February 1, 2018

What relief is available to an aggrieved party when their spouse is dissipating assets?

 

An anti-dissipation relief is available to an aggrieved spouse who is married out of community of property, subject to the accrual system when the other spouse is nefariously dissipating or secreting assets away so as to defeat an eventual accrual claim when divorce is finally granted.

Generally, when two people are not married in community of property, the spouse has no vested rights in any assets invested or registered in the other’s name, be it money, shares, movable or immovable property – generally any portion of the husband’s estate.

Section 3(1) and 3(2) of the Matrimonial Property Act No 88 of 1984 is clear that only on dissolution of the marriage, does a spouse (the wife) acquire a right to claim half the net accrual of the other spouse’s estate.

By necessary implication, before the dissolution of the marriage, the spouse has only a contingent right (not a vested right) to claim half the net accrual of the other’s estate. Only when the contingency eventually materialises does the spouse have a vested right.

It follows therefore, the spouse does not have a general right to prevent the other from dealing freely with assets separately owned by them.

That is however not the end of the matter as even a contingent right to claim half of the accrual in the estate of the husband could be protectable by interdict pendent lite if it can be shown that the other spouse:

  • has assets within the jurisdiction of the court;
  • has no bona fide defence against the contingent right; and
  • has the intention to defeat their spouse’s claim or render it hollow by dissipating or secreting assets away so as to defeat it. For example by selling a significant asset, like a house. This impugned transaction to sell the immovable property must warrant an inference of mala fides or some other conduct with nefarious intentions.

Importantly, In addition to the above jurisdictional requirement, the spouse must still show a well-grounded apprehension of irreparable loss should the interdict pendent lite not be granted.

The corollary is that the other spouse must, on the facts, not be able to show that if their partner was eventually successful in the eventual accrual claim in the divorce, they would still be able to meet and satisfy the accrual claim in due course. They may do this by showing that even if they were to sell a significant asset  the accrual claim in favour of is so negligible or minimal as to be satisfied by other available assets when such accrual determination is finally made in the main action.

It must be noted that, because of its invasiveness and Draconian nature courts are reluctant to grant this relief bar the clearest of cases. It is equally worth mentioning that the accrual calculations on the basis of which the application rests should be crafted in such a way that dispute of fact is avoided as dispute of fact may invariably lead to the need for the matter to be determined after full discovery and oral evidence.

In the alternative, an aggrieved spouse may approach the court on the basis of section 8(1) of Act 88 of 1984, which is titled POWER OF THE COURT TO ORDER DIVISION OF THE ACCRUAL and provides thus:

(1) A court may on the application of a spouse whose marriage is subject to the accrual system and who satisfies the court that his right to share in the accrual of the estate of the other spouse at the dissolution of the marriage is being or will probably be seriously prejudiced by the conduct or proposed conduct of the other spouse, and that other persons will not be prejudiced thereby, order the immediate division of the accrual concerned in accordance with the provisions of this Chapter or on such other basis as the court may deem just.

 Frank Setati
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