MRL3701
EXAM PACK
,EXAM-READY SUMMARY NOTES
MRL3701 Exam Notes (Oct/Nov 2023)
QUESTION 1
1.1 Formal defects
Only fatal if → substantial injustice to creditors and cannot be remedied.
Sec 157(1) → Court may condone unless prejudice cannot be corrected.
1.2 Voluntary sequestration (Ex parte Arntzen)
Requirements: Sec 6(1) → free residue covers costs, benefit to creditors, full
disclosure.
Court stricter than compulsory sequestration (risk of abuse).
Debtor failed disclosure → application refused.
Creditors vulnerable because:
1. Debtor applies, not creditor.
2. Creditors get notice only (not full service).
3. Short time to oppose.
4. Must act quickly to inspect statement.
5. Court can grant on first hearing.
1.3 Acts of Insolvency (Sec 8, Insolvency Act 24/1936)
8(a): Evade debts by leaving SA/hiding.
8(b): Fail to satisfy judgment within 10 days.
8(c): Admit inability to pay or offer compromise.
, 8(d): Prefer one creditor while insolvent.
8(e): Dispose/remove property to prejudice creditors.
8(f): Publish valid notice of surrender.
8(g): Bind self under general sequestration clause.
8(h): Fail to pay over money received on behalf of another.
Insolvency also proven by → actual (liabilities > assets) or commercial (cannot
pay when due).
1.4 Khan v Amod 1947 (2) SA 432 (N)
Applicant abused process: wanted to block debtor’s claim against his son.
Court → discretion to refuse sequestration.
Proper remedy = execute judgment, not sequestration.
Importance of Alienation of Land Act 1944: property sales must be in writing
and signed.
1.5 Constitutional context
Sequestration = deprivation of property rights (Insolvency Act 1936).
Must align with Section 9(3) Constitution → no unfair discrimination.
Jurisdictional requirements:
1. Court with jurisdiction.
2. Debtor domiciled in area.
3. Resided/traded there 6 months before.
4. Assets under jurisdiction.
5. Debtor insolvent (can’t pay debts).
QUESTION 2
, (a) Estate Wege v Strauss 1932 AD 76
Betting contract unenforceable, but payment not “disposition without value.”
Sec 26 Insolvency Act.
(b) Epstein v Epstein 1987 (4) SA 606 (C)
Friendly sequestration not automatically rejected.
Must strictly test “advantage to creditors.”
(c) Pretorius’ Trustee v Van Blommenstein 1949 (1) SA 267 (O)
Court must decide if “ordinary course of business” defence or “intention to prefer”
applies.
Sec 29 Insolvency Act.
(d) Ex Parte Snooke 2014 (5) SA 426 (FB)
Rehabilitation case → noted abuse of sequestration.
Attorneys must stick to approved fees.
Sec 124(3): rehabilitation restores estate to insolvent.
(e) Prinsloo v Van Zyl NO 1967 (1) SA 581 (T)
Composition valid only if ¾ in number and value of creditors agree.
Sec 119 Insolvency Act.
2.2 Trustee & Rachel’s political career
Insolvency = trustee manages estate.
Trustee may restrict activities (e.g., politics) if it harms creditors’ interests.
2.3 Grounds for removal of trustee
EXAM PACK
,EXAM-READY SUMMARY NOTES
MRL3701 Exam Notes (Oct/Nov 2023)
QUESTION 1
1.1 Formal defects
Only fatal if → substantial injustice to creditors and cannot be remedied.
Sec 157(1) → Court may condone unless prejudice cannot be corrected.
1.2 Voluntary sequestration (Ex parte Arntzen)
Requirements: Sec 6(1) → free residue covers costs, benefit to creditors, full
disclosure.
Court stricter than compulsory sequestration (risk of abuse).
Debtor failed disclosure → application refused.
Creditors vulnerable because:
1. Debtor applies, not creditor.
2. Creditors get notice only (not full service).
3. Short time to oppose.
4. Must act quickly to inspect statement.
5. Court can grant on first hearing.
1.3 Acts of Insolvency (Sec 8, Insolvency Act 24/1936)
8(a): Evade debts by leaving SA/hiding.
8(b): Fail to satisfy judgment within 10 days.
8(c): Admit inability to pay or offer compromise.
, 8(d): Prefer one creditor while insolvent.
8(e): Dispose/remove property to prejudice creditors.
8(f): Publish valid notice of surrender.
8(g): Bind self under general sequestration clause.
8(h): Fail to pay over money received on behalf of another.
Insolvency also proven by → actual (liabilities > assets) or commercial (cannot
pay when due).
1.4 Khan v Amod 1947 (2) SA 432 (N)
Applicant abused process: wanted to block debtor’s claim against his son.
Court → discretion to refuse sequestration.
Proper remedy = execute judgment, not sequestration.
Importance of Alienation of Land Act 1944: property sales must be in writing
and signed.
1.5 Constitutional context
Sequestration = deprivation of property rights (Insolvency Act 1936).
Must align with Section 9(3) Constitution → no unfair discrimination.
Jurisdictional requirements:
1. Court with jurisdiction.
2. Debtor domiciled in area.
3. Resided/traded there 6 months before.
4. Assets under jurisdiction.
5. Debtor insolvent (can’t pay debts).
QUESTION 2
, (a) Estate Wege v Strauss 1932 AD 76
Betting contract unenforceable, but payment not “disposition without value.”
Sec 26 Insolvency Act.
(b) Epstein v Epstein 1987 (4) SA 606 (C)
Friendly sequestration not automatically rejected.
Must strictly test “advantage to creditors.”
(c) Pretorius’ Trustee v Van Blommenstein 1949 (1) SA 267 (O)
Court must decide if “ordinary course of business” defence or “intention to prefer”
applies.
Sec 29 Insolvency Act.
(d) Ex Parte Snooke 2014 (5) SA 426 (FB)
Rehabilitation case → noted abuse of sequestration.
Attorneys must stick to approved fees.
Sec 124(3): rehabilitation restores estate to insolvent.
(e) Prinsloo v Van Zyl NO 1967 (1) SA 581 (T)
Composition valid only if ¾ in number and value of creditors agree.
Sec 119 Insolvency Act.
2.2 Trustee & Rachel’s political career
Insolvency = trustee manages estate.
Trustee may restrict activities (e.g., politics) if it harms creditors’ interests.
2.3 Grounds for removal of trustee
