Christensen N O and Another v De Magalhaes

The applicants were trustees of the insolvent estate of Mr Antonio de Magalhaes, who was married out of community of property to the respondent. After sequestration of the insolvent’s estate in 2019, the trustees attached the respondent’s bank accounts in terms of s 21(1) of the Insolvency Act 24 of 1936. The respondent applied under s 21(2)(c) for the release of funds in a First National Bank Money Maximiser account, which represented the remaining proceeds from the sale of immovable property in Simonstown registered in her name. She alleged that she had acquired the property in 2001 with her own funds and that the proceeds were therefore excluded from the insolvent estate. The trustees refused release, contending that despite registration in her name, the insolvent was the true beneficial owner and that the respondent had failed to prove a title valid against creditors. The High Court and Full Court upheld the respondent’s claim, finding she had discharged the onus. The trustees sought special leave to appeal to the Supreme Court of Appeal, limited to the proceeds of the Simonstown property.

Special leave to appeal was granted. The appeal was upheld with costs. The order of the Full Court was set aside and replaced with an order upholding the trustees’ appeal and dismissing the respondent’s application for release of the funds with costs.

The case reaffirms the strict application of s 21(2)(c) of the Insolvency Act and clarifies that a solvent spouse must positively prove a title valid against creditors. It confirms that registration of property is not decisive where the real agreement and factual matrix indicate otherwise, and cautions courts against conflating s 21 proceedings with collusion or impeachable transaction remedies under the Insolvency Act.