Scheer v Wagner N.O. and Others

Jürgen Scheer’s estate was sequestrated in Austria in 2017, where he was domiciled, and later in South Africa in 2018. Raoul Gregor Wagner N.O. was appointed trustee of Scheer’s Austrian insolvent estate, while joint trustees were appointed in South Africa. It was common cause that most creditors were Austrian and that the Austrian estate faced a substantial deficit, while the South African estate would yield a surplus after payment of South African creditors. Wagner applied to the Western Cape High Court for recognition as foreign trustee and for authority to transfer any surplus from the South African estate to Austria for the benefit of Austrian creditors. Scheer opposed the application, arguing that section 116 of the Insolvency Act 24 of 1936 required any surplus in a South African insolvent estate to be paid into the Guardians’ Fund and thereafter to him upon rehabilitation. The High Court rejected this argument, recognised Wagner, and authorised the transfer of surplus. Scheer appealed to the Supreme Court of Appeal.

The appeal was dismissed with costs, including the costs of two counsel where employed. Leave was granted to adduce further evidence on appeal, and the respondent was ordered to pay the costs of that application.

The judgment clarifies the meaning of ‘surplus’ in section 116 of the Insolvency Act in cases of cross-border insolvency and confirms that the provision does not displace common law principles of international comity. It affirms that South African courts may recognise foreign trustees appointed in the insolvent’s domicile and permit transfer of remaining funds to a foreign estate where a deficit persists, provided South African creditors are fully protected. The case is an important authority on the interaction between statutory insolvency provisions and the common law in cross-border insolvency matters.