“Am I liable for my partner's debt?”
A question that is of importance to all those people married in community of property is: “Am I liable for my partner’s debt?”
In the pivotal high court decision of Andre Van Der Merwe and another v Basson and others, the Gauteng Division of the High Court deals with the degree to which one can hold the joint estate of couples married in community of property liable for the wrongs committed by that spouse after that spouse’s death. This led the court to venture into an interpretation of section 19 of the Matrimonial Property Act (MPA).
This article explores the decision of the high court and its implications on surviving spouses, as well as the consequence of the Basson judgment for those who fall victim to wrongs committed by a spouse married in community of property.
Jan Willem Frederik Basson rendered financial services to various clients, one of which was the Vanina Trust. For many years, Basson fraudulently misappropriated money that he should have paid to the South African Revenue Service (Sars) on behalf of the trust.
Roughly a month before Basson’s death, the trustees, Andre van der Merwe and Maria Elizabeth van der Merwe, found out that he had made no payments to Sars. In total, Basson misappropriated R333 750, of which R74 608.63 were penalties incurred by Sars. It is this amount the trustees of the Vanina Trust sought to claim back from the surviving spouse, Tersia Buckett Basson, in the application brought before the high court.
But the trustees instituted legal proceedings against Tersia, in her capacity as executrix of the estate and in her personal capacity as the widow of the deceased in November 2019. This being before the liquidation and distribution account of the deceased was finalised.
The estate’s liquidation and distribution account was settled in March 2022 and did not include the claim of the trustees. To make matters worse, the trustees failed to file any objections with regard to the liquidation and distribution account.
Should innocent spouses carry liability?
In deciding this matter, the main legal issue the court determined was whether innocent spouses should carry liability for the wrongs committed by a deceased spouse during their marriage in community of property.
The main piece of legislation that speaks to liability committed by spouses is section 19 of the Matrimonial Property Act, which specifically deals with liability for wrongs committed by spouses. Section 19 reads that when a spouse is liable for the payment of damages by way of a delict (wrong) committed by him, such damages or any costs awarded against him should be recovered from the separate property of that spouse and if he has no separate property, the joint estate.
During its interpretation of section 19, the court found that the deceased (Basson) attracted liability to himself by way of a delict (the fraudulent misappropriation of the monies) and in doing so, the default position set out in section 19 should be followed. This being that any damages recoverable for the delict be recovered from the separate estate of the guilty spouse. The court, in its judgment, went a step further and noted that section 1 of the Act provides that a separate property is property that does not form part of the joint estate.
What is a ‘separate estate’ when married in community of property?
In coming to its decision, the court ruled on a very logical question — if one is married in community of property, how does one have both a joint estate and a separate estate? The court noted that a joint estate comprised all excluded assets that a spouse acquired prior to the marriage as well as the assets that he or she accumulated during the marriage. The separate estate, on the other hand, would include, for example, a claim for damages or inheritance.
The deceased in this matter incurred the liability when there was a joint estate in operation and these damages would ordinarily be recovered from the joint estate. But, in this matter, the surviving spouse (Tersia) argued that the joint estate had come to an end on the death of her spouse. In answering the question, the court held that because the joint estate was brought about by a marriage in community of property, once the marriage ends, the joint estate ends as well.
In determining when the joint estate ends, the court, in KG v Minister of Home Affairs and others, held that the marriage is terminated by death or divorce. In this instance, the joint estate was terminated by death and the trustees should have instituted legal action against the separate estate of the late Basson.
Joint estate cannot be reincarnated
In deciding the matter, the court held that once the joint estate is dissolved, it cannot be reincarnated solely for the purpose of resolving “what could have been”. In supporting this decision, the court drew on the decision in Maqubela and Another v The Master, where it was held that the proceeds of life policies do not form part of the joint estate after death because there is no longer a joint estate. The trustees therefore had no recourse in instituting their claim against the joint estate after the death of the deceased.
The court further clarified any other interpretation on the matter and held that it is wrong in law to conclude that damages as a consequence of the wrong committed by the deceased could be paid out of the half share of the deceased spouse after the dissolution of the estate. Once the joint estate ceases to exist, the recoverability against it ceases to exist too.
A proper interpretation of section 19 is that once the joint estate ends by termination of the marriage in community of property (death or divorce), no claim is recoverable against the joint estate because the estate no longer exists.
The right to be presumed innocent
In concluding the matter, the court referred to section 35(h) of the Constitution. In instances such as this, where one spouse is being held liable for the wrongs of the other, the right to be presumed innocent will be infringed. The court also drew from section 39(2) of the Constitution in so far as there is a duty on the court when interpreting legislation and developing common or customary law, to promote the spirit, purport and objects of the Bill of Rights.
The high court held that, like the widow, the trustees would also be deemed as innocent victims. The only recourse available to them would have been the procedure outlined in sections 29-35 of the Administration of Estates Act or an action against the deceased estate.
In coming to its decision, the court weighed heavily on the fact that the trustees failed to lodge a claim against the deceased estate and file any objections to the liquidation and distribution account of the deceased spouse. What surprised the court even further was that the trustees filed the application against the widow even before the liquidation and distribution account was finalised. It seems that under the direction of legal advice, the trustees took the wrong approach and were left with no resource once the matter was finalised in the high court.
Be careful who you sue when someone dies
In a sound judgment with logical reasoning, the court puts to bed various myths about the operation of a joint estate and the degree to which one spouse is liable for the other party’s liabilities after their death.
It also warns those who contract with parties married in community of property and serves as a lesson to always sue against the deceased estate while you still have the opportunity to do so.
Above all, one lesson will resonate with everyone — the joint estate ends when one party in the marriage dies.
Author Profile
Charlise Finch is a candidate attorney at Herold Gie Attorneys and Kaamilah Paulse is a director and the company’s family law attorney.