{"id":637,"date":"2018-10-30T07:13:06","date_gmt":"2018-10-30T07:13:06","guid":{"rendered":"https:\/\/dotnewsconnect.co.za\/law\/?p=637"},"modified":"2018-10-30T07:13:06","modified_gmt":"2018-10-30T07:13:06","slug":"when-is-a-debtor-insolvent-a-case-of-arrear-maintenance-illustrates","status":"publish","type":"post","link":"https:\/\/dotnewsconnect.co.za\/law\/2018\/when-is-a-debtor-insolvent-a-case-of-arrear-maintenance-illustrates\/","title":{"rendered":"When is a Debtor \u201cInsolvent\u201d? A Case of Arrear Maintenance Illustrates"},"content":{"rendered":"<blockquote><p><strong><em>\u201cTo my mind the best proof of solvency is that a man should pay his debts\u201d (quoted in the judgment below)<\/em><\/strong><\/p><\/blockquote>\n<p>If you are owed maintenance you have a variety of enforcement options open to you and should ask your lawyer for advice on which is the best for your particular claim and circumstances.<\/p>\n<p>A recent High Court judgment confirms that one of the weapons in your legal armoury is the sequestration application. And as the defaulter\u2019s desperate attempt to avoid sequestration in this particular case illustrates, even just the threat of sequestration can be a powerful motivator to settle up, regardless of whether your claim is based on maintenance arrears or on any other form of debt.<\/p>\n<p>The reason is that an insolvent has to surrender control of his\/her estate to a Trustee, who collects and sells all the insolvent\u2019s assets and divides the proceeds between the creditors. The insolvent can also be ordered to pay over any excess earnings \u2013 such as for example monthly salary less reasonable expenses &#8211; to the Insolvent Estate. That\u2019s a lot of control to lose over one\u2019s own affairs.<\/p>\n<p>&nbsp;<\/p>\n<h6>Maintenance arrears and a \u201cno goods\u201d return<\/h6>\n<p>In this particular case &#8211;<\/p>\n<ul>\n<li>As part of a divorce settlement, a father was ordered to pay child maintenance, but fell behind and ran up substantial arrears.<\/li>\n<li>His ex-wife obtained judgment against him in the maintenance court for R45k and the sheriff, with a warrant of execution against property in hand, attached a motor vehicle belonging to the father.<\/li>\n<li>Unfortunately the sheriff did not actually remove and sell the vehicle at the time and three months later it was gone. The sheriff then rendered a\u00a0<em>nulla bona<\/em>\u00a0(\u201cno goods\u201d) return when the husband claimed to have no money or attachable assets.<\/li>\n<li>The mother then applied for the sequestration of the father\u2019s estate, and the father raised two main defences \u2013<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h6>\u201cI\u2019m not actually insolvent\u201d<\/h6>\n<p>To sequestrate someone\u2019s estate you have to prove either actual insolvency (not always easy to do) or an \u201cact of insolvency\u201d. And although the sheriff\u2019s\u00a0<em>nulla bona<\/em>return in this matter qualified as an act of insolvency, the husband still insisted that he was actually solvent. He didn\u2019t deny owing the R45k (plus by that stage another R183k) but said that he would make payment once he received tax refunds from SARS in the future.<\/p>\n<p>The Court dismissed this argument, quoting from a 1907 judgment: \u201cSpeaking for myself, I always look with great suspicion upon, and examine very narrowly, the position of a debtor who says, \u2018I am sorry that I cannot pay my creditor, but my assets far exceed my liabilities&#8217;.\u00a0<strong>To my mind the best proof of solvency is that a man should pay his debts;<\/strong>\u00a0and therefore I always examine in a critical spirit the case of a man who does not pay what he owes\u201d (our emphasis).<\/p>\n<p>It was just not good enough, said the Court, for the father to say that he would eventually pay.<\/p>\n<p>&nbsp;<\/p>\n<h6>\u201cSequestration won\u2019t be to the advantage of my creditors\u201d<\/h6>\n<p>To get a sequestration order you must also prove that \u201cthere is reason to believe that it will be to the advantage of creditors of the debtor if his estate is sequestrated\u201d.<\/p>\n<p>The husband\u2019s contention here was that he was under debt review in terms of the National Credit Act, and was making payments to his creditors. The flaw in this argument, said the Court, was that only listed creditors were being paid under the debt review arrangement. Nothing at all had been paid towards maintenance for almost four years, and the arrears were increasing at a rate of some R7k every month.<\/p>\n<p>In those circumstances the Court was satisfied that sequestration would indeed be to the advantage of the husband\u2019s creditors.<\/p>\n<p>&nbsp;<\/p>\n<h6>The Court\u2019s discretion<\/h6>\n<p>Even after you have proved that you have a \u201cliquidated\u201d (agreed or easily-established amount) claim of at least R100, plus insolvency and advantage to creditors as above, the court can still refuse to order sequestration. In this regard it has a wide discretion \u201cto be exercised judicially taking into account all the facts as well as the general history and circumstances of the case\u201d.<\/p>\n<p>Finding there to be \u201cno reasons or circumstances to disentitle her of this order\u201d, the Court held for the mother and sequestrated the defaulting husband\u2019s estate.<\/p>\n<p style=\"font-size: 12px;margin-top: 40px\"><strong>Disclaimer:<\/strong> The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.<\/p>\n<p style=\"font-size: 12px;color: #ccc;text-align: right\">\u00a9 LawDotNews<\/p>\n","protected":false},"excerpt":{"rendered":"<p>\u201cTo my mind the best proof of solvency is that a man should pay his debts\u201d (quoted in the judgment below) If you are owed maintenance you have a variety of enforcement options open to you and should ask your lawyer for advice on which is the best for your particular claim and circumstances. A [&hellip;]<\/p>\n","protected":false},"author":101014,"featured_media":638,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[23,25,24],"tags":[],"class_list":["post-637","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-debt-recovery","category-family-law","category-insolvency-liquidation-business-rescue"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.0 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>When is a Debtor \u201cInsolvent\u201d? A Case of Arrear Maintenance Illustrates &#8226; LawDotNews<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/dotnewsconnect.co.za\/law\/2018\/when-is-a-debtor-insolvent-a-case-of-arrear-maintenance-illustrates\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"When is a Debtor \u201cInsolvent\u201d? A Case of Arrear Maintenance Illustrates &#8226; LawDotNews\" \/>\n<meta property=\"og:description\" content=\"\u201cTo my mind the best proof of solvency is that a man should pay his debts\u201d (quoted in the judgment below) If you are owed maintenance you have a variety of enforcement options open to you and should ask your lawyer for advice on which is the best for your particular claim and circumstances. 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