Section 45(bis) applied

The application of section 45bis(1A) of Act 47 of 1937 in practice appears to be problematic and requires further consideration. The current practice in deeds registries in respect of the section is to insist on endorsing the title deed of property which accrues to both spouses who were formerly married in community of property and who either divorced (section 45bis(1A)(a)) or who were given an order or an order and authorization in terms of section 20 or section 21(1) of the Matrimonial Property Act of 1984 (section45bis(1A)(b)). This "award" as stated in the section is normally on the basis that each spouse/former spouse will retain his or her half share in the property.

It is the view of deeds registries, on the basis of the decision in Ex parte Menzies et Uxor1993 (3) SA 799 (C), that the endorsing of a deed in terms of section 45bis(1A) of the Deeds Registries Act 47 of 1937 is not a transfer but merely a factual endorsement indicating that the "tied" joint ownership of the two persons has terminated and that they may deal with their separate shares independently. Also, that section 3(1)(v) of the Deeds Registries Act 47 of 1937 could just as well have been applied. This is on all fours with the judge's arguments in the Menzies case. The judge states on page 822 "…(a) because section 45 bis(1A) is an enabling provision intended to allow spouses to obtain an endorsement without an order of court … (c) because the provision is essentially a procedural one …".

It is interesting to note that the reason for the very interesting and, in my view, significant judgement from a conveyancing/deeds registration perspective, was the refusal of the acting Registrar to endorse titles registered in the name of the husband alone, in terms of section 3(1)(v) of the Deeds Registries Act 47 of 1937. The acting Registrar was of the opinion that a formal transfer would be required in the circumstances, which were as follows: namely, that the two spouses applied for an order and authority to register an antenuptial contract, in terms of section 21(1) of Act 88 of 1984. They also asked the court for an order directing the Registrar to endorse the title deeds of their properties in terms of section 3(1)(v) of the Deeds Registries Act 47 of 1937, as in their opinion (no doubt their legal counsel's advice), no transfer of property would be required as they intended to retain their one half shares each. The Registrar's report stated: "From a registration point of view, I am unable to give effect to paragraph (h) of the notice of motion as far as erf ….. (referring to properties registered in the name of the husband alone) are concerned. The second applicant (i.e. the wife) is not a registered owner of the said properties and her share in the properties will have to be transferred to her by means of a formal deed of transfer. In this regard, please refer to sections 16 and 45bis of the Deeds Registries Act 47 of 1937".

It is also of interest to note that in the Cape Town Deeds Registry it is practice that where a title is registered in the name of the husband alone (as per section 17(1) of the Deeds Registries Act 47 of 1937 at that time), such title is endorsed with what is still known as the so-called "bastard section 45". This occurs when only the share in land belonging to a deceased husband, the registered owner, is transferred to his heirs. The alternative is to qualify the transfer endorsement on the title (and this is done in terms of section 3(1)(v)) that the remaining half share belongs to the surviving spouse and that she may freely deal with such half share. The Registrar's report would seem to be in direct conflict with this practice, which quite clearly took cognisance of the fact that the wife of the "registered owner", despite her name not being mentioned in the title deed, was vested with the dominium in one half share in the property.

The Deeds Registration Law Manual states in Chapter 4 at 2.8.2(iv) on page 29 that inter alia a rates clearance and transfer duty receipt must be lodged with an application to endorse a title in terms of section 45bis(1A) of the Deeds Registries Act 47 of 1937. This would appear to be incorrect if the view is correct that an endorsement, in terms of section 45bis(1A) of the Deeds Registries Act 47 of 1937, is not a transfer of land or a real right. The conference resolution on which the requirements for the lodging of a rates clearance and a transfer duty receipt are based refers specifically to section 45(1) and 45bis of the Deeds Registries Act 47 of 1937 and not to section 45bis(1A) of the Deeds Registries Act 47 of 1937. However, that section being part of section 45bis of the Deeds Registries Act 47 of 1937, one must assume that it was the intention to include section 45bis(1A) of the Deeds Registries Act 47 of 1937 in the decision. The Cape Town Deeds Office is in agreement with the opinion that an endorsement of a title in terms of section 45bis(1A) of the Deeds Registries Act 47 of 1937 is not a transfer, and the office calls for neither a rates clearance certificate nor for a transfer duty receipt in such cases. It is suggested that the deeds manual be amended in this regard.

In cases where the spouses each retain their half share in property owned by them upon dissolution of the community of property between them, there is no problem of endorsing the title deed of such property in terms of section 45bis(1A) of the Deeds Registries Act 47 of 1937 and everything fits neatly into the box created in the Menziescase. One factor which can affect the situation severely is, however, not factored into this neat little sum. It must be clearly understood that nothing prevents spouses from agreeing, either upon divorce or when requesting the court for an order under section 20 of Act 88 of 1984, or an order and authorization under section 21(1) of Act 88 of 1984, that one spouse will receive a three quarter share in a property and that the other spouse will receive one quarter, or any other computation of shares they may agree upon. Note that the facts still fall completely within the ambit of section 45bis(1A) of Act 47 of 1937.

In the case of divorce the judge also refers to the Divorce Act 70 of 1979 on page 815 at G and states:
"It is open to the divorcing spouses … to arrive at a settlement in terms of which they could, for example, continue as co-owners of particular assets …"
The Deeds Registration Law Manual also, quite correctly, states in Chapter 4 at 2.8.2(ii) on page ………"In the case of (a) supra (being reference to section 45bis(1A)(a)) the court order and settlement agreement must be lodged".

If spouses then agree not to retain equal shares, transfer duty implications must be taken into account, as one spouse is now acquiring a share of the other spouse's share. The property therefore still accrues to both spouses in undivided shares as envisaged in section 45bis(1A)(a), but it can no longer be argued that this is now a mere factual endorsement. Is the endorsement of the title in terms of section 45bis(1A) now suddenly a transfer by endorsement?

Another school of thought is that it was the intention of the legislator that the section only refer to, and be applicable to, the half share that each spouse owned as a result of the marriage in community of property, and that the "respective shares" referred to at the end of the section refers only to such half shares. With respect, this does not seem correct. This argument presumes a lack of knowledge on the part of the legislator and it must be accepted that the legislator was quite aware of all the possibilities when drafting the section. It may also amount to reading things into the section. The "respective shares" can only be the share that accrues to each spouse as envisaged in section 45bis(1A)(a) and must include shares other than half shares as well.

There can be no doubt that, should spouses agree to retaining shares other than a half share each, section 16 of the Deeds Registries Act 47 of 1937 must apply. In other words a transfer of property must take place. It is a fact that half of the dominium vests in each spouse who is party to a marriage in community of property.

A "tied" joint ownership exists where the property belongs to two spouses married in community of property, such as also exists in the case of partnerships and associations, for example, and this is dissolved when the community of property is dissolved. This happens upon the death of one or both of the spouses, divorce, an order of division or a change in matrimonial property system in terms of section 21 of Act 88 of 1984. The judge in the Menzies case says on page 815 at H: "It is my view that what dissolves is not the joint ownership or co-ownership of the spouses, but rather the "tie" restricting that ownership. There is simply a direct change from "tied" co-ownership to free co-ownership by the spouses in all the assets in the selfsame equal shares. These shares remain undivided but now become divisible at the instance of either spouse …" The question as regards spouses retaining shares other than half shares was not dealt with specifically in the Menzies case. In my opinion the statement above ("… there is simply a direct change … to free co-ownership in the selfsame equal shares …) must be seen in the light of what Hahlo says in The South African Law of Husband and Wife, 5th edition, and which is also quoted by the judge in the Menzies case on page 815: "… each spouse retains, subject to an order of forfeiture of benefits, his or her half share until division is effected". However, the wording of section 45bis(1A) of the Deeds Registries Act 47 of 1937 as it stands does not exclude the case where spouses agree to retain shares other than half shares.

Section 45bis(1A) of the Deeds Registries Act 47 of 1937 gives the Registrar the discretion to refuse such an application ("…may, on written application …" endorse the title). The Court stated clearly in the Menzies case that section 45bis(1A) of the Deeds Registries Act 47 of 1937 is an enabling provision and of a procedural nature only. Also, the need in such a case is different. Where each spouse retains a half share in the property, an endorsement in terms of section 45bis(1A) of the Deeds Registries Act 47 of 1937 serves to give notice to the world that the "tied" co-ownership of the two spouses as set out in the title deed has been dissolved and therefore serves only to get the title to the land to reflect the correct legal position of the two owners vis-à-vis each other in that regard. Where spouses, however, agree to retain different shares in land, endorsement of the title in terms of section 45bis(1A) of the Deeds Registries Act 47 of 1937 will not amount to the mere noting on the title deed of the correct legal position as regards ownership in the property vis-à-vis the two spouses or former spouses, who are reflected in the deed as being "tied" co-owners, but will involve the transfer of a fraction of the share of one spouse to the other.

Should the Registrar refuse to allow endorsement of the title in terms of section 45bis(1A) of the Deeds Registries Act 47 of 1937 in a case where spouses agree to retain shares other than half shares upon divorce or upon obtaining an order under section 20 of Act 88 of 1984 or an order and authorization under section 21(1) of Act 88 of 1984? Will a member of the public be able to insist on the endorsement of his/her title deed in terms of section 45bis(1A) of the Deeds Registries Act 47 of 1937? The wording of the section as it stands does not exclude an endorsement in terms of section 45bis(1A) of the Deeds Registries Act 47 of 1937 in the case where spouses agree to retain shares other than half shares as set out above, but in my opinion the Registrar cannot entertain such an application and must insist on a formal transfer of the share in the land.

Readers' comments on the above will be appreciated - Editor of the SA Deeds Journal