Notes Chapter 8-10

CHAPTER 8

ALTERATION OF MATRIMONIAL PROPERTY SYSTEM

 

Learning objective 1:

 

Explain the principle of immutability in our Matrimonial Property law as well as how the principle has been relaxed by the legislation:

 

 

Principle of Immutability:

·                 Prior MPA the immutability principle was applicable in our law; hence once a person was married, the marital regime remained fixed for the duration of the marriage.

·                 As a result of the aforesaid prejudice /disadvantage the legislator relaxed the immutability principle by creating mechanisms within the MPA providing for the change of the marital regime.

 

Mechanisms i.t.o. the MPA:

·                 For limited period the provision was made that permitted a person to include the accrual system to the marital regime if you were married out of community of property - by registering a notarial contract.

·                 Also in limited circumstances the court could order the immediate division of the estate and change the marital regime – (sec 20 MPA )

·                 Sec 8 allows for a very similar provision as Sec 20, whereby it allows for the immediate division of the accrual.

·                 Sec 21(1) makes the provision that a joint application can be made to the high court –asking for permission to change the marital regime.

·                 The High court also has common law powers to rectify/cancel ANC

·                 Theses mechanisms allow change that binds the party to the divorce action as well as 3^rd parties. Referred to as judicial mechanisms.

·                 Extra-judicial mechanism is a mechanism that is not judicial hence only binds spouses (inter partes).

 

Extra-judicial mechanism:

·                 Honey v Honey: parties were married out of community of property including the accrual system.  

Few years later the parties entered into another written agreement –that was notarial executed but not registered nor authorized ito sec 21(1) MPA.  This contract excluded accrual.

·                 Wife divorced husband – question related to the validity of the postnuptial contract?

·                 Found to be invalid – as not authorized ito sec 21(1) MPA

·                 Author criticized the decision: of opinion that the extra-judicial change cannot be binding on 3^rd parties – can however be regarded as a inter partes agreement.

 

 

Sec 21(1) MPA: Court sanctioned alteration

 

Process:

·                 Jointly apply for leave to change system( regardless whether parties are married in/out of community of property, or whether the parties got married before /after MPA)

·                 Ex Parte Sanders – ANC never registered as their attorney omitted to register same, by fault.  A joint application was made and was successful.  

·                 Criticized: wrong decision as it was not the marital regime system that was not in question – they wanted to validate the ANC. Their remedy was ito sec 88 of the Deeds Registration Act. (allow informal ANC to apply to court for permission to have contract formally executed)

·                 Ex parte Engelbrecht: the parties were under the impression that by merely informing the marriage officer of their intention to get married out of community of property. When informed that they required ANC the parties did not want to wait and continued with the ceremony, hence got married in community of property.  

 

Statutory Requirements:

 

·                 Jointly apply to high court

·                 Set new marital regime system in a notarial contract and submit to court- if approved- the approved contract must be registered ito sec 89 of the Deeds Registration Act.

·                 Parties must meet the conditions being that: they must proof that there is a sound reason for the change (depends on facts), notice must be given to all creditors, no other party prejudiced.

 

Procedural requirements:

 

·                 Ex parte Lourens – held that a uniform procedure to bring a Sec 21 application is required. In this case as well as the case of Ex parte le Roux the procedural requirements were crystallized. In that:

 

*Notice must be given to registrar with annexed new notarial contract,

* the intention to make application must be published in the GG & two local newspapers at least two weeks prior to the  application specifying date of application. 

*Notice can be by registered post to all creditors 2 weeks in advance.

 

·                 Fin position of spouses must be addressed in the application as well as sufficient information must be furnished regarding assets and liabilities of the parties. (eg. must state if either estate sequestrated in the past).

·                 Sound reason must be given that is fully substantiated.

·                 Absence of prejudice: explain why no other party will be prejudiced – the new contract must have provision preserving rights of existing creditors.

·                 Domicile: show court has jurisdiction.

 

 

Retroactive Alteration:

·                 Position is unclear – Ex Parte Kros it was found that amendment will have retrospective effect, which is in line with the intention of the legislator – flexible method for altering system.

·                 In Ex parte Oosthuizen – it was found that it does not have retrospective effect; a strict approach was followed in this case.

·                 Both abovementioned cases the parties were married in community of property and wanted to change their regime to out of community of property.

·                 In Ex parte Burger – parties wanted accrual introduced (put values). Found that it could not be done.  Took values at date of marriage.

 

 

Effect of change:

·                 Ex parte Menzies – parties were married in community of property, applied for leave to change to separate estates.  Also asked that some immovable properties be registered in both their names (as some was only registered in husbands name)

·                 Court held that there was no need to transfer half share of the property as the parties shared in a joint estate hence automatically were co-owners.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chapter 9 – Dissolution of Civil Marriage:

 

Ways:

·                 death of one or both of the parties

·                 Annulment of voidable marriage (Divorce refers to the decree issued by the court that terminates a legal marriage. Whereas annulment stands for nullifying a union which is already questionable both legally and religiously.)

·                 divorce

 

Judicial separation:

·                 Prior to the Divorce act, the court had the power to issue orders for judicial separation;

·                 The orders did not dissolve the marriage, but merely allowed for a temporary suspension of some obligations.

·                 Sec 14 of the Divorce act – deprived courts of this power therefore today the only separation orders are those handed down before the Divorce act came into operation ( 1 July 1979)

 

Extra – Judicial Separation:

·                 Today one can still have a extra-judicial separation –it is an agreement between spouses describing under what obligations and duties the parties will live apart(separate);

·                 Hence can dictate the patrimonial consequences, maintenance, parental responsibilities, rights in respect of children etc.

·                 The agreement will operate for as long as both parties up-hold the terms of the agreement;

·                 The agreement does not prohibit the institution of a divorce action.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chapter 10: Dissolution by Death

 

MARRIED IN COMMUNITY OF PROPERTY:

 

·                 Death terminates the marriage relationship as well as the community of property.

·                 Hence the termination takes place ex lege – do not need to apply to court.

·                 Procedure: The appointed executor winds up the estate in terms of the Administration of Estates Act 66 of 1965.

·                 The Net half of the balance of the joint estate will be paid over to the surviving spouse. (MPA), whilst the other half will be distributed ito will (inheritance).

·                 Disadvantages: liquidate some/all assets of joint estate (spouse may by some /all assets of joint estate).

·                 Sell immovable property – no income.

·                 Control over estate is given to executor.

 

MARRIED OUT OF COMMUNITY OF PROPERTY:

 

·                 An ANC is not terminated by death; but only by the settlement of/implementation of outstanding provisions contained in the ANC.

·                 Procedure: Appointed executor winds up deceased estate - surviving spouse must lodge any claim she may have against the deceased estate with the executor (eg sec 23 MPA- household NB);

·                 If the accrual system is applicable and a party is entitled to a accrual claim from deceased estate – the claim must be ledged against the deceased estate and vice versa.

 

 

Maintenance of Surviving Spouse: act 27 of 1990

 

·                 After 1 July 1990 a spouse can claim against the deceased estate for the reasonable maintenance needs she/he may require and until  death / remarriage

·                 The provision is available to all spouses regardless of the marital system

·                 As long as the spouse claiming maintenance are unable to provide for herself and do not have the financial means ( eg. matrimonial property).

 

 

 

 

 

What is regarded as reasonable maintenance needs? p 113

·                 Peruse /self-study.

·                 In Feldman v Oshry – “reasonable” was interpreted using a conservative approach – in line with R43 applications.

·                 Disposal of maintenance claim: Must proof /disproof ito Administration  of Estate Act and Maintenance of surviving spouses act;

·                 Executor can enter into an agreement with a spouse and heirs to settle the maintenance claim.

·                 A trust can therefore be created or assets can be transferred in lieu of maintenance.

·                 In this case – it was found that in the absence of an agreement providing for a lump sum payment, the court cannot make an order for a lump sum payment of maintenance.

·                 A claim for spousal maintenance has the same order of preference as that of a dependant child – therefore if inadequate funds – both claims will be reduced.

 

 

Notes Chapter 7

CHAPTER 7: Variable consequences out of community of property:

 

ANC

 

Purpose is to deviate from the common-law /statutory rules regarding the matrimonial property consequences of marriage.

 

Can include marriage settlements e.g. donations, succession or household expenses.

 

ANC = narrow sense = doc executed before notary and reg in deeds office.

Wide sense = informal agreement between between parties only binding them.

 

Formalities for ANC:

 

Informal only valid inter partes.

Must be registered ito sec 86 of Deeds Reg Act, 87 before notary within 3 months register.

Outside RSA – attested by notary / entered into in accordance with the law of the place of its execution.  Foreign ANC must be registered in deeds registry in RSA within 6 months of its execution.

 

Postnuptial execution and registration:

 

Sec 88 –if signed ANC but did not reg one can approach high court. Either party/beneficiary may bring application and has to :

-        parties must have agreed to terms prior to marriage;

-        good reason given

-        Within reasonable time.

If granted same as reg within 3 months.

 

ANC minor:

 

Consent of guardian – sec 18(4) Children’s act = any guardian.

Should be signed by person assisting minor.

Must have consent to enter into ANC – not only to get married.

 

Content of ANC:

 

ANY provision may be included which is not contra bones mores.

·                 Matrimonial property system: regulate system.

·                 Right of resource iro household NB =sec 23 MPA jointly and severally liable for household NB even if married OUT.

·                 Succession = pactum successorium in ANC (a ANC with scope if a will –can only be amended by joint will)

·                 Marriage settlements = is a donation may be subject to a time clause/condition. Reversion clause (donor stipulate an event upon which the donation will revert to him).

·                 Look at discussion Cumming v Cumming ( revert clause if divorce)

 

 

Interpretation of ANC:

 

Intrepid as any other contract, no specific words –as long as their intention is clear. Any doubt –assumed that the parties intended the minimum departure from common law/statutes.

 

Cancellation & amendment:

 

·                 may CANCEL/AMEND up until the wedding;

·                 once wedding cannot;

·                 When MPA came into effect allowed for amendment –Sec21 by reg notarial contract. 2 years, later further 2 years.

·                 Amend by agreeing to replace a marriage settlement with another donation/revoke it completely;

·                 By making a Joint will circumstances can be amended.

·                 Sound reason

 

Termination of ANC:

 

·                 ANC does not  lapse on dissolution of marriage;

·                 Only terminate when all contractual obligations have been fulfilled eg marriage settlement etc.

 

3 ANC:

 

1. Marriage out of community of property and community of profit and loss without accrual system:

·                 complete separation of property

·                 Used to be standard form – until MPA = now ANC automatically include accrual – therefore must exclude this. Therefore new standard form is ANC including accrual.

·                 Consequences = stay separated, free to contract with each other, no restriction on capacity to act, no liability fir contractual /delictual debt.

 

 

2. Marriage out of community of property with retention of community of profit and loss:

·                 retain assets separately as at time of wedding and separate liability,

·                 Donations etc remain separate; difference is now community of profit and loss is retained therefore all profit and loss arising during marriage become joint profit and loss (each party have an undivided share).

·                 Share during the marriage in postnuptial gains and losses.

 

3. Accrual System:

 

·                 If one spouse contribute towards the other spouse’s estate ( not necessarily financially)

·                 Therefore on dissolution of marriage out of com of profit and loss both spouses should share in the growth of their estates without having ever being a joint estate

·                 Sec2 MPA says that accrual is applicable to all marriages out of community of property where the accrual is not expressly excluded. ( after MPA)

·                 Before MPA – had 4 years to change,

 

How accrual takes place:

·                 Each party retains own estate but on dissolution the spouses share equally in the growth of their respective estates. Death = accrual before inheritance etc.

·                 Accrual claim = ½ of (larger accrual – smaller accrual)

·                 Only at dissolution –sec 3(2) no right to transfer share/not part of insolvent estate.

·                 Claim – sec 3(2) at dissolution, right is during the marriage.

·                 Right is not iro other’s property – sec 4(1) (a) “amount” Reeder v Softline – wanted shares be kept in trust – no spouse has a rught to a asset, only value of asset.

 

Renounce accrual claim:

·                 If solvent can renounce the claim.

·                 Insolvent – protect creditors – sec 3(2) excludes right to in accrual of the other party’s insolvent estate. The right never forms part of the insolvent’s estate. The claim is however not excluded from the insolvent estate.

 

Calculating accrual:

·                 Sec 4(1)(a) MPA = amount by which the net value of his/her estate at divorce exceeds the net value at the commencement of the marriage.

·                 Sec 4 & 5 states certain assets are excluded from the accrual:

·                 Accrual = net end value – net commence value – assets excluded.

·                 Commencement value: provided by declaring value in ANC, or separate statement, if neither then regarded nil unless otherwise proven.  Also nil if liabilities exceed assets.

·                 Fluctuation : CPI consumer price index –GG.

·                 CPI  value of the month in which the marriage is dissolved divided by CPI for the month of the wedding.

·                 Eg : May 1987 : 17.6, Feb 2010: 110.2 then 110.2 divided by 17.6 = 6.26 therefore if value was R100 0000 in 1987 then r100 000 x 6.26.

 

Assets excluded from accrual:

·                 any non –patrimonial damages during marriage

·                 assets exclude in the ANC

·                 any inheritance excluded

·                 Donations ( inter vivos) between living persons.

 

Example : Projector:

 

Protection of spouse’s right to share in accrual:

·                 Sec 8(1) MPA =if one spouse seriously prejudice the other’s right to share –may apply to high court fir immediate separation of accrual.

·                 Court may divide 40/60 –discretion.

·                 Can also order after separation of accrual that marriage strictly out of community without accrual.

·                 Or can order that a new accrual will start after separation of accrual.

·                 Also seek interdict

·                 If assets transferred to 3^rd parties – action Pauliana utilis.

·                 Prodigal

 

Satisfaction of accrual claim:

·                 can cause financial dilemma as result of accrual claim

·                 Sec 10 MPA court may on application defer payment. Eg security/interest/ installments/transfer of some assets etc.

 

Advantages/Disadvantages of regimes: IN/OUT (total separation) /Accrual:

·                 Advantages : IN – no ANC, automatic share in assets, share in assets accumulated, credit-worthiness.

·                 Disadvantages : IN – joint liability, cannot recover delictual damages from each other, admin is complicated, liquidation.

·                 Advantages OUT : no liability,

·                 Disadvantages OUT: no right share in any part of other’s estate.

·                 Advantages Accrual: share in growth, assets prior to marriage not shared, not liable, free to enter into contracts with each other, delictual liability against each other uncomplicated admin.

·                 Disadvantages Accrual: ANC; not share in each other’s credit worthiness, accrual calc complicated.