The right to housing and its application in sequestration: Body Corporate of Old Trafford v Muronzi (016676/2023) [2024] ZAGPPHC 623 (21 June 2024)

Abstract

Insolvency law in South Africa limits the insolvent’s fundamental rights, such as the right of access to adequate housing under section 26 of the Constitution of South Africa, 1996. This limitation arises because the Insolvency Act 24 of 1936 does not exempt the insolvent’s primary residence from vesting in the insolvent estate, vesting that may therefore render the insolvent and his or her family homeless. Before an application for compulsory sequestration can succeed, the applicant must prove a reason to believe that the sequestration will benefit the estate’s creditors. The courts exercise their discretion to grant or refuse a sequestration order, depending on whether this requirement is satisfied. In special circumstances, the court may exercise its discretion to refuse a sequestration order. Special circumstances in Body Corporate of Old Trafford v Muronzi (016676/2023) [2024] ZAGPPHC 623 (21 June 2024) were held to infringe an insolvent’s right to adequate housing without judicial oversight. Rule 31 and rule 46A of the Uniform Rules of Court require the court to consider alternatives to execution before declaring a property executable in an application for default judgments involving a debtor’s home. This case note explores whether rule 46A should also be considered in sequestration applications, where a debtor may be rendered homeless. It also discusses how the right to access adequate housing is enforced in sequestration proceedings. The case note shows that the courts exercise their discretion and creatively apply the advantage requirement to enforce section 26 of the Constitution in the absence of special rules governing judicial oversight of sequestration proceedings.