Developments in the Law of Insolvency

• Jurisdiction: South Africa
• Author: R G Evans
• Date: 03 September 2019
• Pages: 109-118
• Published date: 03 September 2019
• Citation: (2000) 12 SA Merc LJ 109

Developments in the Law of Insolvency

RG EVANS

University of South Africa

During 1999 a number of decisions in respect of issues relating to

insolvency law were handed down by the courts, while the South African

Law Commission published its second Draft Insolvency Bill and an

Explanatory Memorandum

(Discussion Paper 86 Volume 1 Project 63

Review of the Law of Insolvency

and Volume 2 Draft Insolvency Bill —

hereafter referred to as 'Discussion Paper 86' and/or 'the 1999 Draft Bill'.

The previous Draft Bill was published for comment in 1996 as the

Review

of the Law of Insolvency: Draft Insolvency Bill and Explanatory

Memorandum

(Working Paper 66, Project 63 (1996), hereafter referred

to as 'the 1996 Draft Bill').

This analysis attempts to consider and evaluate some of these judicial

decisions during 1999, while simultaneously scrutinizing the relevant

clauses in the 1999 Draft Bill which relate to those decisions. In

Discussion Paper 86 (at 3) the Law Commission points out that the major

stakeholders in the insolvency arena are the commercial community in

general and creditors in particular, insolvent debtors, insolvency

practitioners, and the government. Conflicting interests, they point out,

make it difficult to strike a fair balance between the different interests. A

basis for their latest review of insolvency law (ie, Discussion Paper 86)

was the need for effective, speedy and fair procedures as being important

requirements of the stakeholders.

Will Section 21 Survive?

A thorny issue which had to be dealt with by the Law Commission is

that of s 21 of the Insolvency Act 24 of 1936 ('the Act'). It regulates the

effect of insolvency on the assets of the solvent spouse where the parties

are married out of community of property. After a spate of important

decisions in respect of s 21 in the recent past, this issue again found itself

before the courts in the cases of

Jooste v De Witt

(1999 (2) SA 355 (T))

and

Beddy v Van der Westhuizen

(1999 (3) SA 913 (SCA)). Both decisions

dealt with the release, in terms of s 21(2), of the assets which ostensibly

belong to the solvent spouse. In

Beddy v Van der Westhuizen

the Supreme

Court of Appeal had to deal more specifically with s 21(2)(c) which

provides that the trustee must release property of the solvent spouse

which is proved to have been acquired by the spouse during the marriage

with the insolvent by a title valid as against creditors of the insolvent.

Citing

De Villiers NO v Delta Cables (Pty) Ltd

(1992 (1) SA 9 (A)), the

Court pointed out (at 916A—C) that the purpose of s 21 is to prevent or at

least hamper collusion between spouses to the detriment of the creditors

109

(2000) 12 SA Merc LJ 109

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