Greyling case – end of the road for “without accrual”?

A recent judgment calls into question the constitutionality of matrimonial regime

When a couple marries in South Africa, they have a choice of matrimonial regimes. They can marry “in community of property”, which means all their assets, acquired before or after marriage, form a joint estate, which is divided equally on the dissolution of the marriage (i.e., divorce). Historically, this was the standard marital regime and is still the most common and default option. In other words, unless the couple makes a conscious choice to do otherwise, by drafting an antenuptial contract (ANC), the marriage is automatically in community of property. This arrangement provided protection to women who may have given up their own careers on marriage (or not had a career), ensuring they received a fair allocation of the assets their unpaid work helped the marriage to acquire.

The antenuptial contract

More recently, economic and social circumstances have changed, and many couples opt for marriage out of community of property, governed by an ANC. There are two types of ANC: one that maintains a complete separation, and the other that keeps all assets and liabilities owned before the marriage separate, but allows an equal share of asset growth during the marriage. “With accrual” means that everything acquired after the marriage is considered part of the joint estate, and is divided equally in the event of divorce. This includes any increase in the net value of each individual’s estate. This prevents inequality, particularly in the case of a spouse (usually but not always the woman) who gives up paid employment to look after children or who earns less than the other spouse. On divorce there can be a significant disparity of personal wealth, even if both spouses entered the marriage with equivalent assets. This inequality is remedied by the accrual system. 

Out of community of property without accrual

Complete separation of property without this adjustment for unequal asset growth is known as marriage out of community of property without accrual. In this case, all property owned prior to the marriage and all property acquired during the marriage belongs to the person who acquired it. Couples who choose this regime could be individuals with significant personal assets or debts prior to marriage, entrepreneurs, professionals, or people with inheritances they (or their families) want to safeguard. Or, if one partner owns a business (or they both do), they may want to keep their business assets separate from marital assets to protect the business in case of divorce. And some people, particularly later in life, e.g., in the case of a second marriage, simply prefer to maintain financial independence. They may want to ensure the estate they have built up over a lifetime is passed on intact to their children and not shared with a late-life partner.

Unconstitutional?

However, a recent judgement in the North Gauteng High Court challenges the irrevocability of the “without accrual” system and the legal framework governing divorce in South Africa. The High Court found Section 7(3)(a) of the Divorce Act 70 of 1979 inconsistent with the Constitution and unlawful. The case that came before the Court was Greyling v the Minister of Home Affairs and Others (we’ll call it the Greyling case). 

The Greyling case involved a wife who challenged the legality of a provision within the Divorce Act. She and her husband were married in March 1988 with an ANC which excluded the accrual system. Her father-in-law-to-be provided advice on the terms of the ANC. During the marriage, the wife dedicated herself to raising their children, managing a farm and engaging in community service. Meanwhile, her husband prospered as a successful farmer.

The couple started divorce proceedings in 2016. The main issue before the court was not the distribution of assets but the constitutional validity of denying spouses access to certain provisions of the Divorce Act if they were married out of community of property without accrual. The case hinged on the fact that a spouse’s fundamental human dignity is impaired when no recognition is given to the contribution they may have made to the increase in their spouse’s estate during the marriage. 

Challenging the interpretation of marital rights

The judgment in the Greyling case marked a noteworthy departure from established legal interpretations regarding marital rights and contractual agreements. The court challenged the principle of freedom of contract by declaring Section 7(3)(a) of the Divorce Act unconstitutional to the extent that it restricts the application of just and equitable remedies for spouses and introduced a new precedent for similar matters. 

The case raised questions about the validity and enforceability of ANCs, particularly the ability of parties to make informed decisions when entering into such arrangements. The wife in this instance was advised by her future father-in-law; how reliable and objective was that advice? It challenges the idea that individuals fully comprehend the implications of their choices when agreeing to terms that may impact their future rights.

The impact of the Greyling case also has implications for legal practice, as practitioners may need to reassess their strategies and advice in light of the changes to our legal framework.

Future considerations in divorce cases

Our courts are tasked with considering various factors in similar divorce matters going forward. The court will assess the ability of each spouse to generate income, considering factors such as education level, skills and knowledge as well as employment opportunities. The financial needs of each spouse, including ongoing expenses and lifestyle requirements, will be taken into consideration to ensure a fair outcome. Contributions made by each spouse to the marriage, both financial and non-financial, will be evaluated. This includes contributions to the household, childcare, career sacrifices and support for the other spouse’s professional endeavours. The length of the marriage may also impact the court’s decision, as longer marriages typically involve more intertwined financial affairs and contributions from both spouses. Lastly, the court may also consider the future prospects of each spouse, including potential for career advancement, health concerns and financial stability. 

Equitable approach

This equitable approach in divorce proceedings ensures that lower-earning or non-earning spouses are not unfairly disadvantaged and that the contributions of both parties are recognised and taken into account regardless of the matrimonial property regime in force. This will facilitate a fair distribution of assets upon the dissolution of a marriage.

However, the Greyling case calls into question the role of marriage out of community of property without accrual. An ANC defining this arrangement may become a guideline rather than a legally binding contract. 

Cape Town family lawyer can help

Simon Dippenaar and Associates are experts in family law. We can help you decide which type of marriage is best for you, and draft an ANC appropriate for your circumstances. If you choose marriage out of community of property with accrual, we can assist with the valuation of your respective estates prior to the marriage, and draw up the corresponding contract. If you would like to discuss your options in confidence, call Simon today on 086 099 5146 or email sdippenaar@sdlaw.co.za for a discussion in complete confidence.

Further reading:

• The importance of an antenuptial contract
• Antenuptial contracts – the accrual system
• Antenuptial Contract in South Africa

Divorce Attorney Cape Town

http://divorceattorneycapetown.co.za/

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