Does the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act of 1998 provide Adequate Family Home Protection to Insolvent Debtors or Is It Still Pie in the Sky? (Part 2)
Keywords:insolvency law, exemption for the insolvent’s family home or homestead, protection of occupancy, insolvent debtor, Prevention of Illegal Eviction From and Unlawful Occupation of Land Act 19 of 1998 (the PIE Act)
Although some legal systems provide some protection for a debtor’s homestead or family home when his or her estate is insolvent, such direct protective measures are absent in South African insolvency law. Such protection during insolvency can be provided by means of some level of exemption for the insolvent’s family home or homestead, as in the insolvency laws of the USA, or by providing protection of occupancy to the insolvents and his or her dependants, as is the case in England and Wales.
In view of developments concerning the protection of a debtor’s primary residence in South African individual debt collecting and execution procedures (in light of the right to housing provided for in section 26 of the Constitution), the question was posed in Part 1 of this article whether a court hearing an application for compulsory sequestration should apply the same principles, especially if the debtor raises the point that the sequestration order may render him or her homeless. In this respect, no direct authority for this proposition could be found. (Commentators have argued for some time that the position of the homestead of the debtor in insolvency needs the legislature’s attention as well, but there has not been real progress in this regard to date.)
However, there are a few judgments in which courts have considered the applicability of the Prevention of Illegal Eviction From and Unlawful Occupation of Land Act 19 of 1998 (the PIE Act) after sequestration of the insolvent’s estate. Part 2 of the article is therefore devoted to discussing developments in this regard and to considering what problems are encountered in applying the PIE Act during a debtor’s insolvency. Part 2 also considers whether this Act provides sufficient protection to insolvent debtors to prevent them from being evicted from “their” homes when they cannot afford alternative accommodation.
Against this background, the two parts of the article deal with different aspects of the issue under discussion. Ultimately, the two parts aim to provide some answers to the pertinent question – that is, whether the PIE Act can provide effective interim and/or adequate protection to an insolvent debtor who may be evicted from his or her (former) homestead, in particular in the absence of direct measures in insolvency law to protect insolvents and their dependants under these circumstances. In raising this question, pertinent issues regarding the application of the PIE Act in insolvency are also considered.