Over the past 30 years the landscape of South Africa’s matrimonial property system has gradually shifted to align with modern Constitutional values. In a recent High Court judgment the court introduced changes to the Divorce Act granting courts the power to redistribute assets on divorce, even where the applicable marital property regime excluded this redistribution.
The court in Greyling versus The Minister of Home Affairs and 4 others (“Greyling”) introduced this change when it held section 7(3) of the Divorce Act 70 of 1979 to be unconstitutional. Consequently, spouses married out of community of property without accrual after the commencement of the Matrimonial Property Act 88 of 1984 (“MPA”) are no longer prohibited from applying for redistribution of assets upon divorce.
While this finding still needs to be confirmed by the Constitutional Court, its impact on couples navigating divorce, specifically those married out community of property without accrual, is significant. To appreciate the implications of this change, it is useful to have a general understanding of the various marital property schemes that regulate the division of assets at the dissolution of marriage.
THE MARITAL SCHEMES
The default system when a couple gets married in South Africa is the “in community of property” regime. Under this regime parties will receive an equal distribution of their joint estate at the end of their marriage. Alternatively, parties signing an antenuptial contract may elect to be married “out of community of property”. This allows each spouse to maintain and control their own separate estate.
Importantly, on 1 November 1984 the Matrimonial Property Act introduced the “accrual system”. Parties entering an antenuptial contract can now choose to be married out of community of property including or excluding accrual. On the dissolution of their marriage, spouses married with accrual may share equally in any growth to their separate estates that occurred during the subsistence of their marriage. This allows the spouse with the smaller estate to claim from the larger estate and thus accounts for non-financial contributions made during the marriage. A party married without accrual will not be entitled to a share of any assets their spouse accumulated during the marriage.
With the enactment of the MPA, courts were afforded a discretion under section 7(3) of the Divorce Act to order reasonable redistribution of assets acquired over the course of the marriage, if deemed fair to do so. However, this discretion would only benefit parties who were married ‘out of community of property’ before 1 November 1984. The aim of this judicial discretion was to provide relief to spouses who never had access to the advantages of accrual inclusion. It is this limitation, as reflected in section 7(3) of the Divorce Act, that formed the crux of the issue in the Greyling case.
THE GREYLING CASE
In March 1988 the parties in the Greying case signed an antenuptial contract in which they agreed to be married ‘out of community of property’ excluding the accrual system. Over the course of their marriage Ms Greyling (“the Applicant”) was the primary caregiver for their three children and homemaker, while her husband provided for them financially. At their divorce the Applicant’s estate held only a small inheritance compared to her husband, who had been very successful in his profession and had amassed a lucrative estate to which she would have no legal claim.
The Applicant submitted that under the circumstances it was unconstitutional that she should be precluded from the relief provided by Section 7(3) simply because she was married without accrual after the commencement of the MPA and the accrual system. In distinguishing between couples married before and after 1 November 1984, section 7(3)(a) prevents spouses in her position from applying for a redistribution order even where such a remedy would be fair and just.
On examining this distinction, the court considered whether or not the deprivation of section 7(3) relief constituted unlawful discrimination. The Applicant argued that not only was the differentiation arbitrary and irrational, it also negatively impacted women in a disproportionate manner that amounted to discrimination on the basis of sex, gender, marital status, race, culture and religion.
Primarily, women still assume the roles of principal caregiver and homemaker. In the event of divorce such women are often left with few assets and no compensation for their material, non-financial contributions to the marriage. Without the accrual system to restore balance, the potential relief of an equitable redistribution order could provide valuable assistance. Had she married only a few years sooner, the Applicant would have been protected by the relief she sought.
Judge Van Der Schyf found that the differentiation between those married before and after 1 November 1984, resulting in the deprivation of section 7 (3) relief, did amount to unconstitutional discrimination. Refusing an application for section 7(3) discretion impairs the Applicant’s dignity and limits their recourse. It was also noted that the choice provided by the MPA to benefit from the accrual system was often illusory. Many vulnerable parties are frequently unaware of their options due to lack of education or unable to seize them due to unequal bargaining power within their union. Thus, to extend the courts discretion would be just and equitable.
Ultimately, the court held that s 7(3)(a) of the Divorce Act was inconsistent with the Constitution and thus invalid. The court remedied the limited operation of section 7(3), for those married before the commencement of the MPA, by severing the offending words and reading in the appropriate amendment. As a result, the redistribution discretion is now available to all marriages out of community of property without accrual regardless of the date on which they were married. Even if the parties signed an antenuptial contract to the contrary, they will still be entitled to request equitable division of assets accrued over the duration of their marriage.
RELEVANCE OF THE CASE
The relevance of this finding is undoubtedly significant for many couples in South Africa, however, before applying for the relief of a redistribution order it is important to note that judicial discretion is not unfettered. To succeed in their claim, a party must show that they contributed, directly or indirectly, to the maintenance or increased estate of their spouse during the course of their marriage. These parameters are important because the remedy provided has the potential to nullify an antenuptial contract agreed upon by both parties, which infringes on sanctity of contact.
Sanctity of contract is the concept that a contract, once signed, must be honoured and upheld. To enable parties to disregard the obligations they agreed to in terms of a written contract too easily is problematic. However, arguments in favour of sanctity of contract may be placated under the circumstance, given the vulnerability of the economically disadvantaged spouse. In extreme cases this relief may be the only way for a person to leave an abusive relationship without becoming destitute. Giving a spouse the ability to approach a court for redistribution of assets takes into account the unequal bargaining power prevalent in many marriages.
Additionally, the Court must also consider the fairness and appropriateness of granting such an order, as well as any other relevant factors, before they may presume to interfere in a private relationship. The extent of the distribution will depend substantially on the facts of the case before the court.
Should you find yourself facing the possibility of divorce, ensure that you are aware of the marital property scheme to which you subscribed. Rest assured that whether you are married in community of property without accrual, before or after 1 November 1984, it is likely that you will be able to apply for a redistribution order. In the meantime, we await the confirmation of the Constitutional Court.
Contact us today for a consultation with one of our experienced divorce attorneys to know more.