THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

JUDGMENT
Reportable
Case No: 20808/2014

In the matter between:

ANDREW CHARLES BROOKSTEIN APPELLANT

And

JEANETTE BROOKSTEIN RESPONDENT

Neutral citation: Brookstein v Brookstein (20808/14) [2016] ZASCA 40 (24

March 2016)

Coram: Maya AP, Swain JA and Tsoka, Baartman and Kathree-Setiloane

AJJA

Heard: 26 February 2016

Delivered: 24 March 2016

Summary: Arbitration Act 42 of 1965 – interpretation of ‘matrimonial cause or

matter incidental to such cause’ in s 2 of the Act – court order incorporating
settlement agreement disposed of all matrimonial issues and its natural
consequences – deliberate non-disclosure of true value of accrual – delictual claim
susceptible to arbitration – Matrimonial Property Act 88 of 1984 – date for
determination of value of accrual – date of dissolution appropriate date, not litis
contestatio.
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ORDER

On appeal from: Gauteng Local Division of the High Court, Johannesburg

(Nicholls J sitting as court of first instance).

The appeal is dismissed with costs including the costs consequent upon the
employment of two counsel.

__________________________________________________________________

JUDGMENT
__________________________________________________________________

Tsoka AJA (Maya AP, Swain JA and Baartman, Kathree-Setiloane AJJA

concurring)
[1] The issues for determination in this appeal are twofold. First, whether the
respondent’s delictual claim for damages is a ‘matrimonial cause or matter
incidental to such cause’, as contemplated in s 2 of the Arbitration Act 42 of 1965
(the Act), and is therefore incapable of referral to arbitration. Secondly, whether
the arbitrators erred in assessing the extent of an accrual in a matrimonial dispute,
as at the date of the dissolution of the marriage and not at the date of litis
contestatio. If so, whether this constituted an error of law resulting in the
arbitrators misconceiving the whole nature of the enquiry, with the consequence
that the award falls to be set aside in terms of s 33(1) of the Act.

[2] The facts giving rise to the appeal are, briefly, the following. The appellant,
Mr Charles Brookstein and the respondent, Mrs Jeanette Brookstein were married
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out of community of property but subject to the accrual system on 14 February

1987. The ante-nuptial agreement which governed their marital regime was entered
into before their wedding, on 13 February 1987. The marriage did not survive and,
on 30 November 2006, the respondent instituted a divorce action in the Gauteng
Local Division of the High Court, Johannesburg. She sought a decree of divorce
and ancillary relief including a claim under s 3 of the Matrimonial Property Act 88
of 1984 (the MPA) for half of the accrual of the latter’s estate, as her estate showed
no accrual or a smaller accrual than that of the appellant.

[3] On 5 May 2008, pursuant to a settlement agreement that was made an order
of court, a final decree of divorce was granted. The appellant was ordered to pay
the respondent the amount of R8 007 340 in instalments, in respect of her portion
of the accrual. However, two months later it became public knowledge that a listed
company on the Johannesburg Stock Exchange, Esorfranki Limited, was interested
in purchasing the shares and claims of the Patula Group of Companies (Patula) in
which the appellant had a substantial interest. The respondent got wind of this
information. As a result, in 2010, she successfully launched an ex parte application
with a view to verify the information. Pursuant to the application, the sheriff
attached management accounts and other documents of Patula which confirmed
that, for the period before the granting of the divorce, the appellant’s estate had
shown a substantial accrual in excess of R167 million.

[4] On 4 February 2010, the respondent instituted a claim for delictual damages
in the sum of R83,9 million on the basis that the appellant falsely or negligently
represented that his shares in that company were worth only R20 712 527, when in
truth the shares were worth more than R167 million. According to her, had she
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known the truth, she would not have settled as she did but would have settled for
more. In the alternative, she asserted that the appellant knew the true value of the
shares but fraudulently or negligently failed to disclose this information thereby
inducing her to settle to her detriment.

[5] The respondent obtained judgment by default against the appellant as he had
failed to defend the action. For reasons irrelevant to the appeal, that judgment was
thereafter rescinded by the court and the matter proceeded on an opposed basis.
The trial was set down for August 2012, but it did not proceed as the parties, on the
eve of the trial, entered into an arbitration agreement referring, on an urgent basis,
‘the dispute in the action’ to arbitration.

[6] The arbitration proceeded from 20 August 2012 to 21 November 2012

before the retired Deputy President of the Supreme Court of Appeal, Harms. The
main issue for determination in the arbitration was whether the appellant had
misrepresented the value of the accrual, ie, his interest in Patula. This claim was
dismissed on the basis that a misrepresentation had not been established. Also at
issue was the non-disclosure by the appellant of his loan account, in respect of
which the respondent alleged that a dividend had been declared for the 2008
financial year, of which R7, 8 million had been credited to the appellant’s account.
This claim was upheld and the respondent was awarded R3,9 million with costs
plus interest. Dissatisfied with these findings, the appellant, on 7 December 2012
lodged an appeal before an appeal tribunal, while the respondent cross-appealed.

[7] On 5 October 2013, the appeal proceeded before the appeal tribunal
comprising retired Judges of Appeal, President Howie and Streicher JA, and Mr
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Van der Linde SC. On 15 October 2013 they upheld the respondent’s cross-appeal
and dismissed the appellant’s appeal. The appellant was ordered to pay the
respondent the amount of R35 739 287 with interest, less the maintenance payable
or paid to her in terms of the divorce order. The appeal tribunal agreed with the
finding of the arbitrator that misrepresentation had not been established but found
that non-disclosure, in circumstances where the appellant had a duty to disclose,
had been established. The appeal tribunal also held that as the action was for pure
economic loss, the requirements for factual and legal causation, for purposes of
delict had been proved. It also found that the non-disclosure was deliberate and
intended to induce the respondent into agreeing to an accrued value of the
appellant’s estate that was materially understated. The appeal tribunal was satisfied
that all the other elements of a delictual damages claim for pure economic loss had
been established. Accordingly, it awarded to the respondent damages, being the
difference between the true value of the accrual and the amount she agreed to in
terms of the settlement agreement.

[8] In December 2013 the appellant launched an application in the court a quo
(Nicholls J) against the appeal award. The appellant’s two principal arguments in
the court a quo as set out above were the following. First, the dispute referred to
arbitration was incidental to the matrimonial cause and was accordingly prohibited
for referral to arbitration in terms of s 2 of the Act. Secondly, the appeal tribunal
misconceived the nature of the enquiry by assessing the accrual as at the date of
divorce rather than at litis contestatio, which had the effect that the calculation of
the value of the accrual was incorrect. This resulted in an irregularity that rendered
the entire enquiry procedurally unfair.
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[9] Dealing with the first issue, the court a quo held that the words any
‘matrimonial cause or a matter incidental to such cause’ in s 2 of the Act must be
interpreted to mean any live matrimonial cause either pending, or in the process of
being instituted. Once the settlement agreement was made an order of court on 5
May 2008 the matrimonial cause and all matters incidental thereto, including the
claim for half of the accrual, were no longer alive. The matrimonial cause had
come to its natural conclusion. It also held that whilst the duty to disclose the
accrual was a statutory duty arising from s 7 of the MPA, the delictual claim was
for payment of damages suffered as a result of fraudulent or negligent
misrepresentation alternatively, non-disclosure with regard to the true amount of
the accrual. This was incidental to a delictual cause and not incidental to a
matrimonial cause. Regarding the second point, the court held that as the claim
arises on dissolution of the marriage, the assessment of the value of the accrual
must take place at that date. The court went on to hold that even if it could be said
that the assessment date was incorrect, this did not result in the appeal tribunal
misconceiving the enquiry. It simply meant that it had erred in law which was not
reviewable in terms of the Act. The court a quo accordingly dismissed the
application with costs. This appeal is with its leave.

[10] Counsel for the appellant submitted that, on the pleadings, the real issue for
determination was the accrual of the appellant’s estate. He asserted that the appeal
tribunal’s frequent use of the words ‘accrual’, ‘the accrual system’, ‘the Act and its
provisions’ and the fact that the delict was committed in the context of an accrual
had as a consequence that the action, in essence, was a ‘matrimonial cause or
matter incidental to such cause’. The referral to arbitration was therefore
incompetent and void ab initio. Respondent’s counsel on the other hand, submitted
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that the issue referred to arbitration was a delictual claim which was neither a
‘matrimonial cause nor matter incidental to such cause’ although its genesis lay in
the accrual of the appellant’s estate.

[11] It is necessary for the determination of the first issue to examine the legal

consequences of a settlement agreement being made an order of court. At the stage

when the respondent instituted the delictual action against the appellant, the

parties’ marriage had been dissolved in terms of the court order which incorporated

their settlement agreement. The effect of the settlement agreement being made an

order of court ‘is to change the status of the rights and obligations between the

parties. Save for litigation that may be consequent upon the nature of the particular

order, the order brings finality to the lis between the parties; the lis becomes res

judicata (literally, “a matter judged”). It changes the terms of a settlement

agreement to an enforceable court order….’1

[12] After the order was granted, there was no longer any matrimonial cause to
speak of. Neither was there anything incidental to such cause, as all of the
matrimonial issues were disposed of when the court granted the order
incorporating the settlement agreement. Consequently, there cannot be any issue
still outstanding relating to the marriage. The inevitable result is that the marriage
and all its natural consequences came to an end, and anything relating thereto, such
as proprietary consequences, became res judicata. That being so, the delictual
1
Eke v Parsons [2015] ZACC 30; 2015 (11) BCLR 1319 (CC) para 31.
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claim that was referred to arbitration cannot be said to be incidental to any

matrimonial cause.

[13] Although the failure to disclose the true value of the accrual arose in the
context of the accrual regime which existed between the parties, it was,
accordingly, unavoidable that the pleadings and the tribunal would refer to the
accrual system and the Act. That, however, does not detract from the true cause of
action that was referred to arbitration which was rooted in delict. The respondent’s
contention and argument that the delictual claim, is therefore a matter ‘incidental to
matrimonial cause’ is unsustainable and offends the clear and unambiguous
language of s 2 of the Act.

[14] The appellant’s reliance on Taylor v Kurstag NO2 was misplaced. In that
matter, the referral of custody of the children, maintenance and proprietary
consequence of a pending marriage to an ad hoc Beth Din (Jewish Ecclesiastical
Court) for determination ‘according to arbitration laws of the Republic’ was held
impermissible. Correctly so, as the matrimonial cause was still alive including the
issues of custody, maintenance and the proprietary consequences of such marriage.
The appellant’s reliance on Pitt v Pitt3 was similarly misplaced. In that matter, the
applicant sought an order enforcing the terms of a settlement agreement which
regulated the proprietary consequences of their divorce.

2
Taylor v Kurstag NO & others 2005 (1) SA 362 (W).
3
Pitt v Pitt 1991 (3) SA 863 (D).
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[15] I turn to the issue as to when the value of an accrual should be determined,
ie, whether the value of the accrual should be determined at the close of pleadings,
or at the dissolution of the marriage, either by death or by divorce.

[16] The provisions of the MPA are clear and unambiguous. In terms of s 3
thereof, a spouse acquires a right to claim an accrual at the ‘dissolution of a
marriage’. An exception arises in terms of s 8 of the MPA. In terms of this section,
a spouse is entitled to approach the court for immediate division of the accrual,
where his or her right to share in it at dissolution of the marriage ‘will probably be
seriously prejudiced by the conduct or proposed conduct of the other spouse’. It is
only then that the date for determination of an accrual is brought forward, instead
of at ‘dissolution of the marriage’. Furthermore, in terms of s 4 of the MPA the net
value of the accrual of the estate of a spouse is determined at the dissolution of the
marriage.

[17] This issue has given rise to dissenting decisions in two lines of cases in the
high court. The one view is that the correct date upon which the accrual must be
determined is at the stage of litis contestatio, whereas the other view is that this
must be calculated at the date of dissolution of the marriage. In MB v NB4 Brassey
AJ held that although s 3 establishes the moment at which the contingent right
possessed by a spouse becomes perfected ie, at the dissolution of the marriage, it
does not establish the moment by reference to which the respective estates of the
parties must be assessed. The learned acting judge was of the view that the
problem was one of procedure, not substance, and owed its origin to the fact that
litigation takes time to complete. In his view, the established principle was that the

4
MB v NB 2009 ZAGPJHC 76; 2010 (3) SA 220 (GSJ).
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operative moment was litis contestatio, for that was the moment when the dispute
crystallises and can be presented to court for decision. The view in MB v NB was
followed in MB v DB5 and KS v MS.6

[18] However, in JA v DA7 Sutherland J correctly pointed out at para 11 that the
views of Brassey AJ were obiter and disagreed with the view that the date of the
close of pleadings is the date upon which to determine the content and value of the
estates. In his view, that date was irrelevant for this exercise and the date of
dissolution was the only relevant date upon which to calculate the respective
estates. Because the event of litis contestatio was purely procedural, it had no
bearing on the definition of, or identification of any alleged right which was the
subject of litigation, nor had it any bearing on the determination when, by
operation of law, or upon any given facts any right comes into being. Sutherland J
then stated the following at para 17:
‘When, as in this case, a claim is based on the existence of a right and the claim is for a
performance measured by value it is not possible to calculate that value at a moment prior to the
coming into existence of the right.’

[19] The view of Sutherland J that the time when the right comes into existence is
determinative of the calculation of the value of that right is undoubtedly
jurisprudentially correct. I do not agree with the view expressed in Le Roux v Le
Roux8 which was followed in KS v MS9 that this conclusion will result in a
piecemeal adjudication of issues resulting in further litigation between the parties.
This view was based upon the proposition that a litigant would have to engage in

5
MB v DB [2013] ZAKZDHC 33; 2013 (6) SA 86 (KZD).
6
KS v MS [2015] ZAKZDHC 43; 2016 (1) SA (64) (KZD).
7
JA v DA 2014 (6) SA 233 (GJ).
8 Le Roux v Le Roux (2010) JOL 26003 (NCK).
9
Para 23.
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two distinct actions. The first would be for a divorce and the second for an order in
terms of s 3 of the MPA. I agree, however, with the view of Sutherland J that it
would not be inappropriate to sue for both a divorce and an order pursuant to s 3 of
the MPA in a single action, in which the accrual order is made dependent upon the
grant of a divorce order.

[20] The other problems averted to by Brassey AJ and Sutherland J which may
result from this determination of the date upon which the accrual must be
calculated, cannot obscure what is the clear meaning of the Act. As stated in Natal
Joint Municipal Pension Fund v Endumeni Municipality.10
‘Judges must be alert to, and guard against, the temptation to substitute what they regard as
reasonable, sensible or businesslike for the words actually used. To do so in regard to a statute or
statutory instrument is to cross the divide between interpretation and legislation. . .’
Consequently, MB v NB and MB v DB as well as KS v MS which held that the date
for determination of accrual is at litis contestatio rather than at the dissolution of
marriage, were wrongly decided.

[21] In argument counsel for the appellant was constrained to concede that,
jurisprudentially, the passage of Sutherland J quoted above in JA v DA was correct.
The tribunal accordingly made no error in calculating the accrual as at the date of
the divorce order. In the result, I find that the date at which the accrual of the value
of a spouse married in terms of the MPA is to be determined is the date of
dissolution of the marriage either by death or divorce.

10
Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA) para
18.
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[22] It was common cause that paragraph 87 of the appeal tribunal award
contains an error, which has to be referred back to the tribunal for correction as the
court a quo ordered. I agree.

[23] It is ordered that:

The appeal is dismissed with costs including the costs consequent upon the
employment of two counsel.

____________
M Tsoka
Acting Judge of Appeal
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APPEARANCES:

For Appellant: JG Wasserman SC (with him C Woodrow)

Instructed by:
Thomson Wilks Inc.; Johannesburg
Webbers Attorneys, Bloemfontein

For Respondent: H Epstein SC (with him M Smit)

Instructed by:
David C Feldman Attorneys, Johannesburg
Lovius Block Attorneys, Bloemfontein