Disposition

Where a trader disposes of any business belonging to him or any goods of property forming part thereof, except in the ordinary course of the business, such trader must publish notice of the intended disposition in the Government Gazette and Newspaper, prior to such disposition. If a trader fails to do this, the disposition shall be void as against his creditors for a period of six months after such disposition, and shall be void against the trustee of the estate, if his estate is sequestrated at any time within the six-month period (see Section 34(1) of the Insolvency Act 24 of 1936).

Should it be disputed whether a person is a trader or not, it is assumed that he is a trader until the converse is proved (see the definition of trader in Section 2 of Act 24 of 1936).

In the case of Roos NO and another v Kevin and Lasia Property Investments BK and Others (2005) JOL 15748 (T) on both logic and law, it was found that an Investment Company was not a trader as envisaged in section 34, because it did not merely buy and sell property. This case cannot be seen as a carte blanche that all investment companies entering into sale agreements of immovable property are not deemed to be traders. Each case will have to be decided on its own merits. It is trusted that new case law will provide more clarity on this issue.

Whether a transaction was "in the ordinary course of that business" is an objective test (see Joosub v Ensor NO. 1966(1) SA 319 A) and not always easy to determine, but cognisance must be taken that the test applied is whether the transaction was in the "ordinary course" of "that" business (see Ensor No v Rensco Motors (Pty) Ltd 1981(1) SA 815). Both criteria must be present to apply the objective test.

Allen West
MacRobert Attorneys
Pretoria