Introduction

When couples divorce the patrimonial implications of the dissolution of their union can be catastrophic. It is therefore important that the attorneys involved ensure that the patrimonial claims are formulated correctly in the pleadings and that, should a settlement agreement be prepared and signed, the terms thereof are capable of enforcement. It has become standard practice in most jurisdictions for parties to settle a divorce action and for the settlement agreement to be made an order of court. However, while in some jurisdictions the entire settlement agreement will be made an order as a matter of course, usually in terms of a practice directive, in others the presiding officers prefer to utilise the discretion at their disposal and only make certain terms part of the order. The question of the court’s discretion in relation to the incorporation of settlement agreements into court orders has been raised in two recent cases, namely Thutha v Thutha 2008 (3) SA 494 (TkH) and PL v YL 2012 (6) SA 29 (ECP).

The patrimonial prayers in a divorce action and the use of settlement agreements

At present, when the Plaintiff’s attorney is drafting the particulars of claim in a divorce action arising from a marriage in community of property he/she can choose between two generally accepted prayers, namely “division of the joint estate” or “forfeiture of benefits”. A combination of these prayers is possible where only some benefits are to be forfeited and the rest of the assets are to be divided. More often than not the way in which the joint estate is to be divided becomes a point of disagreement and a divorce action is defended only on that basis. The attorneys for both sides then usually enter into settlement negotiations and a written agreement known as a “settlement agreement” or “consent paper” is drawn up. This document usually sets out in clear terms the way in which the joint estate is to be divided and may, where applicable, also set out what has been agreed upon with regard to maintenance, custody and other ancillary issues. Once the settlement agreement has been drawn up it is signed by both parties and the decision can then be made whether to have it incorporated into the divorce order or not. Should the agreement not be incorporated into the order then it stands as a contract upon which either party can sue at a later stage. To avoid potential future litigation the parties generally opt to have the agreement incorporated into the order. The wording of section 7(1) of the Divorce Act (Act 70 of 1979) gives the impression that the incorporation of a written agreement into the order is possible. Section 7(1) reads as follows:

7.   Division of assets and maintenance of parties
(1)  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.

However, the word “may” is important as it appears to show that the court has a discretion as to whether or not to make an order in accordance with a written agreement. Questions surrounding this “discretion” have been raised in recent case law.

Recent cases

In the recent case of Thutha v Thutha 2008 (3) SA 494 (TkH) Alkema J expressed some concern regarding the practice in the Eastern Cape courts of incorporating settlement agreements into court orders. In this case an application was brought for the enforcement of an order of divorce incorporating a settlement agreement. It was claimed that the Respondent was in contempt of court for failing to comply with the order and the Applicant asked that he be sentenced to a term of imprisonment which term was to be suspended pending his fulfilment of the terms of the agreement. Alkema J dismissed the application on the grounds that the settlement agreement in question was not capable of enforcement.

In his judgment Alkema J stated (at para 15) that “it is trite law that a court order must be effective, enforceable and immediately capable of execution by the sheriff, his deputy, or members of the South African Police Service”. In his opinion, a settlement agreement that contains terms that are not enforceable should not be incorporated into a court order as “a court order without binding effect is incapable of enforcement or execution and is simply not a court order” (para 25).

With regard to section 7(1) of the Divorce Act 70 of 1979 Alkema J stated (at para 43) that this section does not authorise a court to make a settlement agreement part of the court order. It merely sanctions an existing power of the court, in appropriate circumstances, to make an order in accordance with certain terms of the agreement. The court therefore retains the discretion to decide which terms of the agreement are capable of becoming a court order, and which terms are best suited to leave as a contract between the parties upon which they can sue. On that basis he was of the opinion that issues relating to the division of assets in a divorce action, the settlement of the parties' proprietary rights, and incidental matters arising from the dissolution of a marriage, should best be left to the terms of a settlement agreement upon which an aggrieved party may sue, rather than incorporating those issues into an order of court.

In the later case of PL v YL 2012 (6) SA 29 (ECP) an application for leave to appeal was brought by the parties to an unopposed divorce action on the grounds that the presiding officer, namely Alkema J, refused to make a term of their settlement agreement, dealing with the division of joint property, an order of court. Leave to appeal was granted but was limited to the issue of whether the decision in Thutha regarding the courts discretion was correct.

While Alkema J appears to be correct in his interpretation of section 7(1) the fact that this section is applied differently in different jurisdictions is problematic. In the practice manual of the South Gauteng High Court provision is made for the incorporation of a deed of settlement into a court order while in the Practice Manual of the KwaZulu-Natal High Court it is specifically stated that entire agreements cannot form part of a court order. In other jurisdictions, such as the Eastern Cape, no practice directive exists regarding this issue and therefore presiding officers appear to be free to exercise the discretion afforded to them by section 7(1). The problem with this is the lack of certainty on the part of attorneys as to whether their agreements will be acceptable to the presiding officer or not. Attorneys will need to word their settlement agreements carefully so as to ensure that the presiding officer does not deem the terms thereof to be incapable of enforcement and refuse to incorporate them into the order. They may have to, as a precaution, also incorporate into their papers a provision for the appointment of a receiver and liquidator in the event that the settlement agreement is not incorporated into the order and the parties cannot or will not sue under the law of contract.

Conclusion

Parties will almost always, when given the choice, opt to have their agreement incorporated into a court order so that the matter can be finalised and non-compliance can be dealt with by way of execution or contempt proceedings. The prospect of having to sue under the law of contract or secure the services of a receiver and liquidator to divide the joint estate is not an attractive option. The outcome of the appeal in PL v YL is eagerly awaited as the lack of certainty regarding the practice of incorporating agreements into orders is problematic. Conflicting practice directives and the lack of clear guidelines regarding the exercise of an individual judge’s discretion leave attorneys and prospective parties to a divorce action in a precarious position.

References:
Cases:
1. PL v YL 2012 (6) SA 29 (ECP)
3. Thutha v Thutha 2008 (3) SA 494 (TkH)
Legislation:
1. The Divorce Act 70 of 1979

Written by: Luise Ostler, Schoeman-Tshaka Attorneys – Cape Town