Division of Common Property in Divorce Proceedings
The Distinction Between Equalisation of Resources and the Doctrine of Sharing
There are several laws and doctrines that apply to joint property which a couple have accumulated in the course of their shared lives.
Couples married after 1st January 1974 are subject to the Property Relations Between Spouses Act 1973-5733, according to which, any asset, property or right accrued to either one of the parties, regardless of how it is registered, is considered common property.
Couples married before that date, or alternatively couples cohabiting as common-law husband and wife without marriage, are subject to the doctrine of partnership, which is a legal presumption that assumes that a couple who lived in a shared household, exerting a shared effort, and maintaining a regular lifestyle, intended to maintain a partnership in their property.
The doctrine of partnership is a rebuttable presumption, and evidence can be produced regarding non-partnership in assets in general or in particular assets. The court will be required to adjudicate the issue in accordance with the evidence placed before it in the circumstances.
How Is Property Divided Between a Divorcing Couple?
There are several principles according to which the court will determine the issue of property division:
First, the law recognises assets such as gifts or an inheritance received by one of the parties, as assets that are not shared by the couple.
Second, the court will be aided by an accountant, actuary, who will prepare an assessment of the assets and rights belonging to each one of the parties. At times, the calculation is complex. For instance, the attempt to evaluate a husband’s pension rights for the purpose of dividing them, when the husband will only retire in 20 years’ time. For this reason, the expertise of an accountant are required.
Third, the date of record is highly significant, that is to say, the date which will be deemed as the date on which the marriage expired, from which date the partnership ends. A later date will “bring into the fold” partnership in assets that continued to accrue, such as a participation pension. On the other hand, an earlier date will “exclude” from the partnership such rights, and from the date of record and thereafter those will be considered personal rights. For this reason, the date of record can in itself become a source of many disputes.
Additionally, the court is empowered to hold that certain common assets or rights belonging to the couple will not be divided equally, half and half, or to determine that certain assets will not be equalised at all and will remain entirely to one of the parties, and this for the purpose of doing justice between the parties.
On the assumption that the Court is required to equalise all the parties’ rights, it shall appoint an actuary, to whom the parties will be obligated to transfer all the necessary financial material for the purpose of assessing their respective rights. The review will unearth in whose name more rights are registered. Half of the difference in the parties’ respective rights will be transferred to the party who owns less rights, and thus, their rights will be apparently equalised. The court will also order the actuary to prepare the assessment and the manner of division pursuant to a certain date, one or more, and the actuarial opinion will serve as the basis for the equalisation of the parties’ resources. As abovementioned, the court has wide ranging powers and many ways in which it may equalise the parties’ rights.
Over the years, the courts have recognised more and more rights and assets which may be considered common property which is properly capable of being equalised between the parties. Business assets have been recognised as common property, to the extent that they were accumulated in the course of the marriage or cohabitation. In addition, in recent years, career and goodwill assets have been recognised as assets capable of being equalised in instances in which there is a marked gap between the parties’ respective earning abilities, arising from the fact that one party flourished and generated a reputation, prestige and goodwill, in reliance on the other party’s support who fulfilled his or her part by running the household and rearing the children.