The roll of the Liquidator or Receiver

01 February 2021 , Dries Knoetze 4303

In which instances will a Liquidator be appointed?

“My husband and I were married out of community of property with the inclusion of the accrual system and recently applied for a divorce. I have been advised that in order to establish the accrual a Receiver or Liquidator must be appointed. What is a Liquidator and/or Receiver and what are their powers?”

When is a Liquidator appointed?

To answer the question, it is important to note that under normal situations a Liquidator and or Receiver is appointed in marriages which were concluded in community of property. The reason therefore was that according to Section 7 (1) and 7(2) of the Divorce Act, Act 70 of 1979, which states that the Court granting a decree of divorce may, either in accordance with a written agreement entered by the parties, or mero moto, in the absence of such an agreement, make an order with regard to the division of the assets of the parties.

To enable the Court to perform or comply with the order of division of the joint estate, the Court has the power to appoint a receiver or liquidator to realize (which means valuate and sell the assets) and divide the assets of the joint estate on its behalf.

When dealing with a marriage out of community of property with the inclusion of the accrual system, our court have held that the accrual can only be determined after date of divorce, meaning that only after the court has ordered that the marriage relationship between the parties have broken down and a degree of divorce has been issued, the accrual can be calculated. This is in terms of the Section 3 of the Matrimonial Property Act 1984.

It is in order to do the calculations of the accrual, that the courts have appointed a Liquidator or Receiver with the specific powers to determine the accrual and ultimately divide the accrual.

Who is appointed as Liquidator?

Normally the parties will agree to appoint a Liquidator, who is normally an independent attorney, i.e. not the attorneys of the parties, or might even is certain situations appoint an actuary or CA.

If the parties cannot agree to the appointment of an independent person, the Court will have a discretion to appoint an independent person, normally an attorney who has in the past acted as a Liquidator or receiver.

Powers of Liquidator:

The Court will provide the Liquidator with sufficient powers to valuate, determine and calculate the accrual which powers includes a general power of attorney to market, sell and realize any immovable property, power to approach any financial institution to obtain balance statements of investments, savings account and pension funds. This will include providing the financial institutions with specific instructions to withdraw any amount from these accounts.

In short the Liquidator will step into the shoes of the parties and effectively have to power to access all there financial information.

Upon realizing the accrual the Liquidator has the powers to distribute the accrual between the parties by way of either selling all the property to obtain funds or by way of distribution of the property. The Liquidator has ultimate powers and has the final say on how to divide the assets or the accrual, although the final report of the Liquidator might be taken for review in circumstances where the Liquidator acted male fide or did not act in the party’s interest.

Costs of the Liquidator:

Unfortunately the costs for the Liquidator and all related costs, i.e. the costs of estate agents, valuators, transfer fees and municipal costs will be paid by the parties jointly and severally or the Liquidator will first deduct his/her fees and expenses and only thereafter divide the accrual.

Our advice is to before issuing a divorce summons against your spouse to consult with a divorce attorney to establish the risks involved and to assist you with the legalities.

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