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[2016] ZAWCHC 19
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D.L.G v D.W.V.G (484/2014) [2016] ZAWCHC 19 (29 January 2016)
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IN
THE HIGH COURT OF SOUTH AFRICA
WESTERN
CAPE DIVISION, CAPE TOWN
CASE
NO: 484/2014
DATE:
29 JANUARY 2016
In
the matter between:
[D……..]
[L…….]
[G…….]
...............................................................................................
APPELLANT
And
[D……..]
[W……..] [V…….] [G……..]
(Nee
[W………])
..............................................................................................................
RESPONDENT
APPEAL
JUDGMENT DELIVERED ON 29 JANUARY 2016
GAMBLE,
J:
INTRODUCTION
[1]
The parties, who for the sake of convenience I shall call “the
husband” and “the wife”, were married
to each other
on 20 June 1981 in Cape Town. Their marriage was one out of community
of property pursuant to an antenuptial contract,
with the exclusion
of profit and loss or any form of accrual regime. After many years,
some good and some bad, and having seen
their son and daughter each
reach majority, the parties’ marriage foundered on the rocks
and in January 2011 they separated.
[2]
At the end of March 2011 the husband issued summons for a decree of
divorce and ancillary relief in the regional court, Wynberg.
Subsequently, and by agreement, the matter was transferred to the
regional court Cape Town where the trial commenced on 15 June
2012.
Both parties were represented before the magistrate by counsel, in
the case of the wife by senior counsel. The trial was
a protracted
affair with many interruptions and a surfeit of evidence, much of it
attributable to laborious cross examination of
the parties.
[3]
The evidence concluded on 15 May 2013 with judgment being reserved.
Some 14 months later the magistrate delivered a detailed
judgment
which runs to 47 pages. The upshot of the judgement was that the
husband was ordered to pay to the wife the sum of R3 428 333,00,
the parties were ordered to retain such movable assets as were then
in each one’s possession, and the husband was ordered
to pay
the bulk of the wife’s costs of suit. Unhappy with the decision
of the magistrate, the husband lodged an appeal to
this court. As
with all civil appeals from the lower courts, the matter was heard by
two judges in this Division.
[4]
The appeal was originally enrolled for hearing in August 2015 but did
not proceed for reasons which are not relevant. The matter
subsequently came before this court on Friday, 30 October 2015 with
the husband being represented by Advs G. Myburgh SC and D.Watson
(the
latter having appeared for him alone before the court
a
quo
) and the wife by Adv. S. van
Embden.
THE
ISSUES ON APPEAL
[5]
Although the issues before the trial court were fairly extensive and
included reciprocal claims for personal maintenance, on
appeal the
issues were limited to the proprietary consequences of the marriage
and costs. While the issues were fairly limited
the facts were not
but I shall endeavour to send them out as succinctly as possible.
[6]
Given that the parties were married prior to 11 November 1984 and in
light of the fact that they were married out of community
of property
by antenuptial contract, upon divorce each party acquired the right
to prefer against the other a claim for the transfer
of assets in
terms of
section 7
(3) of the
Divorce Act, 70 of 1979
(‘the
Act’). The husband, however, sought no such proprietary order,
claiming rather the implementation of the provisions
of the
antenuptial contract and lifelong maintenance against the wife of R
10 000 per month
[1]
. The wife,
on the other hand, sought lifelong personal maintenance in an amount
considered to be just and equitable by the court,
together with
medical expenses and an annual inflationary increase in maintenance,
as also an order in terms of
section 7(3)
of the Act in such amount
as the court considered just and equitable in the circumstances. She
also claimed costs of suit.
[7]
The capital sum which the trial court ordered the husband to pay the
wife was calculated by effectively massing the respective
estates of
the parties and awarding them each a half share therein. No order for
maintenance was made either way and, as I have
said, the husband was
ordered to pay the wife’s costs of suit save for the costs
relating to the postponement of the matter
on two occasions, when the
parties were ordered to bear their own costs. It was common cause on
appeal that the issue for consideration
was the fairness or not of
the
section 7(3)
order for the redistribution of assets by the
husband to the wife. I shall discuss the import of that section of
the Act later
but it is first necessary to have regard to some
historical background and the facts as they pertained at the time of
divorce.
RELEVANT
BACKGROUND FACTS
[8]
When the parties met the husband was 42 years old and the wife 28.
She was a theatre sister in Durban and he was running a successful
steakhouse business in Paarl. The husband had previously held a sales
position in a company selling business machines and office
supplies.
He decided to change tack and acquired an interest in a Spur ‘steak
ranch’ (as the restaurants in that chain
are known). The Spur
group is a listed company in the food industry which made its name
through the operation of franchised steakhouses
throughout the
country with each outlet bearing an appellation conjouring up
reminiscences of the American Wild West. Names such
as Golden Spur,
Apache Spur, Arizona Spur and Red River Spur are examples thereof.
The husband owned and ran the Pasadena Spur
in Paarl at the time of
their marriage.
[9]
The wife was undoubtedly a hard-working person when she met her
husband and immediately set about helping him in the running
of the
Pasadena Spur. Having no experience in the restaurant trade she was
thrown in at the deep-end but soon found her feet and
was regarded by
the husband as an integral part of the management team. That
business took off well and the parties then
looked to the North where
firstly the San Antonio Spur (in Pietersburg, as Polokwane was then
known), and later the Mohawk Spur
(in Kimberley) were acquired. The
former was run by the parties jointly for about 6 months and, having
installed an equity partner
as the manager there, they moved to
Kimberley where, once again, both were actively involved in all
aspects of running the Mohawk
Spur.
[10]
The husband was highly regarded within the Spur group due to his
business acumen and hard work, and ultimately was asked to
serve on
the franchising committee of that company. Around 1985 the couple
decided to move back to Cape Town where the Acapulco
Spur in
Bergvliet was established. This business was owned by the wife and
she ran it with the assistance of the husband who had
helped her
financially to acquire the outlet. The wife later acquired the
building which housed the Acapulco Spur thanks to the
husband’s
expertise. At the time the trial court made its order the Acapulco
Spur was still trading successfully and was
capably managed by the
wife’s current business partner Mr Ackerman, who runs the
business on a day-to-day basis.
[11]
The husband dabbled in a couple of other Spur businesses and had a
short interest in the Rocky Mountain Spur in Tokai as well
as the
Redhawk Spur nearby. Neither of these was a particularly successful
venture and after managing to extricate himself from
them the husband
continued to assist the wife in the running of the Acapulco Spur. The
husband, it seems, had always dreamed of
retiring early and about 10
years into the marriage (when he was about 53) he decided to retire
and live off the proceeds of a
substantial property and share
portfolio. In retrospect it appears that the seeds of destruction of
the parties’ otherwise
happy relationship were sown through the
husband’s premature decision to give up working. Subsequently
he suffered from bouts
of depression and the parties started to drift
apart.
[12]
As I said earlier, the parties have two children. For reasons which
are not now material their son manifested antisocial behaviour
and
substance abuse, and later a change of sexual orientation. This
placed the marriage under tremendous strain as the parties
struggled
to come to terms with the disappointment of seeing their eldest child
battling not to fall apart. Their daughter too
struggled at school
due to learning difficulties but ultimately she was able to enter
university. The wife, it seems, sought refuge
in alcohol and her
drinking habits only served to alienate the husband further. She
complained of his abusive behaviour towards
her and he of her
persistent drinking with friends. Although the trial court heard
extensive evidence relating to the breakdown
of the marriage (since
it was considered relevant to the competing maintenance claims and
the
section 7(3)
claim) on appeal both parties accepted that the
marriage had broken down irretrievably and that the reasons therefore
were not
material to the adjudication of the issues in the appeal.
[13]
At the time of trial the parties’ former common home in the
affluent Cape Town suburb of Constantia had been sold. The
husband
bought a townhouse in Bloubergstrand on the West Coast where he was
comfortably ensconced with a new partner, while the
wife was
struggling in relative penury in Plumstead sharing a one bedroomed
flat with her son. Her source of income remained the
Acapulco Spur
which was being run by Mr Ackerman, and the building in which it was
housed, for commercial rentals.
[14]
On appeal there was little in issue regarding the extent of the
parties’ respective estates. It was common cause that
when she
came into the marriage the wife had her personal effects and a motor
scooter. The husband owned the Pasadena Spur, a motor
car and a flat
in Cape Town. It was common cause on appeal that, when the trial
concluded, the husband’s estate was valued
at at least R8,6m
and the wife’s at R3,5m. The trial court heard detailed
evidence from accountants appointed by both parties
as to the value
of their respective estates. Ultimately there was one amount in
respect of capital gains tax (CGT) likely to be
paid by the husband
which remained in dispute between the experts. In the greater scheme
of things this figure (approxiamately
R500 000) is not
particularly high and Mr van Embden was happy to argue the matter on
the husband’s expert’s figures.
In a nutshell then, the
husband came into the marriage with fairly substantial assets while
wife came in was nothing, and after
33 years of matrimony both
parties estates had grown significantly, with the husband’s
estate worth more than double that
of the wife.
[15]
It was not in issue that the wife had contributed towards the growth
in the husband’s estate: the extent thereof was
disputed
somewhat. Further it was argued that the husband’s contribution
towards the establishment of the Acapulco Spur was
substantial and
that the wife had thereby been effectively compensated for her
contributions to his estate. During argument,Mr
Myburgh SC
reluctantly conceded that a
section 7(3)
order in an amount not
exceeding R850 000 might be appropriate.
SECTION
7(3)
OF THE
DIVORCE ACT
>
[16]
Section 7
(3) of the Act reads as follows:
“
(3)
A court granting a decree of divorce in respect of a marriage out of
community of property –
(a)
entered into before the commencement
of the
Matrimonial Property Act, 1984
, in terms of an
antenuptial contract by which community of property, community of
profit and loss and accrual sharing in any form
is excluded;
(b)
……
..[Not applicable]
may,
subject to the provisions of sub-sections (4),(5) and (6), on
application by one of the parties to that marriage, in the absence
of
agreement between them regarding a division of their assets, order
that such assets, or such part of the assets, of the other
party as
the court may deem just be transferred to the first mentioned party.”
[17]
As the proviso requires, that sub-section of the Act must be
considered in conjunction with,
inter alia,
sub-sections (4)
and (5) which are to the following effect:
(4)
An order under sub-section (3) shall not be granted unless the court
is satisfied that it is equitable and just by reason of
the fact that
the party in whose favour the order is granted, contributed directly
or indirectly to the maintenance or increase
of the estate of the
party during the subsistence of the marriage, either by the rendering
of services, or the saving of expenses
which would otherwise have
been incurred, or in any other manner;
(5)
In the determination of the assets or part of the assets to be
transferred as contemplated by sub-section (3) the court shall,
apart
from any direct or indirect contribution made by the party concerned
to the maintenance or increase of the estate of the
other party as
contemplated in sub-section (4), also take into account-
(a)
the existing means and obligations of the parties…
(b)
any donation made by one party to the other during the subsistence of
the marriage, or which is owing and enforceable in terms
of an
antenuptial contract;
(c)
any order which the court grants under
section 9
of this act or under
any other law which affects the patrimonial position of the parties;
(d)
any other factor which should in the opinion of the court be taken
into account.”
[18]
Much litigation has ensued over the last 30 years or so in relation
to proprietary claims brought under this section of the
Act, and a
plethora of judgments dealing with the import of the section has been
delivered. The leading judgment, however, is still
Beaumont
[2]
in which Botha JA set out the purpose of the section in its
historical context and discussed the application thereof in fine
detail. At 987G
et
seq
the Learned Judge of Appeal said the following in regard to the
historical setting of the section:
“
Subsection
(3) introduced an entirely novel concept into this branch of our law:
the power of a Court under certain circumstances
to order the
transfer of assets of the one spouse to the other. An order in terms
of ss(3) may be conveniently be referred to as
a redistribution
order. The creation of a power enabling a Court to make a
redistribution order was obviously a reforming and remedial
measure
(cf Kriegler J [in the court a quo] at 179G-H). What the measure was
designed to remedy is trenchantly demonstrated by
the facts of the
present case: the inequity which could flow from the failure of the
law to recognise a right of a spouse upon
divorce to claim an
adjustment of a disparity between the respective assets of the
spouses which is incommensurate with their respective
contributions
during the subsistence of the marriage to the maintenance or increase
of the estate of the one or the other…..
…
.
On satisfaction of the requirements laid down in ss(3) itself and
those incorporated by reference to ss(4), the Court may order
the
transfer of such assets or such part of the assets of the one spouse
to the other ‘as the Court may deem just’….
The
legislature clearly intended to confer a very wide discretion upon a
Court exercising its jurisdiction under ss(3).”
[19]
After observing that sub-section (4) comprises two “
conjoined
jurisdictional preconditions”
relevant to the exercise of a
court’s discretion when applying sub-section (3), Botha JA
discussed the preconditions and their
application thus at 988H –
989A:
“
The
one is a contribution by the one spouse to the estate of the other,
of a kind described in the subsection; the wording of the
subsection
in this regard and its meaning and effect will be examined later in
this judgement. The other is that the Court must
be satisfied that,
by reason of such a contribution, it would be ‘equitable and
just’ to make a redistribution order.
The first requirement
involves a purely factual finding. The second involves the exercise
of a purely discretionary judgement in
equity. It is certainly a very
prominent and important feature of ss(4) that ultimately, when once
the factual requirements of
ss(3) and (4) are satisfied, the
determination of whether or not a redistribution order is to be made
at all is entrusted by the
Legislature to the wholly unfettered
discretionary judgment of the court as to whether it would be
equitable and just to do so.”
[20]
Mr Myburgh SC mounted a novel argument, which he candidly
acknowledged had not been advanced before the trial court, nor in
any
reported case since the introduction of
section 7(3)
in 1984. The
argument asserts that the main purpose of the
Matrimonial Property
Act of 1984
was to
“
channel
the ‘marrying public’ into a system of accrual as the
default regime. The legislature considered this to be
in keeping with
the
mores
of
society consistent with the increase in the divorce rate and the
changed view of marriage as being a partnership quite possibly
(and
indeed frequently) of limited duration rather than as a commitment
for life in which the parties pooled all resources. The
promulgation
of the
Matrimonial Property Act accordingly
entailed a ground shift
in the legal position based on a perceived change in social
mores
.”
Reliance
for this assertion is placed on
Schafer.
[3]
[21]
The argument then goes on to suggest that in the adjudication of
section 7(3)
claims the courts should attempt to achieve redress of
the historical inequities arising from marriages out of community of
property
in terms of antenuptial contracts by making orders which
seek to effectively apply the accrual regime. It was said that the
court
should look at each party’s assets as at the commencement
of the marriage, compare that with the values at divorce and share
the difference in increase equitably.
[22]
There is no merit in this argument whatsoever. In the first place the
reliance on the professed extract from
Schafer
does not sustain any such argument. Secondly, there is nothing in the
express wording of sub-sections (3), (4) and particularly
(5) which
warrants such an approach. It must be borne in mind that we are
concerned here with statutory interpretation and
the primary rule of
interpretation still requires one to initially consider the wording
of the instrument sought to be interpreted
in its contextual
setting
[4]
.Thirdly, and most
importantly, in the application of
section 7(3)
over the decades the
courts, and particularly the Supreme Court of Appeal (and its
predecessor), have stressed time and again that
the court applying
section 7(3)
enjoys a very wide discretion to order what is just and
equitable and that it is not constrained by any point of departure or
end
result.
[5]
[23]
In
Beaumont
[6]
Botha JA stressed that the court must commence with a “clean
slate” and in so doing must ensure that the exercise of
its
discretion is “unfettered by any starting point”, while
in
Jordaan
[7]
Traverso J pertinently referred to the distinction which falls to be
drawn between a claim involving the application of the accrual
system
and the determination of a
section 7(3)
claim. In the circumstances,
the trial court was required to apply the section of the Act without
any preconceived ideas of what
should or should not be, the only
criterion being that the order must be just and equitable.
FACTORS
CONSIDERED BY THE TRIAL COURT IN MAKING THE REDISTRIBUTION ORDER
[24]
It is clear from her judgment that the regional magistrate fully
understood how she was required to approach the granting of
an order
under section 7 (3). Her judgment reflects a thorough consideration
of the applicable legal principles and the relevant
case law,
including the appellate decisions to which I have already referred.
The judgment also reflects consideration of the facts
which in the
regional magistrate’s view constituted material contributions
by the wife to the estate of the husband for purpose
of her property
redistribution claim.
[8]
And,
having found that there were such contributions, the judgment goes on
to assess the application of the “
just
and equitable”
principle.
The judgment also covers the evidence of the experts and conclusions
are arrived at regarding the extent of each party’s
estate at
the time of the granting of the divorce order. In light of the fact
that there was only a minor dispute on appeal rearding
the extent of
the CGT payable by the husband on realization of certain of his
assets , it is not necessary to consider this aspect
of the judgment
either. In summary, I agree with the submission by Mr van Embden that
the regional magistrate’s overall assessment
of the case was
impeccable.
[25]
As I have already said there was no issue on appeal regarding the
wife’s contribution to the growth of the husband’s
estate. Mr Myburgh S.C.’s argument really turned on two points
– firstly, the extent of her contribution and secondly,
the
fact that the wife had been compensated for her contribution during
the course of the marriage. Such compensation was said
to have been
made up by a salary which was paid to her for her services while the
parties ran the Pasadena, San Antonio and Mohawk
Spurs, as well as
the fact that her ownership of the Acapulco Spur was attributable to
a sizeable donation from the husband.
[26]
In considering what one party’s contribution is to the estate
of the other for purposes of a section 7(3) redistribution
order the
court does not approach the matter utilizing fine intellectual
callipers so as to effectively reconstruct a set of accounts
between
the parties. Often the contribution of a spouse may be immeasurable
in monetary terms, particularly where there has been
a saving of
expenses through the conduct of that spouse, where, for example, that
spouse has worked in a family business, or where
the contribution has
been as a home-maker.
[9]
After
all, the essence of such a redistribution order is to justice between
the divorcing spouses and an approach that requires
calculation of
the contribution with an undue degree of exactitude may render that
exercise incapable of proper implementation.
[27]
From the outset the wife participated in the running of the husband’s
businesses without hesitation. One sees, I believe,
a person who
literally rolled up sleeves and pitched in with all the resources she
could muster. Children were reared in carry-cots
at the restaurants
until the parties could afford proper day care and the parties worked
long hours with little sleep to make the
businesses the successes
they became. When the parties relocated to Cape Town and the Acapulco
Spur was acquired things changed.
Initially, the wife ran the
business with the assistance of her husband (who, for example,
purchased meat products and prepared
them in the kitchen) as well as
the further help of an initial equity partner in the business who
was, at all times the minority
shareholder. Later the husband left
the wife to her own devices and she was assisted further by her
subsequent business partner,
also a minority shareholder.
[28]
When the husband retired at the age of 53 his involvement in the
Acapulco Spur was significantly curtailed and it is common
cause that
the wife became the main provider in the family. In evidence before
the regional magistrate the husband said on more
than one occasion
that he regarded their marital relationship as a “
partnership”
or a “
50/50 operation
”. This attitude manifested
itself in a number of ways at a domestic level. When running the
Acapulco Spur the wife carried
50% of the household expenses, school
fees and medical costs. But her contribution was not limited to
household necessaries. If
the parties went out to dinner the wife was
required to chip in and contribute her half share. And, when the
husband invited the
wife to join him on a luxury cruise overseas she
was similarly required to pay her own passage. Ultimately, one is
left with the
very clear impression that the husband set about
installing his wife in a productive business which would cater for
the family’s
needs and which she, as a person more than 12
years his junior, would manage while he enjoyed early retirement.
[29]
To be sure, there were contributions and donations from the husband
to the wife during the subsistence of the marriage, the
most
substantial of these being the sum of R80 000 upon the sale of
the Kimberley business which he called her “
profit share”
as a “
reward for her hard work in his business
”and
a loan of R250 000 which she repaid at market-related rates
together with a further capital amount in the same sum.
While the
husband did not pursue his own claim for a redistribution of property
on the strength of these contributions, they were
directly relevant
under section 7(4) and also under the rubric “
any other
factor”
which section 7 (5) contemplates.
[30]
The regional magistrate was alive to all of the aforementioned
factors (and a number of others which were equally relevant)
in
coming to her decision in the matter. She correctly applied the law
and there is no substance in the submission by counsel for
the
appellant that she erred by failing to approach the matter from a
point of departure predicated on a quasi-accrual marriage.
Further, I
am unable to find in the circumstances that the magistrate exercised
the wide discretion accorded to her under section
7 (3) incorrectly
or improperly. In the absence of any misdirection on the law or a
material finding of fact, and there being no
striking disparity
between the order of the trial court and an order which this court
considers just and equitable , the room for
interference on appeal is
very limited indeed.
[10]
CONCLUSION
[31]
In the circumstances, I would dismiss the appeal with costs.
GAMBLE,
J
I
agree, and it is so ordered.
ERASMUS,
J
[1]
This
relief was eventually abandoned at trial
[2]
Beaumont v Beaumont
1987(1)
SA 967 (AD)
[3]
Schafer
Family Law Service
,
Division B. Matrimonial Property,I General Background, B.1
Introduction.
[4]
Bothma-Batho
Transport (Edms) Bpk v S.Bothma & Seun Transport (Edms) Bpk
2014(2)
SA 494 (SCA) at para’s 11 &12.
[5]
See for example
Beaumont
,supra,
Bezuidenhout
v Bezuidenhout
2005(2)
SA 187 (SCA) at 197 B-E;
Buttner
v Buttner
2006(3)
SA 23 (SCA) at 33B-F;
Kirkland
v Kirkland
2006(6)
SA 144 (C) at 163 A-H.
[6]
998
F-G
[7]
Jordaan
v Jordaan
2001(3)
SA 288 (C) at para 22
[8]
In
light of the fact that the husband did not assert a claim for
redistribution of property under sec 7(3), it was not necessary
to
consider his contributions to her estate.
[9]
Beaumont
at
996H-997H;
Bezuidenhout
at
198G
[10]
Beaumont
1002
B-E