[13]
The success of the business brought in its wake substantial financial advantages for both parties. While
initially they were compelled to live modestly, their position improved rather markedly during the course of the marriage. Eventually
the parties, by all accounts, maintained the lifestyle of those with virtually unlimited funds, including extravagant entertainment
and expensive holidays.
[14]
In 1990, when William went to high school, he became a boarder at the school formerly attended by his
father in Graaff-Reinet. He received regular visits from his parents over weekends. Since Graaff-Reinet and Johannesburg are about
a thousand kilometres apart, driving up and down over weekends became somewhat of an ordeal for the parents. As a result, they decided
to buy an aeroplane. First they bought a small Cessna and then a bigger one. At the time of the trial, both these aeroplanes were
still owned by Andor Abrasives. In order to fly the aeroplanes both obtained private pilot's licences. In the end the respondent
became so fond of flying and so accomplished as a pilot that when she left the appellant and their business at the beginning of 2002,
she decided to take up flying as a career. For that purpose, she required a commercial pilot's licence. At the time of the trial,
that goal, however, remained unfulfilled.
[15]
With the passing of time the parties also succeeded in accumulating substantial assets in their own estates,
apart from the shares in the companies. In 1992 the appellant was offered a 25 per cent shareholding in a milling company called
Sebowana Mills (Pty) Ltd. He was not required to pay any money for the shares but he had to put up a bank guarantee of R1m. The transaction
turned out to be an excellent investment. The guarantee was never called up and in 1996 the appellant sold his shareholding in Sebowana
Mills at a profit of R2m. The appellant also acquired a game farm called Kaboega in the Port Elizabeth area. At the trial this farm
was valued at R6,3m. About 1998 the parties purchased shares in a share block company, Keurview Share Block (Pty) Ltd, which provided
them with two property units near Plettenberg Bay upon which they built their holiday house. These shares, which were held by the
respondent, were valued at R2m.
THE JUDGMENT OF THE COURT A QUO
[16]
On behalf of the respondent it was contended that since the redistribution order granted by the court
a quo involved the exercise of the discretionary power conferred by s 7(3), the room for this court to interfere is limited. It cannot,
so the respondent contended, substitute its own discretion for that of the trial court's simply because it would have preferred a
different result. It can do so only if the trial court had failed, through misdirection or otherwise, to exercise its discretion
properly. It is clear that these contentions are directly supported in the judgment of Botha JA in Beaumont v Beaumont 1987 (1) SA 967 (A) 988H-989A; 1002A-E.
[17]
The appellant's counter-argument was that Beaumont had been overtaken by later judgments of this court, such as, Media Workers Association of South Africa and others v Press Corporation of South Africa Ltd ('Perskor') 1992 (4) SA 791 (A) 796H-I and 800E-G and Knox D'Arcy Ltd and others v Jamieson and others 1996 (4) SA 348 (A) 361G-I. In these judgments, both of EM Grosskopf JA, a distinction is drawn between two categories of discretionary
powers. These two categories can conveniently be described as 'a discretion in the broad sense', on the one hand, and a 'discretion
in the narrow or strict sense' on the other. The essence of a discretion in the latter sense, so Grosskopf JA explained, involves
a choice between two or more different, but equally permissible, alternatives, while the former means no more than a mandate to have
regard to a number of disparate and incommensurable features in arriving at a conclusion. It is only when the exercise of a discretion
is in the strict or narrow sense, Grosskopf JA said, that an appeal court's powers of interference are limited, because it is the
essence of such a discretion that, on the same facts, different minds may legitimately arrive at different conclusions. With regard
to the exercise of a discretion in the broad sense, he said, there is no reason why the powers of an appeal court should be so restricted.
Since these matters can be determined equally appropriately by an appeal court, the latter may substitute its own discretion for
that of the trial court. The mere fact that a discretion is described as 'wide', Grosskopf JA added, does not mean that it is necessarily
a discretion in the strict sense. It only means that the trial court is entitled to have regard to a wide range of disparate and
incommensurable factors in arriving at its decision.
[18]
In view of these later decisions, the appellant argued, the appropriate category for the discretion conferred
upon the trial court in terms of s 7(3) of the Act, is that of discretions in the broad sense. Consequently, the argument went, s
7(3) confers an equally unfettered discretion on this court to make the redistribution order that it may deem just and to substitute
the result of that exercise for the order made by the court a quo. I find this argument attractive in its logical progression and I have no doubt that it will be raised again. However, for present
purposes it is unnecessary to decide its validity. In the light of the view that I hold regarding the outcome of this matter, I am
prepared to assume, without deciding, that a misdirection by the trial court is a prerequisite for this court's interference with
the decision of that court.
[19]
In establishing the legal foundation for his decision, Pincus AJ devoted a substantial part of his judgment
(paras 23, 24 and 27-39) to a relatively new approach by the English courts, which was ultimately endorsed by the House of Lords
in White v White [2001] 1 AC 596 (HL (E)); [2001] 1 All ER 1 (HL). This accepts that as a general guide, or starting point, the combined assets of
the parties should be divided equally and that this principle should be departed from only if and to the extent that there is good
reason for doing so (see eg White v White supra 605G-H; 9e-f). Closely aligned to this approach is the question sometimes posed by the English courts, which is also referred to
by the court a quo (paras 27-29 and 37), namely 'what more the wife could have done to justify an award of 50%?' If the answer to this is that she had
done her utmost and that therefore she could not have done more, it is accepted as a matter of course that there is no justification
to deviate from the equality principle (see eg Lambert v Lambert [2003] Fam 103 (CA); [2003] 4 All ER 342 (CA), paras 14 and 53).
[20]
Though comparative legal study obviously has great value, English cases should be approached with circumspection
in the present context. They emanate from the application of statutory provisions different from ours which, in turn, are to be construed
against an entirely different common law system. It is clear that the English statute (s 25 of the Matrimonial Causes Act 1973 as
substituted by the Matrimonial and Family Proceedings Act 1984) affords the courts an even wider discretion than s 7(3) of our Act
(see eg B Clark and B J van Heerden, "Asset Distribution on Divorce – The Exercise of Judicial Discretion", (1989)
106 SALJ 243 at 247). So, for example, a contribution by a claimant spouse to the estate of the other spouse is not a jurisdictional prerequisite
for redistribution in England as it is in terms of s 7(3). Consequently, the English courts need not consider the nature and extent
of the claimant's contribution to the estate of the other spouse at all, whereas, in terms of our s 7(3), it is the pre-eminent consideration
(see eg Beaumont v Beaumont supra 989B). Although I do not understand our legislature to require a meticulous mathematical calculation of each party's contribution,
the fact remains that our courts are not entitled as a matter of course to 'divide the joint net assets of the parties equally, regardless
of their respective known and unequal contributions' (per Milne JA in Kritzinger v Kritzinger 1989 (1) SA 67 (A) 77F-G).
[21]
As to the different common law systems underlying the different statutory provisions, it is a well known
fact that our common law provides for marriages in community of property as the norm while the English system does not. The result
is that, unlike in England, a marriage can in our law only be concluded out of community of property if the parties consciously elect
to do so in terms of an antenuptial agreement executed before a notary public. Of course we know that these contracts often led to
great inequity and unfairness, particularly towards wives who performed their traditional role. This, after all, was the raison d'etre for the enactment of s 7(3). Nevertheless, its formulation reflects a deliberate choice on the part of the legislature to limit the
courts' discretion in interfering with the contractual election – good or bad – made by the parties when they entered
into their marriage. For instance, the section only applies to marriages that were entered into prior to the commencement of the
Matrimonial Property Act 88 of 1984 on the basis of an antenuptial contract. With regard to marriages entered into subsequently,
in terms of an antenuptial contract, the section finds no application at all. (They are governed by Ch 1 of the Matrimonial Property
Act 88 of 1984.) Women whose marriages were entered into later and with the exclusion of the accrual system may therefore be in the
same disadvantaged position as before. Some suggest that the legislature was too conservative and the reasons for its choice difficult
to understand (see eg June Sinclair, An Introduction to the Matrimonial Property Act 1984, 49-52). One can sympathise with these views. The fact remains, however, that the courts cannot go further than the legislature allows
them to go and that the legislature does not allow them to treat all marriages upon divorce as if they were in community of property
and without an antenuptial contract.
[22]
Moreover, the acceptance of equal distribution as a starting point or general guide as part of our law
would be in direct conflict with the decisions of this court, as appears from the following oft quoted dictum by Botha JA – with reference to the one-third starting point advocated by Lord Denning MR in Wachtel v Wachtel [1973] Fam 72 (CA) 94B-95F; [1973] 1 All ER 829 (CA) 839b-840d – in Beaumont v Beaumont supra 998F-G:
'I do not see any real difficulty in starting with a clean slate, then filling in the void by looking at all the relevant facts and
working through all the relevant considerations, and finally exercising a discretion as to what would be just, completely unfettered
by any starting point.'
[23]
I find myself in respectful agreement with this statement. I also believe that courts should refrain
from putting shackles on a discretionary power which the legislature has left largely unfettered through the acceptance of 'starting
points' or 'guidelines' (see Beaumont 991G-H). Though practitioners may, understandably, prefer guidelines or formulae which may assist in settlement, the problem is that
there is such 'an infinite variety of circumstances under which s 7(3) falls to be applied' (Beaumont 990G-H) that we cannot afford to trade the wide discretion of s 7(3), once it is found to apply, for formulae albeit in the guise
of 'guidelines' or 'starting points'.
[24]
These views with regard to equal division as a starting point are also in accordance with the approach
of the Australian High Court, as appears from the following dictum by Gibbs CJ in Mallet v Mallet (1984) 156 CLR 605 at 610:
'… Parliament has not provided, expressly or by implication, … that there should, on divorce, either generally, or in
certain circumstances, be an equal division of property, or that equality of division should be the normal or proper starting point
for the exercise of the court's discretion. Even to say that in some circumstances equality should be the normal starting point is
to require the courts to act on a presumption which is unauthorized by the legislation. The respective values of the contributions
made by the parties must depend entirely on the facts of the case and the nature of the final order made by the court must result
from a proper exercise of the wide discretionary power … unfettered by the application of supposed rules for which the Family Law Actprovides no warrant.'
[25]
It is not entirely clear what role the court a quo assigned to the English decisions from which it quoted so extensively. On the one hand Pincus AJ expressly admonished himself (in
para 22) that a starting point of equal division would be in conflict with the decision of Botha JA in the Beaumont case. He also disavowed any proposal (in para 23) of a 50/50 split as a starting point in our law. Nevertheless, he referred (in
para 25) with apparent approval to two unreported judgments of the Cape High Court in which it was stated, for instance, with reference
to the White case that:
'I agree with the approach now adopted in Britain and parts of the Commonwealth and I find no reason at all to depart from equality
on the facts of the present case.'
[26]
For the reasons given, the approach 'now adopted in Britain' does not form part of our law and statements
like these can only lead to confusion of thought such as appears to be indicated by the consideration expressed by Pincus AJ (in
para 40), that because the respondent has done her utmost, her contribution must inevitably be afforded equal weight to that of the
appellant.
[27]
A thesis which obviously weighed heavily with the court a quo and to which it also devoted a substantial part of its judgment (paras 40-48), was that it would be in conflict with the anti-discrimination
provisions in s 9 of our Constitution to undervalue the role of housewife and mother traditionally conferred upon women by society.
In developing this theme, Pincus AJ referred, for example (in para 45), to the following statement by the Supreme Court of Canada
in Moge v Moge [1992] 3 SCR 813:
'Fair distribution does not, however, mandate a minute detailed accounting of time, energy and dollars spent in the day to day life
of the spouses … . What the Act requires is a fair and equitable distribution of resources to alleviate the economic consequences
of marriage or marriage breakdown for both spouses, regardless of gender. The reality, however, is that in many if not most marriages,
the wife still remains the economically disadvantaged partner. …
A division of functions between the marriage partners, where one is a wage-earner and the other remains at home will almost invariably
create an economic need in one spouse during marriage. …
Women have tended to suffer economic disadvantages and hardships from marriage or its breakdown because of the traditional division
of labour within that institution.'
[28]
I find myself in agreement with the thesis that the traditional role of housewife, mother and homemaker
should not be undervalued because it is not measurable in terms of money. The plain fact is, however, that this consideration has
nothing to do with the facts of this case. The respondent never assumed the traditional role. She was the financial director of a
company. Her responsibility for William she largely shared with the appellant and although she took responsibility for their household,
she never claimed this to have been her real contribution to his estate. That much was apparent from her pleadings and was confirmed
by her counsel during oral argument. Her major contribution to his estate was through her efforts in their joint business where she
spent almost all her time and where she worked, as she said, shoulder to shoulder with the appellant.
[29]
Obviously, the respondent's additional contribution as mother and homemaker must be afforded due weight.
That will be done. Nevertheless, in the circumstances, the considerations advanced by the court a quo (in para 49), as part of its reasons for splitting the proceeds of the marriage on a 50/50 basis, that the respondent was 'a dedicated
housewife, mother and housemaker' and that it would be unacceptable 'to place greater value on the contribution of the breadwinner
than that of the homemaker', were clearly inappropriate. The same holds true for the further statement (in para 40) that 'the traditional
role played by a South African housewife in the plaintiff's position cannot be held against her'.
[30]
For the reasons given, these statements reflect a clear misdirection on the part of the court a quo in the exercise of its discretion. But for this misdirection, the court would have realised that in this matter, unlike in most other
matters, the contributions of the parties can in fact be compared because the efforts of both were aimed at the promotion of the
same business. Had this comparison been done, the court would have noted two material differences between the respective contributions
of the parties. First, according to the respondent's own evidence, it was the appellant's efforts, not hers, which caused the business
to be exceptionally successful as opposed to just average. Second, since the success of the whole business was dependent on the efforts
of the appellant, he was also, indirectly, responsible for whatever resulted from the respondent's efforts. But for the court's misdirection,
it would therefore have realised that its conclusion (in para 49), that the contributions of the parties were equal, could not be
justified. Since this conclusion formed the keystone to the court's ultimate decision, the misdirection was undoubtedly material.
[31]
A further objection raised by the appellant was that the court a quo had failed to have regard to the nature of the assets in the respective estates. The argument in support of this objection was that
some adjustment should have been made in his favour for the fact that the respondent retained her shares in Keurview (which is in
effect a valuable, unbonded property), and would receive payment in the form of cash, while most of what the appellant retained is
tied up in shares in private companies, which are not readily realisable. I do not believe this objection to be valid. About half
of the respondent's assets are also tied up in shares in the same companies. What placed her at an even greater disadvantage, is
that she is a minority shareholder in companies controlled by the appellant, which had never declared any dividend in the past and
were unlikely to do so in the foreseeable future.
[32]
What should in my view have been of more concern to the court a quo, was the appellant's objection that if he were compelled to pay an amount as large as that which the court eventually decided upon,
it could place the companies in jeopardy. The appellant's evidence in this regard was that the companies had an overdraft facility
of R10m of which about R4,5m had been taken up. According to his further undisputed testimony a business that operates close to the
limit of its overdraft runs the risk of having its overdraft facilities reduced. In cross-examination, various suggestions were made
to the appellant as to how a payment to the respondent could be funded. It was apparent, however, that each of these suggestions
would create difficulties or disadvantages of its own. So, for instance, the suggestion that one or both of the aeroplanes owned
by Andor Abrasives – which were valued at about R2,3 and R1,4m, respectively – could be sold, was met by the response
that a substantial portion of the proceeds of the sale would be payable to the fiscus, since the sale would constitute a recoupment
of past tax deductions. The suggestion that Kaboega game farm could be sold as a whole or in part, raised the difficulty that, since
the farm formed part of the bank's security for the overdraft of the companies, the sale of the farm would probably cause the overdraft
limit to be reduced. The court a quo dismissed these problems with the comment (in para 51) that, if the appellant 'wishes to borrow money, as opposed to selling what
the parties called his "toys", then he must "bear the costs of so doing" '. This in my view amounted to an over
simplification of the undisputed difficulties for the companies raised by the appellant, which could be to the detriment of both
parties.
EXERCISE OF DISCRETION BY THIS COURT
[33]
Given the misdirections found, this court is obliged to substitute its own exercise of the discretion
afforded by s 7(3) for that of the court a quo. In doing so, the first consideration is that both parties have contributed to the substantial financial success of the business
and that they have both given their all. The respondent was also the primary caregiver for William and she took responsibility for
their household as well. These are obviously considerations in her favour. On the other hand, while the efforts of the parties were
aimed at the same goal and although their efforts might have been comparable, the appellant was much more influential in achieving
this goal. Without him the business would, by all accounts, be no more than average. Under his management it became an exceptional
success. For the reasons I have given, I believe that it would be wrong not to regard this as an important factor in his favour.
[34]
Another consideration advanced by counsel for the appellant was that the respondent had already been
compensated for her efforts through the privileges of the affluent lifestyle that the parties enjoyed during `the later years of
their marriage. That, of course, is true. But, the same holds true of the appellant. I therefore do not agree that this is a consideration
in favour of the appellant at all.
[35]
On behalf of the appellant, much was also made of the fact that the substantial profit of about R2m on
the Sebowana Mills transaction (see para 15 above) was made exclusively through his efforts. For reasons of both law and fact, I
do not agree that this transaction deserves any special treatment. As a matter of law, s 7(3) does not require a causal link between
the claimant's contribution and every asset in the estate of the other spouse. As a matter of fact, it is apparent that, but for
the success of the business, the appellant would not have been able to put up the R1m bank guarantee required for the transaction.
As a consequence, the transaction was made possible through the success of the business to which the respondent had made her contribution.
[36]
In all the circumstances, the just redistribution contemplated in s 7(3) will in my view be achieved
if the appellant is ordered to pay the respondent the sum of R4,5m. This will result in a division of their joint assets in the ratio
of about 60:40 in favour of the appellant. The reduction in the amount determined by the court a quo would also avoid the danger to the financial survival of the companies which that determination might have caused.
[37]
Pending this appeal, the appellant has made certain payments in partial performance of the court a quo's judgment. The parties were in agreement, however, that we should not concern ourselves with those payments, nor with the mora interest that has in the meantime become payable, in the formulation of our order. In accordance with this agreement, I propose merely
to substitute the sum of R4,5m for the R7,8m awarded by the court a quo and to leave the arithmetical calculation of the exact amount still owing by the appellant to the parties. The respondent's counsel
also agreed that the appellant should be afforded a period of three months from date of this order to make payment of the amount
still owing by him. The order I propose to make should obviously be understood against the background of these agreements.
[38]
For these reasons, the appeal is upheld with costs, including the costs of two counsel, and the following
order is substituted for para (b) of the order of the court a quo:
'(b)
The defendant is ordered to pay to the plaintiff the sum of R4,5m.'
……………….
F D J BRAND
JUDGE OF APPEAL
Concur:
HARMS
SCOTT
FARLAM
HEHER JJA
.RTF of original document