Brief Summary

Divorce — Antenuptial contract — Validity of unregistered antenuptial contract — Parties married on 4 April 1992, signed a power of attorney for the execution of an antenuptial contract which was not registered — Plaintiff contended marriage was in community of property due to lack of registration — Court found informal antenuptial contract existed, reflecting parties' common intention — Unregistered contract valid between parties, but not enforceable against third parties — Date for determination of accrual contested, with Plaintiff arguing for date of divorce and Defendant for date of litis contestatio — Court held that parties were married out of community of property with accrual system, and determined accrual date as mid-September 2011 when pleadings closed.

Comprehensive Summary

Summary of Judgment

Introduction

This was a divorce action in the High Court of South Africa, KwaZulu-Natal Local Division, Durban, in which the plaintiff sought a decree of divorce and ancillary relief. The parties were spouses, cited as K.J.S (plaintiff) and M.J.S (defendant).

On the day of trial, 2 March 2015, the court ordered a separation of issues in terms of Uniform Rule 33(4). After the plaintiff testified, the court granted immediate relief on the issues capable of final determination at that stage, including a decree of divorce, orders regulating parental rights and responsibilities and the child’s primary residence, and an order separating certain proprietary issues for later determination (with a rider preserving the plaintiff’s right to claim maintenance for herself). Judgment on the separated proprietary issues was delivered on 25 May 2015.

The separated issues concerned the proprietary consequences of the marriage, specifically whether an antenuptial contract (albeit not registered) governed the marriage, and—if the accrual system applied—what the correct date for determining accrual was (whether litis contestatio or the date of divorce).

Material Facts

The parties were married on 4 April 1992 at Bryanston. Prior to the marriage, on 1 April 1992, they signed a power of attorney appointing an attorney (Mr Watson) to execute an antenuptial contract on their behalf before a notary public. The draft antenuptial contract was attached to the power of attorney and was initialled by both parties. Its material terms were that there would be no community of property, no community of profits and losses, each party would be liable for their own debts, and the accrual system in terms of Act 88 of 1984 would apply; commencement values were declared for each spouse’s estate.

It was common cause that, for reasons unknown to the parties, the contemplated antenuptial contract was not executed and registered in the Deeds Office. It was also not in dispute that the contract was therefore not registered as contemplated by section 87 of the Deeds Registries Act 47 of 1937, with the consequence that no formal registered antenuptial contract existed.

Despite the lack of registration, the plaintiff conceded (and the court treated this as material) that before the marriage the parties had agreed that their marriage would be governed by an antenuptial contract in the terms reflected in the draft, and that this agreement was the reason they consulted the attorney to reduce it to writing. She further conceded that she regarded the marriage as being governed by that antenuptial contract which the parties had agreed upon.

For purposes of the accrual-date dispute, certain dates were common cause. The parties separated in early October 2010 with the settled intention of terminating the marriage. Divorce proceedings were instituted on 23 November 2010. The pleadings reflected that the marriage had irretrievably broken down with no prospects of restoration. Pleadings closed in mid-September 2011 (when the time for a replication expired). Amendments were effected during January and February 2015, but the court considered that these did not alter the central issue being adjudicated in the separated proceedings.

Legal Issues

The court was required to determine two central questions.

The first was whether, given that the contemplated antenuptial contract had not been executed and registered in accordance with the Deeds Registries Act 47 of 1937, the parties’ conduct nevertheless amounted to the conclusion of a binding antenuptial agreement inter partes, with the result that the marriage was out of community of property and subject to the accrual system, rather than in community of property as contended by the plaintiff. This issue involved the application of legal rules governing formalities and enforceability to largely common-cause facts, together with an evaluative determination of what the parties’ concessions established about agreement and intention.

The second was, if the marriage was subject to the accrual system, what the correct date was for determining accrual: whether it should be the date of litis contestatio (commonly equated to close of pleadings) or the date of divorce. This question required interpretation and application of the accrual regime under the Matrimonial Property Act 88 of 1984 to the procedural realities of divorce litigation, and it entailed a value-laden, policy-inflected assessment of fairness and practicality as reflected in the authorities discussed.

Court’s Reasoning

On the question whether an antenuptial contract existed between the parties, the court began from the uncontested premise that because the contract was not registered in the Deeds Registry, it could not constitute a formal antenuptial contract binding on third parties. The court referred to sections 86 and 87 of the Deeds Registries Act 47 of 1937, emphasising that an antenuptial contract not registered as required is “of no force or effect as against any person who is not a party thereto.” The court accepted the rationale identified in authority: registration serves to give notice to the world and thereby bind persons who are not parties, including creditors.

However, the court distinguished the position as against third parties from the position between the spouses. It held that the absence of registration did not preclude validity inter partes, where the unregistered document reflected the spouses’ common intention at the time it was entered into. The court treated the plaintiff’s concessions as decisive: she accepted that the parties had, before the marriage, agreed that their marriage would be governed by an antenuptial contract on the terms reflected in the draft and that this was the understanding on which the marriage proceeded.

In rejecting the plaintiff’s argument that no contract came into being because the nominated agent had not executed the contract before a notary public, the court concluded that an informal antenuptial contract existed. It relied on the reasoning in Mathabathe v Mathabathe 1987 (3) SA 45, which recognised that “antenuptial contract” can include informal agreements not complying with section 87 formalities; such agreements are ineffective against third parties but enforceable between spouses to the extent that third-party rights are not affected. On that basis, the court found that an antenuptial agreement was concluded prior to the marriage and that, on its terms, the parties intended the marriage to be governed by the accrual system.

Turning to the date for determining accrual, the court first addressed the plaintiff’s contention that amendments to pleadings shortly before trial meant that a new litis contestatio arose at the commencement of the hearing on 2 March 2015, relying on Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA). The court did not accept that any amendment, irrespective of its materiality, necessarily results in a fresh litis contestatio. It interpreted the Endumeni passage as applying where amendments or agreements add to or alter the issues submitted for adjudication. In this case, the court held, the essential issue remained unchanged despite late amendments; accordingly, the relevant litis contestatio was not displaced on the facts.

The court then considered the accrual regime under section 3 of the Matrimonial Property Act 88 of 1984, noting that a claim for accrual arises “at the dissolution of the marriage” (subject to section 8(1)). It reviewed competing approaches in the case law. It noted the reasoning in M B v N B 2010 (3) SA 220 (GSJ), where it was held that while the right becomes legally enforceable at dissolution, the appropriate procedural moment for assessing estates is litis contestatio, because that is when the dispute crystallises and later transactions should not be brought into account. The court recorded that M B v D B 2013 (6) SA 86 (KZD) expressed support for that approach (though in obiter remarks), while J D v D A 2014 (6) SA 233 (GJ) preferred the date of dissolution as the only relevant date.

The court rejected the approach in J D v D A. It reasoned that using the date of dissolution as the determination date would tend to produce piecemeal adjudication and further litigation, an outcome the court considered inconsistent with legislative intention (with reference to Le Roux v Le Roux [2010] JOL 26003 (NCK)). It also accepted practical and equitable considerations supporting litis contestatio as the determination date: it would promote expedition, limit incentives to dissipate assets after the dispute crystallises, discourage strategic delays aimed at increasing claims, and reflect that by litis contestatio (at the latest) the underlying marital partnership has effectively ended for accrual purposes. On these considerations, and aligning itself with the approach in M B v N B, the court held that litis contestatio is the correct date for determining accrual.

Outcome and Relief

The court declared that the parties’ marriage was out of community of property and subject to the accrual system.

It further declared that the date for determination of accrual is litis contestatio.

The plaintiff was ordered to pay the defendant’s costs, including the costs of the hearing on 2 March 2015.

Cases Cited

Ex parte Spinazze and Another NO 1985 (3) SA 650 (A).

Mathabathe v Mathabathe 1987 (3) SA 45.

Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA).

M B v N B 2010 (3) SA 220 (GSJ).

Reeder v Softline Ltd and Another 2001 (2) SA 844 (WLD).

M B v D B 2013 (6) SA 86 (KZD).

J D v D A 2014 (6) SA 233 (GJ).

Le Roux v Le Roux [2010] JOL 26003 (NCK).

Legislation Cited

Deeds Registries Act 47 of 1937, sections 86 and 87.

Matrimonial Property Act 88 of 1984, sections 3 and 8(1).

Rules of Court Cited

Uniform Rule 33(4).

Held

The court held that, although the parties’ intended antenuptial contract was not executed and registered in accordance with the Deeds Registries Act and therefore could not operate as a formal registered antenuptial contract, the evidence (including the plaintiff’s concessions) established that the parties concluded an informal antenuptial agreement prior to marriage. That informal agreement was valid and enforceable between the spouses, without prejudicing third parties, and it governed the marriage as out of community of property with the accrual system.

On the accrual question, the court held that the appropriate date for determining accrual is litis contestatio, rather than the date of divorce, because litis contestatio represents the procedural moment when the dispute crystallises and provides a practical and equitable basis for assessment that avoids piecemeal litigation and mitigates incentives for strategic delay or dissipation of assets.

LEGAL PRINCIPLES

An antenuptial contract that is not registered in compliance with the Deeds Registries Act is ineffective against third parties, because registration serves a notice function and protects outsiders such as creditors; however, an unregistered antenuptial agreement may still be valid and enforceable between the spouses insofar as third-party rights are not affected.

For marriages subject to the accrual system, while the statutory accrual claim becomes enforceable upon dissolution of the marriage, the operative procedural moment for determining the value of the estates for accrual purposes may be litis contestatio, reflecting the crystallisation of the dispute and supporting efficient, equitable adjudication by excluding post-litis contestatio transactions from the accounting.

K.J.S v M.J.S (14396/2010) [2015] ZAKZDHC 43; 2016 (1) SA 64 (KZD); [2015] 3 All SA 85 (KZD) (25 May 2015)