Divorced in community of property – forfeiture of benefits

What is forfeiture of benefits and when is it justified?

If you marry in community of property you assume that your marital estate is jointly held, and in the event of divorce you will split your assets equally. This is the definition of marriage in community of property and a fair assumption to make. However, there are exceptions to the rule. In some circumstances, according to the Divorce Act 70 of 1979, “the Court may make an order that the patrimonial benefits of the marriage be forfeited by one party in favour of the other, either wholly or in part, if the Court, having regard to the duration of the marriage, the circumstances which gave rise to the breakdown thereof and any substantial misconduct on the part of either of the parties, is satisfied that, if the order for forfeiture is not made, the one party will in relation to the other be unduly benefited.”

An example of this might be the marriage, after a short acquaintance, of a wealthy older person to a much younger spouse. During the marriage the youthful partner has extra-marital relationships and soon decides to file for divorce. It might be deemed an undue benefit if that person walks away with 50% of the older spouse’s assets, and the court might make an order distributing the joint estate in different proportions.

A case appeared before the Gauteng High Court recently in which a wife had been denied an equal share of the joint estate on divorce on the grounds that she unduly benefited. She appealed against the decision, and the appeal was upheld. The case raises some interesting points about the nature of the marital relationship and each spouse’s contribution to it, as well as the legal implications of certain conduct.

What happened?

The couple – we’ll call them Mr and Mrs A – married in 1985. They had three children. During the marriage Mr A paid the bond on the marital home and Mrs A paid the utilities, grocery bills and all the costs associated with raising the children, including school fees. Mrs A left the marriage in 2007, but the couple did not divorce until 2018. Mr A was the plaintiff in the divorce case, with Mrs A the defendant. Mr A claimed the marriage breakdown was a result of Mrs A’s abuse of alcohol and mismanagement of finances.

However, during the marriage Mr A had engaged in extra-marital affairs and had been abusive towards his wife. This was the real cause of her departure from the family home in 2007, the court found.  

After the couple separated, Mr A cashed in his occupational pension and withdrew a lump sum of R500,000, placing the remainder in a living annuity. He bought two vehicles, one of which was financed and the other paid for in cash from the pension lump sum. He also paid off the remaining bond on the marital home. Bear in mind Mr and Mrs A were not divorced at this point, and so these purchases were effectively made from the joint estate. However, Mr A’s view was that Mrs A had abandoned the marriage, and therefore the vehicle and bond repayment costs were covered by him, with no contribution from her. The original divorce decree supported this position, and ordered Mrs A to forfeit as undue the benefits that accrued after she left the marriage in 2007. Mrs A appealed against this decision.

The appeal court’s ruling on the forfeiture of benefits

The High Court upheld the appeal, declaring the original forfeiture of benefits “innately unjust”.  It overturned the divorce order, substituting it with a new decree of divorce, in which “the joint estate of the parties shall be divided in equal shares”. In practice this meant that the living annuity purchased by Mr A was endorsed to give Mrs A 50% of the value of the annuity as at the date of the new divorce order.

The basis for this decision

The High Court considered a number of factors in making its decision, in line with the Divorce Act provisions. It looked at the duration of the marriage, the assets involved, the behaviour of both parties during the marriage, and basic principles of fairness and equity. The marriage had endured for a very long time. The couple had entered the marriage with nothing, building up an estate together over 22 years, before the separation in 2007. Although Mr A had been the main breadwinner, Mrs A had also contributed financially, and morally in her role as mother and homemaker. The court judged that, regardless of financial contribution to the increase in the value of assets, this increase over the long duration of the marriage was a direct result of their marriage in community of property.

The court also decided that, while marriages break down for many reasons and rarely due to one spouse’s behaviour exclusively, in this case Mr A’s “misconduct” – his extra-marital affairs and abuse – undoubtedly led to the demise of the marriage. Therefore Mrs A’s entitlement to the benefits that accrued after 2007 was not undue. His misconduct counted against a forfeiture order in the eyes of the court.

The court also found that the purchases made by Mr A after 2007 were on the strength of existing assets belonging to the joint estate, i.e. the lump sum from the occupational pension. The value of the pension fund was reduced and the value in the joint estate replaced by the value of the vehicle purchased in cash and the equity in the house, now no longer bonded. Therefore Mrs A was granted a 50% interest in the living annuity. Furthermore, Mr A was ordered to pay the costs of the divorce action and of the appeal.

All’s fair…

The law serves to keep the peace and to promote social justice, establish standards and protect liberties and rights. In this case, the couple married with an understanding and an intention about that marriage. It could be argued that Mr A breached the faith Mrs A placed in him as her husband by engaging in extra-marital affairs. Her departure from an untenable home situation was not sufficient justification to deprive her of the legal and moral entitlement to the joint estate their marital regime guaranteed. 

If circumstances had been different, the court’s decision might also have been different, for example in the scenario we described at the beginning. Laws may be straightforward, but people are complex. The purpose of the justice system is to ensure the law is applied with finesse to the myriad conditions that arise in human interaction. Nowhere is this more necessary than in divorce law.

Sensitivity is more important than aggression

Some divorce lawyers are known as “sharks”, because they go on the attack and try to extract revenge on the other spouse. While that may be appealing when you are feeling hurt or angry, it is not in anyone’s best interests. Handling a case like this one requires sensitivity, tact, and an ability to see the big picture. Divorce is not just about the law; it is about people.

SD Law is a firm of attorneys in Cape Town. We’ll help you negotiate a divorce that is fair, right for your family and secures your future. We will protect your interests and ensure a fair division of property and assets, without forfeiture of benefits, and we will do so with sensitivity and compassion. You will walk away with your dignity intact, like Mrs. A. Call Simon now on +27 (0) 86 099 5146 or email  sdippenaar@sdlaw.co.za. We also offer online consultations. We’ll call you back and schedule a meeting at a time that suits you, on the platform of your choosing.

Further reading:

• Divorce and the negotiation for pension benefits
• Divorce and pension sharing
• Death and marital regime
• Divorce by decree, and degree

Divorce Attorney Cape Town

http://divorceattorneycapetown.co.za/

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