MRL3701 - Study Unit 8 - Vesting Of The Assets Of The Solvent Spouse | Questions And
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VESTING OF ASSETS IN TRUSTEE - SECTION 21 (1) the additional effect of a sequestration order (includes
a provisional order) is to vest the separate property of the spouse of the insolvent in the Master and
subsequently the trustee, as if it were the property of the insolvent estate and to empower the Master
or trustee to deal with the property accordingly.
Sequestration thus makes the trustee owner of the solvent spouse's property in he same way as it
makes him owner of the insolvent's property.
Transfer of ownership not intended to be permanent, since the solvent spouse may secure the release
of assets failing withing the categories set out in S21(2).
Until the asset is a actually release the solvent spouse has none of the the ordinary powers of ownership
over it and cannot dispose of it or encumber it.
Section 21 created to hamper collusion between spouses to the detriment of creditors of the insolvent
estate.
HARKSEN v LANE - S21 invalid for violating the solvent spouse's constitutional right (right not to have
property expropriated without compensation) and the right to equality before the law
Majority of CC rejected the contention - Reasoning:
1. Section cannot be regarded as expropriating the solvent spouse's property since it does not
contemplate a permanent transfer of ownership to the Master or the Trustee. Purpose is merely to
ensure that the insolvent estate is not deprived of property to which it is entitled.
2. section does differentiate between the solvent spouse and other persons who might have had
dealings with the insolvent, this differentiation is legitimate and does not infringe the right to equality
before the law because the section has a legitimate purpose and the differentiation has a rational
connection to that purpose.
, 3. The differentiation of the section amounts to discrimination but it does not constitute unfair
discrimination because 1) it does not affect a vulnerable group or a group that has suffered
discrimination in the past 2) it is intended to achieve a worthy and important societal goal, protecting
the rights of creditors of insolvent estates and 3) it does not impair the fundamental dignity of solvent
spouses or bring about an impairment of a comparably serious nature.
MEANING OF A SOLVENT SPOUSE - S21 "spouse" has an extended meaning and includes a wife or a
husband married according to any law or custom, and also a person living with a member of the opposit
sex, although not married to her or him.
ANY REFERENCE TO A HUSBAND, WIFE OR SPOUSE INCLUDES A CIVIL UNION PARTNER
Section 21 applies only where there is indeed a solvent spouse.
where joint estate of spouses in community of property is sequestrated both spouses become insolvent
and s 21 does not apply.
Section 21 contemplates an existing relationship between the spouses, if prior to sequestration the
relationship has been terminated then S21 is not applicable.
CHAPLIN NO v GREGORY - on solvency of a married man or woman who is living with a third person (not
the legal spouse) only the property of the legal spouse, and not that of both the spouse and the third
person, vests in the trustee.
DUTY OF SOLVENT SPOUSE TO LODGE STATEMENT OF AFFAIRS - One of the duties of the sheriff on
receiving a sequestration order is to serve a copy of the order on the solvent spouse if she has a
separate estate that has not been sequestrated.
Solvent spouse must within 7 days of service lodge with Master a statement of her affairs as at the date
of sequestration, framed substantially in accordance with form B of the first Schedule to the Act and
verified by affidavit..
POSTPONING OF VESTING - I.t.o Section 21(10) if the solvent spouse is carrying on the business of a
trader apart from the insolvent spouse, or if it appears to the court that the solvent spouse is likely to
suffer serious prejudice through the immediate vesting of her property the court may when making the
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