, Question 1
Explain the primary objective of s 21 of the Insolvency Act 24 of 1936 and discuss how the provision
balances the protection of creditors against the rights of the solvent spouse.
Model Answer
The primary objective of s 21 is to prevent fraudulent or collusive dissipation of assets that could
prejudice the creditors of the insolvent spouse by creating the appearance that substantial property
belongs to the solvent spouse. When a sequestration order is granted, s 21(1) provides for the
automatic vesting of all property (movable and immovable) that was in the possession of either spouse
or both spouses at the date of sequestration in the Master, and thereafter in the trustee, as if it formed
part of the insolvent estate. This drastic measure is designed to stop any dishonest collusion between
spouses whereby the insolvent spouse might transfer or conceal assets in the name of or under the
control of the solvent spouse shortly before or after insolvency.
However, the section is not intended to permanently deprive the solvent spouse of genuinely separate
property. Subsection 21(2) allows the solvent spouse (or any other person claiming entitlement) to
prove to the trustee’s satisfaction that certain property is his/her separate property and does not form
part of the insolvent estate. If successful, that property must be released from attachment.
The balance is therefore achieved through a temporary protective attachment (to safeguard creditors)
followed by a reclamation mechanism (to protect the innocent solvent spouse). Courts have repeatedly
emphasised that s 21 is a provisional measure only and does not finally determine ownership (Ex parte
The Master of the High Court South Africa (North Gauteng) 2011 (5) SA 311 (GNP); Epstein v Epstein
1906 TS 87). The provision is therefore both creditor-friendly and spouse-protective when correctly
applied.
Question 2
Discuss the meaning of the phrase “in the possession of” as used in s 21(1) of the Insolvency Act and
explain its significance in modern South African insolvency practice.
Model Answer
The phrase “in the possession of either or both of the spouses” in s 21(1) has been given a wide
interpretation by South African courts. Possession is not limited to physical custody; it includes
constructive possession, control, and situations where property is registered in the name of one spouse
but effectively controlled by the other.
In Harrington v Du Preez 1995 (4) SA 388 (C) the court held that furniture standing in the matrimonial
home, even if purchased by the solvent spouse, was “in the possession” of both spouses. Similarly, in
Sackville West v Nourse 1925 AD 516, shares registered in the wife’s name but managed by the husband
were held to fall under s 21.
Explain the primary objective of s 21 of the Insolvency Act 24 of 1936 and discuss how the provision
balances the protection of creditors against the rights of the solvent spouse.
Model Answer
The primary objective of s 21 is to prevent fraudulent or collusive dissipation of assets that could
prejudice the creditors of the insolvent spouse by creating the appearance that substantial property
belongs to the solvent spouse. When a sequestration order is granted, s 21(1) provides for the
automatic vesting of all property (movable and immovable) that was in the possession of either spouse
or both spouses at the date of sequestration in the Master, and thereafter in the trustee, as if it formed
part of the insolvent estate. This drastic measure is designed to stop any dishonest collusion between
spouses whereby the insolvent spouse might transfer or conceal assets in the name of or under the
control of the solvent spouse shortly before or after insolvency.
However, the section is not intended to permanently deprive the solvent spouse of genuinely separate
property. Subsection 21(2) allows the solvent spouse (or any other person claiming entitlement) to
prove to the trustee’s satisfaction that certain property is his/her separate property and does not form
part of the insolvent estate. If successful, that property must be released from attachment.
The balance is therefore achieved through a temporary protective attachment (to safeguard creditors)
followed by a reclamation mechanism (to protect the innocent solvent spouse). Courts have repeatedly
emphasised that s 21 is a provisional measure only and does not finally determine ownership (Ex parte
The Master of the High Court South Africa (North Gauteng) 2011 (5) SA 311 (GNP); Epstein v Epstein
1906 TS 87). The provision is therefore both creditor-friendly and spouse-protective when correctly
applied.
Question 2
Discuss the meaning of the phrase “in the possession of” as used in s 21(1) of the Insolvency Act and
explain its significance in modern South African insolvency practice.
Model Answer
The phrase “in the possession of either or both of the spouses” in s 21(1) has been given a wide
interpretation by South African courts. Possession is not limited to physical custody; it includes
constructive possession, control, and situations where property is registered in the name of one spouse
but effectively controlled by the other.
In Harrington v Du Preez 1995 (4) SA 388 (C) the court held that furniture standing in the matrimonial
home, even if purchased by the solvent spouse, was “in the possession” of both spouses. Similarly, in
Sackville West v Nourse 1925 AD 516, shares registered in the wife’s name but managed by the husband
were held to fall under s 21.
