This article provides a brief overview of the matrimonial property regimes provided for under South African law and unpacks the effect of the landmark judgment of Greyling v Minister of Home Affairs and 2 Others [2022] 3 All SA 58 GP .
The Court’s Discretion to Redistribute Property Among Spouses
Summer is upon us, Covid restrictions are relaxed and many couples will soon be tying the knot. The conclusion of a marriage must be approached from an informed position due to the far-reaching implications it holds. In this article, we will discuss the case of Greyling v Minister of Home Affairs and 2 Others [2022] 3 All SA 58 GP (“Greyling judgment”) and upack its effect on the dissolution of a marriage in which an antenuptial contract (“ANC”) has been concluded. We will also briefly look at the various matrimonial property regimes.
By way of introduction, South African law recognises 3 (three) matrimonial property regimes, namely:
In community of property;
Out of community of property whereby the accural system is excluded; and
Out of community of property subject to the accrual system.
A brief description of each matrimonial property regime follows below:
In Community of Property
If no ANC is concluded, couples are automatically married in community of property, with this being the default position under South Africa law.
In this instance, the two separate estates of the indivuduals which existed prior to the marriage are merged into one joint estate on the date of the marriage. The joint estate is controlled equally by the spouses. The spouses share in each other’s financial prosperity (assets) but also in each other’s financial misfortune (liabilities) and there is very little or no protection against one spouse irresponsibly wasting the assets of the joint estate. One spouses is not protected from the creditors of the other spouse. The capacity of both spouses is limited, and one spouse often requires the consent of the other to perform a valid juristic act.
Out of Community of Property Whereby the Accrual System is Excluded
The patrimonial position of the spouses is similar to their position before conclusion of the marriage. The ANC will confirm that:
Both spouses retain their own separate estates consisting of all the assets and liabilities they had prior to and after entering into the marriage;
Both spouses have full capacity to act with regard to his or her own estate without the consent or knowledge of the other spouse.
Spouses can, generally speaking, not be held accountable for each others’ debts and accordingly do not bear the risk of sharing in the other’s financial losses or recklessness.
Spouses do not share in each other’s profits or financial gain.
Out of Community of Property Subject to the Accrual System
The accrual system was introduced in South African law by the Matrimonial Property Act, 88 of 1984 (“MPA”) which came into effect on 1 November 1984. During the subsistence of the marriage there are two separate estates that are administered independently, and the spouses are not liable to pay each other’s debts. The effect of the accrual system, however, is that on the dissolution of the marriage, the spouses share in the accrual accumulated by each other during the marriage. In the ANC:
The couple may provide that any asset be excluded from the accrual system, as well as any other asset that the spouse acquired by virtue of her/his possession or former possession of such asset.
Any inheritance, legacy, or donation received by a spouse during the marriage from any third party, as well as any other asset that the spouse has acquired by virtue of her/his possession or former possession of the inheritance, legacy, trust or donation is excluded from the accrual system, unless the spouses have agreed otherwise in their ANC or the testator or donor has stipulated otherwise.
Any amount that accrued to a spouse by way of damages, other than damages for patrimonial loss, is excluded from the accrual system.
In the Greyling case, the Court declared section 7 (3) (a) of the Divorce Act, 70 of 1979 (the “Act”) unconstitutional, as it limited the operation of section 7 (3) of the Act. Section 7 (3) of the Act provides the court with a discretion to order the transfer of assets from one spouse to the other, despite them being married out of community of property, where the court deems such transfer just and equitable. Subsection (a) of section 7 (3) provides that spouses who are eligible to approach a court with an application for such a transfer, are those whose marriages out of community were concluded before the MPA came into effect on 1 November 1984. Therefore, all spouses who concluded marriages out of community of property post the commencement of the MPA were not eligible to approach the court for such an order.
The applicant in the Greyling case had concluded her marriage out of community of property to a wealthy farmer in 1988. It was her argument that section 7 (3) (a) of the Act unfairly discriminated against spouses in her position, who otherwise might have contributed either directly and/or indirectly to the growth of the estate of their spouse, in abusive marriages, but are too afraid to walk away with nothing. It was the applicant’s further submission that this discrimination fails against the spirit and tenets of section 9 of the Constitution of the Republic of South Africa, 1996, due to the discrimination being based on the date of the conclusion of the marriage and that the said discrimination was unfair and did not serve a legitimate purpose. The Court agreed with this view and declared section 7 (3) (a) of the Act unconstitutional, subject to confirmation by the Constitutional Court.
It ought to be noted that an order for transfer of property is not obtained automatically. The party bringing such an application must advance ample reasons setting out why it is just and equitable for the court to grant such an order.
In conclusion, in the event that the Greyling judgment is confirmed by the Constitutional Court, spouses married out of community of property with the exclusion of the accrual system, after the commencement date of the MPA will in future be eligible to approach the courts for an order of transfer of property upon dissolution of their marriage. You may wonder whether this departure renders the effect and essence of ANCs fruitless, but to that we respond not at all. The only difference brought about by the Greyling case is that spouses married out of community of property without any form of accrual after the commencement of the MPA will in future be eligible to approach the courts for an order of transfer, subject to the provision of sufficient reasons warranting the order. Nonetheless, the principle of our law that spouses married out of community of property retain their individual estates still remains and the courts will not easily depart from it. We encourage couples to execute ANCs prior to the conclusion of a marriage should they prefer being married out of community of property.
FINAL NOTE
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