Balancing the Scales of Interim Maintenance: A South African Case Study on Inheritance and Rule 43 Orders.

L.M v R.D.M (EL789/2022) [2023] ZAECELLC 32 (31 October 2023)

Case Summary:

The applicant, an ophthalmologist, instituted an application seeking, amongst others, variation of an Order granted by Stretch J on 25 May 2023, in terms of Rule 43(6) of the Uniform Rules of Court.

Parties Involved: The applicant was an established ophthalmologist, and the respondent was his wife, who had not been employed outside the home.

Initial Maintenance Order: On the 2nd of March 2023, Collett AJ had granted the respondent interim maintenance through Rule 43 proceedings. This included a monthly payment of R10,000 and coverage for other expenses such as medical aid, educational costs, and bond payments for properties.

Change in Circumstances: Subsequent to Collett AJ’s order, the applicant stopped an additional monthly stipend, prompting the respondent to seek an urgent variation to reinstate the stipend along with the R10,000 already ordered.

Amended Order by Stretch J: On the 25th of May 2023, the order was amended, and the maintenance, including the costs to be borne by the applicant, was increased.

Inheritance Discovery: In June 2023, it was revealed that the respondent had received an inheritance totaling R1,715,802.92, which had not been previously disclosed.

Applicant’s Application for Variation: The applicant sought the rescission of the 25 May 2023 order on the grounds that the inheritance meant the respondent no longer needed maintenance. This application was also motivated by the financial burden the maintenance payments were placing on him, given they were coming from his practice’s overdraft.

Legal Proceedings: The respondent had obtained a warrant of execution against the applicant for arrears in maintenance, leading to the attachment of his assets. The applicant subsequently filed an urgent application to set aside the warrant and to appeal the maintenance order, which was later settled, leaving only the costs for the urgent application undetermined.

Inheritance Details:

Received by Respondent: The inheritance, amounting to R1,715,802.92, was received by the respondent in June 2023.

Impact on Maintenance Order: Despite the inheritance, the court upheld the maintenance order. The rationale was that the purpose of the interim maintenance was to maintain the financial status quo during the divorce proceedings, and the need for full financial disclosure was critical.

The respondent’s inheritance, received after the interim maintenance order had been set, was not considered to be a significant change in her financial circumstances that would warrant a change in the maintenance arrangements previously ordered by the court.

Legal Precedents and Purpose of Rule 43:

Nature of Interim Maintenance:

Rule 43 of the Uniform Rules of Court is designed to provide interim relief during the pendency of divorce proceedings. The purpose is not to make a final determination of the parties’ financial affairs but to preserve the status quo and prevent financial hardship for the non-earning or lower-earning spouse. This means that even if one party receives an inheritance, the need for interim support remains based on the existing lifestyle and needs established during the marriage.

Timing of Inheritance Receipt:

It was argued that at the time the original maintenance order was made, the respondent had not yet received the inheritance. Thus, the court’s decision was based on the financial information available at that time, which did not include the inheritance.

Preservation of Inherited Assets:

There is a legal principle that inherited assets are to be preserved rather than used for maintenance. This principle aims to protect inheritances as capital assets, which should not necessarily be liquidated to cover income needs, especially if there is another source of income available, like the payer’s earnings.

Financial Disclosure Standards:

Courts require full and frank financial disclosure when determining maintenance. In this instance, the inheritance was disclosed after the initial order, and there was no suggestion that the respondent intentionally withheld this information at the time of the original hearing. Non-disclosure must be material and intentional to warrant a change in the maintenance order.

Financial Circumstances and Obligations

Comparative Wealth and Earning Capacity:

The court likely considered the relative financial positions of the parties. The applicant’s capacity to pay, given his earnings and assets, may have substantially outweighed the respondent’s inheritance.

Role in the Marriage:

The respondent’s role as the primary caregiver over the years and her consequent lack of income or professional progression would have been considered. The court may have determined that the inheritance did not compensate for years of dependency and the opportunity cost of her career.

The Standard of Living During the Marriage:

Maintenance orders often aim to allow the parties to continue to live in a manner similar to that enjoyed during the marriage. The inheritance alone might not provide sufficient income to allow for this, especially if it is intended to be a capital reserve rather than a source of income.

The Court’s Discretion:

Judicial Discretion:

The court has wide discretion in these matters and must balance the interests of both parties. The inheritance may be seen as a resource for the future, while maintenance addresses current needs.

Section 7(2) of the Divorce Act:

The factors outlined in Section 7(2) of the Divorce Act 70 of 1979 must be considered in determining spousal maintenance, which includes the respective means, earnings, financial needs, and obligations of the parties, as well as their standard of living during the marriage.

In essence, the inheritance did not impact the maintenance order because the interim relief provided under Rule 43 is based on the financial reality at the time of the divorce proceedings, with an emphasis on maintaining the standard of living and balancing the financial inequities that may exist due to the marriage dynamics. The respondent’s inheritance, although a factor in the overall financial landscape, was not deemed sufficient to offset the applicant’s ongoing maintenance obligations during the interim period before the final divorce settlement.

Summarised by Bertus Preller, a Family Law and Divorce Law attorney at Maurice Phillips Wisenberg in Cape Town. A blog, managed by SplashLaw, for more information on Family Law read more here.