Application for provisional sequestration
In FirstRand Bank Ltd (“FirstRand”) v Janse van Rensburg and a Related Matter (“JR”)  2 All SA 186 (ECP) FirstRand sought provisional sequestration orders against JR, who were married to each other out of community of property.
FirstRand relied on an act of insolvency contemplated in s 8(g) of the Insolvency Act 24 of 1936 – being the debtor’s written notification of his inability to pay his debts. FirstRand alleged that JR had committed an act of insolvency by applying for debt review in terms of s 86 of the National Credit Act 34 of 2005 (“NCA”).
The court held that:
- there is a difference between an application for debt review, on the one hand, and an application for an administrative order, on the other hand, namely that the procedure by which a debtor can apply for an administration order, in terms of s 74 of the Magistrates’ Courts Act 32 of 1944, involves a materially different procedure to that now provided by the NCA;
- the application for an administrative order meets the particular requirements of s 8(g) of the Insolvency Act, being a notice in writing delivered to a creditor in which the debtor states that he is unable to meet his financial obligations. An unequivocal statement of inability to pay is a critical requirement of s 8(g) of the Insolvency Act 24 of 1936;
- the procedure by which a consumer or debtor applies for debt review in terms of the NCA is different. The application for debt review in terms of s 86 of the NCA does not involve notice given by the debtor to the creditor in which the debtor declares an inability to pay one or more of his debts. A notice of inability to pay a debt envisaged by s 8(g) of the Insolvency Act must be given deliberately and with the intention of giving such notice. No such notice formed the basis of the FirstRand’s application for sequestration. The written notice on which the bank relied was one communicated by a credit bureau rather than by the debtor. It therefore fell short of what was required as it could not be found that the credit bureau acted on the basis of authority specifically conferred by the respondents or on the basis of any general authority that could bind the respondents;
- FirstRand had thus failed to establish that JR committed an act of insolvency in terms of s 8(g) of the Insolvency Act.