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IN THE HIGH COURT OF SOUTH AFRICA 
GAUTENG DIVISION, PRETORIA

                                                                                                   Case No’s:  28761/16
		           36624/16 
		           36626/16
			36636/16 
	DATE:  23/6/2016
In the ex parte applications of:

MARIA CATHARINA FULS	                 Applicant
(ID:…)

DIRK JOHANNES MALAN		           Applicant  
(ID: …)

BAKOALIYE CHRISTABEL THULARE			 Applicant
(ID: …)

CARINA-MARI SCHOLTZ	                  Applicant
(ID: …)
DELETE WHICHEVER IS NOT APPLICABLE
(1)	REPORTABLE: YES/NO
(2)	OF INTEREST TO OTHERS JUDGES: YES/NO
(3)	REVISED

....23/6/2016.....    ..............................................
         DATE                           SIGNATURE	

	    

JUDGMENT

VAN NIEKERK, AJ

[1] 	The remedy available to an insolvent in terms of sections 3(1) of the 	Insolvency Act 24 of 1936, referred to as “voluntary surrender of Estate”, 	has been the subject of various judgments in different divisions of the High 	Court, and a recurring theme of these judgments is the one of abuse of that 	remedy to the detriment of creditors. In this regard see E.P. Erasmus and 	Another 2015 (1) SA 540 (GP) and the authorities referred to therein.

[2]	In the Erasmus judgment referred to supra, Bertelsmann J extensively quote 	from  other judgments on the same topic, and highlight the various 	forms of 	abuse of the process, and the unacceptable features of these applications 	that have been repeatedly referred to by the Courts. Generally stated, Courts 	are faced with these applications on a daily basis, and the majority of these 	applications leave serious doubt whether the granting of the relief sought 	will 	be to the benefit of the creditors. In E.P. Amtzen 2013 (1) SA 49 (KZP) 	Gorven J referred to these applications as “….. a fledling cottage industry …”. 	Suffice it to say that the unacceptable features and abuse referred to in the 	aforementioned judgments have not disappeared and if anything, the “fledling 	cottage industry” has grown into a profitable one.

[3]	The applications in casu are not different to those referred to in the other 	judgments referred to supra. In three of the matters in casu the founding 	affidavits are 	virtually identical and the same valuator was employed to value 	furniture and 	household goods at values, which, in my opinion is 	unrealistically optimistic, clearly intended to achieve the minimum dividend 	requirement of 20 cent in the rand. It is not surprising to note that in those 	applications, the same firm of attorneys represent the applicants. In all these 	matters in casu, the only realisable assets consists of moveable assets with 	minimal value. In all these matters there are lists of creditors, the nature and 	extent of which objectively illustrate that the reason for each of the Applicant’s 	financial woes is the fact that they all to readily availed themselves of credit on 	offer, and did not proverbially cut their cloth according to their means.

[4]	It is trite law that the Applicants should satisfy the court that the surrender of 	their estates will be to the advantage of their creditors. I am not satisfied that, 	on the objective facts as set out in each of the applications, and having regard 	to the remarks of Bertelsmann J. in paragraph 4 of the Erasmus judgment 	supra, there is any prospect of an advantage to creditors in these 	applications.

[5]	Aside from the aforesaid, I am of the view that the Applicants have failed to 	satisfy the requirement of proving an advantage to creditors, for the following 	reasons:

	[5.1]	Some 80 years after commencement of the Insolvency Act, the 			National Credit Act 34 of 2005 (“NCA”), with date of commencement 		being 1 June 2006, was enacted to inter alia promote a fair 				marketplace for access to consumer credit, to generally regulate 			consumer credit, and to provide for debt re-organisation in cases of 			over-indebtedness.
		[Vide: pre-amble to Act 34/2005]
	[5.2]	In terms of the NCA, a debtor is afforded various remedies when faced 		with a situation where the NCA apply and the credit consumer is 			unable to pay his/her debts. A consumer may even be completely 			relieved from his/her obligations in terms of a credit agreement if it is to 		be found that the credit was granted recklessly (Section 83 of the 			NCA). Most importantly, when a consumer is unable to comply with 			his/her obligations in terms of a credit agreement due to over-			indebtedness, a mechanism is provided for in the NCA in terms 			whereof the consumer may apply for a remedy referred to in the NCA 		as “debt review” (Sections 85 and 86 of the NCA). In terms of this 			procedure, should it be found that a consumer is indeed over-indebted, 		a re-arrangement of the debtors obligations may be effected, which 			includes inter-alia a postponement of obligations in terms of a credit 		agreement, a restructuring of payments, or even an order that a credit 		agreement is reckless and thereby exonerating the consumer 			therefrom. (Section 83 of the NCA).

	[5.3]	This procedure in terms of the NCA is clearly in the interest of the 			debtor and the creditor, and to be preferred over the remedy in terms of 		section 3 of the Insolvency Act, for the reason that the debtor is 			relieved from financial strain, but is still required to meet his/her 			contractual obligations, wholly or in part, and the creditor on the other 		hand has a better prospect of receiving at least a substantial portion of 		the outstanding liabilities owed to it by the debtor, if not all, albeit at a 		later stage. This is clearly a situation which is objectively far more 			advantageous to a creditor than the situation referred to in the 			judgments supra, where the creditors often would not even consider 		to file a claim against the insolvent estate for fear of the risk of having 		to eventually 	contribute to costs.

[6]	In my opinion it is therefore incumbent on an applicant in an application for 	voluntary surrender, where it is required to illustrate advantage to creditors, to 	make a full disclosure of at least the following:

	[6.1]	Whether or not the Applicant availed himself/herself of the procedures 		afforded in the NCA for debt review prior to the application being 			proceeded with, and if not, full reasons for such failure.

	[6.2]	A comprehensive report of the debt counsellor involved, explaining 			what procedures were followed, and whether or not the Applicant 			complied with any debt restructuring arrangements.

[7[	In my opinion, it is difficult to foresee how an Applicant in an application for 	voluntary surrender of his/her estate would be able to convince a Court that 	the proper application and adherence to arrangements in terms of sections 	86-88 	of the NCA is not to be preferred in the interest of creditors, compared 	to the 	surrender of his/her estate.

[8]	Where an application of this nature lacks averments in the respect as set out 	supra, it does not comply with the requirement that the Applicant should 	satisfy the Court that it is in the interest of his/her creditors that the estate 	should be surrendered, and should accordingly be dismissed.

[9]	In casu, each of the Applicants listed creditors which prima facie appears to 	have entered into credit agreements with the respective Applicants which falls 	under the provisions of the NCA. No allegations are made in any of the 	applications to convince me that, in the circumstances, sections 3 of the 	Insolvency Act is to be preferred to the benefit of the creditors, instead of a 	proper application of debt relief in terms of NCA.

[10]	In the premises the applications are dismissed. 

PA VAN NIEKERK
ACTING JUDGE OF THE HIGH COURT