Separate property of solvent spouse
After the granting of a sequestration order, the separate estate of the solvent spouse vests in the Master and thereafter in the trustee.1 The court is, however, entitled to make an order declaring that all or a portion of the assets of the solvent spouse shall for a certain period not be affected by the order of sequestration if the solvent spouse is carrying on a business as a trader apart from the insolvent, or if he or she is likely to suffer serious prejudice by reason of the vesting of his or her estate in the Master or trustee.
The court must be satisfied that the solvent spouse is willing and able to make arrangements safeguarding the interest of the insolvent estate in such assets and during the said period the solvent spouse must provide the trustee with evidence in support of such spouse's claim to the assets. The trustee must advise such spouse whether or not he will release the assets as not being subject to administration as part of the insolvent estate and if, upon the expiry of the period, the assets have not been released they vest in the Master or in the trustee.2
In terms of section 21(3) of the Act the trustee is precluded, except with the leave of the court, from realising property ostensibly belonging to the solvent spouse until the expiry of six weeks' written notice given to that spouse of his intention to do so, provided such spouse is in the Republic and the trustee is able to ascertain his or her address. The notice must also be published in the Government Gazette and in a newspaper circulating in the district in which the solvent spouse resides or carries on business, and must invite all separate creditors for value of that spouse to prove their claims.3 The trustee is obliged to release to the solvent spouse any property which is proved:
(a) to have been the property of that spouse before her or his marriage to the insolvent or before 1 October 1926; or
(b) to have been acquired by that spouse under a marriage settlement; or
(c) to have been acquired by that spouse during the marriage by a title valid as against creditors of the insolvent;5 or
(d) to be safeguarded in favour of that spouse in terms of the provisions of the Insurance Act 27 of 1943;6 or
(e) to have been acquired with, or with the income or proceeds of, any of the property referred to above.
The solvent spouse may apply to court for the release of property vested in the trustee or for an order staying the sale of such property or, if it has been sold, for an order declaring the solvent spouse to be entitled to the proceeds, provided they have not already been distributed among creditors.
A trustee who has released property to the solvent spouse may nevertheless prove that it belongs to the insolvent estate and recover it accordingly.9 If release of the property is not claimed and such property ostensibly does not belong to the solvent spouse (although in reality it does) the trustee is entitled to sell the property as part of the insolvent estate.
Where, however, no release is claimed and the property ostensibly belongs to the solvent spouse, his/her creditors for value are entitled to prove claims and share in the proceeds of such property.
