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[2016] ZAKZPHC 98
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V.K and Another v R.N (10978/2012) [2016] ZAKZPHC 98 (11 October 2016)
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NOT
REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
CASE
NO: 10978/2012
In
the matter between:
V.
K.
1
ST
PLAINTIFF
G.
K.
2
ND
PLAINTIFF
and
R.
N.
DEFENDANT
J
U D G M E N T
Delivered on :
TUESDAY, 11 OCTOBER 2016
OLSEN
J
[1]
The first and second plaintiffs in this action are Mr and Mrs K.
married in community of property. Mr K. was the principal
player in the events which give rise to this action, and for the sake
of convenience I will refer to him as the “plaintiff”.
[2]
The plaintiff sues the defendant for repayment of certain loans he
says he made to the defendant. At the outset of the
trial,
before evidence was led, the defendant admitted all save one of the
payments claimed to have been made by the plaintiff
to or on behalf
of the defendant. To avoid cluttering the trial with evidence
to unravel the dispute over the small amount
not thus admitted, the
plaintiff abandoned that claim. The sum of the claims remaining
is R600 000,00, an amount which
is comprised of six payments
made to or on behalf of the defendant by the plaintiff between
September 2011 and January 2012.
The plaintiff claims that
repayment is due on demand, which has been made.
[3]
The defendant pleads that save for one of the payments (an amount of
R40 000,00 paid to his former wife on 12 January 2012)
all of
the payments to him were donations. Whether that is so is the
central issue in this case, nothing having been pleaded
or raised in
evidence or argument by way of an alternative defence that if the
monies were paid as loans, such are not now repayable.
[4]
I propose to deal last with the payment of R40 000,00 which is
not said to have been a donation. That payment aside,
the
payments made can be divided into two tranches, namely
(a)
payments
of R90 000,00 and R10 000,00 made on 23 September 2011; and
(b)
payments
of R340 000,00, R110 000,00 and R10 000,00 made
respectively on 11, 12 and 25 January 2012.
[5]
A chronology of events will assist in unravelling this case and the
disputed issues. The main players are the plaintiff,
his
daughter Cheryl K. and the defendant, all of who gave evidence.
(a)
As at
the beginning of 2008 the defendant was married and owned a house in
Lynfield Park. (The state of the defendant’s marriage
at that
time was not explained in evidence, but it was presumably not good
because a divorce followed.)
(b)
The
defendant, Ms K. and the plaintiff met early in 2008. At
Christmas 2008 Ms K. and the defendant disclosed to the plaintiff
and
his family that a relationship had developed between the two of them.
(c)
Early
in 2009 Ms K. left the plaintiff’s home with her young son to
live with the defendant at Lynfield Park. This caused
problems
in the relationship between the plaintiff and the defendant. In
fact it seems clear that there was a complete breakdown
in the
relationship between them as a result of this occurrence.
(d)
In
2010 the plaintiff and the defendant met at a funeral, and apparently
deciding that life was too short to be carrying on as they
had, they
renewed their friendship.
(e)
Ms K.
continued to reside with the defendant who was still a married man,
at Lynfield Park, and that was the state of matters when
in July 2011
the plaintiff won the lotto. His winnings were a considerable
sum.
(f)
It
seems that by this time the divorce proceedings between the defendant
and his wife were well advanced.
(g)
In
October 2011 the defendant needed money (R90 000,00) to pay into
his bond, and R10 000,00 to bring his arrear debt
with the
municipality up to date. That is when the first tranche of
payments was made.
(h)
In
October 2011 the defendant’s divorce went through. It is
common cause that in consequence presumably of a divorce
settlement
agreement the defendant still had to pay his former wife R40 000,00;
and that he had to clear the bond on the Lynfield
Park house in order
to take transfer of her half share of the property into his name.
(i)
As a
result of this, in January 2012 the plaintiff paid R40 000,00 to
the defendant’s former wife, and R460 000,00
to the
attorneys handling the cancellation of the bond.
(j)
At
some stage the defendant, Ms K. the defendant’s mother and the
defendant’s son had moved in with the plaintiff at
Howick.
It appears that this was after Christmas 2011. The intention
was that the defendant and Ms K. would be
married in due course, and
the plaintiff and the defendant would go into business together.
(k)
The
plaintiff had a son who was 11 years of age at this time. The
defendant’s son was 9 years old. An issue arose
between
the boys in April 2012 as a result of which the defendant, his mother
and his son moved back to Lynfield Park. However
this did not
disturb the relationship between the plaintiff, the defendant and Ms
K.. The defendant visited and stayed over
at the plaintiff’s
house on what appears to have been a regular basis.
(l)
In
July 2012 a family meeting took place at which the question as to
when the defendant and Ms K. were to get married was discussed.
According to the plaintiff this was a discussion, and not an
argument. It is not perfectly clear to me whether the defendant
disputes that this meeting (in July) took place.
(m)
On 12
August 2012 a family meeting did take place. This brought the
relationship between the plaintiff and the defendant to
an end; and
shortly thereafter the breakup of the relationship between Ms K. and
the defendant followed. According
to the plaintiff and
his daughter the fracas occurred because the defendant revealed that
he had transferred into his own name
an expensive Mercedes Benz motor
vehicle which had originally been registered in the name of the
plaintiff. The plaintiff
regarded this as fraud or theft.
According to the defendant the fracas occurred when and because he
and Ms K. announced that
they were to be married at the end of the
year, and the plaintiff was upset as he wanted them to be married
forthwith.
(n)
To
complete the account of the facts, a demand for repayment of the
monies advanced on behalf of the defendant was made, and the
summons
commencing this action was issued on 29 November 2012. The
plaintiff also lodged a complaint with the police concerning
the
Mercedes Benz, and that resulted in criminal proceedings being
commenced against the defendant.
[6]
According to the plaintiff both tranches of money paid by him on
behalf and for the benefit of the defendant were to be repaid
in due
course. Given the relationship between Ms K. and the defendant
that does not strike me as an improbably loose arrangement.
The
plaintiff suggested that the defendant would be able to make
repayments out of his share of the profits which would be earned
from
their proposed joint business venture. According to both Ms K.
and the plaintiff a discussion took place at which such
repayment was
discussed, the plaintiff’s evidence being that it took place in
November 2011; i.e., just after the defendant’s
divorce went
through. This was a family arrangement of some complexity,
given the history of the plaintiff’s initial
disapproval of and
subsequent reconciliation to the relationship between his daughter
and the defendant. The plaintiff himself
said that he had an
idea that if his daughter and the defendant did marry, and the
marriage lasted, he might come to regard the
money he had paid to
discharge the bond over the Lynfield Park property as a gift to his
daughter. The defendant denied that
any discussion concerning
repayment of the monies occurred. That was because, he said,
the money had been donated to him.
[7]
It is the defendant’s own version that the ultimate collapse in
the relationship occurred because of the delay in the
proposed
marriage. Whilst that is disputed, it does seem clear that
there must at least have been some anxiety on the plaintiff’s
part concerning the relationship between his daughter and the
defendant, especially considering its history. Given this,
I
consider it improbable that the plaintiff would have committed
himself to the gifts of money which the defendant says he did.
The dispute over the Mercedes Benz makes the defendant’s
contentions more improbable. He contends that the car was
bought for him. That would lift the plaintiff’s
generosity to the defendant to an even higher level; to well clear
of
R1 million.
[8]
The dispute over the Mercedes Benz took up some time in evidence.
The following is however clear.
(a)
When
it was bought the car was registered in the plaintiff’s name.
(b)
The
defendant pointed out that its number plate was a version of his
name; that signifying the intention that he was its true owner.
When cross-examined on this Ms K. replied immediately that the reason
for that was that her name was going to be put on the number
plate,
but it turned out that it was already taken.
(c)
According
to Ms K. the car was intended as a gift to her, a proposition I find
more probable than the proposition that it was a
gift to the
defendant. However plaintiff insisted that the car was his.
(d)
In
the end the car was re-registered in the plaintiff’s name, the
defendant proclaiming that as it had been gifted to him,
it was being
gifted back. This, said the defendant, was a product of his
religious conviction. But he did not explain
why his conviction
did not extend to returning the money claimed in this action.
(e)
Insofar
as the registration of the Mercedes Benz into the defendant’s
name is concerned, it was put to the plaintiff in cross-examination
that it had been effected on transfer forms signed by the plaintiff
himself. He denied that, and I find it difficult to believe
that the plaintiff would have instituted and pursued the prosecution
of the defendant over this issue if he knew that he had signed
such a
form. It was only revealed by the defendant when he gave
evidence that it was allegedly on the very day that the Mercedes
Benz
had been bought that the plaintiff had signed such a form so that the
transfer of the car could be effected after the defendant’s
divorce went through. The plaintiff was not given the opportunity to
deal with this allegation.
[9]
Two important pieces of documentary evidence were produced as part of
the plaintiff’s case. The first was a printout
of the
plaintiff’s current account out of which the first tranche of
payments had been made. It was perfectly obvious
to me, having
observed both the plaintiff and the defendant giving evidence, that
the plaintiff is a far less modern and sophisticated
man than the
defendant. The plaintiff’s lack of modernity is reflected
in his ability to use his internet banking.
It was done for him
by the defendant.
[10]
The legends entered by the defendant for the payments making up the
first tranche are “Loan RN”. That, according
to the
plaintiff, reflects the true nature of the transaction. The
defendant says that the entries were made in that form
to disguise
the true nature of the transaction. He explains that he had
accompanied the plaintiff to a meeting with the lotto
authorities in
advance of payment of the plaintiff’s winnings, where advice
was given to the plaintiff. At that meeting
the plaintiff was
advised to guard against donations as they attracted tax.
According to the defendant the advice was that
if a donation should
be made it must be disguised as a loan, which can then be written off
at a rate of R100 000,00 per year
in successive exempt
donations. It was to disguise the nature of the transaction,
said the defendant, that he reflected the
payment as loan. I
will revert to this explanation shortly.
[11]
The second piece of documentary evidence is a form which the
defendant was required to sign when the bond on his property was
to
be cancelled and transfer thereof registered in his name
exclusively. It was proved by the evidence of a Ms M., a
conveyancing
paralegal employed by the conveyancing attorneys.
She remembers that the defendant attended her offices in the company
of
the plaintiff when the documents were signed. The form in
question had to be signed in compliance with the
Financial
Intelligence Centre Act, 2001
. The defendant had to state the
source of his funds, and he himself wrote the word “loan”
in the space provided.
Ms M. was not cross-examined. When
he gave his evidence the defendant said that he had told Ms M. that
it really was not
a loan. In my view that evidence may be
safely rejected as an invention made on the spur of the moment when
the defendant
was giving evidence. It is inexplicable, if it is
true, that this was not put to Ms M..
[12]
The defendant’s theme throughout is that the true nature of the
transactions between him and the plaintiff had to be
hidden, prior to
his divorce to hide his windfalls from his wife and also from the tax
authorities, and thereafter to escape tax.
As to the latter, he
claimed to know the difference between avoiding and evading tax, by
which I understood him to be conveying
that he had acted lawfully,
and caused the plaintiff to act lawfully, throughout. What the
defendant overlooked was that
if he had conducted himself lawfully,
then the payments would initially have been loans (although it is not
clear why the first
tranche of R90 000,00 had to be disguised as
such from a tax perspective), and that annual donations would have
been required
to reduce the amounts he had borrowed from the
plaintiff. There is no evidence of that having happened at any
stage.
It was not put to the plaintiff that a promise of such
further successive donations had been made. (If such a promise
had
been made orally then it would not in any event have been
enforceable, given the provisions of
s5
of Act 50 of 1956.)
[13]
There were serious shortcomings, inexcusable in my view, in the
manner in which the defendant’s case was put to the plaintiff
and Ms K.. (I noted during the course of the trial, and it was
mentioned by plaintiff’s counsel during argument, who
had also
noticed it, that save when he was himself giving evidence, the
defendant sat throughout alongside the attorney who conducted
his
case, giving instructions and notes, and so on.) When they were
cross-examined it was put to the plaintiff and Ms K.
that the
defendant denied discussions concerning repayments, and that he
asserted that the monies were paid as donations, and not
as loans.
It was the defendant’s case that such generosity sprung from
some help he had given to the plaintiff before
he won the lotto,
rescuing, he said, the plaintiff’s house from foreclosure on
one occasion. But nothing was put regarding
any specific
exchange, either between the plaintiff and the defendant or between
the defendant and Ms K. where the plaintiff verbalised
his donatory
intent, or Ms K. acknowledged its existence. The court was left
quite in the dark as to any exchange during
which the donatory intent
was expressed and accepted.
[14]
When the defendant gave evidence his version emerged for the first
time as follows. On the very night that his lotto
winnings were
confirmed, the plaintiff promised to buy the defendant a car and free
the defendant’s house from its bond.
According to the
defendant, neither when the first tranche of payments was made about
two months later, nor when the second tranche
of payments was made
six months later, was a word spoken about the payments being
donations. According to the defendant he
did not say words to
the effect of “remember that gift you promised me”.
Neither did he suggest that there were
any expressions of gratitude
made by him for the donations when the payments were made. In
the result his case rests exclusively
on the promise made on the
night the lotto was won, the existence of which promise was not put
to the plaintiff.
[15]
I accept that a winner of the lotto may say unwise things, and make
silly promises, on the night of learning of his or her
windfall.
Whether they may have enforceable content depends on the full
context. Here that could not be explored or
investigated
because this crucial element of the defendant’s case was not
put to the plaintiff or his daughter
[16]
My understanding of the defendant’s own version is that it
amounts to this. He snatched at the statement made by the
plaintiff
on the night the lotto was won, and then, when he asked for money,
kept quiet concerning the basis on which he was asking
for it; with
it in mind, presumably, to spring it on the plaintiff that in fact
the monies were donated if he should ever need
to do so, as he has
done in this action. This version does the defendant no credit,
and I reject it. I find that the
first and second tranches of
payments were in fact loans.
[17]
As to the sum of R40 000,00 paid to the defendant’s former
wife, it is common cause that he owed it to her.
The
defendant’s case is that an older son of the plaintiff owed the
defendant R45 000,00, being the balance outstanding
of the price
of a car sold by the defendant to the plaintiff’s son. He
said that the plaintiff paid his (defendant’s)
wife the sum of
R40 000,00 on behalf of the defendant in order thereby to
discharge the plaintiff’s son’s debt.
The plaintiff
denied that arrangement, and any intention thus to assist his son.
Details of when, where and in what context
such an arrangement was
discussed were absent from the defendant’s account of the
transaction. The plaintiff’s
version is that he was not
involved in the transaction between his son and the defendant, and
that he certainly did not settle
his son’s debt.
[18]
I prefer the plaintiff’s evidence above that of the defendant,
and find that the sum of R40 000,00 paid on behalf
of the
defendant to discharge his debt to his former wife was also a loan by
the plaintiff to the defendant
[19]
Oral argument was delivered on behalf of the parties when the
defendant’s case had closed. Once that was done I
indicated that written argument could be delivered on an issue on
which the legal representatives had not had an opportunity to
prepare, namely the question as to the onus of proof in a case like
this (where a donation is alleged to have been made) in the
light of
the majority view in
Barkhuizen
v Forbes
1998
(1) SA 140
(E). Only Ms Van Jaarsveld, plaintiff’s
counsel, responded. Whilst I am grateful for her assistance, as
it turns
out I find no need to enter into the question myself.
I am satisfied that the plaintiffs’ case has been proved on a
balance of probability, accepting when I reach that conclusion that a
full onus of proof rested on the plaintiffs throughout.
I
accordingly grant judgment in favour of the first and second
plaintiffs against the defendant for
(a)
Payment
of the sum of R600 000,00;
(b)
Interest
on the sum of R600 000,00 at the rate of 15.5% per annum from 19
January 2013 to date of payment;
(c)
Costs
of suit.
______________
OLSEN
J
Date
of Hearing:
WEDNESDAY, 31 AUGUST 2016 &
THURSDAY, 01
SEPTEMBER 2016
Date
of Judgment:
TUESDAY, 11 OCTOBER 2016
For
the Plaintiffs:
Ms
M E VAN JAARSVELD
Instructed
by:
VENNS ATTORNEYS
PLAINTIFFS’
ATTORNEYS
281
PIETERMARITZBURG STREET
PIETERMARITZBURG
(Ref.: N
Jooste/bi/35159908)
(Tel No.: 033
– 355 3120)
For
the Defendant:
MR
T PILLAY
Instructed
by:
THEASEN PILLAY & ASSOCIATES
DEFENDANT’S
ATTORNEY
SUITE 11, 1
ST
FLOOR
PROTEA HOTEL
14 PALM BOULEVARD
UMHLANGA RIDGE
(Ref.:
Umhlanga/vn/n589)
(Tel.: 031 - 566
6743)