FILTERS:

Effect of sequestration

23 June 2011

It often occurs in practice that immovable property is registered in the names of spouses married in community of property to one another, who have subsequent to the registration of the immovable property got divorced, and thereafter one of the spouses was declared insolvent.  The question begging an answer is, who is entitled to deal with such immovable property; the person entitled to such property in terms of the divorce agreement; or the trustee appointed in the insolvent estate of the former spouse?

In the judgment of Corporate Liquidators (Pty) Ltd v M A Wiggill 2007 (2) SA 520 T the facts of the case were briefly the following:

Mr. and Mrs. Wiggill were married in community of property and were divorced on 27 March 1998.  The settlement agreement provided that certain of the immovable property be divided between Mr. and Mrs. Wiggill, so as to enable each to receive a defined portion of the property.

Subsequent to the divorce Mr. Wiggill remarried Mrs. E H Wiggill in community of property.

On 20 March 2002 the estate of Mr. Wiggill and his new spouse Mrs. E H Wiggill was finally sequestrated.

When Mrs. Wiggill approached the trustees in the insolvent estate of Mr. Wiggill and Mrs. E H Wiggill to give effect to the divorce agreement and pass transfer of the defined portion of the land into her name, they refused and contended that the immovable property awarded to Mrs. Wiggill fell into the insolvent estate.

The application of Mrs. Wiggill was successful, however, the trustees were afforded the right of appeal to a full bench of the TPA.

On appeal it was held that on divorce of a marriage in community of property, the result would be that the bound common ownership of the spouses which existed by virtue of the marriage in community of property is converted into free co-ownership.  Although each of the former spouses still remain owners of an undivided half share in the property, such shares are not bound to one another in terms of the joint estate.

Conclusion

From the above referred to case it is quite clear that sequestration, subsequent to the divorce of spouses married in community of property, does not affect the locus standi of the non-insolvent former spouse to deal with his/her movable or immovable property allocated to him/her in terms of the divorce settlement, which was made an order of the court.

The trustee in the insolvent estate thus has no choice in passing transfer of the land into the name of the non-insolvent spouse, should he/she so request same.

Where the joint estate is dissolved and sequestration occurs subsequent to the divorce, and immovable property is registered in the joint estate, the following is of importance:

  • Should no reference to the immovable property be made in the divorce agreement, each spouse is entitled to one half share, and before the trustee or non-insolvent spouse can deal with such half share, the provisions of section 45bis(1A)(a) of the Deeds Registries Act 47 of 1937 must be complied with.
  • Should the non-insolvent spouse be entitled to the property by virtue of the divorce agreement, he/she must apply the provisions of section 45bis(1)(a) of the Deeds Registries Act 47 of 1937 before he/she can deal with the property as a whole.  Similarly where the insolvent estate is entitled to the one half share of the non insolvent spouse, the provisions of the said section 45bis(1)(a) must be complied with before the trustee can deal with the property as a whole.

It is of the utmost importance that the provisions of section 14 of the Deeds Registries Act 47 of 1937 be complied with before an owner can deal with immovable property.

Allen West
Deeds Training
Pretoria

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