date fixed by the President by proclamation in the Gazette.
Page ix
Table of cases
A
Abell v Strauss 1973 (2) SA 611 (W)
— 36, 37
Absa Bank Ltd t/a Trust Bank v Goosen 1998 (2) SA 550 (W)
— 49
Absa Bank Ltd v Chopdat 2000 (2) SA 1088 (W)
— 36
Absa Bank Ltd v Cooper NO & others 2001 (4) SA 876 (T)
— 96
Absa Bank Ltd v De Klerk and related cases 1999 (4) SA 835 (E)
— 4, 43, 44
Absa Bank Ltd v Hoberman & others NNO 1998 (2) SA 781 (C)
— 265
Absa Bank Ltd v Newcity Group (Pty) Ltd, Cohen v Newcity Group (Pty) Ltd & another [2012]
ZAGPJHC 144
— 276
Absa Bank Ltd v Rhebokskloof (Pty) Ltd & others 1993 (4) SA 436 (C)
— 42, 58, 250
Absa Bank Ltd v Scharrighuisen 2000 (2) SA 998 (C)
— 120,141
Absa Bank Ltd v The Master & others NNO 1998 (4) SA 15 (N)
— 183
Acar v Pierce and Other Like Application 1986 (2) SA 827 (W)
— 6, 222
Administrator, Natal v Magill, Grant & Nell (Pty) Ltd (in Liquidation) 1968 (4) SA 44 (D);
1969 (1) SA 660 (A)
— 99
Administratrise van die Adriaan Odendaal Kindertrust v Adjunk-Balju, Harrismith en andere
1991 (1) SA 465 (O)
— 106, 107
Advance Mining Hydraulics (Pty) Ltd & others v Botes NO & others 2000 (1) SA 815 (T)
— 131, 162
Advanced Technologies and Engineering Company (Pty) Ltd v Aeronotique et Technologies
Embarquées SAS (unreported, GNP case no 72522/11, 6 June 2012)
— 277, 278, 280
Afric Oil (Pty) Ltd v Ramadaan Investments CC 2004 (1) SA 35 (N)
— 242
AG Petzetakis International Holdings Limited v Petzetakis Africa (Pty) Ltd & others (Marley
Pipe Systems (Pty) Ltd & another intervening) 2012 (5) SA 515 (GSJ)
— 276
Agyrakis & another v Gunn & another 1963 (1) SA 602 (T)
— 162
Aircondi Refrigeration (Pty) Ltd v Ruskin NO & others 1981 (1) SA 799 (W)
— 116
Al-Kharafi & Sons v Pema & others NNO 2010 (2) SA 360 (W)
— 10, 143, 144, 148
Alley Cat Clothing (Pty) Ltd v De Lisle Weare Racing [2002] 1 All SA 123 (D)
— 141
Amalgamated Banks of South Africa Bpk v De Goede en ’n ander 1997 (4) SA 66 (SCA)
— 143
Amalgamated Hardware & Timber (Pty) Ltd v Wimmers 1964 (2) SA 542 (T)
— 38
Amod v Kahn 1947 (2) SA 432 (N)
— 58
Amod v The Messenger 1909 TS 13
— 25
Apco Africa (Pty) Ltd & another v Apco Worldwide Inc 2008 (5) SA 615 (SCA)
— 243, 244
Appleson v The Master & others 1951 (3) SA 141 (T)
— 165, 166
Argus Printing & Publishing Co Ltd v Anastassiades 1954 (1) SA 72 (W)
— 67, 73
Asmal Wholesalers (Pty) Ltd v Dawood; Marshall Industrials Ltd & another intervening 1963
(1) SA 250 (N)
— 55
Aspeling & another v Hoffman’s Trustee 1917 TPD 305
— 116, 117
A-Team Drankwinkel BK en ’n ander v Botha en ’n ander NNO 1994 (1) SA 1 (A)
— 96
Atkinson v Rare Earth Extraction Co Ltd 2002 (2) SA 547 (C)
— 55
Page x
Attorney-General v Blumenthal 1961 (4) SA 313 (T)

— 254
B
Badenhorst v Bekker NO en andere 1994 (2) SA 155 (N)
— 72, 81
Bagatla Ba Makau Tribe & others v Van Cittert 1929 TPD 210
— 34
Bank of Lisbon and South Africa Ltd v The Master & others 1987 (1) SA 276 (A)
— 185
Bank of Lisbon International Ltd v Western Province Cellars Ltd & another 1998 (3) SA 899
(W)
— 155
Barclays Bank v Giles 1931 TPD 9
— 50
Barclays National Bank Ltd v Umbogintwini Land and Investment Co (Pty) Ltd (in
Liquidation) & another 1985 (4) SA 407 (D))
— 151, 152
Barlows (Eastern Province) Ltd v Bouwer 1950 (4) SA 385 (E)
— 41
Barlows Tractor Co (Pty) Ltd v Townsend 1996 (2) SA 869 (A)
— 118
Barnard and Lynn NNO v Schoeman & another 2000 (3) SA 168 (N)
— 151
Barnard NO v Regspersoon van Aminie en ’n ander 2001 (3) SA 973 (SCA)
— 186
Bassa v The Master & another 1963 (4) SA 510 (N)
— 120
Beddy NO v Van der Westhuizen 1999 (3) SA 913 (SCA)
— 83, 148
Beinash & Co v Nathan (Standard Bank of South Africa Ltd intervening) 1998 (3) SA 540 (W)
— 46, 48
Beira v Raphaely-Weiner & others 1997 (4) SA 332 (SCA)
— 35, 37, 59
Bekker NO v Kotze & others 1996 (4) SA 1293 (Nm)
— 71
Bell & Co v Ivins & Edmonds (1905) 26 NLR 449
— 179
Bernard v Klein NO 1990 (2) SA 306 (W)
— 82, 83, 112
Berrange NO v Hassan & another 2009 (2) SA 339 (N)
— 6, 35, 36, 40, 52, 58, 71
Bhyat v Khurishi 1929 TPD 896
— 49
Bishop v Baker 1962 (2) SA 679 (D)
— 36
Bloom’s Trustee v Fourie 1921 TPD 599
— 141
Blou v Lampert and Chipkin NNO & others 1973 (1) SA 1 (A)
— 205
Body Corporate of Fish Eagle v Group Twelve Investments (Pty) Ltd 2003 (5) SA 414 (W)
— 243
BOE Bank Ltd v Bassage 2006 (5) SA 33 (SCA)
— 183
Boland Bank Bpk v Du Plessis 1995 (4) SA 113 (T)
— 139
Boland Bank Ltd v The Master & another 1991 (3) SA 387 (A)
— 187, 192
Boshoff v South African Mutual Life Assurance Society 2000 (3) SA 597 (C)
— 89
Botha & others NNO v Van den Heever NO & others (unreported, GNP case no 40406/12, 23
July 2012)
— 252, 253
Botha v Swanepoel 2002 (4) SA 577 (T)
— 129
Botha v Von Reiche NO en ’n ander 1962 (1) SA 863 (T)
— 88
BP Southern Africa (Pty) Ltd v Furstenburg 1966 (1) SA 717 (O)
— 44
BP Southern Africa (Pty) Ltd v Viljoen en ’n ander 2002 (5) SA 630 (O)
— 6, 35
Braithwaite v Gilbert (Volkskas Bpk Intervening) 1984 (4) SA 717 (W)
— 33
Brigl v The Master & others 1980 (1) SA 468 (O)
— 121
Brink v Kitshoff NO 1996 (4) SA 197 (CC)
— 13, 83
Britz v De Wet NO en ’n ander 1965 (2) SA 131 (O)
— 95
Bruwil Konstruksie (Edms) Bpk v Whitson NO & another 1980 (4) SA 703 (T)
— 131
Bruyns NO v Aerogrande (Pty) Ltd 1964 (3) SA 554 (W)
— 156
Bryant & Flanagan (Pty) Ltd v Muller & another NNO 1977 (1) SA 800 (N)
— 90
Bryant & Flanagan (Pty) Ltd v Muller & another NNO 1978 (2) SA 807 (A)
— 87, 90
Budge & others NNO v Midnight Storm Investments 256 (Pty) Ltd & another 2012 (2) SA 28
(GSJ)
— 244
Page xi
Business Aviation Corporation (Pty) Ltd & another v Rand Airport Holdings (Pty) Ltd 2006 (6)
SA 605 (SCA)
— 185
C
Cachalia v De Klerk NO and Benjamin NO 1952 (4) SA 672 (T)
— 115, 117, 119
Caldeira v The Master & another 1996 (1) SA 868 (N)
— 117, 118
Caledon Trust and Fire Assurance Co Ltd v Magistrate of Riversdale & others 1937 CPD 349
— 122
Callinicos v Burman 1963 (1) SA 489 (A)
— 118
Canadian Superior Oil Ltd v Concord Insurance Co Ltd (formerly INA Insurance Co Ltd) 1992
(4) SA 263 (W)
— 75
Cape Point Vineyards (Pty) Ltd v Pinnacle Point Group Ltd & another (Advantage Project
Managers (Pty) Ltd intervening) 2011 (5) SA 600 (WCC)
— 279
Capespan (Pty) Ltd v Any Name 451 (Pty) Ltd 2008 (4) SA 510 (C)
— 174
Cassim v The Master & others 1960 (2) SA 347 (D)
— 224
Chairperson, Walmer Estate Residents’ Community Forum & another v City of Cape Town &
others 2009 (2) SA 175 (C)
— 209
Chaplin NO v Gregory (or Wyld) 1950 (3) SA 555 (C)
— 80
Chappell v The Master & others 1928 CPD 289
— 117
Chenille Industries v Vorster 1953 (2) SA 691 (O)
— 58
Choice Holdings Ltd & others v Yabeng Investment Holding Co Ltd 2001 (3) SA 1350 (W)
— 247
Cilliers NO & others v Duin & See (Pty) Ltd 2012 (4) SA 203 (WCC)
— 244
City of Johannesburg v Even Grand 6 CC 2009 (2) SA 111 (SCA)
— 226
City of Johannesburg v Kaplan NO & another 2006 (5) SA 10 (SCA)
— 187
Coetzee v Attorney’s Insurance Indemnity Fund 2003 (1) SA 1 (SCA)
— 75
Coetzee v Government of the Republic of South Africa; Matiso & others v Commanding
Officer, Port Elizabeth Prison, & others 1995 (4) SA 631 (CC)
— 101
Cohen v Jacobs (Stand 675 Dowerglen (Pty) Ltd intervening) [1998] 2 All SA 433 (W)
— 42-3
Commissioner for Inland Revenue v Bowman NO 1990 (3) SA 311 (A)
— 141
Commissioner for Inland Revenue v Friedman & others NNO 1993 (1) SA 353 (A)
— 7
Commissioner, South African Revenue Service v Hawker Air Services (Pty) Ltd;
Commissioner, South African Revenue Service v Hawker Aviation Partnership & others
2006 (4) SA 292 (SCA)
— 6, 44, 45, 221
Commissioner, South African Revenue Service v Stand Two Nine Nought Wynberg (Pty) Ltd
& others 2005 (5) SA 583 (SCA)
— 188, 259
Commonwealth Shippers Ltd v Mayland Properties (Pty) Ltd (United Dress Fabrics (Pty) Ltd
& another intervening) 1978 (1) SA 70 (D)
— 246
Confrees (Pty) Ltd v Oneanate Investments (Pty) Ltd (Snoek Wholesalers (Pty) Ltd & others
intervening) 1996 (1) SA 759 (C)
— 248
Conrad v Conrad’s Trustee 1930 NPD 100
— 84
Consolidated Caterers Ltd v Patterson NO 1960 (4) SA 194 (E)
— 133
Consolidated News Agencies (Pty) Ltd (in Liquidation) v Mobile Telephone Networks (Pty) Ltd
& another 2010 (3) SA 382 (SCA)
— 152
Constandinou v Lipkie NO 1958 (2) SA 122 (O)
— 181
Contract Forwarding (Pty) Ltd v Chesterfin (Pty) Ltd & others 2003 (2) SA 253 (SCA)
— 185
Page xii
Cook NO v SJ Coetzee Inc 2012 (2) SA 616 (GNP)

— 150
Cools v The Master & others 1998 (4) SA 212 (C)
— 114, 165, 194
Cooper & another NNO v Merchant Trade Finance Ltd 2000 (3) SA 1009 (SCA)
— 145, 146
Cooper & others NNO v SA Mutual Life Assurance Society & others 2001 (1) SA 967 (SCA)
— 267
Cooper NO v First National Bank of SA Ltd 2001 (3) SA 705 (SCA)
— 130, 132
Cooper v Master of the Supreme Court & others [1998] 1 All SA 158 (N)
— 129
Cooper v The Master & others 1996 (1) SA 962 (N)
— 128
Corner Shop (Pty) Ltd v Moodley 1950 (4) SA 55 (T)
— 42, 43, 49
Cothill et Uxor v Cornelius 2000 (4) SA 163 (T)
— 106
Court v Standard Bank of SA Ltd; Court v Bester NO & others 1995 (3) SA 123 (A)
— 41, 51
Cowan v Toffee 1947 (2) SA 1148 (T)
— 64
Craggs v Dedekind; Baartman v Baartman & another; Van Jaarsveld v Roebuck; Van Aardt v
Borrett 1996 (1) SA 935 (C)
— 45, 48
Cranko v Borosch’s Trustee 1924 TPD 645
— 110
Cronje NO v De Paiva [1997] 2 All SA 80 (B)
— 141
Cumes & Co v Sacher & another 1932 WLD 213
— 23
Cuninghame & another v First Ready Development 249 (Association incorporated under
section 21) 2010 (5) SA 325 (SCA)
— 244
D
D Glaser & Sons (Pty) Ltd v The Master & another NO 1979 (4) SA 780 (C)
— 187
Dabelstein & others v Lane & Fey NNO 2001 (1) SA 1222 (SCA)
— 140, 149
De Hart NO v Kleynhans & others 1970 (4) SA 383 (O)
— 151
De Jager v Harris NO and the Master 1957 (1) SA 171 (SWA)
— 119
De Lange v Smuts NO & others 1998 (3) SA 785 (CC)
— 9, 13, 113, 164
De Polo & another v Dreyer & others 1991 (2) SA 164 (W)
— 64, 65
De Villiers NO v Delta Cables (Pty) Ltd 1992 (1) SA 9 (A)
— 79
De Villiers NO v Kaplan 1960 (4) SA 476 (C)
— 139
De Villiers NO v Maursen Properties (Pty) Ltd 1983 (4) SA 670 (T)
— 35, 39, 40
De Villiers v Estate De Villiers 1930 CPD 387
— 84
De Villiers v Stuckeris (1829) 1 Menz 377
— 69
De Waardt v Andrew & Thienhaus Ltd 1907 TS 727
— 58
De Wet NO v Jurgens 1970 (3) SA 38 (A)
— 5, 73
De Wet NO v Uys NO en andere 1998 (4) SA 694 (T)
— 89
De Wet v Le Riche 2000 (3) SA 1118 (T)
— 38, 49
De Wit v Boathavens CC (King & another intervening) 1989 (1) SA 606 (C)
— 271, 273
Derby Shirt Manufacturers (Pty) Ltd v Nel NO & another NO 1964 (2) SA 599 (D)
— 115
Detkor (Pty) Ltd v Pienaar 1991 (3) SA 406 (W)
— 49
Deutsche Bank AG v Moser & another 1999 (4) SA 216 (C)
— 9
Development Bank of Southern Africa Ltd v Van Rensburg & others NNO 2002 (5) SA 425
(SCA)
— 185, 253
Dicks v Marais 1952 (3) SA 165 (N)
— 37
Die Meester v Protea Assuransiemaatskappy Bpk 1981 (4) SA 685 (T)
— 9
Dobrin v Trustees Estate Dobrin 1932 WLD 195
— 82
Douglas Green Bellingham v Green t/a Greens Bottle Recyclers 1998 (1) SA 367 (SCA)
— 192
Downs Distributing Co Pty Ltd v Associated Blue Star Stores Pty Ltd (1948) 76 CLR 463
— 143
Page xiii
DP du Plessis Prokureurs v Van Aarde 1999 (4) SA 1333 (T)

— 35
Du Plessis & another NNO v Rolfes Ltd 1997 (2) SA 354 (A)
— 13, 87, 90
Du Plessis NO v Oosthuizen en ’n ander 1999 (2) SA 191 (O)
— 146, 164, 233
Du Plessis NO v Oosthuizen; Du Plessis NO v Van Zyl 1995 (3) SA 604 (O)
— 163
Du Plessis v Pienaar NO & others 2003 (1) SA 671 (SCA)
— 6, 71, 81
Du Toit’s Executor v Du Toit 1911 CPD 713
— 226
Duchen v Flax 1938 WLD 119
— 37
Duet and Magnum Financial Services CC (in Liquidation) v Koster 2010 (4) SA 499 (SCA)
— 151
Dunlop Tyres (Pty) Ltd v Brewitt 1999 (2) SA 580 (W)
— 44, 46, 47
Durandt NO v Pienaar NO & others 2000 (4) SA 869 (C)
— 139
Durandt v Fedsure General Insurance Ltd 2005 (3) SA 350 (SCA)
— 125
E
Eastern Free State Cape Co-operative Ltd v The Master & others 1997 (3) SA 899 (E)
— 183
Eastern Metropolitan Substructure of the Greater Johannesburg Transitional Council v Venter
NO 2001 (1) SA 360 (SCA)
— 90, 186
Ebrahimi v Westbourne Galleries Ltd [1973] AC 360 (HL)
— 245
Ecker v Dean 1940 AD 206
— 67, 68
Edkins v Registrar of Deeds, Johannesburg & others [2012] ZAGPHC 58 (9 March 2012)
— 255
Eliasov NO v Arenel (Pvt) Ltd 1979 (3) SA 415 (R)
— 145
Engelbrecht v Mundell’s Trustee 1934 CPD 111
— 174
Engen Petroleum Ltd v Multi Waste (Pty) Ltd & others 2012 (5) SA 596 (GSJ)
— 250, 276, 286
Ensor NO v New Mayfair Hotel 1968 (4) SA 462 (N)
— 143
Ensor NO v Rensco Motors (Pty) Ltd 1981 (1) SA 815 (A)
— 155, 156
Enyati Resources Ltd & another v Thorne NO & another 1984 (2) SA 551 (C)
— 84
Enyati Resources Ltd v Glaum NO & another 1989 (2) SA 314 (C)
— 142
Epstein v Epstein 1987 (4) SA 606 (C)
— 47
Equisec (Pty) Ltd v Rodriques & another 1999 (3) SA 113 (W)
— 164
Erasmus v Pentamed Investments (Pty) Ltd 1982 (1) SA 178 (W)
— 244
Essop v The Master & another 1983 (1) SA 926 (C)
— 112, 159
Estate Hart v Robinson 1936 GWLD 24
— 25
Estate Jager v Whittaker & another 1944 AD 246 at 250
— 139, 141
Estate Jamodien v Registrar of Deeds 1933 CPD 348
— 175
Estate Louw v Credit Corporation of SA Ltd 1956 (3) SA 303 (C)
— 65
Estate Salzmann v Van Rooyen 1944 OPD 1
— 36
Estate Wege v Strauss 1932 AD 76
— 141, 144
Esterhuizen v Swanepoel & sixteen other cases 2004 (4) SA 89 (W)
— 43, 46, 47, 48
Euromarine International of Mauren v The Ship Berg & others 1984 (4) SA 647 (N)
— 186
Ex parte Albert 1937 CPD 276
— 213
Ex parte Alberts 1937 OPD 2
— 27
Ex parte Anderson 1995 (1) SA 40 (SE)
— 11, 211
Ex parte Anthony & ’n ander en ses soortgelyke aansoeke 2000 (4) SA 116 (C)
— 24, 27, 28, 29, 43, 72, 174
Ex parte Arnold 1939 CPD 392
— 22
Ex parte Barton 1926 CPD 252
— 20
Ex parte Bellairs 1932 EDL 189
— 31
Ex parte Berman 1972 (3) SA 128 (R)
— 29, 31
Page xiv
Ex parte Berson; Levin & Kagan v Berson 1938 WLD 107

— 23, 29, 34, 41
Ex parte Bester & another 1937 CPD 45
— 18, 221
Ex parte Blumberg 1914 EDL 1
— 216
Ex parte Bosch & another 1959 (2) SA 163 (C)
— 11
Ex parte Bouwer and similar applications 2009 (6) SA 382 (GNP)
— 23, 24, 27, 28, 43, 48
Ex parte Brown 1951 (4) SA 246 (N)
— 18, 27
Ex parte Bruce 1956 (1) SA 480 (SR)
— 34
Ex parte BZ Stegmann 1902 TS 40
— 298
Ex parte Cohen & another 1974 (4) SA 674 (W)
— 224
Ex parte Collins 1927 WLD 172
— 19
Ex parte Cowley 1950 (4) SA 161 (GW)
— 10
Ex parte Curry 1965 (1) SA 392 (C)
— 211
Ex parte Cutting 1943 CPD 51
— 215
Ex parte Davis 1938 CPD 335
— 212, 216
Ex parte De la Harpe 1937 OPD 56
— 213
Ex parte De Villiers & another NNO: In re Carbon Developments (Pty) Ltd (in Liquidation)
1993 (1) SA 493 (A)
— 120
Ex parte Deemter 1962 (2) SA 228 (E)
— 18
Ex parte Dickerson 1939 OPD 6
— 28
Ex parte Dogo 1938 WLD 187
— 22
Ex parte Douglas 1964 (4) SA 385 (O)
— 211
Ex parte Du Plessis 1957 (2) SA 253 (W)
— 66
Ex parte Du Plessis NO 1953 (4) SA 11 (T)
— 230
Ex parte Du Toit 1955 (3) SA 38 (W)
— 23
Ex parte Du Toit 1964 (3) SA 159 (T)
— 216
Ex parte Dworsky 1970 (2) SA 293 (T)
— 68
Ex parte Elliot 1997 (4) SA 292 (W)
— 212
Ex parte Estate Benn 1956 (4) SA 184 (C)
— 230
Ex parte Ezer 1934 CPD 65
— 216
Ex parte Fakir 1956 (4) SA 177 (C)
— 11
Ex parte Foley 1954 (3) SA 1 (O)
— 11
Ex parte Ford and two similar cases 2009 (3) SA 376 (WCC)
— 30
Ex parte Fourie [2008] 4 All SA 340 (D)
— 209, 213, 215, 216
Ex parte Fowler 1937 TPD 353
— 77, 215
Ex parte Foxcroft 1923 OPD 234
— 5, 6
Ex parte Garvie 1924 OPD 108
— 212
Ex parte Geeringh 1980 (2) SA 788 (O)
— 6
Ex parte Goldman 1930 WLD 158
— 20
Ex parte Goshalia 1957 (2) SA 182 (N)
— 216
Ex parte Graaff-Reinet Rollermeule (Edms) Bpk 2000 (4) SA 670 (E)
— 246
Ex parte Greef 1940 (2) PH C80 (C)
— 18
Ex parte Hajee 1939 NPD 197
— 216
Ex parte Harmse 2005 (1) SA 323 (N)
— 3, 18, 19, 21, 27, 30
Ex parte Harrod 1954 (4) SA 28 (SR)
— 68
Ex parte Hay Automobile Company 1931 GWL 23
— 27
Ex parte Hayes 1970 (4) SA 94 (NC)
— 28, 30
Ex parte Henning 1981 (3) SA 843 (O)
— 28
Ex parte Henri 1974 (3) SA 717 (N)
— 11
Ex parte Hetzler 1969 (3) SA 90 (T)
— 21
Ex parte Heydenreich 1917 TPD 657
— 209
Ex parte Hittersay 1974 (4) SA 326 (SWA)
— 209, 215
Page xv
Ex parte Houston 1958 (1) SA 448 (N)

— 18
Ex parte Immerman 1941 CPD 369
— 11
Ex parte Isaacs 1952 (4) SA 128 (O)
— 215
Ex parte Jacobs 1977 (4) SA 155 (NC)
— 169, 217
Ex parte Jordaan: In re Grunow Estates (Edms) Bpk v Jordaan 1993 (3) SA 448 (O)
— 58
Ex parte Josselowitz 1957 (2) SA 120 (W)
— 215
Ex parte Kelly 2008 (4) SA 615 (T)
— 27, 31
Ex parte Koch 1983 (3) SA 700 (SE)
— 213
Ex parte Kriel 1949 (1) SA 971 (O)
— 218
Ex parte Kruger 1928 CPD 233
— 30
Ex parte Kruger 1947 (2) SA 130 (SWA)
— 24
Ex parte Lamain 1921 SWA 42
— 23
Ex parte Laserow 1939 TPD 422
— 211
Ex parte Le Roux 1996 (2) SA 419 (C)
— 209, 216
Ex parte Lee 1956 (4) SA 587 (D)
— 22
Ex parte Levin and Gohn; Ex parte Hyton 1939 WLD 219
— 30
Ex parte Logan 1929 TPD 201
— 30
Ex parte Looney 1938 GWL 21
— 230
Ex parte Marais & two others 1957 (3) SA 311 (W)
— 11
Ex parte Mark 1932 WLD 53
— 216
Ex parte Martens 1951 (4) SA 530 (N)
— 216
Ex parte Matthee 1975 (3) SA 804 (O)
— 215
Ex parte Mattysen et uxor (First Rand Bank Ltd intervening) 2003 (2) SA 308 (T)
— 24, 28
Ex parte Mavromati 1948 (3) SA 886 (W)
— 32
Ex parte Meine 1937 CPD 154
— 215, 217
Ex parte Meyer 1927 OPD 170
— 21
Ex parte Minnie et Uxor 1996 (3) SA 97 (SE)
— 211, 212
Ex parte Murphy 1929 EDL 168 171
— 23
Ex parte Nel 1954 (2) SA 638 (O)
— 22
Ex parte Nel 1960 (3) SA 715 (GW)
— 11
Ex parte New Seasons Auto Holdings (Pty) Ltd 2008 (4) SA 341 (W)
— 246
Ex parte Nieburg 1929 CPD 362
— 206
Ex parte Nortje 1928 SWA 23
— 19
Ex parte Ogunlaja & Others [2011] JOL 2709 (GNP)
— 43
Ex parte Olivier 1948 (2) SA 545 (C)
— 65, 66, 218
Ex parte Oosthuizen unreported, NWM case no 607/12, 12 July 2012
— 210, 218
Ex parte Oosthuysen 1995 (2) SA 694 (T)
— 21
Ex parte Palmer and Palmer 1961 (1) SA 602 (W)
— 213
Ex parte Palmer NO: In re Hahn 1993 (3) SA 359 (C)
— 298
Ex parte Parker 1946 CPD 536
— 218
Ex parte Phillips 1938 CPD 381
— 214
Ex parte Pillay; Mayet v Pillay 1955 (2) SA 309 (N)
— 4
Ex parte Pochlmann & Kohl 1940 WLD 109
— 221
Ex parte Porritt 1991 (3) SA 866 (N)
— 209, 216
Ex parte Pretoria Hypotheek Maatschappy 1933 OPD 137
— 25
Ex parte Prins & another 1921 CPD 616
— 24
Ex parte Roos 1955 (1) SA 572 (O)
— 215
Ex parte Royston 1948 (2) SA 1026 (W)
— 211
Ex parte Rudolph 1975 (3) SA 974 (E)
— 21
Page xvi
Ex parte Rupert 1947 (1) SA 147 (C)

— 215
Ex parte Russlyn Construction (Pty) Ltd 1987 (1) SA 33 (D)
— 246
Ex parte Schoeman 1943 OPD 197
— 212
Ex parte Screen Media Ltd 1991 (3) SA 462 (W)
— 246
Ex parte Sedeman 1950 (2) SA 689 (C)
— 211
Ex parte Silverstone 1968 (2) SA 196 (O)
— 23
Ex parte Slabbert 1960 (4) SA 677 (T)
— 10, 11
Ex parte Smith 1958 (3) SA 568 (O)
— 27
Ex parte Steele 1948 (1) SA 1203 (W)
— 218
Ex parte Steenkamp and related cases 1996 (3) SA 822 (W)
— 27, 43, 46, 47
Ex parte Steyn 1979 (2) SA 309 (O)
— 299
Ex parte Stirling; Landsberg v Stirling (1922) 43 NPD 466
— 30
Ex parte Strip Mining (Pty) Ltd: In re Natal Coal Exploration Co (in Liquidation) (Kangra
Group (Pty) Ltd & another intervening) 1999 (1) SA 1086 (SCA)
— 267
Ex parte Swanepoel 1975 (2) SA 367 (O)
— 19
Ex parte Tangent Sheeting (Pty) Ltd 1993 (3) SA 488 (W)
— 246
Ex parte The Master of the High Court South Africa (North Gauteng) 2011 (5) SA 311 (GNP)
— 9, 108, 124
Ex parte Theron 1923 OPD 46
— 19
Ex parte Theron en ’n ander; Ex parte Smit; Ex parte Webster 1999 (4) SA 136 (O)
— 72, 215
Ex parte Thomas; Ex parte Thomas [2002] 4 All SA 227 (T)
— 212
Ex parte Vally 1930 CPD 304
— 5
Ex parte Van Blerk 1938 CPD 133
— 211
Ex parte Van den Berg 1950 (1) SA 816 (W)
— 30
Ex parte Van den Berg 1962 (4) SA 402 (O)
— 18
Ex parte Van der Merwe 1963 (1) SA 268 (O)
— 211
Ex parte Van der Merwe 2008 (6) SA 451 (W)
— 179, 206, 217, 218
Ex parte Van Heerden 1923 CPD 279
— 19
Ex parte Van Rensburg 1946 OPD 64
— 64, 72
Ex parte van Rensburg 1955 (1) SA 570 (O)
— 11
Ex parte Van Staden 1967 (4) SA 375 (R)
— 217
Ex parte Van Zyl 1963 (2) SA 311 (GW)
— 214
Ex parte Van Zyl 1991 (2) SA 313 (C)
— 210
Ex parte Van Zyl 1997 (2) SA 438 (E)
— 211
Ex parte Veitch 1965 (1) SA 667 (W)
— 28
Ex parte Venter 1931 SWA 3
— 85
Ex parte Vermaak 1935 CPD 258
— 213
Ex parte Viviers et Uxor (Sattar intervening) 2001 (3) SA 240 (T)
— 24, 26
Ex parte Vogt 1936 SWA 39
— 81
Ex parte Vos 1930 TPD 381
— 20
Ex parte Wassenaar 1968 (2) SA 726 (T)
— 21
Ex parte Watson 1926 WLD 237
— 28
Ex parte Wessels & Venter NNO: In re Pyke-Nott’s Insolvent Estate 1996 (2) SA 677 (O)
— 300
Ex parte Wilson 1921 CPD 377
— 21
Ex parte Woolf 1958 (4) SA 190 (N)
— 209
Excellent Petroleum (Pty) Ltd v Brent Oil (Pty) Ltd 2012 (5) SA 407 (GNP)
— 254, 255
F
Fairleigh NO v Whitehead & another 2001 (2) SA 1197 (SCA)
— 225
Page xvii
Fairlie v Raubenheimer 1935 AD 135

— 12, 13
Faure v Britz NO 1981 (4) SA 346 (O)
— 227
Fenhalls v Ebrahim & others 1956 (4) SA 723 (D)
— 148
Ferela (Pty) Ltd v Craigie & others 1980 (3) SA 167 (W)
— 49
Ferros (OVS) Staalvensterfabrieke (Edms) Bpk v Sullivan 1959 (2) SA 531 (O)
— 56
Fesi & another v Absa Bank Ltd 2000 (1) SA 499 (C)
— 28, 30, 43
Fey NO & another v Mackay [2004] 4 All SA 50 (C)
— 65, 78
Fey NO and Whiteford NO v Serfontein & another 1993 (2) SA 605 (A)
— 127
Fey NO v Van der Westhuizen & others 2005 (2) SA 236 (C)
— 132
First National Bank Ltd v E U Civils (Pty) Ltd; First National Bank Ltd v E U Plant (Pty) Ltd;
Bassett v EU Civils (Pty) Ltd; E U Holdings (Pty) Ltd v E U Plant (Pty) Ltd 1996 (1) SA 924
(C)
— 253
First National Bank of SA Ltd v Cooper NO & another 1998 (3) SA 894 (W)
— 199
FirstRand Bank Ltd & others v Magistrate, Germiston & others [2004] 2 All SA 629 (W)
— 199
FirstRand Bank Ltd v Evans 2011 (4) SA 597 (KZD)
— 5, 42
Firstrand Bank Ltd v Imperial Crown Trading 143 (Pty) Ltd 2012 (4) SA 266 (KZD)
— 241, 250, 251
Firstrand Bank Ltd v Janse van Rensburg and a related matter [2012] 2 All SA 186 (ECP)
— 42
Fisher v Pujol 1972 (2) SA 496 (T)
— 52
Fittinghoff & others v Rollins; Fittinghoff & others v Stockton 1997 (1) SA 535 (W)
— 39
Fourie NO v Le Roux & others 2006 (1) SA 279 (T)
— 257
Francis George Hill Family Trust v South African Reserve Bank & others 1992 (3) SA 91 (A)
— 10
Freedman and Rossi (Pty) Ltd v Geustyn & others 1986 (4) SA 762 (W)
— 153
Friedberg v Van Niekerk 1962 (2) SA 413 (C)
— 34
Fullard v Fullard 1979 (1) SA 368 (T)
— 56
Fundstrust (Edms) Bpk (in likwidasie) v Marais en andere [1996] 3 All SA 574 (C)
— 267
G
Gain NO v Parker & Son 1933 CPD 75
— 223
Gainsford & others NNO v HIAB AB 2000 (3) SA 635 (W)
— 263
Gainsford & others NNO v Tiffski Property Investments (Pty) Ltd & others 2012 (3) SA 35
(SCA)
— 154, 155, 156, 157
Galaxie Melodies (Pty) Ltd v Dally NO 1975 (4) SA 736 (A)
— 140, 156
Ganes & another v Telecom Namibia Ltd 2004 (3) SA 615 (SCA)
— 57
Gardee v Dhanmanta Holdings & others 1978 (1) SA 1066 (N)
— 44, 223
Gardener & another v Walters & another NNO (In re Ex parte Walters & another NNO) 2002
(5) SA 796 (C)
— 300
Gazit Properties v Botha & others NNO 2012 (2) SA 306 (SCA)
— 143, 144
Geduldt v The Master & others 2005 (4) SA 460 (C)
— 10, 258, 270
George Hartman & Kie v Landdros, Reitz en andere 1958 (4) SA 514 (O)
— 129, 133
George v Lewe 1935 AD 249
— 66
Gert de Jager (Edms) Bpk v Jones NO en McHardy NO 1964 (3) SA 325 (A)
— 147,148, 153
Geyser NO & another v Telkom SA Ltd 2004 (3) SA 535 (T)
— 152
Gibson NO v Iscor Housing Utility Co Ltd & others 1963 (3) SA 783 (T)
— 25
Giddy, Giddy and White’s Estate v Du Plessis 1938 EDL 73
— 146
Gilbey Distillers & Vintners (Pty) Ltd & others v Morris NO & another 1991 (1) SA 648 (A)
— 198, 199
Page xviii
Gillis-Mason Construction Co (Pty) Ltd v Overvaal Crushers (Pty) Ltd 1971 (1) SA 524 (T)
— 247
Glen Anil Finance (Pty) Ltd v Joint Liquidators Glen Anil Development Corporation Ltd (in
Liquidation) 1981 (1) SA 171 (A)
— 87
Goldblatt’s Wholesale (Pty) Ltd v Damalis 1953 (3) SA 730 (O)
— 41
Goldfields Trading Co (Pty) Ltd v Schutte 1956 (3) SA 1 (O)
— 108
Goldseller v Hill 1908 TS 822
— 125, 130
Goode, Durrant & Murray Ltd v Hewitt and Cornell NNO 1961 (4) SA 286 (N)
— 141
Goode, Durrant and Murray (SA) Ltd & another v Lawrence 1961 (4) SA 329 (W)
— 8
Goodricke & Son v Auto Protection Insurance Co Ltd (in Liquidation) 1968 (1) SA 717 (A)
— 92
Goodwin Stable Trust v Duohex (Pty) Ltd & another 1998 (4) SA 606 (C)
— 109, 174
Gordon NO v Standard Merchant Bank Ltd 1983 (3) SA 68 (A)
— 89, 95
Gore & another NNO v Roma Agencies CC 1998 (2) SA 518 (C)
— 87
Gore & another NNO v Saficon Industrial (Pty) Ltd 1994 (4) SA 536 (W)
— 155, 156
Gore & another NNO v The Master 2002 (2) SA 283 (E)
— 128
Gore & others NNO v Shell South Africa (Pty) Ltd 2004 (2) SA 521 (C)
— 144, 145, 146
Gormley v West City Precinct Properties (Pty) Ltd (Anglo Irish Bank Corporation Ltd
intervening); Anglo Irish Bank Corporation Ltd v West City Precinct Properties (Pty) Ltd &
another [2012] ZAWCHC 3 (18 April 2012)
— 250, 276, 277
Gottschalk v Gough 1997 (4) SA 562 (C)
— 59
Gouws v Scholtz 1989 (4) SA 315 (NC)
— 52
Greub v The Master & others 1999 (1) SA 746 (C)
— 209, 213, 216
Grevler v Landsdown & ’n ander NNO 1991 (3) SA 175 (T)
— 66, 208
Grimbeek v The Master & others 1926 CPD 183
— 229
Grobler v Oosthuizen 2009 (5) SA 500 (SCA)
— 185
Grufin Finance Co (Pty) Ltd v Cohen & others NNO 1991 (2) SA 345 (W)
— 113, 178
Gumede & others v Subel NO & others 2006 (3) SA 498 (SCA)
— 165
Gungudoo & another v Hannover Reinsurance Group Africa (Pty) Ltd & another [2012] 3 All
SA 609 (SCA)
— 52
Gypsum Industries Ltd v Standard General Insurance Co Ltd 1991 (1) SA 718 (W)
— 74
H
Hannover Reinsurance Group Africa (Pty) Ltd & another v Gungudoo & another 2012 (1) SA
125 (GSJ)
— 53, 57
Harcourt v Eastman NO 1953 (2) SA 424 (N)
— 140
Harksen v Lane NO & others 1998 (1) SA 300 (CC)
— 13, 79, 80, 161, 162
Harksen v The Magistrate, Wynberg & others [1997] 2 All SA 205 (C)
— 163
Harrington v Fester & others 1980 (4) SA 424 (C)
— 204
Harris v Trustee of Buissinne (1840) 2 Menz 105
— 89, 95
Harrismith Board of Executors v Odendaal 1923 AD 530
— 154, 156
Hassim Moti & Co v Insolvent Estate M Joosub and Co 1927 TPD 778
— 116
Hassim v Mohideen 1930 TPD 562
— 229
Haupt t/a Soft Copy v Brewers Marketing Intelligence (Pty) Ltd & others 2005 (1) SA 398 (C)
— 67
Hawkins v Cohen NO 1994 (4) SA 23 (W)
— 84
Hawkins’ Trustee v Corio Saw and Planing Mills Ltd & others 1923 WLD 125
— 150
Helderberg Laboratories CC & others v Sola Technologies (Pty) Ltd 2008 (2) SA 627 (C)
— 243
Page xix
Hendricks NO & others v Cape Kingdom (Pty) Ltd 2010 (5) SA 274 (WCC)
— 53, 256
Hendriks NO v Swanepoel 1962 (4) SA 338 (A)
— 143, 144
Heneways Freight Services (Pty) Ltd v Grogor 2007 (2) SA 561 (SCA)
— 266
Hillhouse v Stott; Freban Investments (Pty) Ltd v Itzkin; Botha v Botha 1990 (4) SA 580 (W)
— 20
Hobson NO v Abib 1981 (1) SA 556 (N)
— 70, 130
Hockey NO v Rixom NO & Smith 1939 SR 107
— 148
Hosking & another v Van der Merwe & another NNO 1992 (1) SA 920 (W)
— 166
Howard v Herrigel & another NNO 1991 (2) SA 660 (A)
— 266, 267
Hubert Davies Water Engineering (Pty) Ltd v The Body Corporate of ‘‘The Village’’ & others
1981 (3) SA 97 (D)
— 96, 97
Hudson & others NNO v Wilkins NO & others 2003 (6) SA 234 (T)
— 259, 260
Hudson v The Master & others 2002 (1) SA 862 (T)
— 265
Hugo NO v Lipkie 1961 (3) SA 66 (O)
— 43
Hulett v Gangat & others 1932 NPD 682
— 25
Hülse-Reutter & another v HEG Consulting Enterprises (Pty) Ltd (Lane and Fey NNO
intervening) 1998 (2) SA 208 (C)
— 251
Hurley and Seymour NO v W H Muller & Co 1924 NPD 121
— 141
I
Ilic v Parginos 1985 (1) SA 795 (A)
— 112, 115, 206
Ilsley v De Klerk NO & another 1934 TPD 55
— 117
In re Estate Hough 1919 CPD 160
— 175
In re Harpur (1882) 2 EDC 103
— 49
In re Hugo 1921 CPD 742
— 51
In re Rhenosterkop Copper Co (1908) 18 CTR 931
— 243
Intercontinental Exports (Pty) Ltd v Fowles 2000 (4) SA 833 (W)
— 51
Investec Bank Ltd & another v Mutemeri & another 2010 (1) SA 265 (GSJ)
— 24, 28
Investec Bank Ltd v Lewis 2002 (2) SA 111 (C)
— 34
Isaacson and Son v Van Druten’s Trustee 1930 GWL 33
— 143
Israel v Burger 1961 (1) SA 827 (O)
— 68
J
Jacobs v Hessels 1984 (3) SA 601 (T)
— 67, 174
James v Magistrate, Wynberg & others 1995 (1) SA 1 (C)
— 260
Janit v Van den Heever & another NNO (No 2) 2001 (1) SA 1062 (W)
— 230
Janit v Van den Heever & others NO (No 1) 2001 (1) SA 731 (W)
— 80, 81, 230
Janse Van Rensburg & others NNO v Steyn 2012 (3) SA 72 (SCA)
— 151
Janse van Rensburg v Muller 1996 (2) SA 557 (A)
— 122, 173
Janse van Rensburg v The Master & others 2004 (5) SA 173 (T)
— 258
Jeeva & another v Tuck NO & others 1998 (1) SA 785 (SE)
— 10, 119
Jhatam & others v Jhatam 1958 (4) SA 36 (N)
— 46, 56
Johannesburg Livestock Co v Herr 1921 WLD 121
— 35
Johnson v Hirotec (Pty) Ltd 2000 (4) SA 930 (SCA)
— 243, 250
Joint Liquidators of Glen Anil Development Corporation Ltd (in Liquidation) v Hill Samuel
(SA) Ltd 1982 (1) SA 103 (A)
— 184
Joosab v Ensor NO 1966 (1) SA 319 (A)
— 154, 155
Jooste v De Witt NO 1999 (2) SA 355 (T)
— 83
Joosub v Soomar 1930 TPD 773
— 35, 40
Jordaan v Richter en ’n ander 1979 (3) SA 1213 (O)
— 125
Jordaan v Richter en andere 1981 (1) SA 490 (O)
— 67, 121, 122
Page xx
Judelowitz’s Trustee v The Sheriff 1904 TS 839

— 106
Julie Whyte Dresses (Pty) Ltd v Whitehead 1970 (3) SA 218 (D)
— 57
K
Kader v Haliman 1958 (4) SA 31 (N)
— 49
Kahan NO v Hydro Holdings (Pty) Ltd 1980 (3) SA 511 (T)
— 99, 132
Kalil v Decotex (Pty) Ltd & another 1988 (1) SA 943 (A)
— 54, 55, 251
Kalinko v Nisbet & others 2002 (5) SA 766 (W)
— 267
Kanakia v Ritzshelf 1004 CC t/a Passage to India & another 2003 (2) SA 39 (D)
— 244
Kathrada Bros v Asmal (1919) 40 NPD 199
— 34
Kellerman NO v Van Vuren & others 1994 (4) SA 336 (T)
— 139
Kelvin Park Properties CC v Paterson NO 2001 (3) SA 31 (SCA)
— 154, 155
Kent v Transvaalsche Bank 1907 TS 765
— 38
Kerbyn 178 (Pty) Ltd v Van den Heever & others NNO 2000 (4) SA 804 (W)
— 131, 148
Kevin and Lasia Property Investment CC & another v Roos NO & others 2004 (4) SA 103
(SCA)
— 154
Kia Intertrade Johannesburg (Pty) Ltd v Infinite Motors (Pty) Ltd [1999] 2 All SA 268 (W)
— 243
King Pie Holdings (Pty) Ltd v King Pie (Pinetown) (Pty) Ltd; King Pie Holdings (Pty) Ltd v
King Pie (Durban) (Pty) Ltd 1998 (4) SA 1240 (D)
— 255
Klass v Contract Interiors CC (in liquidation) & others 2010 (5) SA 40 (D)
— 267
Klatzkin v Noble NO 1915 AD 713
— 133, 134
Klein NO v Kolosus Holdings Ltd & another 2003 (6) SA 198 (T)
— 115
Klein NO v South African Transport Services & others 1992 (3) SA 509 (W)
— 92
Kleinsakeontwikkelingskorporasie Bpk v Santambank Bpk 1988 (3) SA 266 (C)
— 185
Klemrock (Pty) Ltd v De Klerk & another 1973 (3) SA 925 (W)
— 47
Klerck and Schärges NNO v Lee & others 1995 (3) SA 340 (SE)
— 139
Klerck NO v Kaye 1989 (3) SA 669 (C)
— 143, 145
Kleynhans v Van der Westhuizen NO 1970 (1) SA 565 (O)
— 50
Kleynhans v Van der Westhuizen NO 1970 (2) SA 742 (A)
— 34
Klopper NO v The Master 2009 (3) SA 571 (SCA)
— 128
Koen & another v Wedgewood Village Golf & Country Estate (Pty) Ltd & others 2012 (2) SA
378 (WCC)
— 276
Kommissaris van Binnelandse Inkomste en ’n ander v Willers en andere 1994 (3) SA 283 (A)
— 199
Kommissaris van Binnelandse Inkomste en ’n ander v Willers en andere 1999 (3) SA 19
(HHA)
— 148
Kopman & another v Benjamin 1951 (1) SA 882 (W)
— 204
Kovacs Investments 571 (Pty) Ltd v Investec Bank Limited & another: In re Investec Bank
Limited v Also Holdings (Pty) Ltd ZAWCHC 110 (22 February 2012)
— 276
Kruger v Symington NO en andere 1958 (2) SA 128 (O)
— 67
Kuhn v Karp 1948 (4) SA 825 (T)
— 46
Kuming v Paterson NO 1954 (2) SA 130 (E)
— 88
Kuper v Stern and Hewitt NO 1941 WLD 1
— 67
Kyle & others v Maritz & Pieterse Inc [2002] 3 All SA 223 (T)
— 246, 250
L
Laeveldse Koöperasie Bpk v Joubert 1980 (3) SA 1117 (T)
— 40
Lamonica v Baltic Reefers Management Ltd 2011 (3) SA 164 (WCC)
— 298
Land- en Landboubank van Suid-Afrika v Cogmanskloof Besproeiingsraad 1992 (1) SA 217
(A)
— 187
Page xxi
Land- en Landboubank van Suid-Afrika v Joubert NO 1982 (3) SA 643 (C)

— 4
Lane & another NNO v Dabelstein & others (Lane & another NNO intervening) 1999 (3) SA
150 (C)
— 149
Lane & another NNO v Magistrate, Wynberg 1997 (2) SA 869 (C)
— 162
Lane NO & another v Harksen & others [1998] 4 All SA 7 (C)
— 147, 149
Lane NO v Olivier Transport 1997 (1) SA 383 (C)
— 254
Langeberg Koöperasie Bpk v Inverdoorn Farming and Trading Co Ltd 1965 (2) SA 597 (A)
— 139
Laskarides & another v German Tyre Centre (Pty) Ltd (in Liquidation) & others NNO 2010 (1)
SA 390 (W)
— 166
Lategan & others v Lategan NO & others 2003 (6) SA 611 (D)
— 265
Laver v Olivier 1953 (2) SA 437 (T)
— 37
Lawclaims (Pty) Ltd v Rea Shipping Co SA: Schiffscommerz Aussenhandels Betrieb der VVB
Schiffbau intervening 1979 (4) SA 745 (N)
— 7, 8
Le Roux & others v Viana NO & others 2008 (2) SA 173 (SCA)
— 131
Le Roux v Standard General Versekeringsmaatskappy Bpk 2000 (4) SA 1035 (SCA)
— 75
Leech & others v Farber NO & others 2000 (2) SA 444 (W)
— 265
Legh v Nungu Trading 353 (Pty) Ltd & another 2008 (2) SA 1 (SCA)
— 254
Lenco Holdings Ltd & others v Eckstein & others 1996 (2) SA 693 (N)
— 54
Letsitele Stores (Pty) Ltd v Roets & others 1958 (2) SA 224 (T)
— 254
Leyds NO v Simon & others 1964 (1) SA 377 (T)
— 111
Linden Duplex (Pty) Ltd v Harrowsmith 1978 (1) SA 371 (W)
— 153
Linder Bros v Gordon (1913) 34 NPD 225
— 49
Lindhaven Meat Market CC v Reyneke 2001 (1) SA 454 (W)
— 34, 53, 55
Lipschitz v Wattrus NO 1980 (1) SA 662 (T)
— 124
Lithins v Laeveldse Koöperasie Bpk & another 1989 (3) SA 891 (T)
— 174
LL Mining Corporation Ltd v Namco (Pty) Ltd (in Liquidation) & others 2004 (3) SA 407 (C)
— 255
Loch & another v John Blackwood Ltd [1924] AC 783 (PC)
— 244
Lockhat Bros & Co Ltd v Joffe’s Estate 1937 EDL 2
— 229
London Estates (Pty) Ltd v Nair 1957 (3) SA 591 (D)
— 43, 49
Lotter v Arlow & another 2002 (6) SA 60 (T)
— 54
Lotzof v Raubenheimer 1959 (1) SA 90 (O)
— 43, 44, 45
Louw NO & others v Coetzee & others 2003 (3) SA 329 (SCA)
— 77
Louw NO v DMA Fishing Enterprises (Pty) Ltd & another 2002 (2) SA 163 (SE)
— 140, 147
Louw v WP (Koöperatief) Bpk 1998 (2) SA 418 (SCA)
— 59
Love & another v Santam Life Insurance Ltd & another 2004 (3) SA 445 (SE)
— 139
Lubbe v Estate Lubbe 1935 CPD 299
— 159
Lubbe v Volkskas Bpk 1992 (3) SA 868 (A)
— 179, 180
Lurie Brothers Ltd v Arcache (1927) 48 NPD 139
— 48
Lurie NO v Mahomed 1952 (3) SA 194 (N)
— 206
Lynn & Main Inc v Mitha NO 2006 (5) SA 380 (N)
— 4
Lynn & Main Inc v Naidoo & another 2006 (1) SA 59 (N)
— 36, 44, 55
M
M&V Tractor and Implement Agencies BK v Vennootskap DSU Cilliers en Seuns en andere
(Kelrn Vervoer (Edms) Bpk tussenbeitredend) 2000 (2) SA 571 (NC)
— 56
Ma-Afrika Groepbelange (Pty) Ltd & another v Millman and Powell NNO & another 1997 (1)
SA 547 (C)
— 259, 260
Page xxii
Mackay v Cahi 1962 (4) SA 193 (O)

— 40
MacKay v Fey NO & another 2006 (3) SA 182 (SCA)
— 78
Madodza (Pty) Ltd v Absa Bank Ltd & others [2012] ZAGPPHC 165 (15 August 2012)
— 277, 278
Magnum Financial Holdings (Pty) Ltd (in Liquidation) v Summerly & another NNO 1984 (1)
SA 160 (W)
— 6, 7
Maharaj v Sanlam Life Insurance Ltd & others 2011 (6) SA 17 (KZD)
— 6
Mahomed v Lockhat Brothers & Co Ltd 1944 AD 230
— 71, 203
Mahomed v Malk 1930 TPD 615
— 57
Main Industries (Pty) Ltd v Serfontein & another 1991 (2) SA 604 (N)
— 49
Malcomess’s Estate v De Kock 1937 EDL 18
— 85
Malherbe’s Trustee v Dinner & others 1922 OPD 18
— 143
Mamacos v Davids 1976 (1) SA 19 (C)
— 44
Manitoba Investment Holdings Ltd v Lipchin & others 2010 (2) SA 612 (GNP)
— 299
Marais v Engler Earthworks (Pty) Ltd; Engler Earthworks (Pty) Ltd v Marais 1998 (2) SA 450
(E)
— 66
Marendaz v Smuts 1966 (4) SA 66 (T)
— 115
Maritz t/a Maritz & Kie Rekenmeester v Walters & another 2002 (1) SA 689 (C)
— 46
Marques & another v De Villiers & another NNO 1990 (4) SA 415 (W)
— 112, 160
Marshall Bros Trustee v Transvaalsche Bank 1907 TS 1060
— 134
Master of the Supreme Court v Nevsky 1907 TS 268
— 25
Maudsley v Maudsley’s Trustees 1940 WLD 166
— 83
Mayekiso’s Estate v Menziwa 1931 EDL 376
— 25
McCarthy Ltd v Gore NO 2007 (6) SA 366 (SCA)
— 154
Mears v Rissik, Mackenzie NO and Mears’ Trustee 1905 TS 303
— 67
Melville v Busane & another 2012 (1) SA 233 (ECP)
— 7
Merrick & Co v Drew (1908) 29 NLR 557
— 49
Mervis Brothers (Pty) Ltd v Hanekom 1963 (2) SA 125 (T)
— 64
Meskin & Co v Friedman 1948 (2) SA 555 (W)
— 44
Meskin v Amod 1956 (3) SA 120 (N)
— 34, 37
Meskin v The Master & another 1963 (3) SA 229 (D)
— 124
Metje & Ziegler Ltd v Carstens 1959 (4) SA 434 (SWA)
— 58
Meyer & Kie v Maree 1967 (3) SA 27 (T)
— 43
Meyer NO v Transvaalse Lewendehawe Koöperasie Bpk en andere 1982 (4) SA 746 (A)
— 147
Meyer v Batten 1999 (1) SA 1041 (W)
— 48
Mia v The Master & others 1940 TPD 86
— 112, 204, 205
Michalow NO v Premier Milling Co Ltd 1960 (2) SA 59 (W)
— 223
Miller & others v Nafcoc Investment Holding Co Ltd & others 2010 (6) SA 390 (SCA)
— 125
Miller v Janks 1944 TPD 127
— 5, 6, 19, 72
Millman & another NNO v Masterbond Participation Bond Trust Managers (Pty) Ltd (under
Curatorship) & others 1997 (1) SA 113 (C)
— 141
Millman & another NNO v Pieterse & others 1997 (1) SA 784 (C)
— 10, 119
Millman NO and Stein NO v Kamfer 1993 (1) SA 305 (C)
— 153
Mindel Bros and Mindel v Selikman 1930 WLD 242
— 39
Mindel v Shaer 1937 TPD 378
— 19
Minister of Justice v Firstrand Bank Ltd & others 2003 (6) SA 636 (SCA)
— 258
Mitchell & another v Hodes & others NNO 2003 (3) SA 176 (C)
— 265
Moch v Nedtravel (Pty) Ltd t/a American Express Travel Service 1996 (3) SA 1 (A)
— 53, 59
Page xxiii
Mondi Limited v Rhodes [1997] 3 All SA 291 (D)

— 32
Montelindo Compania Naviera SA v Bank of Lisbon and SA Ltd 1969 (2) SA 127 (W)
— 88, 90
Moodley NO v Milne NO 1965 (1) SA 154 (D)
— 206
Moodley v Medley 1963 (3) SA 453 (N)
— 37
Moodliar NO & others v Hendricks NO & others 2011 (2) SA 199 (WCC)
— 53, 262
Mookrey v Smith NO & another 1989 (2) SA 707 (C)
— 175
Moolman v Builders & Developers (Pty) Ltd (in Provisional Liquidation): Jooste intervening
1990 (1) SA 954 (A)
— 298, 299
Moosa NO v Mavjee Bhawan (Pty) Ltd & another 1967 (3) SA 131 (T)
— 244, 245
Moosagee v Bhyat & Co 1921 TPD 465
— 26
Morgan & ’n Ander v Wessels NO 1990 (3) SA 57 (O)
— 97
Morris and Strydom NNO v The Master & others 1994 (2) SA 731 (N)
— 199
Mosenthal Bros Ltd & another v Moritz 1929 WLD 84
— 85
Mostert NO v Von Hirschberg 1961 (1) SA 146 (O)
— 37
Mouw v Imanu-Shalom Congregation & another 1994 (2) SA 240 (W)
— 245
Mthimkhulu v Rampersad & another (BOE Bank Ltd, intervening creditor) [2000] 3 All SA
512 (N)
— 46, 48
Mulder & another v Beacon Island Shareblock Ltd 1999 (2) SA 274 (C)
— 8
Muller v De Wet NO & others 1999 (2) SA 1024 (W)
— 67
Muller v De Wet NO & others 2001 (2) SA 489 (W)
— 175
Myburgh v Walters NO 2001 (2) SA 127 (C)
— 149
N
Nahrungsmittel GmbH v Otto 1991 (4) SA 414 (C)
— 39
Nahrungsmittel GmbH v Otto 1993 (1) SA 639 (A)
— 7
Naidoo & another v Matlala NO & others 2012 (1) SA 143 (GNP)
— 24, 28, 30, 32, 48, 70, 101
Naidoo v Absa Bank Ltd 2010 (4) SA 597 (SCA)
— 5
Natal Law Society v Stokes & another 2002 (3) SA 189 (N)
— 93
Nathan & Co v Sheonandan 1963 (1) SA 179 (N)
— 37
National Union of Leather Workers v Barnard and Perry NNO 2001 (4) SA 1261 (LAC)
— 252
Naude v Serfontein NO en ’n ander 1978 (1) SA 633 (O)
— 175
Nedbank Ltd v Master of the High Court, Witwatersrand Local Division, & others 2009 (3) SA
403 (W)
— 166, 264
Nedbank Ltd v Norton 1987 (3) SA 619 (N)
— 37
Nedcor Bank Ltd v Absa Bank & another 1995 (4) SA 727 (W)
— 148
Nedcor Bank Ltd v Samuel & others 2005 (2) SA 439 (W)
— 255
Nedcor Bank Ltd v The Master & others 2002 (1) SA 390 (SCA)
— 111
Nedcor Investment Bank v Pretoria Belgrave Hotel (Pty) Ltd 2003 (5) SA 189 (SCA)
— 87, 90
Nel & another NNO v The Master (Absa Bank Ltd & others intervening) 2005 (1) SA 276
(SCA)
— 10, 119, 128
Nel & others NNO v The Master & others 2002 (3) SA 354 (SCA)
— 253
Nel NO v Body Corporate of the Seaways Building & another 1996 (1) SA 131 (A)
— 186
Nel v Le Roux NO & others 1966 (3) SA 562 (CC)
— 161
Nel v Lubbe 1999 (3) SA 109 (W)
— 48, 50
Netherlands Bank of SA Ltd v Le Roux NO & another 1965 (1) SA 681 (T)
— 230
Nieuwenhuizen & another v Nedcor Bank Ltd [2001] 2 All SA 364 (O)
— 30
Nieuwoudt v Faught NO en andere 1987 (4) SA 101 (C)
— 164
Page xxiv
Nieuwoudt v The Master & others NNO 1988 (4) SA 513 (A)
— 67
Noord-Westelike Koöperatiewe Landboumaatskappy Bpk v Die Meester en andere 1982 (4)
SA 486 (NC)
— 87
Norex Industrial Properties (Pty) Ltd v Monarch South Africa Insurance Co Ltd 1987 (1) SA
827 (A)
— 89
North American Bank Ltd (in Liquidation) v Granit 1998 (3) SA 557 (W)
— 217
Nosworthy v Holman 1993 (2) SA 774 (E)
— 44
O
O’Shea NO v Van Zyl & others NNO 2012 (1) SA 90 (SCA)
— 41
Oakdene Square Properties (Pty) Ltd & others v Farm Bothasfontein (Kyalami) (Pty) Ltd &
others 2012 (3) SA 273 (GSJ))
— 250
Oakdene Square Properties (Pty) Ltd & others v Farm Bothasfontein (Kyalami) (Pty) Ltd;
Farm Bothasfontein (Kyalami) (Pty) Ltd v Kyalami Events and Exhibitions (Pty) Ltd 2012
(3) SA 273 (GSJ)
— 276, 286
Ongevallekommissaris v Die Meester 1989 (4) SA 69 (T)
— 196
Optima Fertilizers (Pty) Ltd v Turner 1968 (4) SA 29 (D)
— 41
Ozinsky NO v Lloyd & others 1995 (2) SA 915 (A)
— 266
P
P de V Reklame (Edms) Bpk v Gesamentlike Onderneming van SA Numismatiese Buro
(Edms) Bpk en Vitaware (Edms) Bpk 1985 (4) SA 876 (C)
— 6
P G Bison Ltd v Johannesburg Glassworks (Pty) Ltd (in Liquidation) 2006 (4) SA 535 (W)
— 118
Paarl Board of Executors v Estate Ansell 1916 CPD 8
— 229
Paizes v Phitides 1940 WLD 189
— 35, 38
Papenfus v Transvaal Board for the Development of Peri-Urban Areas 1969 (2) SA 66 (T)
— 28
Parbhoo & others v Getz NO & another 1997 (4) SA 1095 (CC)
— 150, 163
Paruk & others v Parker, Wood & Co Ltd 1917 AD 163
— 122
Patel v Paruk’s Trustee 1944 AD 469
— 137
Patel v Sonday 1936 CPD 466
— 41, 43
Paterson NO v Trust Bank of Africa Ltd 1979 (4) SA 992 (A)
— 143, 144
Payslip Investment Holdings CC v Y2K TEC Ltd 2001 (4) SA 781 (C)
— 55, 241, 251
Peach v Stewart NO & another 1929 WLD 228
— 117
Pellow NO & another v Club Refrigeration CC 2006 (1) SA 230 (SCA)
— 98
Peterson & another NNO v Claassen & others 2006 (5) SA 191 (C)
— 148
PG Bison Ltd v Johannesburg Glassworks (Pty) Ltd (in Liquidation) & others [2008] 1 All SA
473 (W)
— 118
Philip Business Services CC v De Villiers & others NNO 1991 (3) SA 552 (T)
— 131
Philips v Commissioner of Child Welfare, Bellville 1956 (2) SA 330 (C)
— 8
Philotex (Pty) Ltd & others v Snyman & others; Braitex (Pty) Ltd & others v Snyman &
others 1998 (2) SA 138 (SCA)
— 266
Pieterse v Shrosbree NO & others; Shrosbree NO v Love & others 2005 (1) SA 309 (SCA)
— 75
Pine Village Home Owners Association Ltd & others v The Master & others 2001 (2) SA 576
(SE)
— 113, 122, 233
Pitsiladi v Van Rensburg & others NNO 2002 (2) SA 160 (SE)
— 160, 161, 162, 163
Podlas v Cohen and Bryden NNO & others 1994 (4) SA 662 (T)
— 166
Ponammal NO v Taylor NO & another 1963 (2) SA 656 (N)
— 73
Porteous v Strydom NO 1984 (2) SA 489 (D)
— 91
Page xxv
Porterstraat 69 Eiendomme (Pty) Ltd v PA Venter Worcester (Pty) Ltd 2000 (4) SA 598 (C)
— 267
Potgieter NO v Daewoo Heavy Industries (Edms) Bpk 2003 (3) SA 98 (SCA)
— 96
Powell & another v Leech & another; Leech & others v Powell & others [1997] 4 All SA 106
(W)
— 260
Premier Finance Corporation (Pty) Ltd v B Grillanda, trading as Auto Sales Centre 1972 (1)
SA 347 (D)
— 38
Premier Western Cape & others v Parker & Mohammed & others [1999] 1 All SA 176 (C)
— 34, 54
Pretorius & others v Marais & others 1981 (1) SA 1051 (A)
— 162
Pretorius NO v Stock Owners’ Co-operative Co Ltd 1959 (4) SA 462 (A)
— 145, 146
Pretorius’s Trustee v Van Blommenstein 1949 (1) SA 267 (O)
— 144, 145, 146
Priest v Charles 1935 AD 147
— 66
Prinsloo en ’n ander v Van Zyl NO 1967 (1) SA 581 (T)
— 204
Proksch v Die Meester en andere 1969 (4) SA 567 (A)
— 120
Provincial Building Society of South Africa v Du Bois 1966 (3) SA 76 (W)
— 54
Przybylak v Santam Insurance Ltd 1992 (1) SA 588 (C)
— 75
R
R v Botha 1951 (1) SA 236 (T)
— 235
R v Cassim 1932 CPD 209
— 66
R v Greenspan 1945 AD 474
— 234
R v Hohls 1959 (2) SA 656 (N)
— 34
R v Klisser & Rosenberg 1949 (3) SA 807 (W)
— 232, 233
R v Kruger 1956 (2) SA 201 (A)
— 234
R v Lewin 1930 AD 344
— 20
R v Macleod 1935 EDL 284
— 128
R v Omarjee 1955 (2) SA 546 (A)
— 232
R v Papangelis 1960 (2) SA 309 (O)
— 66
R v Tewari 1960 (2) SA 465 (D)
— 37
R v Vather & another 1961 (1) SA 350 (A)
— 234
Rabbich v Miller (1885) 6 NLR 167
— 36
Rainbow Diamonds (Edms) Bpk en andere v Suid-Afrikaanse Nasionale
Lewensassuransiemaatskappy 1984 (3) SA 1 (A)
— 268
Rand Air (Pty) Ltd v Ray Bester Investments (Pty) Ltd 1985 (2) SA 345 (W)
— 243
Ratilal v Dos Santos 1995 (4) SA 117 (W)
— 49
Rautenbach v Morris: In re Estate Rautenbach 1961 (3) SA 728 (E)
— 84
Re Estate Potgieter 1908 TS 982
— 137
Reddy v Body Corporate of Croftdene Mall 2002 (5) SA 640 (D)
— 7
Redler v Collier and The Cereal Manufacturing Co Ltd 1923 CPD 458
— 244
Regular Investments (Pty) Ltd v Du Plessis 1972 (2) SA 493 (O)
— 56
Reliance Agencies (Pty) Ltd v Patel 1946 CPD 463
— 35
Rennie NO v Registrar of Deeds & another 1977 (2) SA 513 (C)
— 255
Rens v Gutman NO & others 2003 (1) SA 93 (C)
— 83
Ressel v Levin 1964 (1) SA 128 (C)
— 44
Reuben Rosenblum Family Investments (Pty) Ltd & another v Marsubar (Pty) Ltd (Forward
Enterprises (Pty) Ltd & others intervening) 2003 (3) SA 547 (C)
— 58
Reynolds & others NNO v Standard Bank of South Africa Ltd 2011 (3) SA 660 (W)
— 150
Reynolds NO v Mecklenberg (Pty) Ltd 1996 (1) SA 75 (W)
— 251
Richard Keay Pollock NO v North Copper Wire (Pty) Ltd [2002] 1 All SA 244 (T)
— 255
Page xxvi
Richter NO v Riverside Estates (Pty) Ltd 1946 OPD 209

— 4
Robson v Wax Works (Pty) Ltd & others 2001 (3) SA 1117 (C)
— 251
Rodrew (Pty) Ltd v Rossouw 1975 (3) SA 137 (O)
— 37, 41
Roman Catholic Church (Klerksdorp Diocese) v Southern Life Association Ltd 1992 (2) SA
807 (A)
— 100
Ronbel 108 (Pty) Ltd v Sublime Investments (Pty) Ltd (in Liquidation) 2010 (2) SA 517
(SCA)
— 255
Roos NO en ’n ander v Kevin and Lasia Property Investments BK en andere 2002 (6) SA 409
(T)
— 154, 155
Rosenberg v Dry’s Executors & others 1911 AD 679
— 228
Rossouw and Rossouw v Hodgson & others 1925 AD 97
— 115
Rousseau & others NNO v Visser & another 1989 (2) SA 289 (C)
— 140
Rousseau NO v Standard Bank of SA Ltd 1976 (4) SA 104 (C)
— 139
Roux en andere v Van Rensburg NO 1996 (4) SA 271 (A)
— 99, 133, 179
Roux v Die Meester en ’n ander 1997 (1) SA 815 (T)
— 162, 166
Ruskin NO v Barclays Bank DCO 1959 (1) SA 577 (W)
— 151, 152
Ruskin NO v Speedy Engineering Works (Pty) Ltd & others 1975 (4) SA 126 (W)
— 121
Rutherford v Ferguson & others 2000 (2) SA 275 (O)
— 59
S
S v Clifford 1976 (1) SA 695 (A)
— 234
S v Ostilly & others (2) 1977 (4) SA 738 (D)
— 234
S v Saunders 1984 (2) SA 102 (T)
— 234
S v Van der Merwe 1980 (3) SA 406 (NC)
— 66
SA Incorporated Merchants’ Protection Agency Ltd v Kruger & another 1947 (4) SA 304 (T)
— 222
SA Leather Co (Pty) Ltd v Main Clothing Manufacturers (Pty) Ltd & another 1958 (2) SA 118
(O)
— 221
SA Spice Works (Pty) Ltd v Spies 1957 (1) SA 679 (T)
— 42
SAA Distributors (Pty) Ltd v Sport en Spel (Edms) Bpk 1973 (3) SA 371 (C)
— 250, 267
Saber Motors (Pty) Ltd v Morophane 1961 (1) SA 759 (W)
— 38
Sabie Mediese Sentrum (Edms) Bpk v Die Meester en andere 1977 (4) SA 389 (T)
— 124
SACCAWU v Master of the Supreme Court [2007] 4 All SA 1034 (T)
— 108
Sacks Morris (Pty) Ltd v Smith 1951 (3) SA 167 (O)
— 53
Sackstein en Venter NNO v Greyling 1990 (2) SA 323 (O)
— 140
Sackstein NO v Proudfoot SA (Pty) Ltd [2005] JOL 14088 (W)
— 299
Sackstein NO v Proudfoot SA (Pty) Ltd 2003 (4) SA 348 (SCA)
— 139, 243, 266, 299, 300
Sackstein NO v Van der Westhuizen en ’n ander 1996 (2) SA 431 (O)
— 139
SAI Investments v Van der Schyff NO & others 1999 (3) SA 340 (N)
— 108
Saincic & others v Industro-Clean (Pty) Ltd & another 2009 (1) SA 538 (SCA)
— 267
Sanddune CC v Catt 1998 (2) SA 461 (SE)
— 34
Sandoz Products (Pty) Ltd v Van Zyl NO 1996 (3) SA 726 (C)
— 96
Santam Ltd v Norman 1996 (3) SA 502 (C)
— 74
Santam Versekeringsmaatskappy Bpk v Kruger 1978 (3) SA 656 (A)
— 73
Scania Finance Southern Africa (Pty) Ltd v Thomi-Gee Road Carrier CC, Absa Bank Ltd v
Fernofire Bethlehem CC [2012] ZAFSHC 148
— 270
Scharff’s Trustee v Scharff 1915 TPD 463
— 148
Schmidt & another NNO v Absa Bank Ltd 2002 (6) SA 706 (W)
— 254
Page xxvii
Schneider NO v Raikin 1955 (1) SA 19 (W)

— 34
Schoeman v Thompson 1927 WLD 298
— 68
Schurmann v The Master and Paxton NO 1925 TPD 188
— 116
Scott-Hayward NO v Lief NO 1958 (3) SA 65 (T)
— 156
Securefin Ltd v KNA Insurance and Investment Brokers (Pty) Ltd [2001] 3 All SA 15 (T)
— 251
Shaban & Co (Pty) Ltd v Plank 1966 (1) SA 59 (O)
— 41
Shepherd v Mitchell Cotts Seafreight (SA) (Pty) Ltd 1984 (3) SA 202 (T)
— 50
Shepstone & Wylie & others v Geyser NO 1998 (3) SA 1036 (SCA)
— 264
Shrosbree & others NNO v Van Rooyen NO & others 2004 (1) SA 226 (SE)
— 81
Shurrie v Sheriff for the Supreme Court, Wynberg, & others 1995 (4) SA 709 (C)
— 255
Sibakhulu Construction (Pty) Ltd v Wedgewood Village Golf Country Estate (Pty) Ltd 2011
JDR 1565 (WCC)
— 242
Siltek Holdings (Pty) Ltd (in Liquidation) t/a Workgroup v Business Connexion Solutions (Pty)
Ltd [2009] 1 All SA 571 (SCA)
— 100
Silverstream Investments (Kranskop) CC v Ronbo Automotive CC 1997 (1) SA 107 (D)
— 156
Simon NO & others v Coetzee [2007] 2 All SA 110 (T)
— 142, 143
Simon NO & others v Mitsui and Co Ltd & others 1997 (2) SA 475 (W)
— 139, 140
Simon v DCU Holdings (Pty) Ltd & others 2000 (3) SA 202 (T)
— 154, 157
Simpson & Liesching v Van Breda 1930 CPD 195
— 34
Simpson v Klein NO & others 1987 (1) SA 405 (W)
— 70
Sinclair v Meintjes (1874) 4 Buch 40
— 69
Singer NO v The Master & another 1996 (2) SA 133 (A)
— 183, 187, 192
Singer NO v Weiss & another 1992 (4) SA 362 (T)
— 73
Skordis v Nissiotis 1955 (1) SA 395 (N)
— 55
Slater’s Trustee v Smith & Co (1886) 4 SC 135
— 122
Slims (Pty) Ltd & another v Morris NO 1988 (1) SA 715 (A)
— 99
Smith & another v Parton NO 1980 (3) SA 724 (D)
— 87, 89, 90
Smith and Walton (SA) (Pty) Ltd v Holt 1961 (4) SA 157 (D)
— 56
Smith v Porritt & others 2008 (6) SA 303 (SCA)
— 46
Smuts, Trustee of Neethling v Neethling (1844) 3 Menz 283
— 89
Snyman & others v Simon NO & another 2001 (2) SA 998 (W)
— 131
Snyman v Rheeder NO 1989 (4) SA 496 (T)
— 83
Snyman v The Master & others 2003 (1) SA 239 (T)
— 183, 196
Society of Lloyd’s v Romahn and two other cases 2006 (4) SA 23 (C)
— 299
Somchem (Pty) Ltd v Federated Insurance Co Ltd & another 1983 (4) SA 609 (C)
— 89
Soomar v Avon Leigh CC t/a Elsea Products 2000 (1) SA 524 (E)
— 157
Souter NO v Said NO 1957 (3) SA 457 (W)
— 85
South African Milling Co (Pty) Ltd v Reddy 1980 (3) SA 431 (SE)
— 34
South African Philips (Pty) Ltd & others v The Master & others 2000 (2) SA 841 (N)
— 265
Southern Palace Investments 265 (Pty) Ltd v Midnight Storm Investments 386 Ltd 2012 (2)
SA 423 (WCC)
— 250, 275, 276
Spence v The Master & others 2000 (2) SA 717 (T)
— 271
Spencer v Standard Building Society 1931 TPD 481
— 63
Spendiff NO v Kolektor (Pty) Ltd 1992 (2) SA 537 (A)
— 8
Stadler en andere v Wessels NO en andere 2000 (4) SA 544 (O)
— 166
Stainer v Estate Bukes 1933 OPD 86
— 229
Standard Bank of SA Ltd v Essop 1997 (4) SA 569 (D)
— 52
Standard Bank of SA Ltd v Sewpersadh & another 2005 (4) SA 148 (C)
— 35, 53
Page xxviii
Standard Bank of SA Ltd v The Master & others 1999 (2) SA 257 (SCA)
— 257
Standard Bank of SA Ltd v The Master of the High Court 2009 (5) SA 13 (E)
— 117
Standard Bank of South Africa Ltd v Cato and Gunn NNO & others 1981 (1) SA 647 (W)
— 118
Standard Bank of South Africa Ltd v Townsend & others 1997 (3) SA 41 (W)
— 96, 178, 186
Standard Bank of South Africa v Sappeur-Fleury 1925 SWA 7
— 39
Standard Bank of South Africa v The Master of the High Court & others 2010 (4) SA 405
(SCA)
— 117, 124, 129, 130, 260
Standard Bank v Estate Van Rhyn 1925 AD 266
— 135
Standard Bank van SA Bpk v Van Zyl NO en ’n ander 1999 (2) SA 221 (O)
— 229
Standard Finance Corporation of South Africa Ltd (in Liquidation) v Greenstein 1964 (3) SA
573 (A)
— 139, 142
Stephen Fraser (Pty) Ltd v Ramla & others 1961 (2) SA 554 (W)
— 222
Stocks & Stocks Industrial Holdings (Pty) Ltd & another v Roberts t/a Premier Timber &
Trading [1998] 4 All SA 231 (SE)
— 37
Storti v Nugent & others 2001 (3) SA 783 (W)
— 32, 267
Strauss & others v Master of the High Court & others 2001 (1) SA 649 (T)
— 10
Strauss & others v The Master & others NNO 2001 (1) SA 649 (T)
— 166, 167
Streicher v Viljoen [1999] 3 All SA 257 (NC)
— 47
Stride v Castelein 2000 (3) SA 662 (W)
— 52
Strydom NO v Master of the High Court & another 2010 (6) SA 630 (GNP)
— 128
Strydom NO v MGN Construction (Pty) Ltd & another: In re Haljen (Pty) Ltd (in Liquidation)
1983 (1) SA 799 (D)
— 255
Sugden & others v Beaconhurst Dairies (Pty) Ltd & others 1963 (2) SA 174 (E)
— 50
Supermarket Haasenback (Pty) Ltd v Santam Insurance Ltd 1989 (2) SA 790 (W)
— 75
Supermarket Leaseback (Elsburg) (Pty) Ltd v Santam Insurance Ltd 1991 (1) SA 410 (A)
— 75
Swadif (Pty) Ltd v Dyke NO 1978 (1) SA 928 (A)
— 139, 148
Swanepoel NO v National Bank of South Africa 1923 OPD 35
— 145
Swart en ’n ander v Cronje en ’n ander NNO 1991 (4) SA 296 (T)
— 166
Swart v Beagles Run Investments 25 (Pty) Ltd (Four Creditors Intervening) 2011 (5) SA 422
(GNP)
— 275, 276
Swellendam Municipality v Kennedy 1934 CPD 448
— 58
Syfrets Bank Ltd & others v Sheriff of the Supreme Court, Durban Central, & another;
Schoerie NO v Syfrets Bank Ltd & others 1997 (1) SA 764 (D)
— 70, 255
Syfrets Bank Ltd v Sheriff of the Supreme Court, Durban Central; Schoerie NO v Syfrets
Bank Ltd 1997 (1) SA 764 (D)
— 101
T
Talacchi & another v The Master & others 1997 (1) SA 702 (T)
— 119
Tangney & others v Zive’s Trustee 1961 (1) SA 449 (W)
— 88, 89
Taylor and Steyn NNO v Koekemoer 1982 (1) SA 374 (T)
— 254
Taylor and Thorne NNO & others v The Master 1965 (1) SA 658 (N)
— 115
Terblanche NO v Baxtrans CC & another 1998 (3) SA 912 (C)
— 141
Tewari v Secura Investments 1960 (3) SA 432 (N)
— 37
The Government v Thorne & another NNO 1974 (2) SA 1 (A)
— 100
The Master of the High Court (North Gauteng High Court, Pretoria) v Motala NO & others
2012 (3) SA 325 (SCA)
— 108
The Master v Omar NO 1958 (2) SA 547 (T)
— 230
The Master v Stuart 1981 (2) SA 472 (E)
— 118
The Master v Talmud 1960 (1) SA 236 (C)
— 9
Page xxix
The Nantai Princess: Nantai Line Co Ltd & another v Cargo Laden on the MV Nantai Princess
and Other Vessels & others 1997 (2) SA 580 (D)
— 255
Theron v Phoenix Marketing (Pty) Ltd (Heyman intervening) 1998 (4) SA 287 (W)
— 251
Thomas Construction (Pty) Ltd (in Liquidation) v Grafton Furniture Manufacturers (Pty) Ltd
1988 (2) SA 546 (A)
— 87, 90
Thomas v Cakebread 1975 (1) SA 616 (D)
— 51
Thorne & another NNO v The Government 1973 (4) SA 42 (T)
— 98, 100, 254
Thorne NO v Sinclair 1930 EDL 409
— 48
Thorne v The Master 1964 (3) SA 38 (N)
— 129, 134, 159
Timm v Kay & another 1954 (4) SA 585 (T)
— 93, 180
Tolstrup NO v Kwapa NO 2002 (5) SA 73 (W)
— 229
Tongaat Paper Co (Pty) Ltd v The Master & others 2011 (2) SA 17 (KZP)
— 10, 262
Trans-Drakensberg Bank Ltd v The Master & others 1962 (4) SA 417 (N)
— 120
Trust Wholesalers and Woollens (Pty) Ltd v Mackan 1954 (2) SA 109 (N)
— 43
Trustees Estate Chin v National Bank of South Africa Ltd 1915 AD 353
— 148
Trustees of the Insolvent Estate of S W Sutton v H & T McCubbin (1891) 12 NLR 351
— 122
Trustees of Wright v Executors of Wright (1872) 2 Roscoe 84
— 69
Turnbull v Van Zyl NO 1974 (1) SA 440 (C)
— 82
Turnover Holdings (Pty) Ltd v Saphi (Pty) Ltd 1997 (1) SA 263 (T)
— 263
Turquoise River Incorporated v McMenamin & others 1992 (3) SA 653 (D)
— 106
U
UDC Bank Ltd v Seacat Leasing and Finance Co (Pty) Ltd & another 1979 (4) SA 682 (T)
— 96, 97
Ukubona 2000 Electrical CC & another v City Power Johannesburg (Pty) Ltd 2004 (6) SA 323
(SCA)
— 96
Ultrapolymers (Pty) Ltd v Maredi NO & another 2012 (4) SA 232 (GSJ)
— 150
United Building Society Ltd & another NO v Du Plessis 1990 (3) SA 75 (W)
— 179, 180
Unitrans Freight (Pty) Ltd v Santam Ltd 2004 (6) SA 21 (SCA)
— 75
Uys & another v Du Plessis (Ferreira intervening) 2001 (3) SA 250 (C)
— 50
Uys & another v Sam Friedman Ltd 1934 OPD 80
— 87
V
Van der Bergh v Insolvent Estate Van der Bergh 1931 CPD 1
— 84, 180
Van der Burgh v Van Dyk en ’n ander 1993 (3) SA 312 (O)
— 96
Van der Merwe and Sellar v Uys 1932 OPD 125
— 49
Van der Vyver v Estate Van der Vyver 1932 CPD 45
— 180
Van der Walt NO & another v Le Roux NO & another 4 All SA 476 (O)
— 144
Van der Westhuizen v Roodt & others 1986 (1) SA 693 (N)
— 166
Van Eck v Kirkwood 1997 (1) SA 289 (SE)
— 44, 47
Van Eeden’s Trustee v Pelunski & Mervis & others 1922 OPD 144
— 145
Van Niekerk v Bayer Suid-Afrika (Edms) Bpk 4 All SA 212 (NC)
— 71
Van Niekerk v Seriso 321 CC & another [2012] ZAWCHC 63 (20 March 2012)
— 241, 250, 279
Van Niekerk v Seriso 321 CC (Firstrand Bank Ltd intervening) (WCC) unreported case no
23929/12 (20 March 2012)
— 241, 250
Van Rooyen v Van Rooyen (Automutual Investments (EC) (Pty) Ltd, intervening creditor)
[2000] 2 All SA 485 (SE)
— 46
Van Schalkwyk v Die Meester 1975 (2) SA 508 (N)
— 82
Van Vuuren v Jansen 1977 (3) SA 1062 (T)
— 38
Van Wyk, Von Ludwig & Hanekom Inc v Ferguson [2001] 2 All SA 592 (C)
— 52, 58
Van Zyl & others NNO v Turner & another NNO 1998 (2) SA 236 (C)
— 139, 143, 144, 146
Page xxx
Van Zyl NO v The Master 2000 (3) SA 602 (C)

— 262
Van Zyl v Lloyd 1929 WLD 96 100
— 23
Vather v Dhavraj 1973 (2) SA 232 (N)
— 110
Velcich & others v Land and Agricultural Bank of South Africa & others 1996 (1) SA 17 (A)
— 180
Venfin Investments (Pty) Ltd v KZN Resins (Pty) Ltd t/a KZN Resins [2011] 4 All SA 369
(SCA)
— 75
Venter NO v Avfin (Pty) Ltd 1996 (1) SA 826 (A)
— 97, 178
Venter NO v Barsouth Investments (Pty) Ltd 1992 (2) SA 78 (C)
— 146
Venter v Van Graan 1929 TPD 435
— 35
Venter v Volkskas Ltd 1973 (3) SA 175 (T)
— 3, 143, 145
Vermaak v Joubert and May 1990 (3) SA 866 (A)
— 154
Viljoen v Venter NO 1981 (2) SA 152 (W)
— 298
Vision Projects (Pty) Ltd v Cooper Conroy Bell & Richards Inc 1998 (4) SA 1182 (SCA)
— 95
Visser en ’n ander v Rousseau en andere NNO 1990 (1) SA 139 (A)
— 141
Visser’s Trustee v Spangenberg 1920 CPD 73
— 12
Voget & others v Kleynhans 2003 (2) SA 148 (C)
— 67, 71
Volkskas Bank (’n Divisie van Absa Bank Bpk) v Pietersen 1993 (1) SA 312 (C)
— 41
Volkskas Bpk NO v Barclays Bank (DC & O) 1955 (3) SA 104 (T)
— 149
Volkskas Bpk v Meester van die Hooggeregshof en ’n ander 1987 (4) SA 192 (NC)
— 184
Vorster v Steyn NO en andere 1981 (2) SA 831 (O)
— 72, 218
W
W L Carroll & Co v Ray Hall Motors (Pty) Ltd 1972 (4) SA 728 (T)
— 65
Walker v Syfret NO 1911 AD 141
— 4
Walker v Walker [1998] 2 All SA 382 (W)
— 44
Ward & another v Smit & others: In re Gurr v Zambia Airways Corporation Ltd 1998 (3) SA
175 (SCA)
— 243, 267, 298
Ward v Barrett NO & another NO 1963 (2) SA 546 (A)
— 4, 87, 225
Warricker & another NNO v Liberty Life Association of Africa Ltd 2003 (6) SA 272 (W)
— 76, 109
Wattrus NO 1980 (1) SA 662 (T)
— 108
Webb v Bergsma (1887) 4 HCG 376
— 25
Weinberg v Weinberg 1958 (2) SA 618 (C)
— 66
Weltmans Custom Office Furniture (Pty) Ltd (in Liquidation) v Whistlers CC 1999 (3) SA
1116 (SCA)
— 157, 158
Wessels NO v De Jager en ’n ander NNO 2000 (4) SA 924 (SCA)
— 72, 139
Wessels NO v Van Tonder en ’n ander 1997 (1) SA 616 (O)
— 163, 166
Wessels v De Klerk & another 1960 (4) SA 310 (T)
— 65
Western Bank Ltd v Els 1976 (2) SA 797 (T)
— 37
Western Flyer Manufacturing (Pty) Ltd v Dewrance & others NNO: In re Dewrance & others
NNO v North West Transport Investments (Pty) Ltd (under Judicial Management) & others
2007 (6) SA 459 (B)
— 11, 149
Wilde & another v Wadolf Investments (Pty) Ltd & others 2005 (1) SA 354 (W)
— 245, 247
Wilken & others NNO v Reichenberg 1999 (1) SA 852 (W)
— 37
Wilkens v Potgieter NO & another 1996 (4) SA 936 (T)
— 113, 118, 197
Wilkins v Pieterse 1937 CPD 165
— 45
Williams Hunt (Vereeniging) Ltd v Slomowitz & another 1960 (1) SA 499 (T)
— 96
Wolpe v Gale 1980 (3) SA 259 (W)
— 149
Page xxxi
Wynne and Godlonton NNO v Mitchell & another NNO; Wynne and Cornish NNO v Mitchell &
another NNO 1973 (1) SA 283 (E)
— 115
Y
Yiannoulis v Grobler & others 1963 (1) SA 599 (T)
— 160
Z
Zamzar Trading (Pty) Ltd (in Liquidation) v Standard Bank of SA Ltd 2001 (2) SA 508 (W)
— 140
Zulman & others v Schultz 1924 TPD 24
— 205
Page xxxiii
Table of statutes
A
Adjustment of Fines Act 101 of 1991
— 234
Administration of Estates Act 66 of 1965
— 9, 225, 229
s 23 — 69
s 34 — 225-226, 229-230
s 34(1) — 225-227
s 34(1)(a) — 225
s 34(1)(b)-(c) — 226
s 34(2) — 225-226
s 34(3)-(4) — 226
s 34(7)(a) — 227
s 34(7)(a)(i)-(ii) — 227
s 34(7)(b) — 227
s 34(7A) — 227-228
s 34(8) — 227
s 34(9) — 227-228
s 34(10)-(12) — 228
s 34(13) — 229
s 35(3)-(4) — 227
s 35(5)(a) — 227
s 35(6) — 227
s 35(7)-(8) — 228
s 35(10)-(11) — 228
s 77(3) — 69
Admission of Advocates Act 74 of 1964
s 7 — 69
Alienation of Land Act 68 of 1981
— 93-94, 187
s 1 — 93
s 4 — 93
s 18(1) — 94
s 20(1) — 94
s 20(5) — 94
s 20(5)(a) — 94
s 21(1) — 94
s 21(2)(a) — 94
s 21(2)(b) — 95
s 22(1)-(2) — 94
s 22(5) — 94
s 27 — 93
s 28(1) — 94
Chapter II — 93-94
Attorneys Act 53 of 1979
s 22(1)(e) — 69
Page xxxiv
s 78(7) — 76
B
Basic Conditions of Employment Act 75 of 1997
s 41 — 92
C
Civil Union Act 17 of 2006
— 80
s 13(1)-(2) — 80
Close Corporations Act 69 of 1984
— 176, 246, 269
s 7 — 270
s 26 — 274
s 29 — 176
s 34(1)-(2) — 176
s 34(2)(a)-(c) — 176
s 47(1)(b)(i) — 68
s 56 — 271
ss 63-65 — 272
s 66 — 270
s 66(1) — 269
s 66(1A) — 269, 275
s 66(2) — 269
s 66(2)(a)(xiv) — 270
s 66(2)(b)(i) — 270
s 67(2) — 269
s 68 — 270
s 69 — 270
s 70(2)-(4) — 272
s 71(1)-(3) — 272
s 72 — 269
s 72(1)-(6) — 273
s 72(7) — 274
s 72(7)(a) — 274
s 72(8)-(12) — 274
s 73(1)-(2) — 273
s 74(1)-(4) — 270
s 76(1) — 270
s 78(1) — 271
s 78(1)(a)-(b) — 271
s 79(a)-(i) — 271
s 80(a)-(c) — 272
s 81(1) — 272
Part VIII — 272
— 7, 68, 163, 240, 245, 248, 260-261, 267, 269-270, 299
s 1 — 6-7
s 12(1) — 241
s 13 — 264
s 103(3) — 247
s 200 — 252-253
s 219 — 261
Page xxxv
s 252(3) — 245
s 337 — 6, 240
ss 338-339 — 6, 240
s 340 — 6, 240, 299
s 340(1) — 266, 300
s 341 — 6, 240, 302
s 341(1)-(2) — 254
s 342 — 6, 240, 261-262
s 343 — 6, 240
s 343(1)-(2) — 241
s 343(2)(a) — 252
s 344 — 6, 240, 242, 245, 248
s 344(a) — 242, 280
s 344(c) — 242
s 344(e)-(f) — 242
s 344(g)-(h) — 243
s 345 — 6, 240, 242, 270
s 345(1)(a) — 242, 247
s 345(1)(b)-(c) — 243
s 345(2) — 243
s 346 — 6, 240, 249
s 346(1)(a) — 246
s 346(1)(b)-(c) — 247
s 346(1)(d) — 248
s 346(1)(e) — 248, 265
s 346(1)(f) — 248
s 346(2) — 247
s 346(3)-(4) — 249
s 346(4A) — 53, 249
s 346(4A)(a)(i)-(iv) — 249
s 346(4A)(b) — 250
s 346A — 53
s 346A(1)-(2) — 256
s 347 — 240
s 347(1) — 6, 250-251
s 347(2) — 251
s 348 — 6, 240, 253
s 349 — 6, 240-241, 252
s 350 — 6, 240
s 350(1) — 252
s 351 — 6, 252
s 351(1) — 252
s 351(2) — 260
s 352 — 6, 240
s 352(1) — 253
s 353 — 6, 240
s 353(1)-(2) — 254
s 354 — 6, 240
s 354(1) — 241, 267
s 354(2) — 267
Page xxxvi
ss 355-356 — 6, 240
s 356(1) — 256
s 356(2)(a)(i)-(ii) — 256
s 356(2)(b) — 256
s 357 — 6, 240
s 357(1) — 256
s 357(3) — 6, 256
s 358 — 6, 240
s 359 — 240, 302
s 359(1)(a)-(b) — 255
s 359(2) — 255
s 359(2)(b) — 255
ss 360-361 — 6, 240
s 361(1)-(2) — 254
ss 362-363 — 6, 240
s 363(1) — 253
s 363(2) — 256
s 363(5) — 256
s 364 — 6, 240
s 364(1) — 256-257
s 364(2) — 257
ss 365-366 — 6, 240
s 366(1)-(2) — 257
s 367 — 6, 240
s 368 — 240, 257
s 369(1) — 258
s 369(2)(a)-(b) — 258
s 370 — 6, 240
s 370(1) — 258
s 371 — 6, 258, 270
s 371(1)-(3) — 258
s 372 — 6, 240
s 372(a)-(j) — 258
s 373 — 6, 240
s 374 — 240, 258
ss 375-379 — 6, 240
s 379(1)(a)-(e) — 259
s 379(2) — 259-260
ss 380-384 — 6, 240
s 385 — 6, 240, 266
s 386 — 6, 240
s 386(1)(a)-(e) — 263
s 386(2) — 263
s 386(2A) — 263
s 386(2B) — 263
s 386(3) — 263
s 386(4) — 264
s 386(4)(a)-(i) — 263
s 386(5) — 262-263
s 386(6) — 257
Page xxxvii
s 387 — 6, 240
s 387(1)-(3) — 260
s 388 — 6, 240
s 388(1) — 263
ss 389-390 — 6, 240
s 391 — 240, 259, 299
s 392 — 240, 260
s 393 — 6, 240
s 393(1)-(3) — 260
s 394 — 6, 240
s 394(1) — 260
ss 395-400 — 6, 240
s 400(1)-(3) — 261
s 401 — 240, 261
s 402 — 6, 240
s 402(a)-(i) — 261
s 403 — 6, 240
s 403(1) — 261
s 404 — 240, 261
s 405-406 — 6, 240
s 406(1) — 262
s 407 — 6, 240
s 407(1)-(4) — 262
s 408 — 240, 262
s 409 — 6, 240
ss 410-412 — 6, 240
s 412(1) — 257
s 413 — 6, 240, 257
s 414 — 6, 240
s 414(1)-(2) — 257
s 415 — 6, 163, 240, 265
s 415(1) — 150, 163, 264
s 415(3) — 6, 264
s 415(5) — 150, 163, 264
s 416 — 6, 240
s 417 — 240, 248, 264-265
s 417(1) — 265
s 417(2)(b) — 265
s 417(2)(c) — 265
s 418 — 6, 240, 248, 264
s 418(1)(c) — 265
s 419 — 6, 240, 268
s 419(2) — 268
s 420 — 6, 240
s 421 — 240, 268
ss 422-423 — 6, 240
s 423(1) — 266, 273
s 424 — 6, 240, 266-267
s 425 — 6, 240, 253
s 426 — 6, 240
Page xxxviiii
s 433(1) — 248
Chapter XIV — 6-7, 240, 268-269
— 6, 68, 241, 246-248, 267, 269-270, 274, 277
s 1 — 7, 270
s 7(k) — 275
s 16 — 291
s 22(1) — 283
s 23(3)(b) — 242
s 31(3) — 287
ss 36-40 — 291
s 66(1) — 247
s 69(8)(b)(i) — 68
s 69(11) — 68
ss 75-77 — 283, 285
s 77(3)(b)-(c) — 283
s 79 — 240, 249
s 79(1) — 241
s 79(1)(a)(ii) — 252
s 79(2) — 249
s 79(3) — 241
s 80 — 240, 249
s 80(1)-(3) — 252
s 80(6) — 253
s 80(7) — 256
s 80(8)(a) — 254
s 80(8)(b)(i)-(ii) — 254
s 81 — 240, 249
s 81(1) — 241-242, 248
s 81(1)(a) — 253
s 81(1)(a)(i) — 242
s 81(1)(a)(ii) — 241, 245, 248
s 81(1)(b) — 245, 248, 253
s 81(1)(c) — 248
s 81(1)(c)(i) — 245
s 81(1)(c)(ii) — 243, 248
s 81(1)(d) — 249
s 81(1)(d)(i)-(ii) — 244, 246
s 81(1)(d)(iii) — 244
s 81(1)(e) — 249-250
s 81(1)(e)(i)-(ii) — 246
s 81(1)(f) — 249-250
s 81(1)(f)(i)-(ii) — 246
s 81(2) — 249
s 81(3) — 250
s 81(4)(a)-(b) — 253
s 82 — 240, 268
s 82(1)-(2) — 268
s 82(3)(b)(ii) — 268
s 83 — 240, 268
Page xxxix
s 83(1) — 268
s 128(1)(a) — 278
s 128(1)(b) — 276
s 128(1)(f) — 277
s 128(1)(g) — 288
s 128(1)(h) — 276
s 129 — 245
s 129(1)(a)-(b) — 277
s 129(2)(a)-(b) — 277
s 129(3)(a) — 277
s 129(3)(b) — 277, 284
s 129(4)(a)-(b) — 277
s 129(5)(a) — 277-278, 280
s 129(5)(b) — 278, 280
s 129(6) — 278, 280
s 129(7) — 278
s 130(1)(a) — 278
s 130(1)(b)-(c) — 279
s 130(2)-(4) — 278
s 130(5)(a)-(c) — 278
s 130(6)(a) — 279, 284
s 131(1) — 279
s 131(2)(a)-(b) — 279
s 131(3) — 279
s 131(4) — 276, 279
s 131(4)(b) — 241, 279
s 131(5) — 279, 284
s 131(6) — 241, 279
s 131(7) — 241, 280
s 131(8) — 280
s 131(8)(a)-(b) — 279
s 132(1)-(2) — 280
s 132(2)(b) — 245
s 132(2)(c)(i) — 245
s 132(2)(c)(ii) — 291
s 132(3) — 285
s 133(1) — 281
s 133(1)(a)-(f) — 281
s 133(2)-(3) — 281
s 134(1)(a) — 281
s 134(1)(b) — 282
s 134(1)(c) — 281
s 134(2) — 281
s 134(3)(a)-(b) — 281
s 135(1) — 289-290
s 135(2) — 289
s 135(3) — 285, 290
s 135(3)(a) — 290
s 135(3)(b) — 289
s 135(4) — 285, 290
Page xl
s 136 — 282
s 136(1)(a)-(b) — 282
s 136(2)(a)-(b) — 282
s 136(2A)(c) — 282
s 136(3) — 282
s 137(1) — 282
s 137(2) — 283
s 137(2)(c)-(d) — 283
s 137(3)-(5) — 283
s 138 — 277
s 138(1)(a)-(c) — 284
s 138(1)(d) — 68, 284
s 138(1)(e)-(f) — 284
s 138(3) — 284
s 139(1)-(3) — 284
s 140(1)(a) — 282, 284
s 140(1)(b) — 284
s 140(2) — 284
s 140(3)(a)-(c) — 285
s 140(4) — 259, 285
s 141(1) — 286
s 141(2)(a)-(c) — 286
s 142(1)-(3) — 283
s 142(4) — 285
s 143(1)-(4) — 285
s 144(1) — 288
s 144(1)(a)-(b) — 287
s 144(2) — 287-288
s 144(3) — 287
s 144(3)(c) — 287
s 144(4)(a)-(b) — 287
s 145(3) — 288
s 145(4)(a)-(b) — 288
s 145(5)(a)-(c) — 288
s 145(6) — 288
s 146 — 288
s 147(1) — 289
s 147(3) — 289
s 148(1)-(2) — 289
s 149(1)(a)-(c) — 289
s 149(2) — 289
s 150(1)-(2) — 290
s 150(2)(a)(ii) — 287
s 150(2)(b)(v) — 287
s 150(2)(c)(iv) — 290
s 150(3) — 290-291
s 150(4)-(5) — 290
s 151(1) — 290
s 151(2) — 290
s 152(1)(a)-(c) — 290
Page xli
s 152(1)(d) — 291
s 152(2) — 291-292
s 152(3)(a)-(c) — 291
s 152(4)-(5) — 291
s 152(6)(a)-(b) — 291
s 152(7)-(8) — 291
s 153(1)(a) — 292
s 153(1)(b)(i) — 292
s 153(1)(b)(ii) — 287-288, 292
s 153(3)-(5) — 292
s 154(1)-(2) — 291
s 155(1)-(6) — 292
s 155(7)(a)-(b) — 292
s 155(8)(a)-(c) — 293
s 155(9) — 293
s 163 — 251
s 224(3) — 240
Chapter 2, Part G — 249
Chapter 6 — 275, 280, 283, 287-288
Schedule 5
Item 9 — 268
Item 9(1) — 240, 266
Item 9(2) — 240, 249
Item 9(3) — 268
Item 9(4)(a) — 240
Compensation for Occupational Injuries and Diseases Act 130 of 1993
— 74, 191
s 32(1)(b) — 74
Constitution of the Republic of South Africa 200 of 1993
s 11(1) — 161
s 13 — 161
Chapter 3 — 161
Constitution of the Republic of South Africa, 1996
— 13, 165
s 2 — 13
s 7 — 13
ss 8-12 — 13
s 12(1)(b) — 165
s 13 — 13
s 14 — 13, 165
ss 14-25 — 13
s 25(1) — 157
ss 26-31 — 13
s 32 — 13, 165
ss 33-34 — 13
s 35 — 13, 150
ss 36-39 — 13
s 47(1)(c) — 68
s 62 — 68
s 106(1)(c) — 68
Schedule 6, Item 23 — 165
Page xlii
Contingency Fees Act 66 of 1997

s 2(1) — 136
Criminal Procedure Act 51 of 1977
s 297 — 234
— 298, 300-303
s 1(c) — 302
s 1(g)-(h) — 301
s 2(1) — 301-302
s 2(2)-(5) — 298, 301, 303
ss 3-6 — 301
ss 8-12 — 301
s 13(1)-(2) — 301
ss 14-15 — 301
s 16(3) — 301
s 17 — 301
s 19 — 302
s 19(1) — 302
s 19(4) — 302
s 20(1) — 302
s 20(1)(d) — 302
s 20(2)-(4) — 302
s 21 — 302
s 21(2)-(3) — 302
ss 22-23 — 302
s 23(2) — 302
s 24 — 302
s 25 — 303
s 25(1) — 302
s 25(2) — 303
ss 26-27 — 303
s 28(1)-(2) — 303
s 29 — 303
s 29(a)-(c) — 303
ss 30-32 — 303
Customs and Excise Act 91 of 1964
— 191
s 114(1) — 176
E
Estate Agents Act 112 of 1976
— 69
s 27(a)(ii) — 69
s 32(8) — 76
F
Financial Institutions (Protection of Funds) Act 28 of 2001
s 1 — 76
s 4(5) — 76
Financial Markets Control Act 55 of 1989
— 177
s 1 — 177
Friendly Societies Act 25 of 1956
s 48A(1)-(2) — 77
Page xliii
G
s 5 — 82
General Pensions Act 29 of 1979
s 3 — 73
I
— 191
— 12
s 150(2) — 20
— 12, 24, 26-28, 31, 50, 72, 81, 95, 106, 108, 111, 117-118, 120, 129-130, 139-140,
143, 148, 153, 159, 175, 178, 184, 186, 188-189, 205, 221, 225-226, 229, 231-234,
257, 269
s 2 — 3, 6-7, 19, 57, 66, 70-71, 79, 88, 138-139, 142, 150, 154, 177, 182-184, 221,
231, 234, 240
s 3(1) — 6, 17-18, 230
s 3(2) — 18, 221-222
s 3(3) — 30
s 4 — 20
s 4(2)(a) — 21
s 4(2)(b)(i) — 21
s 4(2)(b)(ii)(aa)-(bb) — 22
s 4(2)(b)(iii) — 22
s 4(3) — 24, 40
s 4(4)-(6) — 24
s 5(1) — 25
s 5(2) — 25, 26
s 6 — 40
s 6(1) — 18, 30
s 6(2) — 26
s 7 — 40
s 7(1)-(2) — 26
s 8(a) — 36
s 8(b) — 36-39
s 8(c) — 39
s 8(d)-(e) — 40
s 8(f) — 26, 40-41
s 8(g) — 41-42, 46
s 8(h) — 42
s 9(1) — 17, 33-35, 49, 229
s 9(2) — 34
s 9(3) — 49-51
s 9(3)(a) — 49
s 9(4) — 49, 51
s 9(4A)(a) — 40, 53-54
s 9(4A)(a)(i)-(iii) — 52
s 9(4A)(a)(ii)(aa)-(bb) — 53
s 9(4A)(a)(iv) — 52
s 9(4A)(b) — 53
s 9(5) — 51, 54
s 10 — 53-54
Page xliv
s 10(c) — 222-223
s 11(1) — 54
s 11(2) — 55
s 11(2A)(a)-(c) — 55
s 11(3)-(4) — 56
s 12 — 53
s 12(1) — 33
s 12(1)(c) — 43
s 12(2) — 57
s 13 — 222
s 13(1)-(3) — 222
s 14(1) — 51
s 14(2) — 58
s 14(3) — 196
s 15 — 58
s 16(1) — 106
s 16(2)(a)-(b) — 168
s 16(3) — 81
s 16(5) — 81, 168
s 17(1)(a)-(b) — 105
s 17(2) — 105
s 17(3)(a)-(b) — 105
s 17(3)bis — 105
s 17(4) — 105
s 18(1) — 107-108
s 18(2) — 108
s 18(3) — 88, 109, 149
s 18A — 108
s 18B(1)-(3) — 133
s 19 — 131
s 19(1) — 106
s 19(1)bis — 106
s 19(2) — 106
s 19(3)(a)-(b) — 107
s 19(4) — 107
s 20 — 81, 302
s 20(1)(a) — 70
s 20(1)(b) — 100
s 20(1)(c) — 101, 254
s 20(1)(d) — 101
s 20(2) — 71
s 21 — 13, 72, 79-81, 106, 302
s 21(1) — 79, 180, 230
s 21(2) — 79, 181
s 21(2)(a)-(c) — 82
s 21(2)(d)-(e) — 83
s 21(3) — 180-181
s 21(4) — 84
s 21(5) — 85, 114, 181
s 21(6)-(8) — 85
Page xlv
s 21(9) — 114
s 21(10) — 81
s 21(11) — 85
s 21(12) — 84
s 21(13) — 80
s 22 — 86, 133
s 23 — 100, 302
s 23(2) — 63-64
s 23(3) — 65-66
s 23(3)bis — 66
s 23(4) — 169
s 23(5) — 28, 44, 63, 72-73, 169, 217
s 23(6) — 64, 66
s 23(7) — 64-66, 73
s 23(8) — 64-66, 73-74
s 23(9) — 64-66, 72
s 23(10) — 66
s 23(11) — 73
s 23(12) — 168
s 23(13)-(14) — 169
s 24(1) — 65
s 24(2) — 71
s 25(1) — 217
s 25(2) — 71
s 25(3) — 77, 217
s 25(4) — 77-78, 217
s 26 — 83, 140-142, 151, 153
s 26(1) — 140-141
s 26(1)(a)-(b) — 140
s 26(2) — 139, 142
s 27 — 82, 151
s 27(1)-(2) — 142
s 28 — 151
s 29 — 140-143, 147, 151, 153, 286
s 29(1) — 142-143, 300
s 30 — 140-141, 147, 151, 153, 286, 300
s 31 — 140, 151, 153, 286
s 31(1) — 147
s 31(2) — 147, 153
s 31(3) — 147
s 32 — 149-150
s 32(1) — 149-150
s 32(2) — 150
s 32(3) — 151
s 33(1) — 151
s 34 — 157
s 34(1) — 42, 153-155, 157
s 34(2) — 42, 154
s 34(3) — 157-158
s 34(4) — 154
Page xlvi
s 35 — 88
s 35A — 97, 282
s 35A(1)-(4) — 98
s 35A(5) — 153
s 35B — 98, 282
s 35B(1)-(3) — 98
s 35B(4) — 153
s 36 — 91
s 36(1) — 91
s 36(4) — 91
s 37 — 89
s 37(1)-(4) — 89
s 37(5) — 99, 174
s 38 — 190
s 38(1) — 91
s 38(2)(a)-(b) — 91
s 38(4) — 91
s 38(5)-(7) — 91-92
s 38(8) — 92
s 38(9)(a) — 92
s 38(10) — 92
s 38(10)(a) — 91
s 38(11) — 92
s 39(1) — 111
s 39(2)-(4) — 113
s 39(5) — 111
s 39(6) — 111, 113
s 40 — 204
s 40(1)-(2) — 111
s 40(3) — 198
s 40(3)(a)-(c) — 111
s 41 — 112, 159, 204
s 42(1)-(2) — 112
s 43 — 113
s 44 — 114, 177-178, 190, 205
s 44(1) — 113-114
s 44(3) — 116-117
s 44(4) — 115, 178, 183
s 44(5) — 116
s 44(6) — 115
s 44(7) — 116-117
s 44(8)-(9) — 116
s 45(1)-(2) — 117
s 45(3) — 118, 197
s 47 — 178-179
s 48 — 119
s 48(a) — 119, 121
s 48(b) — 119
s 49(1)-(2) — 224
s 50(1) — 119
Page xlvii
s 50(2) — 120
s 52(1)-(4) — 121
s 52(5) — 121, 205
s 52(6) — 121
s 53(1) — 121
s 53(2) — 121-122
s 53(2)(a)-(e) — 122
s 53(3)-(4) — 122
s 53(5) — 137
s 54(1)-(2) — 123
s 54(3)(a)-(b) — 123
s 54(4) — 121
s 54(5) — 32, 59, 70
s 55 — 126
s 55(a) — 68
s 56(1) — 123
s 56(2)-(3) — 124
s 56(4) — 125
s 56(5) — 124-125
s 57(1)-(2) — 125
s 57(5) — 124-125
s 57(6) — 124
s 57(7)-(10) — 125
s 58 — 126
s 58(a) — 68
s 59 — 125-126
s 60-61 — 127
s 62(1)-(2) — 127
s 63(1) — 26, 107, 109, 127-129, 159
s 63(2) — 129
s 64(1)-(3) — 160
s 65 — 162-163
s 65(1) — 159, 161-162
s 65(2) — 162-163
s 65(2A) — 163-164, 233
s 65(2A)(a)-(b) — 163
s 65(3)-(4) — 162
s 65(5) — 163, 233
s 65(6) — 162
s 65(7) — 161
s 65(8) — 160
s 66(1) — 164
s 66(2) — 164-165
s 66(3) — 13, 161, 164-165
s 66(4)-(6) — 164
s 67(1) — 165
s 68(1) — 233
s 68(2) — 113
s 69 — 131
s 69(1) — 97, 131
Page xlviii
s 69(2) — 131-132
s 69(3) — 131-132
s 69(4) — 131
s 70 — 26
s 70(1)(a)-(c) — 135
s 70(2)-(6) — 135
s 71(1)-(2) — 134
s 72 — 126
s 72(1) — 135
s 73(1) — 136
s 73(1)(b) — 136
s 73(2) — 136-137
s 73(3) — 136
s 73(5) — 137
s 75 — 302
s 75(1) — 100
s 75(2) — 118
s 77 — 86, 133
s 78(1) — 133
s 78(2) — 137
s 78(3) — 118-119
s 79 — 133
s 80(1) — 133-134
s 80(2) — 134
s 80bis(1)-(2) — 176
s 81 — 88
s 81(1) — 134-135, 207
s 81(1)(a)-(i) — 135
s 81(1)bis(a)-(b) — 136
s 81(2) — 134, 233
s 81(3)(a)-(c) — 136
s 81(4) — 135
s 82 — 175
s 82(1) — 174-176
s 82(2)-(5) — 175
s 82(6) — 43, 72, 174
s 82(7)-(8) — 175
s 83 — 115, 121, 131, 177-179, 226-227
s 83(1)-(3) — 177
s 83(5) — 115, 177
s 83(6) — 178-179
s 83(7)-(8) — 178
s 83(8)(a)-(d) — 177
s 83(9) — 177-178
s 83(10) — 115, 177-179
s 83(11) — 178, 180, 195
s 83(12) — 192
s 83(13) — 181
s 84(1) — 23, 95-97, 186
s 84(2) — 97
Page xlix
s 85(2) — 185
s 85(2)(a)-(d) — 185
s 88 — 184
s 89 — 187, 226
s 89(1) — 94, 129, 186, 195
s 89(2) — 183, 192, 195
s 89(3) — 119, 187
s 91 — 133, 193, 196
s 92(1)-(3) — 194
s 92(4) — 194, 196
s 92(5) — 194, 224
s 93 — 193, 195
s 94 — 195
s 95 — 188
s 95(1) — 187
s 96 — 184, 188
s 96(1) — 188
s 96(2)-(3) — 189
s 96(4) — 187
s 97 — 19, 184, 188, 195
s 97(1)-(2) — 189
s 97(2)(c) — 26, 107, 109, 129, 133
s 97(3) — 31, 58
s 98 — 184, 188
s 98(1)-(2) — 189
s 98A — 184, 190, 287
s 98A(1) — 190
s 98A(1)(a) — 190
s 98A(1)(a)(i)-(iv) — 190
s 98A(1)(b) — 190
s 98A(2)(a)-(b) — 190
s 98A(2)(d) — 190
s 98A(3) — 190
s 98A(4)(a)-(c) — 190
s 98A(6) — 190
s 99 — 188
s 99(1)-(2) — 191
s 100 — 188
s 101-102 — 184, 188, 191
s 103(1)(a)-(b) — 192
s 103(2) — 187, 192
s 104(1) — 114
s 104(2) — 114, 149
s 104(3) — 149
s 105 — 188, 196
s 106 — 114, 188, 195-196
s 106(a) — 196
s 106(b) — 122, 196
s 107 — 188, 194
s 108(1)-(5) — 198
Page l
s 109(1) — 197
s 109(1)(a)-(b) — 197
s 109(2)-(3) — 197
s 110(1) — 196
s 111(1)-(2) — 198
s 111(2)(a)-(b) — 198
s 112 — 118, 150, 198-199
s 113(1)-(3) — 199
s 114(1)-(2) — 199
s 116 — 230
s 116bis — 135
s 116bis(1)-(2) — 130, 197
s 117 — 135
s 118(1) — 199
s 119 — 203-207
s 119(1)-(4) — 204
s 119(5) — 112, 204
s 119(6) — 204
s 119(7) — 121, 205
s 119(8) — 205
s 120(1) — 206
s 120(2) — 206, 217
s 120(3) — 206
s 121(1)-(2) — 223
s 122 — 206
s 123(1)-(2) — 206
s 124(1) — 207, 209, 211
s 124(2) — 209, 211, 213
s 124(2)(a)-(b) — 209
s 124(2)(c) — 209, 213
s 124(3) — 71, 210
s 124(3)(a) — 211
s 124(4) — 212
s 124(5) — 210-211, 213
s 125 — 212, 214
s 126 — 212
s 127(1)-(2) — 214
s 127(3) — 215
s 127(4) — 216
s 127A(1)-(4) — 208
s 128 — 224
s 129(1) — 217
s 129(1)(b) — 5
s 129(2)-(3) — 217
ss 130-131 — 207, 217
s 132 — 210, 234
s 132(a)-(b) — 234
ss 133-134 — 210, 234
s 134(1) — 234
s 135 — 234
Page li
s 135(1) — 234
s 135(3) — 234
s 136 — 234
s 136(a) — 169
s 136(b)(i) — 168-169
s 136(b)(iv) — 169
s 136(c) — 169
s 137 — 234
s 137(a) — 234
s 137(b) — 234-235
s 137(c) — 66, 234
s 137(d) — 234
s 138 — 234
s 138(b) — 134, 169
s 138(c) — 169
s 139 — 161, 234-235
s 139(1) — 161, 234
s 140 — 170, 234
s 141 — 207, 217, 234-235
s 142 — 107, 234-235
s 143 — 234
s 143(1)(a)-(c) — 232
s 143(2) — 232
s 144 — 234-235
s 145 — 145, 234-235
s 146 — 233
s 147(1)-(2) — 231
s 149 — 8
s 149(1) — 7-8, 21
s 149(1)(a)-(b) — 7
s 149(2) — 31-32, 59
s 150 — 59
s 150(1) — 31, 59
s 150(3) — 31
s 150(5) — 31
s 151 — 10, 72, 108, 119, 128, 166, 264
s 152 — 166
s 152(2)-(4) — 165
s 152(5)-(7) — 166
s 153(1) — 9
s 154(1) — 9
s 154(2) — 232
s 154(3)-(4) — 233
s 156 — 74, 87
s 157 — 10
s 157(1) — 10-11, 21
First Schedule
Annexure I — 22
Annexure II — 22
Annexure III — 22-23
Page lii
Annexure IV — 23
Annexure V — 23
Annexure VI — 23
Annexure VIII — 23
Form A — 20
Form B — 22, 81, 168
Form C — 115
Form D — 115
Second Schedule — 115
Tariff B — 128, 187
Third Schedule — 187
para 4 — 9
Insurance Act 27 of 1943
— 83
s 44 — 13, 83
s 44(1)-(2) — 83
L
Labour Relations Act 66 of 1995
s 189 — 29, 53, 282
s 189A — 282
s 197A(2) — 92
s 197B(2) — 29, 53
Land and Agricultural Development Bank 15 of 2002
s 1 — 68
s 10(e) — 68
s 30 — 188
Land Reform (Labour Tenants) Act 3 of 1996
— 77
s 39(c) — 77
Law No 1 of 1865 (Natal)
— 221-222
Liquor Act 27 of 1989
s 118(a) — 71
Liquor Act 59 of 2003
s 1 — 69
s 11(2)(b) — 69
s 17(1) — 69
s 17(2) — 69
Local Government: Municipal Systems Act 32 of 2000
s 118 — 226
s 118(3) — 187
Long-term Insurance Act 52 of 1998
— 83
s 63(1) — 75-76
s 63(1)(a) — 75-76
s 63(1)(b) — 76
s 63(2)(a)-(b) — 75
s 63(3) — 76
Page liii
M
Magistrates’ Courts Act 32 of 1944
— 7, 101
s 29(1)(fA) — 270
s 70 — 25
s 74 — 41
Marriage Act 25 of 1961
— 80
Matrimonial Property Act 88 of 1984
— 76
s 3(2) — 76
s 17(4) — 18
s 17(4)(b) — 49
s 17(5) — 6
s 22 — 82
Mental Health Act 18 of 1973
— 126
N
National Credit Act 34 of 2005
— 23, 30-31, 42, 68, 91, 96, 188
s 1 — 95-96
s 20(2)(a) — 68
s 20(2)(c) — 68
s 46(2) — 68
s 46(4)(a) — 68
s 86(7) — 31
s 129(b) — 5
National Payment System Act 78 of 1998
— 98
National Supplies Procurement Act 89 of 1970
— 191
Notarial Bonds (Natal) Act 18 of 1932
— 177
s 1 — 184
O
Occupational Diseases in Mines and Works Act 78 of 1973
— 191
s 131(1) — 74
Ordinance 64 of 1829 (Cape)
— 12
Ordinance 6 of 1843 (Cape)
— 12
Ordinance of Amsterdam, 1777
— 12
P
Prescription Act 68 of 1969
— 281
Prevention of Organized Crime Act 121 of 1998
s 35(2)(a)-(b) — 153
Chapter 5 — 154
S
Sectional Titles Act 95 of 1986
— 7, 93
s 1 — 93
s 15B(3)(a)(i)(aa) — 186
Securities Services Act 36 of 2004
s 1 — 76, 97
s 10 — 97
Page liv
s 27 — 76
s 27(3) — 76
s 27(5) — 76
s 66 — 97
s 117 — 177
Security by Means of Movable Property Act 57 of 1993
— 184, 188
s 1 — 177, 184
s 2 — 188
s 1(3) — 191
Ship Registration Act 58 of 1998
s 31 — 184
s 31(5) — 184
Sheriffs Act 90 of 1986
s 22(3) — 76
Special Partnerships Limited Liability Act 24 of 1861 (Cape)
— 221-222
Subdivision of Agricultural Land Act 70 of 1970
— 93
s 1 — 93
Supreme Court Act 59 of 1959
s9 — 8
s 19(1)(a)(iii) — 59
s 20(4) — 59
T
Trust Property Control Act 57 of 1988
s 12 — 76
s 20(2)(c) — 69
U
Unemployment Insurance Act 30 of 1966
s 6 — 190
Unemployment Insurance Act 63 of 2001
s 33 — 74
Unemployment Insurance Contributions Act 4 of 2002
— 191
V
Value-Added Tax Act 89 of 1991
— 191
Notices, Rules and Regulations

Cape Court Practice Note 5
— 29
Regulation 124 — 279
Page lv
Insolvency Act 24 Of 1936

Regulation 3(1) — 118
Form 6 — 211
Magistrates’ Courts Rules
Rule 62(1)(b) — 67
Uniform Rules of Court
— 150
Rule 6(2) — 52
Rule 6(5)(a) — 52
Page 533
Index
A
absence from Republic or dwelling — 36
accrual system — 76
accrued right of cancellation — 91
action Pauliana — 148-149
acts of insolvency — 35-36
administration of estates, see also insolvent
deceased estates
partners and partnership — 224
affective persons, rights of
business rescue — 286-288
creditors — 287-288
employees — 286-287
security holders — 288
affidavit — 21-23, 27-30, 42-43, 47-54, 56-57, 81, 84-85, 115-116, 136, 168-169, 177,
190, 192, 194, 197, 212-215, 250, 252
agent
authorized — 37, 135
offences — 232
alienation — 65, 81, 93-95, 139, 174, 187
antenuptial contract — 142
application for compulsory sequestration
anticipation of return day — 56
applicant entitled to apply in terms of s 9(1) — 34-35
copies to debtor — 51-53
filing of — 51
final sequestration — 57
form and content — 48-50
intervention by another creditor — 56
Master’s records and report — 51
opposition to — 56
provisional — 53-55
security for costs — 51
service of rule nisi — 55-56
steps prior to adjudication — 51-53
application for rehabilitation
adjudication on — 214
composition — 213
form and content — 212-213
lapse of time — 213
Master’s report — 214
no claim proved — 213
payment in full — 214
application for voluntary surrender
adjudication on — 29-30
copy to consulting party — 29
filing of at court — 29
forms and contents — 27-28
arbitration, submission of disputes by trustees — 137
arrear interest — 119
assets, see also realization of general estate assets; realization of particular assets
delivery of by insolvent — 168
encumbered, see encumbered assets
interdict to prevent dissipation — 132
and liabilities — 5
new after sequestration — 65
trustee taking charge of — 131-133
unencumbered, see unencumbered assets (free residue)
vesting in trustee — 79-82
association of persons — 6-7
attachment of property — 23, 38, 47, 71, 74, 105-107, 150, 188-189, 235, 255
auction, public — 174-175
B
bank accounts — 259
bedding — 72
Bill of Rights — 13
binding agreements — 63
body corporate — 6-7, 258
Bond Market Association — 98
bonorumdistractio — 12
bonorumemptio — 12
breach in procedure — 11
business rescue
commencement of — 277-280
compromise with creditors — 292-293
compulsory — 279-280
contracts — 282
directors — 282-283
duration — 280
Page 534
effect of — 280-283
employees and — 286-287
employment contracts — 282
financing during proceedings — 289-290
investigation of affairs of company — 286
legal proceedings — 280-281
meetings and committee — 289
no reasonable prospect of — 245
property interests — 281-282
purpose of — 275-277
right of ‘affected person’ — 278-279, 286-288
shareholders — 282
termination of — 245
voluntary — 277-279
business rescue plan
content — 290
implementation — 291
meeting to consider — 290-291
non-adoption — 291-292
publication — 290
vote on — 290-291
business rescue practitioner
appointment — 284
functions and duties — 284-285
qualification — 283-284
removal and replacement — 284
remuneration — 285
C
capital, loss of — 242
capitis diminutio (reduction in status) — 63
caveats, entry of — 105-106
cession bonorum — 12
cession in securitatem debiti — 185
civil actions — 25
claim/s
concurrent — 88-90, 93, 95, 100, 119, 156, 182-186, 192, 207, 209, 288
of concurrent creditors — 184, 186, 192
full payment and rehabilitation — 210
liquidated — 34-35, 115, 247
preferent — 89, 94, 113, 179, 186, 190, 255, 287
ranking of — 186-192
secured — 187-188
claim documents
adjudication by presiding officer — 116-117
attendance by creditor — 116
disputed — 118-119
interrogation of creditor — 116
review of decision — 119
time and place lodged — 115-116
trustee’s examination — 117-118
unliquidated — 115, 264
which documents must be lodged — 115
claims, proof of
necessity for — 113-114
partnership — 223-224
procedure for — 114-119
time for — 114
winding-up — 257
close corporation
realization of assets — 176-177
winding-up, see winding-up of close corporations
collusion, potential for — 46
collusive disposition — 147-148
commissioner of oaths — 28, 115
committees, business rescue — 289
common-law
compromise — 204
cross-border insolvency — 298-300
company, winding-up of, see winding-up of companies
compensation
for defamation or personal injury — 73-74
for occupational injuries or diseases — 74
Compensation Commissioner — 191
competing courts — 8-9
compliance notice, failure to comply — 246
composite contract — 88
composition
by partner — 205, 223
by partnership — 205, 223
statutory — 203
composition, offer of
acceptance of — 205
concurrent creditors bound — 206
consequences of — 206-207
creditors via trustee — 204-205
illegal inducement to accept — 207
liquidation of corporation — 273-274
rehabilitation — 209-211
restoration of property — 205
terms of — 205
trustees and — 206-207
compromise
business rescue and — 292-293
Page 535
common-law — 203-204
of cross-border insolvency — 299-300
compulsory sequestration
application — 48-57
costs of proceedings — 58
description — 17
discretion of court — 57-58
notice of surrender and — 26
partnership estate — 222-223
potential — 26
requirements — 33-48
setting aside — 59
unwarranted or vexatious proceedings — 58-59
concurrent claim — 88-90, 93, 95, 100, 119, 156, 182-186, 192, 207, 209, 288
concurrent creditors — 182-183, 192, 206
concursus creditorum — 4, 87, 98-100, 210, 225, 254
conditional debts — 119-120
condonation of irregularities — 10-11
consortium (marital companionship), loss of — 73
Constitutional Court — 13, 80, 101, 150
consulting party — 29
contingent creditors — 23, 247
contingent interests in property — 71
contract of mandate (mandatum) — 92-93
contracting — 63-65
contracts
acquiring immovable property — 88
business rescue — 282
cancellation on insolvency — 98-99
completed by insolvent but not by other party — 86-87
consequences of abiding by — 90-91
consequences of repudiating — 89
continuance of — 87
continued use of insolvent’s property — 99
direct payment of insolvent’s subcontractors — 99
employment — 91, 282
hire of property — 88-89
informal market agreement — 98
instalment agreements — 95-97
lease of immovable property — 93
mandate — 92-93
partnership — 64, 66
not completed by insolvent — 87
not prohibited — 64-65
prohibited — 63-64
protection of solvent party — 98-100
resale of immovable property not yet acquired — 95
reservation of ownership until full payment — 98
sale of goods on instalments — 95
sale of land on instalments — 93-95
set-off on insolvency — 99-100
suspended on sequestration — 91-93
terminated on sequestration — 91-93
transaction on exchange — 97-98
trustee cannot repudiate — 93-95
trustee’s election — 87-89
uncompleted — 86-100
vesting of insolvent’s property — 99
contractual capacity — 63
contractual claim — 34
contractual rights — 65
contribution
and distribution plan — 196
form of plan — 196
liability to contribute — 195-196
plan of — 195-196
contumelia (insult) — 73
costs
compulsory sequestration — 58
encumbered assets — 186-187
entitlement to — 68
execution — 189
security for — 51, 67-68, 249
sequestration — 189
surrender — 31
creditors
advantage of — 43-45
attendance of meetings — 116
concurrent — 182-183
contingent or prospective — 21, 247
disposition in fraud of — 148
disposition prejudicing creditors — 39
interrogation of — 116
intervention by another — 56
liquidator’s report — 261
meetings — 110-113
notice of surrender — 21
preferent — 183-184
realization of security — 177-178
ranking of claims — 186-192
rights of and solvent spouse’s property — 85
Page 536
secured — 183
security not realized by — 178
trustee’s report to — 135-136
types of — 182-185
voting and resolutions — 121-122
winding-up of companies by — 247, 252-253
criminal prosecutions — 25, 145-146, 169, 232
cross-border insolvency
definition — 297
legislation — 300-303
main problems — 297-298
South African common law — 298-300
curator — 12, 26
curator bonis — 25-26, 107
D
damages
general — 73
special — 73
deadlock in management of voting — 244-246, 249
death-bed expenses — 184, 187-189
debt, inability to pay — 41-43
debtor
and creditor liens — 185-186
and estate — 7-8
in fact insolvent — 42-43
insolvent estate — 18-19
meaning of — 6-7
debts
conditional — 119
effect of order setting aside disposition on — 152-153
inability of company to pay — 242
payable after sequestration — 120
recovery of — 133
deceased debtor — 18
deceased estate, see insolvent deceased estates
deceased person — 7
declaratory order regarding property — 217
defamation — 73
delictual claim — 34
deregistration
of company — 268
of corporation — 274
Desolate Boedelkamers — 12
Director of Public Prosecutions — 135, 165, 261, 264-265
directors
winding-up — 254
discretion of court — 30-31, 57-58
discrimination — 80, 92
disposable property — 36-38, 243
disposition
beneficiary’s right to share in estate — 142
collusive — 147-148
exemptions — 152
in fraud of creditors — 148
impeachable — 138-158
made not for value — 140
meaning of — 138-140
no intention to prefer — 143, 145
order setting aside, see disposition order, setting aside of
prejudicing creditors — 39
setting aside — 140
suretyship — 139
transfer of business, see transfer of business
uncompleted — 139
undue preference — 145-147
voidable, see voidable disposition, setting aside of
voidable preference — 142-145
what must be proved — 140-143, 145-147
disposition of property
actual — 39
ANC, in terms of — 142
attempted — 39
in course of business — 143-145
effect of — 39
exemptions — 142
prejudicing creditors — 39
disposition order, setting aside of
effect on underlying debt — 152-153
execution on court’s judgment — 151
indemnity to bona fide recipient — 151-152
recovery of property alienated — 151
dissolution
of company — 243, 268
of corporation — 274
distribution
account, see liquidation account
of assets — 262
Page 537
collection of contributions — 199

and contribution plan — 196
of estate — 199
insolvent deceased estate — 228
payment of dividends — 199
plan of — 195
dividends, payment of — 199
divorce — 6, 35, 66, 81
documents
trustee taking charge of — 131-133
domicile or property within jurisdiction — 7-8
dominus litis — 56
E
employees
notice of surrender — 21-22
offences — 232
salary or remuneration — 184, 190
employment contract — 91-92, 282
encumbered assets
immovable property — 187
initial costs — 186-187
liquidation account and — 194-195
movable property — 187-188
secured claims — 187-188
enrichment liens — 185-186
entity — 6-7
estate
acquisition during insolvency — 78
administration — 69, 224
collection of assets — 5
disposal of property by insolvent — 77
distribution of — 228
meaning of — 5-6
preservation of pending trustee’s appointment — 105-109
property falling into — 71-72
property not falling into — 72-77
records — 232
representative and offences — 232
separate administration of — 224
sequestration of deceased — 229-230
sequestration of solvent spouse’s — 85
surplus in either — 224
vesting in trustee — 70-71
estate accounts
combined plan of contribution — 196
confirmation of — 198-199, 228
distribution of estate — 199
examination by Master — 197
failure to submit — 197
form of — 227
inspection by interested parties — 198, 227
insolvent deceased — 227-228
liquidation account — 194
objections to — 198, 228
plan of contribution — 195-196
plan of distribution — 195
supplementary — 228
time for lodging — 227
time to be submitted — 196-197
trading account — 195
estate bank account — 135
evidence
setting aside voidable dispositions — 150
evidence and offences
certificate by Master — 233
estate records — 232-233
income tax returns — 233
interrogation — 233
proof of liability — 233
record of meeting — 233
exchange
rules of — 153
transaction on — 97-98
execution, costs of — 189-190
external company
dissolution of — 243, 247
F
factual insolvency — 42
failure
to apply for surrender — 40-41
to comply with compliance notice — 246
to satisfy judgment — 36-39
fideicommissary heir or legatee — 71, 139
final sequestration — 57
foreign company — 7, 243
formal defect (irregularity) — 10-11
founding affidavit — 27, 29, 48, 50-52, 54, 212
fraud
disposition in of creditors — 148
illegality or misapplication of company assets — 246
free residue — 18, 19, 47, 50, 182-184, 186-192, 194-197
‘friendly’ sequestration — 45-48
friendly society moneys and assets — 77
Page 538
fundamental rights — 13,161

funeral expenses — 184, 187-188
future obligations — 35, 59
G
goods
ownership — 98
purchase of — 95-97
reservation of ownership until full payment — 98
sale of — 95
subject to statutory lien — 176
transfer of — 156
H
High Court
Local Division — 7
Provincial Division — 7, 9, 51
history — 11-13
holding office — 68-69
hypothec
instalment agreement — 186
landlord’s legal — 185
I
illegal sale — 25
immovable assets — 22, 88
immovable property
held as security — 179
lease of — 93
resale — 95
secured claims — 187
impeachable dispositions — 138-158
impeachable transactions — 44, 229, 266
impossibility — 11, 96
inability to pay
of company to pay — 242
notice of — 41-42
transfer of business — 42-43
income tax
evidence — 233-234
unencumbered assets — 191
incorporeal assets — 37
incorporeal rights — 106
informal market, agreement on — 98
inheritance — 72, 139
iniuria — 73
injury to personality interests — 73
inquiry by Master of court — 264-266
insolvency
act of — 35-42
determination of — 225-226
law — 4-5, 12-13, 182, 229, 240, 261, 266, 287, 297-300
legal proceedings before — 100-101
meaning of — 3-4
procedure — 225-226
insolvent
contracting — 63-66
debtors — 42-43
definition — 3-4
holding position — 68-69
legal position — 63-69
legal proceedings, instituting and defending — 66-67
offences committed by — 234
unrehabilitated — 68-69
vesting of assets — 70-78
insolvent deceased estates
determining insolvency — 225-226
distribution of — 228
estate account — 227-228
sale of assets — 226-227
sequestration of — 229-230
insolvent, duties of
attending meetings — 270
delivery of assets — 168
delivery of records — 168
delivery of statement of affairs — 168
giving evidence — 170
informing trustee of addresses — 160
providing assistance — 168
providing information — 169
record of assets and disbursements — 169
instalment agreement
hypothec — 186
purchase of goods — 95-97
sale of goods — 95
sale of land — 93-95
insurance policies
covering liability to third parties — 74-75
life — 75-76
intangible property — 8
interim relief — 150
International Securities Lenders
Association — 98
International Securities Market
Association — 98
International Swaps and Derivatives
Association — 98
interrogation
of creditor by trustee — 116
evidence given at — 233
Page 539
failure to attend or submit to — 164-165

and inquiry — 165-167
by Master — 165-167
privilege — 162-164
procedure at — 162
revealing possible offence — 165
subject-matter of — 161
by trustee — 159-165
when and where may take place — 159-160
winding-up of companies — 264
who may be interrogated — 160-161
who may interrogate — 161
investments — 260
irregularities, condonation of — 10-11
J
joint estate of spouses, sequestration of — 5-6, 35, 49, 71, 80, 222, 229
joint trustees — 125
judgment debt — 11, 37, 101, 151
judicial management — 248, 266
judicial manager
duties — 248
jurisdiction
competing courts — 8-9
of the court — 7-9
over debtor and estate — 7-8
domicile or property within — 7-8
in litigation against third parties — 8
offences — 231
residence or business within — 8
setting aside of impeachable disposition — 150
winding-up by court — 241-242, 270
which court — 7
juristic person (universitas) — 6-7, 12-13, 221, 272, 298
L
labour tenant, right to land — 77
landlord’s legal hypothec — 185
land, right in land — 77
land, sale on instalments — 93-95
lawful income — 73
law of insolvency — 4-5, 12-13, 182, 229, 240, 261, 266, 287, 297-300
lease
of immovable property — 93-94
rights acquired from State in terms of — 176
legal advice to trustees — 136-137
legal grievance — 10, 258
legal proceedings
before insolvency — 100-101
instituting and defending — 66-68
trustees and — 136-137
lex Julia — 12
lex Poetelia — 11
liabilities
and assets — 5
to third persons — 74-75, 87
lien, statutory — 176
life policies — 75-76, 83
liquidated claim — 34-35, 115, 247
liquidation account
confirmation of account — 262
contents — 194
distribution of assets — 262
division into encumbered assets and free residue — 194-195
inspection — 272
preparation and lodging — 261
liquidator
appointment — 257-258, 270-272
duties, see liquidator duties
persons disqualified — 258-259
powers, see liquidator powers
provisional — 258
release of — 266
removal from office — 259
liquidator duties
bank account and investments — 260
distribution of assets — 262
exposure of offences — 260-261
general function — 259-260
investigation of personal liability of members — 272-273
liquidation and distribution account — 261
keeping records — 260
providing information — 260
report to creditors — 261, 271
liquidator powers
authority of members and creditors — 263-264
Master’s consent — 263
no permission required — 263
livelihood, earning a — 65-66
loss of capital — 242
Page 540
loss of consortium — 73
M
magister bonorum — 12
maintenance — 66, 74
malicious prosecution — 74
malpractice, potential for — 46
mandate — 92-93
market
informal, agreement on — 98
participant — 97-98
values — 19, 22, 42, 98, 143, 157
marriage
accrual system — 76
in community of property — 5-6, 18, 35, 49, 71-72, 80, 222, 229
out of community of property — 6, 72
release of solvent spouse’s property — 82-84
Master
application for winding-up by — 248
certificate of — 233
‘creature of statute’ — 9
examination of estate account — 187
functions and powers — 9-10
interrogation by — 165-167
liquidator’s powers requiring consent — 263
records and reports — 9, 29, 51, 249
removal of trustee — 126-127
review — 10
meetings of creditors
business rescue plan — 291
date and venue — 112
first — 111
general — 112
general provisions — 112-113
presiding officer at — 112-113
record of proceedings — 113, 233
second — 111
special — 111-112
statement privileged — 113
types of — 110-112
winding-up — 256-257, 271
mercantile law — 5
miner, benefits payable to — 74
Mines and Works Compensation Fund — 191
misapplication of money or property — 273
missio in possessionem — 11
Model Law on Cross-Border Insolvency (1997) — 298, 301, 303
mortgage bond — 25, 37, 39, 93-94, 115, 156-157, 177, 179, 184, 187
movable assets — 23, 43, 88, 185
movable incorporeal property — 185
movable property
secured claims — 187
movable property held as security
effect of non-compliance with Act — 178-179
notice that movable security held — 177
realization of security by creditor — 177-178
security not realized by creditor — 178
N
National Economic, Development and Labour Council (Nedlac) — 190
National Supplies Procurement Fund — 191
natural person — 6, 18, 221, 270, 298
notice
inability to pay — 41-42
movable security held creditor — 177
sequestration — 105-106
winding-up — 249-250, 256
notice of motion — 27, 29, 48, 51, 54, 212, 214
notice of surrender
compulsory sequestration and — 26
creditors — 21-22
effect of — 24-26
intention — 20-21
lapse of — 26
South African Revenue Service — 22
trade union and employees — 21-22
no withdrawal without consent — 26
nulla bona return — 37-38, 44-45, 49, 52
O
occupational injuries or diseases — 74
offences
employees and agents — 232
estate representative — 232
evidence — 232
exposure of — 260-261
jurisdiction — 231
partners — 224, 231-232
sentence — 234
offences, specific
by any person — 235
Page 541
by insolvent — 234
by trustee — 235
offer of arrangement — 40
office, holding of — 68-69
onus of proof — 83
opposition of application — 56
order of rehabilitation — 32, 209, 216
ownership in goods, reserving until payment — 98
P
partner’s estate, sequestration of — 223
partners
composition by — 223
offences — 224, 231-232
partnership
administration of estate — 224
composition by — 223
contract of — 66
proof of claims — 223-224
partnership estate
compulsory sequestration — 222-223
rehabilitation — 224
sequestration of — 221-224
surrender of — 22, 222
voluntary surrender — 24, 221-222
pension — 73
perishables — 108, 302
personal assets — 38
personal injury — 73-74
personal liability
of members — 272
and offences — 266-267
personal right — 7
pledge — 185
policies
liability to third parties — 74-75, 87
life — 75-76, 83
post-sequestration partnership — 64
powers of court — 250-251
preferent claim — 89, 94, 113, 179, 186, 190, 255, 287
preferent creditors — 183-184
prescription of claim — 151
private estate, surrender of — 22, 222
privilege — 162-164
procedure, breach in — 10-11
proceedings
brought/defended personally — 66-67
unwarranted or vexatious — 58-59
prohibited contract
effect of — 65
legal position of insolvent — 63-64
proof of claims
action to establish disputed claim — 118-119
adjudication on claims by presiding officer — 116-117
arrear interest — 119
attendance by creditor — 116
conditional debts — 119-120
debts payable after sequestration — 120
documents to be lodged — 115
examination of claim documents — 116
interrogation of creditor — 116
necessity for — 113-114
partnership and — 223
procedure for — 114-119
review on decision on — 119
time for — 114
time and place for lodging claim documents — 115-116
trustee’s examination — 117-118
property
attachment of — 106-107
benefits payable to miner — 74
continued use of insolvent’s — 99
contract to acquire immovable — 88
declaratory order — 217-218
disposal of estate by insolvent — 77-78
execution against debtor’s — 11, 25, 48
falling into estate — 71-72
hire of — 88-89
lease — 93
not falling into estate — 72-77
perishables — 108, 302
release by court — 84
release by trustee — 84
release procedure — 83-84
removal with intent to prejudice or prefer — 40
restoration of property — 206
sale of land on instalments — 93-95
vesting of insolvent’s — 99
wearing apparel, bedding — 72
property of solvent spouse
acquired by valid title — 82-83
acquired under marriage settlement — 82
categories to be released — 82-83
owned before marriage — 82
Page 542
property protected under certain provisions — 83

realization of — 180-181
property not released — 85
protected — 83, 98-100
sequestration of estate — 85
property rights, alienation or abandonment — 93-94, 138, 139
provisional liquidator, see liquidator
provisional or final judicial manager — 248
provisional order — 4, 35, 47, 52-57, 70, 79, 105, 204, 248, 250, 254, 263
provisional sequestration — 53-55
provisional trustee
appointment — 107-108
remuneration — 109
rights and duties — 108-109
Q
quasi-partnership — 244
R
realization of general estate assets
manner of — 174
public auction/tender — 174-175
sale in contravention of Act — 175
sale of assets — 176
trustee purchase of assets — 175
realization of particular assets
goods subject to statutory lien — 176
immovable property held as security — 179-180
interest in close corporation — 176
movable property held as security — 177-179
rights acquired from State — 176
realization of solvent spouse’s property — 180-181
receipt book — 134
reduction in status (capitisdiminutio) — 63
Registrar of Deeds — 77, 94, 105, 108, 133, 184, 208, 217
rehabilitation
application for — 212-214
automatic after 10 years — 208
circumstances in which may be sought — 209-210
composition of not less than 50 cents in rand — 209
by court — 208-217
effect of — 217
full payment of all proved claims — 210
laps of prescribed period — 209
no claims proved after 6 months — 210
notice of intention to apply — 210-212
partnership estate — 224
right to prompt — 207
rehabilitation at court’s discretion
grant subject to condition — 215-216
postponement of — 215
refusal of — 216
unconditional rehabilitation — 216-217
rehabilitation by court
application for — 212-214
circumstances — 209-210
declaratory order — 217-219
discretion of court — 214-217
illegal inducement not to oppose — 217
preliminary steps — 210-212
trustee’s report to Master — 212
release of property
by court — 84
by solvent spouse — 83-84
removal of property
intent to prejudice or prefer — 40
remuneration
of business rescue practitioner — 285
of close corporation members — 272
of employees — 184, 190
of trustee — 109, 128-129
for work done — 72-73
repudiation of contract — 89, 100
residence or business — 8, 37, 211, 301
resolutions of creditors
setting aside of — 122
restoration of property
to insolvent — 206
to insolvent’s spouse — 206
reversionary interest — 67
right
to compensation — 87, 89
in land — 77
of labour tenant to land — 77
to performance — 7, 86
to prompt rehabilitation — 207
of retention — 185-186
of review — 10
Roman-Dutch law — 12
Roman law — 11-12
rule nisi, service of — 55-56
Page 543
S
sale
of estate assets — 174-176, 226-227
of goods on instalments — 95
of land on instalments — 93-95
secured claims — 187-188
secured creditors — 183
security
conferring preference — 184-186
for costs — 51, 67-68, 249
not realized by creditor — 178
realized by creditor — 177-178
sentence — 234
sequestration
compulsory, see compulsory sequestration
cost of — 189
deceased estate — 229-230
final — 57
meaning — 3
methods of, see compulsory sequestration; voluntary surrender
partner’s estate — 223
partnership — 221-224
provisional — 53-55
sequestration order
advantage to creditors — 19-20, 43-45
costs of — 189
debts payable after — 120
purpose of — 3-5
rescinding order — 32
setting aside — 31-32, 59
service of order — 106-107
service of rule nisi — 55-56
set-off on insolvency — 99-100
share in accrual — 76
shareholders — 282
slavery (manusiniectio) — 11
solvent party, provisions to protect — 98-100
solvent spouse
duty to lodge statement of affairs — 81
meaning of — 80-81
postponement of vesting — 81-82
provisions to protect — 98-100
realization of — 180-181
release of property by court — 84
release of property by trustee — 82-84
rights of creditors — 85
sequestration of estate — 85
vesting of assets in trustee — 79-80
South African law — 12-13
South African Law Reform Commission — 13
South African Revenue Service — 22, 52, 55, 176, 191, 224, 233, 249, 257, 259
special mortgage — 184-185
special resolution — 242
statement of affairs
duty of solvent spouse — 81
lodging of — 24, 256
preparation — 22-24
winding-up — 256
statutory composition — 203
statutory lien — 176
statutory obligations of creditors — 191
stay of proceedings — 255
stay of sales in execution — 25
subcontractors of insolvent — 99
subordination agreement — 120
substantial compliance — 11, 53, 256
surety — 23, 35, 89, 120, 134, 139, 142, 152-153, 183, 204, 205, 206, 217, 247, 255,
274, 281, 293
surrender of estates, see also voluntary surrender
applicants — 28
T
tenders — 174-175
trader, definition of — 66, 154
trade unions — 21-22, 29, 52, 55, 56, 92, 249, 256, 278, 286-287, 289
trading account — 195
transactions
on exchange — 97-98
impeachable — 266
transfer of business
after proceedings instituted — 157-158
inability to pay debts after notice of — 42-43
without prescribed notice — 153-157
trust
property/funds — 76-77
trustee/s
absolute disqualification — 125-126
appointment — 123-124
composition, offer of and — 206-207
disqualification by court — 127
election of — 123, 127
election to perform in terms of contract — 87-88
Page 544
interrogation by — 159-165
joint — 125
objection to appointment — 125
offences committed by — 235
persons disqualified — 125-126
provisional, see provisional trustee
purchase of assets by — 175-176
recognition of foreign — 127
refusal to appoint — 124-125
relative disqualification — 124-125
removal from office by Court — 127
removal from office by Master — 126-127
remuneration — 128-129
resignation and leave of absent trustee — 127
solvent spouse, release of property by — 82-84
solvent spouse, vesting of assets of — 79-80
vacation of office — 126
vesting of estate in — 70-71
trustee duties and powers
assets and documents — 131-133
continuation of insolvent’s business — 133-134
estate bank account — 135
investigation of insolvent’s affairs — 134
legal advice and proceedings — 136-137
receipt book — 134
recovery of debts due to estate — 133
report to creditors — 135-136
submission of disputes to arbitration — 137
Twelve Tables — 11
U
undue preference — 145-147
Unemployment Fund — 190
unemployment insurance benefits — 74
Unemployment Insurance Fund — 190-191
unencumbered assets (free residue)
concurrent creditors — 192
costs of execution — 189
costs of sequestration — 189
death-bed expenses — 188-189
funeral expenses — 188
general or special bond — 191
income tax — 191
liquidation account — 194-195
salary/remuneration of employees — 190-191
statutory obligations — 191
unfair discrimination — 80
United Nations Commission on
International Trade Law (UNCITRAL) — 297-298, 301
universitasiuris — 12
unliquidated claim — 115, 264
unliquidated conditional claim — 120
unrehabilitated insolvent — 68-69
unwarranted proceedings — 58-59
V
valuation, independent — 24
vesting
of assets in trustee — 70-71
of assets of insolvent — 70-78
of estate in trustee — 70-71
insolvent’s property — 99
postponement of — 81-82
vexatious proceedings — 58-59
viva voce evidence — 55, 57
vocation, pursuing without consent — 66
voidable disposition, setting aside of
evidence — 150-151
interim relief — 150
jurisdiction of court — 150
prescription of claim — 151
time for bringing proceedings — 150
who may sue — 148-149
voidable preference — 142-145
voluntary surrender
advantage of creditors — 19-20
costs — 31
court’s discretion — 30-31
curator bonis, appointment of — 25-26
debtor’s estate insolvent — 18-19
description — 17
effect of notice to surrender — 24-26
formalities — 20-24
lodgement of statement of affairs — 24
notice of, see notice of surrender
partnership estate — 24, 221-222
preparation of statement of affairs — 22-24
requirements for — 18-20
setting aside of — 31-32
stay of sales in execution — 25
sufficient free residue — 19
who may apply — 18
Page 545
voluntary winding-up
close corporations — 270
companies — 252-253
conversion of into winding-up by court — 245
members — 252
voting of creditors
determination of — 121-122
entitlement — 121
questions on which may vote — 121
through agent — 122
W
warrant of execution — 243, 272
wearing apparel — 72
winding-up
alternatives to — 241
modes of — 241
winding-up by court
of close corporations — 270
of companies — 241-251
grounds for — 242-246, 270
jurisdiction — 241-242, 270
parties who may apply — 246-249
powers of court — 251
prior to application — 249-250
winding-up of close corporations
composition — 273-274
by court — 270
deregistration — 274
dissolution — 274
grounds for — 270
liquidator — 270-271
meetings of creditors and members — 271
misapplication of money or property — 273
payments by reason of membership — 272
personal liability of members — 272-273
report to creditors and members — 271
salary or remuneration of members — 272
setting aside payments to members — 271-273
voluntary — 270
winding-up of companies
business rescue and — 245
commencement of — 253-254
consequences of — 253-256
by court — 241-251
deadlock in management of voting — 245-246
deregistration — 268
directors divested of powers and control — 254
dissolution — 243, 268
failure to commence or continue business — 242
failure to comply with compliance notice — 246
fraud, illegality or misapplication of company assets — 246
impeachable transactions — 266
inability to pay debts — 242-243
insolvent company — 246-248
inquiry by Master or court — 264-266
interrogation and inquiry — 26
just and equitable — 243-245
liquidator — 257-264
lodgement of statement of affairs with Master — 256
loss of capital — 242
meetings — 256-257
notice of — 249, 256
parties who may apply — 246-249
personal liability and offences — 266-267
proof of claims — 257
release of liquidator — 266
solvent company — 248-249
special resolution — 242
staying of proceedings — 255-256
staying or setting aside — 267
subsequent unauthorized dispositions void — 254-255
when may be wound up by court — 242-246

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Page v

Part 2 Obtaining a sequestration order

Part 3 Effects of sequestration

Part 4 Collection of estate assets

Part 5 Realization and distribution of the assets

Part 6 Composition and rehabilitation

Part 8 Winding-up and rescue of companies and close corporations

Part 9 Cross-border insolvency

1.1 Meaning of ‘insolvency’

1.1 Meaning of ‘insolvency’

of ‘being sequestrated’ (Land- en Landboubank van Suid-Afrika v Joubert NO 1982 (3) SA

1.3 What may be sequestrated

1.3.1 Meaning of ‘estate’

1.3.2 Meaning of ‘debtor’

Gesamentlike Onderneming van SA Numismatiese Buro (Edms) Bpk en Vitaware

1.4 Jurisdiction of the court

1.4.2 Jurisdiction over a debtor and his estate

1.4.3 Jurisdiction in litigation against third parties

1.4.4 Competing courts—removal to another court

1.5 The master

1.6 Condonation of irregularities

1.7 Historical overview

1.7.2 Roman-Dutch law

1.7.3 South African law

Chapter 2: Voluntary surrender

2.1 Who may apply

Chapter 3: Compulsory sequestration

2.2.1 Debtor’s estate insolvent

2.2.2 Free residue sufficient to pay costs of sequestration

2.2.3 Sequestration to be to advantage of creditors

2.3.1 Notice of intention to surrender

2.3.2 Notice to creditors and other parties

2.3.3 Preparation and lodging of statement of affairs

2.4 Effect of notice of surrender

2.4.1 Stay of sales in execution

2.4.2 Curator bonis may be appointed

2.4.3 Potential compulsory sequestration

2.4.4 No withdrawal of notice without consent

2.4.5 Lapse of notice of surrender

2.5 Application for surrender

2.5.2 Filing of application at court

2.5.3 Copy of application to ‘consulting party’

2.5.4 Master’s report

2.5.5 Opposition to application

2.5.6 Adjudication on application

2.7 Costs of surrender

3.1.2 Debtor committed act of insolvency or is insolvent

marked ‘without prejudice’ sent in a genuine attempt to reach a compromise in relation to a

(d) Removal of property with intent to prejudice or prefer

• failed to apply for acceptance of the surrender on the specified date.

3.1.3 Reason to believe sequestration will be to advantage of creditors

position of the creditors if there is no sequestration with their position if there is a

3.1.4 ‘Friendly’ sequestration

3.2 Application for sequestration

3.2.2 Steps prior to adjudication on application

3.2.3 Provisional sequestration

3.2.4 Service of rule nisi

3.2.5 Opposition to application

3.2.6 Anticipation of return day