The SA Law Reform Commission has proposed an overhaul of the child maintenance regime that, if approved, would cause authorities to pursue trusts and living annuities of defaulters.
The commission was given the task in 2011 to conduct a review of the Maintenance Act. This was in response to challenges in implementing the act, which prevent the establishment of a fair and equitable maintenance system.
The commission, headed by Constitutional Court justice Jody Kollapen, has now issued its final recommendations after several iterations over the years.
The commission said many defendants tried to avoid payment of maintenance by establishing trusts, and courts should be empowered to circumvent the typical outcomes that result from creating a trust.
“Courts should also be specifically empowered to declare a so-called trust to be a sham or a simulation in certain circumstances,” the commission said in the review of the act.
“As our courts have difficulty in distinguishing accurately between the circumstances under which a trust can be declared a sham or a simulation and the circumstances under which the veneer or veil of a trust can be pierced, it was decided to include the two new subsections in section 16, which deals with the orders that a maintenance court can make.”
To give effect to the above recommendation, the commission says for the court to declare a “trust” a sham for the purposes of maintenance debtors, it must consider several factors.
These include instances in which the founder of the trust by evidence before court had no real intention to create a trust or the trust has no commercial substance or makes no sense in the opinion of the court.
The commission says after the trust is declared a sham, any assets and income of the “trust” form part of the personal estate and income of the maintenance debtor who purports to be the founder or a trustee of the so-called trust.
According to the 2011 census, more than 48% of children in SA lived with only one parent and more than 90% of maintenance defaulters were men.
The review found several weaknesses in the legislative framework. These include only making provision for arrear maintenance but not providing for future maintenance.
The review also found that the act did not make provision for mediation in maintenance matters although mediation is provided to clients in maintenance courts on a voluntary basis.
The commission wants the maintenance court to be empowered to go after defaulters’ living annuities.
“It is also recommended that in case of attachment of arrears maintenance from the benefit paid to the respondent by the fund/insurer from such a living annuity, that the maintenance court be empowered to determine the percentage payout, the rate at which the payment is taxed (provided that the income tax laws are observed), as well as the frequency of such payments towards the respondent, in order for the maintenance payments to be made on a monthly basis in terms of the monthly court order, as the latter can be changed by the respondent to thwart payment.”
Children’s best interests
Another weakness flagged is that there is no formula for the determination of maintenance awards, causing discontent among some who feel let down by maintenance orders that are not in line with children’s best interests.
Another key shortcoming flagged is that the act is silent on indigent maintenance debtors who may make contribution in kind to the maintenance of the child. The commission proposed that SA mirror the Namibian maintenance laws that allow for other forms of maintenance to cater for a non-custodial parent who has no money to pay for maintenance but can contribute in kind towards the wellbeing of his or her child.
The commission says other forms of non-monetary contribution should be explored to ensure that both parents contribute their fair share.
The commission also proposes that defaulters be reported to credit agencies.
“The commission recommends that the Maintenance Act should provide for the handing over of details of maintenance debtors to credit ratings agencies immediately after a maintenance order is granted,” the commission says.
“The reason for this amendment is that credit providers rely on disclosures made by the person applying for credit whether [he or she has] a maintenance obligation and currently there is no concomitant means of verifying that whatever is disclosed or not disclosed in the credit application against a credit report provided by credit bureaus is the truth.”
In circumstances in which a maintenance debtor is sequestrated, the commission proposes that any arrears maintenance or future maintenance payable by the debtor be regarded as a top priority.
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