Abstract:
Although some legal systems provide some protection of the homestead or family
home for the debtor when his or her estate is insolvent, such direct protective
measures are absent in South African insolvency law. Such protection during
insolvency can be provided by means of some level of exemption of the family home
or homestead of the insolvent like in the insolvency laws of the USA, or by providing
protection of occupancy to the insolvents and his or her dependants as is the case in
England and Wales.
In view of the developments in light of the right to housing as provided for in
section 26 of the Constitution concerning the protection of the primary residence of a
debtor in South African individual debt collecting and execution procedures, the
question will be posed in Part 1 of this article if the same principles should apply in
the case of a court hearing an application for compulsory sequestration, especially if
the debtor raises the point that the sequestration order may render him or her
homeless, should also be considered by such court. In this respect, no direct
authority for this proposition could be found yet. (Commentators have argued for
some time that the position of the homestead of the debtor in insolvency needs
attention of the legislature as well but there has not been real progress in this regard
to date.)
However, there are a few judgments where the applicability of the Prevention of
Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998 (the PIE Act)
after sequestration of the insolvent’s estate has been considered. Part 2 of the article
will therefore be devoted to discuss developments in this regard and to consider what
problems are encountered in applying the PIE Act during insolvency of the debtor
and also if this Act provides sufficient protection to insolvent debtors to prevent them
from being evicted from “their” homes where they cannot afford alternative
accommodation.
Against this background, the two parts of the article deal with different aspects of
the issue under discussion. Ultimately the two parts are thematic to provide some
answers to the pertinent question, namely if the PIE Act can provide effective interim
and/or adequate protection to an insolvent debtor who may be evicted from his or her
(former) homestead – in particular in the absence of direct measures in insolvency law, which protect insolvents and their dependants under these circumstances. In
raising this question pertinent issues regarding the application of the PIE Act in
insolvency also will be considered.
