FINANCIAL CONSEQUENCES OF DIVORCE IN SOUTH AFRICA
A BRIEF OVERVIEW
The Divorce Act, Act 70 of 1979 determines in terms of section 7(1) thereof that a court granting a decree of divorce may make an order for the division of marital assets or for payment of spousal maintenance in accordance with the written agreement between the parties. These agreements usually set out how the parties will divide the marital property and whether or not one of them will pay maintenance to the other. Such an agreement is usually called a deed of settlement,
Matrimonial Property Systems usually include rules about how property of married partners must be divided at the end of their marriage. When parties are married in community of property, each spouse in entitled to half of the joint estate at the date of the divorce. However and if the Accrual System applies to a marriage, accrual is shared according to the provisions of the Matrimonial Property Act, Act 88 of 1984 and in particular sections 2 to 10 of the said Act. Parties who are simply married out of community of property without accrual, keep their own estates and share nothing upon divorce.
In certain instances the court can make an order which depart from the ordinary rules relating to the division of property as set out in paragraph 2 above, for example as provided for in section 9 of The Divorce Act as well as Section 7(3), which relates to transfer orders It results that many spouses depart from the default rules relating to the division of marital property as contained in their settlement agreements.
In certain instances such as in terms of section 9(1) of The Divorce Act ,the court can make an order in terms where of one of the spouses will be deprived of the patrimonial benefits of the marriage and the other spouse will keep the benefits but only once the court has had regard to factors such as:-
the duration of the marriage,
the circumstances which led to the breakdown and
any substantial misconduct on the part of either of the parties.
It is however important to note that spouses can only be deprived of their claim to property or assets that their spouses brought into their marriage, and they cannot be ordered to forfeit assets that he or she brought into the marriage. It is also interesting to remember that forfeiture orders cannot be made against spouses who contributed more than a half of the assets to the joint estate, as they will always receive at least half of the said joint estate.\
5. As a result as how the Accrual System was designed to work spouses who are married out of community with the Accrual System only has a claim to share in the other spouses accrual, if their own estate indicates less accrual than their spouses estate, which mean that the spouse with the larger accrual can never have an accrual claim against the other spouse and can never be ordered to forfeit in terms of section 9(1) of The Divorce Act.
6. However the court can also order a forfeiture of other sorts of benefits to which a spouse might be entitled to in terms of an antenuptial contract which was concluded before the marriage.
7. When the court is satisfied that a spouse will be unbenefited it will order a forfeiture of patrimonial benefits of the marriage. In other words, a spouse must not derive an unfair financial benefit from being married to someone. When the court decides whether or not or not to order a forfeiture of patrimonial benefits it may consider some of the following factors:
1) The circumstances that led to the breakdown of the marriage.
2) The duration of the marriage.
3) Any substantial misconduct by either of the spouses.
In the Appellate Division case of Wijker vs Wijker[ii] held the correct way to approach the forfeiture in terms of section 9(1) is to enquire whether or not the party against whom the order is sought will in fact be benefitted ,which is purely a factual question. Once it is established that the party will be benefitted, the court will further consider whether the party will be unduly benefitted if a forfeiture order is not made.
8. In terms of Section 7(3) of The Divorce Act, marriages out of community of property which were entered into before the commencement of the relevant acts finds application which inter alia determines that a divorce court can order one of the spouses to transfer part of his or her estate to the other spouse. This is called a distribution order. The said Section 7(3) of The Divorce Act in essence caters for people who do not have the advantage the Statutory Accrual System which came into operation in 1984.
9. Several writers have argued that after the commencement of the matrimonial Property Act, couples have a choice whether or not to share assets or gains, and they can deliberately and explicitly exclude both community of property as well as the accrual system in their antenuptial contracts. As our Law respects the freedom of contract and personal autonomy and by reason of the fact that it’s not the court’s role to impose patrimonial consequences on spouses who have deliberately chosen to reject them, there is no need for new reform to cater for instances, such as provided for in terms of Section 7(3) of the Divorce Act.
10. Provision is also made in the Divorce Act in terms of Section 7(2), for the payment of maintenance by one of the ex-spouses to the other for a period after the divorce. Spousal maintenance awards are usually based on the needs of the claimant ex-spouse. Some of the reasons which the court considers to award spousal maintenance are inter alia the following:
It is in the best interest of the children to have a stay at home mother.
The ex-wife cannot find work at the moment.
The ex-wife will never find work.
It is a form of compensation for the years invested in the marriage.
11. As regards to pension interest of a particular spouse when it comes to a divorce, this could constitute a significant aspect of his or her patrimony, but usually the amount is not available as cash at the time of the divorce as it is still tied up in the Pension Fund.
12. Section 7(7) of The Divorce Act provides that a spouse pension interest should be deemed part of his or her estate which means that with regard to spouses married in community of property, the other party was entitled to half a share of the others pension interest in the event of a divorce. Section 7(8)of the Divorce Act further provided that this amount would only become due when the members spouse’s pension was paid out. The legislature has addressed the inherent problem which arose as a result of the aforesaid two sections by promulgating an amendment to the Pension Fund Act (Act 24 of 1956). Sections 3D(a), (d) and (e) now provide that the non-member spouse’s share of the Pension Fund can either be paid out immediately or will re-invest it on his or her own behalf.
A final interesting fact is that when parties have been married in community of property and they both owned an immovable property in their joint estate and one of them has lawfully acquired the share of his or her formal spouse in the immovable property by virtue of a divorce order, the Registrar of deeds may, on written application by the spouse concerned, endorse the title deed of the immovable property in terms of Section 45 bis (1) (a) of the Deeds Registries Act and endorse the Title Deed to the extent that such spouse is entitled to deal therewith as if he or she had taken formal transfer thereof into his or her own name of the share of the former spouse in the property.