Hiding money divorce

Hiding assets in a divorce.


In a recent matter before the Supreme Court of Appeal in the case of DEB v MGB 2014 ZASCA 137, the court expressed its disapproval of parties in divorce proceedings who does not properly disclose their assets. The attitude of many husbands, particularly in relation to money claims where they control the money and assets, can be characterized as “catch me if you can”.

They set themselves up as immovable objects in the hopes that they will wear down the other party. They use every means to do so. They fail to discover and disclose properly, fail to provide any particulars of assets within their peculiar knowledge and generally delay and obfuscate in the hope that they will not be “caught” and have to disgorge what is in law due to the other party.

In this matter the husband clearly failed to comply with the provisions of s 7 of the Act. He delayed providing what were obviously relevant documents until the last minute and then did not discover them. He declined to provide any documents concerning the financial position of one of his businesses. He did not provide documents which could be used to trace assets derived from the excluded assets. He did not prove that documents relating to another business were furnished timeously or at all pursuant to a subpoena issued after initially claiming that he could not furnish these without the consent of his co-trustees. He inexplicably did not testify and then took a technical point concerning documentary proof.

The court stated that the approach of the husband deserved censure and may have warranted a punitive costs order at the trial.

In this matter the husband was ordered to pay the wife an amount of R 6.4 million and to transfer half of a loan account of approximately R 11 million to her. The husband was also ordered to pay the costs of the appeal.

Compiled by Bertus Preller – Family Law and Divorce Attorney

http://www.divorceattorney.co.za

couple-living-together

Be careful, living together may cost you half of your assets when you breakup.


Recent case law in South Africa has far reaching consequences for unmarried couples who live together. In one case the court concluded that an unmarried woman who devoted all her time, effort and energy in promoting the interests of both parties by maintaining their common home in raising their children was entitled to 30 % of her partner’s net asset value at the date their relationship ended. In another case an award of more than R 6 million was granted to an unmarried woman who actively helped her partner in building his estate.

In the recent case of Cloete versus Maritz case number 6222/2010 and 16433/2012, in the Western Cape High court a judge has made a farmer (Mr Maritz) pay more than R 6 million for leaving his fiancée (Miss Cloete) of 10 years after he downplayed the role she played in building up his businesses and suggested she had illegally occupied his house in Cape Town.

After 10 years together, the court heard, how the man deserted his fiancée in March 2009, and by December that same year he married somebody else. Judge Robert Henney of the Cape Town High Court ordered the man to compensate his fiancée just over R6 million within 30 days, failing which his house could be attached.

The facts of the case were briefly as follows:

Having been in a relationship with each other, the parties on or about 10 March 1998 agreed to marry each other within a reasonable time after such date. As a result of this, the parties became engaged to one another during February 1999. Cloete alleged that on 24 April and 7 May 2009 Maritz repudiated the agreement by refusing to marry her. It was alleged that he did so by informing her that he did not want to see her again and that he had somebody new in his life. She alleged that the rejection was wrongful an unlawful and she issued summons against him whereby she claimed a 50% share of the value of the assets of Maritz based on a universal partnership, repayment of the sum of R 26,000 which was donated by her to Maritz and R 25,000 for damages for breach of promise to marry her. Throughout their relationship, Maritz and Cloete started various business ventures, both in South Africa and also in Namibia. According to Cloete, she invested considerable time in the businesses, including a farm in Namibia, since Maritz had a permanent job.

In 2001, they also bought a house in Cape Town as an investment, and they discussed changing it into a guest-house with the goal of ultimately retiring there. The house was registered in Maritz’s name. In March 2009 Maritz broke the news that he had someone new in his life, Cloete then moved into the house in Cape Town since according to her, she had nowhere else to go. Cloete testified that she later wrote a letter in which she told Maritz she had nothing to her name, even though she had worked hard to build up their businesses. Maritz filed a counter-claim that Cloete was unlawfully occupying the property and requested the court to evict her and also that she be ordered to pay damages to him equal to reasonable market related monthly rental of R 20,000 for 21 months unlawful occupation. Maritz disputed that there was a legally enforceable engagement, or that a universal partnership existed. He maintained that the decision to end the relationship was mutual. He also argued that he and Cloete signed an antenuptial contract prior to their intended marriage, and said this was an indication that they never intended to form a universal partnership.

The court’s finding

Judge Henney said in his judgement that Cloete came across as an honest and genuine person, who did not contribute to and assist Maritz purely to gain financially, but because of her deep love, affection, admiration and loyalty she had for him. It was clear it was never her intention, when she entered into the relationship with Maritz, to gain financially from it. The impression created was that she was the submissive and the caring partner who at all times acted in (his) best interests,” the judge said. Maritz, on the other hand, tried to downplay Cloete’s involvement, and diminish her contribution to that of an ordinary worker.

The Judge felt that Cloete’s role in the partnership was not limited to that of a housewife who tended to the maintenance of the home. He found that Cloete assisted Maritz in executing the commercial undertaking of the partnership. This contribution she made was in addition to the indispensable contribution she made to the businesses where she contributed her skills, energy, time, capital and income to promote the interests of the universal partnership. The judge found further that she contributed her admin skills and know-how for the promotion of the businesses she further contributed to the financial growth of the businesses and as a result of this, they acquired a number of assets during the relationship. Given the relationship they were involved in and businesses, the only conclusion that the court could come to was that a universal partnership came into existence.

Judge Henney said in light of the relationship and Cloete’s “inextricable” involvement in the businesses, the only conclusion was that a universal partnership had existed. He ordered Maritz to pay Cloete R 6.166 million, which constitutes a 50 % share in the universal partnership, as well as R 25 000 for breach of promise. Maritz was also ordered to pay costs.

Judge Henney mainly relied on the case of Butters v Mncora (181/11) [2012] ZASCA 29, discussed below.

The Law

A question that needs to be considered is whether there was a universal partnership that existed between the parties. The legal principles applicable to a universal partnership was summarised by the Supreme Court of Appeal in Butters v Mncora (181/11) [2012] ZASCA 29. The Appellate Division held that while cohabitation does not give rise to special legal consequences, a cohabitee can invoke remedies in private law which in this case was based on the law of partnership.

In this case, the parties were involved in a 19 year relationship, most, but not all, of which was spent living together. They had been engaged for nearly 10 years, but never married. During the course of the relationship, Butters had accumulated a sizeable estate from his business interests, which included a security company. Mncora had initially worked briefly as a secretary but, at the persistence of Butters, had stopped working to stay at home and care for the couple’s children and Butters’ child from another relationship. Butters had provided for all the financial needs of the family. The relationship terminated abruptly and a dispute soon ensued as to whether Mncora was entitled to any of Butters’ assets, even though she had never been married to Butters.

In the trial court, the plaintiff accepted that she had had virtually nothing to do with the defendant’s business and, in fact, had never entered the business premises. She conceded that her contribution to the partnership was limited to caring for the family and running the family home. The legal premise for the majority’s judgement started by recording that “the general rule of our law is that cohabitation does not give rise to special legal consequences”. However, the cohabitee has a remedy derived from the law of partnership and has the onus of establishing the partnership essentials. The path breaking aspect of the judgement is the finding that the partnership enterprise need not be confined to a commercial undertaking and that therefore “once it is accepted that the partnership enterprise may extend beyond commercial undertakings, logic dictates, in my view that the contribution of both parties need not be confined to a profit-making entity… It can be accepted that the plaintiff’s contribution to the commercial undertaking contacted by the defendant was insignificant. Yet, she spent all her time, effort and energy in promoting the interests of both parties in the communal enterprise by maintaining their common home in raising their children. On the premise that the partnership enterprise between them could notionally include both the commercial undertaking and the non-profit making part of their family life, for which the plaintiff took responsibility, her contribution to that notional partnership enterprise can hardly be denied”.

In light of the Butters case it appears that if a cohabitees evidence is accepted that “everything was for both of us… we were sharing everything”, this may well be sufficient to prove a universal partnership, even in circumstances where the plaintiff’s contribution were limited to running the joint household and raising the children.

The appeal court considered the essential elements of partnerships. Firstly, each of the parties must contribute something into the partnership or bind themselves to bring something into the partnership, whether it be money or labour or skill. The second element is that the partnership business should be carried on for the joint benefit of both parties. The third is that the object should be to make a profit.

There are two kinds of universal partnerships; firstly, ones where the parties agreed to put in common all their property present and future; and secondly, those where parties agreed that all they may acquire during the existence of the partnership from every kind of commercial undertaking, will be partnership property. A universal partnership does not require an express agreement. Like any other contract it can come into existence by tacit (unspoken) agreement, that is by an agreement derived from the conduct of the parties. Where the conduct of the parties is capable of more than one interpretation, the test for when a tacit universal partnership can be held to exist is whether it is more probable than not that a tacit agreement had been reached.

The Trends

It is clear that the Butters case broadened the application of a universal partnership, certainly in the case of cohabitees. This has very important practical consequences given the rising trend of people living in domestic partnerships in South Africa. In America for example, 40% of all couples living together are unmarried. In Sweden, 9/10 couples marrying for the first time already lived together and in Denmark, more than one third of women in the early 20’s are living in extra marital intimate relationships. A report recently published in the UK using the latest data from the Office for National Statistics revealed a generational shift away from the institution of marriage, with youths far less likely ever to wed than their parents and grandparents. The research by the Marriage Foundation showed that, for a variety of reasons, 47% of women and 48% of men aged 20 will never marry. In South Africa an increasing number of couples are cohabiting and delaying their walk down the aisle.

 

Given the latest developments in the law of universal partnerships, couples who do not wish to be married would be well advised to consider entering into a written cohabitation agreement to regulate their cohabitation relationship, otherwise separation may just have devastating consequences.

Compiled by Bertus Preller

Family Law and Divorce Attorney and author of Everyone’s Guide to Divorce and Separation – Random House.

Twitter: bertuspreller

Websites: http://www.divorcelaws.co.za

Facebook: http://www.facebook.com/divorceattorneys

Source:http://voices.news24.com/bertus-preller/2014/07/careful-cohabitation-may-cost-half-assets-breakup/ 

 

Ingredients for a successful marriage – a Divorce Attorney’s perspective


Successful Relationships

There is a saying that a relationship is not a place where you go to take, it is a place where you go to give. You need to look at your partner and realize that you are not going to change him or her. Ask yourself this: “Does my partner have the basic qualities that matter to me, characteristics that are not going to change over time?” Remember that it is not all about the wedding cake, the wedding ceremony, the wedding gifts or the wedding dress.

It takes a lot of work and effort to make it work. Lack of communication tops the list of the reasons for divorce. There is the cliché that women want men to know what they want and what they are thinking without ever having to tell them, but the reality is that couples need to talk and express their feelings and fears to their spouse. It is when spouses only start thinking about their own wants and needs and no longer function as a “team”, that things start to fall apart. Unfortunately in many instances our ability to learn about relationships shuts down at the point when the marriage begins to get tough and just because couples develop disagreements, I am sure that many marriages could have been saved if the couples persevered just a little more. Conflict should be seen as an inevitable part of relationships. One of the secrets to a good marriage is to find your equal partner, not a partner who is going to dominate or control you or who you can dominate or control. Any relationship for it to work must be based on mutual respect, common purpose and of course trust. When a couple start to lose one of those ingredients, the wheels come off. Many people get married and expect to live a fairy-tale but that is surely not the reality. Couples fight about trivial things, disagree on many issues such as the finances and children. Many people refuse to grow and blame their partners for all of the problems in the marriage instead of taking responsibility for their actions. Having said this, both parties must be willing to change for the better and if one refuses to do so, the relationship will be in trouble.

Keys to a happy relationship

The key to any happy and healthy marriage really is communication. Many of my divorce clients, when asked for the reason for the breakdown of their relationship, respond with the words “We grew apart” or “We have nothing in common any longer”. It is so important to be an active contestant in your own marriage instead of a passive spouse. In happy marriages there are no secret vendettas or agendas. Lack of trust is an clear killer, and harbouring bitterness and carrying grudges does not make for contentment. It all comes back to commitment and that, in tough times, you don’t even allow yourself to think of getting out. Couples must understand that not every disagreement has to end up as a full blown argument and it is not necessary to win each and every argument or to be always right. Sometimes rather let it be. It is also true that no marriage can survive without some sort of conflict, whether major or minor but the key is to make sure that the issues are addressed in a controlled and dignified manner, without personal mud-slinging or insults.

How to deal with in-laws?

I do not believe in divided loyalties at all. Once you marry someone, your loyalty and devotion first is to your partner and the family that you two create together. I am not saying that you should not be close to your extended family but if your mother-in-law for example is continually butting into your life and your relationship and offering opinions and solutions and you feel as if your husband is always taking her side rather than yours, then, it becomes your husband’s problem and not yours. Each person should take care of his/her own family tree, since you have the most history with your mother, and your husband the most with his parents. So, if you have a mother who is constantly on your husband’s case about how you should to be raising your children, stand up and say something to her. Never make it your husband’s fight. And, if your mother-in-law is drives you up the wall, tell your husband to deal with her. I have seen many cases where the in-laws became one of the reasons for divorce.

Main reasons for divorce?

Reasons cited by both men and women as the most common causes of divorce include loss of love and incompatibility, poor communication, addiction, basic unhappiness, infidelity, emotional problems, conflict over roles, and spouses’ personality traits. All studies on the prevention of relationship breakdown and the causes of divorce reach the common conclusion that a constellation of factors, not just one, is normally responsible. The following are the ten most commonly cited reasons, drawn from various records, and in no particular order.

Differences in priorities
A difference in priorities, which a lot of men and women discuss and anticipate prior to their marriage, can become major issues at a later stage. If one spouse wants to start a family and the other does not, it may create immense conflict.

Religious, cultural or ethnic differences
Couples of different religious, cultural or ethnic background may sometimes disregard the expectations of each other’s religion/culture/ethnicity, causing resentment. Conflict can also arise when children are involved, as most parents prefer their children to take on their own traditions.

Parental responsibilities
It often happens that spouses aren’t able to constructively co-parent their children. Differing ideas on how to raise children commonly cause rifts in a marriage.

Finances
When times are tough, marriages take strain. Married couples, whether happy or not, may disagree about certain financial issues, which if not resolved can put undue stress on their relationship.

Sexual incompatibility
Men and women differ emotionally, mentally and sexually. Things change as the marriage progresses, i.e. children are born, health challenges arise and careers change. All these things can impact a couple’s sexual relationship. If a spouse is not being physically fulfilled, he/she will look elsewhere. In most cases, sexual dissatisfaction will result in divorce.

Addiction
Addiction of any kind is like a black hole, sucking in everything in its path of destruction, throwing family life off balance the stronger it gets, putting undue strain on relationships. Whether the addiction is to alcohol, drugs or, increasingly, pornography or social networking, the effect is the same. Before the internet, strip clubs, videos and DVDs fed pornographic addiction. These days, more and more people spend countless hours viewing pornography online, buying into the fantasy. Addiction of this nature not only has a degrading effect on the individuals in the relationship, but also leaves disastrous emotional scars on children, close relatives and friends.

Social networking
Social media like Facebook, Twitter and BBM/WHATSAPP is affecting privacy and family interaction more and more, as it blurs the lines between public and private domains. The nature of these media outlets encourages free-spirited posting, commenting and sharing of information, often thoughtlessly. Spouses who spend countless hours on social networks to the exclusion of valuable family interaction, create a disconnect that often cannot be repaired, and divorce follows. What is posted on social networking sites is not as private as many think, and Facebook flirting is cited as the cause of an increasing number of divorces. With a multitude of profiles just a click away, it has made it really easy for people to see if the grass is greener on the other side.

Infidelity
Infidelity/adultery, more commonly known as ‘cheating’, is near the top of the list of reasons for divorcing in South Africa. Adultery is defined as extramarital sex that wilfully and maliciously interferes with marriage relations, leading to the irretrievable breakdown of the marriage relationship. Infidelity undermines the root of the relationship, namely trust, and is a violation of the mutually agreed rules or boundaries that a couple assumes when they start their relationship.

Abuse
Abuse is one of the top reasons for divorce. Abuse occurs in all age groups, ethnic groups and class groups, and comes in a variety of forms, from physical abuse (domestic violence) to verbal, emotional, psychological and even financial abuse. It can include things like telling a child they are unwanted, name calling, ignoring, restricting a person to a room, monitoring phone calls, forcing a spouse into doing something that he/she is uncomfortable with and withholding finances. Abusers can be male or female and abuse can occur in heterosexual relationships, same-sex relationships and parent-child relationships. While women and children are the most victimised, men are also abused, especially verbally and emotionally, although sometimes physically too.

Lack of communication
The writer Josh Billings once said that ‘Silence is one of the hardest arguments to refute’. Lack of communication is the single biggest cause for divorce and accounts for almost 70 per cent of all marital breakdowns. Without proper communication, no relationship can survive. Good communication does not mean always agreeing with each other. Couples with communication problems that usually lead to divorce are often unable to find a middle ground and are unwilling to compromise. A lack of communication in any area of a marriage can cause major damage to the relationship. Many couples lack communication when it comes to making decisions about finances, leading to financial problems and endless arguments. Many also fall down when they have to make decisions about their children.

What mistakes do couples make when they divorce?

Divorce need not be bitter or erupt into a war. Unfortunately, though, in many divorces, spouses turn what could be an amicable end to their marriage into an emotionally difficult and expensive legal battle by allowing their anger, hurt and fear to take over their rational thinking. Getting divorced is never easy, but when people realise that it is not about winners and losers and massive legal bills, but about making a clean break and working out the terms of the divorce together or with the intervention of legal representatives, then the process can be relatively easy. If you can, try your level best to conclude your divorce in an uncontested manner, without having to go to trial. Do everything you can to make the divorce as non-acrimonious as possible. Although your role as a spouse ends, if you have children, your role as a parent continues. A contested divorce means long unnecessary delays, huge legal bills and unpredictable emotions.

Very often spouses make the error of wanting a divorce for useless reasons. This comes from being wrapped up with the idea of being hurt and concentrating on one’s self rather than separating the actual events from the end results. It is very tough to lift your thinking and be ostensibly autonomous to your own situation, sometimes this is often impossible to do. But, when you can look at your situation objectively, and then go through your divorce decision making process, you may be closer to the real answers that you search for.

It is my view that the reason for many problems that we experience in relationships stems from the fact that people are fickle and that our circumstances and life experiences change and shape us every day. A healthy relationship is an evolving relationship and each partner should learn and grow through the relationship, and often through the conflicts.

By Bertus Preller

Family Law Attorney

Abrahams and Gross Inc. Cape Town

Twitter: @bertuspreller

Websites: http://www.divorceattorney.co.za and http://www.divorcelaws.co.za

Relocation Dispute, father wins court battle.


child support

E v E (3718/2013) [2014] ZAKZDHC 10 (26 March 2014)

The applicant (mother) in this case was a resident of Luxemburg having emigrated from South Africa in May 2013. The respondent (father) resided at Mtunzini, KwaZulu-Natal. The applicant sought leave to remove their minor child, J, from the Republic of South Africa for the purpose of relocating permanently with her to Luxemburg. The application was opposed by the respondent.

The parties were married to each other but later divorced. There were two minor children born of the marriage namely a boy seventeen (17) years of age and a J, a girl in grade seven (7). In terms of the divorce order, a settlement agreement between the parties signed in January 2007 was made an order of the court. The settlement agreement provided that it was in the best interest of the children that custody be awarded to the parties jointly. The children “primary residence” was to be with the mother, while the respondent would have the “right of reasonable access to the children” the applicant and the respondent retained their rights of guardianship in respect of both children. The applicant and the respondent retained their rights of guardianship in respect of both children.

On 13 May 2013 (subsequent to the divorce) the applicant left South Africa and relocated / emigrated to Luxemburg. The applicant subsequently wanted to take the younger child J to go and live with her in Luxemburg leaving South Africa permanently. The respondent as the guardian had to give or refuse consent to J’s removal from the Republic of South Africa in terms of Section 18 (3)(c) (iii) of the Children’s Act 38 of 2005. The respondent refused to give such consent. The applicant as a result thereof brought a court application.

The application was opposed and was ultimately referred for oral evidence. It was not in dispute that the older child wanted to stay with his father. As from 13 May 2013 (the departure of the applicant), J was left in the care of and residence of the respondent at the respondents home in Mtunzini, KwaZulu-Natal this was the position until March 2014 when the application was heard.

The family advocate referring to the Children’s Act, Act 38 of 2005 draws attention to the following particular sections:

Section 9:

“in all matters concerning the care, protection and well-being of the child of the standard that the child’s best interest is of paramount importance, must be applied.”

Section 7 (1) (b): “the attitude of the parents, or any specific parent towards

(i)            the child; and

(ii)           the exercise of parental responsibilities and rights in respect of the child.”

Section 7(1)(d): 

“the likely effect on the child of any change in the child’s circumstances including the likely effect on the child of any separation from

(i) both or either of the parents;

(ii) any brother or sister of the child …”

Section 7(1)(f):

“the need for the child …

(ii) to maintain a connection until his or her family , extended family, culture or tradition;”

Section 7 (1)(g):

“the child :-

(i) age

(ii) gender

(iii) background; and

(iv) any of the relevant characteristics of the child

Section 7(1)(h):

“the child’s physical and emotional security and his or her intellectual, emotional, social and cultural development”

The Family Advocate’s office recommended as follows in both their report:

The children to primarily reside with the respondent. The applicant to be entitled to exercise contact with the children as follows:

Both short school vacations which apply to the children’s school in South Africa. One short vacation to be exercised in South Africa and the other may be abroad. Half of December/ January school vacations which apply to the children’s schools in South Africa, with the halves to alternate annually between the parties may be abroad. Vacation contact which may be at the prior election of the applicant, be exercised in Europe, in which regard the necessary consent is to be given for the children’s passports and for them to travel out of South Africa for the purpose of the vacation. Skype and telephonic contact at reasonable times. Any further contact that the parties may agree upon, including reasonable contact in South Africa in the event that the applicant is available in South Africa, and prior arrangements have been made, subject thereto that it does not interfere with the children’s schooling/ extra-mural activities.

A child psychologist also found that J should remain in the primary care of her father, the respondent in South Africa.

What emerged from the interviews with both Family Advocate and the psychologist was that none of the parents was disqualified as a custodian parent. It also emerged that the applicant and respondent did not see eye to eye. This fact was reported by both children during their interviews they would fight about everything and anything.

The only report proposing otherwise was that of the Respondent’s psychologist who proposed that J should relocate with the applicant to Luxemburg. The psychologist was engaged and paid for by the applicant. This after it became obvious to the applicant that two experts were holding opinions against her. The court found that her psychologist’s report as well as the oral evidence given by the psychologist showed clear signs of partiality.

In the case of Jackson v Jackson 2002 SA 303 SCA it was held that partiality inevitably detracts from the value of expert evidence. Citing the case of Stock v Stock 1981 (3) SA 1980 at 1296 E to F the following was said in Jackson:

“an expert in the field of psychology or psychiatry who is asked to testify in a case of this nature (custody disputes), a case in which difficult emotional, intellectual and psychological problems arise within the family, must be made to understand that he is here to assist the court. If he is to be helpful he must be neutral. The evidence of such a witness is of little value where he or she is partisan and consistently asserts the cause of the party who calls him.”

The applicant’s fiancé also testified. He gave a rosy picture of life in Luxemburg. The court found that although it may be so, that the most important aspect was what was in the interest of the child.

J expressly said that she enjoyed her life in South Africa and would like to spend her time with her friends. J had initially wished to be with her mother at Mtunzini, Northern KwaZulu-Natal but her mother was no longer there but overseas. Because J was still young both the Family Advocate and the psychologist on behalf of the Respondent was of the opinion that she was not able to make any proper reasonable and calculated choice. J expressed the desire to remain in South Africa to the Family Advocate and she has been in the de facto care of the respondent since May 2013 to date of the application.

In determining what is in the best interest of a minor, a court is bound to take into account what has happened in the past and in fact right up till the day of the application. See the case of FS v JJ 2011 (3) SA 126 par 44. The applicant emigrated to Luxemburg leaving J with the respondent. There was evidence that J had improved remarkably in her school work and earned an academic merit award. She passed grade six (6) with an A aggregate. This did not happen while she was in the care of the applicant. She was flourishing intellectually, physically, emotionally and socially. A joint letter from her school teachers supported.

The court found that the applicant’s decision to relocate was not unreasonable and was bona fida but that it was not in the best interest of the child J.

Think before you get married


Political Marriage

The short-lived “marriage” between the DA’s Helen Zille and Agang SA’s Mamphela Ramphele might be old news for some but a marriage without the existence of an Antenuptial contract or “ANC” can have devastated consequences for the parties involved not only during the course of the marriage but also in the unlikely event of a divorce. Therefore if you do get married make sure your paperwork is in order before the big day otherwise the damage may be substantial. Unfortunately, as in the case in question parties focus so much on the marriage ceremony itself that they completely forget the implications of neglecting to make an informed decision regarding the marriage regime, in the unlikely event that they do divorce.

In accordance with the Matrimonial Property Act 88 of 1984, which came into operation on 1 November 1984, there are three forms of matrimonial property regimes in South Africa, namely:

Marriages in community of property
Marriages out of community of property without accrual
Marriages out of community of property with accrual

Marriages in community of property

Marriage in community of property is undoubtedly the cheapest and most popular form of all the matrimonial regimes, although deeply flawed. No ANC is required, so if you marry without an antenuptial contract, you will by default be married in community of property. In this form of marriage, the spouses’ estates (what they own/assets and any debt/liabilities) are joined together and each has the right of disposal over the assets; they are equal concurrent managers of the joint estate. Each has an undivided or indivisible half share of the joint or communal estate.

Advantages of marriage in community of property

You don’t have to enter into a special contract before being able to get married.
When you are the financially weaker spouse, you get to share in the assets of your spouse.

Disadvantages of marriage in community of property

When you are the economically stronger spouse, you have to share your assets with your spouse.
You are jointly liable for each other’s debts. This is particularly problematic on insolvency.
The joint administration of the estate is rather complicated.
When a marriage starts to fail, it can become difficult to obtain joint consent.

One of the most devastating consequences of a marriage in community of property is that when one spouse becomes insolvent (cannot pay his/her debts), both spouses will be declared insolvent, because there is one communal estate. If there is a court order against either one of the spouses, the communal estate can be lost.

The consequences of divorce when married in community of property

Upon divorce, the assets of the joint estate as at the date of divorce will be divided equally between the parties, unless a spouse claims forfeiture and the court grants such a forfeiture order.

Marriages out of community of property

This matrimonial property regime involves an ANC (i.e. an agreement entered into before the marriage) where community of property and profit and loss are excluded. There is no joining of the spouses’ estates into one joint estate. Each spouse has his/her own separate estate, consisting of his/her premarital assets and debts, and all the assets and debts he/she acquires during the marriage. They each administer their own separate estates and have full and exclusive control over their own property. By marrying out of community of property, the spouses choose to keep their estates separate and whatever assets and liabilities they individually had before the date of marriage will remain part of their separate estates. The spouses can, however, agree to include the accrual between them so that both spouses will share equally in the growth during the marriage of each other’s separate estates.

Antenuptial contracts (ANC)

A marriage out of community of property is achieved by drawing up an ANC. The ANC will be the most important contract that a married couple will sign in their lifetime. Entered into before marriage, the purpose of the contract is to change some or all of the automatic financial consequences of marriage.

The ANC allows the husband and wife to tailor-make their very own matrimonial property regime. They can include any provisions they like in their ANC, as long as the provisions are not against the law, good morals or the nature of marriage. ANC’s are problematic to change as they dictate the financial and proprietary consequences of the couple’s future and can affect the rights of the couple’s creditors.

Couples may enter into one of two types of ANC:

an ANC that excludes community of property, community of profit and loss, and the accrual system; or
an ANC that excludes community of property and community of profit and loss, but includes the accrual system.

The ‘accrual’ is the extent to which the husband and wife have become richer by the end of the marriage, in other words, the amount by which the spouses’ joint wealth has increased over the period of the marriage. When married according to the accrual system, each spouse acquires a certain right to the other’s property on divorce. Neither system is superior to the other. The marital property regime chosen (i.e. with or without accrual) must suit the couple’s relationship dynamic and specific needs. Note that the ANC is a normal contract, so all the rules as to fraud, duress and mistake apply.

The consequences of divorce when married out of community of property without the accrual after 1 November 1984

In a marriage out of community of property without the accrual contracted after 1 November 1984, there can be no claim for a transfer of assets. The argument is that there are now three matrimonial property regimes to choose from, and if the parties willingly decided to marry out of community of property and without the accrual system, one of the parties cannot later request a redistribution of assets. In such a regime, upon divorce, each party will retain their separate estates, i.e. what they had upon marriage and including all growth to the separate estate that occurred during the marriage, minus any losses that may have been sustained. For example, if the husband came into the marriage with R10 000, he would leave with R10 000 + profits ˗ losses.

A spouse who contributed to the other spouse’s estate, whether in cash or otherwise, will have a difficult time proving that he/she is entitled to anything from their ex’s estate on divorce as contributions play no role if the parties are married without the accrual. If, for example, the wife stays home to raise the children and does not contribute financially towards the marriage and the other spouse works and accumulates assets, the wife may find herself with nothing and no claim to her husband’s assets.

Advantages of marriage out of community of property without the accrual

Each spouse keeps his/her own assets and is free to deal with his/her own estate as he/she likes.
Spouses are generally not liable for each other’s debts. Thus, if one spouse becomes insolvent, creditors cannot touch the assets of the other spouse.
The financially stronger spouse does not have to share his/her estate with the weaker spouse. This is subject to judicial discretion and forfeiture of benefits.

Disadvantages of marriage out of community of property without the accrual

The economically weaker spouse, traditionally the woman, does not get to share in the estate of the stronger spouse, even though she may have indirectly contributed to the estate by running the household and looking after the children. This is subject to judicial discretion and forfeiture of benefits.
An ANC has to be entered into in order to marry out of community of property. This costs money, and the parties must pay the fees of a notary and costs of registration.

Marriages out of community of property with the accrual

After 1984, anyone entering into an ANC that excludes community of property and community of profit and loss is automatically married under the accrual system. Spouses may, however, exclude the accrual system in their ANC, but if they do not do so expressly, the accrual applies. When the accrual is included, a spouse will be entitled to share in the growth of the two estates at divorce.

This is surely the most appropriate and ideal way to marry. All the assets that each party owns prior to the marriage can either be excluded or included in the accrual. If no assets are excluded in the ANC, the value of each party’s estate at the commencement of the marriage is deemed to be nil.

The consequences of divorce when married out of community of property with the accrual

Accrual is a way to ensure that both spouses in a marriage gain a fair share of the estate once the marriage comes to an end. The accrual system does not apply automatically to all marriages out of community of property. For the accrual system to apply, the ANC must be drafted in a certain way. The accrual system incorporates a calculation that is applied when the marriage is dissolved by divorce. The spouses will share the assets during the course of their marriage based on a particular calculation when the marriage is terminated.

The term ‘accrual’ is used to denote the net increase in value of a spouse’s estate since the date of marriage. In other words, what was yours before the marriage remains yours, and what you have earned during the marriage belongs to both of you. Because the right to share in accrual is exercisable only upon dissolution of the marriage, such a right is not transferable and cannot be attached by creditors during the subsistence of the marriage.

The following assets are not taken into account when determining the accrual (are not included in the net value of the estate):

Any asset excluded from the accrual system under the ANC, as well as any other asset that the spouse acquired by virtue of his/her possession or former possession of such asset.
Any inheritance, legacy, trust or donation received by a spouse during the marriage from any third party, as well as any other asset that the spouse has acquired by virtue of his/her possession or former possession of the inheritance, legacy, trust or donation, unless the spouses have agreed otherwise in their ANC or the testator/trix or donor has stipulated otherwise.
Any donation between the spouses.
Any amount that accrued to a spouse by way of damages (e.g. slander), other than damages for patrimonial loss or the proceeds of an insurance policy in respect of a dread disease.

Commencement values and accruals

Where parties wish to enter into an ANC with the accrual system, they must make sure that the commencement values of their respective estates (i.e. how much their estates are worth at the time of marriage) have been verified and accepted by both parties. It often happens in divorce matters that one party will allege that the other’s commencement value was inflated or completely inaccurate.

Upon the dissolution of the marriage by divorce, the net estate value (assets less liabilities less excluded assets and/or commencement values) of each estate is determined separately. The larger estate must then transfer half of the difference to the smaller estate. Putting it another way, the smaller estate must claim for an amount equal to half of the difference between the accruals of the respective estates. The right to share in the accrual only commences upon dissolution of the marriage by divorce.

The commencement value to be subtracted from the current value of the estate must be adjusted with the consumer price index (CPI) to make provision for any change in the value of money. To calculate the adjustment, go to http://www.statssa.gov.za and click on ‘Historical CPI’ and then on ‘Key indicators’. The factor by which the commencement value must be multiplied to get to the adapted value is calculated by dividing the value for the month of the dissolution of the marriage by the value for the month in which the parties were married.

Advantages of marriage out of community of property with the accrual

The spouses share the increase in their assets accumulated during the marriage and the economically weaker spouse benefits.
The spouses do not share their assets acquired before their marriage (but only if excluded in the ANC or included in the commencement values of the parties’ estates). The accrual system appeals to people who are already wealthy at the time of marriage.
During the course of the marriage, each spouse manages his/her estate at will. There is no complex joint or equal administration.
The spouses are not liable for each other’s debts. All that they share is their net assets. Thus, if one spouse becomes insolvent, the other spouse is protected against creditors.

Disadvantages of marriage out of community of property with the accrual

The economically stronger spouse has to share the profits that he/she made during the marriage.
One has to enter into an ANC in order for the accrual system to apply.
The calculation of accrual at the end of the marriage can be a bit complex.

Compiled by Bertus Preller

Family Law and Divorce Attorney and author of Everyone’s Guide to Divorce and Separation – Random House.

Twitter: bertuspreller

Websites:  http://www.divorcelaws.co.za or http://www.divorceattorney.co.za

Facebook: http://www.facebook.com/divorceattorneys

Book review on Everyone’s Guide to Divorce and Separation


Deur Jaco Barnard-Naudé is professor in regsfilosofie aan die Universiteit van Kaapstad.

Book

Ons leef vandag in ‘n wêreld van toenemende vloeibaarheid en pluraliteit op die vlak van persoonlike verhoudings. Die een dag besluit jy en jou beste vriend nog om lewenskoste te beperk deur ‘n woonstel te deel en die volgende dag word die platoniese vriendskap iets meer en julle woon voortaan saam as man en vrou. Of man en man. ‘n Paar jaar later besluit julle om te trou. As julle ‘n eendersgeslagtelike verhouding bedryf, moet julle deur die hekke van die Wet op Burgerlike Verbintenisse, 2006, toegang verkry tot die twyfelagtige groener gras van die huwelik. Heteroseksuele saamwoners het ‘n addisionele (en meer konvensionele) wet beskikbaar waarvolgens hulle in die huwelik kan tree – die Huwelikswet van die Jaar van Onse Heer 1961. As julle byvoorbeeld in Tamboerskloof saamwoon en besluit die huwelik is nie wat julle en ander eende van julle dam wil hê nie, hoef julle nie te trou om die verbintenis regtens erken te kry nie: die 2006-Wet maak voorsiening vir ‘n burgerlike vennootskap wat presies dieselfde gevolge as ‘n huwelik het.

Ek het al hierdie dinge geweet voordat ek hierdie uiters leesbare en akkurate boek onder die oë gehad het, omdat ek vir ‘n regsfakulteit werk en self betrokke was by die totstandkoming van die 2006-Wet. Vir diegene wat tans in ‘n saamwonery van een of ander aard verkeer, dit oorweeg om een of ander Groot Stap (insluitend skeiding van tafel en bed) te doen en nié in die regsberoep werk of betroubare vriende daarin (skaars spesie) het nie, kan ekEveryone’s Guide to Divorce and Separation aanbeveel.

Die titel is ondeurdag. Hoewel die regstema van geregtelike skeiding prominent daarin bespreek word, soos die titel aandui, handel groot gedeeltes daarvan oor die regsgevolge van die totstandkoming van ‘n huwelik of ander permanente saamwoonverhouding. Selfs die gevolge van die totstandkoming van die ouwêreldse “verlowing” (en wat die lô sê oor die verloofring wanneer jy dit in sy gesig terugsmyt) word met erns bespreek. En as lobola deel was van jou huweliksonderhandelinge en jy is getroud ingevolge die Wet op Erkenning van Gewoonteregtelike Huwelike, sal jy interessante dinge lees oor hoe om te verhoed dat jou man se aanhoudende trouery jou nie finansieel benadeel nie.

‘n Groot gedeelte van die boek handel oor die onwillekeurige partye tot ‘n saamwoonverhouding: die kinders. Daar is ‘n omvattende bespreking van wat die verantwoordelikhede teenoor kinders in ‘n gesin is – veral wanneer die ouers se saamwoonverhouding tot ‘n einde kom en ook in gevalle waar Ma en Pa eens saamgewoon, of ten minste saam verkeer, het, maar by geboorte van die kind reeds aanbeweeg het. Die boek stel dit in hierdie konteks direk en duidelik: die kind(ers) sit met die gebakte pere van julle mislukte verhouding sonder dat hulle daarvoor gevra het. Die allerminste wat julle kan doen, is alles in julle vermoë ten einde te verseker dat hulle so onbeskadig as moontlik uit die puin van julle verhouding tree.

Bostaande is maar een rede waarom die skrywer (‘n prokureur) daarvoor pleit dat egskeidings nie in litigasie behoort te eindig nie. Daar is merendeels slegs verloorders in ‘n bestrede egskeiding, en té dikwels, waar kinders betrokke is, is dit húlle wat as pionne in die vuilspel gebruik word en die meeste verloor.

Benewens ‘n omvattende verduideliking van die egskeidingsproses bevat die boek ook heelwat praktiese wenke vir mense wat deur so ‘n proses moet gaan (waartydens gesinsgeweld nie uitgesluit word nie, daarom die hoofstuk oor laasgenoemde). Dit het my lank geneem om die bul by die horings te pak en hierdie boek te lees, want egskeiding is nooit ‘n aangename onderwerp om oor te dink of te lees nie – ons dink veel eerder aan die feeste van die huweliksdag. Maar as jy jou in ‘n skeidingsituasie bevind (en nie in die regsberoep werk of daarin bevriend is nie), moet jy jou, soos vir enige stryd, hoe gemoedelik ook al, bewapen. En Preller se boek is ‘n sterk wapen. Kry dit.

divorce and separation

 

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Original article at: http://www.litnet.co.za/Article/2013-everyones-guide-to-divorce-and-separation-bertus-preller

A look at marriage in community of property


relationships

The Matrimonial Property Regimes

The Matrimonial Property Act of 1984 provides for three types of marriages under South African law, namely:

Marriage in community of property; and

Two forms of marriage out of community of property governed by an antenuptial contract, namely one with accrual and one without accrual.

Marriage in Community of Property

When no antenuptial contract is signed, then the marriage is, by default, a marriage in community of property. Besides the obligations in respect of property ownership the law also places obligations on couple’s for example they have a duty to support each other by providing clothing accommodation, food, medical services and other necessities. The duty of support is a duty that goes both ways, and if the husband doesn’t have the necessary means to support himself, then the wife has a legal obligation to support him and vice versa. Furthermore, in case of marriage, mere separation is not recognised by the law and a couple must be divorced for the dissolution of the marriage to be recognised and ensuing a division of assets to take place.

Under the Matrimonial Property Act, partners married in community of property have equal legal status. Apart from certain exclusions all property is shared by the parties in a joint estate. The couples become joint owners of all the assets and liabilities they acquired before they got married and those acquired during the marriage. Four example, if the husband has a motor vehicle valued at R 200 000 and an outstanding loan of R 100,000, it means that the other party assumes half of the assets and becomes the joint owner of the car, but also take up the joint liability for the debt of R 100,000.

The main exclusions to communal ownership of:

Assets excluded by a will for example, if you inherit property through someone leaving it to you in his/her will. It will be excluded from the joint estate. Only if the will specifically states it is to be excluded.

Assets excluded from the joint estate in a prenuptial contract or agreement. Before tying the knot, partners can sign the agreement in which they specify assets that they want don’t want to be included in the joint estate.

Gifts and donations. These are assets that partners give to each other, including those given during their engagement.

Partners have an equal say in financial transactions that affect the joint estate. Transactions that require the written consent of both partners are for example when they buy or sell large assets that are part of the joint estate’s such as a house, taking out a bond, entering into credit agreements and ceding insurance policies or investments. Verbal consent between partners is required for transactions, such as the sale or disposal of household goods.

A major disadvantage for marrying in community of property is when one of the partners gets into debt and is declared insolvent then both spouses are equally affected. In other words, the joint estate becomes an insolvent estate. Creditors can then go after all the assets in the joint estate and also the assets excluded from it, such as inherited property.

What happens on divorce?

On divorce the joint estate will split equally between the separating partners even if one partner has contributed towards the bulk of the assets by for example being the sole breadwinner. The excluded assets remain in the names of the separated partners. However, the terms of the marital regime can be overridden. For example, if a couple is married in community of property and in filing for divorce one partner believes that the equal split of assets would unduly benefit the other party, the party can claim a forfeiture of patrimonial benefits. A classic example of where this could apply is where a young man with minimal assets marries an older wealthy woman and in the course of a short marriage has affairs with younger women. Hurt and humiliated the wife sues for divorce. In the event of such a claim under the Divorce Act, the divorce court will consider the misconduct by one of, or both of the parties, the duration of the marriage and the circumstances leading to the breakdown. A partner cannot forfeit assets that he or she had to before the marriage and brought into the joint estate. In the event of the court granting forfeiture it may be either wholly or partially in favour of the claimant. The Matrimonial Property regimes can also be overridden by the spouses themselves in the case of an uncontested divorce. One form of an uncontested divorce is where the parties enter into a settlement agreement also known as a consent paper which regulates property ownership issues arising from the termination of the marriage. The parties have full contractual freedom, either to apply the matrimonial property regimes applicable to their marriage or to draw up a settlement agreement. A settlement agreement will be made an order of the court when the decree of divorce is granted.

The Pension Funds Amendment Act, 2007, introduced the so-called clean-break principle for the treatment of retirement fund benefits upon the granting of a divorce decree. The Act allows retirement funds to deduct an amount or percentage upon divorce from a member’s benefit and pay it to the non-member spouse or to a retirement fund of his/her choice. The clean-break principle allows a non-member former spouse to access an agreed or court-ordered share of the member spouse’s retirement savings on divorce.

Any assigned amount may be paid from the member’s pension fund to a non-member spouse in terms of a divorce order granted under the Divorce Act, irrespective of the date of divorce, but may not be more than 100 per cent of the value of the member’s withdrawal benefit at the date of divorce. In order for the fund to make the deduction and payment to the non-member spouse, the fund must be ordered to endorse its records (make a note on the system) to such effect and/or to make payment to the non-member spouse. The non-member spouse can elect to receive a cash lump sum or to have the money transferred to an approved pension fund.

What happens if a partner dies?

You may be under the mistaken impression that on the death of a partner the joint estate simply passes to the surviving partner without the need of an executor. Unfortunately, life is not so simple. On the death of either party, the joint assets in the name of the decrease partner are frozen, which can leave the surviving partner with our immediate access to funds in the estate. On finalisation of the estate the surviving partner will automatically get his or her behalf. The other half is distributed according to the will of the deceased partner. If no will has been drawn up, the deceased half of the estate is distributed in terms of the laws that govern interstate succession.

Disadvantages of a marriage in community of property:

The economically stronger spouse has to share his or her assets with his or her spouse.

The spouses are jointly liable for each other’s debts. This is particularly problematic on insolvency.

The joint administration of the estate is quite complicated.

While the marriage is a happy one, it is no real problem to obtain your spouse’s consent. But when the marriage starts to fail, the requirement of joint consent is difficult to satisfy.