Section 7(3) Redistribution Claims in Divorce: Entitlement, Proof, and Resolution

A practical 3-hour session on one of the most significant (re)developing areas of South African matrimonial property law

Section 7(3) redistribution claims have moved firmly back into the spotlight.

The judgment of the Constitutional Court in EB v ER; KG v Minister of Home Affairs materially changed the reach of the redistribution remedy and reintroduced it as alive-and-well in South African Law. Courts are once again being called upon to determine difficult questions concerning entitlement, contribution, valuation, quantification and fairness in the application of sections 7(3), 7(4) and 7(5) of the Divorce Act.

A redistribution claim is a statutory remedy. A claimant must bring the claim within the ambit of section 7(3), establish the contribution contemplated in section 7(4), and persuade the court that it is just and equitable to make a redistribution order. The extent of any redistribution must then be determined with reference to the considerations set out in section 7(5).

For practitioners, the real challenge lies in understanding when the remedy is available, what must be pleaded and proved, how the value and composition of the respective estates affect the enquiry, and how the dispute may ultimately be resolved.

The central questions are:

When is a spouse entitled to claim?

What must actually be proved?

How should the claim be analysed and quantified?

Where settlement is possible, how can the dispute be mediated intelligently and realistically?

This three-hour session examines section 7(3) claims through three practical lenses:

LENS 1: ENTITLEMENT

What does the law permit?

We begin with the legislative and case-law basis of the remedy.

The session considers sections 7(3), 7(4) and 7(5) of the Divorce Act, the historical limitation of redistribution claims, and the effect of the Constitutional Court judgment in EB v ER; KG v Minister of Home Affairs on the availability of the remedy.

Particular attention will be given to the distinction between a redistribution claim and other patrimonial claims and remedies arising on divorce, including accrual, forfeiture of patrimonial benefits and spousal maintenance.

We will examine:

• when a claim under section 7(3) is competent;
• the effect of EB v ER; KG v Minister of Home Affairs;
• which spouses may now institute redistribution claims;
• the requirement of direct or indirect contribution;
• financial and non-financial contributions;
• the considerations contemplated in sections 7(4) and 7(5);
• the discretion afforded to the court; and
• the limits of the redistribution remedy.

The objective is to establish the applicable law before turning to the practical question: how does one prove the claim?

LENS 2: PROOF

How does a redistribution claim actually work?

A section 7(3) enquiry requires considerably more than a comparison of the net values of the spouses’ respective estates.

Practitioners must consider the history of the marriage, identify the contributions relied upon, determine the nature and value of the assets and liabilities in the respective estates, and examine the relationship between the alleged contributions and the maintenance or increase of the estate of the other spouse.

This part of the training moves from the legal principles to the practical preparation and conduct of the claim.

We will consider:

• what the claimant must plead and prove;
• the onus resting upon the claimant;
• identifying the estate against which redistribution is sought;
• establishing the nature and extent of the respective spouses’ estates;
• direct and indirect contributions;
• homemaking, parenting, career sacrifice and support of the other spouse’s career;
• contributions which saved expenses or assisted in the maintenance or growth of the other spouse’s estate;
• the history of asset and wealth accumulation during the marriage;
• financial disclosure;
• discovery and requests for further information and documentation;
• assets and interests held through companies, trusts and other structures;
• valuation of immovable property, businesses, shares and other interests;
• pension and retirement fund interests;
• the use of expert evidence;
• evidential difficulties where records are incomplete or unavailable;
• pleading a redistribution claim;
• opposing a redistribution claim;
• identifying claims which in substance seek an equal division of estates without establishing the requirements of section 7(3); and
• moving from proof of contribution to the formulation of an appropriate redistribution order.

The focus is on properly investigating, pleading, proving and evaluating the claim from the outset.

LENS 3: RESOLUTION

How do you mediate a section 7(3) dispute?

Redistribution disputes are well suited to mediation where the relevant legal, factual and financial issues have first been properly identified.

They frequently involve competing versions of the parties’ respective contributions, incomplete financial disclosure, disagreements concerning the value or ownership of assets, complex asset-holding structures and considerable uncertainty as to the outcome of litigation.

They may also involve fundamentally different perceptions of the value of financial and non-financial contributions made during the marriage.

The mediator must create a process in which the parties are able to negotiate with a proper understanding of the legal issues, the available evidence, the composition and value of the estates, and the risks associated with continued litigation.

This part of the session considers:

• the legal principles a mediator needs to understand when dealing with a section 7(3) claim;
• ensuring sufficient financial disclosure before substantive negotiations take place;
• identifying agreed and disputed assets and liabilities;
• identifying the contributions alleged by each party;
• dealing with competing versions concerning contribution;
• separating the question of entitlement from the question of the extent of any redistribution;
• assisting parties to assess litigation risk without assuming the role of an adjudicator;
• evaluating competing settlement proposals;
• settlement by reference to a percentage of an estate or the transfer of identified assets;
• cash payments and transfers of property;
• liquidity and the practical implementation of settlement proposals;
• pension and retirement fund interests;
• the relationship between redistribution and spousal maintenance;
• the use of valuers, accountants and other experts where necessary;
• dealing with cases in which one party has substantially greater access to or knowledge of the financial information;
• progressing settlement where particular valuations or items of disclosure remain outstanding; and
• recording settlement terms in a manner that is clear, enforceable and capable of incorporation into the divorce order.

Why this training matters

The law relating to redistribution claims has changed materially.

The judgment of the Constitutional Court in EB v ER; KG v Minister of Home Affairs extended the practical relevance of section 7(3), and subsequent judgments are beginning to address how the remedy is to operate in practice.

Practitioners must therefore be able to identify when a redistribution claim is legally competent and assess whether the facts and available evidence support it.

A poorly founded claim can result in lengthy and expensive litigation where the requirements of sections 7(3) and 7(4) have not been established.

A properly prepared claim requires careful consideration of the applicable legal principles, the contributions relied upon, the evidence available to prove those contributions, the composition and value of the respective estates, and the factors relevant to the exercise of the court’s discretion.

The same considerations are central to meaningful settlement negotiations and mediation.

Who should attend?

This session is particularly relevant to:

• Family law attorneys;
• Advocates practising in matrimonial law;
• Divorce and family mediators;
• Candidate legal practitioners;
• Other family dispute resolution practitioners who regularly encounter patrimonial disputes; and
• Practitioners involved in the negotiation and settlement of divorce matters.

What you will leave with

By the end of the session, participants should be better equipped to:

• identify when a section 7(3) redistribution claim is competent;
• distinguish redistribution from accrual, forfeiture and maintenance claims;
• apply sections 7(3), 7(4) and 7(5) to the facts of a matter;
• identify what must be pleaded and proved to establish a claim;
• assess direct and indirect contributions;
• identify the evidence required to prove or oppose a claim;
• approach financial disclosure, discovery and valuation effectively;
• assess the composition and value of the relevant estates;
• understand the considerations relevant to the extent of any redistribution;
• assess litigation risk more realistically; and
• mediate and negotiate the settlement of redistribution disputes more effectively.