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[2020] ZAGPJHC 52
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I R v H R (2013/40348) [2020] ZAGPJHC 52 (12 February 2020)
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REPUBLIC
OF SOUTH AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA,
GAUTENG LOCAL
DIVISION, JOHANNESBURG
CASE NO: 2013/40348
In the
matter between:
R,
I
Applicant
And
R,
H
Respondent
J U D G M E N T
LAMONT,
J
:
[1]
The applicant who is the plaintiff in the main action, brings this
application in terms of Rule 43 for a contribution towards
her costs
in the amount of some R5,3 million. The respondent was previously
ordered to pay a contribution towards the costs in
a total amount of
R680, 000. The contribution has been used up.
[2]
The parties were married to each other on 26 January 1991. Prior to
the marriage they concluded an antenuptial contract which
incorporated the accrual system. The respondent excluded assets
having a value of R626 000 from the determination of the accrual.
The
assets excluded property valued at R293 000, life insurances and
retirement annuity funds valued at R73 000, ordinary shares
and other
marketable securities valued at R1 025 000 and an investment in
an aircraft owning partnership valued at R100 000.
The respondent’s
liabilities comprised a mortgage bond over fixed property valued at
R127 000 and other secured loans valued
at R738 000.
[3] The parties were
divorced on 29 April 2015. The issues in the action other than the
divorce were postponed
sine die
and remain to be determined.
Those issues include:-
3.1
whether the applicant should forfeit the benefits arising out of the
antenuptial contract;
3.2 how much, if anything
should be paid by the respondent to the applicant arising out of the
accrual;
3.3 maintenance for the
applicant, including the amount and duration thereof;
3.4 whether the assets of
certain companies and trusts be taken into account in determining the
value of the respondent’s
estate for purposes of the accrual;
3.5 costs.
[4]
Over the years up until the divorce the respondent amassed an estate
valued at approximately R412 million. The applicant’s
estate is
worth approximately R1 million less debts amounting to approximately
R860, 000. Both the applicant and respondent are
skilled graduates;
the respondent has worked over the years and continues in employment.
The applicant is 64 years old and is unemployed.
She is financially
dependent on the respondent. The applicant’s financial status
is not seriously contested and it is common
cause that to litigate
she needs a contribution towards costs.
[5]
The applicant bears the onus to establish the value of the
respondent’s estate at the date of divorce.
[1]
The respondent bears the onus to establish what assets are to be
excluded from the calculation and the reason for such exclusion.
[2]
At the trial the applicant must accordingly be in a position to
identify all the respondent’s assets and value them at the
date
of the marriage and the date of divorce. The applicant must also be
able to deal with the evidence which will be forthcoming
from the
respondent’s experts concerning the excluded assets both as to
what they are and what their value is. In order to
do this the
applicant must be able to identify and value excluded assets at the
date of marriage and track such assets as they
were converted into
other assets over the period of the marriage. She must in particular,
be able to cogently deal with the evidence
given by the highly
skilled expert the respondent proposes calling to explain why his
opinion and reasoning, as well as the facts
on which he relies,
should not be accepted.
[6]
While the parties lived together their expenses were commensurate
with the high income earned by the respondent. They lived
in a
property in Sandhurst on some 2,9 ha on which was constructed a house
of some 3400 m². The applicant continues to live
on the property
and over the past 5 years since the divorce the respondent and one of
the trusts has paid an amount in excess of
R17 million for the
running maintenance and upkeep of the property. This asset and the
money it has consumed over the period is
indicative of the
respondent’s wealth.
[7]
The issue in this case is not whether the respondent can afford to
pay the contribution, it is rather whether the applicant
requires the
contribution to reasonably prosecute her case.
[8]
It is common cause that the applicant is entitled to be placed in a
position to adequately present her case and that relevant
factors
include the scale on which the respondent is litigating and what is
reasonable for her needs to adequately arm herself
to present her
case.
[3]
[9]
The scale upon which the applicant is entitled to litigate must be
measured against the parties’ financial circumstances.
If the
parties are wealthy the applicant is entitled to litigate upon the
basis you would reasonably expect rich people to litigate.
[4]
[10]
Section 9(1) of the Constitution guarantees parties the right
to equality before the law and equal protection of the
law. In
Cary
v Cary
[5]
it was held that the guarantee meant that an applicant was entitled
to a contribution towards her costs to ensure the quality of
arms in
the divorce action. The obligation to make payment is a function of
the maintenance obligation of the respondent. The quantum
of the
maintenance obligation will be established by the ability of the
respondent to make payment of the reasonable needs of the
applicant.
As the respondent is well able to pay, the only question to be
determined is what the reasonable needs of the applicant
are in the
context of the applicant exercising her right to formulate and
develop the case as she sees appropriate.
[11]
The fact that the respondent’s complaint is directed only
towards whether or not the costs are being reasonably incurred
and
not towards the fact that he either cannot afford them or that they
are out of keeping with the expectation of what such costs
would be
in the type of litigation is indicative that the costs claimed are
commensurate with the standard of living of the parties.
The defence
is that it is not necessary to incur costs as the expenditure is
wasteful, not that it is not necessary to incur the
costs to achieve
the desired result. It is of course difficult to assess wastefulness
without knowledge of all the facts. If the
process followed does not
produce all the facts there is a risk that the exposure of the
additional facts will cast a different
light on the result. It is
this risk the process proposed by the applicant’s expert seeks
to reduce.
[12]
The applicant is entitled to formulate and develop her case as she
sees fit. The only limit on this is that if she, in formulating
and
developing a case acts unreasonably, the respondent is not obliged to
pay for such unreasonableness. The applicant’s
financial
position is parlous. She needs to ensure that the best case
reasonably possible is placed before court to obtain to the
fullest
extent her financial entitlement as that order will form the basis of
her funding for the rest of her life.
[13]
The respondent some time ago obtained a report from an expert,
Professor Wainer. When the matter came before me at the time
of the
previous Rule 43 application it appeared to me that an approach to
the matter could be to consider the report of Wainer
and use it as a
tool to assist in the investigation of the assets and liabilities of
respondent. The applicant employed an expert
Abrahams whose view was
that the Wainer report contained certain anomalies; was fatally
flawed in that it did not deal with the
flow of the respondent’s
capital and fruits from the excluded assets; did not attempt to
ascertain whether or not all the
assets over the period were the only
assets acquired and whether the expenses were the only expenses. His
view is that the appropriate
methodology to the forensic
investigation involves a consideration of a vast series of documents.
In particular he believes it
will be necessary to identify and
separate the assets and liabilities of the parties at the date of
marriage, the co-mingling of
assets and liabilities which took place
thereafter, various foreign assets and undisclosed income, the flows
of monies through
the various bank accounts, a determination of which
assets were to be included in the accrual and which are to be
excluded as they
were purchased with excluded assets and the
contingent assets.
[14]
Abrahams devised a plan by which the process could be executed; it
is contained in a memorandum (at page 63 to
74) and a
document entitled “Certain additional steps to be taken and
areas still to be covered” (page 44 to 46). I
do not propose to
deal in detail with the plan Abrahams devised. The investigation to
be undertaken requires detailed examination
of various cash books,
bank statements, books of account of the respondent, the trusts and
companies, detail of the amnesty application
filed by the respondent
relating to unauthorized transfers offshore, employment contract of
the respondent, share purchase schemes
and housing loan schemes, the
financial statements of the various companies and respondent’s
tax information of the various
companies and trusts, additional
documentation the nature and extent of which will be determined
during the investigation. Only
in this way, according to Abraham’s
evidence will it be possible to segregate the assets and liabilities
of the parties,
the mingling of the assets and liabilities, the
mingling of capital from excluded assets and income from excluded
assets with other
assets and income. It is apparent that the
investigation, if it is undertaken will successfully separate
included and excluded
assets, identify them and value them. The
investigation will further place the applicant in a position to deal
with the reports
filed by Professor Wainer as well as contentions
made by him concerning the state of the respondent’s financial
affairs and
in particular his valuation of the accrual. Once the
investigation is complete she will be able to establish the accrual
and identify
the excluded assets. She will also be able to deal with
her claim for maintenance.
[15]
The respondent suggests that such an exhaustive investigation is
excessive and overly expensive. His contention is that the
investigation is simply uneconomic and involves unreasonably incurred
expense. The respondent does not suggest that adopting the
applicant’s expert’s methodology will not achieve
the result which is sought namely, the proof of those facts
the onus
upon which lies on her and the ability to cross-examine the
respondent’s witnesses both as to opinion and fact.
The
respondent suggests that the approach I had considered appropriate at
the hearing of the first Rule 43 contribution for costs
application
was the correct way for the applicant to prepare a case. The first
problem with the respondent’s suggestion is
that it does not
take into account that the applicant is unable to make any proper
assessment of the Wainer report unless she has
facts of her own with
which to compare the facts and findings of Wainer. In order to obtain
such facts the applicant must conduct
an investigation. The second
problem with the respondent’s suggestion is that it overlooks
the right of the applicant to
conduct the case as she deems fit. It
does not appear to me to be unreasonable for the applicant to seek to
obtain a definitive
answer to the problem by using the methodology
proposed by Abrahams. On the face of it she has difficulty with the
Wainer report
which according to her expert has deficiencies. She
could easily be misled if she relies on a report containing secondary
information
rather than relying on a report containing actual
information and facts which she could use at the trial to establish
the inaccuracies
both as to fact and opinion her expert states exist
in the Wainer report. The third problem with the respondent’s
submission
is that it is common cause that there are voluminous
documents created over a lengthy period and hence the investigation
will be
lengthy and costly. The issues are complex and will require a
sharp mind to unravel. For example, the respondent at a point in time
became the owner of assets which existed in a foreign country. He
brought an amnesty application which presumably involves the
confession of facts for which he required amnesty. The respondent’s
books and documents need to be considered to discover
what the source
of the income/asset is which existed in the foreign country and how
the transfer took place.
[16]
I deliberately do not embark upon a detailed examination of each and
every issue as in due course there will be a trial and
comments which
I make today may affect the assessment of the evidence at the trial.
It appears to me to be reasonable for the applicant
to embark upon
the course suggested by Abrahams. The fact that it is lengthy and
expensive is overcome by the ability of the respondent
to pay and the
right of the applicant to litigate at an appropriate level to achieve
an accurate result.
[17]
Once I accept that Abrahams methodology is acceptable the
respondent’s defence, which was limited to an attack upon the
appropriateness or otherwise of Abraham’s methodology falls
away.
[18]
The costs for the other experts is not seriously in dispute.
[19]
The quantum of the contribution which I propose to make is high. If
the applicant is successful it will have been worth it
from her point
of view to undertake the Abrahams investigation. If the applicant is
unsuccessful it seems likely that she will
still be awarded something
as and by way of an accrual. If the applicant is awarded something as
and by way of an accrual the respondent
will be able to successfully
motivate the recovery of all or at least some of the contribution I
propose to order if the court
believes the costs were unreasonably
incurred once it has considered all the evidence.
[20]
The contribution which the applicant seeks to pay attorneys’
fees is in my view unjustified at the present time. I propose
to
order R1 million under this claim.
[21]
The applicant stated that if she received the contributions claim for
the experts she would have sufficient to prepare a case
properly and
ensure the presence of the experts at court when the matter is heard.
No further applications for contribution will
be permitted for
experts of the nature currently being considered. The attorneys’
in due course can bring whatever application
may be necessary if they
do not have sufficient funds.
[22]
I amended the draft order prepared by the applicant to reflect the
appropriate order and I make an order in terms thereof.
The draft
order annexure X is made an order of court.
__________________________________________
C G
LAMONT
JUDGE
OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
ATTORNEY
FOR THE APPLICANT: Billy Gundelfinger
COUNSEL
FOR APPLICANT:
Adv.
J.A. Woodward SC
ATTORNEY
FOR THE RESPONDENT: Tugendhaft Wapnick Banchetti and
Partners
COUNSEL FOR
RESPONDENT: Adv. A. Subel SC
Adv.
D.N. Lundström
DATE/S
OF HEARING:
4
February 2020
DATE
OF JUDGMENT:
12
February 2020
[1]
ST
v CT
2018 (5) SA 479
(SCA) para 37- 40
[2]
ST
supra
[3]
Nicholson
v
Nicholson
1998 (1) SA 48
(W) at 50C-G; see also
Van
Rhyn v Van Rhyn
a judgment delivered in this court by Van der Linde J in case number
30947/2016 para 17
[4]
Glazer
v Glazer
1959 (3) SA 928 (W)
[5]
1999
(3) SA 615
(C) at 616B – E