Understanding anti-dissipation measures in divorce proceedings

09 Apr 2024

An anti-dissipation measure refers to a legal directive designed to prevent an individual from liquidating or concealing assets during divorce proceedings. The Matrimonial Property Act holds significant relevance in addressing the dissipation of joint assets in marriages governed by community property laws. Primarily, it mandates that one spouse cannot dispose of or transfer substantial assets, including real estate, securities, or financial investments, without obtaining the explicit consent of the other spouse.[1]

Furthermore, the Act prohibits a spouse from accessing funds held in the other spouse’s name, entering into credit agreements, or assuming surety obligations without obtaining consent. Additionally, it encompasses restrictions on encumbering household items or accepting payments owed to the other spouse without their explicit permission. While consent may be ratified post-action, it must be obtained individually for each Act in specific instances and witnessed by two competent individuals.

Under specific circumstances, donations made without the consent of the other spouse may be deemed permissible, as long as they do not unfairly disadvantage the interests of the non-consenting spouse. When evaluating such donations, the Court takes into account various factors including their value, purpose, and the financial status of both spouses. However, in instances where one spouse conducts transactions that violate these regulations without the knowledge of the third party, resulting in a loss to the joint estate, the affected spouse reserves the right to petition the Court for an adjustment in the division of the estate. In such cases, the Court considers the value of the dissipated property when making determinations in favour of the affected spouse.

The Court may, upon application by a spouse, order an immediate equal division of the estate or adopt a just approach if one spouse’s actions jeopardise the other’s interest without adversely affecting other parties. This provision is particularly relevant in community property marriages, offering protection against asset mismanagement or dissipation.[2]

Requirements

Effectively managing the intricacies of divorce proceedings, particularly concerning financial settlements, demands a comprehensive grasp of the prerequisites and legal precedents governing anti-dissipation measures. These measures are built upon a foundation of several fundamental requirements akin to interim injunctions, yet specifically crafted to safeguard assets during divorce proceedings:

1. Prima facie right
2. Well-grounded apprehension of irreparable harm
3. Balance of convenience
4. Absence of alternative remedies

When determining whether an Applicant has satisfied these requirements, courts are guided by the approach articulated by Holmes J in Olympic Passenger Services v Ramlagan 1957 (2) SA 382 (D):

“It thus appears that where the applicant’s right is clear, and the other requisites are present, no difficulty presents itself about granting an interdict. At the other end of the scale, where his prospects of ultimate success are nil, obviously the court will refuse an interdict. Between these two extremes falls the intermediate cases in which, on the papers as a whole, the applicant’s prospects of ultimate success may range all the way from strong to weak. The expression ‘prima facie established though open to some doubt’ seems to me a brilliantly apt classification of these cases. In such cases, upon the proof of a well-grounded apprehension of irreparable harm, and there being no ordinary alternative remedy, the court may grant an interdict.

“It has a discretion, to be exercised judicially upon a consideration of all the facts. Usually this will resolve itself into a nice consideration of all the prospects of success and the balance of convenience. The stronger the prospects of success, the less need for such a balance to favour the applicant: the weaker the prospects of success, the greater the need for the balance of convenience to favour him. I need hardly add that by balance of convenience is meant the prejudice to the applicant if the interdict be refused, weighed against the prejudice to the respondent if it be granted.”

Conclusion

Anti-dissipation measures play a crucial role in safeguarding marital assets and ensuring fair divorce settlements. Through legal requirements and precedents, they prevent asset dissipation, fostering transparency and equity in the divorce process. For any contractual assistance, contact an attorney at SchoemanLaw.

References:

[1] Matrimonial Property Act, s15 (9) (b).
[2] Matrimonial Property Act, s20.

See also:

• Navigating the grounds for divorce: From fault to no-fault
• Constitutional Court changes the Divorce Act
• Till trust do us part: Navigating the complexities of trusts in divorce proceedings
• Two essential legal documents: A will and an antenuptial contract

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)