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[2021] ZAECELLC 4
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J.L.T v C.H.T and Another (EL 819/2020) [2021] ZAECELLC 4 (22 January 2021)
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NOT REPORTABLE
IN THE HIGH COURT
OF SOUTH AFRICA
(EAST LONDON
CIRCUIT LOCAL DIVISION)
Case
No. EL 819/2020
In
the matter between:
J[…]
L[…] T[…]
Applicant
and
C[…]
H[…] T[…]
First
Respondent
WYLDE
ATTORNEYS INC.
Second
Respondent
JUDGMENT
HARTLE
J
[1]
The
applicant, who is married to the first respondent by antenuptial
contract with the application of the accrual system, seeks
an
anti-dissipation interdict against him pending the finalization of
their divorce action (issued out of this court under case
number
1269/19), in effect freezing the nett proceeds from the sale of their
matrimonial home which the applicant, at the time
of the launch of
this application, was expecting to be paid by the second respondent.
The latter party was the conveyancer
appointed by the first
respondent to register the transfer and the firm also represents him
in the pending divorce action.
[2]
The
application was launched on an urgent basis, but the question of
urgency effectively became moot by the order of this court
granted on
25 August 2020 pursuant to which an undertaking was given by the
second respondent to hold the nett proceeds of the
sale in trust
pending finalization of this application at least. Urgency,
more particularly the applicant’s expectation
that short
service of the application should be condoned by this court, was
however not conceded by the respondents.
[3]
After
I heard argument in the matter on 17 September 2020, I ordered that
this undertaking given by the second respondent be extended
pending
the delivery of my judgment herein.
[4]
The
simple question for determination is whether the applicant has made
out a case for the grant of the interdict.
[5]
An
anti-dissipation interdict, so called, may be granted where a
respondent is believed to be deliberately arranging his affairs
is
such a way so as to ensure that by the time the applicant is in a
position to execute judgment he will be without assets or
sufficient
assets on which the applicant expects to execute. It is not a
claim to substitute the applicants claim for the
loss suffered, but
to enforce it in the event of success in the pending action so that
he will not be left with a hollow judgment.
It is an interdict of an
unusual nature
.
It is not the usual case where its purpose is to preserve an asset
which is in issue between the parties. In fact, the applicant,
as is
the case in this instance, lays no claim to the property in question
merely alleging a general right to damages or, as is
the case here,
to a matrimonial property accrual. Moreover, the conduct sought to be
interdicted is usually prima facie lawful,
yet its effect is that it
prevents the respondent from dealing freely with his assets.
The applicant further obtains no preferential
rights over the asset
forming the subject matter of the interdict.
[1]
[6]
The
remedy that the interdict provides performs a similar function to
that of the “
Mareva
injunction of the English law but the English principles are not
automatically applicable. It has its own unique development
in
our country and our law has recognized this type of interdict for
many years without giving it any specific name. The interdict
is
dubbed “an anti-dissipation interdict” by Stegmann J in
the leading case of Knox D’Arcy Ltd v Jamieson
[2]
although the Appellate Division of the Supreme Court
[3]
did not consider such appellation to be quite
appropriate. Instead, it observed that:
"anti-dissipation"
(the title) suffers from the defect that in most cases, and certainly
in the present case, the interdict
is not sought to prevent the
respondent from dissipating his assets, but rather from preserving
them so well that the applicant
cannot get his hands on them.”
[7]
Since
the purpose of the interdict is to prevent a person (the intended
defendant) who can be shown to have assets and who is about
to defeat
the plaintiff’s claim, or to render it hollow, by secreting or
dissipating assets before judgment can be obtained
or executed, and
thereby successfully defeating the ends of justice by doing so, the
applicant
who bears the onus to establish the necessary requirements for the
grant of the interdict, need show a particular state of mind
on the
part of the respondent, i e, that he is getting rid of the funds, or
is likely to do so, with the intention of defeating
the claims of
creditors. But it is not essential to establish an intention on the
part of the respondent to frustrate an anticipated
judgement
if
the conduct of the respondent is likely to have that effect
.
[8]
The
requirements that must be satisfied to obtain an anti-dissipation
interdict (which is interim both in form and substance)
[4]
are the same for any other interim interdict, provided that it has
been held that the interdict is
sui
generis
.
It is either available or it is not and no other remedy, such as a
claim for damages, can really take its place.
[9]
As
for the standard of proof required and the manner in which disputed
facts are to be approached in determining whether the interdict
should be granted or not the Supreme Court of Appeal in Knox D’
Arcy Limited v Jamieson concluded as follows:
“
The
basis of the petitioners' claim as set out in the petition for leave
to appeal and their heads of argument is that they have
proved prima
facie that the respondents had an intention to defeat the
petitioners' claims, or to render them hollow, by secreting
their
assets. It was common cause that if these facts could be proved,
together with the other requirements for an interim interdict,
the
petitioners would have a good case, and for the reasons given above I
agree with this approach. There was some argument on
whether the fact
that assets were secreted with the intent to thwart the petitioners'
claim had to be proved on a balance of probabilities
or merely prima
facie. However, it seems to me that here also the relative strength
or weakness of the petitioners' proof would
be a factor to be taken
into account and weighed against other features in deciding whether
an interim interdict should be granted.”
[10]
Firstly,
a word needs be said regarding the basis upon which the applicant
claims she has an interest in approaching this court
for the
interdict.
[11]
A
spouse married out of community of property in terms of an
antenuptial contract with accrual has no vested rights in any of the
assets, investments or property registered in the name of the other
spouse. The
Matrimonial Property Act, No. 88 of 1984
makes it
clear that only on dissolution of the marriage does a spouse acquire
a right to claim half of the nett accrual of the
other spouse’s
estate.
[5]
Before that
dissolution, a spouse who has an accrual in his or her estate that is
smaller than the accrual in the other spouse’s
estate has only
a contingent right to claim half of the accrual in the estate of that
other spouse, not a vested right.
[6]
[12]
The
applicant spouse’s right to claim the accrual, if the
jurisdictional basis for it exist, will only become a vested right
when the contingency materializes, upon dissolution of the marriage
either by divorce or death.
[13]
The
applicant spouse was held in RS v MS and Others
[7]
to have no general right to prevent the other spouse from freely
dealing with his own property. Even if that contingent right
could be protected by an interdict
pendente
lite
such an application would need to show:
13.1
that the other spouse had assets within the jurisdiction of the
court;
[8]
13.2
that the other spouse had no
bona
fide
defence against the applicant’s alleged contingent right;
[9]
and
13.3
that the other spouse had the intention to defeat the applicant’s
claim or to render it hollow by dissipating
or secreting assets.
[10]
[14]
Even
if those requirements are present, an applicant must still show a
well-grounded fear of irreparable loss should the interdict
not be
granted
pendente
lite
.
[15]
Because
of the draconian nature of this remedy,
[11]
the courts have been reluctant to grant it except in the clearest of
cases.
[12]
[16]
The
effective relief sought by the applicant in the present instance, if
the order is granted, is that the first respondent will
be precluded
from dealing with the
entire
proceeds of the sale of his property pending the finalization of the
divorce claim including the adjudication of the applicant’s
contingent accrual claim against the first respondent.
[13]
[17]
It
is not in dispute that the applicant has an accrual claim against the
first respondent. It is only the third requirement
postulated
above (which is the
raison
d’etre
for the grant of an anti-dissipation interdict) which is in
contention and which in my view effectively disposes of this matter.
[18]
At
the launch of the application the transfer arising from the sale of
the immovable property was said to be “imminent”.
The
second respondent confirmed that the transfer had not been registered
by the time of the launch of the application,
[14]
but asserted that it would have been registered “before
the 2
nd
of September 2020”.
[15]
[19]
The
second respondent clarified in the answering affidavit further filed
on its behalf that the purchase price for the sale of the
matrimonial
home was in the sum of R3 1 000 000.00 and constituted a
market related value for the property. The
applicant did not
suggest otherwise and also did not take issue with the first
respondent’s sale of the property
per
se.
Her
only interest was in the
pro
tempore
freezing of proceeds of the sale.
[20]
The
application was quite evidently motivated on the basis of the
respondent’s failure to have given an undertaking required
by
her attorney from the first respondent prior to registration of
transfer that the proceeds would be held in trust pending the
finalization of the divorce action. The sale of the property itself
must have come as no surprise to the applicant since the first
respondent advised his intention on 25 November 2019 already, via the
agency of the second respondent, of his intention to dispose
of it.
However, the second respondent had advised in such communication that
“(i)n the event that our client receives
any offers on the
immovable property this will be conveyed to your offices in order to
come to an agreement regarding the proceeds.”
[21]
On
5 August 2020 the second respondent informed the applicant’s
attorneys that the property had been sold and requested that
she
vacate it with the parties’ two children by the end of August
2020. On 7 August 2020, the applicant’s attorneys
addressed a letter to the second respondent requesting the firm,
inter
alia
,
to give the undertaking (premised no doubt on their earlier assurance
given but with the twist indicated below) that:
“
the
proceeds of the property are to be held in trust by the conveyancing
attorneys until finalization of the divorce. This
is to ensure
that your client does not diminish his assets further.”
[22]
The
second respondent appeared to be of the view that since the first
respondent had acknowledged that the applicant had an accrual
claim
in her favour, that it was unnecessary to give any undertaking. They
were further quite emphatic in refuting any suggestion
that the first
respondent had ever attempted to dissipate his assets (more
particularly the parties’ home) with the intention
to prejudice
her. They questioned why the applicant’s attorneys were
alleging that the first respondent was “diminishing”
his
assets and added their assurance that:
“
the
value of the immovable property has been included in all of the first
respondent’s schedules of assets and liabilities.
It was
previously explained to your client and to her previous attorneys of
record that our client is not able to afford the cost
of the
immovable property in the current economic recession and with the
sole responsibility of (their daughter’s)
tertiary
education falling squarely on (his) shoulders the parties will need
to ultimately make changes in their respective accommodation
once the
divorce is finalized.”
[23]
They
further intimated that instructions were held on behalf of the first
respondent to oppose any urgent application launched by
the applicant
on the basis that such an application was unnecessary.
[24]
This
was taken by the applicant as a refusal to provide the undertaking
sought. On 12 August 2020, the applicant’s attorneys
advised the second respondent as follows:
“
It
is noted that your client refuses to provide an undertaking to retain
the proceeds of the sale of the property in trust.
Your
contention that your client has not dissipated his assets is
incorrect. From his
section 7
notice dated 4 December 2019 to
his so-called “amended
section 7
notice dated 9 July 2020, a
mere seven months later, his nett assets have been diminished by more
than R1 000 000.00
(one million rand) from R2, 368,
767.00 to R1, 353, 316.38.
Should
your client not intend to dissipate his assets further, we fail to
see why he refuses to provide the undertaking to retain
the proceeds
in trust pending finalization of the divorce.”
[25]
He
was given a final opportunity to provide such an undertaking by 19
August 2020.
[26]
The
second respondent reverted on 19 August 2020. The opinion was
expressed that the first respondent’s updated
section 7
notice
[16]
had indicated an
increase in his liabilities rather than a decrease in his assets and
that this could not be construed as a dissipation
of his assets.
The second respondent further assured the applicant’s attorney
that the first respondent was mindful
of his obligation to provide
accommodation for the applicant and their children hence his
“hesitation to commit the nett
proceeds to being held in trust
pending the finalization of the divorce in the event that the funds
may be required for the purchase
of a suitable immovable property.”
The second respondent went on to confirm the first respondent’s
commitment
to both support the applicant and the minor children and
to settle the divorce on a fair and equitable basis.
[27]
Self-evidently
the applicant’s belief that the first respondent has the
intention to frustrate her contingent accrual claim
rests entirely on
the showing in the
section 7
notice that that he had reduced the
value of his accrual by more than R1 000 000.00 in only 7
months coupled with his
by now clear intimation that he was not going
to give her the undertaking as sought despite previously (in 2019)
confirming that
he had no problem keeping her in the loop in this
respect.
[28]
It
is plain to see however that this deduction is based (with hindsight)
on a mere paper entry, the reduced figure having been arrived
at by
the corresponding indication in the notice (dated in July 2020) that
his liabilities have increased. The contentious liabilities
include a
purported loan taken from his mother in the sum of R113, 000,00,
drawings against the bond in the sum of R160, 268,00
for a so-called
“Covid loan”, provision for tax payable to SARS, legal
fees (evidently in respect of the pending divorce
action), and the
costs associated with the sale of the matrimonial home, provision for
which was ostensibly not made in the earlier
section 7
notice.
One of the indicated liabilities, for “tertiary and educational
fees”, has even been reduced substantially
since the earlier
notice by approximately R130, 000,00. (I am satisfied on this showing
on its own that no conduct on the part
of the first respondent is
demonstrated which either establishes the requisite intention for the
grant of the anti-dissipation
interdict or gives one an impression
that this showing is likely to have the effect of frustrating the
applicant’s anticipated
judgment in the divorce action.)
[29]
No
doubt with a view to demonstrating
male
fides
on the first respondent’s part to add credence to her claim
that he is attempting to frustrate the payment of her contingent
claim in due course (the value of which she did not even bother to
quantify) she asserted (feebly in my view) in this respect that
there
these historical expenses against the first respondent’s asset
base indicated in the
section 7
notice had been “lavishly”
incurred by him “going on holidays and purchasing luxury
equipment for surfing”.
In this respect she alleged that
between June 2019 and July 2020 he travelled substantially for
pleasure including an overseas
trip to Israel for two weeks in June
2019, a trip to Durban in June 2019 and a trip to Jeffrey’s Bay
in July 2019.
A further trip to Jeffrey’s Bay happened
again in July 2020.
[30]
She
asserts the following reason why she suggests that the entire
proceeds from the sale of the first respondent’s property
to
which she can lay no claim must be preserved pending adjudication of
her accrual claim in the divorce proceedings:
“
I
have already been severely prejudiced by the first respondent’s
conduct regarding his accrual and should he receive the
proceeds, I
have no alternative remedy to safeguard the amount which will be due
to me. The first respondent has lavishly
spent money and
increased his liabilities substantially, which I submit he has done
with the intention to prejudice me. I
dispute his need to
increase such liabilities or incur them and I will dispute this in
the divorce action. The first respondent
refuses to undertake
to keep the proceeds in trust and the only logical conclusion for
that would be that he intends to spend it.”
[31]
Although
suggesting her reluctance to have approached this court for the
relief which she seeks, the applicant’s claims that
the first
respondent has left her with “no option” based on his
refusal to give her the requested undertaking or to
propose any
manner to “safeguard her accrual claim”.
[32]
The
first respondent in his answering affidavit reveals that he
contemplates using the proceeds of the sale of the property for
the
purpose of purchasing immovable property as suitable accommodation
for the applicant and the children. He asserts that
he has
always been
bona
fide
in his dealings with her throughout these proceedings and denies that
he at any stage has attempted to conceal or dissipate his
assets in
order to harm or prejudice her. He further denies in any event
that he spent money lavishly or incurred unnecessary
liabilities with
the supposed intention to prejudice her.
[33]
No
doubt realizing that she had failed in her founding affidavit to
indicate any facts from which it can properly be inferred that
the
first respondent has or is dissipating his assets with malevolent
intent to prejudice her contingent claim, the applicant brazenly
sought to broaden the basis for an interdict application in her
replying affidavit
inter
alia
by seeking to paint the first respondent in a bad light, making
allegations against him that on anyone’s reading are plainly
scandalous and vexatious. More especially the suggestion is
made that he has the propensity to resign from employment and
to
dissipate or conceal assets to frustrate her claims based on past
alleged conduct when faced with marital problems and divorce
proceedings. More importantly, the allegations further
constitute new material not even remotely canvassed in the founding
affidavit which fundamentally seek to change the premise of her case
made out in the first place. This information would
also
certainly all have been within her knowledge when she deposed to her
founding affidavit, yet she fails to explain the late
introduction of
such material.
[34]
It
is such a trite legal principle that an applicant must make out his
case in his founding papers and should be permitted to amplify
such a
case in reply only in exceptional circumstances. The first respondent
made an application to strike out several allegations
in the replying
affidavit on the basis that they are prejudicial to him and stand to
be struck out on the grounds that they attack
his credibility; that
the applicant makes averments that are inadmissible; and that she
introduced new matter. There is absolute
merit in the
submissions made on the first respondent’s behalf that the
highlighted paragraphs stand to be struck out as
inadmissible.
Clear prejudice exists in allowing them to stand. Most notably,
having been hurried along to argue the matter
on an urgent basis, the
first respondent has not had an opportunity to deal with the
applicant’s purported new case.
[35]
Reverting
to the applicant’s limited if not banal allegations relied upon
in her founding affidavit it is not apparent that
prima
facie
the first respondent intends to defeat the applicant’s claim or
to render it hollow by dissipating his assets in order to
achieve
such an end. The paper entry which suggests that he is concealing the
real value of his estate, or undervaluing it, is
simply that. A
dated statement of value that can be challenged in the divorce
action. There are simply no other primary facts
from which the
inference can or should be drawn that the first respondent is
ordering his affairs in such a manner that is likely
to have the
effect of frustrating the payment of the applicant’s contingent
accrual claim in due course or rendering the
payment thereof
nugatory.
[36]
In
any event on the applicant’s own admission the first respondent
is well able to provide for his maintenance obligations
and other
obligations from his substantial income which suggests that he should
therefore in any event be in a position to meet
payment of the
applicant’s accrual claim which he has assured the court he
will make good on. In RS v MS & Others
[17]
the court held that the balance was in the applicant’s spouse’s
favour since his wealth and income-earning potential
meant that any
eventual claim by the applicant would be quickly settled if
successful but granting the application would cause
him significant
harm by depriving him of the funds he required to run his business.
[37]
In
the result the application ought to be dismissed. Despite the
applicant’s claimed financial circumstances, it would
be remiss
of me not to grant costs against her (which can be deducted from the
accrual claim paid to her ultimately) on the simple
basis that there
was no real basis to have approached this court for the grant of an
anti-dissipation interdict, the real reason
being to force her hand
regarding the required undertaking. Her interests would have
been better served in my view by holding
the first respondent to
terms to do as he said, which is to provide the undertaking promised
by him in 2019 once the property had
been sold. The fact that
he has confirmed in these proceedings that he remains committed to
paying her the value of her accrual
does not detract from the fact
that the applicant’s recourse to the present applicant
constitutes an abuse plain and simple.
I am also inclined to
award punitive costs in respect of the first respondent’s
application to strike out for the reasons
stated above.
[38]
I
make the following order:
1.
The
entirety of paragraphs 4, 21, 22, 23, 24, 25, 26, 28, 29, 30, 31, 32
37, 39, 42, 52, 47, 49 and 53 of the applicant’s
replying
affidavit are struck out.
2.
The
applicant is ordered to pay the costs of the interlocutory
application to strike out on the scale of attorney and client.
3.
The
main application is dismissed with costs on the party and party
scale.
________________
B HARTLE
JUDGE
OF THE HIGH COURT
DATE OF HEARING:
17 September
2020
DATE
OF JUDGMENT:
22 January
2021*
*Judgment
delivered electronically on this date by email to the parties.
APPEARANCES
:
For the
applicant: Ms. N Mitchell of The Legal Aid Board South
Africa, East London (ref. Ms. N Mitchell).
For
the first and respondent: Ms. N Molony instructed by Wylde
Attorneys Inc., East London (ref. Ms. T Wylde).
[1]
See
generally (in relation to paragraph [6] to [10] above The Civil
Practice of the High Courts of South Africa, Herbstein and
Van
Winsen, vol 2, 5
th
ed at 1488-1493 and the authorities cited in Chapter VII titled:”
Anti-dissipation Interdicts (The So-called “
Mareva
-Type
Injunctions” or ‘Freezing Injunctions’).
[2]
1994 (3) SA
700
(W) at 706D-E.
[3]
Knox D’Arcy
v Jamieson 1996 (4) SA 348 (A).
[4]
This
is so despite the fact that the respondent is irreversibly
inconvenienced while the interdict is in operation and the
resolution
of the main dispute is pending. It is said that
irrevocable inconvenience is inherent in the temporary regulation of
disputes
by means of interim interdicts. See Knox D’ Arcy Ltd
v Jamieson
1995 (2) SA 579
(W) at 600G-H, 603F-606B.
[5]
See
section 3
(1) and (2).
[6]
RS
v MS and Others
2014 2 SA 511
(GJ) at paras [11] – [13].
[7]
Supra
at
para [15].
[8]
The
interdict is however no longer restricted to assets within the
Republic. See
Metlika
Trading Ltd v Commissioner, SARS
2005 (3) SA 1
SCA
at
17.
[9]
Stegmann J
clarified in Knox D’ Arcy Ltd v Jamieson
[1996] ZASCA 58
;
1996 (4) SA 348
(A)
at 372 that this requirement is inappropriate. However, one of
the ways of establishing a
prima
facie
right and/or a well-grounded apprehension of irreparable harm is to
show that the respondent lacks a
bona
fide
defence to the applicant’s claim. See Knox D’ Arcy Ltd v
Jamieson
1995 (2) SA 579
(W) at 593H-600G.
[10]
Supra
at
para [17]. This brings us back into the purview of the special Knox
D’ Arcy interdict.
[11]
By
its very nature the effect of such relief is that it is invasive and
inclined to render the consequences inequitable.
[12]
Supra
at para [18]. See generally Knox D’Arcy Ltd & Others
v Jamieson & Others
[1996] ZASCA 58
;
[1996] (4) SA 348
A at 372C; Mngadi v Beacon
Sweets & Chocolates Provident Fund and Others
2004 (5) SA 388
(D) at 396 E; Reeder v Softline Ltd
2001 SA 844
(W) at 849 –
851. See also The Civil Practice of the High Courts of South Africa,
Herbstein and Van Winsen, vol 2, 5
th
ed at 1492-3.
[13]
Ms.
Mitchell who appeared for the applicant acknowledged at the hearing
that it would not be proper to interdict the entire proceeds
but
that an amount of R676, 658,00 should be held in reserve to satisfy
her client’s contingent accrual claim (acknowledged
by the
first respondent in earlier correspondence to represent the value of
her interest although in his answering affidavit
he put her interest
no higher than R500, 000,00). It is unthinkable, in the light
of the caution expressed by our courts
concerning the potentially
prejudicial nature of anti-dissipation interdicts, that the
applicant could have sought to interdict
the entire proceeds held in
trust by the second respondent representing the nett proceeds of the
transfer, estimated to be in
the sum of approximately R1, 402,
000,00. (The applicant could not even be bothered to say what
the extent of the proceeds
were). This was in fact the case that the
respondents were required to meet and also appears to be the premise
upon which the
first respondent was prevailed upon to give the
interim undertaking which he did for the entire proceeds to be held
in trust,
to his obvious prejudice.
[14]
The
application was ostensibly issued on 21 August 2020 (although the
registrar’s stamp bears the date 11 August 2020.)
It was
served on the respondents on 24 August 2020.
[15]
This
background is relevant because the applicant purported to launch the
application on truly short notice, if not ostensibly
on an
ex
parte
basis if regard is had to the prayers as framed in the notice of
motion. The respondents lament the fact that despite transfer
being
at least a week away they were forced to court under great haste and
directed to file their answering affidavits under
extremely
truncated periods so that the matter could be heard on an urgent
basis.
[16]
This notice
was ostensibly provided pursuant to the provisions of the
Matrimonial Property Act during
the conduct of the divorce
proceedings.
[17]
Supra
at
par [27].