Asset forfeiture

When speaking about forfeiture orders, I am often reminded of the old nursery tale of the Little Red Hen. I do not intend to bore my readers with a full retelling of the story, but in short the fable revolves around a Little Red Hen who wants to bake a loaf of bread and does not receive any help from the other animals on the farm. In the end the Little Red Hen eats the loaf of bread on her own, despite the other animals’ desire to share in the spoils.

Here is a link to the full story for those who wish to read it for themselves.

I have always loved the cathartic ending in the story where the Little Red Hen enjoys the fruits of her hard work on her own. One seems to enjoy a sense of justice and retribution in that the other animals get their comeuppance at the end of the story. This is, however, not the crux of the story which I wish to focus on. In this blog entry I want to focus on the element of unjust enrichment and fairness, rather than retribution and punishment.

 

 

I have encountered many clients who feel much like a frustrated version of the Little Red Hen when it comes to divorce proceedings. These clients often feel like their spouse is not entitled to share in the spoils of the marriage for a variety of reasons.

In many instances this desire to have a spouse forfeit their share of the spoils is motivated by anger, bitterness, or a sense of revenge – in these cases a Forfeiture Order may not be appropriate. In many instances, however, justice may dictate that one party forfeits a portion of, or even the whole of the patrimonial benefits of a marriage, in favour of their spouse.

The Grounds for a Forfeiture Order

To examine the grounds upon which a forfeiture order may be granted, one must turn to the Divorce Act. Specifically, Section 9(1) reads as follows:

When a decree of divorce is granted on the ground of the irretrievable break-down of a marriage the court may make an order that the patrimonial benefits of the marriage be forfeited by one party in favour of the other, either wholly or in part, if the court, having regard to the duration of the marriage, the circumstances which gave rise to the break-down thereof and any substantial misconduct on the part of either of the parties, is satisfied that, if the order for forfeiture is not made, the one party will in relation to the other be unduly benefited.

From the above it appears that there are three things that a Court may take into account when deciding whether or not to grant a forfeiture order. These are:

  1. The duration of the marriage;
  2. The circumstances which gave rise to the break-down of the marriage;
  3. Any substantial misconduct on the part of either of the parties;

Undue Benefit

The overriding test, if one has regard to the legislation above, can be found in the last line thereof:

[if the Court] is satisfied that, if the order for forfeiture is not made, the one party will in relation to the other be unduly benefited.

Various factors may contribute to an element of undue benefit, and these have to be evaluated on a case by case basis.

In Closing

A forfeiture order may not always be the appropriate remedy to a person getting divorced, but there are various circumstances which may render a forfeiture order necessary.

Posted by Mervyn Vermeulen of Vermeulen Attorneys In Roodepoort