Masilela Legal Practitioners

13/05/2022

Court Changes Divorce Act
On 11 May 2022 the Pretoria High Court ordered that Section 7(3)(a) of the Divorce Act, 70 of 1979, is declared inconsistent with the Constitution and invalid to the extent that the provision limits the operation of Section 7(3) of the Divorce Act to marriages out of community of property entered into before the commencement of the Matrimonial Property Act. Simply put, individuals married out of community of property without the accrual will now be entitled to claim a redistribution of assets despite the content of their signed antenuptial contract. It should, however, be kept in mind that such a redistribution claim is not an automatic entitlement. A spouse instituting a Section 7(3) claim will still need to prove their direct or indirect contributions made towards the estate of the other spouse to be successful. The court hearing such an application will then have to decide upon not only whether such a spouse is entitled to a claim, but also the extent thereof which may differ greatly from matter to matter. The relief granted in the application will have far reaching consequences on the patrimonial consequences of many marriages. The outcome of the application is as such of significant importance to the South African Society at large .

Adams & Adams acted on behalf of the amicus curiae who was represented by a team of Advocates consisting of Advocate Sybrandt Stadler, Advocate Sonika Mentz, Advocate Besty Nchabaleng and lead by Advocate Liezl Haupt SC.

10/03/2021

Class Action By Those Dispossessed Of Homes By SA Banks
On Friday 10 February 2020, hundreds of ex-homeowners filed a class action in the South Gauteng High Court for damages, claiming such from the major banks for their actions in repossessing their homes and selling the same on auction at a fraction of the cost. The matter that was originally brought before the Constitutional Court , which referred the matter to the lower courts for full hearings, seeks to have the banks held accountable for their actions in auctioning off homes at far below market value. The particular application wants the court to represent four different classes:

Those whose properties were sold for more than 10% below market value since the Constitution came into effect in 1994;
Those whose properties were sold by the banks in a manner that was not a "last resort" as required by law;
Those who remain in debt to the bank after their properties were sold at prices below market value; and
Those who were overcharged on their bond fees in the course of legal action.
With all the major banks represented, the National Credit Regulator, the Minister of Constitutional Development and the South African Human Rights Commission has also been cited as respondents. The application or class action has been structured that anyone who fits within one of the classes is automatically deemed to be part of the action unless they specifically "opt out."

A legal representative for the applicants stated that the banks use the subterfuge that foreclosure or auctions are the last resort and prefer to work with the clients, rendering thousands of families homeless and deprived of a place to live.

Up to and including the year 2017, the Banks were selling houses at sheriff auctions, without a reserve price, thus leading to substantial losses and the owners still owing large sums to the bank after the auction. In 2018 , the High Courts altered the rules to include reserve prices for properties to be sold by auction by a bank. This move has been met with widespread approval, albeit the major banks have argued that it restricts their ability to reclaim all or a portion of the amount outstanding.



The application follows recent international trends, where both legislatures and judiciaries have begun to alter the approach to sales in executions and have begun to alter their bias to favour indebted consumers rather than massive regional and international banks.

Social activists have stated that the case is vital in order to restore human dignity and have stated that the banks have in the past 25 years acted in a manner contrary to the values that the Constitution of South Africa espouses. The applicants want the court to focus on the following:

"...questions of whether the witness's property was sold for substantially less than value and whether the sale was a last resort and thus whether the bank is liable to that class and to avoid issues extraneous to those issues".

It should be noted that, if the applicants succeed, it would result in a financial windfall and recompensation of their loss and a severe financial knock for the banks.

25 Feb 2020
Author ESI Attorneys

25/08/2020

03/03/2020

Division of Assets on Divorce
Dividing Assets Divorce, divorce South Africa, divorces
Spouses may also enter into a settlement agreement, referred to as a consent paper, which will regulate the proprietary issues flowing from the termination of their marriage. The parties have full contractual freedom to either apply the matrimonial property regime applicable to their marriage or to draw up a settlement agreement that they find better suited to their specific circumstances. The settlement agreement will be made an order of the court when the decree of divorce is granted.

The consequences of divorce when married in community of property

Upon divorce, the assets of the joint estate as at the date of divorce will be divided equally between the parties, unless a spouse claims forfeiture and the court grants such a forfeiture order. A forfeiture order cannot be granted automatically and must be specifically requested in the summons.

In terms of the Act, the court has discretion when granting a divorce on grounds of irretrievable breakdown for a marriage in community of property to order that the patrimonial benefits of one party be forfeited in favour of the other. A gift received during the marriage does not fall within the assets that a party can forfeit and a spouse cannot forfeit assets that he/she brought into the joint estate.

When spouses are married in community of property, their assets are tied up in the joint estate and, when a court grants a decree of divorce, the assets must be divided. Where the spouses agree on a division of the joint estate, a settlement agreement may be drafted to be incorporated in the decree of divorce and made an order of the court. Where spouses do not reach an agreement on how to divide their joint estate (as often happens), the court has the power to appoint a receiver or liquidator to realise and divide the assets of the joint estate on its behalf.

Where one spouse is acting in a negligent or reckless manner and alienates assets of the joint estate pending divorce, the other spouse may lodge an application to the court to suspend his/her spouse’s capacity over the joint estate. When the court grants such an order, the spouse who brought the application may then control the estate without the other’s consent.

Marriages out of community of property without the accrual

In this system, when couples marry each spouse keeps a separate estate and whatever assets and liabilities they individually had before the marriage form part of their separate estates. Furthermore, assets and liabilities acquired by each during the marriage also fall within their separate estates. This system gives each spouse absolute independence of contractual capacity and protects each spouse’s estate against claims by the other spouse’s creditors.

A marriage is out of community of property if it falls within one of the following categories:

the parties entered into a valid ANC prior to their marriage that excludes community of property;
the parties changed their marital regime by way of a court application from in community of property to out of community of property;
the parties are black South Africans who married prior to 2 December 1988 without entering into an ANC; or
the legal system of the country in which the husband was domiciled at the time of the marriage dictates that the parties will be married out of community of property.

Before 1 November 1984

Marriages out of community of property concluded before 1 November 1984 are based on the principle that each spouse has his/her own separate estate. Prior to 1984, spouses either entered into in community of property or out of community of property marriages. The accrual system only came into operation on 1 November 1984.

The consequences of divorce when married out of community of property before 1 November 1984

A ‘redistribution of assets’ section was introduced in the Divorce Act to assist spouses who married out of community of property prior to the enactment of the Matrimonial Property Act 88 of 1984. Although this section may only apply to a relatively small number of marriages, it is important to a particularly vulnerable class of women, namely older women who are less likely to find employment upon divorce and who do not qualify for either child-support grants (as their children would be older) or state pensions.

This reforming and remedial measure applies to marriages out of community of property entered into between whites, coloureds and Asians before 1 November 1984, and to black people married out of community of property in terms of the old Black Administration Act 38 of 1927, prior to the commencement of the Marriage and Matrimonial Property Law Amendment Act 3 of 1988. It was introduced to redress the financial imbalance invariably suffered by the wife on termination of the marriage by divorce.

In the absence of a divorce settlement agreement between the spouses, they retain their own separate estates and there is no sharing of assets on divorce, unless the court granting the decree of divorce orders a redistribution of assets between the parties in terms of Section 7(3) of the Divorce Act. A pension interest forms part of the spouse’s estate and will form part of the assets if redistribution is ordered. The parties may also agree to share the pension interest.

The court will not grant a redistribution order unless it is satisfied that it isequitable and just to do so. Apart from contributions made by the party concerned, the court will also take into account, among other things, the existing meansand obligationsof bothparties. The Act sets out two requirements that must be met if the court is to consider granting a redistribution order:

the spouse seeking the order must have contributed directly or indirectly to the maintenance or the increase of the other spouse’s estate during the marriage; and
the court must be satisfied that by reason of such a contribution, it would be equitable and just to make a redistribution order.

Although the law allows either spouse to apply for a redistribution order, in practice this section has largely been used by women. In past cases, the courts have

specifically considered the historical gender imbalance that made it more difficult for women to access the labour market;
acknowledged that wives’ household duties should not be viewed as of less value than the employment duties of the husband;
noted that the Act is sufficiently worded to cover any contribution a spouse makes, including the ordinary duties of a wife; and
found that it is not always necessary for an applicant to show which assets he/she contributed to, but merely to prove that a contribution was made to the other spouse’s estate.

The court is thus enjoined to apply discretion, justice and equity in coming to the assistance of the financially disadvantaged spouse.

The consequences of divorce when married out of community of property without the accrual after 1 November 1984

In a marriage out of community of property without the accrual contracted after 1 November 1984, there can be no claim for a transfer of assets. The argument is that there are now three matrimonial property regimes to choose from, and if the parties willingly decided to marry out of community of property and without the accrual system, one of the parties cannot later request a redistribution of assets. In such a regime, upon divorce, each party will retain their separate estates, i.e. what they had upon marriage and including all growth to the separate estate that occurred during the marriage, minus any losses that may have been sustained. For example, if the husband came into the marriage with R10 000, he would leave with R10 000 + profits ˗ losses. The only claim a spouse may institute would be for spousal maintenance.

The consequences of divorce when married out of community of property with the accrual

Accrual is a way to ensure that both spouses in a marriage gain a fair share of the estate once the marriage comes to an end. The accrual system does not apply automatically to all marriages out of community of property. For the accrual system to apply, the ANC must be drafted in a certain way. The accrual system incorporates a calculation that is applied when the marriage is dissolved by divorce. The spouses will share the assets during the course of their marriage based on a particular calculation when the marriage is terminated.

The term ‘accrual’ is used to denote the net increase in value of a spouse’s estate since the date of marriage. In other words, what was yours before the marriage remains yours, and what you have earned during the marriage belongs to both of you. Because the right to share in accrual is exercisable only upon dissolution of the marriage, such a right is not transferable and cannot be attached by creditors during the subsistence of the marriage.

The following assets are not taken into account when determining the accrual (are not included in the net value of the estate):

Any asset excluded from the accrual system under the ANC, as well as any other asset that the spouse acquired by virtue of his/her possession or former possession of such asset.
Any inheritance, legacy, trust or donation received by a spouse during the marriage from any third party, as well as any other asset that the spouse has acquired by virtue of his/her possession or former possession of the inheritance, legacy, trust or donation, unless the spouses have agreed otherwise in their ANC or the testator/trix or donor has stipulated otherwise.
Any donation between the spouses.
Any amount that accrued to a spouse by way of damages (e.g. slander), other than damages for patrimonial loss or the proceeds of an insurance policy in respect of a dread disease.

The mere fact that the assets of a trust are vested in the trustee does not per se exclude them from consideration when determining what must be taken into account when making a redistribution order or considering an accrual claim. Where a spouse has transferred assets in his/her name into a trust, in order for the court to take such assets into account, there must be evidence first that the party in question controlled the trust, and second that, but for the trust, he/she would have acquired and owned the assets in his/her own name.

Commencement values and accruals

Where parties wish to enter into an ANC with the accrual system, they must make sure that the commencement values of their respective estates (i.e. how much their estates are worth at the time of marriage) have been verified and accepted by both parties. It often happens in divorce matters that one party will allege that the other’s commencement value was inflated or completely inaccurate.

Upon the dissolution of the marriage by divorce, the net estate value (assets less liabilities less excluded assets and/or commencement values) of each estate is determined separately. The larger estate must then transfer half of the difference to the smaller estate. Putting it another way, the smaller estate must claim for an amount equal to half of the difference between the accruals of the respective estates. The right to share in the accrual only commences upon dissolution of the marriage by divorce.

The commencement value to be subtracted from the current value of the estate must be adjusted with the consumer price index (CPI) to make provision for any change in the value of money. To calculate the adjustment, go to www.statssa.gov.za and click on ‘Historical CPI’ and then on ‘Key indicators’. The factor by which the commencement value must be multiplied to get to the adapted value is calculated by dividing the value for the month of the dissolution of the marriage by the value for the month in which the parties were married.

For example:

Mr and Mrs Cruise were married in May 1990, and divorced in March 2012. In May 1990, Mr Cruise had a commencement value of R10 000. According to the CPI table:

May 1990 = 26.1

March 2012 = 120.9

Thus: 120.9 ÷ 26.1 = 4.6321

This adapted commencement value will be deducted from Mr Cruise’s assets.

Determine the each estate’s accrual as follows:

Draft a list of all the assets, such as immovable property, furniture, vehicles, pension interest, annuities, policies, investments, bank accounts and interests such as shares and loan accounts in companies/partnerships/trusts or any other form of business, etc. obtained during the marriage at the present day values.
Deduct the assets that were excluded in the ANC, as well as any other assets acquired by virtue of the possession, or former possession, of the excluded assets.Deduct inheritances, legacies or donations, as well as any other asset acquired by virtue of the possession, or former possession, of the inheritances, legacies or donations.
Deduct any debts and liabilities.
Deduct the commencement value, as stated in the ANC and adjusted by CPI.
The net result will be the accrual in the estate.

If the parties cannot reach an agreement, the court will adjudicate on the issues at trial.

Welcome to Stats SA. We are currently running the User Satisfaction Survey 2020. How satisfied are you with our statistics, our dissemination products, our information services and the organisation?

30/01/2020

Can you be retrenched without being consulted? Constitutional Court makes a far-reaching ruling

AMCU challenged sections of the Labour Relations Act


The Constitutional Court has ruled in favour of the majoritarian principle in labour law.

When a union negotiates a retrenchment agreement with an employer, should this be binding on employees who are not members of the union? The Constitutional Court ruled on this last week.

The court found that in some circumstances the answer is yes. An employer can finalise a retrenchment agreement with a majority union – and the outcome will bind minority unions, even when their members have not been consulted.

One of the objectives of the 1995 Labour Relations Act (LRA) was to guarantee the freedom of employees to form and join trade unions and to strike, and the rights of trade unions to bargain collectively with employers and employers’ organisations. In line with international accepted mechanisms, the majoritarian path was chosen to realise these objectives. That means giving preferential or even exclusive bargaining rights to trade unions that represent the majority of employees.

Minority unions have recently challenged this model in the courts. The most recent of these challenges was decided by the Constitutional Court last week by the narrowest of margins.

In August 2015, mining company Royal Bafokeng Platinum Limited entered into consultations with the majority union at the mine, National Union of Mineworkers (NUM), and United Association of South Africa Union (UASA), one of the two minority unions (the Association of Mineworkers and Construction Union or AMCU was the other), about retrenchments. A retrenchment agreement was signed on 18 September 2015. The agreement was extended to all employees, whether they were members of NUM or UASA or not, as is permitted by section 23 of the LRA, and provided that all employees to be retrenched waived their rights to challenge the lawfulness or fairness of the retrenchments. AMCU was never included in these consultations.

With some of the retrenched employees, AMCU approached the Court to challenge the constitutionality of sections 23 and 189(1) of the LRA.

The court was unanimous that section 23(1)(d) of the LRA, which allows for collective agreements to be extended to employees who are not members of the majority union was not inconsistent with the right to fair labour practices, as AMCU had argued. Even where the extension of the collective agreement related to retrenchment, the limitation was justified, the judges ruled, considering the benefits of majoritarianism in encouraging the democratisation of the workplace and curbing the proliferation of trade unions in that space.

The interpretation of section189(1) on the facts was more complicated. This section sets out the requirements for consultation when an employer contemplates retrenchments. It requires the employer to

consult people covered by a collective agreement;
or, if no such agreement exists, the workplace forum and any registered trade union whose members are likely to be affected;
or, if no workplace forum exists, the relevant unions;
or, finally, if no union exists either, the employees likely to be affected themselves.
The question raised was whether this section allows the employer, when a collective agreement is signed on retrenchment, not to consult at all with employees who belong to a union that is not party to the agreement. Is it fair to be retrenched without having any say about it, either in person or through the representative union of your choice?

In a five-to-four split judgement, the Constitutional Court ruled that it is indeed a fair labour practice. Judge Johan Froneman, writing for the majority, emphasised that this section has consistently been interpreted in this way by South African Courts “for at least twenty years”. If one accepts that the majoritarian principle on which section 189 is based is constitutional, he continued, one must accept that the consultation requirements set out in section 189 are consistent with that principle and the Constitution. To contemplate parallel and individual consultations, is to undermine the very point of collective bargaining, he wrote.

Acting Judge Aubrey Ledwaba, writing for the minority, found that employees facing retrenchment do retain a right to be consulted. In so far as section 189 does not require individual consultation with employees who stand to be retrenched, it limits the right to fair labour practice. Judge Chris Jafta, who wrote a separate judgment in support of the minority, argued that the facts of this case show that section 189(1) not only enables discrimination, but infringes on the right to free association. Members of AMCU were denied the protections afforded the members of NUM and UASA, he wrote, and therefore were denied the equal protection and benefit of the law solely for the reason that they chose to join AMCU. As such, section 189(1) is indeed unconstitutional, he found.

The majority rejected this interpretation and set out why the protection of the majoritarian principle protects employees. Offering individual consultation “can only be near-futile” , wrote Judge Froneman. “An individual employee, or even a group of individual employees, has or have scant bargaining clout, particularly where the employer is preoccupied with processing dismissal for operational requirements. A majority union, by contrast, wields coercive power, by immediate or future threat of industrial action. It is this power that may sway an employer to agree to benefits on retrenchment, or better yet, fewer or no dismissals.”

27/01/2020

MBUNGELA AND ANOTHER v MKABI AND OTHERS 2020 (1) SA 41 (SCA)

Customary law — Customary marriage — Requirements — Handing-over of bride — Not necessarily key determinant of valid customary marriage — Waiver permissible — Recognition of Customary Marriages Act 120 of 1998, s 3(1)(b).

In the court a quo Mr Mkabi, who was Swati, had successfully launched an action for an order declaring that he had concluded a valid customary marriage with the late Ms Mbungela (the deceased), who was Shangaan. In the present appeal brought by the defendants in the action, the deceased's brother — Mr Mbungela — and daughter — Ms Mkhonza, the principal issue addressed was the following: Did the customary marriage entered into between Mr Mkabi and the deceased meet the requirement for validity set out in s 3(1)(b) of the Recognition of Customary Marriages Act 120 of 1998 — that it be celebrated in accordance with customary law — where there had been no ceremony of handing-over of the bride. The SCA ultimately agreed with the finding of the High Court that, on the facts of the case, the marriage custom of the 'bridal transfer' ritual had been waived (see [26]), and that such waiver did not invalidate their customary-law marriage. In reaching such conclusion, the SCA —

Held, that the purpose of the ceremony of the handing-over of a bride was to mark the beginning of a couple's customary marriage and introduce the bride to the groom's family. It was an important but not necessarily a key determinant of a valid customary marriage. It could not be placed above the couple's clear volition and intent to marry under customary law, where, as happened here, their families, who come from different ethnic groups, were involved in, and acknowledged, the formalisation of their marital partnership and did not specify that the marriage would be validated only upon bridal transfer. (See [30].) (Such a finding, the court held, recognised the living, actually observed customary law (see [18], [26] and [28]), and to insist upon a bridal transfer would be incongruent with customary law's inherent flexibility and pragmatism (see [28])).

Held, further, that in all the circumstances the essential requirements for a valid customary marriage were met (see [30]). Appeal accordingly dismissed.

01/01/2020

We wish you a prosperous new year 2020

25/12/2019

We wish you a merry christmas, enjoy responsible

11/12/2019

Failing to pay Maintenance whilst unemployed is a valid defence.

S v PAPERS 2019 (2) SACR 638 (NCK)
Maintenance— Failure to pay — Contravention of s 31(1) of Maintenance Act 99 of 1998 — Proof of — No proper investigation of accused's ability to pay maintenance when failed to do so — Fact that unemployed at time constituting valid defence to offence.

The appellant was convicted in a magistrates' court of failing to pay maintenance in contravention of s 31(1) of the Maintenance Act 99 of 1998 after pleading guilty to the charge and making a statement, in terms of s 112(2) of the Criminal Procedure Act 51 of 1977 (the CPA), in which he admitted the elements of the offence. In mitigation of sentence, however, his legal representative mentioned that one of the reasons for his conviction was his loss of permanent employment. It appeared that he was R11 000 in arrears and the magistrate held that, due to the huge amount involved, he did not qualify for a suspended sentence. He sentenced the appellant to 30 months' imprisonment in terms of s 276(1)(i) of the CPA. On appeal,
Held, that there had been no proper investigation of the accused's ability to pay maintenance during the time when he failed to do so. The complainant's evidence confirmed that he had complied with the maintenance order until April 2016 and made one payment in July 2017. Moreover, the fact, that he was unemployed when he failed to comply with his obligation, constituted a valid defence to the offence. If he could not be blamed for his lack of means, he was entitled to an acquittal. (See [30].) Appeal upheld, and conviction and sentence set aside.

18/11/2019

Sign up to claim from UIF

If Unemployment Insurance Fund (UIF) contributions were deducted from your salary while you were working (this will appear as a deduction on your payslip), then you are entitled to claim UIF when you are retrenched.

It is important to note that you must lodge your UIF claim within six months of the date you stop working.

You will need to register for UIF by completing a registration form and you have to produce a copy of your barcoded South African identity document, copies of your last six payslips, a service certificate from your employer, and a UI-19 form filled in and signed by your employer.

Once you have all this and proof of your registration as someone seeking work, you must go to the nearest Labour Centre in your area and ask to sign the unemployment register. The Department of Labour takes about eight weeks to get back to you, and you will have to sign the unemployment register every four weeks to prove that you still need to claim the UIF benefits.

Your salary and UIF contributions over the last four years will determine how much you receive in benefits from the UIF. For example, if you earned R15 000 a month and were employed for four years (48 months), you would be entitled to R35 297.87 in UIF benefits and this would be paid out over eight months, with payments of R4 412.33 a month.

05/11/2019

Media Statement from the LPC

The Legal Practice Council (LPC) has noted with concern that it is now becoming a trend that some law firms are making a driver’s license and or ownership of a motor vehicle as one of the key requirements for graduates to be considered for practical vocational training (PVT) contracts. A driver’s license and or ownership of a motor vehicle is and cannot be an inherent requirement for attaining a PVT contract.

“As the LPC, we will be investigating this matter internally through our Transformation Committee and then make an official pronouncement in due course. The LPC views this practice as one of the barriers to access to the profession when one of our core responsibilities is the transformation of the legal profession. The requirement of a drivers’ license or motor vehicle for the purposes of PVT is unfair and discriminatory as it affects many graduates who are from poor backgrounds, mostly black and female’’ said Ms. Kathleen Matolo -Dlepu,

Chairperson of the Legal Practice Council