Swart v Starbuck and Others

The appellant was an unrehabilitated insolvent whose estate was sequestrated in October and November 2005. Immovable properties forming part of the insolvent estate were sold by the trustees by private treaty before the second meeting of creditors, pursuant to written offers accepted in December 2005 and later authorised by the Master in January 2006 under s 80bis of the Insolvency Act 24 of 1936. The properties were transferred to the purchaser in June 2006, and the creditors later approved the trustees’ report reflecting the sale. The insolvent sued the trustees for damages, alleging that the sale was irregular and constituted maladministration because it occurred without proper authority and contrary to s 82 of the Insolvency Act.

The appeal was dismissed with costs, including the costs of two counsel.

The case clarifies the scope and application of ss 80bis, 82(1) and 82(8) of the Insolvency Act, confirming that s 82 does not apply to sales authorised by the Master before the second meeting of creditors. It also reaffirms the abstract theory of transfer in South African property law and underscores the legal effect of unchallenged administrative authorisations by the Master in insolvency proceedings.