Statutory discretion or common law power? Some reflections on “veil piercing” and the consideration of (the value of) trust assets in dividing matrimonial property at divorce – Part Two
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Date
2017
Authors
Smith, B. S.
Journal Title
Journal ISSN
Volume Title
Publisher
Faculty of Law, University of the Free State
Abstract
Although it is an entrenched principle of company law that the
abuse of corporate personality may require the “corporate veil”
of a company to be “pierced”, this possibility has only recently
become a feature of South African trust law. While this is a salutary
development in theory, the application and practical usefulness of
this remedy remain shrouded in uncertainty. A particularly acute
manifestation hereof arises where it is argued that (the value of)
trust property should be considered for the purposes of dividing
matrimonial property at divorce. By drawing on the established
principles of “piercing” in the company context and analysing
relevant case law, Part One of this article (that appeared in the
December 2016 issue of this journal) concluded that the prevailing
position in respect of trusts neither accords with the principles of
proper trust administration nor gives effect to the legal obligations
imposed on divorcing spouses by matrimonial property law. More
specifically, it was argued that, while piercing the trust veil is a power
that is derived from common law (as opposed to legislation), the
actual exercising of this power in a divorce context is dependent on
a nexus provided by the matrimonial property regime in question.
From this platform, Part Two of the article provides perspectives
on how the property of an abused trust should be dealt with in
divorces involving the three major matrimonial property regimes
that are recognised by South African family law. Potential litigation
based on these contentions should contribute towards rectifying
the unsatisfactory legal position that prevails.
Description
Keywords
Common law, Matrimonial property, Trust assets, Corporate veil, Family law, Divorce
Citation
Smith, B. S. (2017). Statutory discretion or common law power? Some reflections on “veil piercing” and the consideration of (the value of) trust assets in dividing matrimonial property at divorce – Part Two. Journal for Juridical Science, 42(1), 1-18.