The effect that section 21 of the Insolvency Bill has on persons married in terms of Islamic law - part 2

• Author: N. Gabru
• Pages: 19-35
• DOI: 10.10520/EJC51193
• Published date: 01 January 2004
• Date: 01 January 2004

N Gabru

The effect that section 21 of the

Insolvency Bill

has on persons

married in terms of Islamic law —

Part 2

1. Introduction

In the first part of this research, the purpose and goal of section 21 was

discussed taking into consideration the criticism that surrounds section

21. The solvent spouse’s right to apply for the release of property was

also considered. A brief discussion of the draft

Insolvency Bill

formed the

concluding paragraph of part one of the research.

In this, the second part of the research, the constitutional implications

of section 21 will be considered followed by a comparative study of some

international jurisdictions in paragraph three. Clause 22A of the draft

Insolvency

Bill

will be discussed in paragraph four hereunder.

The third part of the research deals with the Islamic law and the

principles of debt and insolvency as contained in that legal system. The

effect that section 21 of the

Insolveny Act

has on Muslim spouses is also

discussed, and is followed by a solution and a conclusion.

2. The constitutionality of section 21

2.1 A South African approach

In October 1997, the Constitutional Court decided on the constitutionality

of section 21. After the sequestration of her husband’s estate, Harksen’s

property was attached by the trustee of the insolvent estate. She was also

summoned for interrogation at the meeting of the insolvent estate’s

creditors. Harksen challenged the constitutionality of section 21, section

Journal for Estate Planning Law 2004-2005(1)

: 19-35

N Gabru, North-West University (Potchefstroom Campus).

20

Journal for Estate Planning Law 2004-2005(1)

64 and section 65 of the

Insolvency Act

.1This matter was referred to the

Constitutional Court by the Cape Provincial Division. For the purposes of

this research, only the question of the constitutionality of section 21 of the

Act will be dealt with.

Harksen argued that section 21 of the Act infringed the property clause2

and her right to equality.3She argued that the automatic vesting of her

property in the trustee constituted expropriation of that property without

any provision for compensation as required by the property clause.

The court reasoned that although section 21 of the Act differentiated

between the solvent spouse and other persons who had dealings with the

insolvent, the section had a rational and legitimate purpose.4Therefore, it

was the view of the court that section 21 did not amount to an infringement

of the right to equal protection before the law.Although this section discriminate d

against the solvent spouse, the discrimination was not “unfair” because it

was not aimed at a vulnerable group which had suffered in the past. The

discrimination was also not “unfair” because the values underlying it were

consistent with the values protected by the equality clause itself.Fur thermore,

the burden imposed by the provision did not lead to an impairment of the

solvent spouse’s dignity, nor did it constitute an impairment of a comparably

serious nature.5

The court added that the law relating to impeachable transactions was

inadequate to protect creditors and section 21 of the Act was, therefore,

necessary to ensure that all property of the insolvent spouse found its

way into the insolvent estate.The court fur ther supported the imposition

of the

onus

on the solvent spouse to prove ownership of the property in

order to obtain its release, pointing out that the facts pertaining to

ownership often fell within the peculiar knowledge of the spouses and it

would, therefore, be illogical to place the burden of proof on the Master or

the trustee as was done in the past.6

1

Insolvency Act

24 of 1936.

2 S 28 of the

interim Constitution

(s 25 of the

Constitution

).

3 S 8 of the

interim Constitution

(s 9 of the

Constitution

).

4 Namely to prevent an insolvent potentially defrauding creditors by hiding assets

in the solvent spouse’s estate.

5 This submission is consistent with that of the Cork Commission. See fn 84 of

the first part of this research.

6

Harksen v Lane

1998 SA 300 (CC) at par 36 37 and 317F-318C.