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[2019] ZAECPEHC 23
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JM V GM and Others (3145/2015) [2019] ZAECPEHC 23 (9 April 2019)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
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IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE LOCAL DIVISION, PORT ELIZABETH)
CASE
NO: 3145/2015
Date
heard: 12 March 2019
Date
delivered: 09 April 2019
In
the matter between:
J[…]
A[…] M[…] (Born C[…])
Applicant
and
G[…]
S[…] M[…]
Respondent
JUDGMENT
RUGUNANAN,
AJ
[1]
This is an application in terms of rule
43(6) in which the applicant seeks a costs contribution from the
respondent. The background
to the matter is set out hereunder.
[2]
The parties were married to each other on 9
March 1991 in Port Elizabeth out of community of property in terms of
an ante-nuptial
agreement which incorporates the accrual system. The
divorce action, instituted by the applicant against the respondent on
13 August
2015 proceeds to trial on 5 August 2019 (there being at
least three interim postponements of the action, a series of three
opposed
interlocutory applications and a joinder of some 27 trusts,
among them two offshore trusts known as the Christim Trust and the
Highway Trust).
[3]
In
December 2016 the applicant launched an application for discovery in
terms of Rule 35(11). This application was recently heard
by Revelas
J simultaneously with three others involving an application under
Rule 21(4), an application to amend the particulars
of claim in the
divorce action, and an application for introducing a further
affidavit.
[1]
[4]
On 10 February 2017 the applicant launched
a rule 43 application in which she sought maintenance
pendente
lite
, a contribution towards costs and
ancillary relief. On 2 March 2017 the applicant delivered a
supplementary affidavit in the rule
43 application. On 16 March 2017
the respondent launched an application under rule 30 in which he
sought an order setting aside
the rule 43 application on the basis
that it was an irregular proceeding. The applicant opposed the rule
30 application and the
matter was heard on 10 August 2017 before
Eksteen J. Judgment in the rule 30 application was delivered on 22
August 2017, and an
order was made dismissing the rule 30 application
with costs, such costs inclusive of the costs of two senior counsel.
[5]
The rule 43 application was heard on 16
November 2017. In terms of the order granted on 5 December 2017, the
applicant was awarded
an initial contribution towards costs in the
amount of R1 million
per
Revelas J.
[6]
On 10 October 2018 the applicant launched
the present rule 43(6) application. On 5 March 2019 the applicant
launched an application
to file a further affidavit in respect of the
rule 43(6) application. This application and the rule 43(6)
application were heard
simultaneously by this court on 12 March 2019.
Noting on the one hand that the material raised in the applicant’s
further
affidavit related to the issue of respondent’s alleged
affordability while on the other hand the respondent stated that the
applicant’s case in investigating various trusts is
speculative, I granted leave to both parties to file their further
affidavits
such leave being granted to permit a ventilation of the
issues. The affidavits deal with documentation pertaining to the
respondent’s
approval for administrative relief under the
Exchange Control Special Voluntary Disclosure Programme (to which I
revert below).
[7]
In
her notice of motion the applicant seeks an order in the following
terms:
1.
Directing the respondent to
pay the applicant’s attorneys of record a further contribution
towards the applicant’s legal
costs until the first day of
trial, in the amount of R1 200 000;
2.
In the alternative to prayer 1
above, and only in the event of the above Honourable Court finding
that the applicant is bound by
the agreement reached with the
respondent on 26 June 2018, in respect of a further contribution
towards her legal costs, directing
the respondent to pay to the
applicant’s attorneys of record a further contribution towards
the applicant’s legal costs
until the day preceding the first
day of trial, in the amount of R625 000;
3.
Directing the respondent to pay a
daily contribution of R125 000 towards the applicant’s costs,
effective as of the second
day of trial in the event of the court
granting the relief sought in prayer 1 above and from the first day
of trial in the event
of the court granting the alternative relief in
prayer 2 above, each such payment to be made by electronic funds
transfer to be
received by the applicant’s attorneys of record
in the trust account by 09h00 on each day;
4.
Directing that the respondent shall
bear the costs of this application on the scale as between attorney
and client, including the
costs of two senior counsel.
[8]
The respondent disputes that he is liable
to make a contribution of R1 200 000 and further, that he is
able to afford to make
one. His contention is that the applicant is
bound by an agreement concluded between the parties during June 2018
(to which I revert
below) and that insofar as the remaining prayers
for relief are concerned, the applicant is possessed of sufficient
means to make
arrangements to pay her own costs in full.
The
application to strike out
[9]
The
respondent sought to have several paragraphs (i.e. paragraph 10, the
last sentence in paragraph 34, and the whole of paragraphs
35, 36,
37, 42, 43, 44 and 45) of the applicant’s founding affidavit
[2]
struck out mainly on the ground that the material they contain
impermissibly refers to ‘without prejudice’
communications
and a settlement agreement pertaining to the divorce
action between the parties.
[10]
Ms
Dicker SC, who appeared for the applicant, contended that the
material in the said paragraphs maintain relevance in the sense
that
they are indicative the circumstances that have driven the applicant
to incur costs to date, this being due to the divorce
action having
previously settled but for the respondent’s failure to have
signed a written deed of settlement. Relying on
Gore
v Amalgamated Mining Holdings
,
[3]
Ms Dicker contended further that if a party such as the respondent
applies to strike out what is alleged to be inadmissible evidence
but
does not deal with the merits as in pleading over, then he or she
stands or falls on the basis of that choice.
[4]
In any event, so the argument went, the impugned paragraphs do not
disclose detail of the settlement; they are merely broad-based
factual averments lending context to the events that culminated in
the current status of the litigation between the parties.
[11]
Ms
Gassner SC who appeared for the respondent submitted that the
respondent’s denial of the material contained in the said
paragraphs is nothing more than an indication that a settlement was
not reached. In this regard the respondent could not be expected
to
plead over or answer the applicant’s allegations where she does
not proffer detail of the settlement. But the fact that
detail of the
settlement agreement is not mentioned does not mean that the material
is not without prejudice. In this regard Ms
Gassner referred to
Waste
Tech (Pty) Ltd v Van Zyl & Glanville NNO
[5]
,
as authority for the proposition that statements made expressly or
impliedly without prejudice in the course of
bona
fide
negotiations for the settlement of a dispute cannot be disclosed in
evidence without the consent of both parties. The exception
to this
rule envisages a binding settlement agreement that results in an
enforceable compromise of the suit.
[6]
Inasmusch as the applicant’s founding affidavit indicates that
the alleged settlement agreement is unenforceable, I am in
agreement
with Ms Gassner that the applicant is precluded from disclosing
settlement communications relevant thereto. In the circumstances
I am
of the view that the applicant’s allegations in the
aforementioned paragraphs are patently not necessary for a
determination
of the issues in this application and fall to be struck
out.
The
costs contribution of R1 200 000 until the first day of
trial
[12]
There are a number of disputed matters in
the papers, which are somewhat lengthier and more involved than is
usually the case. Based
on fairness and upon a robust appraisal of
matters still to be decided at the trial, I must do the best I can in
the circumstances
to achieve a fair, though perhaps rough and ready,
solution to the problem of placing both parties in a position to
present their
cases properly before the court.
[13]
It is clear from the papers that both the
applicant and the respondent are wealthy people and that they enjoyed
a luxurious lifestyle
during the subsistence of their marriage. The
respondent is a businessman who has accumulated wealth both locally
and abroad, the
bulk of which is held in various trusts. In pursuit
of her claim for the division of the accrual, the applicant believes
that the
respondent is the
alter ego
of the numerous trusts presently cited as defendants in the main
action and that he has control of trust assets and has access
to
substantial trust funds both for his personal benefit and for
financing the costs contribution which she seeks. For this reason
the
applicant sought leave to file a further affidavit attaching
documentation pertaining to the Exchange Control Special Voluntary
Disclosure Programme.
[14]
The
dispute whether the respondent has control of trust assets and access
to trust funds is a controversial issue that cannot be
determined in
favour of the applicant in these proceedings. The issue is triable in
the divorce proceedings, for two reasons. Firstly,
if regard is had
the provisions of the ante-nuptial agreement concluded between the
applicant and the respondent which expressly
exclude trust assets
from the operation of the accrual. Secondly, the pronouncement by the
Supreme Court of Appeal in
REM
v VM
[7]
2017
(3) SA 371
(SCA)
wherein it was held that control by a trustee of a trust asset in
breach of the trust deed does not change the nature of the trust
asset and does not vest ownership of the trust asset in the trustee
spouse, nor does it lay a foundation for taking a trust asset
into
account in determining the accrual of a spouse’s estate.
[15]
Ms
Gassner submitted, and correctly in my view, that in seeking to
justify the costs contribution she seeks the applicant has nowhere
in
her papers identified
prima
facie
evidence from which it can reasonably be inferred that the trust
assets are beneficially owned by the respondent, nor has she
identified or particularised any assailable transactions regarding
the respondent’s alleged handling of trust assets as personal
assets notwithstanding extensive forensic investigations by her
accountant one Greyling. Absent any
prima
facie
evidence, alternatively fact-specific evidence, the claim for a
further costs contribution cannot be supported by speculative
inferences which appears to be the approach adopted by the applicant.
In this regard the applicant’s further affidavit, which
introduced the respondent’s application for administrative
relief under the Exchange Control Special Voluntary Disclosure
Programme
[8]
in terms of which
the respondent was permitted to repatriate to this country US$
678 486.00 worth of assets, does not assist
in advancing the
applicant’s case for a costs contribution. The respondent
maintains that these are not his personal funds
but funds held by the
Highway Trust and that the dispute concerning these funds cannot be
ventilated in the present rule 43 proceedings.
[16]
Dealing
with the various interlocutory applications mentioned earlier; in a
broad sense, these were brought by the applicant to
establish
inter
alia
the financial position of the trusts, the respondent’s level of
involvement in the affairs of the trusts, and the extent
of their
assets and liabilities. In respect of these interlocutory
applications the applicant seeks a costs contribution approximating
R1 200 000.
[9]
[17]
Although
a rule 43 costs contribution order may not be limited to party and
party costs and may include attorney and client costs,
[10]
it is a well-established principle that an applicant seeking a
contribution under the rule is not entitled to obtain a contribution
to, or recover, costs in interlocutory applications.
[11]
The rationale for this principle is that spouses who are successful
in interlocutory applications in divorce actions will generally
be
awarded costs of the interlocutory application. If a successful
spouse, in addition, is awarded a costs contribution in terms
of rule
43 for the same interlocutory application, the result would be a
duplication of the costs award which is clearly inequitable.
[18]
Ms Dicker contended that this principle
emanates from pre-constitutional jurisprudence and that in deciding
the issue this court
should adopt the “equality of arms”
approach based on the constitutional prescript of equality before the
law. In this
regard, I was urged to make a costs contribution award
in respect of the interlocutory applications launched by the
applicant to
date. I am not convinced that this is what I
should do. The order by Eksteen J dismissing the rule 30 application
on 22 August
2017 incorporated a costs order in favour of the
applicant which included the costs of two counsel. According to the
applicant,
these costs are in the process of being taxed. On this
basis there is no reason to depart from the established principle
even if
it is the applicant’s gripe that the costs order is
limited to party and party costs. In addition, the recent judgment by
Revelas J in respect of the rule 35(11) application (along with the
others) incorporated an order to the effect that the costs
of the
rule 35(11) application be reserved for determination by the trial
court. It is considered unfeasible to make provision
for a costs
contribution at this stage when the applicant’s entitlement to
those costs is yet to be determined. Incorporating
what has been
stated above, and for reasons that follow hereunder, I am of the view
that a costs contribution of R1 200 000
until the first day
of trial is not justified.
The
costs contribution agreement of June 2018
[19]
During
June 2018 the respondent made an offer, which the applicant accepted,
that in addition to the R1 million costs contribution
that the
respondent had previously paid in terms of the order granted on 5
December 2017, he would pay a further amount of R1 250
000 in
two instalments towards the applicant's costs up to but not including
the first day of trial. The costs contribution agreement
relied on by
the respondent is evidenced by a series of emails exchanged between
the parties’ attorneys.
[12]
The costs contribution was to be paid by the respondent in two equal
instalments of R625 000; the first instalment payable
on 5 July
2018 and the second on 31 July 2018. The applicant's acceptance of
the respondent's tender was conveyed in an email dated
26 June 2018
and is not disputed. It is common cause that the first instalment was
paid by the respondent and accepted by the applicant,
but that the
second instalment, despite him seeking an extension for payment until
the end of September 2018, remains unpaid to
date. This amount is
currently held in the respondent's attorneys’ trust account. In
failing to make payment of the second
instalment when it became due
the respondent has breached the costs contribution agreement.
Notwithstanding this, the applicant
did not cancel the agreement, nor
does she seek cancellation of the agreement in her founding affidavit
in this application, this
despite her contention that the respondent
repudiated the agreement.
[20]
It
is evident from the relief sought in the notice of motion and in the
founding affidavit
[13]
that
the applicant elects to enforce the costs contribution agreement on
the one hand while on the other, also seeking to pursue
a claim for a
costs contribution of R1 200 000.
[21]
On facts indicating that the applicant
retained the first instalment and not having cancelled the agreement
on the ground of repudiation
but claiming enforcement thereof, Ms
Gassner contended that the application of the doctrine of election
precludes the applicant
from claiming a remedy inconsistent with the
terms of the costs contribution agreement. The essential
characteristics of the doctrine
of election appear from the following
dictum
in
Bekazaku Properties (Pty) Ltd V Pam
Golding Properties (Pty) Ltd
1996
(2) SA 537
(C) at 542 E-F
:
“
When
one party to a contract commits a breach of a material term, the
other party is faced with an election. He may cancel the contract
or
he may insist upon due performance by the party in breach. The
remedies available to the innocent party are inconsistent. The
choice
of one necessarily excludes the other, or as it is said, he cannot
both approbate and reprobate. Once he has elected to
pursue one
remedy, he is bound by his election and cannot resile from it without
the consent of the other party. Election is a
species of waiver; an
election to pursue one remedy involves the waiver or abandonment of
the other.”
[14]
[22]
I
accord recognition to this statement of the law and am of the view
that the applicant is bound by the terms of the costs contribution
agreement. This also stems from a recognition that a costs
contribution is akin to a claim for maintenance which rests on the
duty of support between spouses
[15]
and that a court is not empowered to vary an undertaking or agreement
for the payment of maintenance in respect of which no order
has been
made.
[16]
The
alternative further contribution of R625 000 plus the daily
contribution of R125 000 with effect from the first day
of trial
[23]
Tritely,
a claim for contribution towards costs in a matrimonial suit is
sui
generis.
The
contribution is towards the costs of the action.
[17]
The basis for such a claim is the duty of support which the spouses
owe to each other.
[18]
In assessing the quantum of the contribution to enable the party
seeking the contribution to present his/her case adequately
before
the court, the court would have regard to the circumstances of the
case, the financial position of the parties and the particular
issues
involved in the pending litigation.
[19]
Impacting on the considerations underlying contributions towards
costs is the constitutional requirement of equality before the
law in
matrimonial disputes, so that a wealthy spouse does not enjoy
unwarranted advantage over the other, less wealthy, spouse.
[20]
[24]
From what becomes apparent hereunder, the
applicant is possessed of sufficient means to ensure that she
litigates against the respondent
on an equal footing. Quoting
directly from the founding affidavit, this is what the applicant
says:
Paragraph
82:
“
I
have three Investec accounts, two local, which have balances of
R43 341 and R87 010 and an Investec UK account which
has an
investment of £45 101
as
at 2 October 2018
.”
Paragraph
83:
“
My
ABSA account has R4 046
at 2
October 2018
. My RBS accounts
have approximately £16 and £2 851 respectively.”
(The
emphasis in bold is mine).
[25]
Although
unemployed, the applicant in addition, owns three immovable
investment properties and presently resides on a property owned
by
the respondent (23 H[…] Road). She owns two luxury motor
vehicles, a Mercedes and a Porsche having a value of R250 000
and R800 000 respectively. Her net asset portfolio approximates
to R13 million.
[21]
She
has also remained silent about disclosing whether an agreement has
been concluded with her attorneys in terms whereof she ceded
her
potential accrual award as security for legal costs. Correspondence
directed to the applicant’s attorneys was met with
a refusal to
make such disclosure. Considering that the applicant’s
attorneys concluded a similar agreement with another
client, the
respondent draws the inference that the applicant had indeed provided
her attorneys with security for costs. The refusal
to make such
disclosure is certainly a relevant factor in deciding whether the
applicant may be awarded a costs contribution.
[26]
The
respondent has net assets approximating R8.6 million comprising
primarily of eight immovable properties (among them 23 H[…]
Road), a shareholding and a retirement capital portfolio.
[22]
He does not own a motor vehicle. His monthly income after tax is
R164 000. From this amount should be deducted a monthly amount
of R137 000. The latter amount is the sum total of what it costs
him to service the maintenance order of 5 December 2017.
What the
respondent is effectively left with is R27 000 to cover his
personal expenses. He contends that he is unable to afford
the
contribution/s that the applicant seeks.
[27]
The
sum total of the alternative contribution of R625 000 plus the
R125 000 from first day of trial amounts to R750 000.
The
applicant’s UK investment of £45 101 converts to the
conservative equivalent of R845 192.
[23]
This amount exceeds the sum total of R750 000 by a considerable
margin. Nowhere does the applicant state that she is unable
to access
this investment nor does she state that she is unable to repatriate
these funds. The applicant, self-evidently, has the
means for
ensuring that she has sufficient cover to meet the costs of her
preparation for trial (R625 000) and to cover the
costs she
requires for the first day of trial (R125 000). She is capable
of litigating without a contribution. Regard being
had to her
available resources I am satisfied that the applicant, by her own
showing, is capable of placing herself in a position
of equality
before the law without a costs contribution for the amount/s claimed.
It has not been demonstrated that the applicant
has a need for
the contribution/s which she claims, and in the circumstances I do
not consider it appropriate to exercise a discretion
in her favour at
this stage.
[24]
I regard the
applicant’s personal wealth and resources as also the
speculative nature of her accrual claim as weighty considerations
militating against a further costs contribution in her favour.
However should circumstances necessitate the applicant may seek
a
daily costs contribution either when the trial in the main action
commences or after the first day of trial.
[25]
[28]
In the result I make the following order
pendente lite
:
[28.1]
In accordance with the agreement concluded between the parties during
June 2018, the respondent shall pay to the applicant,
within 10 days
from the date of this order, the amount of R625 000 (six hundred
and twenty five thousand Rand) plus interest
calculated with effect
from 31 July 2018 to date of payment;
[28.2]
The applicant is given leave to approach the trial court on the same
papers for a further contribution, if so advised;
[28.3]
The applicant shall pay the respondent’s costs in respect of
the application to strike out;
[28.4]
The costs of the application in terms of uniform rule 43(6) and the
costs of the applicant’s application to file
one further
affidavit in support of the said application are reserved for
determination by the trial court.
________________
S
RUGUNANAN
ACTING
JUDGE OF THE HIGH COURT
Appearances:
For
the Applicant: Adv. T. A. Dicker SC, instructed by Catto
Neethling Wiid Inc., Cape Town, c/o Greyventeins Inc., Port
Elizabeth.
For
the First Respondent: Adv. B. Gassner SC, instructed by Miller
Du Toit Cloete Inc., Cape Town, c/o Kaplan Blumberg Attorneys,
Port
Elizabeth.
[1]
See
J[…] A[…] M[…] (Born C[…]) v G[…]
S[…] M[…] (3145/2015) [2019] ZAECPEHC
16 ( 26
March 2019)
[2]
i.e.
the founding affidavit in the present rule 43(6) application.
[3]
1985
(1) SA 295
(C) at 295 H-I
[4]
See
also
Helen
Suzman Foundation v President of the RSA & Others
2015 (2) SA 1
(CC) at paragraph [136] and Pienaar & Another v Strauss &
Another (3930/2016) [2017] ZAECPEHC (28 March 2017)
[5]
2002
(1) SA 841
(E) at 846 E; and Naidoo v Marine & Trade Insurance
Co Ltd1978 (3) SA 666 (AD) at 677 A-B;
[6]
Gcabashe
v Nene
1975 (3) SA 912
(D&CLD) at 914 E
[7]
2017
(3) SA 371 (SCA)
[8]
per
Regulation 24 of the Exchange Control Regulations
[9]
Founding
affidavit rule 43(6) application, page 2, paragraph 102
[10]
Dodo
v Dodo
1990 (2) SA 77
(WLD) at 99 H-I
[11]
Micklem
v Micklem
1988 (3) SA 259
(CPD) at 263 A; Service v Service
1968 (3)
SA 526
(D); and Maas v Maas 1993 (3) SA885 (O)
[12]
Founding
affidavit rule 43(6) application, Annexures JAM2, JAM3 and JAM4 pp
50-58
[13]
Founding
affidavit rule 43(6) application, page8, paragraphs 16-19
[14]
Approved
in
Merryhill
(Pty) Ltd v Engelbrecht
2008 (2) SA 544
(SCA) at 550 B-H
[15]
Glazer
v Glazer
1959 (3) SA 928
(WLD) at 931 G-H
[16]
Schutte
v Schutte 1986 (1) SA 872 (AD)
[17]
Maas
v Maas
1993 (3) SA 885
(O) at 888J-889B
[18]
Glazer
v Glazer supra at 931 G-H
[19]
Carey
v Carey 1999 (3) SA 615 (C)
[20]
Carey
v Carey supra
[21]
Calculated
in rounded off figures : R15 million less R1,8 million in
liabilities and less R50 000 expenses - per Annexure
JM5, page
47 of the rule 43 application
[22]
Sworn
reply, page 135, paragraph 45 a.r.w. Annexure “GMW 15”
pages 226-227
[23]
See
calculation in respondent’s sworn reply at page 143
[24]
Amanda
Lategan (Kolesky) v Wessel Daniel Lategan (1307/2016) [2017]
ZAECPEHC (15 April 2017)
and
cf.
Marie
Doninique Edwige Synott v David James Pierce Synott (Unreported) CPD
Case No 14525/93, 14 December 1993
[25]
Brown
v Brown
1970 (2) SA 625
(W); Amanda Lategan (Kolesky) v Wessel
Daniel Lategan supra at paragraph [15]