Forfeiture of assets at divorce

Before the introduction of the Divorce Act, a forfeiture order was based on the principle that no one ought to benefit financially from a marriage that he/she damaged. Under the current Divorce Act, conduct of the parties is just one of the factors that a court will consider when deciding to grant a forfeiture order. Our courts have done away with the guilty party principle as a ground for divorce or as the main reason for a forfeiture order.

Forfeiture of patrimonial benefits entails a court granting an order of divorce and including an order that one party forfeits the assets which would have been acquired by them because of the marriage in community of property or benefits accrued as a result of an ante-nuptial claim. The concept of forfeiture of patrimonial benefits is legislated by Section 9(1) of the Divorce Act 70 of 1979 (“The Act”). In terms of the Act the courts should grant a forfeiture order in circumstances where, if the order is not granted, one party will be “unduly benefited” in relation to the other party.

In terms of the Act, the court has discretion when granting a divorce on grounds of irretrievable breakdown for a marriage in community of property to order that the patrimonial benefits of one party be forfeited in favour of the other. A gift received during the marriage does not fall within the assets that a party can forfeit, and a spouse cannot forfeit assets that he/she brought into the joint estate. Forfeiture may be either wholly or partially in favour of a party.

Courts must consider three factors before granting a forfeiture order:

· 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.

The court’s discretion is restricted to the above criteria alone and no other factor may be considered when determining whether to grant a forfeiture order or not.

When spouses are married in community of property, their assets are tied up in the joint estate and, when a court grants a decree of divorce, the assets must be divided. Where the spouses agree on a division of the joint estate, a settlement agreement may be drafted to be incorporated in the decree of divorce and made an order of the court. Where spouses do not reach an agreement on how to divide their joint estate (as often happens), the court has the power to appoint a receiver or liquidator to realize and divide the assets of the joint estate on its behalf. In exercising its discretion to appoint a liquidator, the court will look at various factors such as the size, nature, and value of the joint estate. The liquidator’s fees are then paid from the joint estate.

There is always a risk that one spouse in a marriage in community of property may prejudice the other spouse’s interest in the joint estate pending divorce. The law protects that spouse against the reckless or intentional behavior of the other spouse during divorce proceedings.

Where one spouse is acting in a negligent or reckless manner and alienates assets of the joint estate pending divorce, the other spouse may lodge an application to the court to suspend his/her spouse’s capacity over the joint estate. When the court grants such an order, the spouse who brought the application may then control the estate without the other’s consent.