MRL3701
ASSIGNMENT 1
SEMESTER 2 2026
UNIQUE NO.
DUE DATE: 13 AUGUST 2026
, Insolvency Law - MRL3701
Assignment 1 Semester 2 2026
QUESTION 1
Naledi’s creditors must determine whether her conduct amounts to an act of
insolvency in terms of section 8(a) of the Insolvency Act 24 of 1936. Section 8(a)
provides that a debtor commits an act of insolvency if she leaves the Republic, remains
outside the Republic, departs from her dwelling, or otherwise absents herself with the
intention of evading or delaying payment of her debts.
There are therefore two essential requirements. First, there must be an act of departure
or absence contemplated by the section. Secondly, and more importantly, the absence
must be accompanied by the intention to evade or delay payment of debts. The
mere fact that a debtor is absent from South Africa is not, on its own, sufficient to
establish an act of insolvency. The creditor must establish the required intention.
The intention contemplated in section 8(a) is a subjective intention. This means that
the court must determine what the debtor actually intended when she left, remained
outside the Republic or otherwise absented herself. However, because a person's state
of mind cannot ordinarily be established directly, the court determines intention through
inferential reasoning. In Hassan and Another v Berrange NO 2006 (6) SA 329 (SCA),
the Supreme Court of Appeal confirmed that intention under section 8(a) is subjective
and must be established from all the relevant facts and circumstances. The court
considers what, on the probabilities, was the debtor's dominant, operative or effective
intention. A debtor's mere denial of an intention to evade or delay payment is therefore
not decisive.
The same approach was followed in Oro Africa (Pty) Ltd v Currin 2015, where the court
explained that leaving the Republic or remaining absent from it may give rise to an
inference of the required intention, but absence alone is insufficient. There may be an
innocent or legitimate explanation for the absence, and the surrounding circumstances
ASSIGNMENT 1
SEMESTER 2 2026
UNIQUE NO.
DUE DATE: 13 AUGUST 2026
, Insolvency Law - MRL3701
Assignment 1 Semester 2 2026
QUESTION 1
Naledi’s creditors must determine whether her conduct amounts to an act of
insolvency in terms of section 8(a) of the Insolvency Act 24 of 1936. Section 8(a)
provides that a debtor commits an act of insolvency if she leaves the Republic, remains
outside the Republic, departs from her dwelling, or otherwise absents herself with the
intention of evading or delaying payment of her debts.
There are therefore two essential requirements. First, there must be an act of departure
or absence contemplated by the section. Secondly, and more importantly, the absence
must be accompanied by the intention to evade or delay payment of debts. The
mere fact that a debtor is absent from South Africa is not, on its own, sufficient to
establish an act of insolvency. The creditor must establish the required intention.
The intention contemplated in section 8(a) is a subjective intention. This means that
the court must determine what the debtor actually intended when she left, remained
outside the Republic or otherwise absented herself. However, because a person's state
of mind cannot ordinarily be established directly, the court determines intention through
inferential reasoning. In Hassan and Another v Berrange NO 2006 (6) SA 329 (SCA),
the Supreme Court of Appeal confirmed that intention under section 8(a) is subjective
and must be established from all the relevant facts and circumstances. The court
considers what, on the probabilities, was the debtor's dominant, operative or effective
intention. A debtor's mere denial of an intention to evade or delay payment is therefore
not decisive.
The same approach was followed in Oro Africa (Pty) Ltd v Currin 2015, where the court
explained that leaving the Republic or remaining absent from it may give rise to an
inference of the required intention, but absence alone is insufficient. There may be an
innocent or legitimate explanation for the absence, and the surrounding circumstances
