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[2018] ZAGPJHC 699
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B F v R F (2017/5018A) [2018] ZAGPJHC 699; 2019 (4) SA 145 (GJ) (2 July 2018)
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REPUBLIC
OF SOUTH AFRICA
THE
HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 2017/5018A
In
the matter between:
F
B
APPELLANT
AND
F,
R
RESPONDENT
JUDGMENT
(Coram
Matojane, Sutherland et Siwendu JJ)
Headnote
– interpretation of clause excluding assets from accrual in an
ante-nuptial marriage contract –
The
principal controversy was whether the text meant that the
shareholding in two companies which the husband either held or had
rights to at the commencement of the marriage were alone excluded, or
whether additional shares in those two companies acquired
after the
marriage were also excluded from the accrual – the husband made
no allegation that he relied on the latter shares
having been
acquired by virtue of them being the fruits of the earlier
shareholding within the meaning of section 4 of the Matrimonial
Propertry Act
The
majority judgment (Sutherland and Matojane JJ) held that the shares
acquired after the marriage were not included, both on a
texual
appreciation and having regard tro the implications of section 4 of
the Matrimonial Property Act on the intention of the
contracting
parties which, properly interpreted, meant that the exclusion of
assets acquired after marriage was wholly inconsistent
with the
purpose of the statute; the contrary view of the writer, Schafer,
being rejected.
The
Minority judgment (Siwendu J) held that the evidence adduced on
affidavit and the terms of the statrement of case placed before
the
trial court did not afford a court a sufficient basis upon which to
decide the issue and that the matter ought to have been
referred back
to the trial court
Order:
The appeal was upheld and a declaration made accordingly.
Sutherland
J:
Introduction
[1]
The controversy before the court is about the meaning of clause 4 of
an ante-nuptial contract. The clause reads:
“
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. [RBH]
4.2 All shares and
loan accounts in National Re Investments (Pty) Limited.”[NRI]
[2]
The dispute between the parties is about whether certain of the
assets that the husband possesses at the dissolution of the
marriage,
which he did not possess at the commencement of the marriage, are
excluded by this clause.
[3]
The bare facts are these:
3.1. At the commencement
of the marriage, the husband possessed:
3.1.1. 220 of 1000 issued
shares in RBH plus a credit balance loan account
3.1.2. A right as
beneficial owner to 21 of 100 shares in NRI, plus a credit balance
loan account.
3.1.3. It is common cause
these assets were excluded.
3.2. At the dissolution
of the marriage, the husband possessed:
3.2.1 The entire
shareholdings in RBH plus a credit balance loan account greater than
initially.
3.2.2. The entire
shareholdings in NRI plus a credit balance loan account greater than
initially.
[4]
The critical question is: Are the additional shares over and above
what the husband possessed at the commencement
also
excluded?
[5]
There is a controversy about whether the words used in the clause
evidences an intention to exclude assets that were acquired
in the
future; i.e. after the commencement of the marriage. The additional
shares possessed at the dissolution are assets acquired
after the
commencement of the marriage and during its existence.
[6]
I have read the judgment of my colleague Siwendu J. We disagree on
the outcome of the case. I understand our points of departure
to be
twofold; first, the meaning to be attributed to the text of the
clause, and second, as to whether it is lawful to exclude,
in an Ante
Nuptial contract establishing an accrual regime, assets acquired in
the future; i.e after the commencement of the marriage.
[7]
I deal first with the text of clause 4 and thereafter with the
application and significance of section 4(1)(b) ii of the Matrimonial
Property Act 88 of 1984 (MPA).
An
analysis of the text of clause 4
.
[8]
Several components of the text in the clause have triggered distinct
debates. These are dealt with in turn.
[9]
First, it is appropriate to examine the structure of the clause.
9.1. The two
sub-paragraphs serve to identify the assets. In context, they serve
no other purpose. Notably, neither is a self- standing
sentence; i.e.
one would not write those words independently of other words. Indeed,
they are not proper sentences, lacking a verb,
or a subject or an
object. Accordingly, they are demonstrably subordinate clauses. A
subordinate clause can only have a meaning
in the context of the
primary clause.
9.2. The primary clause
is the preamble. In that text, there is a reference to the two
subordinate clauses. The words that connect
the primary and
subordinate clauses are:
“
That the assets of the husband
which are listed hereunder
….”
For illustration
purposes, the primary clause could have written to incorporate the
substance of the subordinate clauses thus:
“
That the assets of the
husband,
[i.e.]
all shares and loan accounts in RBH and all
shares and loan accounts in NRI
, and all liabilities associated
therewith or any other asset acquired by the husband shall not be
taken into account as part of
the husband’s estate at either
the commencement or dissolution of the marriage.”
[10]
The significance of examining the structure of the text is that the
conclusion must be reached that the words: “That
the assets of
the husband
which are listed hereunder”
govern the subordinate clauses. The implications of this analysis are
that:
10.1. The introductory
phrase, i.e. ‘The assets of the husband’ can only mean
assets that he at that time possessed;
i.e. at the commencement of
the marriage.
10.2. The phrase “which
are listed hereunder” must be subject to that assertion; i.e.
assets which he already possesses.
10.3. The phrases in the
subordinate clauses do not and cannot contemplate assets yet to be
acquired; the word “all”
must be understood to mean “all
of the husband’s shares etc” not “all the shares in
the company”.
Were the meaning to be attributed to the
subordinate clauses to be different, the text would not make sense.
[11]
Accordingly, what was excluded from the accrual were the existing
assets of the husband, as defined, being all of his interest
that he
possessed in the two companies as at the commencement of the
marriage.
[12]
It is in this respect that the judgment of my colleague Siwendu J and
this judgment differ: in the judgment of Siwendu J, at
[12] and [20]
she recognises the validity of excluding an asset yet to be acquired
through the mechanism of clause 4 and concludes
that the sub-clauses
govern the introductory phrase in the primary clause. I disagree.
[13]
It has been suggested that a construction of the text of clause 4
evidences an intention to use the phrase “All Shares..”
to contemplate a wide class of asset, including contingent rights to
assets yet to be acquired, because, as agreed in the stated
case, the
right of the husband to shares in NRI, as at the commencement of the
marriage, was merely beneficial ownership. I do
not agree with this
construction. The critical fact, in my view, is the existence
of a right at the commencement of the marriage.
If the husband has a
right to become a registered shareholder at a later time or realised
only at a later time, that right and
its fruits; i.e. fulfilment of
the right to the shares, is what is contemplated as the asset being
excluded. As addressed hereafter,
section 4(1) (b) (ii) deals
expressly with that consequence.
[14]
The phrase: “…and all liabilities presently
[1]
associated therewith…” is thought to have an impact on
the controversy. In my view, this is misplaced. There are three
aspects to consider.
[15]
First, the identified assets are shares and loan accounts. What
generically could constitute a liability associated with
either?
There are two scenarios.
15.1. Debts owed by the
husband: It is possible to own shares for which you have not yet paid
the price. That debt is an associated
liability. Loan accounts can
stand in debit or credit, depending on whether the company owes you
money or the other way around.
The phrase, in context, if it alluded
to debit balances, immunised the wife’s share of the accrual
from any liability to
be reconciled with any outstanding indebtedness
that might remain extant upon dissolution of the marriage.
15.2. Debts owed by the
companies to the husband: This takes the form of credit
balances. The money owed to the husband at
the time of the
commencement of the marriage is said in the Stated Case, to be less
than the sum owed to him as at the dissolution.
This ‘asset’
would have been fluid over time during the marriage. The
qualification “presently associated therewith”
serves to
determine the exclusion of the value of the credit balance, if any,
as at the commencement of the marriage. If a greater
sum was standing
to his credit at the dissolution, the difference would not be
excluded. The use of the qualifier “presently”
is
superfluous but serves to emphasise this construction.
[16]
Second, the use of the present tense evinces, in this example, an
acknowledgement by the drafter of the clause that it was
an existing
liability being contemplated. Not too much ought to be made of the
tense employed in the text; generally, it can be
and often is
neutral. In this case, it is Section 4(1)(b)ii which is the true
source of the impossibility of providing for a future
asset to be
excluded, and in a similar vein, the parties also cannot choose any
timing for the exclusion of an asset because the
MPA determines that.
[17]
Third, it has also been suggested that the primary clause in its use
of the phrase “….all liabilities associated
therewith….”
qualifies the phrase which follows immediately; i.e “….
or any other asset acquired …”
In my view this is
incorrect. The text has not been punctuated. There are several places
where commas would have been useful. Optimally,
a comma should have
been inserted between “therewith” and “or”.
However, punctuated or not, the subclause
following on “or”
cannot be subordinate to the former sub-clause. Indeed, the second
subclause addresses a distinct
topic and uses text that has been
lifted from section 4(1)(b)(ii). The significance of this is the
incorporation of a phrase from
the section which signifies that
subordination of clause 4 to that section was intended.
[18]
The text of the primary clause includes the phrase “…at
either the commencement or dissolution of the marriage.”
In the judgment a quo, a significance was attributed to this choice
of words. In my view this was misplaced. This phrase derives
not from
a choice by the contracting parties, but rather, is merely part of
the text lifted straight out of section 4(1)(b)(ii)
of the MPA.
Accordingly, its usage cannot be a clue as to the subjective
intentions of the contracting parties; rather the whole
of the phrase
lifted out of the section is what the parties must be held to have
intended. The implication of that choice is that
the contracting
parties intended to frame their agreement to comply with the section,
the true point of significance.
The
implications of
section 4(1)(b)(ii)
of the
Matrimonial Property Act
88 of 1984
.
[19]
In order to address the significance of the statutory infrastructure
of the accrual regime, it is necessary to examine the
relevant
passages in
sections 2
-
5
.
1
.25cm; margin-bottom: 0cm; line-height: 150%">
“
2
Marriages
subject to accrual system
Every marriage
out of community of property in terms of an antenuptial contract by
which community of property and community of
profit and loss are
excluded, which is entered into after the commencement of this Act
,
is subject to the accrual system specified in this Chapter,
except in so far as that system is expressly excluded by the
antenuptial contract.
3 Accrual
system
(1) At 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 between the accrual of the
respective estates of the
spouses.
(2) …..
4 Accrual
of estate
(1)
(a)
The accrual of the estate of a spouse is the amount by which the net
value of his estate at the dissolution of his marriage exceeds
the
net value of his estate at the commencement of that marriage.
(b)
In the determination of the accrual
of the estate of a spouse-
(i) any amount
which accrued to that estate by way of damages, other than damages
for patrimonial loss, is left out of account;
(ii) 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 the dissolution of his marriage;
(iii) …..
(2) ….
5
Inheritances, legacies and donations excluded from accrual
(1)
An
inheritance, a legacy or a donation which accrues to a spouse during
the 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.
(2)…...”
[Underlining
supplied]
[20]
In my view, it is fundamentally 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 MPA
provides for certain special cases where assets acquired after
commencement of the marriage are
ex-lege
excluded.
[21]
It is readily apparent that a portion of the controversial clause 4,
is a repetition of the provisions of
section 4(1)(b)ii
of the
Matrimonial Property Act 88 of 1984
. The lifted portion can be
illustrated thus:
“
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.”
[22]
That clause 4 invokes this section is significant. What the text of
the clause can mean cannot differ from what the text of
the section
means. Purposively interpreted, the section, in the context of the
MPA, is a component of a scheme to facilitate married
couples
maintaining separate estates during the existence of the marriage,
but, compelling a calculation to take place upon dissolution
to share
in equal parts the wealth acquired by each of them during the
marriage. If a married couple agrees, they can exclude,
in terms of
section 4(1)(b)ii
, assets which each of them possesses as at the
commencement of the marriage from such ‘accrual’.
[23]
Importantly, married couples cannot, pursuant to
section 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.
[24]
It follows that when persons contemplating marriage expressly invoke
section 4(1)(b)ii
they are not free to design a regime in terms of
which assets which may be acquired in the future can be excluded from
the accrual.
No clause in an Ante Nuptial Contract addressing the
exclusion of assets can validly contradict that principle, and the
text of
any clause must be read in this context. Moreover, the text
of clause 4, as addressed above, cannot be read to mean that assets
to be acquired in the future are sought to be excluded.
[25]
The primary example of an asset that does not exist at the
commencement of the marriage which can be excluded is an asset which
derives: “ …by virtue of his possession or former
possession of the first mentioned asset…”. In this
case,
it is plain that no claim by the respondent relies on that mechanism.
Any
additional
shares
acquired are not, without more, to be understood to derive from the
consequence of the growth of the
initial
assets
.
In this case, the point to emphasise is that
each
share is an asset
and the companies,
per
se,
in
which the shares exist are not assets of the husband. If the husband
sought to justify the acquisition of the additional shareholding
as
having been the fruits of the initial shareholding, it was incumbent
on him to allege that, which would have precipitated a
forensic
enquiry to decide a disputed fact, not result in a stated case. The
onus is on he who claims an exclusion to prove it.
[2]
An absence of even such an averment that the additional shares are
the progeny of the initial asset eliminates that
causa.
[26]
The allusion in an argument on behalf of the respondent to the views
of the author Schafer, bears mention.
[3]
Shafer opines that an asset
yet
to be acquired
can be excluded, though she thinks the position is unclear. She
writes:
“
An
asset can also be expressly excluded from the accrual system in the
antenuptial contract. This asset, as well as any other asset
which
the spouse acquired by virtue of his or her possession or former
possession of the first-mentioned asset, is not taken into
account as
part of that estate at the commencement or at the dissolution of the
marriage.
“
It
is not clear from the Act whether this provision only applies to
assets already forming part of the particular spouse’s
estate
or whether it also applies to future assets which are identified but
which have not yet been acquired at the commencement
of the marriage
.
It is arguably the better view that
the provision must include the latter category of assets
.
Regardless of what interpretation is followed, it is clear that the
Act does not make provision for the parties to agree, during
the
existence of the marriage, to exclude any assets from the accrual
which have not already been mentioned in the antenuptial
contract.”
(Underlining
supplied)
[27]
This view is neither substantiated nor reasoned. In my view, it
cannot be the preferable meaning. 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. A
potential spouse could, on this thesis, exclude everything he
would
acquire in future and produce a hollow “accrual”.
[28]
It is possible to exclude an asset to which a spouse may have a
contingent right. Section 5 addresses this very issue in respect
of
certain classes; ie inheritances, legacies and donations. Benefits
may accrue to persons from their status as beneficiaries
of a
Discretionary Trust.
[4]
These
benefits from a Trust can be excluded on the premise that it is the
status as beneficiary that confers a right, which is
the right being
excluded. However, to exclude an asset in respect a mere
spes
,
i.e. the hope or aspiration to buy out one’s partners’
shares cannot be excluded.
[29]
Furthermore, it is notable that Section 4(1)(b)ii is cast as a
deviation from the general accrual regime, and does so
within a
limited scope; i.e. you
exclude
assets rather than
specify what assets are
included
. A strict
interpretation of what is excluded would in such a context be
warranted and consistent with the onus to prove an
exclusion.
The
approach of the Court to a stated case
[30]
For the reasons given, the question of interrogating the stated case
and contemplating a referral back does not, in my view,
arise.
Conclusions
[31]
In my view, on the stated case, a declarator should follow that only
the assets possessed at the commencement of the marriage,
being the
220 shares in RBH and the 21 shares in NRI, plus the value of the
credit balances of the two loan accounts, as at that
date, fall to be
excluded.
[32]
The valuation of the assets was no part of the question posed to the
court.
The
Order
It
is ordered that:
1. The appeal be upheld
with costs, including the costs of two counsel.
2. (i) The difference in
the issued share capital now owned by the plaintiff in Rand building
Hydraulics (Pty) Ltd and National
Reinvestments (Pty) Ltd and that
which was owned by him at the date of the conclusion of the date of
the marriage, and,
(ii) the difference
between the credit balances now due to the plaintiff under the loan
accounts in Rand building Hydraulics (Pty)
Ltd and National
Reinvestments (Pty) Ltd and the credit balances which were due to him
thereunder at the time of date of the marriage,
are subject to the
accrual sharing and the value to be ascribed to these differences is
to be taken into account in the reckoning
in determining the
defendant’s entitlement in terms chapter 1 of Act 88 of 197
_______________________________
Sutherland
J
I
agree.
_______________________________
Matojane
J
Siwendu
J (Dissenting):
[1]
This appeal concerns the disputed interpretation of an antenuptial
contract (ANC) entered by the appellant and the respondent.
The
appellant and the respondent were married to one another on the 20
th
February 1993 in terms of an ante-nuptial contract incorporating the
accrual system. Divorce proceedings are pending, and
the
parties agreed to approach the court on a separated issue for the
proper interpretation of the ANC to determine the assets
to be taken
into the reckoning of accrual
calculation
.
[2]
It is common cause that at the date of the ANC, the respondent held
shares in Rand Building Hydraulics (Pty) Ltd (RBH) and had
“
beneficial
ownership”
of
shares in National Reinvestment (Pty) Limited (NR). Of the
authorised share-capital comprising 4000 shares in RBH, having
a par
value of R100 per share, 1000 shares were in issue. The respondent
held 220 shares of the issued shares. The respondent took
transfer of
21 shares in NR in January 1994, a year after their marriage. Between
April 1997 to October 1998 he had increased his
shareholding in two
tranches, from 220 shares to 310 shares, and later acquired the
entire issued share capital comprising of 690
shares. He
subsequently acquired the entire issued share capital in NR in two
tranches, namely 9 shares on 7 April
1997 and a further 69 shares in
October 1998 respectively.
[3]
The Appellant claims that:
[3.1]
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
[3.2]
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.
[4]
This contention was dismissed by Wright J. He held that it was clear
from the wording of Clause 4 of the ANC 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. The learned judge held that the words
“
dissolution”
and “
and all
liabilities presently associated there with”
in the ANC indicate that the parties intended to limit the exclusion
by defining more closely the scope of the assets to be excluded
at
the commencement of the marriage. The words were intended and had the
effect of narrowing the exclusion by qualifying the assets
subject to
exclusion.
[5]
Before dealing with the issues, it is necessary to make general
observations of the ANC. It is a concise contract comprising
two
pages. Other than the net asset value of the respective estates
declared by both parties, namely; (R300 000,00 in respect of
the
respondent and R 81 000.00 in respect of the appellant), it has no
other provisions in respect of their respective assets.
The main
provision regulating the accrual is in clause 4, the subject of the
disputed interpretation.
[6] Clause 4 reads as
follows:
4
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
[7] In terms of section 3
of the MPA, 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. It is now settled that the net value of the
accrual of a spouse is determined
at dissolution (grant of the
divorce) in terms of section 4. As observed by the court a quo,
the wording of Clause 4 of the
ANC mirrors section 4 (1)(b) of the
MPA which reads:
“
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
.”
[8]
The issue in this appeal is whether the parties intended through
Clauses 4.1 and 4.2 to exclude from the accrual those shares
acquired
by the respondent after the date of the marriage. In addition, if
those shares do not represent a growth in the assets
held by the
respondent, it is whether their acquisition constitutes an
acquisition of a future asset, and, consequently, their
exclusion is
impermissible under Section 4 (1)(b)(ii) of the MPA. The question
whether the ANC has an impermissible exclusion was
raised in a
cursory manner during the appeal. Both parties approached the matter
as a dispute that involves an interpretation of
the ANC. There was
agreement that the purpose of Clause 4 was to define the assets that
were not the subject of the accrual.
[9] Before us Mr Farber
SC, argued that the court should have found that the assets listed in
Clause 4 were confined to the respondents’
shares and credit
balances under the loan accounts either at the date of the ANC,
alternatively, the date of the marriage because:
[9.1] the words “
at
commencement and or dissolution of the marriage”
were not
intended to be a bridge or hit or define the nature or composition of
the assets in question. The words “
at commencement and or
dissolution of the marriage”
do not serve to amplify upon
that which has been excluded. Both parties agree on this score that
the phrase “
at the commencement and dissolution of the
marriage”
has no bearing on the actual definition of the
asset to be excluded.
[9.2]
Notionally, a single asset may be excluded under Section 4 of the
MPA. What is the subject of exclusion might differ in quality
and
extent at dissolution when compared to the situation at commencement.
[10]
The pillar of Mr Farber’s argument is based on the
interpretation of the first part of clause 4, which for convenience
I
refer to as “
the
opening clause”.
He argued that the words, “
the
assets of the husband”
and “
all
liabilities presently associated there with”
,
were cast in the present tense. Therefore, they refer to shares and
loan accounts which were extent and constituted assets in
the estate
of the husband at the time of the conclusion of the ANC or the
marriage.
[11]
To buttress this argument, he submitted that the words “
present
liabilities associated there with
”
qualify the scope of the excluded assets. According to this argument,
the reference to “
assets
which are listed hereunder”
is
constrained by the reference to “
the
liabilities presently associated therewith”
because
the ANC could not have referred to liabilities in respect of which
there were no assets and/or to assets which did not exist
at the
time. He argued that one cannot exclude from the operation of the
accrual at the commencement of the marriage that which
did not exist
as an asset in the hands of the husband at the time of the marriage.
Therefore, this court must confine the assets
to those in respect of
which the husband had incurred a liability at the time of the
antenuptial contract or marriage.
[12]
Ms Nathan SC for the respondent on the other hand contended that the
nub of the issue concerns the question: “
what
shares have been excluded?”
She
argued that the clause amplified by the appellant is not material to
the determination of “
what
assets”
are
excluded. The subject of the exclusion is clearly defined in
the ANC as “
All
Shares and loan accounts
in
Rand Building
Hydraulic (Pty) Limited and
All
shares
and
loan accounts
in National Re Investments (Pty) Limited”
.
[ emphasis added].
No
extrinsic evidence is required to interpret the clause. The ANC
did not specify the number of shares to be excluded but
instead
referred to “
All
Shares
”
.
[13]
She argued that the purpose of the ANC is to provide for the
exclusion of an asset and the growth, if any, at the time of the
commencement of the marriage, and for determining accrual, at the
dissolution of the marriage. The argument by the respondent is
that
in the context of the whole clause, it makes it clear that
all
the shares
at the
commencement and dissolution are excluded. Ms Nathan SC submitted
that the relevance of the phrase is intended to accommodate
the
potential growth and is intended to include the growth in the asset.
A different interpretation would render the provision
meaningless if
an asset were to be excluded at the commencement of the marriage but
not at the dissolution.
[14]
In so far as the meaning of the phrase “
liabilities
presently associated therewith”
is concerned, the respondent claims it has no bearing on the
definition of the asset. It merely qualifies the liabilities. It does
not confine the meaning and reference to “
all
shares
” to
the shares held at the time of the commencement of the marriage.
[15]
The source of the irreconcilable and competing interpretation is that
the appellant places emphasis on “
liabilities
presently associated therewith”
and submits that “
presently
”
qualifies the meaning of “
all
shares”
. She
contends that the word “
all
shares
”
should be restrictively interpreted to mean “
100
shares”
and
“
21 Shares”
held and/ or beneficially owned at the time of the marriage in
respect of both companies. On the face of it, the shares appear
to be
nominal to warrant exclusion in the ANC. On the other hand, if
the interpretation proffered by the respondent is correct,
it seems
inconsistent to refer to liabilities associated with the shares at
the time of the marriage, only to exclude the liabilities
associated
with the subsequent acquisition at the dissolution of the marriage.
Ms Nathan SC conceded that the practical effect
of the latter
exclusion results in a complicated calculation of the accrual.
Nevertheless, she contended that if liabilities in
respect of the
shares acquired after the marriage were excluded at the dissolution
of the marriage, that would benefit the appellant.
[16]
I have applied the trite principles in
Natal
Municipal Pension Fund v Endumeni Municipality
[5]
to
the
ordinary language and words used in the ANC as the starting point to
ascertain the meaning intended by the parties. I
am also of the
view that the cardinal rule of interpretation is that, a unitary
approach must be adopted because it is presumed
that parties intended
that the words used should be afforded meaning and not be interpreted
in a manner that renders them nugatory,
inoperative, invalid or
meaningless. This appraoch is apposite in this case. I have in
addition considered the approach to be adopted
to the interpretation
of the “opening clause” of clause 4 the ANC. That the
clause mirrors section 4 of the MPA fortifies
its general nature.
[17]
In my view, the words “
the
assets of the husband listed hereunder”
hints at the general and/or opening nature of the clause. This means
it was not intended to override the specific provisions and
stipulations in clauses 4.1 and 4.2 of the ANC. Accordingly, the
presumption that, a general provision in a statute or document
cannot
trump or derogate from special provisions applies
[6]
.
Consistent with this view, the words “
all
shares”
in clauses 4.1 and 4.2 are cast wide. The words must be read in
conjunction with the phrase “
the
assets of the husband listed hereunder”.
The noun “
shares”
clearly refers to a genus of assets or asset class subject to
exclusion from the ANC. The use of the determiner “
all”
before “
shares”
,
has significance. The argument by the appellant would only be
sustainable if there was no determiner or description of the shares
to be excluded as “
all
shares”.
[18]
I favor the unitary approach to interpretation referred to in para 16
above. When inquiry to the meaning to be ascribed
to the
phrase, “
any
asset acquired by virtue of the possession”
was raised with Mr Farber SC, he submitted that the matter would have
been different if the items excluded were sold and the proceeds
derived therefrom were utilised to acquire a different asset. He
submitted that this was not the respondent’s case and it
was
not the case the appellant was called to meet. Relying on
MD
v DB
,
he argued that the respondent bore the onus to prove that he acquired
the assets by virtue of his earlier possession and the respondent
has
done neither. This principle is also confirmed in
AM
V JM
,
by Cloete AJ
[7]
.
[19] It remained unclear
whether the acquisition was because of “
ä growth
”
in the respondent’s assets. How the additional shares were
acquired, and what contribution if any the appellant made
towards
their acquisition remained unaccounted and unclear throughout the
appeal.
[20]
An important consideration in this case also dovetails with the
meaning to be ascribed to “
assets”
under the MPA. The
legal meaning of “
assets”
includes tangible and intangible assets. I favor a wide scope and
meaning which incorporates personal rights and intangible assets
rather than a narrow one, subject to there being a determinable
value. In this vein, curiously, in the stated case, the
appellant accepted that the share-holding the respondent acquired in
NRI, was “
beneficially
owned
” by the
respondent at the time of the marriage although the shares were
registered in the respondent’s name a year
after the marriage.
[21]
Objectively viewed, the acceptance by the appellant of the
“
beneficial
ownership”
(which is by its nature is a personal right accruing to the
respondent) signals that when, the words “
assets”,
“assets listed hereunder”
and “
all
shares
”
are read in their context, the appellant accepted the wide scope and
meaning “
assets”
conjure.
In my view, given that the RBH and NR are private companies, subject
to the facts made available, “
assets
”
can include
contingent
rights
,
the respondent may have had in the two companies in respect of the
shares at the time of the marriage. It is not clear on the
facts
presented whether the respondent had a pre-existing option to acquire
the additional shares, or a right of pre-emption to
acquire the
additional shares
[8]
at
the time of the marriage.
[22]
Mr Farber argued that to the extent that Clause 4 is capable of two
different meanings, the court must give preference to the
meaning
which best promotes the objectives of accrual system
[9]
.
This argument is based on the import of Section 4 (1)(b)(ii) and,
purportedly the onus it was argued the respondent has, to prove
the
exclusions.
[23] The argument while
seemingly flawless, presents the following difficulties:
[23.1]
Section 4 (1)(b)(ii), is also based on considerations of
fairness
and is designed to recognize the contribution a spouse may have made
to the growth of the estate of another
[10]
[23.2]
the vexed questions in the present case arise because to arrive at
the contractual intention of the parties, the court must
peel beyond
the literal meaning of the words used. All the
material
known to those responsible
must be
provided to
elucidate:
[23.2.1] the source of
the right (s) in respect of the shares subsequently acquired;
[23.2.2] whether the
right existed at the time of the marriage thereby leading to the
subsequent acquisition of the shares and
[23.2.3]
how the shares were acquired and paid for, all considered in the
light of all relevant admissible evidence
[11]
;
and
[23.2.4]
what contribution if any the appellant made to the “
growth
”
[23.4]
It is untimely to determine the issue solely on an onus to be
discharged by the respondent. The issues are inextricably linked
with
the absent facts referred to as well as the absent evidence of the
appellant’s
own
contribution to the growth –
[23.5]
Whether the parties concluded an ANC which had a term that is
unenforceable or
ultra
vires
the MPA was
not an issue separated out for determination before Wright J nor was
it the basis of the appeal.
[24] A question that
arose is whether a party can exclude from the accrual regime an
identified asset class which is to be
acquired in the future from the
ANC. This too was not argued before Wright J. I have no doubt
that given the considerations
of policy flowing from this question,
both parties would have presented comprehensive facts and argument to
address it.
[25]
Upholding the appeal is inappropriate and untimely. Majiedt JA,
writing for the SCA in
ST
V CT
[12]
points
to
Section
7 of the MPA
[13]
and
the foremost duty to make full disclosure of relevant information
albeit in the context of discovery and states that:
“
As
far as the accrual claim goes, full and proper disclosure,
particularly of his financial affairs, was self-evidently required
of
the appellant. And s 7 of the MPA unequivocally required of the
appellant ‘to furnish full particulars of the value of
[his]
estate’. Discovery is not dictated by a litigant’s view
of what is relevant – it is a matter for the court,
with
reference to the pleadings.”
.
“
The
duty to make full and frank disclosure in these types of cases has
also occupied the attention of the English courts. The applicable
legislation contains similar requirements of financial disclosure as
ours. In Livesey (formerly Jenkins) v Jenkins, Lord Brandon
declared,
with reference to this duty, that ‘. . . unless the parties
make full disclosure of all material facts, the court
cannot lawfully
or, properly exercise [its] discretion’. That case concerned
ancillary orders for financial provision and
property adjustment
after divorce and the duty to make full disclosure. And, in a more
recent case on the same subject, Lord Sumption
stated that ‘[t]he
proper exercise of these powers calls for a considerable measure of
candour by the parties in disclosing
their financial affairs”
[26]
The narrowly framed stated case
[14]
absent
the background and factual matrix limits the exercise expected of the
court. Both parties approached the matter as a clear-
cut dispute
about an interpretation of the ANC. Evidently, had the issue been
determined in trial proceedings, the short-comings
would have been
cured by proper the discovery founded on the duty envisaged by
Section 7 of the MPA. The interests of justice demand
that the matter
is referred to the court a quo to be decided on full and complete
facts.
[27]
A referral of a matter back for consideration is not uncommon. In
Minister
of Police v Mboweni and Another
[15]
,
Wallis
JA (citing Innes CJ in
Geldenhuys
and Neethling v Beuthin
1981 AD 426
at 441 and Bane v D’Ambrosi)
points
out that matters cannot be decided on assumptions nor can courts
pronounce on abstract questions or advise
“
It
is clear therefore that a special case must set out the agreed facts,
not assumptions. The point was re-emphasised in Bane v
D’
Ambrosi where it was said that deciding such a case on assumptions
defeats the purpose of the rule, which is to enable
a case to be
determined without the necessity of hearing all, or at least a major
part of the evidence. A judge faced with a request
to determine a
special case where the facts are inadequately stated should decline
to accede to the request.”
[28]
Later, in
Feedpro
Animal Nutrition (Pty) Ltd v Nienaber NO and Another
[16]
Setiloane
AJA
“
While
a court may in a stated case, in terms of rule 33 (3) of the Uniform
rules draw any inference of fact from the agreed facts
as if proved
at the trial, the Rule presupposes that the agreed facts are
adequately stated for determination of the issues in
question. Where,
as in this case, the agreed facts are discordant, ambivalent, and
inadequately stated…the process of inferential
reasoning has
no place case…It would be impermissible for a court, which is
adjudicating a dispute on a statement of agreed
facts, to have regard
to or assume facts, which fall outside the scope and ambit of the
agreed facts”
[29] This case cries out
for such an approach. Accordingly, the court a quo should have
established the background and factual
matrix referred in the
judgment and declined a determination absent the facts which would
yield an unjust result .
[30]
In the result, I would propose the following order:
The
appeal is dismissed;
[a] The order and the
finding of the court a quo dismissing the declaration sought by the
appellant is set aside;
[b] The matter is
remitted to the court a quo for the determination of declaration in
the light of the factual matrix and background
referred in the
judgment.
[c] Each party must pay
its own costs.
________________________
S
IWENDU J
For the Appellant: G
Farber SC,
With him Adv L Segal,
instructed by Larry
Chimes Attorney.
For the Respondent: Adv
Nathan SC,
instructed
by Yammin Hammond Inc.
[1]
The
use of the word “presently” bears mention. It is plain
to me that the word meant to used was “at Present’,
rather than presently. However, the misuse of “presently”
to mean “at present” is so common place in
South African
English usage that the two are virtually interchangeable. The word
“presently” according to the pedants
means “in a
moment’ or “just now”. Plainly that meaning cannot
be attributed to the phrase: “presently
associated therewith”
[2]
See:
MB v DB
2013 (6) SA 86
(KZN) at 95H.
[3]
Family Law Service B14.
[4]
See
REM v VM 2017 (3) SA 371 (SCA)
[5]
Interpretation
is the process of attributing meaning to the words used in a
document, be it legislation, some other statutory
instrument, or
contract, having regard to the context provided by reading the
particular provision or provisions in the light
of the document as a
whole and the circumstances attendant upon its coming into
existence. Whatever the nature of the document,
consideration must
be given to the language used in the light of the ordinary rules of
grammar and syntax; the context in which
the provision appears; the
apparent purpose to which it is directed and the material known to
those responsible for its production.
Where more than one meaning is
possible each possibility must be weighed in the light of all these
factors. The process is objective
not subjective. A sensible meaning
is to be preferred to one that leads to insensible or unbusinesslike
results or undermines
the apparent purpose of the document. Judges
must be alert to, and guard against, the temptation to substitute
what they regard
as reasonable, sensible or businesslike for the
words actually used. To do so in regard to a statute or statutory
instrument
is to cross the divide between interpretation and
legislation. In a contractual context it is to make a contract for
the parties
other than the one they in fact made. The ‘inevitable
point of departure is the
language
of the provision itself’ read in
context
and having regard to
the
purpose of the provision
and the background to the preparation and production of the
document.
See
also - Novartis SA (Pty) Ltd v Maphil Trading (Pty) Ltd 2016 (1) SA
578 (SCA)
[6]
Generalia
specialibus non derogant. ( See S v Mhlungu 1995(2) SACR 277 (CC) at
[113])
[7]
The
court held that: “Although the defendant’s counsel
argued that [the] plaintiff bears the onus to establish that
the
defendant’s alleged excluded assets should form part of the
accrual in his estate, it is clear that the defendant bears
the onus
to persuade this court that such assets should indeed be excluded
from the accrual”
[9]
“
W
V H 2017(1) SA 196 (WCC) Weinkove AJ where the court held that an
ANC is a contract sui generis. Any pacta that finds its way
into an
ANC will always be subject to the test of public policy because
ANC’s are unique in the sense that they can only
be executed
in a prescribed manner and in a prescribed form because this is the
very foundation of a contract of marriage. The
legislator and courts
have consistently monitored contracts of this nature. It is not
helpful to refer to commercial contracts
or to import the findings
of the courts in those cases into ANC’s as if ANC’s
stand on the same footing.”
[10]
This is consistent with my preference for a wide definition of
assets rather than mere tangible assets to recognise human capital
contribution to the growth of another’s estate
[11]
Bothma-
Batho Transport (Edms) Bpk v S Bothma & Seun Transport (Edms)
Bpk
2014 (2) SA 494
(SCA) para 12; See also Thoroughbred Breeders
Association of South Africa v Price Waterhouse [
2001] 4 All SA 161
(A) and Novartis SA (Pty)(Ltd) v Maphil Trading (Pty)(Ltd)
(2016) (1) SA 111
SCA
[12]
ST
and CT (1224/16)
[2018] ZASCA 73
(30 May 2018)
[13]
Section
7:
Obligation
to furnish particulars of value of estate – When it is
necessary to determine the accrual of the estate of a
spouse or
deceased spouse, that spouse or the executor of the estate of the
deceased spouse, as the case may be, shall within
a reasonable time
at the request of the other spouse or the executor of the estate of
the other spouse, as the case may be, furnish
full particulars of
the value of that estate.’
[14]
G4S
Cash Solutions [SA] [PTY] Ltd v Zandspruit Cash and Carry [Pty] Ltd
and another 2017 [2] SA 24 [SCA] at para 13 the
court held
that “ whilst it is not for the court to prescribe to
litigants whether or not or to what extent, they should
present
evidence, it seems to me that a party bearing the onus in a dispute
regarding the proper interpretation of a contract
should bear in
mind that to simply rely on a linguistic interpretation alone may
not suffice to discharge the onus. Therefore,
if available, relevant
evidence regarding the factual matrix in which the contract was
concluded and the subsequent conduct of
the parties should be called
in aid of the interpretative process” [para 13]
[15]
(657/2013)
[ 2014] ZASCA 107
[16]
(20866/2014)
[2016] ZASCA 32
(23 March 2016)