MRL3701 - STUDY UNIT 4 COMPULSORY
SEQUESTRATION
ABSA BANK v DE KLERK - questions and answers-a dividend of five cents in the rand was
regarded as sufficient
ACTS OF INSOLVENCY - questions and answers-Legislature has designated certain acts or
omissions by a debtor as "acts of insolvency"
An act of insolvency need to be committed vis-a-vis the sequestration 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
intendedto have any bearing on that credit's affairs (BEIRA V RAPHAELY-WEINER AND
OTHERS)
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 BAN OF SAL LTD v SEWPERSADH & ANOTHER) and for
sequestration of the separate estate of the other spouse after dissolution of the marriage by
divorce (BP SOUTH AFRICA v VILJOEN & ANDER)
ACTUAL DISPOSITION - questions and answers-- Must have the effect of prejudicing the
debtor's creditors or preferring one creditor above another
AMALGAMATED HARDWARE & TIMBER v WIMMERS - questions and answers-If sheriff's
return of service merely refers to movable property, it does not establish and act of insolvency
APPLICANT ENTITLED TO APPLY IN TERMS OF s9(1) - questions and answers-Proceedings
for the compulsory sequestration of debtors estate to be instituted by:
a. creditor or his agent who has a liquidated claim against the debtor for not less than R100
b. two or more creditors or their agents who have liquidated claims against the debtor
amounting, in aggregate, to not less than R200.
Agent must be authorised to do so prior to bringing the application. Applicants lack of authority
cannot be cured by ratification once the application has been launched (SOUTH AFRICAN
MILLING CO v REDDY.
ATTEMPTED DISPOSITION - questions and answers-- Must be such that it would, if completed,
have the same effect.
, BEIRA V RAPHAELY-WEINER - questions and answers-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.
BERRANGE NO v HASSAN & ANOTHER - questions and answers-Example of removal with
intent to prejudice creditors is sending of money or goods to a foreign country so as not to be
available for the settlement of creditor's claims.
CONDUCT DESIGNATED AS ACTS OF INSOLVENCY (A) - questions and answers-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 absent himself, with intent by doing so to evade or delay payment of
his debts (s8(a))
- Credit mus establish debtor's intention to evade payment of his debts (ESTATE SALZMANN V
VAN ROOYEN) - Proo fof departure or absence is not sufficient, because a person may leave or
absent himself for reasons complete unconnected with the paymenr or non-payment of debts.
(BISHOP V BAKER)
CONDUCT DESIGNATED AS ACTS OF INSOLVENCY (B) - questions and answers-b). Failure
to satisfy judgement
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 judgement s8(b)
Subsection creates two separate acts of insolvence
1. where the debtor upon demand by the sheriff, fails to satisfy the judgement or to indicate
disposable property sufficient to satisfy it;
2. when the sheriff, without presenting the writ to the debtor, fails to find sufficient disposable
property to satisfy the judgement and states this fact in his return.
The 2 acts although separate are not independent of each other.
The second act applies only if the first cannot be established.
CONDUCT DESIGNATED AS ACTS OF INSOLVENCY (C) - questions and answers-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 (s8(c))
2 sets of circumstances:
SEQUESTRATION
ABSA BANK v DE KLERK - questions and answers-a dividend of five cents in the rand was
regarded as sufficient
ACTS OF INSOLVENCY - questions and answers-Legislature has designated certain acts or
omissions by a debtor as "acts of insolvency"
An act of insolvency need to be committed vis-a-vis the sequestration 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
intendedto have any bearing on that credit's affairs (BEIRA V RAPHAELY-WEINER AND
OTHERS)
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 BAN OF SAL LTD v SEWPERSADH & ANOTHER) and for
sequestration of the separate estate of the other spouse after dissolution of the marriage by
divorce (BP SOUTH AFRICA v VILJOEN & ANDER)
ACTUAL DISPOSITION - questions and answers-- Must have the effect of prejudicing the
debtor's creditors or preferring one creditor above another
AMALGAMATED HARDWARE & TIMBER v WIMMERS - questions and answers-If sheriff's
return of service merely refers to movable property, it does not establish and act of insolvency
APPLICANT ENTITLED TO APPLY IN TERMS OF s9(1) - questions and answers-Proceedings
for the compulsory sequestration of debtors estate to be instituted by:
a. creditor or his agent who has a liquidated claim against the debtor for not less than R100
b. two or more creditors or their agents who have liquidated claims against the debtor
amounting, in aggregate, to not less than R200.
Agent must be authorised to do so prior to bringing the application. Applicants lack of authority
cannot be cured by ratification once the application has been launched (SOUTH AFRICAN
MILLING CO v REDDY.
ATTEMPTED DISPOSITION - questions and answers-- Must be such that it would, if completed,
have the same effect.
, BEIRA V RAPHAELY-WEINER - questions and answers-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.
BERRANGE NO v HASSAN & ANOTHER - questions and answers-Example of removal with
intent to prejudice creditors is sending of money or goods to a foreign country so as not to be
available for the settlement of creditor's claims.
CONDUCT DESIGNATED AS ACTS OF INSOLVENCY (A) - questions and answers-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 absent himself, with intent by doing so to evade or delay payment of
his debts (s8(a))
- Credit mus establish debtor's intention to evade payment of his debts (ESTATE SALZMANN V
VAN ROOYEN) - Proo fof departure or absence is not sufficient, because a person may leave or
absent himself for reasons complete unconnected with the paymenr or non-payment of debts.
(BISHOP V BAKER)
CONDUCT DESIGNATED AS ACTS OF INSOLVENCY (B) - questions and answers-b). Failure
to satisfy judgement
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 judgement s8(b)
Subsection creates two separate acts of insolvence
1. where the debtor upon demand by the sheriff, fails to satisfy the judgement or to indicate
disposable property sufficient to satisfy it;
2. when the sheriff, without presenting the writ to the debtor, fails to find sufficient disposable
property to satisfy the judgement and states this fact in his return.
The 2 acts although separate are not independent of each other.
The second act applies only if the first cannot be established.
CONDUCT DESIGNATED AS ACTS OF INSOLVENCY (C) - questions and answers-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 (s8(c))
2 sets of circumstances:
