The wheels of justice are often criticised for turning far too slowly. This article examines the use of newspapers and the Government Gazette in advertisements of legal notices specifically that of a sale of business and the advertisements concerned with an estate. Legal advertisements are important for various reasons and it is time that the legislature considers the possibility of using more modern ways of advertising notices for legal reasons rather than the current outdated means. 

Section 34 of the Insolvency Act Number 24 of 1936 (“Insolvency Act”) requires a trader who is selling his / her business to a purchaser to give notice to creditors of the intended sale of business by publishing such a notice in the Government Gazette and in two English and two Afrikaans newspapers. Similarly in the Administration of the Estates Act Number 66 of 1965 (“Estates Act”) requires the executor to advertise the estate for creditors to lodge claims in terms of section 29 and an advertisement stating that the estate will lie open for inspection for a period of time in terms of section 35. The Estates Act requires the sections 29 and 35 advertisements to published in the Government Gazette and in a newspaper where the deceased was ordinarily resident.

The section 34 advertisement in terms of the Insolvency Act is a notice to creditors calling upon the creditors to demand payment from the trader for outstanding accounts. Failure to publish said notice and conclude a sale of a business has the following consequences:

• the transfer shall be void as against his / her creditors for a period of six months after such transfer; and
• if the trader’s estate is sequestrated within the six month period, it shall be void against the trustee of his / her estate.  

In terms of section 29 of the Estates Act, in a similar vein, the executor of a deceased estate calls upon creditors of the deceased to submit claims of outstanding amounts to him/her within a specified period of time. Failure to do so timeously will result in the creditor approaching the Master of the High Court for permission to lodge a claim with the executor of the estate. Section 35 of the Estates Act falls at the back end of the process of winding-up an estate and gives notice to interested persons to inspect the liquidation and distribution account and, if so required, to object to said account by lodging a notice of objection to the Master of the High Court. Failure to inspect the account (and lodge a notice of objection, if so required) will result in the estate been wound-up according to that account.  

There is nothing wrong with this system other than it is outdated and seems to be a ticking-box exercise rather than satisfying the purpose for which it was constructed. Creditors of a business are usually business owners and business owners do not have the time to peruse newspapers or the Government Gazette in search of the possibility of a debtor selling his/her business. Of course, creditors may become aware that the business is to be sold imminently but that again seems to be place the onus on the creditor to search the papers and the Gazette for the possibility of such a notice. In a similar vein, creditors must make the necessary searches in papers to establish when can they submit claims (and to whom they must submit those claims) as well inspecting the liquidation distribution account when the account is to lay open for inspection.

It should not be an exercise of the trader or the executor to simply place advertisements in the Government Gazette and newspapers to tick the formalities box as per statutory requirements. It should be a genuine advertisement in accordance with the times of the day to call upon those creditors who have claims against the business or estate and submit those claims. It should not be an exercise where the creditors of a business or estate search the various papers and Gazette on the possibility that they find a notice.

Instead the law around these advertisements should in my view be modernised by creating, for example, a website where traders or executors are able to satisfy their statutory obligations and having their corresponding creditors engage in a simple search on the website. The use of technology has various ways of keeping creditors up to date with the latest notices by alerts and search options. Some may say that this could be done by directing the newspapers to make available the notices on their website – I am unsure that this is a viable option as it does not detract from the problem of which newspaper is it advertised in the first place. 

In conclusion, fewer and fewer people are making use of newspapers as more and more people are able to access their written media on the net and through their cellular phones. Legal advertisements through the old fashioned mediums are old fashioned and in my view out dated. It is time for the legislature to realise that there are far better, expeditious and practical ways of advertising in terms of statutory obligations and that the use of technology is the way of the future.   

Written and prepared by Kirith P. Haria, BKM Attorneys