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Dissolution of Marriage Under Accrual System The beginning of the end – dissolution of marriage under accrual system By Clement Marumoagae As a family law practitioner, I have realised that when entering into marriage, most people are not aware of the laws that have direct effect on their estates and only get to be conscious of them when they divorce. The aim of this article is to highlight different matrimonial regimes in South Africa, but more particularly to discuss an option available to those whose marriage is subject to an accrual system as far as protecting their claim to the growth of their spouses’ estates is concerned. I will show that the Matrimonial Property Act 88 of 1984 (the Act) does provide for the division of the growth of the marriage without the parties thereto actually instituting divorce proceedings. Marital regimes and the accrual system In practice, parties to a marriage often enter into a marriage without deciding the marital regime that will be applicable to their marriage. On divorce, parties are faced with consequences that they did not prepare themselves for when they married. It is trite that: ‘[i]n the absence of an antenuptial contract providing otherwise, marriage ex lege creates community of property and of profit and loss – communio bonorum. Community comes into being by operation of law as soon as the marriage is solemnised. It can be described as a universal economic partnership of the spouses in which all their assets and liabilities are merged in a joint estate in which both spouses, irrespective of the value of their contributions hold equal shares’ (JA Robinson ‘Matrimonial Property Regimes and Damages: The Far Reaches of the South African Constitution’ (2007) 10 3 PER 70 at 71). Unless excluded by a will, the general rule is that all the assets that the spouses had before the marriage, as well as assets they accumulate after entering into the marriage fall into the joint estate. Nonetheless, spouses may retain a separate estate in that certain exceptions do exist where assets do not fall into the joint estate (see s 7(7) of the Divorce Act 70 of 1979). It is well documented that in terms of South African Family Law, people can either marry in community of property, out of community of property with or without the application of the accrual system. The marital regime choice that prospective spouses make will determine their proprietary rights both during the subsistence of their marriage and when their marriage is dissolved either by death or divorce. In order for a prospective spouse to marry in any regime other than community of property, they have to conclude an antenuptial contract (ANC). An ANC may be referred to as a contract that is concluded by prospective spouses before the marriage, which details the terms and conditions of the union and thus exclude community of property. This contract can, among others, ensure that spouses are not held liable for each other’s debts and do not share in each other’s profits arising from the marriage. It further enables parties to transact without each other’s consent where consent would ordinarily be required if they were married in community of property. In terms of s 87(1) of the Deeds Registries Act 47 of 1937 ‘[a]n antenuptial contract executed in the Republic shall be attested by a notary and shall be registered in a deeds registry within three months after the date of its execution or within such extended period as the court may on application allow’. As such, I submit that it is imperative that such a contract is drafted by a practising notary public, because vaguely drawn antenuptial contracts can result in costly litigation when parties divorce, as was the case in B v B (SCA) (unreported case no 952/12, 24-3-2014) (Lewis JA). In B v B the court held that: ‘It is clear to me that the parties did intend to exclude community of property and profit and loss and to adopt the system of accrual: But it is far from clear how they intended to do that. If the contract had included only the first three clauses they would effectively have achieved a contract out of community of property, subject to the accrual system regulated by the Act. But the clauses that followed are so contradictory and incoherent that in my view they vitiate the contract as a whole. No certainty has been achieved as to what the contract meant – what the parties intended to achieve. The contract does not embody terms that enable this court to give effect to what their intention might have been’ (para 19). In this case, the terms of the ANC were inconsistent and incoherent and the context did not clarify precisely what the parties intended to achieve. As such, the contract was held to be void for vagueness and the marriage was regarded to be in community of property (see the headnote of the case). Badly drawn ANCs may lead to spouses being unable to prevent their assets being part of the accrual of the marriage, and thus be subject to division when parties divorce. The Act introduced into South African Law the system of accrual, which could be made applicable to marriages contracted out of community of property and of profit and loss by way of an ANC (See B v B (SCA) (unreported case no 700/2013, 25-9-2014) (Gorven J) para 4). In terms of s 2 of the Act all marriages out of community of property, in terms of an ANC are subject to the accrual system ‘except insofar as that system is expressly excluded by the [ANC]’. This simply entails that if spouses do not wish an accrual system to be applicable to their marriage they need to expressly exclude it from their ANC. Nonetheless, if parties decide to marry out of community of property subject to the accrual system, they still have a choice to list their individual assets, which they wish not to be part of the accrual, which will effectively be excluded when the accrual is calculated should they divorce. However, it must be borne in mind that there are certain assets that are automatically excluded from forming part of an individual spouse’s estate. In terms of s 5(1) of the Act ‘[a]n inheritance, a legacy or a donation which accrues to a spouse during the subsistence of his marriage, as well as any other asset which he acquired by virtue of his possession or former possession of such inheritance, legacy or donation, does not form part of the accrual of his estate, except in so far as the spouses may agree otherwise in their antenuptial contract or in so far as the testator or donor may stipulate otherwise’. Furthermore, ‘a donation between spouses, other than a donation mortis causa, is not taken into account either as part of the estate of the donor or as part of the estate of the donee’ in the determination of the accrual of the estate of a spouse (see s 5(2) of the Act). It is important to note that ‘an asset which has been excluded from the accrual system in terms of the [ANC] 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 the dissolution of his marriage’ (s 4(1)(b)(ii) of the Act). Division of accrual during the subsistence of the marriage The accrual system can be thought of as a deferred community of gains (HR Hahlo The South African Law of Husband and Wife 5ed (Cape Town: Juta 1985) at 304). ‘During the subsistence of the marriage, it is out of community of property and community of profit and loss. Each spouse retains and controls his or her estate, but on dissolution of the marriage the spouses share equally in the accrual or growth their estates have shown during the subsistence of the marriage’ (J Heaton South African Family Law 3ed (Durban: LexisNexis 2010) at 94). The practical implication of the accrual system is outlined in s 3(1) of the Act, which provides that ‘[a]t the dissolution of a marriage subject to the accrual system, by divorce or by the death of one or both of the spouses, the spouse whose estate shows no accrual or a smaller accrual than the estate of the other spouse, or his estate if he is deceased, acquires a claim against the other spouse or his estate for an amount equal to half of the difference’. It was held in Reeder v Softline Ltd and Another 2001 (2) SA 844 (W) at 849, that ‘a spouse who alleges that her estate has shown no accrual or a smaller accrual than the estate of the other spouse, and who ... claims half the difference of the accrual between the two estates, has a contingent right and not a vested right.’ This simply means that no spouse has a claim to a specific asset in the estate of the other, but has a future claim that could arise when parties divorce or in terms of s 8 of the Act to the accrual in the other spouse’s estate. Even though it is rare and case law is not particularly clear in this regard, it nonetheless appears that if the estates of parties to a marriage subject to an accrual system are substantially the same, there can be no sharing.
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