Do business rescue proceedings affect the liability of sureties of the company?

by | Jul 22, 2020 | SAMLJ, SAMLJ V31 I1

Do business rescue proceedings affect the liability of sureties of the company?

Author Simphiwe P Phungula

ISSN: 1996-2185
Affiliations: Lecturer, School of Law, University of KwaZulu-Natal, LLB LLM (UKZN)
Source: South African Mercantile Law Journal, Volume 31 Issue 1, 2019, p. 129 – 144

Abstract

This article deals with the legal position of sureties of a company that has commenced business rescue. It analyses how sections 133 and 154 of the Companies Act apply to debts incurred by the company and whether these sections extend to sureties by examining how the courts interpret sections 133 and 154 in relation to the liability of sureties for the debts of the company. It starts by explaining the general legal principles governing suretyship, and then addresses sections 133 and 154 and their impact on the sureties of a company undergoing business rescue.

To foreclose or not to foreclose: revealing the ‘cracks’ within the residential foreclosure process in South Africa

by | Jul 22, 2020 | SAMLJ, SAMLJ V31 I1

To foreclose or not to foreclose: revealing the ‘cracks’ within the residential foreclosure process in South Africa

Authors Ciresh Singh

ISSN: 1996-2185
Affiliations: LLB, LLM, PhD Candidate at the University of KwaZulu-Natal.
Source: South African Mercantile Law Journal, Volume 31 Issue 1, 2019, p. 145 – 162

Abstract

The execution against hypothecated immovable property, also known as foreclosure, involves a delicate balancing of mortgagor and mortgagee rights. Section 26(1) of the Constitution of the Republic of South Africa, 1996 (‘Constitution’) provides that ‘everyone has the right to have access to adequate housing’. Foreclosure can be seen as an infringement of a mortgagor’s right to have access to adequate housing. Thus, during foreclosure a balance needs to be struck between the mortgagor’s right to have access to adequate housing and the mortgagee’s foreclosure rights. Unfortunately, South African law has not provided clarity on the balancing of mortgagor and mortgagee rights during the foreclosure process and this has resulted in considerable inconsistency. With the exception of rule 46A of the Uniform Rules of Court, there is no specific legislation that governs foreclosure process. This ‘crack’ in the law is concerning given the economic and social impact of mortgage and foreclosure. The argument in this article is that current rules governing foreclosure are inadequate and lack a structured framework. In particular, the current laws do not provide any clarity as to when foreclosure against a home is justifiable or when it is not, nor do they provide any guidelines for courts to consider during foreclosure proceedings. This lack of clarity has resulted in much confusion, and it is submitted that there is a need for establishing clarity for purposes of certainty in law regarding foreclosure. Accordingly, it will be suggested that the adoption of a ‘Foreclosure Act’ is required to establish clarity in foreclosure process and fairly balance the interests of all parties concerned during foreclosure against a home.