In October 2023, the Constitutional Court extended judicial discretion to order redistribution of assets at the dissolution of marriages out of community of property without accrual, entered into after 1 November 1984 and/or dissolved by death. This decision came from two interconnected cases, EB v ER and Others (CCT 364/21) and KG v Minister of Home Affairs and Others (CCT 158/22), aimed at addressing the constitutionality of section 7(3) of the Divorce Act.
Understanding the matrimonial property system
Spouses married out of community of property without the implementation of the accrual system to their marriage maintain separate estates throughout the marriage. In the absence of the inclusion of the accrual system, there is no sharing of the increase in the other spouse’s estate over the duration of the marriage once the marriage comes to an end (either through death or divorce).
This system has often been criticised for its potential unfairness, particularly when one spouse contributes significantly towards the household and family without financial compensation. These non-financial contributions are not recognised in the same way as direct financial contributions made by the other spouse.
What has changed?
The Constitutional Court’s ruling in EB v ER and Others and KG v Minister of Home Affairs has altered the landscape for these marriages. Previously, section 7(3) of the Divorce Act only allowed for the redistribution of assets upon divorce for marriages out of community of property without accrual entered into before 1 November 1984 (being the date from which certain parties could elect for the accrual system to be applied to their marriage). This left many spouses married after this date or whose marriages were dissolved by death, without a legal remedy to claim a share of the growth in his/her spouse’s estate during the marriage.
In EB v ER and Others and KG v Minister of Home Affairs the Court found that this differentiation was irrational and constituted unfair discrimination, particularly against women, who are disproportionately affected by the lack of a redistribution remedy. The Court recognised that the exclusion based on dissolution of the marriage by death did not serve a legitimate purpose and violated the constitutional right to equality. The Court found it necessary to extend the redistribution remedy to spouses who were married after 1 November 1984 too.
Why the change?
The primary motivation for the Court’s decision was to address the unfairness and gender discrimination perpetuated by the existing legislation. The Court noted that the absence of a redistribution remedy failed to account for non-financial contributions of spouses. By including marriages entered into after 1 November 1984 within the scope of section 7(3), the Court aimed to provide a more equitable division of assets at the dissolution of such marriages, whether by divorce or death.
Implications for future spouses
The implications of this ruling are far-reaching. Spouses in marriages out of community of property without the implementation of the accrual system now have legal recourse to apply for a redistribution order upon the dissolution of their marriage. This means that non-financial contributions, such as managing the household, raising children and contributing indirectly to the growth of the other spouse’s estate can be considered when dividing assets, offering greater protection and a measure of fairness and equity.
Future spouses should be aware that while they may enter into an antenuptial contract excluding community of property and the application of the accrual system, the courts now have the discretion to redistribute assets on dissolution of the marriage if the spouse claiming the redistribution can prove that it is just and equitable to make such order. Although it can be difficult to prove, the possibility of a redistribution remedy can provide peace of mind, particularly for those who, through handling the family responsibilities for example, may indirectly contribute towards the growth of the other spouse’s estate.
This article is a general information sheet and should not be used or relied on as legal or other 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 legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).