Case summary written by Celeste Frank and checked by Jordan Dias
Background
On 20 February 1993, the Appellant and the Respondent were married out of community of property with the inclusion of the accrual system. The parties were presently in divorce proceedings and disputed a clause of their ANC excluding, inter alia, certain shares from the Respondent’s estate for purposes of the accrual calculation. Clause 4 reads as follows:-
“That the assets of the Husband which are listed hereunder and all liabilities presently associated therewith or any other asset acquired by the Husband by virtue of his possession or former possession of such asset shall not be taken into account as part of the Husband’s Estate at either the commencement or dissolution of the marriage.
4.1 All shares and loan accounts in Rand Building Hydraulic (Pty) Limited
4.2 All shares and loan accounts in National Re Investments (Pty) Limited…”
The issue on appeal was whether the parties intended, through Clause 4, to exclude from the accrual those shares which the Respondent possessed at the dissolution of the marriage, which he did not possess at the commencement of the marriage. Moreover, and if those shares do not represent a growth in the assets held by the Respondent, did their acquisition constitute an acquisition of a future asset and, consequently, their exclusion is impermissible under Section 4 (1)(b)(ii) of the Matrimonial Property Act (“the Act”).
It was common cause that the Respondent held 4000 shares in Rand Building Hydraulics (Pty) Ltd (“RBH”), having a value of R100 per share, and had “beneficial ownership” of shares in National Reinvestment (Pty) Limited (“NR”).
The Appellant claimed that
- the difference in the issued share capital owned by the Respondent in RBH and NR, at the date of the dissolution of the marriage, and that owned by him at the date of the ANC or the date of the marriage; and
- the differences between the credit balances under the loan accounts in RBH and NR and those credit balances that were due to him at the time of the ANC, alternatively, the date of the marriage; are subject to accrual sharing.
The Court a quo dismissed this contention and held that it was clear from the wording of Clause 4 that the shares and loan accounts, held by the Respondent both at the commencement and dissolution of the marriage, were to be excluded from consideration for accrual purposes.
In terms of section 3 of the Act, a spouse acquires a right to claim accrual at the dissolution of marriage unless a court orders an immediate and prior division under section 8. The wording of Clause 4 of the ANC mirrors section 4 (1)(b) of the Act, which reads as follows:-
“In the determination of the accrual of the estate of a spouse an asset which has been excluded from the accrual system in terms of the antenuptial contract of the spouses, as well as any other asset which he acquired by virtue of his possession or former possession of the first- mentioned asset, is not taken into account as part of that estate at the commencement or dissolution of his marriage.”
Court Held
On appeal, the High Court indicated that it was incompatible with the accrual regime that assets (acquired after the commencement of the marriage) can be excluded in anticipation of acquisition. Section 5 of the Act provides for certain special cases where assets acquired after commencement of the marriage are ex-lege excluded.
The High Court stated that married couples cannot, pursuant to s 4(1)(b)(ii), have both an accrual during the marriage and exclude wealth or assets acquired by either of them in the future (i.e. during the marriage). There is only one moment at which any asset of a spouse can be excluded and that is at the commencement of the marriage. Section 4(1)(b)(ii) allows no other act or timing of exclusion.
Moreover, it would make a nonsense of the accrual system if assets in respect of which no rights existed at the commencement of the marriage could be excluded in anticipation of acquisition in the future.
On the stated case, the High Court declared that only the assets possessed at the commencement of the marriage fall to be excluded.
Value
Our attention is drawn to the importance of the wording of an antenuptial contract to determine whether certain of assets possessed by a husband, at the dissolution of the marriage, which he did not possess at the commencement of the marriage, are excluded by a clause within the ANC.
Meta Description
The issue on appeal was whether the parties intended, through a clause in their ANC, to exclude from the accrual those shares which the Husband possessed at the dissolution of the marriage, which he did not possess at the commencement of the marriage.
Focus Keywords
Decree of divorce; Antenuptial contract; clauses; interpretation, Divorce, Proprietary rights, Accrual system, Matrimonial Property Act 88 of 1984.
