This
is an appeal against the decision of the High Court dated 2 July 2014
granting the respondent's claim to the farm he is leasing from the
State.
The
appellant was the respondent's wife. Their marriage was solemnized
on 21 May 1993 in terms of the Marriages Act [Chapter
5:11].
Due to differences, which the respondent considered to have led to
the irretrievable break down of the marriage, he, in September 2009,
issued summons in the High Court against the appellant claiming a
decree of divorce and ancillary relief. The respondent alleged that
the marital relationship between him and the appellant had
irretrievably broken down to such an extent that there were no
prospects of the restoration of a normal marriage relationship. The
appellant initially entered an appearance to defend arguing that
there were prospects of a restoration of a normal marriage
relationship. The parties later agreed that a decree of divorce
should be granted by consent. On 31
August 2012,
the High Court granted them a decree of divorce in terms of a consent
paper.
The
consent order resolved the proprietary consequences of their divorce
except the issues relating to the distribution of their rights in
Allan Grange Farm which the respondent is leasing from the State. The
issues were captured in paragraphs 8 to 8.3 of the consent order
granted by HLATSHWAYO J…, as follows:-
“8.
It is recorded that paragraphs 3, 4 and 5 do not reflect a final
settlement of the proprietary consequences of the marriage and the
parties to that end agree as follows:-
8.1
Defendant shall be entitled to remain in occupation of that portion
of Allan Grange Farm (the Farm) for a period of 9 months from the
date hereof, and shall, during that period, investigate such
alternatives as may be available to her.
8.2
If the parties have not settled their differences in relation to the
farm, then, at the expiry of the said period of 9 months, either
party shall be entitled to apply to the Registrar of this Honourable
Court for this matter to be tried on the issues set out in para 8.3
hereof.
8.3
The issues for trial shall be:-
(i)
Whether defendant is entitled to any rights in respect of the Farm.
(ii)
What constitutes a fair and equitable distribution of the rights held
by the parties in regard to the Farm.”...,.
Paragraph
8.3 sets out the issues which were to be determined through the trial
which took place before the court a
quo.
The
period within which the appellant was allowed to remain on the farm
lapsed. The parties failed to resolve their differences in terms of
clause 8.2. The respondent requested the Registrar of the High Court
to set down the matter for trial on the unresolved issues relating to
the distribution of their rights in the farm.
At
the trial, it was agreed that the parties had conducted their
business on the farm since 2002. The respondent had initially been
allocated the farm through an offer letter, and, together with the
appellant, they proved to the acquiring authority that they are
serious farmers after which the respondent was given a 99-year lease.
The lease was registered with the Registrar of Deeds in terms of
section 65(1) of the Deeds Registries Act [Chapter
20:05].
It was registered in favour of the respondent through a Notarial Deed
of Lease dated 15 May 2007. The lease was registered during the
subsistence of the marriage. During that period, the parties were
jointly conducting their farming businesses on the farm.
Upon
separation, they separately embarked on individual farming activities
on the same farm. The appellant raised chickens and pigs on one
portion of the farm while the respondent concentrated on crop
production on the other portion. On signing the consent paper, they
agreed that the appellant would remain in occupation of a portion of
the farm she was using for a period of 9 months.
At
the trial, the issues before the court a
quo
were:-
1.
Whether the appellant was entitled to any rights in the farm; and
2.
What constitutes a fair and equitable distribution of those rights.
The
parties led evidence to substantiate their positions. The respondent,
wanting all rights in the lease to be awarded to him, led evidence to
the effect that rights to the farm were allocated to him through the
lease agreement. It was argued, on behalf of the respondent, that the
farm does not form part of the assets of the parties capable of
distribution in terms of the Matrimonial Causes Act [Chapter
5:13].
On
the other hand, the appellant wanted the lease, or a portion of the
farm where she was conducting her farming activities, to be awarded
to her. She viewed the farm as part of their matrimonial property.
After
hearing the parties' evidence, the court a
quo
found for the respondent. It found that the farm does not belong to
the parties but to the Government which leased it to the respondent.
The court found that because of the 99-year lease, the parties have
personal rights to the farm, and, as such, the farm does not form
part of the matrimonial assets of the parties which is capable of
distribution on divorce.
Aggrieved
by the decision of the court a
quo
the
appellant appealed to this Court. Although the appeal was premised on
several grounds, it raises two issues:-
1.
Whether, in terms of the Matrimonial Causes Act, the parties'
rights in the leased farm can be distributed on divorce.
2.
If they can be distributed, what would be a fair and equitable
distribution of those rights.
Counsel
for the appellant submitted that the court a
quo
erred
by failing to make a distinction between the farm and the spouses'
rights in the leased farm being an asset of the spouses. She
submitted that the spouses' rights in the 99-year lease are an
asset of the spouses.
I
agree.
Counsel
for the respondent, without disputing that the spouses' rights in
the 99-year lease are an asset of the spouses, submitted that the
appellant shot herself in the foot by seeking to be awarded a portion
of the farm measuring 400 hectares of the farm or the whole farm.
That submission is answered by the consent order granted by
HLATSHWAYO J…, on 31 August 2012, which, in paragraph 8.3 clearly
states the issues which would be referred to trial if the former
spouses failed to settle on the issue of the distribution of their
rights in the farm. The court a
quo
should have been guided by the issues before it instead of abandoning
them because of what the appellant subsequently sought to be granted.
It should further have been guided by the circumstances of the
parties and the law.
It
is not in dispute that the farm was leased to the respondent by the
acquiring authority. That was an Executive decision which the Court
cannot interfere with. Re-allocating the farm, or any part of it,
would be irregular as it would amount to the court usurping the
Executive powers of the acquiring authority. Although
the farm was initially allocated to the respondent, through an offer
letter, the respondent has since been granted a 99-year lease. The
court has authority to distribute the value of the parties'
interests in the 99-year lease which was registered in the Deeds
Registry through a Notarial Deed of Lease. It is a long term lease
which encumbers or limits the rights of the owner and affords the
lessee limited real rights. It is enforceable against third parties
and entitles the lessee to use and enjoy the property till the end of
the lease period when all rights to the property will revert to the
lessor.
What
is important to note is the effect of a registered long lease.
The
effect of registering a long lease is to give the lessee limited real
rights which are capable of enforcement against the whole world. W.
E. COOPER; Landlord
and Tenant,
Second Edition... commented on the nature of the lessee's rights in
a long lease as follows:
“A
lessee is also entitled to have the lease registered against the
title deeds of the property. When he is given occupation, or the
lease is registered, the lessee acquires a real right. Once his real
right is so constituted the lessee can enforce it against the whole
world. Consequently, upon being given occupation, or the lease being
registered, the lessee should be entitled to eject a trespasser.”
In
the case of Heynes
Matthew Ltd v Gibson N.O.
1950
(1) SA 13 (C)…,. DE VILLIERS JP said:
“When
once the lessee has been granted a lease of more than 10 years then
certain legal qualities attach thereto. One of the legal qualities
that attaches to it is that, being a lease in longum
tempus,
it requires to be registered to bind third parties. Registration
really may be said to be equivalent to full delivery to the lessee of
the rights granted to him by the lease. He is entitled, therefore, to
whatever advantages flow from a lease of this description.
One of the advantages is that upon due registration he is protected
for the term of the lease against all third parties.”…,.
It
is clear from the above that once a long lease is registered, it
confers limited real rights to the lessee. The real rights are an
asset of the parties which must be distributed by the courts.
What
cannot be denied from the facts of this case is that the appellant,
having been the spouse of the respondent when the lease was acquired
and registered, has interests in the benefits which flow from the
lease. The parties were benefitting from farming on the leased land.
They each had an expectation to continue to benefit from their
farming activities for the duration of the lease. That expectation is
like a pension - a long term one. That brings the parties interest in
the lease within the ambit of section
7(4)
of the Matrimonial Causes Act.
It
is not an issue that the acquiring authority owns the farm which it
allocated and subsequently leased to the respondent for his and his
family's benefit. On page 1 of the lease agreement the word
'lessee' is defined as follows:
“In
relation to any person who holds land under this lease, lessee shall
mean that person and his spouse or spouses jointly.”
There
is, therefore, no doubt that the appellant has rights and interests
in the farm as a joint lessee by virtue of her being the respondent's
erstwhile wife. It is clear that the lease was granted for the
respondent's and appellant's benefit. The use of the word
'jointly' means they were both intended to benefit from the farm.
The
acquiring authority, however, has the exclusive right to allocate or
lease the farm. In terms of paragraph 29 of the Lease Agreement:
“No
variation or amendment of it is valid unless it is put in writing and
signed by both parties.”
This
means any variation, including that of adjusting the order of
lessees, must be in writing and signed by the Acquiring Authority and
the respondent. The courts cannot create a contract for the parties.
There
are, however, benefits and advantages which flow from the lease,
which are capable of being distributed by the courts in terms of
section 7(4) of the Matrimonial Causes Act which provides as
follows:-
“(4)
In making an order in terms of subsection (1) an
appropriate court shall have regard to all the circumstances of the
case,
including
the following -
(a)
The
income-earning capacity,
assets and other financial resources which
each spouse and
child has
or is likely to have in the foreseeable future;
(b)
The
financial needs,
obligations and responsibilities which
each spouse and
child has
or
is likely to have in the foreseeable future;
(c)
The
standard of living of the family,
including the manner in which any child was being educated or trained
or expected to be educated or trained;
(d)
The age and physical and mental condition of each spouse and child;
(e)
The
direct or indirect contribution made by each spouse to the family,
including contributions made by looking after the home and caring for
the family and any other domestic duties;
(f)
The
value to either of the spouses or
to any child
of any benefit, including a pension or gratuity, which
such spouse or
child
will lose as a result of the dissolution of the marriage;
(g)
The duration of the marriage; and,
in so doing, the court shall endeavour, as far as is reasonable and
practicable, and,
having regard to their conduct, is
just to do so, to place the spouses and
children
in the position they would have been in had a normal marriage
relationship continued between the spouses.”...,.
In
terms of section 7(4) of the Matrimonial Causes Act, the court a
quo
was required to “have regard to all the circumstances of the case”
- including those mentioned in section 7(4)(a) to (g) of the
Matrimonial Causes Act. The use of the word “shall” in section
7(4) makes it mandatory for a court to take into consideration every
circumstance of the divorcing spouses.
The
circumstances mentioned in section 7(4)(a) to (g) of the Matrimonial
Causes Act must also be taken into consideration. The fact that the
court a
quo
found that the appellant should leave the farm means that her
income-earning capacity will be affected as she will not be able to
continue with her farming projects on the farm. That should have been
taken into consideration in distributing the value of the parties'
rights and interests in the farm. The loss of an income-earning
capacity has an effect on the appellant's financial needs and
standard of living. These should have been taken into consideration
in considering the position the appellant would have been in if a
normal marriage relationship had continued between her and the
respondent.
The
benefits flowing from the lease will exclusively accrue to the party
who will remain in occupation of the farm if they are not
distributed. In terms of the provisions of section 7(4)(f) of the
Matrimonial Causes Act, the court is entitled to consider the value
of “any benefit” a spouse will lose on divorce in distributing
the matrimonial property of the spouses. The court a
quo
failed to consider, and distribute, the value of the benefits which
flow from a registered long lease which confers real rights. It is
the value of those benefits and advantages which are distributable in
terms of section 7(4) of the Matrimonial Causes Act.
In
this case, there is evidence that the parties were benefiting from
their farming projects. The party who will leave the farm as a result
of the divorce will lose those benefits while the party who remains
on the farm will continue to enjoy its full benefits. It is therefore
just and equitable that the value of those benefits should be taken
into consideration in distributing the assets of the divorcing
spouses.
The
rights in the lease accrued to the appellant by virtue of the fact
that she was married to the respondent. She, in fact, contributed
directly and indirectly to their being able to qualify for the
99-year lease. The rights and benefits the respondent derives from
the lease are a necessary consideration in the distribution of the
assets of the spouses. The lease forms part of the assets of the
spouses but was allocated in such a way that it cannot be taken away
from the respondent, who signed the lease agreement, through a court
order and be awarded to the appellant who is a lessee by virtue of
her having been the respondent's spouse at the time the contract of
lease was signed.
The
distribution of the assets of the parties through the consent paper
did not take into consideration the parties' interests in the value
of the benefits attached to the farm. The value of the leased farm to
the parties should be considered in distributing their assets to
ensure that the respondent does not benefit unjustly at the expense
of the appellant. In terms of the provisions of the Matrimonial
Causes Act, the court must endeavour,
as far as is reasonable and practicable, and, having regard to their
conduct, is just to do so, to place the spouses
and
children
in
the position they would have been had a normal marriage relationship
continued between the spouses.
The court should therefore take into consideration the position the
parties would have been in if they had continued farming on the
leased farm, if their marriage had not irretrievably broken down.
The
lease constitutes part of the assets of the spouses and should have
been taken into consideration in terms of section 7(1)(a) of the
Matrimonial Causes Act which provides as follows:
“7
Division of assets and maintenance orders
(1)
Subject to this section, in granting a decree of divorce, judicial
separation or nullity of marriage, or at any time thereafter, an
appropriate court may make an order with regard to -
(a)
The division, apportionment or distribution of the assets of the
spouses, including an order that any asset be transferred from one
spouse to the other.”
Assets
of spouses' means all the assets owned by either spouse at the time
of divorce - individually and those owned jointly. They include
assets acquired by either spouse before the marriage or during the
period of separation. See
Gonye
v Gonye
2009
(1)) ZLR 232 (S).
The
99-year lease is an asset of the spouses.
Notwithstanding
that the court cannot re-allocate or lease the farm, it can, however,
take into consideration the value of the benefits which flow from it
(into account) and make the necessary adjustments when distributing
the other assets of the spouses or directly distribute the value of
the spouse's rights and interests in the farm.
I
am aware that the other assets of the spouses were distributed
through the consent order. It is therefore no-longer possible to take
the value of the spouses' interests and benefits from the leased
farm into consideration in the distribution of their assets. It is,
however, still possible for the court a
quo
to
hear
evidence on the value of the parties' rights and interests in the
leased farm to enable it to determine their value and order the party
who will remain on the farm to pay the party who has to leave the
value of his or her share of the benefits, taking into consideration
the provisions of section 7(4) of the Matrimonial Causes Act.
The
court a
quo
erred in failing to appreciate that although the granting of the
lease was in the domain of the Executive, the lease had value
attached to it which the courts are entitled to distribute between
the spouses. The issue of distribution of the value attached to the
99-year lease was before the court a
quo
which did not take it into consideration in distributing the assets
of the spouses.
It
is important to stress that section 7 of the Matrimonial Causes Act
requires the courts to take into consideration all the circumstances
of the spouses' case in distributing their assets.
The
consent order granted by the court did not take into account the
parties rights in the leased farm. The court a
quo
which was seized with the issue of the distribution of the parties'
rights in the farm should have taken them into consideration and
distributed them. The appeal has merit and must be allowed. The case
should be remitted to the court
a
quo
for it to consider the value of the parties' interests in the
leased farm to enable it to distribute such interests between them.
It
is therefore ordered as follows:-
1.
The appeal is allowed with costs.
2.
The decision of the court a
quo
is set aside.
3.
The matter is remitted to the court a
quo
for it to determine the value of the spouses' rights in the farm
and equitably distribute such value between them.
