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2011 (4) SA p597
Citation | 2011 (4) SA 597 (KZD) |
Case No | 4229/10 |
Court | KwaZulu-Natal High Court, Durban |
Judge | Wallis J |
Heard | February 11, 2011 |
Judgment | March 18, 2011 |
Counsel | AWM Harcourt SC (with WN Shapiro) for the applicant. KJ Kemp SC (with E Crots) for the respondent. |
Annotations | Link to Case Annotations |
Flynote : Sleutelwoorde
Insolvency — Act of insolvency — Notice to creditor of inability to pay debt — What amounts to — Notification by debtor to creditor that he has applied for debt review — Notice indicating intention to pay debts other than in accordance with existing contractual obligations in consequence of debt-rearrangement order — Such constituting notice as intended and amounting to act of insolvency — Insolvency Act 24 of 1936, s 8(g) read with C National Credit Act 34 of 2005, s 87. Insolvency — Compulsory sequestration — Provisional sequestration — Discretion of court — Where conditions for granting of provisional order satisfied, for debtor to show special circumstances warranting exercise of discretion D in his favour — Delay in bringing of application and granting of debt-rearrangement order under NCA — While former may be significant in cases where situation of debtor changed to extent that inappropriate to grant order, latter constituting powerful reason for court to exercise its discretion in favour of debtor — Insolvency Act 24 of 1936, s 9 read with National Credit Act 34 of 2005, s 88(3). E Credit agreement — Consumer credit agreement — Debt review — Debt review and sequestration — Application for sequestration not enforcement of credit agreement — Fact that consumer under debt review not immunising him against sequestration proceedings — Existence of debt-rearrangement order not affecting situation. F Headnote : Kopnota

In order to determine whether a notice amounts to a notice of inability to pay debts as intended in s 8(g) of the Insolvency Act 24 of 1936, one has to ask what the notice meant to the creditor at the time of its receipt, and not on the date on which the sequestration application is launched. A notification G by a debtor to a creditor, stating that he has applied for debt review and intends to repay his debts in accordance with a debt-rearrangement order under s 87 of the National Credit Act 34 of 2005 (NCA), amounts to the giving of notice by the debtor that he is unable to pay a debt as intended in s 8(g). (Paragraphs [15] – [23] at 602H – 605I, paraphrased.) The debt-review provisions of the NCA do not preclude a credit provider from H bringing an application for the sequestration of a debtor's estate, and the fact that a debt-rearrangement order has been granted does not affect the situation. (Paragraphs [25] and [36] at 606B – F and 611E – F.) Once a creditor has prima facie established the requirements for the granting of a provisional liquidation order, the court is obliged to grant the order, unless the debtor can point to special circumstances. A delay in launching the I application after the commission of an act of insolvency will be pertinent, only where it is shown that circumstances have so changed, since the act of insolvency, that it would no longer be appropriate for the court to grant the order. The existence of a debt-rearrangement order is, however, a powerful incentive for the court to exercise its discretion in favour of the debtor. (Paragraphs [29] – [37] at 608C – 612B, paraphrased.) J 2011 (4) SA p598

Wallis J
Cases Considered
A Annotations:
Reported cases
Abell v Strauss1973 (2) SA 611 (W): dictum at 613B – C doubted Bhyatt v Kurishi 1929 TPD 896: considered
BMW Financial Services (SA) (Pty) Ltd v Mudaly2010 (5) SA 618 (KZD): B compared Cargo Laden and Lately Laden on Board the MV Thalassini Avgi v MV Dimitris1989 (3) SA 820 (A): dictum at 833C – F applied Chenille Industries v Vorster1953 (2) SA 691 (O): dictum at 696D –...