Abstract

The Insolvency Act defines a disposition for purposes of the act and states that a voidable disposition does not include a disposition in compliance with an order of court. Section 29 of the act defines a voidable preference for this section as a debtor’s disposition of his property made not more than six months before the sequestration of his estate. A sequestration is defined with reference to a sequestration order, which means any order of court whereby an estate is sequestrated and includes a provisional order. In the Mercantile case the marriage of the respondent and his erstwhile wife was dissolved by a divorce order of the divorce court in January 2020. Incorporated into the court order is the settlement of the parties’ respective claims regarding their matrimonial property regime. The parties had been married with a classic antenuptial contract that excluded any community of property, community of profit and loss or any accrual sharing. Notwithstanding the fact that the judgment indicates otherwise, section 7(3) of the Divorce Act could not have applied in the light of the settlement agreement. This section is applicable only in the absence of any agreement between the parties regarding the division of their assets. Only where section 7(3) applies is the court granted a wide discretion to order that such assets, or such part of the assets, of the other party as the court may deem just, must be transferred to the first-mentioned party. The final settlement of the erstwhile couple’s property regime was consequently not as a result of the court’s exercising its statutory discretion but the result of the agreement sanctioned by the court’s order. In accordance with the agreed settlement, the husband was compelled by the court order to transfer a house in Gallo Manor registered in his name as immovable property to the erstwhile wife. This property was unburdened by any registered limited real security right such as a mortgage bond. The transfer was completed in March 2020 when the property was transferred into the woman’s name in accordance with the requirements of the Deeds Registries Act 47 of 1937. Mercantile Bank attained a provisional sequestration order against the respondent in October 2021 and apparently, according to Maier-Frawley J’s judgment, indicated its intention to rely on section 29 of the Insolvency Act to claim the reversal of the transfer of the immovable property as an alleged voidable disposition of a valuable asset from the estate of the respondent as debtor to the detriment of the claimant and other creditors. It is submitted that the six-month limit forms an unsurpassable hurdle and bars the application of section 29 in this matter. In addition, any reliance on eg section 31 of the Insolvency Act that refers to collusive dealings before sequestration without an equivalent six-month time bar will be barred by the explicit definition of a disposition in the act that excludes a disposition in compliance with an order of court. It may be doubted whether it is justified to waste additional costs and the time of the high court in light of the foregoing in this matter. Where the legal position is crystalized the court is left without a contrary discretion.