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Living In Sin Could Be Expensive !

5 Apr 2012

Until the recent 2012 judgement of the Supreme Court of Appeal in the case of Butters vs Mncora it was understood in South African law that upon the break up of a relationship between a man and a woman who lived together as if they were husband and wife but who never got married, each party would leave the relationship with no more and no less than what they had individually accumulated. In most instances this resulted in the woman being left high and dry as it was invariably the woman who had been expected to sacrifice career opportunities to care for house and family whilst the man earned money and thereby accumulated assets. The above judgement has turned this understanding on its head! The facts of the case are not particularly remarkable. The couple lived with one another as if they were husband and wife for 20 years. During this period they had two children together. At
some fairly early stage in the relationship the man (who at the start of the relationship had nothing) started his own business and did very well over the following years. During the very initial stages of the business the woman helped the husband a little with the growth of the business but thereafter had nothing to do with the business at all. She never enquired about the economic state of the business nor in fact visited the business premises. The woman worked in a lowly paid position for about a year and thereafter stayed home to care for the house in which they lived (which was registered in the name of the man); their two children and some of the children of the man from a previous relationship. There was never any direct discussion between the man and the woman over true ownership of the assets which the man had been acquiring but the woman assumed that "everything was for us". As she had no income for the vast majority of the time spent together the man provided all the income needed for the household to operate. Against the background of these few simple facts the court rather surprisingly concluded that by virtue of their conduct a "universal partnership" had in fact been agreed to between the parties. It consequently found that
everything the man had come to own was part of that partnership and that the woman was entitled to a partnership share thereof. The judgement does not give any guidance on how the partnership share is to be determined in cases like this as the parties effectively accepted between themselves that if the court found the universal partnership to exist between them the partnership share of the woman would be 30%. The concept of a "universal partnership" is not unknown in South African law and it has from time to time assisted women who have found themselves in the same predicament as the woman in this case. Previous decisions have however made it very clear that it is not easy
to prove the existence of a universal partnership and that some real evidence (as opposed to a mere assumption or belief) would be needed before a court would conclude that it was indeed the intention of the parties to pool and share all their assets. On the basis of previous decisions this particular case should never have succeeded! Two of the five judges of appeal in this case in fact decided differently! This decision has accordingly opened Pandora's Box for all couples who have chosen to live together as husband and wife even though they have not formally married. In
the light of this judgement such parties would be well advised to either get married and formally regulate their financial affairs by way of an antenuptial contract or to enter into a written agreement whereby the existence of a universal partnership is expressly excluded.