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[2002] ZASCA 163
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Du Plessis and Others v Pienaar NO and Others (514/2001) [2002] ZASCA 163; [2002] 4 All SA 311 (SCA); 2003 (1) SA 671 (SCA) (26 September 2002)
THE
SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Reportable
CASE NO:
514/2001
In the matter between :
LOUISA DU PLESSIS
Appellant
and
MARIANA PIENAAR NO
1st
Respondent
NICO
HENDRIK BOEZAART NO
2nd
Respondent
ABSA
BANK LIMITED
3rd
Respondent
MASTER
OF THE HIGH COURT
4th
Respondent
SUSCA
WATTS (BORN DU PLESSIS)
5th
Respondent
PETRO
DU PLESSIS
6th
Respondent
LOURENS LEWIES DU PLESSIS
7th Respondent
____________________________________________________________
Coram:
HARMS,
CAMERON, BRAND, NUGENT JJA
et
HEHER AJA
Heard:
10
SEPTEMBER 2002
Delivered
:
26 SEPTEMBER 2002
Summary: Spouse married in
community of property – separate property – whether
available to creditors upon insolvency
of spouses.
_____________________________________________________________
J U D G M E N T
_____________________________________________________________
NUGENT JA:
NUGENT JA:
[1] One of the ordinary consequences of marriage in community of
property is that the property of the spouses is brought together
in a
joint estate that is owned by them in equal undivided shares. It is
well recognised, however, that either spouse might also
own separate
property that is excluded from the joint estate (
Erasmus v Erasmus
1942 AD 265
;
Cuming v Cuming and Others
1945 AD 201).
The
question in this appeal is whether that separate property is
available to meet the claims of joint creditors of the spouses
upon
their insolvency.
[2] The question arises in the present case in relation to certain
farms, equipment, and livestock that were inherited by the appellant
upon the death of her father in 1983. At the time the inheritance
accrued to the appellant she was married, in community of property,
and the marriage is still in existence. The property was bequeathed
to the appellant subject to a stipulation that it was not to
form
part of the joint estate of the appellant and her husband, that it
was not to be subject to the marital power of the appellant’s
husband, and that it was not to fall within ‘any possible
insolvent estate’ of the appellant’s husband nor vest
in
the trustee of such estate.
[3] The appellant’s husband carried on business as a
moneylender for the benefit of the joint estate. The business fell
upon hard times and on 19 March 2000 an order was made by the
Transvaal Provincial Division finally sequestrating the joint estate
of the appellant and her husband (which is the usual form in which
such orders are granted when the parties are married in community
of
property.) The first and second respondents are the trustees of the
insolvent estate. (The remaining respondents played no
role in the
proceedings in this Court or in the Court
a quo.
) The
trustees laid claim to the appellant’s separate property for
the benefit of creditors whereupon the appellant applied
to the
Transvaal Provincial Division for orders declaring that the property
did not form part of the insolvent estate, prohibiting
the trustees
from selling the property for the benefit of creditors, and
compelling them to restore the property to her. (The
appellant also
claimed other relief in the alternative but that claim was
subsequently abandoned.) The matter came before Van der
Westhuizen J
who followed the decision of McLaren J in
Badenhorst v Bekker NO
en Andere
1994 (2) SA 155
(N) and dismissed the appellant’s
claims with costs but granted leave to appeal to this Court.
[4] The central premise upon which the various submissions made by
the appellant was founded was that the debts that have given
rise to
the claims against the insolvent estate were debts that were incurred
by the joint estate. That being so, it was submitted,
they are
recoverable only from the property of the joint estate, and not from
the separate property of the appellant which falls
outside the joint
estate. The respondent’s counsel, in an erudite and helpful
argument, pointed out, correctly, that the
premise for those
submissions is unsound: Debts are not incurred by a person’s
estate - the estate is merely the source from
which the debt is
recovered. The debt is incurred, however, by the person who is the
debtor. Accordingly the ‘joint estate’
did not incur the
debts that are now sought to be recovered and it is not the insolvent
debtor. The insolvent debtors are both
the appellant and her
husband, for when spouses are married to one another in community of
property debts incurred by one spouse
generally accrue to them both.
(There are exceptions that are not relevant to this appeal.) That
was expressed as follows by Rabie
JA in
De Wet NO v Jurgens
1970 (3) SA 38
(A) at 47D-F and quoted with approval in
Nedbank
Ltd v Van Zyl
[1990] ZASCA 12
;
1990 (2) SA 469
(A) at 476B-E:
‘
Dit blyk duidelik dat die man en die vrou se
skulde gemeenskaplike skulde is wat uit die gemeenskaplike boedel
betaalbaar is. Hulle
is dus eintlik medeskuldenaars. Dit is wel
waar dat die man gewoonweg verantwoordelik is vir die betaling van
skulde, maar dit
beteken nie dat net hy skuldenaar is nie. Betalings
word van hom geëis omdat hy in beheer van die boedel is, en hy
word in
die Hof aangespreek omdat, behalwe in sekere
uitsonderingsgevalle, slegs hy voor die Hof gedaag kan word. Wanneer
hy ‘n
vonnisskuld betaal, betaal hy dit uit die gemeenskaplike
boedel, en wanneer hy ‘n vonnisskuld nie betaal nie, word
eksekusie
teen die bate in die gemeenskaplike boedel gehef.’
[5] Once it is accepted that debts are incurred by persons, rather
than by their estates, and that when the marriage is in community
of
property both spouses are generally liable for payment of the debts
that are incurred by one of them, it follows that a creditor
may look
to the estates of both the debtors for recovery of the debt. In the
case of a spouse such as the appellant that estate
comprises not only
her undivided interest in the joint estate but also her separate
property that falls outside the joint estate
(see J.C. Sonnekus
‘Insolvensie by Huwelike in Gemeenskap van Goed’
1986
TSAR
92
at 97; A.H. Van Wyk
The Power to Dispose of the
Assets of the Universal Matrimonial Community of Property
unpublished
doctoral thesis Leiden 1971 p. 60). The fact that some of her
property is separately owned is relevant to the manner
in which the
property may be dealt with by the spouses
inter se
and to
their rights upon dissolution of the marriage but does not affect the
ordinary right of a creditor to look to all the property
of the
debtor in satisfaction of a debt.
[6] Similarly, the remedies provided for by the
Insolvency Act 24 of
1936
are available against both spouses for recovery of the debt that
is due by both of them. Before the
Matrimonial Property Act 88 of
1984
came into effect the husband, in whom the marital power vested,
could be cited alone in proceedings for sequestration of the joint
estate, but even then the consequence of such an order being granted
was to render both spouses ‘insolvent’ as contemplated
by
the Act with all which that entails (
De Wet NO v Jurgens, supra,
at 48A-C).
(Section 17(4)(b)
of the
Matrimonial Property Act now
requires
both spouses to be cited in an application for the
sequestration of a joint estate.) Moreover, the
Insolvency Act does
not recognise separate estates of a debtor, nor does it allow for the
sequestration of only part of a debtor’s estate. An
order of
sequestration has the effect of divesting the debtor of the whole of
his or her estate.
Section 20(1)(a)
provides expressly that the
effect of the sequestration of the estate of an insolvent shall be
‘to divest the insolvent of
his estate and to vest it in the
Master until a trustee has been appointed, and, upon the appointment
of a trustee, to vest the
estate in him.’
Section 20(2)
in
turn provides that for the purposes of subsection (1) the estate of
an insolvent shall include:
‘
(a) all property of the insolvent at the date of
the sequestration, including property or the proceeds thereof which
are in the
hands of a sheriff or a messenger under writ of
attachment;
(b) all property which the insolvent may acquire or
which may accrue to him during the sequestration, except as otherwise
provided
in section twenty-three.’
[7] There is no provision, then, for
only part of a debtor’s estate to be available to his or her
creditors, nor, when incurring
a debt, is a debtor capable in law of
binding only part of his or her estate for its recovery. When the
estate is sequestrated
for recovery of the joint debts of the
spouses, both spouses become ‘insolvent debtors’ for
purposes of the
Insolvency Act, with
the consequence that the
property of both of them (comprising their undivided interests in the
joint estate as well as separately
owned property) is available to
meet the claims of creditors. In my view that follows inevitably
from the joint liability of the
spouses for debts that are incurred
by either of them, and the ordinary legal consequences to a debtor of
having incurred debt.
Neither one of the spouses, nor a testator, is
capable in law of unilaterally altering those ordinary consequences.
A spouse who
is married in community of property, and who owns
separate property, is in no stronger position than any other debtor
who similarly
is not capable in law of immunising property against
the claims of creditors. (cf
Ex parte Estate Kelly
1942 OPD
265.
[8] We were referred to two decisions in which a contrary conclusion
was reached. In
Ex parte Oberholzer
1967 (1) PH C7 (GW) it
was held that a donor or testator is entitled to give or bequeath
immovable property to a woman who is married
in community of property
so as not to form part of the joint estate, and not to be subject to
the marital power of her husband,
‘with the result that in the
event of the insolvency of her husband, it will not form part of the
insolvent joint estate.’
It would be superfluous to repeat
the very full analysis by McLaren J in
Badenhorst’s
case
of the authorities that were relied upon in that case: it is
sufficient to say that I agree with his conclusion that those
authorities do not provide cogent support for the conclusion that was
reached. In
Van Wyk v Groch en Andere
1968 (3) SA 240
(E) it
was held that the separate property of a woman who was married in
community of property was immune from attachment in satisfaction
of a
judgment obtained against her husband. The
ratio
of that
decision was expressed as follows at 242C-D:
‘
Daar kan geen beginselrede bestaan waarom die
uitsluiting van ‘n man se maritale mag, ten aansien van
spesifieke bemaakte
eiendom deur ‘n testateur, nie die eggenote
ingelyks beveilig met betrekking tot sodanige eiendom nie. Hieruit
volg dit,
na my mening, dat die afsonderlike eiendom van ‘n
getroude vrou ten opsigte waarvan die maritale mag uitgesluit is,
onvatbaar
is vir beslaglegging deur ‘n skuldeiser van die man.’
If the judgment debt that was in issue in that case was incurred by
the husband as administrator of the joint estate (there is
nothing in
the judgment to suggest that it was not) then in my view the decision
was unsound. As was the decision in
Oberholzer’s
case,
and for the same reason. Both courts appear to have overlooked the
fact that the debt in issue was not the debt merely of
the husband
but was a joint debt of the spouses. The separate property of the
wife was not in truth being sought in satisfaction
of the debt of her
husband (as was suggested in
Van Wyk’s
case at 242D and
in
Oberholzer’s
case) but was being sought to satisfy
her own debt, albeit that it was incurred by her husband in his
capacity as administrator
of the joint estate. In neither case were
any cogent reasons proffered for why the separate property was
protected against what
were in law the wife’s own creditors.
[9] The appellant also submitted
that the
Matrimonial Property Act has
had the effect of creating a
separate estate comprising all property that is excluded from the
joint estate, and that that estate
is protected against the
incursions of joint creditors of the spouses. The result, according
to that submission, is that each
estate (i.e. the joint estate and
the separate estate) is capable of having its own discrete creditors.
There are indeed various
provisions of the Act that give recognition
to the separate property of spouses who are married in community of
property (see
sections 17
,
18
,
19
and the definition of ‘separate
property’) but I do not think that implies the creation of a
novel entity that is capable
of incurring discrete debts, or that is
protected from the normal consequences of the spouses’
indebtedness. Indeed, the
existence of such an entity would give
rise to startling anomalies for it would suggest that a debtor might
be insolvent in relation
to one estate and not insolvent in relation
to the other. I do not think that the Act has brought about that
result. It recognises
the existence of separate property in the
relationship between the spouses
inter se
but I do not think
it affects the rights of third parties. For so long as a spouse is a
debtor in my view his or her creditors
may look to all the property
of the debtor in satisfaction of the debt and similarly upon
insolvency all the debtor’s property
is available to his or her
creditors. In those circumstances I agree with the conclusion that
was reached in
Badenhorst’s
case and in the Court
a
quo.
The appeal
is dismissed with costs.
__________________________
R NUGENT
JUDGE OF APPEAL
HARMS JA
)
CAMERON JA
)
BRAND JA
)
HEHER
AJA ) CONCUR