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MRL3701 Assignment 1 (COMPLETE ANSWERS) Semester 1 2026 – DUE 2 March 2026; 100% Correct solutions and explanations.QUESTION
Palesa and her best friend Mpho started a new restaurant business in 2023. Despite
their impressive culinary skills, the restaurant was not a success. Palesa lost a lot of
money which she had invested in the restaurant, leaving her in a dire financial
situation. By 1 October 2025, Palesa’s liabilities exceeded her assets by R1,8 million.
Palesa presently owes a total of R2,4 million to various creditors. Her creditors include
Lethabo to whom she owes R1,1 million.
Over the past few months Palesa has failed to pay many of her debts. This includes
the debt of R1,1 million owed to Lethabo, which was due and payable on 15 January
2026. Lethabo has discovered that Palesa had borrowed from her boyfriend, Andile,
an amount of R900 000, which Palesa had repaid in full on 31 January 2026. Lethabo
is distressed that Palesa had repaid the loan that she had obtained from her boyfriend,
even though the amount was due and payable only on 1 August 2026. Palesa seems
to have been mindful that she was in financial difficulty and that her creditors could
apply for the sequestration of her estate at any time.
Lethabo applies for the compulsory sequestration of Palesa’s estate.
Answer the following questions based on the facts given above:
(a) Explain the concept of a voidable preference and list the requirements that must
be proved for a voidable preference to be set aside by the court. (2)
(b) What is an undue preference and what elements must be proved for a court to set
aside an undue preference? (2)
(c) Discuss whether, and on what basis (if any), the trustee of Palesa’s insolvent estate
would be able to recover the R900 000 paid by Palesa to Andile. (2