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Immovable property: marriage, divorce and creditors

A twice-married and twice-divorced couple were involved in a dispute over immovable property with a creditor of the husband, in Fischer v Ubomi Ushishi Trading and Others 2019 (2) SA 117 (SCA), a case decided by the Supreme Court of Appeal earlier this year.

Mr and Mrs Haynes, who were married in community of property, divorced for the first time in 2012. They entered into a settlement agreement which was incorporated in the divorce order, whereby Mrs Haynes would acquire full ownership of immovable property in Goodwood.

The couple remarried in 2014, this time out of community of property, so that Mrs Haynes could retain ownership of the Goodwood property, which had been awarded to her by the court order of 2012. They divorced for a second time in 2015, each party retaining their own assets.

In 2015 a creditor of Mr Haynes, Fischer, attempted to attach the Goodwood property to satisfy a debt owed to him by Mr Haynes. The title deed of the property still reflected Mr Haynes’ ownership interest, because the transfer of the property into Mrs Haynes’ name, in terms of the first divorce order of 2012, had not been registered in the Deeds Office.

Mrs Haynes resisted the claim to have the Goodwood property attached, on the basis that she was the sole owner of the property in terms of the 2012 divorce order.

The Supreme Court of Appeal decided in favour of Mrs Haynes and against the creditor. The salient aspects of the judgment were the following:

  • Ownership of immovable property does not vest immediately when a settlement agreement, awarding ownership to a particular person, becomes an order of court;
  • Registration of the transfer of property is required by S 16 of the Deeds Registries Act No. 47 if 1937, before ownership of the immovable property passes to such person;
  • The purpose of registration of transfer of immovable property is, firstly, that the title deed reflecting the registration of transfer enables the owner to prove ownership of the property and, secondly, that registration provides publicly accessible information which protects members of the public concluding transactions involving immovable property, because they can easily ascertain who owns that property;
  • The court order awarding immovable property to a particular person creates a personal right enabling that person to compel registration of the property into that person’s name. While this offers some protection to the person who has been awarded the property, the protection is not as strong as it would be if that person actually obtains ownership of the property by registration. However, given the competing personal rights to the property – in this case the right of Mrs Haynes to obtain ownership against the right of the creditor of her ex-husband to attach the property – the court decided that Mrs Haynes’ earlier acquired right trumps that of her ex-husband’s creditor. The court said in this regard:The court therefore ruled in favour of Mrs Haynes, in effect applying the legal maxim “earlier in time, stronger in law” (prior in tempore, potior in iure).
  • “At the time that Mrs Haynes acquired this right, there was no other greater or competing right to defeat her claim. When Fischer applied for an order declaring the property executable, Mr Haynes had already alienated his half-share in the property to Mrs Haynes by way of the settlement agreement.” [30]

This case illustrates how important it is for any spouse to whom immovable property is awarded in a divorce settlement to ensure that the transfer of ownership in the immovable property is registered in the Deeds Office. Before registration the right to become owner may be trumped by an earlier right against the person who is still the registered owner of the property.