Ruling will affect new marriage contracts

ON MAY 11, 2022, the Pretoria High Court handed down a landmark ruling that paved the way for divorcing spouses married out of community of property, without the accrual system, to claim a redistribution of assets despite the content of their signed prenuptial contract.

This is a historic judgment that will have a significant impact, especially for spouses who previously stood to receive nothing if they were married out of community of property.

The court ordered that Section 7(3) (a) of the Divorce Act, 70 of 1979, was declared inconsistent with the Constitution and invalid to the extent that the provision limited the operation of Section 7(3) of the Divorce Act to marriages out of community of property entered into before the commencement of the Matrimonial Property Act.

Previously the law did not provide the court with power to exercise any discretion when it came to awarding assets to a spouse where marriages were concluded out of community of property with the exclusion of the accrual system after November 1, 1984.

The application brought before the High Court in Pretoria argued that the limitation of when you were married was unconstitutional, because it discriminated between people married before the act and after the act.

Judge Elmarie van der Schyff, who presided over this case, declared that this particular section of the Divorce Act was invalid in terms of the Constitution, as the provision limited some spouses to be appropriately compensated from the assets that they had a role in accruing during the marriage.

The practical effect of the judgment is that if someone going through a divorce feels that they contributed to the marriage, directly or indirectly, can now apply for a fair share of the assets accumulated by their spouses during the marriage.

An easy example of this would be a divorcing couple where the husband has his own business, and the wife was mainly a housewife. By taking care of the household and children throughout the marriage, the wife played a significant supportive role allowing him to focus on his business.

A court might see this as an indirect contribution towards the growth of the estate and therefore then allocate certain assets to her during the divorce proceedings.

It is easier to substantiate and prove direct contributions to the assets accumulated throughout the marriage, as these usually include things like monetary investments in businesses, etc. However, proving indirect contributions is where it becomes more difficult as this usually relates to emotional or physical support given to the spouse in order for them to work, and unfortunately in most cases the only testimony to this would be the applicant’s own testimony.

Even though this judgment holds great promise for divorcing spouses married out of community of property, it should however be kept in mind that such a redistribution claim is not an automatic entitlement.

A spouse instituting a Section 7(3) claim will still need to prove their direct or indirect contributions made towards the estate of the other spouse to be successful. It is then up to the court handling this application to decide not only whether the spouse is entitled to a redistribution claim, but also the extent thereof.

This will be handled on a case-bycase basis and the extent of each claim may differ greatly from matter to matter.

Regardless of how couples are married, specifically if couples are married without the accrual and decided not to share their assets going into the marriage, that agreement will not apply as strictly any more.

It is clear that this ruling will have an impact on individuals and their considerations when it comes to entering into a new marriage contract.

It is key to remember that in South Africa the law allows for couples to get married in one of three ways.

Firstly, a couple can get married in community of property where the spouses share everything. Secondly, they can choose to get married out of community of property, with the accrual, that allows for the establishment of starting values of the assets both parties are bringing into the marriage. However, what is accumulated throughout the marriage will then be shared in the event of a divorce.

Finally, a couple can get married out of community of property, without the accrual, which means what’s mine is mine and what’s yours is yours. This judgment is only applicable to couples married out of community of property without the accrual.

Although divorce cases that have already been completed and finalised will not be able to take advantage of this ruling, couples with divorce proceedings still pending have the opportunity to apply for redistribution of assets.

The relief granted in the application will have far reaching consequences on the patrimonial consequences of many marriages.

The outcome of the application is as such of significant importance to the South African society at large.