Vesting of the gssets of

the insolvent
Chapter 5
Vestig of estate ii trustee
The function of the trustee is to collect the
assets in the estate, realize them and
distribute the proceeds amongst creditors in
the order of preference laid down by the Act.
The Act provides that the efect of a
sequestration order is to divest the insolvent
of his estate and vest it in the Master and
thereafter the trustee.
Vestig of estate ii trustee
Vesting occurs even in respect of property
which has been sold in execution if the
debtor’s estate is sequestrated before
delivery or transfer of the property
concerned.
If a provisional trustee is appointed, the
estate vests in him before vesting in the
trustee.
Vestig of estate ii trustee
The estate remains vested in the trustee until:
o The discharge of the sequestration order by the
court;
o The acceptance by creditors of an ofer of
composition made by the insolvent which provides
that the insolvent’s property will be restored to
him;
o An order for the insolvent’s rehabilitation is
granted in terms of s 124(3).
Property which falls iito estate.
The insolvent estate comprise the following:
 All property of the insolvent at the date of
sequestration, including property in the hands of a
sherif under a writ of attachment;
 All property which the insolvent acquires or which
accrues to him during the sequestration (s20(2),
including any property that the insolvent recovers for
the beneft of the estate where the trustee fails to take
the necessary action.
What is ‘property’
It means movable or immovable property wherever
situate in the Republic, and includes contingent
interests in property, other than the contingent
interests in a fdeicommissary heir or legatee.
Immovable property is defned as land and every right
or interest in land or minerals which is registerable in a
deeds registry within the Republic.
Movable property is every kind of property and
includes a liquor licence and a right of action.
What is ‘property'. Coitiued
o Assets situated outside the Republic are not included
even though, if the debtor is domiciled within the
jurisdiction of the court, the sequestration order
divests him of all his movable property, wherever
situated.
Whenever an insolvent has acquired possession of
property which is claimed by the trustee, it is deemed
to belong to the insolvent estate unless the contrary is
proved (s24(2)).
Coit…
o Sequestration of the joint estate makes both spouses
‘insolvent debtors’ for the purposes of the Act, with the
consequence that the property of both of them
(comprising their shares in the joint estate as well as
separately owned property) vests in the trustee and is
available to meet the claims of creditors.
Property inherited by a spouse to a marriage in
community of property forms part of the insolvent
estate, even if the will contains a provision specifcally
excluding the property from any community of property.
Coit…
Property inherited by the insolvent during his insolvency
falls into his insolvent estate, notwithstanding a contrary
provision in the testator’s will.
However if the insolvent refuses to accept property
bequeathed to him or an insurance beneft of which he
has been nominated as a benefciary, the property of
beneft does not vest in his estate
Property of the spouse of the insolvent, where the
marriage is out of community of property, also vest in the
trustee.
Property which does not fgll into estgte.
Wearing apparel, bedding.
Section 82(6)
The insolvent may retain for his own use wearing
apparel and bedding, as well as such households
furniture, tools and other means of subsistence as the
creditor may determine.
Read the case of Ex parte Anthony en n’ Ander en ses
soortgelyke Aansoeke 2000 (4) SA 116 (C) 125
Remuieratoi for work doie.
Section 23(9) provides that the insolvent may recover
for his own beneft the remuneration or reward for
work done or professional services rendered by him or
on his behalf after sequestration.
The section is qualifed by section 23(5) which says
that the trustee is entitled to any moneys which the
insolvent has received in the course of his profession
etc, which in opinion of the Master is not necessary for
the support of the insolvent and his dependents.
Read Ex Parte Van Rensburg 1946 OPD 64
Peisioi.
Section 23(7) provides that the insolvent may recover
for his own beneft any pension to which he may be
entitled for services rendered by him.
Section 3 of the General Pensions Act 29 of 1979
Object of the Fund
The object of the Fund shall be to provide the
pensions and certain other related benefts as
determined in this Law to members and pensioners
and their benefciaries.
Compensgtion for defgmgtion or persongl injury.
Section 23(8) allows the insolvent to recover for his
own benefts compensation for any loss or damage
which he may have sufered, whether before or after
sequestration of his estate, by reason of defamation or
personal injury.
Read De Wet NO v Jurgens 1970 (3) SA 38 (A) damages
for contumelia and consortium and Santam
Versekeringsmaatskappy Bpk v Kruger 1978 (3) SA 656
(A) general damages and special damages.
Compensgtion for occupgtiongl injuries or disegses.
Compensation payable or already paid to an employee
in terms of the Compensation for Occupational
Injuries and Diseases Act 130 of 1993 would seem to be
excluded from the insolvent estate on the basis that it
is compensation for loss or damage sufered as a result
of personal injury.
Section 32(1) of the Act provides that compensation is
not subject to attachment or any other form of
execution by an order of the court.
Beiefts payable to miier.
The right of a miner to a beneft or a gratuity, or
money paid to the miner as such, does not form part of
his insolvent estate.
Section 131(1) of the Occupational Diseases in Mines
and Works Act 78 of 1973 provides that………………..
Occupatoial Diseases ii Miies aid Works
Act 78 of 1973
131. Benefts and service gratuity free from attachment

(1) A right to a beneft to which any person is entitled under this Act, and a
right to a gratuity under section 133, shall not be capable of being ceded by
the holder thereof, and such a right or any money paid by the commissioner
as such a beneft or gratuity to or for the beneft of the person entitled
thereto, or any money paid by the commissioner to or for the beneft of any
person as a special award or a special allowance under any provision of this
Act, shall not be subject to attachment in execution of a judgment or order
of a court of law, except at the instance of the commissioner acting under
section 104, and if the estate of the holder of such a right or of a person to
whom or for whose beneft such money has been paid, is sequestrated as
insolvent, the said right or money shall not form part of his insolvent estate.
Occupgtiongl Disegses in Mines gnd Works Act 78 of
1973
2. If a person to whom or for whose beneft such a
beneft (other than a monthly pension or allowance) or
such a gratuity has been paid, has purchased any
immovable or movable property, and the purchase price
or not less than one-quarter of the purchase price has
been paid out of the beneft or gratuity, that property
shall not be subject to attachment for a debt (or a
novation thereof) which arose before the beneft or
gratuity in question was paid to or for the beneft of the
judgment debtor.
Unemployment Insurgnce Benefts.
Section 33 of the Unemployment Insurance
Act 63 of 2001 provides that benefts which an
employee is entitled in terms of the Act are
not capable of being assigned or attached by
any order of the court, except one relating to
maintenance of the dependents or former
spouse of that employee.
Unemployment Insurgnce Act 63 of 2001
Benefts not to be assigned, attached or set of
33. (1) Benefts may not be—
(a) assigned;
(b) attached by the order of any court, except by any
court order relating to maintenance of the dependants,
including a former spouse, of that contributor; or
(c) set of against any debt;
(2) For purposes of subsection (1), “debt” does not
include a debt arising from benefts paid in error under
the provisions of this Act.
Insurgnce policies.
Policies covering liability to third parties.
If prior to sequestration, the insolvent was insured against
liability to third persons and incurred liability covered by
the policy, his rights against the insurer pass, upon
sequestration, to the third person and not the insolvent
estate.
The following should be noted with regard to s156:
o The section is applicable, not only where the insolvent
insured himself against liability to third persons, but also
where another person took out a policy extending
contractually bound to indemnify the insolvent.
Insurgnce policies.
o The section is restricted to insurance
against liability to third parties under a
policy of indemnity insurance.
o The section does not give the third
person greater rights against the
insurer than the insolvent had under
the policy.
Insurgnce policies
Life policies
Section 63(1) of the Long term Insurance Act 52 of 1998
excludes certain insurance benefts from the insolvent
estate, namely:
o The policy benefts provided to the insolvent under an
assistance life, disability, health policy which has been in
force for at least three years and in which the insolvent or
his spouse is the life insured.
o Any assets which the insolvent acquired exclusively with
such policy benefts within a period of fve years from the
date on which they were provided.
Life policies
o The policy benefts or assets are excluded to an
aggregate amount of R50 000 or such other amount as
the minister of Finance may prescribe.
o If the insolvent is the named benefciary of policies
totaling R80 000, he is entitled to R50 000 and the
remaining R30 000 vests in the insolvent estate.
o The onus is on the insolvent to prove, on a balance of
probabilities, that he is protected by s63.
Shgre in gccrugl
In a marriage which is subject to accrual
system, the right of a spouse to share, in
terms of the Matrimonial Property Act
88 of 1984, in the accrual of the estate of
the other spouse does not form part of
the insolvent estate of the frst spouse.
Trust property/fuids
As a rule, money or property transferred to an agent to
enable him to carry out his mandate falls into the
insolvent estate of the agent.
The position is diferent with regard to trust property
and funds:
 The assets of a duly constituted trust, although vesting
in the trustee, do not form part of his personal estate
on insolvency.
Trust property coitiued …
 Money held in trust account of an attorney, notary or
conveyancer, or of an estate agent, does not form part
of the insolvent estate of the person concerned unless
and until all claims against the trust account have
been satisfed and a balance remains in the account.
 Trust property invested, held, kept in safe custody,
controlled or administered by a fnancial institution or
a nominee company does not form of the assets or
funds of that institution or company
Right of lgbour tengnt to lgnd or right in lgnd.
If the insolvent is a labour tenant and
entitled to apply for an award for land or
a right in land under the Land Reform
Act 3 of 1996, his right in this regards
does not form part of the insolvent
estate.
Friendly society moneys gnd gssets.
Moneys due as benefts under the
rules of a friendly society to a
member who retires having been a
member for at least three years do
not fall into his insolvent estate part.
Property gcquired with money from gbove.
Property acquired with money from any of
the above sources does not vest in the
trustee.
This applies equally to property acquired
with remuneration in respect of work done.
The property like remuneration, is prima
facie the property of the insolvent.
Disposgl of estgte property by insolvent.
o The insolvent, for obvious reasons, cannot dispose
of property that forms part of his insolvent estate,
the Act allows one exception:
 Section 25(3)provides that the insolvent brings
about any act of registration in respect of
immovable property in his estate after expiry of
every caveat entered against that property by the
Registrar of Deeds, the act of registration is valid.
Acquisition of new estgte during insolvency.
The insolvent may during the period
of his insolvency, acquire a new assets
and hold it with a title adverse to his
trustee.
The court have held that the after-
acquired estate can, in turn, be
sequestrated.