Some Aspects of South African Cross-Border Insolvency Relief: The Lehane Matter


  • Alastair David Smith University of South Africa



insolvency law, cross-border insolvency, foreign insolvency no bar to South African proceedings, recognition of foreign non-domiciliary trustee in exceptional circumstances


The Lehane matter wound its way through the Cape Provincial Division of the High Court and reached the Supreme Court of Appeal. Mr Dunne, the debtor, lived in the United States of America and ran an international web of companies. One of these companies, Lagoon Beach Hotel, operated a Cape Town hotel. Mr Dunne later filed for chapter 7 bankruptcy in the United States and soon was also bankrupted by the Irish High Court. The Irish official trustee, Lehane, applied to the Cape court for the recognition of his status as a foreign trustee and for an anti-dissipation order preventing the disposal of South African property to which Mr Dunne was connected. Lehane succeeded at every stage of the South African proceedings.

Initially, Steyn J recognised Lehane as the trustee as though a sequestration order had been granted against Mr Dunne in terms of the Insolvency Act 1936, thus diverging from the approach taken by the Judicial Committee of the Privy Council in Singularis Holdings Ltd v PricewaterhouseCoopers (Bermuda). Subsequently, Yekiso J's approach to applying the Insolvency Act without derogating from its generality opens up the possibility of applying section 21 of the Insolvency Act to significant effect against Mrs Dunne's South African property. Yet the territorialist restriction in Yekiso J's order that only creditors with causes of action which arose in South Africa were entitled to claim against the insolvent estate excluded many foreign creditors, even those from Ireland.

Of the many issues raised by the Lagoon Beach Hotel company, two that are chosen for discussion in this case note are the possible application of the automatic stay under section 362 of the United States Bankruptcy Code 1978 to the South African proceedings, and the standing of Lehane because of the litigants' dispute whether Mr Dunne was domiciled in the United States or Ireland.

Yekiso J and subsequently Leach JA held that the American automatic stay did not govern the South African proceedings. Significantly, the American and the Irish trustees were co-operating with respect to proceedings in Ireland and South Africa that involved Mr Dunne. And Leach JA deftly deferred to the Irish court the decision regarding the application of the American automatic stay and its relevance to the Irish proceedings.

As for the disputed domicile of Mr Dunne, Yekiso J and Leach JA both considered that Mr Dunne had retained his Irish domicile. The established principles of recognising a foreign domiciliary trustee before he might deal with South African property, whether movable or immovable, were confirmed. Leach JA, however, went on to discuss the assistance that might cautiously be accorded to Lehane if Mr Dunne were domiciled elsewhere than in Ireland. Even then, the relevance of domicile could not be gainsaid.

In the comments, it is pointed out that trustees appointed in countries other than the insolvent's domicile may still be recognised by South African courts. The insolvent's submitting to the jurisdiction of a court that is not the court of his domicile is discussed; on its facts, the cited authority does not bear out the relevant principle. And the possibility of recognising non-domiciliary trustees in exceptional circumstances and for exceptional convenience is explored. The cases cited in support of this principle are shown to yield differing results.



Download data is not yet available.


Metrics Loading ...

Author Biography

Alastair David Smith, University of South Africa

Professor, Department of Mercantile Law, College of Law, University of South Africa.




Bertelsmann et al Mars

Bertelsmann E et al Mars: The Law of Insolvency in South Africa 9th ed (Juta Cape Town 2008)

Collins et al Dicey, Morris and Collins

Collins L et al Dicey, Morris and Collins: The Conflict of Laws 14th ed (Sweet and Maxwell London 2006)

Kunst et al Meskin

Kunst JA et al Meskin: Insolvency Law and Its Operation in Winding-Up electronic version (LexisNexis Durban 1990-)

O'Brien "Transnational Aspects"

O'Brien P "Transnational Aspects in South African Insolvency Law" Unpublished contribution delivered at the Rand Afrikaans University Research Unit for Banking Law Reform of South African Insolvency Law Conference (28 August 1995 Johannesburg)

Sharrock, Van der Linde and Smith Hockly

Sharrock R, Van der Linde K and Smith A Hockly's Insolvency Law 9th ed (Juta Cape Town 2008)

Sheldon Cross-Border Insolvency

Sheldon R (ed) Cross-Border Insolvency 4th ed (Bloomsbury London 2015)

Smart Cross-Border Insolvency

Smart P St J Cross-Border Insolvency 2nd ed (Butterworths London 1998)

Smith 2002 SA Merc LJ

Smith A "Some Aspects of Comity and the Protection of Local Creditors in Cross-Border Insolvency Law: South Africa and the United States Compared" 2002 SA Merc LJ 17-30

Smith 2016 Obiter

Smith A "Assisting Foreign Insolvency Practitioners in Cross-Border Insolvency: Some Foreign Insights into South African Law: Singularis Holdings Ltd v PricewaterhouseCoopers (Bermuda) [2014] UKPC 36 (10 November 2014), [2015] 2 WLR 971: cases" 2016 Obiter 167-186

Smith and Boraine 2002 Am Bankr Inst L Rev

Smith A and Boraine A "Crossing Borders into South African Insolvency Law: From the Roman-Dutch Jurists to the UNCITRAL Model Law" 2002 Am Bankr Inst L Rev 135-215

Steyn Uitleg van Wette

Steyn LC Die Uitleg van Wette 4th ed (Juta Cape Town 1974)

Westbrook 2005 Am Bankr LJ

Westbrook JL "Chapter 15 at Last" 2005 Am Bankr LJ 713-728

Case law

South Africa

Beddy v Van der Westhuizen 1999 3 SA 913 (SCA)

Bishop v Conrath 1947 2 SA 800 (T)

Ex parte Getliffe: In re Dominion Reefs Ltd 1965 4 SA 75 (T)

Ex parte Lehane (unreported) case number 15678/2014 of 2 September 2014

Ex parte Palmer: In re Hahn 1993 3 SA 359 (C)

Ex parte Robinson's Trustee 1910 TPD 25

Ex parte Singer: In re Insolvent Estate Skeen 1905 26 NLR 536

Ex parte Stegmann 1902 TS 40

Herman v Tebb 1929 CPD 65

Hymore Agencies Durban (Pty) Ltd v Gin Nih Weaving Factory 1959 1 SA 180 (N)

Jooste v De Witt 1999 2 SA 355 (T)

Lagoon Beach Hotel v Lehane 2016 3 SA 143 (SCA)

Lehane v Lagoon Beach Hotel (Pty) Ltd 2014 ZAWCHC 203 (17 October 2014)

Lehane v Lagoon Beach Hotel (Pty) Ltd 2015 4 SA 72 (WCC)

Moolman v Builders and Developers (Pty) Ltd (in Provisional

Liquidation): JoosteIntervening 1990 1 SA 954 (A)

M T D (Mangula) Ltd v Frost and Power: Ex parte Power 1966 2 SA 713 (R)

R v Etberg 1932 AD 142

Re African Farms Ltd 1906 TS 373

Re Estate Morris 1907 TS 657

Rens v Gutman 2003 1 SA 93 (C)

Richards v Doveton's Trustees 1884 3 SC 123

Smit v Abrahams 1992 3 SA 158 (C)

Trustee of Howse, Sons & Co, Trustees of Howse, Sons & Co, Jocelyne v Shearer & Hine 1884 3 SC 14

Viljoen v Venter 1981 2 SA 152 (W)

Ward v Smit: In re Gurr v Zambia Airways Corporation Ltd 1998 3 SA 175 (SCA)

United Kingdom and other jurisdictions

Araya v Coghill 1921 SC 462

Cleve v Jacomb 1864 Mac 171

Ex parte Cridland 1814 3 V & B 94

Geddes v Mowat 1824 1 Gl & J 414

Goetze v Aders 1874 2 R 150

In re Thulin 1995 1 WLR 165

In re Sillar, Hurley v Winbush 1956 IR 344

In the matter of Dunne (a Bankrupt) 2013 IEHC 583 (6 December 2013)

In the matter of Sean Dunne (a Bankrupt) 2015 IESC 42 (15 May 2015)

Lyall v Jardine, Matheson & Co 1870 LR 3 PC 318 (see also 1870 7 Moo PC NS 116, 17 ER 45)

Re Anderson 1911 1 KB 896

Re Artola Hermanos 1890 24 QBD 640

Re Flightlease (Ireland) Limited (in Voluntary Liquidation) 2012 1 IR 722

Re O'Reardon 1873 LR 9 Ch App 74

Re P MacFadyen & Co 1908 1 KB 675

Rubin v Eurofinance SA 2012 UKSC 46 (24 October 2012), 2013 1 AC 236

Selkrig v Davies 1814 2 Rose 291, Selkrig v Davies 1814 2 Dow PC 230, 3 ER 848

Singularis Holdings Ltd v PricewaterhouseCoopers (Bermuda) 2014 UKPC 36 (10 November 2014), 2015 2 WLR 971

Stewart v Auld 1851 13 D 1337

Young v Buckel 1864 2 M 1077


South Africa

Cross-Border Insolvency Act 42 of 2000

Insolvency Act 24 of 1936

United States

Bankruptcy Code, 1978

International law instruments

UNCITRAL Model Law on Cross-Border Insolvency (1997)

Internet sources

Anon 2016

Anon 2016 High Court Extends Sean Dunne Bankruptcy accessed 11 July 2016

LII 2016

Legal Information Institute 2016 11 US Code Chapter 15 - Ancillary and Other Cross-Border Cases accessed 11 July 2016

NAMA Wine Lake 2013

NAMA Wine Lake 2013 Exclusive! Sean Dunne Files for Bankruptcy in US on Good Friday accessed 7 July 2016

O'Carroll 2015

O'Carroll S 2015 Seán Dunne's Wife Won't Profit from the Sale of Luxury Hotel accessed 11 July 2016

O'Donovan 2013

O'Donovan D 2013 What Irish 'Bankruptcy' Means for Bust Developer Sean Dunne accessed 7 July 2016

O'Faolain 2016

O'Faolain A 2016 Gayle Killilea Dunne Fails in Move to Quiz US Lawyer accessed 7 July 2016

O'Faolain 2016

O'Faolain A 2016 High Court Grants Extension to Sean Dunne's Bankruptcy accessed 19 July 2016

Quinlan 2014

Quinlan R 2014 Divorce Not on Cards for Sean Dunne and Gayle Killilea accessed on 12 July 2016

Supreme Court of Ireland 2016

Supreme Court of Ireland 2016 About the Supreme Court accessed 7 July 2016


United Nations Commission on International Trade Law 2016 Status: UNCITRAL Model Law on Cross-Border Insolvency (1997) accessed 11 July 2016

Wikipedia 2016

Wikipedia 2016 Seán Dunne (Businessman) accessed 11 July 2016



How to Cite

Smith, A. D. (2017). Some Aspects of South African Cross-Border Insolvency Relief: The Lehane Matter. Potchefstroom Electronic Law Journal, 19, 1–25.



Case Notes