South African Family Law PDF

6 THE VARIABLE CONSEQUENCES OF A CIVIL MARRIAGE – MARRIAGE IN COMMUNITY OF PROPERTY 6.1 Introduction Until the commencement of the Matrimonial Property Act 88 of 1984 on 1 November 1984, two main matrimonial...

6 THE VARIABLE CONSEQUENCES OF A CIVIL MARRIAGE – MARRIAGE IN COMMUNITY OF PROPERTY 6.1 Introduction Until the commencement of the Matrimonial Property Act 88 of 1984 on 1 November 1984, two main matrimonial property systems existed in South Africa, namely marriage in commu- nity of property with the marital power, and marriage out of community of property with the exclusion of both community of profit and loss and the husband’s marital power. The latter matrimonial property system is also known as complete separation of property. Other matri- monial property systems were possible, but seldom occurred in practice. The Matrimonial Property Act did not abolish the two matrimonial property systems which were most common before 1984, but it abolished the marital power1 and introduced a vari- ation of marriage out of community of property, namely the accrual system.2 However, the primary matrimonial property system has always been, and still is, universal community of property. In fact, when a couple enters into a civil marriage, a rebuttable presumption arises that they are marrying in community of property.3 The Matrimonial Property Act did not change this. 6.2 Cases in which community of property does not arise As pointed out above, our law rebuttably presumes that all civil marriages are in community of property. This presumption is rebutted by proving the presence of any of the following circumstances: (1) The existence of a valid antenuptial contract in which community of property and com- munity of profit and loss are excluded.4 (2) The existence of a valid postnuptial notarial contract in which community of property and community of profit and loss are excluded.5 (3) The husband’s lex domicilii at the time of the marriage provides that the marriage is out of community of property. In terms of South African law, the husband’s lex domicilii at the time of the wedding determines the matrimonial property system that operates in the marriage.6 Thus, if the husband is domiciled in a country where marriage is automatically ________________________ 1 Originally, the marital power was abolished only in marriages white, coloured and Asian persons entered into after the coming into operation of the Act: see below in this chapter. 2 The accrual system is discussed in ch 7 below. 3 Edelstein v Edelstein 1952 (3) SA 1 (A); Brummund v Brummund’s Estate 1993 (2) SA 494 (NmHC). 4 The requirements for the creation of a valid antenuptial contract are discussed in ch 7 below. 5 On postnuptial variation of the matrimonial property system by means of a notarial contract, see ch 8 below. 6 Frankel’s Estate v The Master 1950 (1) SA 220 (A). For criticism of this rule, especially in the light of the Con- stitution of the Republic of South Africa, 1996, see Forsyth 295–296 fn 116, 300; Neels 1992 TSAR 336; Hea- ton and Schoeman 2000 THRHR 146; Schoeman 2004 TSAR 117–118, 140; Neels and Wethmar-Lemmer continued 61 62 South African Family Law out of community of property, the spouses are married out of community of property unless they enter into an antenuptial contract in which they choose community of prop- erty. For example, if the husband is domiciled in England at the time of the marriage and the parties do not enter into an antenuptial contract, the marriage would, in terms of English law, be out of community of property. Should the parties later emigrate to South Africa, the marriage would remain out of community of property.7 (4) The spouses are African persons who entered into a civil marriage which is governed by section 22(6) of the Black Administration Act 38 of 1927. In terms of this section, civil marriages African persons entered into before the coming into operation of the Mar- riage and Matrimonial Property Law Amendment Act 3 of 1988 (that is, before 2 De- cember 1988) are out of community of property, unless the spouses made a joint written declaration before a magistrate, commissioner or marriage officer, within one month prior to the marriage, that they wished to marry in community of property, profit and loss. This position is therefore the exact opposite of that which applies in marriages between white, coloured and Asian persons. The Marriage and Matrimonial Property Law Amend- ment Act repealed section 22(6) of the Black Administration Act and brought the patri- monial consequences of civil marriages of African persons into line with those of white, coloured and Asian persons. The patrimonial consequences of a civil marriage an Afri- can couple entered into on or after 2 December 1988 are therefore exactly the same as those that apply in the civil marriages of white, coloured and Asian persons. African persons who married before the coming into operation of the Marriage and Matrimonial Property Law Amendment Act could cause the provisions of the Matrimo- nial Property Act to apply to their civil marriage by executing and registering a notarial contract to that effect within two years of the commencement of the Marriage and Mat- rimonial Property Law Amendment Act.8 In such cases the provisions of the Matrimonial Property Act applied from the date on which the contract was registered. The possibility of changing the matrimonial property system in this manner ceased to exist on 2 Decem- ber 1990, but parties can still alter their matrimonial property system in terms of section 21(1) of the Matrimonial Property Act.9 6.3 The nature of universal community of property The generally accepted view is that universal community of property entails that the spouses become tied co-owners in undivided and indivisible half-shares of all the assets and liabilities they have at the time of their marriage as well as all the assets and liabilities they acquire during the marriage. Upon marriage, the spouses’ separate estates are automatically merged into one joint estate for the duration of the marriage. Upon dissolution of the marriage, all liabilities are settled from the joint estate and the balance of the joint estate is distributed 10 equally between the spouses. This view of the nature of universal community of property was confirmed and applied by the Appellate Division (now the Supreme Court of Appeal) in Estate Sayle v Commissioner for Inland Revenue,11 De Wet v Jurgens 12 and Mazibuko v National Director ________________________ 2008 TSAR 587–588. Unfortunately, South African private international law does not currently have a ready replacement for the rule. Therefore, the legislator should step in to enact a suitable and constitutionally acceptable rule: Heaton Persons 41; Schoeman 2004 TSAR 140. 7 Frankel’s Estate v The Master 1950 (1) SA 220 (A); see also Sperling v Sperling 1975 (3) SA 707 (A); Bell v Bell 1991 (4) SA 195 (W); Brummund v Brummund’s Estate 1993 (2) SA 494 (NmHC). 8 Ss 21(2)(a), 25(2) and 25(3) of the Matrimonial Property Act. 9 On s 21(1) of the Matrimonial Property Act, see ch 8 below. 10 If the marriage is terminated by divorce, the spouses’ tied co-ownership of undivided and indivisible shares of the joint estate automatically changes to free co-ownership of determinate and divisible shares: Ex parte Menzies 1993 (3) SA 799 (C); Gugu v Zongwana 1 All SA 203 (ECM). See further Heaton in Heaton (ed) Law of Divorce and Dissolution of Life Partnerships 96. 11 1945 AD 388, Heaton and Kruger Casebook on Family Law case. 12 1970 (3) SA 38 (A), Heaton and Kruger Casebook on Family Law case.  Chapter 6: Variable consequences of a civil marriage - Marriage in community of property 63 of Public Prosecutions.13 It is important to note that this view implies that the spouses cannot divide the joint estate during the subsistence of the marriage, for their half-shares are not only undivided, but also indivisible for as long as the marriage lasts.14 6.4 The content of universal community of property 6.4.1 Assets (a) General The moment spouses enter into a marriage in community of property, they become co- owners of all the assets either of them owns. Generally, all assets acquired by either spouse after marriage also become part of the joint estate.15 An asset is anything that has monetary value for the person who holds a right, title or interest in it. Examples of assets are immovable property; share-block interests; motor vehicles; boats; aeroplanes; money; jewellery; clothing; loan accounts in companies or partnerships; membership interests in close corporations; goodwill in firms or businesses; shares; furniture; domestic appliances; works of art; debts one of the spouses can claim; policies that have a cash or surrender value;16 and pension benefits that have already accrued to one of the spouses.17 The transfer of ownership which occurs when spouses enter into a marriage in community of property takes place automatically by operation of law so that no delivery of movable prop- erty, registration of immovable property, cession of rights, and so on, is necessary.18 The general rule that all assets of both spouses become part of the joint estate is subject to exceptions which are discussed immediately below. ________________________ 13 2009 (6) SA 479 (SCA); see also Ex parte Menzies 1993 (3) SA 799 (C); Du Plessis v Pienaar 4 All SA 311 (SCA), 2003 (1) SA 671 (SCA); Corporate Liquidators (Pty) Ltd v Wiggill 4 All SA 439 (T), 2007 (2) SA 520 (T); Zulu v Zulu 2008 (4) SA 12 (D). 14 See also ch 8 below. In certain circumstances, the court may divide the joint estate: see the discussion of s 20 of the Matrimonial Property Act below in this chapter. If the spouses agree on an extra-judicial separa- tion, they may also deviate from the consequences of community of property for the duration of their sepa- ration: see ch 9 below. 15 This includes the right to occupy premises in terms of a tenancy, residential permit or statutory lease: Persad v Persad 1989 (4) SA 685 (D); Toho v Diepmeadow City Council 1993 (2) SA 679 (W); Moremi v Moremi 2000 (1) SA 936 (W). 16 Prior to the maturity date of the policy or the insured’s death or disability, it is only the policy holder’s rights to surrender the policy, obtain a loan against the policy, etc that fall into the joint estate: Hees v South- ern Life Association Ltd 1 All SA 327 (W), 2000 (1) SA 943 (W); Danielz v De Wet 2009 (6) SA 42 (C). Likewise, a person who has been nominated as the beneficiary of a life insurance policy only acquires a right to the proceeds of the policy when the policy matures or the insured dies or becomes disabled and the beneficiary accepts the proceeds: Pieterse v Shrosbee; Shrosbee v Love 3 All SA 343 (SCA), 2005 (1) SA 309 (SCA); Oshry v Feldman 1 All SA 124 (SCA), 2010 (6) SA 19 (SCA), Heaton and Kruger Case- book on Family Law case ; PPS Insurance Company Ltd v Mkhabela 2012 (3) SA 292 (SCA). On the issue of whether the proceeds of a life insurance policy fall into the joint estate or into the estate of the deceased after his or her death, see ch 10 fn 5 below. 17 If the benefits have not yet accrued to the spouse, s 7(7) and (8) of the Divorce Act applies if the marriage is terminated by divorce: see ch 12 below. On assets, see further Heaton in Heaton (ed) Law of Divorce and Dissolution of Life Partnerships 70–80. 18 Ex parte Menzies 1993 (3) SA 799 (C); Corporate Liquidators (Pty) Ltd v Wiggill 4 All SA 439 (T), 2007 (2) SA 520 (T). Immovable property and real rights in immovable property which are obtained during the subsistence of the marriage are registered in the names of both spouses unless such registration takes place in the name of a partnership and the spouse is only involved in the capacity of partner: s 17(1) of the Deeds Registries Act 47 of 1937. If immovable property which is registered in the name of either spouse is brought into the joint estate, a note reflecting the other spouse’s interest in the property must be made on the title deed if this is requested: s 17(4) of the Deeds Registries Act. 64 South African Family Law (b) Separate assets19 (i) Assets excluded in an antenuptial contract The spouses can exclude assets from the joint estate in an antenuptial contract. The fruits of such assets form part of the joint estate unless they are also excluded in the antenuptial contract.20 By virtue of the maxim pretium succedit in locum rei, res succedit in locum pretii (that is, literally, the price takes the place of the asset, the asset takes the place of the price) any asset which replaces an asset that is excluded in an antenuptial contract also falls outside the joint estate.21 Thus, for example, if the spouses excluded an amount of money from the joint estate and the money is used to buy a house, the house is also excluded from the joint estate.22 (ii) Assets excluded by will or deed of donation A third party may make a donation or bequest to a spouse, subject to the condition that the 23 asset must not become part of the joint estate. The maxim pretium succedit in locum rei, res succedit in locum pretii operates in respect of this category of excluded assets too.24 Thus, for example, if a spouse inherits an amount of money that is excluded from the joint estate and uses it to buy a motor vehicle, the motor vehicle is his or her separate property.25 However, the fruits (for example, interest) of the donated or bequeathed asset fall into the joint estate unless the donor or testator specifically excluded them too.26 (iii) Assets subject to a fideicommissum or usufruct Property which is subject to a fideicommissum or usufruct is not part of the joint estate, but the fruits or proceeds derived from such property are.27 Various reasons have been put forward for this rule.28 The most acceptable explanation is that assets which are subject to a fideicom- missum or usufruct do not fall into the joint estate because they are the beneficiary’s personal rights which he or she cannot alienate.29 As a usufruct is inalienable, it cannot be replaced, but fideicommissary property can. Some authors suggest that an asset which replaces property that is subject to a fideicommissum falls into the joint estate, because the rationale for excluding the fideicommissary property does not apply to the replacement asset.30 ________________________ 19 As is clear from the list of exceptions, separate assets were recognised at common law. Moseneke DCJ’s statement in Van der Merwe v Road Accident Fund 2006 (6) BCLR 682 (CC), 2006 (4) SA 230 (CC) par 31 that the Matrimonial Property Act introduced the notion of separate property is therefore incorrect. On this point, see further Klopper 2007 THRHR 677–679. 20 Blatchford v Blatchford’s Executors (1861) 1 EDC 365. 21 Ex parte Lelie 1945 WLD 167. 22 If the proceeds are used to buy another asset of the same or a lesser value, the replacement is the spouse’s separate property. The same applies if the separate asset is merely exchanged for another. However, it is not clear what the position is if the value of the replacement or substitute exceeds that of the asset which was originally excluded from the joint estate. Presumably the replacement or substitute is excluded only up to an amount which is equal to the value of the original asset: Heaton in Heaton (ed) Law of Divorce and Dissolution of Life Partnerships 80. 23 De Jong and Pintens 2015 TSAR 560 suggest that the default position ought to be that bequests and donations become separate property. 24 Ex parte Lelie 1945 WLD 167. 25 But see fn 22 above on the difficulty that arises if the value of the replacement or substitute exceeds that of the inheritance. 26 Yeats 1944 THRHR 159 et seq. 27 Van der Merwe v Van Wyk 1921 EDL 298; Barnett v Rudman 1934 AD 203; Van Wyk v Groch 1968 (3) SA 240 (E); see also Roux v Santam Versekeringsmaatskappy Bpk 1977 (3) SA 261 (T). 28 Coren Consilia 25 finds the reason in the prohibition on alienation which is placed on the property. Voet 23.2.77 states that the reason is that the property is res aliena (ie, the asset of another). In Barnett v Rudman 1934 AD 203 213 Beyers JA was of the opinion that the reason is to be found in the wishes of the testator. 29 Hahlo, 5th edn, 167; see also Church and Church in Church (ed) LAWSA Marriage par 70; Van der Vyver and Joubert 540. 30 Lee and Honoré par 81(x); Wille’s Principles 270 fn 370; Yeats 1944 THRHR 159 et seq.  Chapter 6: Variable consequences of a civil marriage - Marriage in community of property 65 (iv) Jocalia (that is, engagement gifts) Arrhae sponsalitiae and sponsalitia largitas do not become part of the joint estate.31 In respect of this category too, some authors suggest that replacement assets fall into the joint estate.32 (v) Benefits under the Friendly Societies Act 25 of 1956 In terms of section 17 of the Friendly Societies Act 25 of 1956, benefits due to a married woman in terms of the Act do not fall into the joint estate.33 Restricting the exclusion to bene- fits that are due to a wife constitutes unfair discrimination that is just as unjustifiable as the discrimination that was occasioned by section 44(1) and (2) of the Insurance Act 27 of 1943, except that, here, men are the victims of the discrimination. Section 44(1) and (2) of the Insurance Act deprived wives of all or some of the benefits of life insurance policies ceded to them or made in their favour by their husbands. In Brink v Kitshoff 34 the Constitutional Court set section 44(1) and (2) aside on the ground that it constituted an unjustifiable violation of women’s right not to be subject to unfair discrimination on the grounds of sex and marital status.35 It is submitted that the same fate would befall section 17 of the Friendly Societies Act if it was ever to be challenged under the Constitution.36 (vi) Non-patrimonial damages Section 18(a) of the Matrimonial Property Act provides that any amount a spouse recovers by way of non-patrimonial damages for a delict committed against him or her is his or her sep- arate property. In terms of the decision in Van den Berg v Van den Berg,37 this provision includes disability payments the injured spouse receives in terms of an insurance policy. The court held that even though such payments are made in terms of the insurance contract between the spouse and the insurance company, the payment is a direct result of a delict committed against the spouse. The court therefore concluded that the causa (that is, the ground) for the payment is delictual and not contractual, and that the amount is covered by section 18(a) because it relates to non-patrimonial loss. Section 18(a) is silent on the exclusion of proceeds and replacement assets of non- patrimonial damages from the joint estate. In the case of marriages which are subject to the accrual system, the Matrimonial Property Act expressly provides that the proceeds and re- placements of some assets excluded from the accrual are similarly excluded from the accru- al.38 In accordance with the maxim inclusio unius est exclusio alterius (that is, specific inclusion of one implies exclusion of the other), the fact that the legislator expressly dealt with pro- ceeds and replacements of excluded assets in some sections of the Act suggests that it did not intend the proceeds and replacements of other excluded assets to be excluded from either the joint estate or the accrual.39 Thus, the proceeds and replacement assets of non- 40 patrimonial damages are probably not excluded from the joint estate. ________________________ 31 On the meaning of these terms, see ch 2 above. At common law, all jocalia became the sole property of the recipient: see Yeats 1944 THRHR 159 et seq who refers to Rodenburg, Matthaeus, Van Wesel, Groenewegen and Cos. In Reddy v Chinasamy 1932 NPD 461 the matter of sponsalitia largitas was raised. The husband had given his wife a pair of gold bracelets during their engagement. During the marriage a creditor attached them. The court decided, mistakenly in view of the common law, that the bracelets fell into the joint estate. In Barkhan v Barkhan 1960 (4) SA 288 (W), followed in Levin v Levin 1960 (4) SA 469 (W), the court held that arrhae sponsalitiae (in this case, an engagement ring) fall outside the joint estate and cannot be recov- ered by the husband upon divorce. 32 Lee and Honoré par 81(x) fn; Wille’s Principles 271 fn 373; Yeats 1944 THRHR 159 et seq. 33 As the Act is silent on the exclusion of proceeds or replacement assets, it is presumably only the amount of the benefits that is excluded from the joint estate. But see Lee and Honoré par 81 fn; Wille’s Principles 272 fn 375. 34 1996 (6) BCLR 752 (CC), 1996 (4) SA 197 (CC). 35 Ss 9(3) and 36 of the Constitution. 36 See also Heaton Bill of Rights Compendium par 3C23. 37 2003 (6) SA 229 (T). For criticism of the view that such damages are non-patrimonial, see Mailula 2005 THRHR 310–315. 38 Ss 4(1)(b)(ii) and 5(1) of the Matrimonial Property Act. See further ch 7 below. 39 But see Wille’s Principles 271 fn 371. 40 See also Heaton in Heaton (ed) Law of Divorce and Dissolution of Life Partnerships 81.