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.

Employment Equity Amendment Act 2022: Key Changes Impacting South African Employers

By Sharusha Moodley

On April 14, 2023, the Employment Equity Amendment Act 4 of 2022 (EEA Amendment) came into effect, bringing significant changes to South Africa's Employment Equity Act 66 of 1998 (EEA). These amendments aim to enhance the promotion of equity and inclusivity in the workplace. This article provides a brief overview of the key amendments and their implications for employers in the country.

Expanded Definition of "Designated Employer": One notable amendment is the redefinition of a "designated employer." Previously, this term considered both the number of employees and the annual turnover of a business. However, the EEA Amendment now defines a designated employer as one that employs more than 50 employees, irrespective of the business's annual turnover. This change may result in some employers no longer having a legal obligation to actively address underrepresented designated groups or promote affirmative action.

Inclusion of "People with Disabilities": The EEA Amendment expands the definition of "people with disabilities" to include those with an intellectual impairment that substantially limits their employment prospects. By recognizing a broader range of disabilities, this amendment seeks to provide greater support and opportunities for individuals facing intellectual challenges.

Introduction of National Economic Sectors: Section 15A has been introduced into the EEA, granting the Minister of Employment and Labour the authority to identify national economic sectors. This step aims to ensure targeted equity measures in specific industries or sectors where disparities may exist. The identification of these sectors will enable the Minister to set numerical targets tailored to address equity issues within each sector.

Broadened Powers of the Labour Inspector: Under the amended legislation, labour inspectors now have wider powers. In cases where an employer fails to prepare an employment equity plan, a compliance order can be issued. This measure aims to enforce compliance with the law and promote the development and implementation of comprehensive employment equity plans by employers.

The Minister of Employment and Labour is expected to commence consultations and publish draft national economic sectors, along with their corresponding targets. Employers should stay informed about these developments and actively participate in the consultation process to ensure their voices are heard and to understand how these amendments may specifically impact their business sector.

The Employment Equity Amendment Act 2022 introduces important changes to the Employment Equity Act in South Africa, with the aim of fostering greater workplace equity and inclusivity. Employers need to familiarise themselves with the amended legislation, particularly the redefined designated employer category and the forthcoming national economic sector codes. By proactively staying informed and engaging in the consultation process, employers can navigate these changes effectively while promoting a more equitable and diverse work environment.

Please contact Sharusha Moodley for all your employment law issues.