For many South African couples, there has been a quietly held belief that registering immovable property in the name of the solvent spouse would shield that property from the claims of the insolvent spouse’s creditors.
The Supreme Court of Appeal’s (SCA) decision in Christensen NO and Another v De Magalhaes [2025] (Christensen) has not rendered this belief obsolete. By overturning the judgment of Maeir-Frawley J in the court of first instance, as well as the subsequent High Court appeal decision, the SCA has, however, fundamentally altered its simplicity. The question is no longer answered by a confident “yes” or an unequivocal “no”.
Spotlight on ‘protected’ proceeds
In Christensen, the SCA was called upon to determine whether the proceeds from the sale of immovable property were protected from the creditors of an insolvent husband.
The property had been registered in the solvent spouse’s (the wife’s) name as far back as 2001. Nearly two decades later, in 2019, the property was sold. Approximately six months thereafter, in July 2019, the husband’s estate was sequestrated.
Acting in terms of section 21 of the Insolvency Act 24 of 1936, the trustees attached the sale proceeds, contending that the insolvent spouse (the husband) was the true beneficial owner of the property.
Section 21 provides a powerful statutory mechanism: upon sequestration, the property of the solvent spouse vests in the trustee, subject to recovery if the solvent spouse can satisfy the requirements of section 21(2)(c) which imposes an evidentiary burden.
Charlise Finch and Werner Lotter 5 Aug 2025 Proving ‘true ownership’
The general principle is that registration alone does not constitute sufficient grounds to provide the requisite protection against a spouse’s creditors. The solvent spouse must place cogent, credible evidence before the court substantiating their status as the true beneficial owner.
In this case, the wife’s explanations were described as 'selective, evasive, unpersuasive, and at times contradictory'. She could not adequately account for the source of the purchase price, ongoing bond repayments made by the insolvent spouse, or the broader financial arrangements between the parties.
In resolving the dispute, the SCA reaffirmed a foundational principle of South African law that ownership of property requires not only registration, but also requires credible proof of a genuine, serious intention between the parties that ownership would pass, matched by an intention on the recipient’s part to receive it.
Implications
The practical implications are thus far-reaching. Registering property in a spouse’s name can still operate as a protective measure but only where it reflects economic reality.
Spouses seeking to rely on separate ownership must be able to demonstrate a genuine intention by providing clear proof of funding, repayment, record-keeping, and conduct consistent with that ownership.
Strategies resting on informal understandings or patchy documentation now carry substantial risk.
Lara Horne and Werner Lotter 3 Jun 2025 Narrowing options
So, is it still worth registering property in a spouse’s name? The answer is no longer an easy yes.
Christensen does not close the door on spousal property protection, but it narrows that doorway considerably and demands transparency and proof in order to establish true ownership by the solvent spouse.
The era in which registration alone could be relied upon as a shield against insolvency has passed.
