July 15, 2022

KVV | A Note from our Director

Hope

The Word of God says that three things matter, faith, hope and love. What does this have to do with life, at work, life at home ?

At work we all have a role to play and influence those around us. We can lead the way and we do not necessarily have to have a leadership or managerial position to influence people. If you influence people you are a leader.

When we go home all of us no matter background or position, is a dad, or mom, or brother, or sister. Every dad and mother has a leadership role to play.

Just as our Father through our Lord Jesus gives us faith, hope, and love, we can be that faith, hope and love to those around us and those we influence.

Recently we had a discussion with Mr Brand Pretorius and he said that in this time of uncertainty in the world not just in South Africa we as influencers need to be the hope many of us so desperately need. Where there is hope there is faith that things will get better. Where there is hope there is energy to move forward. Where there is hope there is light….

Where there is hope there is engagement by all to make things better. Although we cannot see hope in the physical sense, we can feel it in our spirit and that leads to action that brings results that shows that hope in action leaves a tangible result.

The beauty of hope is that it takes one to ignite that inner flame, that inner spirit that is contagious. It spreads quickly and brings change for the better of the family, community, workplace and the country.

Kind Regards
Roy Kapp | Director

July 15, 2022

Buying and Selling Property: Who Pays What Costs?

“Risk comes from not knowing what you’re doing” (Warren Buffett)
Don’t risk not knowing what you’re doing when you either sell or buy property. Avoid nasty shocks by budgeting properly for the costs you will incur – some of them can be substantial, and some are less obvious than others. The checklists below are of necessity not exhaustive and you would do well to take specific professional advice and to get cost quotes before you finalise your financial planning.
The costs you will pay as buyer
In the excitement of buying a house (particularly if it’s your first one!) it’s easy to underbudget and forget all the amounts of money you will have to pay over and above the purchase price. One suggestion is to budget for costs totaling up to about 10% of the purchase price, but here’s a list to help you with your own calculations (ignore any items that don’t apply to your purchase) –
  • Transfer duty (a government tax payable to the state via SARS unless the sale is subject to vat). You will pay on a sliding scale depending on the purchase price and beware – this can be a substantial cost!
  • The applicable transfer fees that the conveyancers will charge for their services in handling the transfer (you must pay these before transfer)
  • Deeds Office fees
  • Bond registration fees charged by the bank’s attorney
  • Bond/Home Loan initiation fee payable to the bank (the bank may also require you to take out a home loan protection life policy)
  • Occupational interest, if payable when you move in before the transfer takes place
  • Pro-rata rates, municipal charges and levies (some payable in advance)
  • If you are buying into a complex (sectional title or Homeowners Association) you may be liable for body corporate or HOA levy clearance fees in addition to pro-rata levies
  • Don’t forget other costs like moving costs, redecorating, telephone and internet connections, water and electricity deposits etc
  • Also remember to budget for your ongoing monthly costs of property ownership – rates, levies, municipal services, insurance (building and contents), security, building maintenance and the like.
The costs you will pay as seller
Again, ignore any of these items that don’t apply to your particular sale –
  • Estate agent’s commission (don’t forget the vat component)
  • Certificates of compliance – electrical, water, gas, electric fence, and the like. Provide also for the possibility of repairs and upgrades to ensure compliance with regulations
  • Bond cancellation fees (be careful here to give the bank enough notice to avoid having to pay an early termination penalty as well)
  • Rates and levies
  • If you live in a complex, there may be other fees payable to your body corporate or Homeowners Association.
Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

July 15, 2022

Bodies Corporate: Forcing Access to Units, and Round Robin Resolutions

Owning your own property comes with a raft of benefits, including a general right to privacy and control over who can access your property and who can’t. But of course there are exceptions. And apart from the obvious ones, a recent High Court judgment highlights one that is particular to sectional title schemes. It involved a unit owner whose “recalcitrant actions” prevented a body corporate from entering his unit to check for a water leak.
A recalcitrant unit owner blocks access to his unit for a leak test
  • A unit in a sectional title scheme had a damp problem and the neighbouring unit owner initially allowed the body corporate access to his unit to conduct a leak test. No leaks were found.
  • However three months later the damp problem was still unresolved, and this time the neighbour flat out refused access to his unit for a second leak detection test. Requests for access through the managing agents, loss adjusters, leak detection agents and the body corporate’s attorneys all fell on deaf ears.
  • The body corporate applied to the High Court for an urgent order compelling access within 48 hours.
  • Although the neighbour had initially taken the stance that there was no reason why a second inspection should be conducted, he had a last-minute change of mind (after taking legal advice) and accepted that the body corporate is entitled to conduct reasonable inspections from time to time in order to properly manage the common property. He made a settlement offer to this effect to the body corporate, which rejected the offer as it still wanted its costs.
  • Ultimately the Court rejected the neighbour’s attacks on the body corporate’s standing to bring the court application and held the neighbour liable to the body corporate for both the leak detection costs and the legal costs (only on the Ombud’s tariff – more on that below).
Were the body corporate’s round robin resolutions valid?
At issue was the validity of two body corporate resolutions. The full details of the various legal challenges mounted against the resolutions will be of great interest to industry professionals, but for most bodies corporate and unit owners perhaps the most important practical aspect is the attack on the first resolution because it was signed only by two of the five trustees on a round robin basis. The Court was unimpressed by the neighbour’s argument that the resolution was defective because it was not signed by a majority of trustees and did not record date, place, and time. “It is common practise” said the Court “what with the onslaught and the lagging effects of [Covid 19] that trustees, shareholders, governing bodies and directors meet virtually and sign documents via round robin.” “It is … not uncommon for [trustees] to manage the affairs of the body corporate as they deem fit and in the best interests of the owners. Ad hoc and informal meetings are often held in order to deal with incidents without having to call or convene a formal meeting of the trustees.”
Each case will be different
The particular facts in this case clearly played a significant role in the Court’s ultimate decision, and there is no substitute for legal advice specific to each unique set of circumstances. For example, one of this scheme’s Management Rules specifically caters for a trustee meeting by ‘any other method’ which, said the Court “in my view would encompass and encapsulate the extension of the method of signing resolutions. It would be absurd to consider or apply anything to the contrary.” Important also was the Court’s finding that “throughout the entire process all the trustees were aware of and informed of what was transpiring”.
Finally, a warning from the Court to always approach the Ombud first
The Court once again confirmed the principle that in a matter such as this the parties should in the first instance approach the CSOS (Community Schemes Ombud Service) rather than the High Court. Commenting that “I am of the view that this matter should never have been brought before this court as first instance” and “There are no exceptional circumstances pertaining to this matter, but rather issues that fall squarely within the ambit of the Ombud that can and would have been expeditiously dealt with at no cost as the employ of legal representatives is not permitted” the Court awarded legal costs to the body corporate only “on the tariff applicable in respect of proceedings under the ambit of the Ombud”. Reading between the lines, the body corporate was possibly fortunate that the High Court agreed to hear its application at all. It may well have been saved only by the Court’s expressed displeasure with the neighbour’s “recalcitrant actions” and by his conduct in opposing the application in the first place. Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

July 15, 2022

Verbal Agreements – Not Much Good, But Lots of Bad and Ugly

“The Good, The Bad, and The Ugly” (Spaghetti Western, 1966)
A common myth – one that can get you into a whole lot of trouble if you aren’t alive to it – is that verbal contracts are not legally enforceable in South Africa. The opposite is true. With very few exceptions, our law will hold you to all your agreements, whether oral or written.
What verbal agreements aren’t binding?
Not many. Only a few types of agreement must be in writing to be fully valid, the most common being contracts for the sale, exchange, or donation of land or of any “interest in land”, ante-nuptial contracts (ANCs); and deeds of suretyship.
So, watch what you say!
Firstly, although our laws of contract are complex, with many exceptions and “ifs and buts”, at the most basic level the only requirements for a binding contract are an “offer” and an “acceptance” of that offer. So, watch what you say! Make an offer to someone else, or accept another person’s offer, and that little voice at the back of your mind telling you “Don’t worry, you aren’t actually tying yourself into anything here” is very likely to be (a) totally wrong and (b) getting you into a whole lot of trouble.
The danger – a little bit of Good, but mostly Bad and Ugly
Of course, verbal agreements do have their benefits – they’re quick, easy, and cost-free. We enter into little give-and-take deals with others in our daily lives without a second thought and with not a drop of ink in sight. And that’s absolutely fine for the little things. But contracting orally is a terrible idea when the stakes are high –
  1. Our not-so-sharp memories: As the old proverb warns us: “The bluntest pencil is better than the sharpest memory”. It’s a human trait for us to “hear what we want to hear”. And to remember what we want to remember. You and the other person could well, in all innocence, come away from exactly the same discussion with totally different ideas and memories of what you actually agreed to.Next thing you know you’re both in court, swearing to the truth of your own versions and leaving it to a judicial officer to try and decide whose recollection is the more accurate. That decision could go either way.Record what you agree to, for all to see.
  2. The fraud risk: Worse, if your opponent isn’t above stretching the truth a little (or a lot!) you have the same problem but magnified. Make it difficult for a dishonest party to wriggle out of an agreement – or to misrepresent its terms – by recording it in black and white.
  3. Proof: Which brings us to the question of proof. With an oral agreement it is your word against theirs. At best, you may be lucky enough to have a witness available to support your version, but such a witness may or may not have a good memory and high credibility. That can never match up to the evidential weight of a “signed, sealed and delivered” contract.
  4. Certainty and Dispute: Let’s bring that all together under the heading of “certainty”. Although written contracts aren’t perfect – our courts are regularly faced with disputes over them – there’s a lot less room for misinterpretation, uncertainty, and dispute when you can stand up in court waving a signed piece of paper rather than saying “As I recall it…”
An end note on electronic contracts
This is a whole other topic on its own, but bear in mind that since the arrival on the scene of the ECT (Electronic Communications and Transactions) Act you can often contract electronically via email, WhatsApp, and the like. There’s both a warning there (“be careful what you agree to electronically!”) and an opportunity (“paper, pen and ink not always needed!”). Take professional advice in any doubt. Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

July 15, 2022

Trusts on Divorce: Are You Stuck with an Ex-Spouse as Trustee?

“Love is grand. Divorce is a hundred grand.” (Anon)
That’s a great scenario whilst the marriage prospers, but what happens on divorce? A recent High Court decision addressed one such scenario – Trusts may be formed for a variety of reasons, and the purpose and structure of each trust will inform the choice of trustees. When it comes to families aiming to preserve and protect family assets for future generations, often both spouses are appointed not only as beneficiaries, but also as trustees.
‘Not the Titanic’ – this marriage took six years to sink
In 2014, whilst a marriage was (as the Court put it in a judgment rich in nautical imagery) “still in calm waters”, the spouses formed four trusts. Two were called business trusts, one a property trust, and the fourth a family trust. Naming choices aside, the critical issue is that both spouses had been appointed as trustees. Regrettably in 2015 the couple “drifted” apart and their marriage “ran aground and settled on the rocky shores of the divorce courts door” with the institution of divorce proceedings. “Unlike the Titanic” observed the Court, the relationship took six years more to be finally laid to rest – the divorce was only granted in 2021.
The ex-spouses apply for each other’s removal as trustee
The ex-husband then applied to the High Court for removal of his ex-wife as trustee of all four trusts on the grounds that she had breached her duties as trustee. Most significantly, he said, she had failed to attend trustee meetings for some five years despite being invited to them.
  • Her main defence was that, in the context of the ongoing divorce proceedings, her ex-husband’s conduct made it impossible for her to attend to her duties as trustee.The Court was unconvinced by her various allegations in this regard, and two aspects in particular bear mention –
    • She complained that being in the minority her decisions were overruled – not an excuse for failing to attend meetings held the Court.
    • Her ex-husband failed to provide a vehicle to enable her to attend meetings – again no excuse, said the Court, there being a provision in the trust deed for virtual meetings.
  • Also counting against her was the fact that she was living in a trust-owned property “but fails to maintain such and pays no rent at all despite receiving the amount of R10 000,00 per month towards property expenses incurred.”
  • Finding that she had not been involved in the trust’s affairs and did nothing to safeguard them, the Court ordered her removal as trustee.
The Court then rejected as being without merit her counterclaim for her ex-husband’s removal as trustee on the grounds of a breach of his duty of trust towards her and a conflict of duty between his private interests and his duties as trustee. Let’s have a look at the law behind those decisions –
What are a trustee’s duties?
Per the Trust Property Control Act: “A trustee shall in the performance of his/her duties and the exercise of his/her powers, act with the care, diligence and skill which can reasonably be expected of a person who manages the affairs of another”.
Must a trustee be impartial?
The Court: “It is not required of a trustee to be total[ly] impartial or [to have] no connection with the beneficiaries, but rather that he or she is capable of bringing the necessary independent mind to bear [to] the business of the trust and of deciding what is in the interests of the trust.”
When will a court remove a trustee?
The court has a discretion which it must exercise “with circumspection”. Per the Court: “The court has to be satisfied that the requested removal will be in the best interest of the trust and the beneficiaries … a mere conflict of interest between trustees and beneficiaries or amongst the trustees [is] insufficient for the removal of a trustee … the overriding question is always whether or not the conduct of the trustee imperils the trust property or its administration”. There is no requirement to prove bad faith or misconduct, rather “the essential test is whether such disharmony, as in the present matter, imperils the trust estate or its proper administration … It is therefore clear that the court may remove a trustee from office in the event that such removal will be in the interest of the trust and its beneficiaries.” (Emphasis supplied) In closing… If you are faced with a divorce scenario, avoid a situation such as the ex-spouses in this matter faced by making sure that all questions around any trusts involved – such as who is to remain as trustee, who is to remain as beneficiary and so on – are resolved as part of the divorce process, and not left for future resolution. Even better, take professional advice upfront when setting up trusts on how to avoid any future disputes that may arise should your marriage ever sail into stormy waters. Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

July 15, 2022

Website of the Month: Don’t Let Hybrid Work Break Your Company Culture!

As pandemic restrictions ease around the world, many businesses forced by lockdown to “go remote” are torn between returning to office and keeping everyone working remotely. An increasing number are opting for one or other hybrid model, which can come with major benefits but also major challenges. One of those challenges is the risk of losing a cohesive company culture built up over years and perhaps decades of in-office teamwork. Have a read of PwC’s “Three ways to prevent hybrid work from breaking your company culture” here for some ideas on mitigating that risk. Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

June 24, 2022

A Note from our Director | Mariette van Zyl

A Note from our Director

I have always been envious of morning people – being able to jump out of bed at the crack of dawn with an attitude of carpe diem and a song in the heart. Personally, I have always been a lot more capable of burning the midnight oil than igniting same early in the morning. And that weakness is multiplied when the said morning is in the middle of winter, when mornings are both early and cold and you need double the amount of coffee before you can get going. Thank goodness that God has a fondness of diversity and that we are all created different.

If you are a morning person, then I admire you greatly! If, however, you are more like me, then this past week marked some good news for us. The 21st of June 2022 – the shortest day and the longest night in South Africa, and the turn of the season! Yeah!!

On a more serious note though, this reminds me of one of the certainties of life : that seasons will always change. It is one of the assurances we can hold on to during the most difficult times in life – that no matter how bad things are going at the moment, like the season, things will change. The tides will turn, the earth will continue on its orbit around the sun and the empty branches of the trees will start sprouting new leaves as the sun rises earlier and the temperature becomes milder.

This week saw something else that we all have been looking forward to – maybe with some level of uncertainty, but also a level of hope. The Government repealed the remaining COVID-19 regulations which included the rules on wearing masks indoors and the limitation on public events and gatherings. These past two and half years were certainly trying for the human race. The worldwide pandemic caused sickness, death, uncertainty and financial strain, to name but a few of its implications.

I am reminded of the quote by Albert Camus: “In the depth of winter, I finally learned that within me there lay an invincible summer.”

We all had to dig deep these past two years – I know I have. May this change of season be more than just the literal transition from winter to summer. May this also symbolize the change that we have been desperately looking forward to. A rise from the ashes of the Covid Pandemic where we will move forward with more strength, more resilience, and most of all, more appreciation for the gift of live.

To those who have lost loved ones in this pandemic. I know your pain. May you to find a glimpse of spring on your horizon. And may hope and faith always be your anchor.

Mariette van Zyl | Director

May 26, 2022

The “Great Resignation” is Upon Us – Know the Law!

“Signs of the “Great Resignation” are rippling across South Africa” (Business Insider report, 22 April 2022)

The global pandemic-induced “Great Resignation” trend is upon us, and both employers and employees need to be aware of how our law views the whole question of employee resignation.

A recent Labour Court decision gives some valuable guidance –

The sick employee who tried to withdraw his resignation after a “miraculous” recovery
  • The Deputy Financial Officer of a municipality under administration tendered in writing his immediate resignation from his post on the grounds of ill health.
  • Two weeks later he sought to withdraw his resignation stating “It gives me pleasure that my health as prompted resignation has miraculously improved that I am normal to endure the temperature in the area”.
  • The municipality told him his withdrawal of resignation was not accepted and he applied to the Labour Court for an order reinstating him to his position with full salary and benefits.
  • Many of the facts were in dispute, but critically the Court found that the employee “has by word shown a clear and unambiguous intention not to go on with his contract of employment”, that he did not act in the heat of the moment, that his failure to report for duty thereafter “confirms his subjective intention to quit”, that he communicated his resignation to the correct municipal official who had not objected to it and could be presumed to have accepted it, and that his request to withdraw his resignation was indeed refused by his employer.

The Court held accordingly that the employee’s resignation stood. In doing so, it answered a variety of important questions as follows –

The law on resignation: 7 critical questions answered
  1. What is resignation and how does it affect the contract of employment? 
    “Resignation as a voluntary act is a unilateral act that ends the employment relationship.” (The “voluntary” part is important here! In this case the employee “…consciously elected to resign. He must be allowed to remain in that freely chosen path”.).
  2. When does resignation take effect?
     “Resignation takes effect once communicated to an employer…”.
  3. Who must resignation be communicated to? 
    When it comes to a corporate employer “In my view anyone superior to an employee is sufficient. He or she represents an employer one way or another.” (No doubt some contracts of employment will specify exactly how and to whom a resignation must be communicated).
  4. Must an employer accept a resignation to make it effective? 
    No, “…there is no legal requirement that the resignation must be accepted.”
  5. What if the employee must serve a notice period? 
    This makes no difference; the resignation is effective once communicated: “…This is so even if an employee is contractually obligated to serve a notice period and does not serve it.”
  6. Can an employee unilaterally withdraw a resignation? 
    No, “… it is incapable of being withdrawn unless an employer consents thereto”.
  7. If an employer does accept a withdrawal of resignation, is that a reinstatement? 
    No, “…where an employee withdraws a resignation, all it means is that such an employee is seeking to be rehired or re-employed … A contract of employment can only be brought back from the ashes in the same way it is conceived; namely offer and acceptance.” (The lesson for employers here is to be crystal clear in rejecting a request to withdraw a resignation, as anything less might be construed as re-employment).

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

May 26, 2022

Landlords: Zoning Law Contravention Could Invalidate Your Lease

“…it is a general rule that a contract impliedly prohibited by statute is void and unenforceable…” (extract from judgment below)

Here’s yet another warning from our courts of the importance of complying with your local municipal zoning laws, whether you buy property to live in, as a capital investment, or to let out.

One risk for a landlord is finding yourself with an invalid lease and no claim against your tenant. A recent High Court decision illustrates –

The unlawful coffee shop and the invalid lease
  • A landlord rented premises to a tenant for use as a coffee shop, home industry and restaurant. The tenant also resided on the premises, but no rental for the residential component was specified in the lease.
  • The business use was contrary to zoning provisions indicating that the property could only be used for dwelling purposes as it was zoned “Single Residential 2”.
  • The landlord, although aware of the zoning restrictions, told the tenant that she could operate her business.   
  • When the landlord sued for arrear rental and payment of municipal charges the tenant’s defence was that the lease was invalid and unenforceable.
  • The High Court (hearing an appeal from the Magistrate’s Court) held the lease agreement to be illegal, void and unenforceable. The tenant, it said, could not be expected to establish from the municipality, before entering into the lease agreement, whether the premises could be used for her business. She had seen other restaurants in the same street and had no reason to question the landlord’s right to allow her to trade as she did.
  • As to the applicable law, the Court found that “although it is a general rule that a contract impliedly prohibited by statute is void and unenforceable, this rule is not inflexible or inexorable [inevitable].” The Court’s analysis of when this will apply (and when it won’t) will be of great interest to property professionals, but for most landlords the important thing is the fact that your lease will normally be invalid when it contravenes local legislation. 
  • In that event, you will have no claim against your tenant because, as the Court here put it “this court shall not countenance unlawful conduct by allowing the [landlord] from benefiting from an illegal contract.”
  • Bottom line – the coffee shop tenant is not liable for rental, nor even for municipal charges relating to her occupation and use of the premises.
Zoning – what to do when buying or letting out property

The bottom line is that you need to understand all local zoning restrictions before buying property or letting it out to a tenant. If as a landlord you are aware of a possible issue in this regard, take professional advice on whether you may be able to word the lease in such a way as to protect you from losing all your claims against the tenant should worst come to worst.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

May 26, 2022

New Ruling on Divorce Assets: How Does it Affect You?

“…the inequality at hand is caused when, after the conclusion of the marriage, a distortion is caused by the fact that one spouse contributes directly or indirectly to the other’s maintenance or the increase of the other’s estate without any quid pro quo.” (Extract from judgment below)

You may have read of the recent High Court decision declaring a section of the Divorce Act invalid.

To understand the importance of this new ruling for many couples about to divorce (and for all couples about to marry), let’s start at the beginning –

A recap – your 3 choices of “marital regime” on marriage
  1. You can marry in community of property: All of your assets and liabilities are merged into one “joint estate” in which each of you has an undivided half share. On divorce or death the joint estate (including any profit or loss) is split equally between you, regardless of what each of you brought into the marriage or contributed to it thereafter. This by the way is the “default” regime – so you will automatically be married in community of property if you don’t specify otherwise in an ANC executed before you marry.
  2. You can marry out of community of property without the accrual system: Your own assets and liabilities, both what you bring in and what you acquire during the marriage, remain exclusively yours to do with as you wish. Note here that the “accrual system” (see option 3 below) will apply to you unless your ANC (ante-nuptial contract) specifically excludes it.
  3. You can marry out of community of property with the accrual system: As with the previous option, your own assets and liabilities remain solely yours. On divorce or death you share equally in the “accrual” (growth) of your assets (with a few exceptions) during the marriage.

Before we move on to the altogether less happy subject of divorce – if you are about to marry, take full advice on which of these options is best for you before you tie the knot!

Does this new ruling apply to your marriage?

This ruling does not apply to you if your marriage was terminated by death or divorce prior to the judgment (which was handed down on 11 May 2022).

It does apply to you if –

  1. Your marriage is still in existence, and
  2. You chose Option 2 above, in other words if you are married out of community of property without accrual, and
  3. Your marriage was concluded after 1 November 1984. Why that 1984 cut-off date? Well, what this High Court case was really all about was the fact that where a marriage was concluded before 1 November 1984 (that’s when the new “Matrimonial Property Act” took effect), courts had a discretion to make a “redistribution order” transferring assets between the divorcing spouses. But (until now) courts have had no such discretion for marriages concluded after the cut-off date.
The constitutional invalidity

That time bar – the 1 November 1984 cut-off – is set by a section of the Divorce Act. And that, held the Court, is unconstitutional because it discriminates between couples based solely on the date of their marriage.

It deprives couples married after the cut-off date of the opportunity to ask a court for a share of benefits acquired during the marriage, based on their respective contributions (direct and indirect) “to the other’s maintenance and estate growth during the subsistence of the marriage”. In practice (until now), a spouse could be left destitute after spending decades contributing to a marriage and to the other spouse’s wealth.

The Court’s declaration of constitutional invalidity, whilst it must still be confirmed by the Constitutional Court, changes all that.

The practical effect of the ruling
  • Courts now have a very wide discretion to order a “redistribution” of assets between you and your spouse, ordering a transfer of assets and money from one spouse to another, regardless of what your ANC provides.
  • That gives you the right to claim compensation for your contributions to the marriage, in other words to claim a fair share of wealth accrued during the marriage (assets brought into the marriage aren’t affected). You will have to prove your case, show what you contributed, and convince the court that a redistribution in your favour is warranted.
  • The practical effect of such a redistribution order “is that the party who contributed to the other’s gain is compensated for its contribution to the extent that a court finds just and equitable. To this end, the court is cloaked with a wide discretion taking into account an infinite variety of factors.” Factors likely to be considered are each spouse’s respective contributions of time, services, savings of expenses, their current financial positions, what was agreed in the ANC, and the like – each case will be different.
  • Note that this is not the same as accrual (Option 3 above). With accrual, the spouse with less asset growth (accrual) during the marriage has an automatic claim against the other for half the difference. But with a “redistribution order”, there is nothing automatic or 50/50 about it – instead the court exercises its discretion as to what (if anything) to award to who.

The aim here is not to put the spouses into equal financial positions, the aim is to redress an unfair financial imbalance.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews