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[2018] ZAGPJHC 30
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SC v SC (20976/2017) [2018] ZAGPJHC 30 (28 February 2018)
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IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 20976/2017
REPORTABLE:
NO
OF INTEREST TO
OTHER JUDGES:
YES
DATE:
28 February 2018
In
the matter between:
Sc,
R
Applicant
And
Sc,
L
Respondent
JUDGMENT
SPILG,
J:
INTRODUCTION
1.
This is a
Rule 43 application in which the applicant sought maintenance for
herself and the minor son who is sixteen years old in
an amount of
R36 870 per month in addition to rental (if any) and the payment
of utility bills for the property in which she
resides with their
son. She also sought payment from the respondent of R20 000 as a
contribution towards her costs. Primary
residence and contact had
been agreed.
2.
The matter
was originally set down on my motion court roll of 23 January 2018. I
was dissatisfied with the extent of financial disclosure
made by both
parties and
mero
motu
made
an order under Rule 43(5) requiring certain limited financial
disclosures, as I believe I was obliged to having regard to the
circumstances of the case, including the rights of the minor child in
terms of the Children’s Act 38 of 2005.
[1]
3.
Since the
issue of residence and contact had been resolved, the agreement
reached between the parties also formed part of the order
that was
made.
Both
parties were required to deliver a supplementary affidavit in which
they were to provide full details, accompanied by copies
of source
documents where applicable, of:
a.
In the case
of the applicant; her statements for a period of one year from every
bank account, credit card account and investment
account as well as
her personal tax returns for the previous two years
b.
In the case
of the respondent; the same disclosures as required of the applicant
and in addition bank statements in respect of the
business operated
by the respondent under a close corporation, that business’
last audited set of financial statements and
previous two year’s
tax returns, a summary of all loans made to the respondent by his
brother, copies of all bank statements
in connection with each loan
and an explanation of the terms of the loan agreement with a
confirmatory affidavit by the brother.
4.
The reason
for requiring depositions is that there may not only be a sanction
for perjury but an untruthful statement may amount
to a
misrepresentation entitling the other party to undo any award made or
settlement agreement ultimately reached.
5.
Both
parties filed supplementary affidavits supported by the required
annexures. The matter was then argued on 13 February 2018.
METHODOLOGY
6.
There are
two main factors which indicate that in the circumstances of the case
it is best to establish the amount of maintenance
that is reasonable
and then determine the extent to which it is affordable for the
respondent and whether the applicant should
contribute any amount,
irrespective of whether the respondent can afford to pay the entire
amount or whether there is a shortfall
which the applicant should
make up with any income she may have.
7.
The first
is that both counsel have applied themselves diligently to the task
of considering the reasonableness of the maintenance
claimed. Inter
alia they did so by reference to the disclosed documents which
demonstrated how much was actually spent on specific
items
(particularly if regard was had to the credit card usage and
factoring in where applicable any cash withdrawals)
[2]
.
In the result a number of concessions were made and there are only a
handful of contentious items of expenditure. I am most grateful
to
counsel for their thoroughness.
The
other is that the respondent is effectively the sole breadwinner
while the applicant receives a monthly return on investment
income
derived mainly from her share of the proceeds out of the disposal of
properties that the parties jointly owned.
AMOUNT
OF MAINTENANCE
8.
I do not
propose to go through the contested amounts item by item. There are
however some specific observations that I will make
regarding items
where the parties are far apart.
9.
If regard
is had to the standard of living enjoyed by the parties and taking
into account that there is the extra expense of two
households I
consider a monthly grocery bill of R4500 for a sixteen year old son
and the applicant to be too low. I consider an
amount of R6 000
per month reasonable and not extravagant.
10.
The
applicant includes the cost of wi-fi access as part of the items
claimed under the telephone and data costs. I accordingly give
her
the benefit of R2 600 per month.
11.
To require
of the applicant to spend no more than R6 000 per annum (i.e.
R500 per month) on clothing even for herself alone
let alone anything
for their son fails to take into account the cost of a single basic
item of wearing apparel, be it a skirt,
a pair of running shorts or
shoes or one reasonably smart item of clothing in the year.
12.
Once again
if regard is had to their lifestyle during the marriage setting aside
R500 per month so that their son and the applicant
can go on holiday,
even if it is under a week, is unreasonable. They have holidayed
along the East Coast and an actual amount of
R24 000 was
incurred then.
13.
Entertainment
is a contentious item. However if regard is had to the cost of
attending a film, or a concert or eating out even once
every second
week an amount of R800 per month is inadequate having regard to their
lifestyle.
14.
The
respondent contended that in addition to the costs which the
respondent already pays for the son’s education, the costs
of
occupying a residence and certain other amounts he pays directly, an
overall additional monthly amount of about R18 600 was
reasonable. I
disagree. In my view an amount of R22 100 per month is
reasonable as the total overall amount for the applicant
and their
son.
15.
I again
wish to emphasise, as I did in
Ts
v Ts
,
that a presiding officer does not have regard to what is reasonable
relative to his or her own lifestyle but rather to that of
the
parties.
THE
RESPONDENT’S ABILITY TO PAY
16.
The
respondent claims that the maximum he can afford to pay is R20 000
per month. Until now he has been paying R15 000
per month. The
applicant contends that it is too little and that she has been forced
to eat into savings and part of the capital
realised from the sale of
jointly owned property.
17.
The court
must accept that the respondent now has to provide for two households
and I will also accept that his income in real terms
has not
increased. The parties have lived apart since March 2017 and
the respondent has formed a relationship with another
woman.
18.
Since the
parties were married in community of property the applicant is
entitled to a division of the joint estate. The respondent
has
however sold some of the properties and the applicant received a net
amount of approximately R1.25 million. Of this amount
she still has
an investment of some R800 000 and is able to draw a monthly
amount of some R4 600 if I am not mistaken.
The capital sum is
however intended to provide security for her old age. In the past the
monthly proceeds of investment income
did not appear to be used for
maintenance and it is necessary for her to build up reserves or to
reinvest. At this stage I am not
prepared to take the monthly return
on investment into account.
19.
The
respondent contends that he used the bulk of the monies he received
from the sale of assets to pay back an amount he had borrowed
from
his brother, Corrie, when he set up his business some eight years
ago. He also claims that Corrie used the money to buy a
townhouse.
This is the townhouse where the applicant now resides with their son.
She says that the respondent told her that although
it is effectively
in the name of Corrie through a legal entity, that he, the
respondent, is the true beneficial owner. The respondent
denies this.
20.
It however
appears that at one stage the applicant was expected to pay her
brother-in-law rental of R8 000 per month. It is
evident that
this has fallen away and the applicant will be entitled to reside
there with their son free of rent, levies and utility
bills.
21.
The
respondent conducts a drilling business which he had operated from
the matrimonial home. The business is conducted through the
vehicle
of a close corporation of which the respondent is the sole registered
member
[3]
. Historically the
business has been the main source of the income used to provide for
the family’s needs.
22.
A constant
theme in the respondent’s papers is that he has used joint
estate money or its assets to now repay his brother
for a debt that
allegedly arose some eight years ago and, more recently in 2017 more
debt has been incurred to the brother for
additional sums allegedly
borrowed.
In
turn the applicant’s constant theme is that the respondent is
alienating assets of the joint estate to her prejudice, is
restructuring a debt situation and that the alleged transactions with
the brother are fictitious.
23.
Although
the applicant had worked until 2008 and by the time their son was
seven years old she commenced to stay at home looking
after him. She
proceeded also to assist the respondent in the business during the
mornings when their son was at school. The respondent
would give her
R20 000 per month which would be used to cover household
expenses and a number of debit orders. The respondent
did however pay
other expenses of the applicant such as petrol, meat, insurance and
all the son’s expenses. After July 2017
he reduced the amount
to R15 000 per month.
24.
The
applicant assisted the financial wellbeing of the family in other
ways as well. An amount of R580 000 of her pension pay
out when
she resigned from her employment in 2008 was used to settle the bond
on one of their joint properties and to pay off her
previous car. A
further amount from her pension, of just under R276 500, was
used to purchase a truck for the business
while the remaining R75 000
odd was used for the family, including the provision of a holiday for
all.
25.
The
respondent’s lifestyle reveals that his income and benefits
received from whatever source is greater than the amount he
has been
prepared to declare in these papers. At this stage, at least prima
facie, it appears that he is either restructuring his
affairs,
particularly in relation to the assets and liabilities of the
business or has in fact incurred an historic as well as
a current
liability to his brother. Only a full disclosure of his brother’s
financial affairs, the source of his income,
his tax returns as well
as source of funding for and the procurement of the a drilling
machine which features prominently in the
respondent’s
explanation of the businesses (and hence the respondent’s own)
financial situation will may reveal the
truth.
26.
It is
obvious that the underlying source of each party’s income is
the starting point of any investigation. The underlying
source is not
necessarily, nor even predominantly, an amount deposited into a bank
account at the end of each month. It can be
other forms of benefits
that have an economic value, such as the right to occupy a
residential property indefinitely, the use of
a motor vehicle or
credit card facilities.
27.
The mere
fact that a party claims to earn a salary and produces a pay slip or
even an IRP5 form tells a court very little unless
it is self-evident
that he or she is strictly a wage earner with no personal connection
to the employer.
28.
A pay slip
or tax return is inadequate if the party operates a business through
the vehicle of a legal entity or partnership, is
involved in a family
concern or is the donor, trustee or beneficiary of an inter vivos
trust and the other party alleges that the
disclosed income would be
inadequate to support the lifestyle to which the parties had been
accustomed before separation.
29.
Each of
these mentioned structures enables the deferment of income or its
conversion into other forms of financial benefits,
the
ostensible incurring of debt and expenditure or a claim that it is
just family benevolence that provides handouts or loans
which in
truth are never repayable and are no more than accounting entries
with no actual financial consequences.
30.
By way of
example; salary can be converted in the books and retained as a loan
account or converted into equity or an investment.
The use of assets
registered in the name of a legal entity or a trust, such as a
residential home or motor vehicle can be used
indefinitely for the
de
facto
sole
benefit of a party and recurring purchases or expenditure such as
groceries, petrol, vehicle maintenance, clothing, entertainment
and
even utility bills can be put through the company, while school fees
can be taken out of a trust which provides for such an
expenditure.
31.
In my
respectful view a court should be astute in such cases to place
proper weight on the external manifestations of the parties’
disposable income by reference to the lifestyle enjoyed by them when
they lived together, whether they lived debt free and were
able to
access ready sources of funds as and when needed unless proof is
provided that the individual breadwinner or both of them
lived beyond
their means by reference to overdrafts, genuine loans or had disposed
of a capital asset. In short these various structures
are invariably
established not simply to protect individuals from personal liability
but serve legitimate tax structuring objectives
to defer or convert
income.
32.
Of course
there may be some structures that transgress the boundary between tax
avoidance and tax evasion in which case it is hardly
likely that the
party would provide full disclosure and a court is required to make
an assessment by reference to the lifestyle
led.
33.
In the
present case the respondent has effectively controlled the flow of
monies within the joint estate and is able to restructure
his
affairs. His brother is a related party who may or may not have
concluded genuine arms-length transactions including
the borrowing of
money. At present ether are warning bells particularly in relation to
the delay in repayment of the alleged loan
made some years back that
was claimed to have funded the business.
34.
I am
satisfied that at this stage the applicant’s source of income
or capital base should not be depleted to cover any part
of the
maintenance which I have considered to be reasonable. The respondent
has in the past been well able to cover more than R20 000
of it
whether directly, in the form of remuneration to the applicant or
otherwise through the close corporation. For purposes of
maintenance
claims they are in fact all derived from the same ultimate source
over which the respondent has been able to enjoy
material benefits
for himself and his family during the marriage, let alone that he is
in de facto control of how its revenues
are to be utilised.
CONTRIBUTION
TOWARDS COSTS
35.
This has
now become settled between the parties.
ORDER
36.
I
accordingly order that the respondent:
a.
pay
to the applicant for the maintenance of herself and their son an
amount of R22 100 per month;
b.
pay school
fees and all reasonable educational related expenses including but
not limited to stationary not included in the school
fees, books,
hiking, school tours, extra classes, extra murals, sport equipment,
lockers and excursions;
c.
pay all
expenses pertaining to the property where the applicant and their
minor child presently reside;
d.
pay
directly to the service provider all reasonable medical expenses of
the minor child not paid by the medical aid and if the applicant
does
pay such costs then the respondent will reimburse the applicant
within seven days of being provided with the relevant receipt
and
statement;
e.
pay a
contribution to the applicant’s legal costs in an amount of
R10 000 in two equal instalments
and
as further set out in the draft order which I have initialled.
37.
Costs to be
in the cause.
______________
SPILG
J
DATES
OF HEARINGS
23 January and 13 February 2018
DATE
OF DISCLOSURE ORDER
25 January 2018
DATE
OF RULE 43 ORDER
28 February 2018
FOR
APPLICANT:
Adv JJW Hayes
Carol van Molendorff
Attorneys
FOR
RESPONDENT:
Adv T Engelbrecht
Theron Attorneys
[1]
See Ts v Ts [2017] ZAGPJHC 244
[2]
I believe that the advantages of requiring financial disclosure is
evidenced by the significant closing of the gap between the
parties
respective positions on the amount of maintenance and the court’s
ability to gauge the disposable income
available from the
respondent’s available income stream through the business..
[3]
The respondent claims that a Mr M is a co-member although not
registered as such. For present purposes nothing turns on that
since
on the respondent’s own version Mr M has been there even prior
to the break-up of the marriage and his presence,
or the payment of
any amount to him would already have been taken into account when
determining the family’s spending patterns.
Mr M’s
alleged membership also did not impact on the respondent’s de
facto say in the affairs of the company and
how its funds were
utilised.