Maintenance orders prescribe after 30 years.

A client asked if she would lose her right to claim maintenance from her ex-husband if she had been battling for years to get him to pay. He is now back on his feet and still refuses to maintain his child. He suggests the maintenance order lapsed after three years under the Prescription Act.

The Supreme Court of Appeal ("SCA") in Simon Roy Arcus v Jill Henree Arcus found that if a consent paper is signed and made a court order, the ex-wife has 30 years to enforce the claim for maintenance.

In this case, in 1993, during divorce proceedings between the parties, a court made a maintenance consent paper a court order. The husband was obliged to pay the wife and their two minor daughters maintenance until the daughters were self-supporting and the wife either remarried or died.

The husband failed to pay the maintenance, and after eighteen years, the wife obtained a writ of execution for the arrear maintenance amounting to R3.5-million.

The husband argued that all maintenance obligations due after three years from the date of the court order lapsed due to prescription.

The Prescription Act distinguishes between a "judgment debt" (that prescribes after 30 years) and "any other debt" (that prescribes after three years). The court found that the maintenance obligations in terms of the consent paper constituted a judgment debt.

The court noted that once a court makes a consent paper a court order, that agreement's status changes to an enforceable court order. Thus, it concluded that the three-year prescription period did not apply to maintenance orders as they were not orders that were still in dispute.

Can a court pierce the veil of a trust when calculating the accrual after a divorce?

 

In the case of MJK v IIK [2022] ZASCA 116, the wife sued for divorce. She sought an order declaring that the assets of three trusts and a CC be considered in determining the value of the accrual in terms of ss 3 and 4 of the Matrimonial Property Act 88 of 1984 (the Act). She contended that the trusts and the CC were her husband's alter ego and that during the marriage, he established the trusts and the CC over which he assumed sole de facto control.

The Act provides that during the marriage, each spouse retains control of their property, builds up their estate, and is responsible for their debts.

On dissolution of the marriage by death or divorce, the parties share equally the assets obtained during the marriage (the accrual). They determine the accrual by calculating the difference in the net starting value and the net final value of the estate of each spouse with the exclusion of inheritances, legacies, and donations. On dissolution of the marriage, the parties divide equally the value of the difference in the accrual of the two estates, taking inflation into account.

The Court disagreed with the wife's suggestion that it should regard the assets of trusts of which the husband was a trustee and the close corporation of which he was a sole member as belonging to the husband to determine the accrual of his estate. It rejected her suggestion that he transferred the assets with the dishonest and fraudulent purpose of frustrating her claim to the accrual of the estate. The High Court disagreed that it should pierce the veneer of all three trusts to determine the accrual of the husband's estate as he used the trusts as his alter ego.

The Court agreed with the husband that estate planners have for years used trusts as a convenient tool for estate planning. His principal objective in creating the trusts was to protect their assets to care for his wife and children, mainly their mentally challenged daughter.

It dismissed the wife's claim for an order that the assets of the trusts and the CC were to be used to calculate the accrual of the husband's estate.

 

Can foreigners buy property in South Africa?

A non-resident asked me if he could buy property in South Africa. 

Favourable exchange rates and a world-renowned deeds registration system have encouraged foreigners to snap up properties here. 

A "foreigner" means an individual who is not a citizen of South Africa. The right to own property in South Africa does not extend to an illegal foreigner in the Republic in contravention of the Immigration Act.  Land may be made available to a foreigner who is the holder of a permanent residence permit subject to the conditions of such licence and a refugee with a permanent residence permit after five years of continuous residence in the Republic. 

Letting or selling any immovable property in the Republic to an illegal foreigner is illegal. 

Foreigners may acquire immovable property (including agricultural land) in their names or jointly in undivided shares or via entities such as companies, trusts, or similar entities registered outside South Africa. 

These formalities apply:

 

·         Foreign legal entities which buy property in the country must be registered here and appoint a South African resident public officer on behalf of the local company whose shareholders are non-residents.

 

·         There is a 'non-resident' endorsement on the property's title deed. If the owner sells, they may repatriate all funds introduced from outside South Africa to acquire fixed property in the country and any profit from the sale.

 

·         Non-residents must pay capital gains tax (CGT) on the disposal of immovable property in South Africa, including any right or interest in immovable property. If they want to repatriate funds, they must register as taxpayers and submit income tax returns reflecting the capital gain calculation.

 

·         Suppose the South African Reserve Bank approves foreign loans to fund a land purchase via a corporate entity. In that case, the entity may repatriate the funds and any profits, subject to payment of CGT.

 

·         Loans by a South African bank to non-residents are subject to foreign exchange approval from the Reserve Bank. The bank secures its loan by a mortgage bond registered in its favour.  Banks will only lend non-residents up to 50% of the purchase price of a property.

 

·         Non-residents who have brought funds into South Africa over several years may borrow up to 100% of the total funds invested in the country. This may amount to more than 50% of the purchase price of the property.

 

Employing foreign nationals in South Africa

 In the recent Mukuru decision of Mukuru Financial Services (Pty) Ltd and Another v Department of Employment and Labour, the Court had to consider the facts supporting the contention that Makuru had no option but to employ foreign nationals rather than South African citizens or permanent residents. Did this constitute unfair discrimination?

Mukuru is a financial services provider that uses mobile technology to transfer money across Africa and Asian countries. They applied for a corporate visa to permit them to employ foreign nationals. To qualify, they had to do demonstrate to the Department of Employment and Labour (DEL) that despite conducting a diligent search to find suitable employees that were either South African citizens or permanent residency holders, it was not able to do so. The DEL refused to issue the necessary certificate as they were not satisfied with Mukuru’s attempts to employ South Africans.

Mukuru applied to court to review the DEL decision. The High Court was not persuaded by Mukuru’s explanation why it could not employ South Africans and found that South Africans were unfairly excluded from employment opportunities which constituted unfair discrimination on various constitutional grounds.

It is thus clear that South African employers must justify the employment of foreign nationals over South Africans. Whether an employer can do so, will depend on the facts of each case.

Muslim marriages recognised

This is a judgment of the Constitutional Court, declaring invalid certain provisions of the Marriage and Divorce Acts, and recognising Muslim marriages.

On application for confirmation of an order of constitutional invalidity granted by the Supreme Court of Appeal:

 1.      The Supreme Court of Appeal’s order of constitutional invalidity is confirmed:

 1.1.   The Marriage Act 25 of 1961 (Marriage Act) and the Divorce Act 70 of 1979 (Divorce Act) are declared to be inconsistent with sections 9, 10, 28 and 34 of the Constitution in that they fail to recognize marriages solemnized in accordance with Sharia law (Muslim marriages) which have not been registered as civil marriages, as valid marriages for all purposes in South Africa, and to regulate the consequences of such recognition.

 1.2.   It is declared that section 6 of the Divorce Act is inconsistent with sections 9, 10, 28(2) and 34 of the Constitution, insofar as it fails to provide for mechanisms to safeguard the welfare of minor or dependent children born of Muslim marriages, at the time of dissolution of the Muslim marriage in the same or similar manner as it provides for mechanisms to safeguard the welfare of minor or dependent children born of other marriages that are dissolved.

 1.3.   It is declared that section 7(3) of the Divorce Act is inconsistent with sections 9, 10, and 34 of the Constitution, insofar as it fails to provide for the redistribution of assets, on the dissolution of a Muslim marriage, when such redistribution would be just.

 1.4.   It is declared that section 9(1) of the Divorce Act is inconsistent with sections 9, 10 and 34 of the Constitution, insofar as it fails to make provision for the forfeiture of the patrimonial benefits of a Muslim marriage at the time of its dissolution in the same or similar terms as it does in respect of other marriages that are dissolved.

 1.5.   The common law definition of marriage is declared to be inconsistent with the Constitution and invalid to the extent that it excludes Muslim marriages.

 1.6.   The declarations of invalidity in paragraphs 1.1 to 1.5 above are suspended for a period of 24 months to enable the President and Cabinet, together with Parliament, to remedy the foregoing defects by either amending existing legislation, or initiating and passing new legislation within 24 months, in order to ensure the recognition of Muslim marriages as valid marriages for all purposes in South Africa and to regulate the consequences arising from such recognition.

 1.7.   Pending the coming into force of legislation or amendments to existing legislation referred to in paragraph 1.6, it is declared that Muslim marriages subsisting at 15 December 2014, being the date when this action was instituted in the High Court, or which had been terminated in terms of Sharia law as at 15 December 2014, but in respect of which legal proceedings have been instituted and which proceedings have not been finally determined as at the date of this order, may be dissolved in accordance with the Divorce Act as follows:

 (a)     all the provisions of the Divorce Act shall be applicable, save that all Muslim marriages shall be treated as if they are out of community of property, except where there are agreements to the contrary, and

 (b)     the provisions of section 7(3) of Divorce Act shall apply to such a union regardless of when it was concluded.

 (c)     In the case of a husband who is a spouse in more than one Muslim marriage, the court:

 (i)        shall take into consideration all relevant factors, including any contract or agreement between the relevant spouses, and must make any equitable order that it deems just; and

 (ii)       may order that any person who in the court’s opinion has a sufficient interest in the matter be joined in the proceedings.

 1.8.   Pending the coming into force of legislation or amendments to existing legislation referred to in paragraph 1.6, it is declared that, from the date of this order, section 12(2) of the Children’s Act 38 of 2005 applies to a prospective spouse in a Muslim marriage concluded after the date of this order.

 1.9.   Pending the coming into force of legislation or amendments to existing legislation referred to in paragraph 1.6, for the purpose of paragraph 1.8 above, the provisions of sections 3(1)(a), 3(3)(a) and 3(3)(b), 3(4)(a) and 3(4)(b), and 3(5) of the Recognition of Customary Marriages Act 120 of 1998 shall apply, mutatis mutandis, to Muslim marriages.

 1.10. If administrative or practical problems arise in the implementation of this order, any interested person may approach this Court for a variation of this order.

 1.11.The Department of Home Affairs and the Department of Justice and Constitutional Development shall publish a summary of the orders in paragraphs 1.1 to 1.10 above widely in newspapers and on radio stations, whichever is feasible, without delay.

 2.      The conditional cross appeal by the Women’s Legal Centre Trust, and the appeals by the South African Human Rights Commission and Commission for Gender Equality are dismissed.

 3.      The President and the Minister of Justice and Constitutional Development must pay the Women’s Legal Centre Trust’s costs of this application, including the costs of two counsel.