Allen West Conveyancing Update

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 is declared insolvent. The question requiring 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

In dismissing the application the court a quo considered two judgements: Corporate Liquidators (Pty) Ltd & another v Wiggill & others 2007(2) SA 520 (T) and Middleton v Middleton & another 2010 (1) SA 179 (D).  In Corporate Liquidators it was held that where parties entered into a settlement agreement regarding the division of their assets, which is made an order of court as transfer of property so a spouse was, therefore, not a prerequisite for ownership.  The court in Middleton held that a settlement agreement created only a personal right for the transfer of ownership and consequently that the divorce order did not vest ownership without traditio (delivery of transfer).

The SCA held on a proper construction of s 16 of the Deeds Registries Act 47 of 1937, derivative acquisition of ownership in land required registration.  The third respondent’s acquisition of the second respondent’s  interest  in  the  property  was  derivative:  it  arose  from  the  settlement agreement which gave the third respondent a personal right to enforce registration of the second respondent’s undivided half share in the property.  That agreement, though binding on the contracting parties, did not by itself vest ownership of the second respondent’s half share in the property in the third respondent any more than a contract of sale of land passed ownership to the buyer, and it therefore followed that Middleton was correctly decided.

The SCA found further that the court in Corporate Liquidators overlooked the common law principles of co-ownership, as well as the requirements in s 26 of the Deeds Registries Act that co-ownership in land was only terminated on attestation of deeds of partition transfer by the registrar, when ownership was conveyed to the respective owners of the land. With regard to the second respondent’s alternative defence, the SCA held thus that at the time that the third respondent acquired the personal right to compel transfer of the second respondent’s half share in the property into her name, there was no other greater or competing right to defeat her claim.
When the  appellant  applied  for  an  order  declaring  the  property  executable,  the  second respondent had already alienated his half share in the property to the third’s respondent by way of the settlement agreement.

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.

Given the  above  conflicting  cases  the  matter  was  referred  to  the  Registrars’  Conference requesting guidance (see RCR 35 of 2011).

Conference held that the case of Corporate Liquidators (Pty) Ltd v M A Wiggill, should be followed as it was heard on appeal by a full bench. The division of ownership takes place upon the grant of the divorce.

Should you require any more information on this matter, do not hesitate to contact us. 

Allen West
TONKIN CLACEY PRETORIA 
012 346 1278

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