James William Thomas and Another v Barend Johannes Thomas

Two brothers, James William Thomas (first appellant) and Barend Johannes Thomas (respondent) owned adjacent farms. In 1999, the respondent encountered financial difficulties and sold his two farms to settle debts. On 13 March 2000, Middelplaas-Suid Landgoed (Edms) Bpk (second appellant), co-owned by the first appellant and his son, bought one of the respondent's farms, Middelplaats-South No. 104. After sale, the respondent refused to vacate, leading to successful eviction proceedings with costs against him. During 2003, the respondent instituted an action claiming delivery of certain livestock, alternatively payment valued at R663,111, and damages of R800,000. The claim was later amended and reduced to R327,400. While this action was pending, the respondent's estate was sequestrated on 17 March 2006. The first appellant proved a claim of R97,483.05. The respondent was rehabilitated on 28 May 2010. The trustees, authorized by creditors to abandon assets that could not be monetized, abandoned the right of action. In 2018, the respondent sought a declaratory order that his right, title and interest in the 2003 action did not form part of his insolvent estate and that he could pursue it for his own benefit.

• What is the nature of a right, title and interest in an action (right of action) under insolvency law?
• What is the effect of trustees abandoning/waiving a right of action that formed part of an insolvent estate?
• Whether a rehabilitated insolvent can pursue a right of action that was abandoned by the trustees of his insolvent estate?
• Whether a right of action, being an incorporeal personal right, is extinguished when abandoned by its holders (trustees)?

1. The appeal is upheld with costs. 2. The order of the court a quo is set aside and substituted with the following: 'The application is dismissed with costs.'

When trustees of an insolvent estate, acting within their authority, abandon or waive an incorporeal right such as a right of action (being movable property under the Insolvency Act 24 of 1936), that right is extinguished and ceases to exist. A rehabilitated insolvent cannot subsequently claim or pursue such an extinguished right. The abandonment by the trustees as legal owners of the right of action has the effect of destroying the right itself, unlike the abandonment of corporeal property which merely renders it res nullius. A right of action, being an incorporeal personal right and not a tangible thing, cannot survive abandonment by its holder.

The Court noted that the matter involved unfortunate sibling rivalry over decades within the farming community that resulted in broken familial ties and exorbitant litigation costs. The Court also observed that it was unnecessary to deal with alternative arguments raised by the appellants given the conclusion reached on the main issue. The Court commented on the interchangeable use of the concepts of 'waiver' and 'abandonment' by the parties, noting that in this context they are essentially the same, and provided legal guidance on the distinction between waiving rights versus obligations, citing Christie's Law of Contract.

This judgment clarifies an important distinction in South African insolvency law between the abandonment of corporeal (tangible) property and incorporeal rights by trustees of an insolvent estate. It establishes that while abandoned tangible property may become res nullius and potentially be reclaimed by a rehabilitated insolvent, abandoned incorporeal rights such as rights of action are extinguished and cannot be revived after rehabilitation. The case provides important guidance on the nature and treatment of rights of action as assets in insolvency proceedings and limits the scope of what a rehabilitated insolvent can reclaim under section 129 of the Insolvency Act. It emphasizes that the critical question is the legal effect of abandonment by trustees, not the subsequent rehabilitation of the insolvent.