Release of a Solvent Spouse's Property Under Aection 21(2)(c) of the Insolvency Act 24 of 1936

• Jurisdiction: South Africa
• Date: 27 May 2019
• Pages: 193-200
• Published date: 27 May 2019
• Author: Roger G Evans

RELEASE OF A SOLVENT SPOUSE’S

PROPERTY UNDER SECTION 21(2)(C) OF THE

INSOLVENCY ACT 24 OF 1936*

Roger G Evans

BLC LLB LLM

Associate Professor, Department of Mercantile Law, University of South Africa

1 Introduction

By now it should be well known to legal practitioners that a marriage

out of community of property is not a fool proof legal institution that will

protect spouses’ assets from the reach of their debtors in the event of the

insolvency of one of those spouses. Transferring or donating property

from one spouse to another under insolvent or imminently insolvent

circumstances may not put such property beyond the reach of the

insolvent estate. This is so because section 21 of the Insolvency Act

1

provides that an additional effect of the sequestration of the estate of one

of two spouses is to vest first in the Master, and upon his appointment, in

the trustee, all the property of the spouse whose estate has not been

sequestrated.

2

Although this legislation has in the past been described as drastic,

3

and

similar provisions have been removed from the legislation of many legal

systems, our Constitutional Court has not considered section 21 to be

unconstitutional.

4

One of the reasons why this provision was considered

not to violate the Constitution is the fact that section 21 also makes

provision for the solvent spouse to claim the release of his or her assets

which have vested in the trustee of the insolvent estate.

5

The Act provides

that the trustee of the insolvent estate must release property of the solvent

spouse which is proved, inter alia, to have been acquired by that spouse

during the marriage with the insolvent by a title valid as against creditors

* I thank my colleague Prof B Naude for perusing and commenting on this article. Of course, any faults

that remain are my own.

1

24 of 1936. Hereafter referred to as the Act.

2

S 21(1). For an explanation of the rationale on which this legislation hinges, see Smith The Law of

Insolvency 3 ed (1988) 108.

3

SA Law Commission Review of the Law of Insolvency Voidable Dispositions and Dispositions that may

be set aside and the Effect of Sequestration on the Spouse of the Insolvent Project 63 Working Paper 4

(1991).

4

See Harksen v Lane NO 1997 11 BCLR 1489 (CC). See also Van der Walt & Botha ‘‘Coming to Grips

with the New Constitutional Order: Critical Comments on Harksen v Lane NO’’ 1998 SAPL 17; Evans

‘‘The Constitutionality of Section 21 of the Insolvency Act 24 of 1936’’ 1998 Stell LR 359; Freedman

‘‘Understanding the Right to Equality’’ 1998 SALJ 243.

5

See s 21(2).

193

(2004) 15 Stell LR 193

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