GF Wessels NO v CJ De Jager NO and Another

After the sequestration of his estate but before his rehabilitation, an insolvent person's wife (married out of community of property) took out a life insurance policy on her life, designating the insolvent as the beneficiary in the event of her death. She subsequently died intestate, making the insolvent an intestate heir. The insolvent refused to accept both the insurance benefit and the inheritance. The question arose whether these two benefits vested in the trustee of the insolvent estate such that the trustee acquired the power to accept the benefits himself.

• Whether insurance benefits and inheritance that would otherwise accrue to an insolvent during insolvency constitute 'goods' that vest in the trustee of the insolvent estate under section 20(2)(b) of the Insolvency Act 24 of 1936
• Whether the insolvent acquired a 'right' or merely a 'power/capacity' (bevoegdheid) to accept the insurance benefit and inheritance
• Whether such benefits constitute conditional rights to property that fall within the definition of 'goods' under the Insolvency Act

The appeal was dismissed with costs. Additionally, the Court made a special costs order that the appellant's attorneys may not recover from him any costs attributable to the inclusion of volume 2 of the record (which contained only the parties' heads of argument from the court a quo and was unnecessary for the appeal).

When an insolvent person, after sequestration but before rehabilitation, becomes entitled to accept an insurance benefit or inheritance, he acquires only a power or capacity (bevoegdheid) to accept the benefit, not a vested right. Such a power does not constitute 'goods' or a 'conditional right to goods' that vests in the trustee of the insolvent estate under section 20(2)(b) of the Insolvency Act 24 of 1936. A right only comes into existence upon acceptance of the benefit. Before acceptance, there is merely an offer creating no enforceable obligation, and consequently the trustee has no power to accept the benefit on behalf of the insolvent who has refused it.

The Court observed that it had warned on numerous occasions that special costs orders would be made regarding the inclusion of unnecessary material in appeal records, and had indeed made such orders in a number of appeals, but these warnings had apparently fallen on deaf ears in many cases. The Court also noted in obiter that following the reasoning established in this judgment, Kellerman NO v Van Vuuren 1994(4) SA 336 (T) and Klerck and Schärges NNO v Lee 1995(3) SA 340 (SE) were correctly decided, while Boland Bank v Du Plessis 1995(4) SA 113 (T) was incorrectly decided.

This case is significant in South African insolvency law as it clarifies the distinction between 'rights' and 'powers/capacities' in the context of what vests in a trustee under section 20(2)(b) of the Insolvency Act. It establishes that insurance benefits and inheritances that an insolvent may refuse do not automatically vest in the trustee, as the insolvent acquires only a power to accept, not a vested right. The case provides important guidance on the interpretation of 'goods' and 'conditional rights' in insolvency proceedings. It also demonstrates the Court's willingness to make special costs orders regarding unnecessary material in appeal records.