You and Your Rights

The old saying that love is blind is decidedly apt when applied to the property laws that rule a marriage. Although few couples think about divorce on their wedding day, common sense suggests that perhaps they should. The fact is, marriage is no different from any other contract.

The property laws that govern marriage changed drastically on 1 November 1984, when the Matrimonial Property Act became law. Prior to that date there were essentially two types of marriage:

IN COMMUNITY OF PROPERTY Any money or possessions belonging to either of the spouses at the time of the marriage, or acquired by them at any time thereafter, cease to be the private property of the one person and become part of a joint estate in which each of the partners has an equal, undivided share.

BY ANTENUPTIAL CONTRACT Each spouse retains his or her separate property and has complete freedom to deal with it. If one partner is declared insolvent, the other's property is protected from creditors. Apart from excluding community of property, this contract might contain various other provisions, such as the creation of a trust, or the settlement of property by one spouse upon the other. Despite this, the courts can order that, on divorce, a husband make over part of his estate and pay maintenance to a wife left potentially destitute.

Marriages contracted after 1 November 1984 are governed by three sets of rules:

IN COMMUNITY OF PROPERTY If no antenuptial contract is entered into before the marriage, the couple are still married according to the rules of community of property and the rules of joint administration apply (that is, both spouses administer their joint assets).

BY ANTENUPTIAL CONTRACT WITH ACCRUAL Profits made by each of the parties during the marriage are shared when the marriage is dissolved by death or divorce. All other property is retained by the original owners. This is known as the accrual system.

BY ANTENUPTIAL CONTRACT WITHOUT ACCRUAL If the accrual system is excluded in the antenuptial contract, the marriage is subject to the same rules as marriages out of community of property contracted before the promulgation of the Matrimonial Property Act in 1984 except that, on divorce, the courts will have no discretionary power to redistribute property. In this instance, only periodic maintenance might be available to the divorced wife.

Before 1984: in community of property

The marriage of a couple entered into prior to 1 November 1984, without an antenuptial contract, is automatically in community of property, provided the husband was domiciled in South Africa at the time of the marriage. If the husband was domiciled elsewhere, the law of that country will determine the consequences of the marriage.

Any money and possessions belonging to either partner at the time of the marriage, or acquired afterwards, become part of the joint estate, which is owned by the partners in equal, undivided shares. In these marriages the joint estate was administered solely by the husband by virtue of his marital power (which no longer exists - it was abolished by an amendment to the Matrimonial Property Act in 1993).

Certain items can be excluded from the joint estate to become the sole property of one or other partner, for example, when a third party makes a gift or leaves a legacy to one of the marital partners with the proviso that it must not become part of the joint estate.

If it is a monetary gift or if it is a gift that is sold for money, anything purchased with the proceeds also becomes the sole property of the same person. However, any interest earned on money or income from property owned separately by one partner will normally become part of the joint estate unless this also has been specially excluded.

Engagement and wedding gifts given by a husband to his wife generally do not form part of the joint estate.

If either partner has been awarded costs against the other in matrimonial proceedings (for example, if a wife's divorce action against her husband has been dismissed with costs), those costs must be paid out of the unsuccessful partner's separate estate, if there is one, or the relevant half-share of the joint estate. This money then becomes the separate property of the other partner.

If either partner sues a third party for non-matrimonial damages, such as for defamation or for personal injury, any money awarded as a result becomes the separate property of that partner and does not fall into the joint estate.

The spouses may also sue each other for damages for bodily injury. These damages must be paid out of the half-share of the guilty spouse, and in so far as it does not cover the sum, out of the joint estate, until an adjustment can be made on dissolution of the marriage.

The amount of damages recovered by the injured spouse becomes that partner's separate property.

Just as all the assets of both partners form part of the joint estate, so must all debts owed by either of them be payable out of the joint estate, whether they were incurred before or after the marriage.

WHEN THE MARRIAGE ENDS On termination of their marriage, the husband and wife are each entitled to a half-share of the joint estate, with adjustments made for any fines, damages or certain costs incurred by either during the marriage.

If a marriage ends in divorce, and it is clear that one of the parties is to blame, the innocent partner may be awarded an order for partial or total forfeiture of the benefits of the marriage in community of property when the divorce is granted.

This means that, on division of the joint estate, the guilty partner may forfeit his or her share, or be entitled only to a half-share, or to whatever he or she has contributed to the joint estate, whichever amount is smaller.

If, for example, a man and woman entered into a marriage with each of them having assets valued at R5000, then the value of the joint estate would be R10000 after the marriage. If at the date of divorce the value of the joint estate is R50000, with the wife having contributed R35000 and the husband R15000, the general rule that the joint estate be equally divided will apply, each party receiving R25000.

However, if the wife is the plaintiff in the divorce action and she includes in her summons an application for forfeiture by her husband of the benefits of the marriage in community of property and the court grants this, then he will receive his contribution of R15000 and she hers of R35000.

MERITS AND RISKS The advantage of marriage in community of property is that each partner shares in the fortunes of the other. A woman cannot be left completely destitute at the end of her marriage because she is automatically entitled to a half-share of their joint property.

However, it also has a disadvantage: if one partner becomes insolvent, the other is protected only if he or she owns property that does not form part of the joint estate. Everything in the joint estate will be attached and sold off to pay any creditors.

Before 1984: by antenuptial contract

Many couples who married before 1 November 1984 entered into an antenuptial contract to ensure that their marriage would be out of community of property and out of community of profit and loss, and that the marital power (which gave the husband full power to deal with the joint property) would be excluded. Antenuptial contracts vary, although there are certain clauses that have appeared regularly over many years.

Although a couple could enter into an antenuptial contract where community of property was not excluded, this was seldom done. Normally the purpose of such a contract would have been for one of the partners to create a trust or to settle property on the other.

If the parties did not exclude the husband's marital power, the husband had full power to deal with the joint property, or even with his wife's property if the marriage was out of community of property. It became standard practice, therefore, to include a clause revoking the marital power.

Generally, couples married out of community of property are free to deal with their personal property as they choose at all times, and if one partner is declared insolvent, the other's property is protected.

After 1984: in community of property

Two major differences exist between marriages entered into before and after 1 November 1984: prior to that date, a marriage without an antenuptial contract automatically gave rise to community of property and the marital power; now absence of such a contract gives rise to community of property and joint administration.

The financial consequences of a marriage without an antenuptial contract entered into after the commencement of the Matrimonial Property Act do not differ from the financial consequences of marriages in community of property celebrated before the 1984 reform. The separate property of each of the spouses still forms part of a joint estate owned by the partners in equal, undivided shares.

Administration of the common property, however, does not fall exclusively to the husband (a 1993 amendment to the Matrimonial Property Act abolished marital power). Spouses in these marriages share the administration of the joint estate. In principle, each can perform any legal act in connection with the common property independently of the other, although a number of more important transactions require the agreement of both spouses and consent may be required in writing.

After 1984: by antenuptial contract with accrual

Since the promulgation of the Matrimonial Property Act, couples who married or who will marry by means of an antenuptial contract that excludes community of property will automatically be married according to the accrual system.

This means that they do not share their property while the marriage lasts, but at the end of the marriage they acquire a certain right to each other's property. The accrual is the extent to which the husband and wife have each become richer at the end of the marriage, compared with their respective financial positions on their wedding day. The spouse with the smaller accrual has a claim against the one with the greater accrual for half the difference between the two accruals.

The system ensures that each partner retains as his or her exclusive property for all time anything that he or she owned at the time they were married. Anything that either one obtains during the marriage (other than an inheritance, a legacy or a donation not otherwise agreed upon in an antenuptial contract or otherwise stipulated by the testator or donor) may have to be shared with the other partner should the marriage come to an end. (See accrual system.)

TIME TO PAY If the marriage ends and the accrual has been divided, one partner may owe the other a large amount of money. In order to avoid undue hardship, that partner may apply to a Supreme Court judge for an order to defer payment of all or part of this debt.

The judge may not necessarily issue such an order, but may, instead, rule that the debt be paid by fixed instalments or by the handing over of some specific property to the other partner. Normally an arrangement will be made for the partner who is in debt to the other to provide some form of security and to pay interest if payment in full cannot be made at once. This will become part of the court order.

After 1984: by antenuptial contract without accrual

If accrual is excluded in the antenuptial contract, the marriage will be subject to the same rules that are applicable to marriages contracted with an antenuptial contract before the 1984 Act except that, on divorce, the court will have no power to redistribute property by virtue of a discretionary power.

Only periodic maintenance will be available to the divorced wife in this instance. If the contract does not exclude the accrual system, the system will automatically apply.

Drawing up an antenuptial contract

An antenuptial contract must be drawn up by a notary and signed by the couple in his or her presence. The notary must then register it in a deeds registry within three months of its being signed. A minor must have the consent of his or her legal guardian (normally the father) before entering into an antenuptial contract. Without this consent, the contract would not be valid and the marriage would be in community of property. (See minor.)

THE PROVISIONS Almost any provision can be incorporated in an antenuptial contract, as long as it is not illegal, immoral or impossible. A couple cannot incorporate a provision that conflicts with the essential marriage relationship. For example, they may not agree that they will not live together as husband and wife or permit one another to be unfaithful.

A clause excluding the husband's liability to pay maintenance for his wife if they should divorce, or one providing that neither should be liable to an order for forfeiture of benefits under the antenuptial contract on divorce, is also not allowed.

Succession clauses can be included in the antenuptial contract to the effect that certain property should be inherited by either of the spouses on the other's death. A trust can also be set up in favour of either one of the partners or possibly of children that may be born in the future.

The most common inclusion in antenuptial contracts is a marriage settlement, such as gifts that are given or promised by one person to the other in anticipation of the marriage.

Normally, one of the partners promises to give a specific item, such as a house, an insurance policy or a motor vehicle to the other. These promises can be conditional, such as when a husband promises to take out certain insurance policies if and when any children are born.

A couple may agree in their antenuptial contract that all their wedding gifts they receive should become the property of either one or the other.

After marriage, the terms of the antenuptial contract become irrevocable unless they are amended by an order of the Supreme Court. A marriage settlement is therefore binding on the person who makes it.

If, during the marriage, the maker of the settlement does not fulfil the promises made, these can be enforced as long as an order of court has not been made that the other partner must forfeit the benefits of the marriage.

How to change your matrimonial property system

Under the old law, the matrimonial system chosen by a couple became unalterable once they married.

Spouses who wished to change their marriage contract could do so only by getting a divorce and remarrying.

The Matrimonial Property Act introduced ways to change the consequences that arose when a marriage was celebrated.

For example:

• Couples who married before or after the commencement of the Act can apply to court to change the applicable matrimonial property system;
• Either spouse whose conduct in administering the joint estate (in a marriage where joint administration operates) becomes intolerable, may have his or her powers of administration suspended by the court for a period.

Applying to court

A couple may at any time make a joint application to court to have their matrimonial system changed. They can do this regardless of whether the marriage took place before or after the promulgation of the Act or of the system chosen. The court must, however, be satisfied that:

• There are sound reasons for the change;
• Creditors have been notified sufficiently in advance;
• No other person will be prejudiced.

If permission, that is, an order of court, is granted, the couple will be authorised to enter into a notarial contract to give effect to their new choice.

Protection against abuse

If during the course of a marriage in community of property, or one subject to the accrual system, a spouse's interests are (or are likely to be) seriously prejudiced by the conduct of the other, he or she can apply to court for an order for the immediate division of the existing joint estate or the accrual.

The court may order an equal division or a division on any other basis that it considers fair. The court's power of division amounts to a judicial discretion to depart from the consequences that flow from the matrimonial system on the grounds of the economic misconduct of one spouse. If the court grants such an order, it may also direct that the community of property or the accrual system should, in future, cease to operate in the marriage.

Alternatively, if a husband is a spendthrift who prejudices his wife's interest in the joint estate, his wife can simply apply to the court to have his administration suspended and, if necessary, appoint a curator, who may be the wife. In this case, community of property will continue.

What is a wife allowed to buy?

Any wife, whether married in community of property or not, is entitled to buy certain necessaries needed to maintain the joint household.

A wife may validly enter into purchases (which are, of course, contracts), whether her husband consents to or authorises them or not. If the marriage is in community of property, bills for household necessaries will have to be settled by the joint estate of the parties. If the couple are married out of community of property, they will be jointly and severally liable for these debts; thus a trader who has sold goods on credit to a wife may sue either the wife or the husband if the debt is not settled.

If a couple live together as if they were married, whether they are divorced or never were married, both will be liable for household necessaries (in some cases, however, the woman may be able to bind her partner to payment).

In every case, whether the pair are married or not, there must be a common household (the woman must not be living separately from the man) for this contractual liability to arise.

If the husband is under a duty to support his wife, as is usually the case, this duty does not necessarily end if the couple separate. The husband remains liable to support her unless the separation is due to her fault.

If the wife buys goods on credit in such circumstances, the shopkeeper is still able to look to the husband for payment.

What are 'household necessaries'?

The wife's authority is not limited to the purchase of necessities of life, for example, staple foods and basic clothing. The term covers all those contracts that the court may consider reasonable, having regard to the circumstances of the spouses.

While the wife of a successful professional man could consider expensive clothing or imported foods to be household necessaries, the wife of a poorly paid artisan may be limited to little more than the basics of life.

The wife's authority extends to the purchase of necessities for everyone in the common household, even if they are not children or relatives.

What is a fair share?

Spouses who married out of community of property are jointly and severally (that is, each fully) liable to traders for the payment of any debts incurred by either of them for household necessaries. Either of the spouses may be called upon to pay such debts.

However, Section 23 of the Matrimonial Property Act provides that where one of the spouses has paid more than a fair share of the expenses of the joint household, he or she can recover the excess contribution from the other spouse. This statutory provision applies only to those spouses married prior to the promulgation of the 1984 Act.

If the spouses were married after that date, they will still have to contribute a fair share towards the costs of running the common household, but there is no right of recovery for an excess contribution unless by prior agreement.

Generally, a fair share is calculated according to the means of a spouse. A husband whose financial position is twice as strong as that of his wife would be liable for two-thirds of the cost of household necessaries, while his wife would have to contribute one-third.

If the wife has no means, the husband must bear the entire burden of running the common household.

Couples who married after the commencement of the Act should regulate their liability for household necessaries in their antenuptial contract. If not, one spouse might contribute a great deal more than the other and, in the event of a dispute, be unable to claim any refund for the excess contribution.

Joint administration: what it means

All couples married without an antenuptial contract administer their joint estate together. This means that either party can, subject to certain safeguards, enter into transactions involving the commonly owned property.

These safeguards are important and they include:

WRITTEN CONSENT These are the acts one spouse may not perform without the written consent of the other. The principal ones are:

1. Alienating (for example, selling), mortgaging or granting a servitude over land (a house is considered part of the land);
2. Entering into a contract to alienate, mortgage or grant a servitude over land;
3. Alienating or pledging investments such as shares, stock, debentures, insurance policies, mortgage bonds, fixed deposits or similar assets;
4. Alienating or pledging jewellery, coins, stamps, paintings or other assets held mainly as investments;
5. Withdrawing money in the name of the other spouse in any financial institution or Post Office Savings Bank;
6. As buyer or lessee, entering into a credit agreement or leasing transaction to which the Credit Agreements Act, 1980, applies (see borrowing);
7. As a purchaser, entering into a contract to which the Alienation of Land Act, 1981, (see property, buying; property, selling), applies;
8. Binding himself or herself as surety (see credit guarantee).

Clauses 2, 3, 7 and 8 do not apply if the act is performed by a spouse in the ordinary course of his or her profession, or in the carrying on of a trade or business. Furthermore, clause 3 does not apply to a sale of listed securities on the Stock Exchange and the cession or pledge of listed securities in order to buy listed securities, and to the alienation, cession or pledge of a deposit in his or her name in a bank or other savings institution.

In cases 2 to 7 the consent may be given within a reasonable time after the Act. In cases 1, 2, 6, 7 and 8 the written consent has to be in respect of the particular action and requires two witnesses.

Consent not needed in writing

Although certain acts may not be performed by one spouse without the consent of the other, permission need not always be in writing.

Such instances include:

1. Disposing of or pledging household furniture or other effects
2. Receiving money due as:
   • Remuneration, earnings, bonus, allowance, royalty, pension or gratuity for professional services of the other spouse or the carrying on of a trade or business by him or her;
   • Damages for loss of income;
   • An inheritance, donation, bursary or prize left, bequeathed, made or awarded to the other spouse;
   • Income from the separate property of the other;
   • Dividends or interest on or the proceeds of shares or investments in the other's name;
   • The proceeds of any insurance policy or annuity in favour of the other spouse.
3. Donating an asset of the joint estate or disposing of it without value, except so far as it does not unreasonably prejudice the other spouse's interests in the joint estate and also is: neither one of the acts mentioned above requiring written consent; nor one that involves disposing or pledging of furniture or other effects.

In determining whether a donation or alienation as set out in clause 3 above does not or probably will not unreasonably prejudice the interests of the other spouse, the court has to look at the value of the property, the reason for the donation or disposition, the spouses' financial and social standing and standard of living, and any other relevant factor. Consent to an item falling under clause 1, 2 or 3 above may be given within a reasonable time after the Act.

Legal proceedings

A spouse married in community of property needs the written consent of the other spouse to institute or defend legal proceedings against a third person, except:

• In respect of the separate property of either spouse;
• For recovery of damages other than for financial loss caused by a delict (civil wrong) against him or her (for instance, defamation);
• In respect of a matter relating to his or her profession, trade or business.

If consent cannot be obtained

If a spouse withholds consent or if for any other reason consent cannot be obtained, the other spouse may apply to the relevant provincial or local division of the Supreme Court or to a magistrate's court for an order dispensing with consent.

The court may choose to dispense with it if it is satisfied that consent is being unreasonably withheld or, in any other case, ought to be dispensed with. If a provincial or local division of the Supreme Court is satisfied that it is necessary to protect a spouse's interest in the joint estate, it may on his or her application suspend any power the other spouse may exercise.

If the spouse acts without consent

Provided that the third party did not know and could not reasonably have known of the position, the transaction is deemed to have been with the required consent or, as the case may be, the errant spouse is deemed to have been competent to enter into the transaction. However, the latter, where he or she is at fault, will be penalised on a division of the joint estate if the estate has suffered a loss.

Dividing the joint estate

If one spouse behaves in such a manner that the interests of the other are being (or will be) seriously prejudiced, the other spouse can apply to court to have the joint estate divided immediately into equal shares or on whatever other basis that the court decides.

When ordering division, the court may also order that community of property should cease to operate and be replaced by some other matrimonial property system, subject to certain conditions.