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[2005] ZAGPHC 112
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Corporate Liquidators (Pty) Ltd and Another v Wiggill and Others (A1671/04) [2005] ZAGPHC 112; 2007 (2) SA 520 (T); [2006] 4 All SA 439 (T) (25 October 2005)
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(TRANSVAAL PROVINCIAL DIVISI0N)
Appeal no. A1671/04
DELIVERED: 25/10/05
Reportable
In the appeal of
CORPORATE LIQUIDATORS (PTY) LTD First Appellant DIMAKATSO ARNOLD MOHASOA Second Appellant and ANITA WILMA WIGGILL First Respondent HERBET JAMES VAN DER MERWE Second Respondent
JACOBA CHRISTINA VAN DER MERWE Third Respondent
HARTZENBERG J: [1] This appeal concerns the effect of an order of divorce on the proprietary interest in immovable property of spouses married in community of property. It comes before us in terms of the provisions of Section 20 (1) read with section 20 (4) (b) of Act 59 of 1959 by order of the Supreme Court of Appeal.. [2] The first appellant is a company doing business as liquidators. The second appellant is in the employment of the first appellant and is the appointed trustee in the insolvent estate of M A Wiggill (Mr. Wiggill) and E H Wiggill (Mrs. Wiggill). The first respondent, Mrs. A W Wiggill was previously married to Mr. Wiggill but their marriage was dissolved by order of this court on 27 March 1998. The second and third respondents are the parents of the first respondent. The appeal is against an order of Claassen J, ordering the second appellant to give effect to the divorce order in the case of Mr. Wiggill and the first respondent by subdividing Erf 833, Louis Trichardt and transferring the one portion into the name of the first respondent and the other portion into the insolvent estate of Mr. and Mrs Wiggill, subject to a life-long usufruct over the latter portion in favour of the second and third respondents. There is also an order that the respondents, the appellants before us, are to pay the costs of the application jointly and severally. [3] Mr. Wiggill and the first respondent were married in community of property. They had two fixed properties i.e. Portion 13 of the farm Goedehoop and Erf 833 Louis Trichardt. They entered into a written agreement in which, amongst others, the following provisions were contained: Mr. Wiggill was to institute an action for divorce immediately and pray that the agreement be made an order of court, failing which the first respondent could do so. The joint estate was to be divided in that Portion 13 of Goedehoop was to be sold for R290 000 and the purchase price was to be utilized to pay off the outstanding amount of the mortgage bond over Erf 833 and a number of other debts. It was agreed that the first respondent would become the exclusive owner of the unencumbered proposed portion 1 of Erf 833 (portion 1), in extent 1427 square metres, on which the house was, and Mr. Wiggill would retain as his property the remaining extent of Erf 833, in extent 1428 square metres (the Remaining Extent), subject thereto that on registration of the property in his name he was to register a life-long usufruct in favour of the second and third respondents. It was recorded that the parties intended, without delay, to effect the sub-division and to be jointly liable for the costs of the sub-division
The relevant portion of clause 5 (c) of the agreement reads as follows:
“(c) Verweerderes word die uitsluitlike eienares van:
(i)Die onbeswaarde voornemende gedeelte van woonhuis 833, Munnikstraat 38, Louis Trichardt en is sy geregtig op onmiddellike aflossing
en kansellasie van die bestaande ABSA verband en oordrag van die eiendom op haar naam en kom die partye hieromtrent as volg ooreen:
(aa) dit is die voorneme van die partye om gemelde Erf 833 voor oordrag en sonder versuim te onderverdeel soos per die meegaande
Aansoekskets en voortgestelde onderverdeling hierby aangeheg gemerk “A”
o
In ‘n gedeelte 1 groot 1 427 (EEN DUISEND VIER HONDERD SEWE EN TWINTIG) vierkante meter waarop die hoofwoonhuis gele
is wat die uitsluitlike eiendom van Verweerderes sal wees en dit as sodanig aan haar oor te dra;
o Die Resterende Gedeelte groot 1 428 (EEN DUISEND VIER HONDERD AGT EN TWINTIG) vierkante meter waarop die woonstel gele is wat die eiendom van die Eiser sal bly onderhewig aan die voorwaardes ondervermeld;
(bb) gelyktydig met die neem van die oordrag van die voorgenome Resterende Gedeelte sal die Eiser ‘n lewenslange reg van Vruggebruik
daaroor registreer ten gunste van Verweerderes se ouers:
HERBERT JAMES VAN DER MERWE en JACOBA CHRISTINA VAN DER MERWE (cc) Die Partye sal alle koste van welke aard ookal met betrekking tot uitvoering van voormelde onderverdeling en gelyktydiges in gelyke mate betaal;” [4] Immediately after the order of divorce the first respondent exerted pressure on Mr. Wiggill to effect the sub-division and to transfer her portion of Erf 833 into her name. Portion 13 of Goedehoop was sold and the purchase price was used to pay the identified debts. In particular the outstanding amount of the bond over Erf 833 was paid off. Mr. Wiggill procrastinated using various excuses. In the meantime he married Mrs. Wiggill. During February 2002 the first respondent applied on motion for his committal to imprisonment for contempt of court because of his failure to give effect to the divorce order. In her affidavit supporting the application the first respondent explained that during January 1998 the outstanding amount of the bond was approximately R165 000; that on 3 April 1998 Mr. Wiggill paid an amount of R168 692,24 into the bond account, that she asked him to cancel the bond but that he failed to do so. She further stated that subsequent thereto Mr. Wiggill borrowed further monies from ABSA under cover of the bond that had been paid off but had not been cancelled. [5] The application was served upon Mr. Wiggill on 20 February 2002. On 20 March 2002 the surrender of the joint estate of Mr. and Mrs. Wiggill was accepted by order of this court. The first respondent initially hoped that the second appellant would give effect to the divorce order but ascertained that he refused to do so. As a matter of fact the second appellant sold Erf 833 at a public auction free of any relevant encumbrances. However he has not transferred the property and it is still registered in the name of Mr. Wiggill only. The attorney representing the appellants formally placed that information on record, at our request. The second appellant’s attitude is that at the date of the divorce the first respondent and Mr. Wiggill were joint co-owners of the assets of their joint estate and joint co-debtors in respect of the liabilities; that the settlement agreement was never given effect to; that the respondents only have personal rights against the insolvent estate; that a concursus creditorum came into existence as a result of the sequestration order and that the estate is to be liquidated in terms of the provisions of the Insolvency Act. [6] Claassen J held that one of the natural legal consequences of a marriage in community of property is that both spouses immediately become co-owners of their previously separate estates; which become their joint estate, irrespective of in whose name the assets are held. He held that on dissolution of the marriage the reverse follows automatically. The dominium of each spouse’s share in the joint estate vests in that spouse. He concluded that on divorce the first respondent’s share vested in her and that Mr. Wiggill ceased to have any claim to it, especially as far as the immovable property was concerned. He furthermore held that the first respondent’s portion of the first joint estate never became part of Mr. and Mrs. Wiggill’s joint estate and that registration of her portion in her name was a mere formality. [7] Mr. Swart on behalf of the appellants agrees that on marriage a joint estate comes into existence, that both spouses become co-owners of all the various assets regardless of in whose name they have been held. His case is that on dissolution of the marriage by divorce the first respondent acquired a personal right only against Mr. Wiggill to give effect to the divorce settlement agreement. The argument is that where Mr. Wiggill’s second joint estate was sequestrated before transfer of the property into her name she has no real right in respect of Erf 833. As to the position of the second- and third respondents the argument is that at best for them their life-long usufruct was a stipulation for the benefit of a third party. Even if it is assumed that they accepted the benefit they only acquired a personal right to have the real right of usufruct registered in their favour. [8] In the matter of Ex Parte Menzies et Uxor 1993 (3) SA 799 (C) King J discussed, after an extensive research of the authorities, not only the proprietary consequences of a marriage in community of property but also of the dissolution of a marriage in community of property on the spouses. He indicated that the ways in which community of property may be terminated are by the death of one or both of the spouses, by divorce, by an order of division or by the change in the matrimonial property system in terms of s 21 of the Matrimonial Property Act p 813 A-B. He refers to various authorities to the effect that under our modern system of administering deceased estates dominium in her half share of an immovable property, does not automatically vest in the surviving wife and that dominium is only conferred upon her by registration in her name by the executor Hahlo; The South African Law of Husband and Wife, p174-5; Corbett, Hahlo, Hofmeyr and Kahn The Law of Succession in South Africa pp.4, 12 and 13; Estate Smith v Estate Follett, 1942 AD 364 at 383; CIR v Estate Crewe and Another, 1943 AD 656 at 692 and Greenberg and Others v Estate Greenberg, 361 (A) at 364-5. [9] The learned judge points at certain absurdities that are the result of the acceptance of the modern system of administering deceased estates:
“The partial replacement of the common-law principles by the English system of succession has given rise to various possibilities of absurdity. For example, a surviving husband who, say, inherits his wife’s half-share, could in principle have to take transfer of the property already registered solely in his
own name. Section 45 of the Deeds Registries Act therefore provides for an endorsement of the title deeds where the property is already
registered in the name of the survivor or in the name of the joint estate of the spouses. (In fact large parts of the Act are a patchwork of ad hoc solutions for practical situations which cannot conveniently be dealt with by the simple application of the underlying principles, so that it becomes difficult at times to hold onto the thread of those principles when interpreting the Act P. 814 H-I.)
[10] Under our common law, the learned judge points out, an heir’s ownership vested without the necessity of transfer coram lege loci. In Rosenberg v Dry’s Executors and Others, 1911 AD 679 at 688 Lord de Villiers, C.J. stated:
“It was assumed by the court below that she could acquire no dominium in the farm without registration in the Deeds office in her own name, but it is expressly stated by Groenewegen (Ad. Inst. 3, 23) that the alienation of immovable property, brought about by virtue of the conjugal community of goods, constitutes one of the exceptions
to the general rule of the Dutch law that no such alienation can be effected except coram judice re sitae. In another passage (Ad. Inst. 2, 8) he makes a similar statement, and Voet (23, 2, 68) says that by virtue of the community of goods all the property of the one spouse is vested in the other ipso jure without delivery of corporeal property or cession of incorporeal property.”
At p 689 he stated:
“By our law the Registrar of Deeds is the judex before whom transfer takes place, and registration constitutes the authentic record of such transfer. For the sake of the completeness
of his records the Registrar of Deeds properly requires that a wife, who after her husband’s death wishes to deal with her
half share in any land, shall first receive transfer, but this practice cannot alter the doctrine of our law that, even without registration, the dominium passes by reason of the community.”
[11] The position is that according to common law, dominium in immovable property automatically vested in the surviving spouse on the death of the other spouse. Registration of transfer in the name of the survivor was only necessary for publication purposes. That principle was changed
by our present system of administration of deceased estates in terms whereof dominium only vests in the survivor upon registration of transfer.
[12] In the Menzies matter supra at 815A the learned judge points out that when community of property is dissolved by divorce the laws of succession do not apply. With reference to Joubert (ed): The Law of South Africa Vol. 16 par 119; Hahlo (op cit at 175 n 108) quoting a dictum of Fannin J in Meyer v Thompson N.O. 1971 (3) SA 376 at 377F he discusses the effect of an order of divorce on the proprietary interests of the spouses and then states:
“The implication of the above statement by Hahlo is that, upon the dissolution of the community by divorce, the ex-spouses become in effect free co-owners entitled to a division of the estate. Their shares become divisible. Given the circumstances of divorce, it would rarely arise in practice
that they would elect to continue in co-ownership in this new form, and thus possibly the rule has grown up that the granting of
divorce carries with it an automatic order for division. It is open to the divorcing spouses (see s 7(1) of the Divorce Act,70 of
1979) to arrive at a settlement in terms of which they could, for example, continue as co-owners of particular assets. P. 815G”
[13] There are four important aspects highlighted in the discussion: 1. Dissolution of a marriage by divorce is not governed by the laws of succession. 2.
The order of divorce itself changes the co-ownership of the parties from “tied” co-ownership to “free” co-ownership Pp.810H-811G of the judgment. 3. Section 7 (1) of the Divorce Act gives an opportunity to the spouses to divide the joint estate in any way that suits them. 4. It is arguable that an order of divorce, even without a concomitant order for division of the joint estate, has the automatic effect of dividing the joint estate.
[14] It is now necessary to have a closer look at s. 7 (1) of the Divorce Act and the effect thereof on the proprietary interest of the spouses. It reads as follows:
“A court granting a decree of divorce may in accordance with a written agreement between the parties make an order with regard to the
division of the assets of the parties or the payment of maintenance by the one party to the other”
[15] “A court …may …. make an order with regard to the division of the assets of the parties…” It clearly means that
if the parties enter into a settlement agreement in respect of their assets and the court makes it an order of court that the division of the joint estate will be regulated by the settlement agreement and the parties will be bound by it. If the wife gets the lounge suite and the husband gets the personal computer, the effect of the order will be that the wife immediately becomes the owner
of the lounge suite even if it is still in the possession of the husband. A formal delivery of his half share to the wife is unnecessary. It is also unnecessary to arrange that she be in possession of the lounge suite before she obtains dominium in it. The same holds good for the husband in respect of the personal computer. (It is accepted for the purposes of this judgment that there are no creditors with claims in respect of the lounge suite or the personal computer and that the two items were the property of the parties.)
[16] If, in stead of a personal computer and a lounge suite, the parties own two fixed properties, A and B. The parties agree that the husband gets A and the wife gets B. The court makes the agreement an order of court. The effect of the order is that the joint estate is immediately divided in terms of the order. I cannot think of any conceivable reason why dominium in A does not vest in the husband immediately and dominium in B in the wife. It is in any event in accordance with the common law as expounded in Rosenberg v Dry’s Executors and Others supra. Registration of transfer of the properties to the different spouses is not a requisite for dominium to vest in them. Our system of deeds registration is a negative one where the deeds registry does not necessarily reflect the true state of affairs Cape Explosive Works Ltd v Denel Pty Ltd 2001 (3) SA 569 (SCA) at 579 (par.16). [17] There are two obvious points of difference between the example of the two spouses owning properties A and B and the facts of the present case. In the example there are two separate deeds entities whilst Erf 833 has to be sub-divided into portion 1 and the Remaining Extent. On the other hand the agreement to subdivide is clear. There is a proper plan and a proper description of the two proposed sub-divisions. No discretion was left to Mr. Wiggill as to how the property was to be subdivided just as no discretion was left to him about the question whether the two subdivided portions were to be transferred and to whom. It is possible to pinpoint with precision exactly what physical piece of land the parties and the court intended the first respondent to own. It seems that Claassen J was quite correct to equate the process of sub-division with the transfer of the properties into the names of the parties. Those steps were mere formalities to give effect to the intention of the parties. The court gave effect to their intention by making their agreement a court order in terms of the provisions of s. 7(1) of Act 70 of 1979. [18] A further obvious difference between the example and the present matter is that at the time when the agreement was made an order of court there was a bond registered over the property and there was an amount of approximately R165 000 owing in terms of the bond. It is self evident that spouses cannot through a divorce settlement divest their creditors of claims against them. It is therefore necessary to analyse exactly what had happened in this matter. On the 3 April 1998 there was a bond over the whole Erf 833 and there was an amount payable in terms of the bond of R168 692,24. On that date the whole outstanding amount was paid off and the whole property became unencumbered The bondholder, ABSA, was joined as a third respondent in the application. It chose not to oppose the application.. Although the dominium in portion 1 vested in the first respondent on the date of the divorce, i.e. 27 March 1998 she could clearly not get a clean title because of the amount owing and the bond over the property. On 3 April 1998 the position changed significantly. The outstanding amount in terms of the bond was paid off. The first respondent and Mr. Wiggill were entitled to have the bond cancelled. The first respondent did not encumber portion 1 in any way. The debts incurred by Mr. Wiggill after 27 March 1998 could not bind the erstwhile joint estate because it was dissolved on 27 March 1998. Mr. Wiggill had no authority to encumber portion 1. Consequently the bondholder does not have any claim against the first respondent or a secured claim in respect of portion 1. [18] There is quite a resemblance between the facts of this case and the facts in the matter of Rosenberg v Dry’s Executor and Others, supra. A husband and wife married in community of property made a joint will in terms of which they appointed the survivor as heir and executor. They made a codicil by which they bequeathed to the children a farm in equal shares but stipulated that the survivor was to remain in possession of the farm until his or her death when it was to become the property of the children but further stipulated that the survivor was not to sell or mortgage the farm. The husband died. The wife adiated and became executrix. She became indebted to the appellant. On her death she had no separate assets. The appellant obtained a judgment against the executor dative. On p. 688 of the judgment Lord de Villiers C J stated:
“As to the testator’s half share in the farm, it is clear that it cannot be charged with the debts of the testatrix, which were
incurred after his death. The legatees now have a real right in respect of such share with which such debts cannot come into competition.
In regard, however, to the half share of the testatrix, she did not, either by joining in the making of the mutual will, or by adiation after the death of her husband, divest herself of her ownership.”
[19] It follows in my view that the first respondent is the owner of an unencumbered portion 1. She is entitled to cancellation of the
bond over portion 1 and to transfer of the property into her name. The order of the court a quo enjoins the appellants to do so. The order places a greater burden on the appellants than what the divorce order placed upon Mr. Wiggill. Mr. Wiggill and the first respondent were each responsible for half of the costs of sub-division and transfer of the properties into
their names. The order is not qualified to provide for the payment of her half-share of the costs. Moreover the obligation to pay
for half of such costs became the obligation of the separate estates of Mr. Wiggill and the first respondent that came into existence on divorce. When Mr. Wiggill remarried his obligation became the obligation of that joint estate. That joint estate is insolvent. The obligation to pay for half of the expenses is an ordinary unsecured claim which ranks as a concurrent claim against the insolvent estate. If the appellants are to provide for those expenses out of the free residue the concurrent claim is elevated to a claim with some
sort of preference.
[20] The solution seems to be that the first respondent is to provide the funds to subdivide Erf 833, to cancel the bond over it and to have it registered in her name. The appellants must recognize a claim for half of those expenses as a concurrent claim of the first respondent against the insolvent estate. The order in her favour will have to be changed in this respect. [21] The position of the second- and third respondents is different. They were not married to Mr. Wiggill. There was no automatic vesting of their right of usufruct. If they accepted the stipulation in their favour they acquired no more than a personal right to obtain a real right, a jus in personam ad rem adquirendam. It seems likely that they accepted the benefit because they wanted to live in the apartment and they joined in the bringing of both applications. It is unlikely that the Remaining Extent, sold subject to the usufruct, will fetch a high enough price to pay all the claims against the insolvent estate. The second- and third respondents have no more than concurrent claims for the value of the usufruct against the insolvent estate The life expectancy of one of them may be longer than that of the other, with the result that when the value is assessed there may by a joint value until a certain date and thereafter a value in favour of the one with longest life expectancy for the further period.. It follows that the order in their favour will have to be set aside. [22] In my view the real issue between the parties was whether the first respondent is entitled to the transfer of portion 1 in her name. On that score she was successful both in the court a quo and in this court. The change in respect of the costs is more cosmetic than anything else. In my view she is entitled to her costs in both courts. As for the second- and the third respondents their claim was subsidiary to the claim of the first respondent. A very small portion of the papers pertain exclusively to their claim. Much less of the argument in court was devoted to the appeal against the order in their favour than the order in favour of the first respondent. There was no reason why the court a quo had to make an order of costs against the second- and third respondents. The first respondent was substantially successful and their claim, in the process, just fell by the wayside. As far as the appeal is concerned no more than 15% of the costs of appeal was occasioned by their opposition to the appeal. The following order is made: 1.
The appeal succeeds partially:
2. The order of the court a quo is set aside and substituted with the following:
“1 Die tweede respondent word gelas om uitvoering te gee aan die bepalings van die egskeidingsooreenkoms wat ‘n bevel van hierdie
hof gemaak is in saaknommer 4958/98, deur:
1.1 Toe te sien dat Erf 833 Louis Trichardt onderverdeel word in twee gedeeltes, soos uiteengesit in paragraaf 5 (b) (i) (aa) van
die gemelde egskeidingsooreenkoms;
1.2 Om transport van die gedeelte na verwys in klousule 5 (b) (i) van die egskeidingsooreenkoms onbelas aan die eerste applikante oor te dra.
2. Die eerste applikante is verantwoordelik vir die koste van die bovermelde onderverdeling en oordrag en die nodige stappe om die
oordrag te bewerkstellig en moet re
lings met die tweede respondent tref vir die betaling daarvan.
3 Die eerste applikante het ‘n konkurrente eis teen die insolvente boedel vir die helfte van die kostes bedoel in 2 hierbo. 4 Die tweede- en derde applikante se aansoek word van die hand gewys
5. Die eerste en die tweede respondente word gesamentlik en afsonderlik gelas om die eerste applikante se koste te betaal.
6. Geen kostebevel word gemaak vir of teen die tweede en die derde applikante nie.”
3. The appellants are ordered to pay the first respondent’s costs of appeal.
4. The second- and third respondents are ordered to pay 15% of the appellants’ costs of appeal.
……………………….
W J HARTZENBERG JUDGE OF THE HIGH COURT
I agree.
………………………. N.M. MAVUNDLA JUDGE OF THE HIGH COURT
I agree.
…………………
N RANCHOD ACTING JUDGE OF THE HIGH COURT FOR THE APPELLANTS: ADV B H SWART SC INSTRUCTED BY: MESSRS COUZYN HERTZOG & HORAK, PTA FOR THE RESPONDENTS: ADV F M M SNYMAN INSTRUCTED BY: HORN & MARSHALL ATTORNEYS, PTA HEARD ON: 10/10/2005 |