Remedies when a party dissipates assets pending a divorce

What is an accrual calculation in a divorce? 

An accrual calculation refers to the process of determining a monetary claim made by a spouse who has accumulated less wealth during the marriage against the spouse who has accumulated more. This claim arises when a marriage subject to the accrual system is dissolved. It aims to equalize the financial positions of the spouses. It's important to note that an accrual claim does not entitle a spouse to a direct share of the other spouse's assets. See Reeder v Softline Limited and Another 2001 (2) SA 844 (W) at 848J- 849A. 

When is the value of a spouse's accrual calculated? 

The value of a spouse's accrual is calculated at the date of the marriage's dissolution, as per the Matrimonial Property Act of 1984. 

The exception: Dissipation of assets 

However, there can be concerns if one spouse dissipates their assets before the divorce is finalized, as it can negatively impact the other spouse's accrual claim. When assets are dissipated before the accrual calculation date, two negative effects occur: 

·         The dissipating spouse will have fewer assets or a lower net value in their estate at the accrual calculation date, reducing the difference in accrual between their estate and the other spouse's estate. This lowers the other spouse's claim. 

·         With fewer assets available in the dissipating spouse's estate, it becomes more challenging to satisfy the accrual claim even if awarded by the court. In other words, the dissipating spouse may not have sufficient assets to fulfil the claim. 

Who determines the accrual calculation? 

If the spouses cannot agree on how to calculate each other's accrual, and there's no agreement to involve a third party, the court has the responsibility to determine the extent of the accrual claim. However, unlike marriages in community of property, the court cannot delegate this responsibility to a third party without the agreement of both parties. 

The available remedy 

According to Section 8(1) of the Matrimonial Property Act, a court may order the immediate division of the accrual if a spouse demonstrates to the court that their right to share in the other spouse's accrual will be seriously prejudiced by the conduct or proposed conduct of the other spouse, without prejudicing any other person. The court can base this order on the provisions of the Act or any other justifiable basis. 

To obtain an immediate division of the accrual, the requesting spouse needs to satisfy the court that: 

·         The marriage is subject to the accrual system.

·         They have the right to share in the other spouse's accrual upon divorce.

·         Their right will be significantly prejudiced by the other spouse's conduct.

·         The immediate division will not prejudice any other person. 

If a spouse suspects that their partner is dissipating assets during divorce proceedings, they can apply for urgent interim relief from the court to prevent such dissipation. This relief is temporary until the divorce is finalized. Alternatively, they can request a court order for an immediate division of the accrual. However, they must demonstrate that they are entitled to the accrual claim even at the date of divorce, without a significant increase in their own estate. 

When considering an immediate division of the accrual as a final remedy, the court will apply the test outlined in Plascon-Evans Paints Limited v Van Riebeeck Paints (Pty) Limited 1984 (3) SA 623 (A) at 634 E-G. This means that the relief can only be granted if the facts, as stated by the respondents and admitted in the applicants' affidavits, justify it. Factual disputes should be resolved by accepting the respondents' version, except when it is clearly unreasonable or untenable based on the available evidence. 

It's crucial to carefully assess the genuineness of any apparent factual disputes to ensure that immediate division effectively protects the position of the vulnerable spouse. 

Importantly, an accrual calculation does not entitle one spouse to a portion of the other spouse's assets. It represents a deferred equalization claim. This distinction is essential in determining the nature of interdictory relief to protect the claim. A spouse cannot seek an interdict or interim relief for a claim of half of their spouse's assets; the claim solely relies on the accrual in their own estate.