The insolvent estate of Hertzog van der Westhuizen was finally sequestrated in February 1995. Upon sequestration, all property of his solvent spouse, Joan van der Westhuizen, vested in the trustee in terms of s 21(1) of the Insolvency Act 24 of 1936. The wife applied under s 21(2) for the release of a holiday home at Hartenbos which had been transferred into her name in September 1991 pursuant to a purported sale concluded between the spouses in May 1990. The trustee refused to release the property, contending that the sale was a simulated transaction and in truth a collusive donation designed to place the property beyond the reach of creditors, particularly the Davis Myles Trust. The wife alleged that she paid the purchase price from her own separate estate and that she acquired the property by a title valid as against creditors. The trustee appealed against the High Court’s order releasing the property to the wife.
The appeal was upheld. The order of the court a quo releasing the property to the wife was set aside, and the application by the solvent spouse for release of the property under s 21(2) was dismissed.
The case authoritatively clarifies the application of s 21 of the Insolvency Act and reinforces that its purpose is to prevent collusion between spouses to the detriment of creditors. It confirms that even after the statutory recognition that donations may in principle found valid title, collusive donations or other collusive transactions cannot do so. The judgment underscores the rigorous evidentiary burden placed on a solvent spouse seeking the release of property from an insolvent estate.