Divorce Attorney Cape Town

REASONS WHY A PENSION FUND MAY REJECT A DIVORCE SETTLEMENT AGREEMENT


Never rush into a division of retirement savings in a divorce settlement.

Divorce settlement agreements or court orders that award a share of a fund member’s retirement savings to a non-member spouse are rejected by retirement fund administrators for various reasons, including the court order not stating the name of the fund.

Where a spouse belongs to a number of retirement funds (for example, a pension fund and a provident fund), it may not be clear against which fund the divorce order can be enforced, especially if the order states only the words “the fund” instead of the words “the funds”.

  • Date of divorce

The situation where the date of the divorce is after the member spouse left the fund complicates the issue. The definition of a “pension interest” in the Divorce Act has a connotation that, in order to calculate the pension interest, the member has to be in active employment and active fund membership at the date of divorce so that it may be deemed that he or she has resigned on the date of divorce and his or her former spouse is now entitled to a portion of his or her fund benefit as at that date.

But, if your employment (which is a condition for fund membership) already terminated at the date of divorce, then you cannot be deemed to have resigned at the date of divorce and your former spouse cannot be paid a portion of what would have been your fund benefit at the date of divorce.

  • Decision-making

A non-member spouse is at liberty to make a decision in terms of the divorce settlement agreement. It happens frequently in some divorce orders that the non-member spouse, as part of the divorce settlement, is compelled to preserve the benefit and is being forced to transfer the benefit to a preservation fund.

In terms of the Pension Funds Act, a retirement fund is compelled to give the non-member spouse the right to decide how the pension interest award should be paid out to the member. On presentation of a valid divorce order, the fund has normally 45 days to request the non-member spouse to decide how the pension interest due to him/her must be paid. The non-member spouse has 120 days in which to make a decision.

If the decision is made in terms of the divorce settlement agreement and the fund is not made a party to that agreement, the fund cannot enforce the provision.

  • Interest on the benefit

In terms of legislation, no interest is payable in the first 120 days from the date of the divorce to the date on which the non-member spouse decides what to do with his/her share of the benefit. Interest is added only for periods exceeding 120 days. This should be reviewed to allow interest to be payable from the date of the divorce, because, when markets are volatile, it can make a difference to the non-member spouse or the member spouse.

Before obtaining a divorce, both the member spouse and the non-member spouse should ask the retirement fund or its administrator about the current fund value and the present value of the pension interest – these two values may differ – to ensure an equitable division of the assets.

Frequently the member spouse is reluctant to co-operate in this process, but the non-member spouse is entitled to ask the fund for the relevant information. If the fund is not prepared to divulge the information, the non-member spouse may be entitled to it in terms of the Promotion of Access to Information Act.

The current fund value is the amount typically reflected on a benefit statement and indicates the value of the member’s investment – the rand value of all the assets in the member’s underlying portfolios on a given date in a defined contribution fund or an RA fund, or the actuarial reserve value (the amount notionally held by the fund to provide for the future retirement benefit) in a defined benefit fund.

In most defined contribution funds, the resignation benefit will equal the current fund value, but this may not be the case in defined benefit funds. In retirement annuity (RA) funds, because the pension interest consists of contributions plus simple interest, the effect of compounded returns usually means that the current fund value will be significantly higher than the pension interest.

If sufficient uncertainty exists as to which fund is in fact intended, the divorce order will not be enforceable. Orders are frequently obtained in which the insurance company that sponsors or administers the pension fund is mistakenly cited instead of the fund. It is not sufficient to refer to the sponsor or administrator (for example, the Old Mutual pension fund), as these financial institutions typically operate several funds.

The law provides for two separate systems for a non-member spouse to access a member spouse’s pension on divorce.

These are:

  • Ordinary matrimonial law – The principles of ordinary law concerning the division of assets on divorce cover pension benefits that have already accrued to a fund member at the time of divorce. An example of an accrued benefit is where a member has retired from a fund and has been paid a lump sum benefit and/or a monthly pension at the time the divorce order is granted.
  • Section 7(7) of the Divorce Act – In terms of an amendment to the Divorce Act, a non-member spouse is entitled to share in the assets of a pension fund member where the benefit has not accrued to the member at the date of the divorce.
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Forfeiture of patrimonial benefits – it’s not really about what’s fair


Forfeiture of patrimonial benefits – it’s not about what’s fair

The law regarding forfeiture of patrimonial benefits on divorce continues to trouble most legal practitioners in South Africa. This is reflected by the way most pleadings are drafted and the prayers sought in these pleadings. As such, divorce courts have become hesitant to grant forfeiture orders. It has long been accepted that when parties enter into a marriage in community of property one joint estate will be formed. It has been stated that: ‘Community of property is a universal economic partnership of the spouses. All their assets and liabilities are merged in a joint estate, in which both spouses, irrespective of the value of the financial contributions, hold equal shares’ (HR Hahlo The South African Law of Husband and Wife 5ed (Cape Town: Juta 1985) at 157-8).

Choosing community of property

In most instances, parties entering into a marriage do not make equal contributions towards the joint estate for a variety of reasons, including, but not limited to –

  • one spouse might enter into the marriage already owning property (movable or immovable);
  •  one spouse’s salary might be more than that of the other;
  •  one spouse might not be employed;
  •  one spouse might request the other to stop working in order to take care of the household and children; and
  • one party might have been employed for some time and have substantial pension benefits.

As such, entering into a marriage in community of property is a risk that each spouse takes. The spouses will, on the date the joint estate is created, become joint owners of all the assets brought into the estate and will also share each other’s liabilities.

The law provides alternatives to a party who believes that the other party will end up being unduly benefited by the marriage. Such a party can conclude an antenuptual contract and ensure that the marriage is one out of community of property or out of community of property subject to the accrual system, where he will be able to exclude assets that he does not wish the other party to benefit from. However, if parties decide to marry each other in community of property, then ‘joint ownership of another’s property is a right that each of the spouses acquires when concluding a marriage in community of property’ (JW v SW 2011 (1) SA 545 (GNP) para 18, citing the headnote in Engelbrecht v Engelbrecht 1989 (1) SA 597 (K)). It is well established that if an antenuptial contract is not signed before the marriage, the marriage will automatically be in community of property. The parties to such a marriage will be contracted to deal with both the advantages and disadvantages of this marital regime. ‘One of the ordinary consequences of marriage in community of property is that the property of the spouses is brought together in a joint estate that is owned by them in equal undivided shares’ (Du Plessis v Pienaar NO and Others [2002] 4 All SA 311 (SCA) para 1). It can be reasonably argued that parties entering into marriage in community of property tacitly and expressly consent to build one joint estate that will hopefully grow and mutually benefit them. However, in practice when a marriage sours one party might decide to divorce and attempt to ensure that the other party does not share in the joint estate. A division of the joint estate is a natural consequence of a divorce where the parties were married in community of property. However, a party to the divorce proceedings who believes that the other party should not share in the joint estate may request the court to order forfeiture of benefits when issuing the order of divorce.

Forfeiture of benefits: Undue benefit NOT fairness

On divorce the court is empowered to order forfeiture of all or only some of the patrimonial benefits derived from the marriage (Ex Parte De Beer 1952 (3) SA 288 (T)). Schäfer has argued that courts do not have the power to order forfeiture ‘merely because this might seem equitable’.

‘While the court has a wide discretion in that it may order forfeiture in relation of the whole or part only of the benefits, it is not empowered to award a “portion of an errant husband’s separate estate” to his wife, for example, merely because this might seem equitable in the circumstances. Nor may a forfeiture order be granted simply to balance the fact that one of the spouses or partners has made a greater contribution than the other to the joint estate. The forfeiture order relates only to the benefits of the marriage … . The precise nature of these benefits depends on the particular matrimonial regime’ (Schäfer Family Law Service: Issue 54, October 2010, 26 – 27).

The party claiming forfeiture must show the court that the other party will be benefited if the order is not made. However, it is the nature of marriages in community of property to benefit parties thereto and it will not be enough to just prove that the other party will be benefited. As such, ‘the court may not use a forfeiture order as a mechanism for deviating from the normal consequences of the spouses’ matrimonial property system and achieving a redistribution of assets simply because it considers this fair and just’ (Cronje & Heaton South African Family Law 2ed (Durban: LexisNexis Butterworths 2004) at 132). The second leg of the inquiry is for the party claiming forfeiture to show that the other party will be unduly benefited if the order is not made. The courts have ‘emphasised that a party who seeks a forfeiture order must first establish the nature and extent of the benefit’. Unless that is proved, the court cannot decide if the benefit was undue or not’ (JW para 18). It has, however, been held that:

‘Unless the parties (either before or during the marriage) make precisely equal contributions the one that contributed less shall on dissolution of the marriage be benefited above the other if forfeiture is not ordered. This is the inevitable consequence of the parties’ matrimonial property regime.

The legislature (in s 9 of the Divorce Act 70 of 1979) does not give the greater contributor the opportunity to complain about this. He can only complain if the benefit was undue’ (Headnote in the Engelbrecht case at 599).

It is at this stage that the court should look at s 9(1) of the Divorce Act 70 of 1979, which lists the following factors which the court ought to take into account when deciding whether the party against whom forfeiture is sought would be unduly benefited or not –

  • the duration of the marriage;
  • the circumstances that gave rise to the breakdown of the marriage; and
  • any substantial misconduct on the part of either of the parties.

The court is not called on to decide what is fair and equitable in the circumstances, but rather to decide whether or not the party against whom forfeiture is sought would be unduly benefited if such an order is not granted. The fairness principle was rejected by the Supreme Court of Appeal in Wijker v Wijker 1993 (4) SA 720 (A) at 731C-H:

‘The finding that the appellant would be unduly benefited if a forfeiture order was not made, was therefore based on a principle of fairness. It seems to me that the learned trial judge, in adopting this approach, lost sight of what a marriage in community of property really entails. … The fact that the appellant is entitled to share in the successful business established by the respondent is a consequence of their marriage in community of property. In making a value judgment this equitable principle applied by the court a quo is not justified. Not only is it contrary to the basic concept of community of property, but there is no provision in the section for the application of such a principle. Even if it is assumed that the appellant made no contribution to the success of the business and that the benefit which he will receive will be a substantial one, it does not necessarily follow that he will be unduly benefited. … The benefit that will be received cannot be viewed in isolation, but in order to determine whether a party will be unduly benefited, the court must have regard to the factors mentioned in the section. In my judgment the approach adopted by the court a quo in concluding that the appellant would be unduly benefited should a forfeiture order not be granted was clearly wrong.’

To date the courts have not fully unpacked the concept of ‘undue benefit’. However, I submit that undue benefit will be illustrated by, among others, the relatively short period of the marriage. It is advisable, therefore, to have regard to the date of separation and not necessarily the date of divorce. I submit that the date the parties stopped residing together as husband and wife provides a clear indication of when the marriage broke down, as opposed to the date of divorce. The parties must also have been consistent, in that they denied each other conjugal rights, among others, during the period of separation and divorce. Undue benefit can also be proved where one party continually makes the living conditions in the household intolerable by, inter alia

  • not contributing to household expenses;
  • selling assets of the joint estate without the other’s consent;
  • inviting friends and family members to reside in the common home against the will of the other party;
  • continually undermining the other spouse; and
  • abusing the other spouse emotionally, verbally, financially and/or physically.

Undue benefit may also be established by proving that the other party is having an extramarital affair and also if such an affair has resulted in the birth of an illegitimate child. Lastly, it appears that failure to contribute financially with respect to the acquisition and/or maintenance of the asset to be forfeited by the spouse against whom forfeiture is sought will also be considered by the court. In practice, this is an allegation most practitioners rely on for an order of forfeiture.

Conclusion

It was held in the Wijker case that not all of the factors in s 9(1) of the Divorce Act need to be alleged and proved for forfeiture to be granted. The court was of the view that ‘the context and the subject matter make it abundantly clear that the legislature could never have intended that the factors mentioned in the section should be considered cumulatively’ (at 729E-F). The factors in s 9(1) are a closed list and ‘[t]he trial court may therefore not have regard to any factors other than those listed in s 9(1) in determining whether or not the spouse against whom the forfeiture order is claimed will, in relation to the other spouse, be unduly benefited if such an order is not made’ (Botha v Botha 2006 (4) SA 144 (SCA) para 8). Finally, a party claiming forfeiture must plead the necessary facts to support that claim and clearly identify those assets he wishes the other party to forfeit by relying on s 9(1) of the Divorce Act and not any other factor that is not recognised by that section. Furthermore, such a party must formulate a proper prayer in the pleadings to define the nature of the relief sought.

By Clement Marumoagae LLB (Wits) LLM (NWU) Certificate in Advanced Broadcasting Law (Wits) is a candidate attorney at the Wits Law Clinic. This article first appeared in the July 2011 edition of De Rebus, the SA attorneys’ journal published by the Law Society of South Africa.

Can the media report on divorce cases?


Can the media report on Divorce cases?

A recent article in the Rapport newspaper under the heading “Steekse Steve laat sy egskeiding sloer” certainly may have raised some legal eyebrows, especially having regard to the fact that the South African Divorce Act strictly prohibits the media from publishing the names of the parties involved in divorce proceedings.

Divorce can have severe and traumatic effects on children and private details made available through the media may exacerbate this.

One of the most important questions in a free, open and democratic society that is based on human dignity, equality and freedom, is how one should balance the right of freedom of expression, against the right to privacy and dignity of an individual on the other hand.

In the case of Johncom Media Investments v Mandel and Others the Constitutional Court balanced this important right against the rights of dignity and privacy. The court found that the objective of section 12 of the Divorce Act was “to protect the privacy and dignity of people involved in divorce proceedings, in particular children”. By doing so the Court decided to invalidate section 12 of the Divorce Act, but also to prohibit the publication of the names of any of the parties to a divorce or the children. What this in actual fact means is that the media is free to report on the details of a divorce matter but that they may not publish the names of any of the parties involved in a divorce when doing so.

The judgment was referred to as a ‘lukewarm triumph for press freedom’, by retired academic Marinus Wiechers in a Beeld newspaper report as saying that the judges’ qualification of the order declaring Section 12 of the Divorce Act unconstitutional may leave the media in a worse position as no names may be published. In the judgment, the Constitutional Court gave to the media with one hand and took away with the other. While the court has basically struck down a provision of the Divorce Act which prevented the media from publishing any particulars of a divorce action, or any information that emerges in the course of such an action, it also ordered that no party or child involved in divorce proceedings may be identified.

Even attorneys are bound by confidentiality and may not divulge information to the press.  Unless there are exceptional circumstances and the media successfully applies for an order to publish the names and identities of those involved, any story on divorce proceedings that does so will amount to contempt of court.

The judgement of the Constitutional Court resulted in a situation which is actually the reverse of Section 12 meaning that the media can now report all the detail they wish, as a means of informing and educating the public about divorce matters, but unless there are exceptional circumstances, they may not name or identify the people involved.

Where there is a clear public interest in a particular case, the media must apply for an order enabling them to name the parties involved in the divorce matter. Such cases may include, for example, public figures. The key would be to ensure that there is a clear and genuine public interest in naming and or identifying the people involved.

The ruling highlight the importance of media freedom as well as children’s rights and it also has the effect of requiring stronger legal and ethical adherence to reporting not only on children but also, more broadly, on areas that are normally private and personal by nature.

The Divorce Act imposes a criminal sanction in that a person who in contravention of this section publishes any particulars or information shall be guilty of an offense and liable on conviction to a fine not exceeding one thousand rand or to imprisonment for a period not exceeding one year or to both such fine and such imprisonment.

The Constitutional Court has clearly stated that as important as freedom of expression is, it does not enjoy any preferential status over any other rights.

The question is whether Rapport was entitled to name Steve Hofmeyr…….You be the judge.

About the author:

Bertus Preller is a Family Law and Divorce Attorney based in Cape Town and has more than 20 years experience in most sectors of the law and 13 years as a practicing attorney. He specializes in Family law and Divorce Law at Abrahams and Gross Attorneys Inc. and deals with Family and Divorce matters across the country. He is also the Family Law expert on Health24.com and on the expert panel of Law24.com and is frequently quoted on Family Law issues in newspapers such as the Sunday Times and Business Times. His clients include celebrities, actors and actresses, sportsmen and sportswomen, television presenters and various high net worth individuals.


					

Interview with Bertus Preller, a celebrity divorce attorney based in Cape Town


Business Times Interview – by Adele Shevel

Maria Shriver’s doing it; Tiger Wood’s wife did it. Making the decision to terminate a marriage is a tough one, and the chances are it’s followed by an even more traumatic lead-up to the divorce.

Shriver and Woods are very wealthy, their husbands hugely successful, and high profile infidelity was peppered into the mix. But it’s not only the rich who need to ascertain the financial situation of their husbands.

Women are encouraged to gather as much financial information about their husband’s financial affairs before the divorce proceedings commence, to establish the magnitude of the estate.

Bertus Preller, a celebrity divorce attorney at Abrahams and Gross in Cape Town provides guidance as to how to get your affairs in order before making that final call.

“It’s extremely important for any woman to know what’s going on in her husband’s financial affairs. It’s difficult when you don’t have access to his share portfolio or balance sheet, but one must reasonably expect to get an idea of financial affairs.”

An attorney cannot negotiate on behalf of a client without knowing in advance what the estate is worth.

In many divorce settlements, the wife ends up seeing what the estate is worth after it takes place.

  • Make copies of your husband’s bank statements, credit card statements and get hold of the short-term insurance policies as well as copies of pension funds and retirement funds. This will provide input on the extent of assets available and the value of the estate.
  • Build a clause into the settlement agreement to say if any assets that come to light after the divorce settlement, the wife is entitled to 50% of those assets and the husband will have to pay the legal fees involved in this process.
  • A more accurate sense of assets will come to light if the divorce is contested as parties are required to disclose any information to do with financial affairs. The husband can be required under oath to make full disclosure of his assets, and it is perjury if he doesn’t.
  • Women are advised not to leave the matrimonial home if children are involved, because it provides a sense of stability for the kids. It’s better for the husband to leave. If he makes himself guilty of abuse, the wife can get a restraining order to evict him from the property. In some instances, the husband can be restricted from accessing certain parts of the home.
  • Where the parties are married in community of property the wife is entitled to half the pension or retirement annuity fund. In a marriage out of community with the accrual, the pension fund will be regarded as part of the husband’s assets for purposes of calculating the accrual.
  • In terms of the Divorce Act, the wife (if married in community of property) can choose to ask for the pension fund money to be paid in cash, or transferred to a pension fund of her choice.  Normally pension funds pay out the wife’s portion in 3 to 6 months after the divorce. Wives of employees for the SA government have had to wait for her husband to resign or die before she could access her portion of his pension. But this might change — a judgement issued this month said it was unconstitutional for the wife of a government employee not to be allowed to access his pension following a divorce.
  • Make a list of your monthly income and expenses, as if you’re going to live on your own with your children. It’s important because you get situations where the wife is not working or earns much less than the husband and doesn’t have the money to fight a divorce battle.  She can bring an application pending a divorce, for interim maintenance, which means contributing maintenance before the divorce is finalised. She can also apply for contribution to her legal expenses. If interim-maintenance is granted and the husband does not comply with the court order, he is in contempt of court.
  • In some instances the wife can apply for emergency monetary relief in the magistrate’s court pending the institution of an application for interim maintenance by utilizing the provisions of the domestic violence act because the husband has blocked the use of credit.
  • Interim maintenance falls away once the divorce order is granted. There have been situations where the wife has been granted very favourable interim maintenance terms, so she stalls the divorce in order to continue getting a hearty amount of money each month.
  • The granting of interim maintenance divorce cannot be appealed. The only way the husband can minimize this is if he goes back to court and explains and proves that his financial situation has changed so much that he’s entitled to a reduction. But this does not happen easily.
  • Many battles in a divorce surround the children. Normally the wife is the parent of primary residence and the husband the parent of alternate residence. Increasingly, there’s a shared parenting approach with children staying with the mother for a week and then the father for a week and each party takes care of the children during that period.  “We see a lot of children used as a weapon. I tend to immediately get a parenting plan in place, and register that with the family advocate and stipulate that if issues arise with parenting and the children they need to go to a psychologist or a social worker”.
  • In matters where money is not fought over, it may make financial sense to go to one lawyer who can work for both parties. But a divorce that is acrimonious requires that each party needs a lawyer to assist.
  • A few mediation organizations exist where people can see a mediator to resolve disputes, to settle with both parties. The mediator doesn’t have the authority to issue and award damages but he can facilitate the process. If an abusive husband is involved, mediation is unlikely to work.  But it can work if the divorce is not acrimonious. Parties have to pay. “Sometimes this route can be more expensive than an uncontested divorce, depending on the amount of sessions that the parties have to attend” says Preller.
  • Where a couple owns a property together, they need to decide whether both parties want to keep the interest in the property, sell the property and split the proceeds, or whether one wants to buy out the other. The decision has financial implications because of transfer duties and tax.
  • It’s important to consider instances where the husband has no assets. A policy should be taken out in the event that the husband passes away and there is no money to help cover maintenance, in case of his death.

“The decision to divorce is a business decision. You need to look at what happens until the children turn 21, that there’s maintenance, medical cover for them, a school education and whether it’s government or private school and tertiary education,” says Preller.

About Bertus Preller

Bertus Preller is a Family Law and Divorce Attorney based in Cape Town and has more than 20 years experience in most sectors of the law and 13 years as a practicing attorney. He specializes in Family law and Divorce Law at Abrahams and Gross Attorneys Inc. and deals with Family and Divorce matters across the country.Bertus is also the Family Law expert on Health24.com and on the expert panel of Law24.com and is frequently quoted on Family Law issues in newspapers such as the Sunday Times and Business Times. His clients include celebrities, actors and actresses, sportsmen and sportswomen, television presenters and various high net worth individuals.

His areas of expertise are Divorce Law, Family Law, International Divorce Law, Divorce Mediation, Parenting Plans, Parental Responsibilities and Rights, Custody (care and contact) of children, same sex marriages, unmarried fathers rights, domestic violence matters, digital rights, media law and criminal law.

Bertus also has a passion for gadgets and technology and he co-pioneered the development of technology in which the first book in the world was delivered to a mobile phone utilizing sms and java technology and also advised a number of South African book publishers on the Google Book settlement class action and negotiated contracts with the likes of Google and Amazon.com.

He specializes in Divorce Law, Family Law, Divorce Mediation, Parenting Plans, Parental Responsibilities and Rights, Custody (care and contact) of children, same sex marriages, unmarried fathers rights, domestic violence matters, international divorce law, digital rights, media law and criminal law.

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