Vonnisbespreking : Nog ’n vriendskaplike-sekwestrasie-aansoek sneuwel : Botha v Botha [2017] JOL 38011 (VB)

Abstract

Botha is one of many friendly sequestration applications that was dismissed because the applicant failed to prove that it would be to the advantage of creditors to sequestrate the respondent-debtor’s estate. Daffue J suggested that Botha was a typical case where the debtor should rather have pursued his rights regarding debt review under the National Credit Act (NCA) 34 of 2005 in order to find a way out of his financial dilemma. However, unlike the position regarding rehabilitation after sequestration under the Insolvency Act 24 of 1936, debt review does not provide for any discharge of debt, since the NCA’s objective of providing debt relief is subject to the principle of satisfaction by the debtor of all financial obligations. The aim of this case note is to analyse and evaluate the facts and decision in Botha in light of international trends and guidelines that all ―honest but unfortunate debtors‖ who land in a hopeless financial situation due to factors beyond their control, should be provided relief in the form of a discharge. The legal implication of the decision, namely that the current South African system provides discharge relief only to debtors who have sufficient assets to prove advantage, is important. Therefore, recent law reform proposals that provision be made for a procedure of debt intervention as well as the proposals for a pre-liquidation composition are also discussed. However, it is argued that the proposed procedures would not have provided a viable solution to the debtor’s financial predicament in Botha. The conclusion is that the shortcomings of the system should be addressed in a holistic and comprehensive manner. Unnecessary restrictions on access to debt relief and the overlap between the various procedures should be eliminated. Ultimately it is imperative that all debtors, from both the lower income and middle income groups, should be offered equal protection and relief by means of a discharge from debt.