BEWARE OF THE JOINT ESTATE – IT DIES WITH YOUR SPOUSE

A question which remains of importance to the thousands of individuals married in community of property is, ‘Am I liable for my partners 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 liability of their spouse, caused by a wrong committed by that spouse, after their death. This led the court to venture into an interpretation of section 19 of the Matrimonial Property Act (“MPA”) and hold that the joint estate comes to an end once the marriage terminates, on the death of a spouse.  

This article explores the decision of the high court and its implications on surviving spouses, as well as the consequence of the judgment on those who fall victim to wrongs committed by spouses married in community of property. 

Read the judgment here: 

https://www.saflii.org/za/cases/ZAGPJHC/2024/659.html 

Andre Van Der Merwe and another v Basson and others 

Mr. Basson rendered financial services to various clients, one of such clients was the Vanina Trust. For many years, Mr. Basson fraudulently misappropriated monies which he ought to have paid to the South African Revenue Service (‘SARS’) on behalf of his client, the trust.  

Roughly one month before the death of the deceased spouse, the trustees found out that they Basson had made no payments to SARS. In total, Basson misappropriated an amount of R333 750.00, of which R74 608.63 were penalties incurred by SARS. It is this amount which the trustees of the Vanina Trust sought to claim back from the surviving spouse in the application brought before the high court. 

However, the trustees instituted legal proceedings against the widow, in her capacity as executrix of the estate late, as well as 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.  

After the death of the deceased, the Estate late JWF Basson was registered and the widow, Tersia Buckett Basson was appointed as the executrix of the estate late. 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 which 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 which speaks to liability committed by spouses is section 19 of the MPA, which specifically deals with to liability for delicts 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 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 MPA 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 noted 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 of all excluded assets which a spouse acquired prior to the marriage as well as the assets which 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 – these damages would ordinarily be recovered from such joint estate. However, in this matter, the surviving spouse 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 terminated at the death of deceased and the trustees in this matter should have instituted legal action against the separate estate of the spouse – that being the estate late of JWF 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 delictual damages, such 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, 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 in this matter held that just as 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 in this matter 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 of the deceased even before the liquidation and distribution account was finalised. It seems that under the direction of legal advice, the trustees took the wrong approach to their relief and was left with no resource once the matter was finalised in the high court.  

Be careful who you sue when a party dies  

In a sound judgment with logical reasoning, the court puts to bed various myths around 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 whilst you still have the opportunity to do so. Above all, one lesson will resonate with all – the joint estate ends when one party in the marriage passes on.