V.M (born T) v R.E.M and Others (559/2007) [2015] ZAGPPHC 66 (4 February 2015)

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[2015] ZAGPPHC 66
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V.M (born T) v R.E.M and Others (559/2007) [2015] ZAGPPHC 66 (4 February 2015)

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REPUBLIC
OF SOUTH AFRICA
IN THE HIGH COURT
OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
CASE NO: 559/2007
DATE: 4 FEBRUARY
2015
NOT REPORTABLE
NOT OF INTEREST
TO OTHER JUDGES
IN THE MATTER
BETWEEN:
V[...] M[...]
(born
T[...])
........................................................................................................
PLAINTIFF
(Identity Number:
[...])
and
R[...] E[...]
M[...]
....................................................................................................
FIRST
DEFENDANT
(Identity Number:
[...])
FIRST DEFENDANT
E[...] M[...] N.O
….....................................................
SECOND
DEFENDANT
B[...] L[...]
F[...] N.O
….......................................................................................
THIRD
DEFENDANT
FIRST DEFENDANT
E[...] M[...] N.O.
…...................................................
FOURTH
DEFENDANT
V[...] M[...]
N.O.
…..............................................................................................
FIFTH
DEFENDANT
FIRST DEFENDANT
E[...] M[...] N.O.
….......................................................
SIXTH
DEFENDANT
S[...]
M[...]
......................................................................................................
SEVENTH
DEFENDANT
JUDGMENT
KUBUSHI, J
INTRODUCTION
[1] These
proceedings bring to an end the protracted and acrimonious divorce
proceedings of the M[...]. Mr M[...]’ counsel
referred to it as
the end of the war of the M[...], which appears to be a bigger battle
than the war of the Roses.
[2] The summons that
commenced these proceedings was issued on 10 January 2007. The relief
sought by the plaintiff against the first
defendant was for a decree
of divorce and ancillary relief. The second to the seventh defendants
were later joined as parties to
the action. As a result of this
joinder, the trustees of three trusts, namely the Shajo Trust
(“Shajo”), the Capmarb
Business Trust (“Capmarb")
and the R[...] M[...] Family Trust (“RMF trust") became
parties to these proceedings.
[3] The first,
second, third, fourth and sixth defendants are respectively defending
the action against them. There is no appearance
for the fifth and
seventh defendants.
[4] I shall for
convenience refer to the parties as follows: the plaintiff will be
referred to as Mrs V[...] M[...]; the first defendant
as Mr R[...]
M[...]; the other defendants as second defendant, fourth defendant
and sixth defendant respectively. Where I refer
to the first, second,
third, fourth and sixth defendants collectively I shall simply refer
to them as defendants. And, where I
refer to Mr and Mrs M[...]
jointly I will refer to them as the parties.
[5]
Mr and Mrs M[...] were married to each other, in terms of an
ante-nuptial contract. Their marriage regime was out of community
of
property with the accrual system as contemplated in chapter 1 of the
Matrimonial Property Act No. 88 of 1984 (“the Act”).
The
parties were married to each other on 24 October 1998. Due to various
grounds, which grounds were in dispute, the parties were
by agreement
divorced on 19 October 2011. When the final order of divorce was
granted, the agreement entered into by the parties
was elevated to an
order of court. In terms of clause 1 of the said agreement, the
parties agreed to postpone the plaintiff’s
patrimonial claim
arising from the ante-nuptial contract,
sine
die.
The
current proceedings are in respect of the said patrimonial claim.
[6] At the
commencement of the current proceedings the parties were agreed on
the following issues:
a. that the claim of
maintenance arising from the particulars of claim will be dealt with
by the Maintenance Court.
b. the relevant date
for purposes of the determination of the accrual is the date of
divorce, namely, 19 October 2011.
c. the values placed
on certain assets of the first defendant, namely, the 2002 BMW BBOlC;
2005 Landrover Discovery; usufruct of
property; 51% interest in
Kairos (“KVC"); Loans receivable from Shajo Trust; loan
receivable from Milplum Trading CC
and Amex card.
I was informed at
the commencement of the trial that the parties were agreed that the
documents discovered are what they purport
to be.
BACKGROUND
[7] A brief
background as to the circumstances which led to the proceedings
before me is required. Mr and Mrs M[...] first became
involved in a
relationship in 1986. This relationship resulted in Mrs M[...]
falling pregnant and the parties getting married in
September 1986.
The parties’ eldest daughter, S[...], was born on [...] 1987.
In October 1987 Mrs M[...] suspected that Mr
M[...] was having an
extra marital relationship with one V[...] B[...] (who according Mr
M[...] is V[...] W[...]). As a result
of this infidelity, according
to Mrs M[...], the marriage broke down and the parties were divorced
in January 1988 and Mrs M[...]
was awarded custody of S[...].
[8]
Later on, Mr M[...] pursued Mrs M[...] and the parties became
involved in a relationship again, which resulted in them getting

married again in April 1991. In December 1991 Mrs M[...] fell
pregnant. When she was four months pregnant, she found out that Mr

M[...] was having an affair with one of his colleagues, C[...] - Mr
M[...] denies this relationship. The parties’ son D[...]
was
born in August 1992 and passed away two days after birth. Meanwhile
in June 1992 Mrs M[...] had instituted divorce proceedings
and a
decree of divorce was granted in December 1992. At the beginning of
1996 the parties again started a relationship and were
married to
each other for the third time on 24 October 1998. This is the
marriage which is the subject matter of the proceedings
before me. In
June 2001 the parties’ second daughter, J[...], was born. And,
in December 2003 Mrs M[...], again, found out
that Mr M[...] was
romantically involved with another woman, N[...] F[...] (N[...]). Mr
M[...] concedes that he was indeed involved
with N[...]. The parties,
attempted to save the marriage which did not succeed. They went
through counselling individually and
together and eventually
separated on 30 November 2006. In January 2007 Mrs M[...], instituted
divorce proceedings and the parties
were finally divorced on 19
October 2011. A settlement agreement entered between them was made an
order of court. As already stated
earlier in this judgment, in terms
of the settlement agreement the proprietary disputes were postponed
sine die.
The
current proceedings are intended to address the issues relating to
the patrimonial claims that arise from the ante-nuptial contract.
[9] I must also
mention that a lot was said about the history of the parties in their
evidence. This evidence included the manner
in which the parties
conducted their relationship and in particular referred to the use of
drugs by both parties, and the resultant
drug parties and sexual
interaction between the parties. Though I take cognisant of this
evidence I, however, do not find it necessary
to dwell into it as it
does not strictly pertain to the issues before me. It is evidence
which can to a certain extent assist me
in credibility findings.
THE CLAIMS TO BE
ADJUDICATED UPON
[10] The claims
before me are in the main for accrual. In her amended particulars of
claim, Mrs M[...] has put forward various claims
as follows:
a. In claim “A",
she claims a fixed property in terms of the provisions of the
ante-nuptial contract. The ante-nuptial
contract provides that she
would be entitled to claim such property should it be proved that Mr
M[...] is the cause of a future
divorce through an extra- marital
relationship.
b.
In claim “B” she claims that Shajo is the
alter
ego
of
Mr M[...] and that the assets of such trust should be taken into
consideration in determining her accrual claim.
c.
In the alternative to claim “B”, she claims in terms of
the
actio
pauliana,
as
claim “C”, 50% membership interest in Milcar Development
CC (“Milcar”) which according to her was fraudulently

transferred to Shajo to defeat her claim in terms of the accrual
system.
d. In claim “D”,
she claims contributions made to the R[...] M[...] F[...] Trust (“RMF
trust”) which should
be taken into consideration when
determining her accrual claim.
e.
In claim “E”, she claims that the RMF trust is the
alter
ego
of
Mr M[...] and that the assets of such trust be taken into
consideration when determining her accrual claim.
f.
In claim “F", her claim is that Capmark Business Trust
(“Capmark”) is the
alter
ego
of
Mr M[...] and that its assets should be taken into account when
determining her accrual claim.
[11] The defendants
are defending the action and have raised various defences to the
claims along the following lines:
a.
that evidence in support of Mrs M[...] claim that RMF trust is the
alter ego
of
Mr M[...] is inadmissible and Mrs M[...] should be
estopped
from
averring that the RMF trust is the
alter
ego
of
Mr
M[...].
b. that the assets
which presently vests in the trusts and/or close corporations and/or
companies are excluded in terms of the provisions
of the ante-nuptial
contract in that they were by virtue of Mr M[...] possession of
certain assets excluded in the ante-nuptial
contract.
c. that Mr M[...]
denies that his estate has accrued at all.
d. that Mr M[...]
denies that he is the cause of the divorce through an extra marital
relationship.
e.
that the trusts are not the
alter
ego
of
Mr M[...].
[12] In argument
before me, Mr M[...] counsel made the following submissions, which
submissions I am in agreement with:
a. that Mrs M[...]
claim for a property to the value of R300 000 in terms of the final
clause of the ante-nuptial contract should
be decided separately from
the other issues; and
b. that the
remainder of the claims, being intertwined, should be approached as
follows:
i. by determining
whether the assets in the trusts and/or entities in question are
excluded from the accrual system in terms of
the provisions of clause
6 of the ante-nuptial contract (the exclusion clause) and in the
event I find that they are indeed excluded,
that the remainder of the
issues in respect of such assets will be academic.
ii. should it be
found that such assets are not excluded in terms of the exclusion
clause; the next issue to determine is whether
or not:
aa.
the relevant trusts are indeed the
alter
ego
of
Mr M[...] as alleged; and
bb.
Mrs M[...] is entitled to the relief claimed in terms of the
actio
pauliana
in
respect of the transaction where the 50% membership interest in
Milcar was registered in the name of Shajo. (This claim is in
the
alternative to the claim whether or not Mr M[...] is the
alter
ego
of
Shajo, and, should I find that it is so, then this claim will fall
away because the shares will then
de
facto
vest
in the estate of Mr M[...])
cc.
Mrs M[...] is entitled to lead evidence in support of her claim that
the RMF trust is the
alter
ego
of
Mr M[...] and thereafter determining whether the RMF trust is indeed
the
alter ego
of
Mr M[...].
c. Only in the event
of Mrs M[...] being successful with any of the aforesaid claims, can
any determination of accrual be done.
I shall therefore
deal with Mrs M[...] claims as set out in the submission above.
The provisions of
the ante-nuptial contract
[13] Before I deal
with the different claims, I pause, to set out the terms of the
antenuptial contract which are relevant for purposes
of this
judgment.
“
..
. AND the Appearer declared on behalf of his principals that whereas
a marriage has been agreed
upon,
and
is intended to be solemnised between the parties, they have agreed
and now contract with each other as follows:
1. That there shall
be no community of property between them;
2. That there shall
be no community of profit and loss between them;
3. That the marriage
shall be subject to the accrual system in terms of Chapter 1 of the
Matrimonial Property Act, 1984 (Act No.
88 of 1984);
4. ...
5. That for the
purpose of proof of the net value of their respective estates to be
as follows: that of
R[...] E[...] M[...]
to be R2 425 000. 00
…
.
that of
V[...] T[...]
to be R341 000. 00
…
.
6. That the assets
of the parties herein contracting with each other, belonging to
either of them, which are listed hereunder and
having the values
shown herein above, together with all liabilities presently
associated with such assets, or any other asset acquired
by such
party by virtue of the possession or former possession of such asset,
shall not be taken into account as part of the other
party’s
estate and/or form part of the accrual system on the dissolution of
the marriage.
All assets as
referred to in this paragraph herein above under 4 (four) and five
(5) shall be the assets of such party alone, and
shall all loss and
profit on such asset form the sole and exclusive profit and/or loss
of such party without the other party having
any right to any part
and/or profit or loss on such asset, except for contributions made to
the R[...] M[...] Family Trust after
date of marriage, which
contributions and growth on such contributions will be subject to the
accrual system.
The assets of
R[...] E[...] M[...]
so to be excluded
are
A beneficial
interest in Vacation Investment Port Folio Trust and/or any other
trust conducting business in the vacation time share
property market.
Members interest in
R[...] M[...] Consultants CC.
Beneficial interest
in the R[...] M[...] F[...] Trust, fixed property within R[...]
M[...] Family Trust Portion 400 of Erf 375 RIETFONTEIN.
Beneficial interest
in the Genwill Trust
...
Should it be proved
that the principal, R[...] E[...] M[...] be the cause of a future
divorce through an extra marital relationship,
he will effect that
the principal V[...] T[...] obtains a fixed property to the value
R300 000 (Three Hundred Thousand Rand). Such
property shall be given
to the principal V[...] T[...] within 3 (three) months after
dissolving the marriage. R[...] E[...] M[...]
shall pay the transfer
and bond registration costs of the said fixed property as well as the
monthly instalments on the said property,
bonded by a financial
institution. This figure of R300 000 (Three Hundred Thousand), is to
escalate at 10% (Ten Percent) per annum.”
Claim “A”
[14] I shall in this
judgment deal first with Mrs M[...] claim “A”. In terms
of the provisions of the ante-nuptial contract,
Mrs M[...] is
entitled to claim a fixed property from Mr M[...] to the value of
R300 000, should it be proved that Mr M[...] is
the cause of a future
divorce through an extra marital relationship. Claim “A"
is in respect of this provision.
[15]
According to Mrs M[...] in the particulars of claim, Mr M[...] is
liable to effect that she obtains a fixed property the value
of which
is to be calculated by escalating the value of R300 000 at 10%
per
annum
from
date of marriage to date of divorce. The property is to be
transferred to Mrs M[...] within three months after the marriage
has
dissolved and Mr M[...] is to pay the transfer and bond registration
costs of the said fixed property as well as the monthly
instalments
on the said property. And alternatively, in the event Mr M[...] fails
to comply he shall be liable to Mrs M[...] in
the sum of R300 000
escalated at 10%
per
annum
from
date of marriage to date of divorce, plus the value of transfer and
bond registration costs, which amount shall be due and
owing on the
date three months after the marriage shall have dissolved.
[16] It is not in
dispute that during the subsistence of the parties’ third
marriage, Mr M[...] had an extra marital relationship
with one Nicky
Farrell. Mr M[...] has conceded as much. Now, Mrs M[...] contends
that that extra marital affair led to the breakdown
or was the cause
of the breakdown of the marriage between her and Mr M[...]. Mr M[...]
on the other hand contends that the extra
marital relationship was
not the cause of the breakdown of the marriage but was one of the
contributing factors which led to the
breakdown of the marriage. In
this respect, Mr M[...] relies on the fact that firstly, Mrs M[...]
did not immediately after discovering
the extra marital affair,
institute divorce proceedings against him; secondly, when Mrs M[...]
instituted the divorce proceedings,
the extra marital ground was only
one of the several grounds stated as the cause for the breakdown of
the marriage. This ground
was not even mentioned as the first one but
appeared as the fourth ground in the list of the grounds mentioned.
The ground was
mentioned as the main ground for the divorce after the
particulars of claim were amended in 2013.
[17] The clause of
the ante-nuptial contract, upon which Mrs M[...]’ claim is
based, i.e. the final clause of paragraph 6
thereof, stipulates as
follows:
“
Should
it be proved that the principal, R[...] E[...] M[...] be
the
cause
of
a future divorce through an extra marital relationship, he will
effect that the principal V[...] T[...] obtains a fixed property
to
the value R300 000 (Three Hundred Thousand Rand). Such property shall
be given to the principal V[...] T[...] within 3 (three)
months after
dissolving the marriage. R[...] E[...] M[...] shall pay the transfer
and bond registration costs of the said fixed
property as well as the
monthly instalments on the said property, bonded by a financial
institution. This figure of R300 000 (Three
Hundred Thousand), is to
escalate at 10% (Ten Percent) per annum.” (my emphasis)
[18] As argued by Mr
M[...]’ counsel, correctly so, this is a contractual claim. And
in so far as it may be necessary to interpret
the ante-nuptial
contract, it must be interpreted on its own wording. It is only when
a court is not able, on the simple wording
of a contract, to
determine what it means, that a court may go into the different ways
of determining the intention of the parties
or try to establish the
meaning of the contract. It is also trite that interpretation of a
contract is the work of the court and
not that of parties to the
contract. Therefore, to the extent that Mrs M[...] in her testimony
sought to provide meaning to the
construction of the ante-nuptial
contract or the intention of the parties, Mr M[...]’ counsel
was correct to have objected
to any such evidence and I intend as a
result not to consider such evidence for purposes of this judgment.
[19] My view,
however, is that, the ante-nuptial contract, in this instance, is not
a difficult contract to interpret. It does not
contain ambiguous
terms or words - the grammar used is simple, everyday grammar and the
intention of the parties is clear. From
the mere reading of the
ante-nuptial contract it can be easily determined that the extra
marital relationship must be the ‘cause’
of the divorce,
that is, it must have caused the disintegration of the marriage.
[20] The crux of the
issue in determining whether Mrs M[...] is entitled to succeed in
this claim is whether Mr M[...]’ extra
marital relationship
with N[...] F[...] is the cause of the divorce granted on 19 October
2011.
[21] Before I go
into the evidence, I pause here to deal first with the contention
raised by Mr M[...]’ counsel during argument
and in his heads
of argument to the effect that this ground of divorce was not
initially raised as the main ground by Mrs M[...]
when she first
instituted the divorce proceedings but was raised only in 2013 after
the particulars of claim were amended.
[22]
It is a general rule that a pleading into which words have been
incorporated by amendment must read as if the incorporated
words had
been in it when it was originally filed.
1
1f
that were not so, it would be futile for the courts to allow, as they
commonly do, the amendment of declarations and summonses
which are
defective for want of vital allegations. What is required to cure
such defective declaration or summons is an averment
of the missing
fact as a fact which existed at the time when the pleading was filed;
the incorporation of an averment which, truly
interpreted, meant that
the vital fact had come into existence at a later date would, on the
authorities, serve no purpose.
2
[23] An amendment
may be brought about by either adding words or phrases or by the
withdrawal of some of the words and phrases in
a pleading or document
to be amended. I am of the view that the principle enunciated in the
Dinath
-judgment above would also be apposite in the circumstances
where the amendment was effected by the withdrawal of some words or
phrases.
[24] It is common
cause that when Mrs M[...] initially issued the summons the ground of
the extra marital relationship of Mr M[...]
was not stated as the
main ground upon which the divorce was claimed. It is also not in
dispute that during the duration of the
proceedings, Mrs M[...]
applied and was granted an amendment to the particulars of claim. In
the application to amend Mrs M[...]
sought to introduce the extra
marital affair of Mr M[...] as the main ground upon which the divorce
was based. The said amendment
was duly effected and incorporated in
the particulars of claim. These are the same particulars of claim
that were before the court
when the divorce was granted.
[25]
It is trite that once pleadings have been amended, and once the
amendment has been incorporated therein, a court is obliged
to hear
the matter on its merits as amended and to adjudicate thereon. It is
not open to a litigant who has allowed the amendment
to be
incorporated in the pleadings thereafter to argue that the court
should disregard it.
3
Mr M[...] can
therefore not be heard to say that I should regard the particulars of
claim in their initial format. The particulars
of claim before me are
in their amended format and they are the particulars of claim upon
which I should adjudicate and on which
I intend to base my judgment.
[26] In order for
Mrs M[...] to succeed in her claim she must prove, on a balance of
probabilities, that the extra marital affair
was the cause of the
divorce and not a contributing factor as argued by Mr M[...].
[27] I did not find
the testimony of Mr and Mrs M[...] on this point to be contradictory
or at odds with each other. Both parties
are agreed that after the
discovery of the extra marital relationship they tried to save the
marriage. They attended counselling
sessions separately and together;
they spent time together and even went on holiday overseas. They
house hunted together and even
bought a new house. What they are at
variance with is whether the extra marital relation caused or
contributed to the breakdown
of the marriage. Mrs M[...] contending
that the extra marital relationship caused the marriage breakdown
whilst on the converse
Mr M[...]’ argues that the extra marital
relationship did not cause the breakdown but was a contributing
factor to the breakdown
of the marriage.
[28]
Both findings of credibility and the factors of probability must be
considered when determining whether a person bearing the
burden of
proof has satisfied that burden of proof or not.
4
Thus
the issue of the conflicting versions before court will be material
in deciding which of the parties is successful.
[29]
In respect of the credibility findings, the submission by Mrs M[...]’
counsel is that Mrs M[...]’ evidence was
clear and consistent
regarding the reason for the breakdown of the marriage. Even under
relatively harrowing cross-examination,
her evidence was and always
has been that the extra marital affair led to the breakdown of the
marriage. As against the evidence
of Mrs M[...], the high watermark
of Mr M[...]’ evidence, according to counsel, was an attempt
though not convincingly so,
to say that he thought that the divorce
was as a result of Mrs M[...] wanting to go to her mother’s
house in Pretoria. Whilst
the evidence shows that their eldest
daughter was at University in Stellenbosch at the time and they were
living in Cape Town at
that stage. Counsel urged me to take into
consideration that Mr M[...] tried to hide the extra marital affair -
he deleted the
emails; his words when he phoned N[...] were “we
are bust we have been bust, turn off your phone." The starting
point,
as argued, is the common cause fact that there was this extra
marital relationship and on a balance of probabilities, that was the

reason for the breakdown of the marriage. In counsel’s
submission, Mrs M[...] has met her
onus
in
respect of the reason for the breakdown of the marriage.
[30] On the
converse, Mr M[...]’ counsel contends that Mr M[...] was in all
respects a credible witness. He made concessions
when it was
necessary to do so. He stood exhaustive cross-examination for almost
two days. There was not one time when it could
be illustrated to the
court that he fabricated any evidence or that he clearly told a lie,
and when he was not aware of facts he
did not try and make them up,
but conceded that he did not know. There is no basis upon which the
court can disregard any of his
evidence, so he argued. Mrs M[...],
according to counsel, did not shy away from trying to create an
adverse impression of Mr M[...]
on each and every occasion when she
could. When she was asked certain questions, which clearly if she
answered the questions truthfully,
would have portrayed her not to be
the angel that she wanted the court to believe she was. She would not
answer the question but
immediately imply Mr M[...] in her answer. It
is clear that the court should approach such evidence carefully
because a witness
who is not prepared to make concession when it is
clear that such concession should be made, and a witness who is not
prepared
to give a truthful answer, but immediately resorts to
implying someone else, is a witness who has something to hide. It is
a witness
who does not want the court to know the full truth and the
whole picture. Counsel submits that, in respect of this evidence,
when
weighing that against the evidence presented by Mr M[...], and
there is any conflict in version, I should accept Mr M[...]’

version.
[31] Both parties
impressed me as very sincere and honest persons. I found both of them
to be credible witnesses. They were both
exposed to harrowing and
exhaustive cross examination but they answered the questions put to
them honestly and without hesitation.
Both conceded issues
which they bore no knowledge of. They simply told the truth of what
they knew. I am generally satisfied with
their testimony and I regard
it as reliable.
[32] However, I find
the probabilities on this claim to be in favour of Mrs M[...]. I
could not find any other reasons proffered
by both parties as to why
their marriage had disintegrated except the extra marital
relationship by Mr M[...]. I find Mr M[...]’
suggestion that
Mrs M[...] wanted to go and live with her mother in Pretoria as a
reason for the breakdown, absurd. The comparison
with the body of
evidence against such proposition is simply overwhelming. It should
be remembered that at that time their daughter
was already studying
at the Stellenbosch University and it was specifically for that
reason that Mrs M[...] did eventually move
to Cape Town.
[33] Mrs M[...]
should not be faulted for trying to reconcile with Mr M[...] after
the extra marital affair. This is normally what
would happen between
spouses who love each other -try to save the marriage before
resorting to the drastic measure of a divorce.
It is so that an extra
marital relationship affects the very foundation of a marriage and
may easily result in the breakdown of
a marriage mainly because trust
issues come into play. I am prepared to accept Mrs M[...]’
version that the extra marital
relationship by Mr M[...],
particularly seen in the light of the previous alleged affairs, and
compounded by Mrs M[...]’
finding that Mr M[...] visited dating
sites, was too much for her to bear. Much as attempts were made by
both parties to save the
relationship, the scar left by Mr M[...]’
infidelity was, in my view, too deep a scar to repair and did lead to
the breakdown
in trust which eventually caused the breakdown of the
marriage.
[34]
As a result, Mrs M[...] should be granted the relief she seeks in
prayer A6 to A8. Mr Reinich (an expert witness called by
Mrs M[...]
to which I shall refer to in this judgment below) calculated the
amount to the value of R1 094 875 as at 28 February
2011. The method
he used in the calculation is a simple mathematical calculation of
the present value and is acceptable. The present
value is calculated
from the original R300 000 over the period of 156 months since the
date of marriage to date of divorce. The
interest rate per year is
10% with twelve payments
per
year.
And, as at 20 October 2011, it will be calculated at 163 months x 10%
x 12 months, and equals Rl 144 004.
[35] I must,
however, state that should Mr M[...] not make the fixed property
available to Mrs M[...] and pay the money directly
to her, there will
be no need for Mr M[...] to pay the amount for bond registration
costs. Mr M[...] will have to pay only for
the transfer costs in the
event Mrs M[...] uses the money to purchase fixed property.
Whether
the assets in the trusts and/or entities in question are excluded
from the
accrual
system.
[36] In the
particulars of claim Mrs M[...] is claiming accrual in respect of the
assets of Mr M[...] which are, according to Mrs
M[...], held in RMF
trust, Shajo, Milcar and Capmark. Mr M[...]’ defence in this
regard, as contained in his special plea,
is that, the assets in
these entities are excluded from his estate for accrual purposes in
terms of clause 6 of the antenuptial
contract, that is, they are
assets which are excluded either because, like the beneficial
interest in RMF trust, they are assets
which are excluded in terms of
the antenuptial agreement; or they are assets which were acquired by
Mr M[...] by virtue of his
possession or former possession of the
assets mentioned as excluded in the ante-nuptial contract.
[37] In order to
complete the picture, it is necessary that I give a brief outline of
the entities involved herein, namely:
a. THE MILCAR
DEVELOPMENT CC
This close
corporation was formed when Kairos Vacation CC (“KVC”)
(an entity which Mr M[...] formed to take forward
his business
interests in the Western Cape) wanted to be involved in the
development aspect of the business. It was set up by money
borrowed
from John Hume. It was initially a shelf close corporation registered
on 11 February 2004 but only started operating on
11 November 2005.
Its initial members were Mr M[...] and Mr Kalbalan. Mr M[...] held
50% of the membership interest. He resigned
from the CC on 5 November
2007 shortly after he separated with Mrs M[...]. The membership was
transferred from his personal name
to Shajo.
b. THE SHAJO TRUST
The trust was
initially registered on 5 May 2006. The donor is Mr M[...] who
donated R1 000 for its foundation. The initial trustees
are Mr M[...]
and Mr Forssmann (Mr M[...]’ long time accountant). The primary
capital beneficiaries are Shaylene M[...],
Jodie M[...] and further
descendants of Mr M[...]. The trust was established to hold Mr M[...]
50% membership interest in Milcar.
In terms of the trust deed the
first trustee binds later trustees to follow and to administer all
assets in the trust in terms
of stipulations of this agreement to the
benefit of primary capital beneficiaries.
c. THE CAPMARK
BUSINESS TRUST
The
founder is Magna Carta Consortium. Mr M[...] was the sole trustee of
the trust. This was a call centre and its purpose was to
source
clients and to invite them to timeshare presentations. Clients were
sourced on databases from different sources. In terms
of the trust
deed, the first trustee undertakes and binds other later trustees to
take steps to ensure that all assets will be
administered in
agreement with the stipulations of this trust deed and to the benefit
of beneficiaries. The trustees have no right
to appoint additional
trustees. The trustees are the only persons appointed as trustees of
this trust. The trustee undertakes to
take control of the assets of
the trust, regardless of the source of the assets for as long as the
trust is in existence. Trust
assets will be kept in the name of the
trustees in their capacity as trustees, or in the name of another
person (juristic person).
The trust was eventually sequestrated.
d. THE R[...] M[...]
FAMILY TRUST
The
founder of the trust is Mrs M[...] and she donated an amount of R100
for its formation. The first trustee was Mr M[...]. The
initial
beneficiaries were Mr M[...], Mrs M[...], Shayleen M[...] and any
further issue of Mr M[...] and the capital beneficiaries
were Mr
M[...] failing him Mrs M[...] and Shaylene M[...] in equal shares
per
stirpes.
The
trust was later amended and Mrs M[...] was incorporated as a
cotrustee. The primary capital beneficiaries being Shaylene M[...],

Jodie M[...] and a child or children from the relationship of above
trustees still to be born. The income beneficiaries are the
spouse,
descendant, dependant, or parent of a primary capital beneficiary
and/or an institution for the advancement of science
or art, or which
is of charitable, educational or religious nature and will benefit
the public in general.
[38] In order to
determine whether or not Mrs M[...] is entitled to the accrual in
respect of the assets as mentioned in paragraph
[36] of this
judgment, I must first determine whether or not these assets form
part of the assets which are excluded in terms of
the ante-nuptial
contract or were acquired as a result of Mr M[...]’ possession
or former possession of the assets referred
to in clause 6 of the
ante-nuptial contract.
[39]
It is trite that in circumstances where the defendant is in
possession of all the facts relating to the assets reflected as
being
excluded in the ante-nuptial contract, he or she should bear the
onus
of
demonstrating what has happened to those assets, how they have become
converted from time to time, and what their present values
are which
fall to be excluded from the calculation of his or her net worth as
at the date of the divorce. Although the plaintiff
bears the
onus
of
establishing the monetary value of the share of the accrual in the
defendant’s estate to which she is entitled, the defendant
is
required to show which assets are to be excluded from the
calculation, and why.
5
[40]
It is common cause, in this instance, that, between the parties, Mr
M[...] is the one in possession of all the facts relating
to the
assets reflected to be excluded, in the ante-nuptial contract. The
onus
is
thus upon him to demonstrate which of the assets are to be excluded,
what happened to the assets, how they have become converted
from time
to time, what their present values are and why they should be
excluded.
[41]
Mr M[...]’ testimony in support of his defence is that he is
presently involved in the timeshare property industry (the
industry).
His involvement in the industry started when he acquired a 25%
beneficial interest in an entity referred to in the ante-nuptial

contract as Vacation Investment Port Folio Trust (“VIP trust”).
VIP trust was a vehicle which he and his then two business
partners
used in order to build up a so-called timeshare industry empire. He
testified that there are various facets in this business,
like
marketing, development, recoveries, reservations and the financing of
deals, falling within the industry. In order to conduct
and better
manage the various branches or facets of their business, the
modus
operandi
utilised
by VIP trust was to establish various entities like trusts, close
corporations or companies which were kept as shelf companies.
The
purpose of such
modus
operandi
was
to ring-fence personal liability and to limit personal and business
risk. As other aspects of the business, like for instance,

development, were opened, such business would be isolated from the
main business and other businesses by using one of the existing
shelf
companies, close corporations or trusts. As a result, VIP trust
opened various companies, close corporations and trusts.
These,
according to him, are the entities which are referred to in the
ante-nuptial contract as excluded, namely,
‘
A
beneficial interest in Vacation Investment Port Folio Trust and/or
any other trust conducting business in the vacation time share

property market’.
[42]
A misunderstanding between Mr M[...] and one of his business partners
led to what is referred to as an asset swap agreement.
The effect of
this agreement was that Mr M[...] exchanged the interests he held in
the various companies, close corporations and
trusts as a trustee,
shareholder and member, respectively, for an interest in KVC and a
right to continue as a developer in Western
Cape. According to Mr
M[...] all the interests which he had in the trusts, companies and
close corporations up and until that time
were derived from the
beneficial interests referred to in the ante-nuptial contract. The
evidence was further that he continued
with the business of KVC in
the Western Cape, which became what his counsel referred to as the
springboard from which his current
businesses in the Cape were
commenced. According to Mr M[...], but for this asset swap agreement,
and but for the fact that he
was involved with these business
partners through the entity referred to in the ante-nuptial contract,
he would not have been in
the Western Cape in the timeshare industry,
selling timeshare and developing timeshare. And, continuing with the
same
modus
operandi as
before,
Shajo, Milcar and Capmark were established.
[43] Mrs M[...]’
counsel submits in argument before me that, it cannot be said that Mr
M[...]’ interests in Shajo, Milcar
and Capmarb are excluded in
terms of the ante-nuptial contract because, firstly, there is no
nexus between the initial assets and
the assets in question;
secondly, the entities that Mr M[...] is relying on to prove the
nexus have not been proven.
[44] It is not in
dispute that the ante-nuptial contract excludes the assets of the
parties belonging to either of them which are
listed in clause 6 of
the ante-nuptial contract (the initial assets) together with all
liabilities presently associated with such
assets, or any other asset
acquired by such party by virtue of the possession or former
possession of such asset. Mr M[...]’
beneficial interest in RMF
trust is also one of the assets listed in clause 6 of the
ante-nuptial contract, and it is, therefore,
excluded for accrual
purposes. And, as already stated in paragraph [12] of this judgment,
in the event I find any of the assets
in question excluded, the
remainder of the issues on such asset becomes academic. Having found
Mr M[...]’ beneficial interest
in RMF trust to be so excluded
any further issue thereon is, thus, academic.
[45] Consequently,
the remaining assets, which have a bearing on this judgment, are Mr
M[...]’ interests in Shajo, Milcar
and Capmarb. It is common
cause that these assets do not form part of the assets mentioned in
clause 6 of the ante-nuptial contract.
In order to prove the
exclusion of these assets from the accrual, Mr M[...] must show that
there is a causal connection (nexus)
between these assets and the
initial assets. It means that, Mr M[...]’ evidence should prove
that his interests in Shajo,
Milcar and Capmarb are assets acquired
by him by virtue of his possession or former possession of his
beneficial interest in RMF
trust, VIP trust and/or any other trust
conducting business in the vacation time share property market. His
evidence must show
how his beneficial interest in these trusts was
converted from time to time until his interests in Shajo, Milcar and
Capmarb were
acquired.
[46] When the asset
swap agreement was concluded, of the initial assets stated in the
exclusion clause, only the beneficial interests
in VIP trust and RMF
trust were still in existence. As regards the other assets mentioned
as excluded in the ante-nuptial contract.
Mr M[...]’
evidence is that: the Rodney M[...] Consultant CC did not play any
role in his estate; Genwill Trust, which was
a marketing agency, is
still in operation but he is no longer a trustee; the Newlands
property was sold and the proceeds thereof
used to buy another
property which is now registered in the name of Mrs M[...]; all
stocks, bonds, shares, share certificates held
in either listed
and/or private companies did not exist at the time. Under cross
examination Mr M[...] remembered that he held
shares in Sanlam and
Old Mutual at the time, which shares had been disposed of. Of the two
entities remaining as stated above,
in which Mr M[...] had beneficial
interests, only VIP trust was involved in the timeshare vacation and
leisure industry. From my
assessment of Mr M[...]’ evidence,
his defence to exclude the assets in question is based on the fact
that the assets are
or were held in the entities which are or were
involved in the industry. I have, therefore, to conclude that his
possession and/or
former possession of the beneficial interest in RMF
trust did not play a role in the acquisition of the assets he seeks
to exclude.
[47] It is not in
dispute that both RMF trust and VIP trust are not specifically
mentioned in the asset swap agreement. RMF trust
would not be
mentioned as such because it was not involved in the time share
industry. Mr M[...]’ assertion is that although
VIP trust is
not specifically mentioned in the asset swap agreement, it formed
part of the entities which he resigned from in order
to acquire KVC
and a right to continue as a developer in Western Cape. According to
him, at the time of signing the asset swap
agreement he had not
resigned from many other entities which he had undertaken to resign
from. Documentation in respect of these
other entities was sent to
him down in Cape Town and he formally resigned from them. VIP trust
was one of those entities. According
to his counsel, failing any
evidence before this court to contradict what Mr M[...] testified in
this regard, his evidence must
be accepted.
[48]
The contention by Mrs M[...]’ counsel on the other hand is that
Mr M[...] bears the
onus
to
prove that his beneficial interest in VIP trust was included in the
asset swap agreement. According to counsel, the asset swap
agreement
is a written agreement and since the other entities were specifically
mentioned in the agreement, VIP trust ought to
have been mentioned as
well.
[49]
It has been held that for as long as the parol evidence rule remains
part of our law, if a document was intended to provide
a complete
memorial of a jural act, extrinsic evidence may not contradict, add
to or modify its meaning.
6
[50] It is my view
that the asset swap agreement as a written agreement was intended to
embody a complete memorial of the agreement
between the parties.
There is no evidence before me to indicate otherwise. As such, no
extrinsic evidence may be accepted to contradict,
add or modify its
meaning. Note should also be taken that the asset swap agreement
cannot be interpreted to mean that all the interests
which Mr M[...]
possessed were part of the exchange in terms of the asset swap
agreement. The relevant clause of the asset swap
agreement reads as
follows:
“
..
. the parties agreed to effect a
certain
asset
swap, whereby
certain
interests,
shareholdings and rights held by Rodney will be transferred to Ian,
and similarly certain interests, shareholdings and
rights held by Ian
will be transferred to Rodney.” (my emphasis).
It is thus on this
basis that I have to find that VIP trust does not form part of the
asset swap agreement. Consequently, it cannot
be said that Mr M[...]’
interests in Shajo, Milcar and Capmarb were acquired by virtue of his
possession or former possession
of the beneficial interest in VIP
trust.
[51] The
ante-nuptial contract also excludes a beneficial interest in any
other trust conducting business in the vacation time share
property
market. According to the evidence of Mr M[...], at the time of the
conclusion of the ante-nuptial contract, and without
mention in name,
various companies, close corporations and trusts were established as
shelf companies and shelf close corporations
to be used in the
business strategy of managing the various other aspects of VIP trust.
And by the time the asset swap agreement
was concluded, VIP trust had
utilised some of these entities to open other businesses like, for
instance, marketing, development
and financing.
[52]
Mr M[...] states in his evidence that his interests in these various
companies, close corporations and trusts were exchanged
for an
interest in KVC and a right to continue as a developer in Western
Cape. Mr M[...] bears the
onus
and
should, therefore, prove that the beneficial interests in Shajo,
Milcar and Capmarb are assets acquired by virtue of his possession
or
former possession of the beneficial interest in these companies,
close corporations and trusts that he eventually swapped for
an
interest in KVC and a right to continue as a developer in Western
Cape. The evidence must show a nexus between the assets in
question
and the beneficial interests in the entities stated.
[53]
When the ante-nuptial contract is interpreted in
sensu
stricto,
the
initial entities in which Mr M[...] has interests should for present
purposes be trusts only. The ante-nuptial contract refers

specifically to VIP trust or ‘any other trust’. It is,
however, not apparent from the evidence of Mr M[...], except
for VIP
trust, which other trust or trusts were excluded in terms of the
ante-nuptial contract as the ante-nuptial contract refers
to trusts
in general terms. Put differently, there is no evidence before me
which indicates the trust or trusts the beneficial
interests of which
Mr M[...] possessed at the time of the conclusion of the antenuptial
contract. VIP trust is the only trust which
operated in the industry
and which is specifically named in the ante-nuptial agreement. I have
since ruled that VIP trust does
not form part of the asset swap
agreement, it is, as a result, not clear from the evidence which
trust or trusts, if any, were
utilised for the exchange in terms of
the asset swap agreement. Mr M[...]’ evidence does not even
show which entities were
acquired by the business after the
ante-nuptial contract was signed and before the asset swap agreement
was entered into and what
beneficial interest, if any, he possessed
in these trusts, which he could have used to acquire interests in KVC
and the right as
a developer in the Western Cape.
The Asset Swop
Agreement
[54] In order to
determine what trust (s) and/or entities were involved for purposes
of the exchange I had to defer to the asset
swap agreement itself.
The following clauses in the asset swap agreement are relevant for
purposes of this judgment:
“
WHEREAS:
1. R[...] and I[...]
together have diverse interests in companies, close corporations and
trusts, as beneficiaries, trustees, shareholders
and members.
2. The parties have
agreed to effect a certain asset swap, whereby certain interests,
shareholdings and rights held by R[...] will
be transferred to
I[...], and similarly certain interests, shareholdings and rights
held by I[...] will be transferred to R[...].
3. R[...] has, as
part of the asset swap, undertaken to resign as a director of Canakam
[Pty] Ltd, and to relinquish all positions
of trusteeship or
directorship in certain companies.
WHEREFOR THE PARTIES
HEREBY AGREE AS FOLLOWS:
1. ASSET SWOP
The parties hereby
agree that the exchange of assets as listed herein together with the
resignation of Rodney as a director of Canakam
and Sales Director of
the Quality Time Marketing group of companies will have an equal
value.
2. CANAKAM
R[...] hereby
tenders his resignation as a director of Canakam and shall transfer
his entire shareholding in Canakam to Quality
Time Marketing [Pty]
Ltd.
3. KAIROS VACATION
CORP CC
I[...] to ensure
that Kairos Vacation Corporation CC as at the 1
st
March
2002 shall have no liabilities whatsoever and shall have no assets
other than furniture and equipment and its trading name...
8. SUMMARY
a. R[...] to resign
from Canabam as set out above.
b. R[...] to resign
as Sales Manager/Director
c. R[...] to waive
all rights and positions in Jaynian Trust.
d. R[...] to waive
all rights and positions in Vestfin Trust.
e. R[...] to waive
all rights and positions in SIR Trust.
f. R[...] to waive
all rights and positions and membership in Lawpro Recoveries cc.
g. R[...] to waive
all rights and positions and membership in Jayvac Stationery cc.
h. R[...] to waive
all rights and positions in Lengen Trust.
i. R[...] to waive
all rights and positions in ACT/Harvey World Travel.
j. ...”
[55] It is apparent
that the above entities are the only ones which were involved in the
exchange that occurred in terms of the
asset swap agreement. What is
also clear is that Mr M[...] resigned his position as Sales Director
of the Quality Time Marketing.
He also resigned as a director of
Canakam [Pty] Ltd and relinquished his entire shareholding therein
and he waived his membership
in Lawpro Recoveries CC and Jayvac
Stationery CC. Canakam is a company and Lawpro and Jayvac are close
corporations.
[56] There are four
trusts mentioned in the asset swap agreement. What is evident from
the asset swap agreement is that Mr M[...]
waived all rights and
positions in respect of the four trusts. There is no mention of a
beneficial interest accruing to Mr M[...]
regarding any of the four
trusts that was transferred in exchange of the interest in KVC. In
the spirit of the ante-nuptial contract
what should be used to
acquire an asset is a beneficial interest in a trust.
[57]
During the duration of the trial, I took the liberty to request
counsel to provide me with authorities explaining the term

‘beneficial interest’. Both counsel furnished me with
judgments wherein the concept of beneficial interest was discussed
in
relation to trusts. Counsel informed me that even after diligent
search, they did not come across a judgment where the term

‘beneficial interest’ was especially defined. The term
‘beneficial interest’ cropped up in the judgment
in
Melville v Busani
and Another
7
where
trusts were concerned. I am indebted to counsel for the endeavour.
[58] I also could
not find any judgment wherein the term ‘beneficial interest’
is defined. I looked up the term in the
internet search engine in the
Free Dictionary (Legal dictionary) by Farflex. The term is explained
as: ‘the right to receive
benefits on assets held by another
party’; ‘Beneficial interest in a trust is whereby one
has vested interest in the
trust assets’; and ‘A
beneficiary of a trust has a beneficial interest in the trust
property, the legal title of which
is held by the trustee.’ I
have, therefore, to agree with the summation by Mr M[...]’
counsel that where a person is
an income beneficiary of a trust or a
capital beneficiary of a trust, such person holds a beneficial
interest in that trust.
[59] Based on that
summation it is clear that directorships, trusteeships and positions
cannot be regarded as beneficial interests
as envisaged in the
ante-nuptial contract, in this instance. Rights, without explaining
the nature of such rights, are in my view
excluded as well.
Consequently, the resignation and/or the waiver by Mr M[...] in the
various positions he held in the numerous
entities does not
constitute a beneficial interest in a trust, even so an interest in a
company or close corporation. And as such
it is not an asset as
contemplated in the ante-nuptial contract.
[60] The
ante-nuptial agreement also allows for the exclusion of ‘any
other asset acquired by such party by virtue of the
possession or
former possession of the initial asset’. In my understanding
the asset so acquired need not necessarily be
a beneficial interest
in a trust. Any other interest, whether a member’s interest in
a close corporation or a shareholding
in a company, would qualify to
be acquired by the possession or former possession of the initial
asset. In this instance, Mr M[...]’
evidence is that his
interests in various companies, close corporations and trusts were
used in the asset swap agreement. Mr M[...]
does not in his evidence
specify these entities by name but I accept that these entities might
have been established. These entities,
as I understand, were
established by Mr M[...] and some of his partners to expand the
business. The problem, however, is that,
I could not find any
evidence which show any link (nexus) between these entities and the
initial assets possessed by Mr M[...].
There is, also, no evidence to
show what interests, if any, Mr M[...] held in any of these entities
and the connection between
these interests, if any, with any asset Mr
M[...] acquired in terms of the asset swap agreement.
[61] There is also
no causal connection between Mr M[...]’ member’s interest
in KVC and his interests in Shajo, or Milcar
or Capmark. According to
the testimony of Mr M[...], Shajo was established in order to hold
his 50% member’s interest in
Milcar. Milcar was formed when KVC
wanted to be involved in the development aspect of the business. It
was set up by money borrowed
from John Hume. Mr M[...] held 50% of
the member’s interest in the close corporation and when he
resigned from the close
corporation his member’s interest was
transferred from his personal name to Shajo. It can, therefore, not
be said that Mr
M[...]’ interest either in Shajo or Milcar was
acquired by his possession or former possession of his member’s
interest
in KVC. Vet Mr M[...]’ counsel argues that it should
be excluded because Milcar was a vehicle created in order to conduct

the development side of the business, and that right to develop came
from the asset swap agreement. This, however, cannot hold
simply
because I could find no connection between the initial assets in the
ante-nuptial agreement and the assets utilised for
the exchange in
the asset swap agreement. There is also no evidence which proves that
Mr M[...]’ beneficial interest in Capmark
was acquired by
virtue of his possession or former possession of his member’s
interest in KVC.
[62] The argument by
Mrs M[...]’ counsel that the assets in question should have
been acquired in exchange of a beneficial
interest in order to fall
within the exclusionary clause is valid. For that purpose, it is,
therefore, important that it be understood
what is meant by the word
‘asset’ as used in the ante-nuptial contract. The
ante-nuptial contract refers to a beneficial
interest in a trust as
an asset. An asset in an entity, whether a trust, a close corporation
or a company, is not that entity itself
but an interest held in that
entity. The asset, therefore, will either be a beneficial interest in
a trust, a member’s interest
in a close corporation or a
shareholding in a company. What is then traded or exchanged is not
the entity but the interests held
in that entity. An entity in which
the asset is held cannot itself be regarded as an asset. Similarly,
an asset is the beneficial
interest in a trust or member’s
interest in a close corporation or a shareholding in a company, and
not the formation of
a trust, close corporation or company.
[63]
The interpretation by Mr M[...]’ counsel that the assets can be
acquired by merely operating in the industry is unfounded.
It is my
view that the establishment of an entity like a trust, a close
corporation or a company, even though such entity would
have operated
in the industry, does not
per
se
translate
into a beneficial interest or an asset. As such Mr M[...]’
involvement in the industry cannot be viewed as an asset,
because
that is not what the ante-nuptial contract contemplates. The
ante-nuptial contract refers to the possession of a beneficial

interest in a specific trust (e.g. VIP trust) and other trusts
conducting business in the vacation timeshare property industry,

and/or any assets acquired by such possession. It can, therefore, not
be said that Mr M[...] acquired the interest in Shajo, Milcar
or
Capmarb by merely being involved in the industry.
[64]
It was therefore expected of Mr M[...] in his evidence to prove that
at the time of the conclusion of the ante-nuptial contract
he
possessed a beneficial interest in each of the four trusts mentioned
in the asset swap agreement if that was the case, and that
such
beneficial interests were transferred in exchange for an interest in
KVC. Or else, he should have established that he utilised
the
beneficial interests he possessed at the time of the conclusion of
the ante-nuptial contract to acquire assets in the form
of interests
in the four trusts which interests were further utilised in the
exchange that occurred in terms of the asset swap
agreement. This he
failed to do. Even if it can be accepted that there would have been
other entities like companies and close
corporations, which would
have been acquired in terms of the business’
modus
operandi,
it
was incumbent upon Mr M[...] to establish the nexus between his
beneficial interest in the initial assets and his interests in
these
entities. The shareholding he held in Canakam and the member’s
interests he held in Lawpro and Jayvac do not assist
his case because
he did not establish that it was by virtue of his possession or
former possession of the beneficial interests
in RMF trust, VIP trust
or any other trust or trusts operating in the industry that he
acquired the interests he held in Canakam,
Lawpro and Jayvac; and
that he used his interests in these entities to acquire a member’s
interest in KVC in terms of the
asset swap agreement. This he failed
to do as well.
[65]
Mr M[...]’ situation is exacerbated by the fact that all these
trusts, including VIP trust are not proven. Counsel for
Mrs M[...]
submitted in argument that, apart from RMF trust, not a single trust,
whether referred to in evidence, referred to in
the ante-nuptial
contract or in the asset swap agreement has been proven. In this
regard he referred me to the following authorities:
the
South
African Law of Trusts 3
rd
Ed by
Honore'
and the judgment in
Meravian
Mission v Mona
(1901)
14
EDC 13.
At page 108, second paragraph of the South African Law of
Trusts, it is stated that:
"The onus of
proving a trust which does not appear on the land register or a trust
different from that appearing in the land
register is naturally on
the person seeking to uphold the supposed trust."
The
onus
is
therefore on Mr M[...] to prove the alleged trusts.
[66]
It is common cause that all the trusts Mr M[...] relies on have not
been discovered as part of the pleadings. Mr M[...]’

explanation for not discovering these trusts is that the asset swap
agreement occurred 12 years ago, he as a result became dispossessed

of the documents pertaining to the trusts, meaning that the documents
were handed over to the other party to the asset swap agreement.
He
as a result lost control of the trust deeds and cannot produce them.
But the
onus
is
on him and I do not hear him saying that the documents are lost or
destroyed. He just lost control of them. From his evidence
I could
decipher that he is still in good terms with the other party to the
asset swap agreement, and it is my view, that he could
have requested
copies of the trust deeds from him. I can, therefore, not accept his
explanation as reasonable.
[67]
I am not persuaded that there is a causal connection between the
initial assets in the ante-nuptial contract, to wit, a beneficial

interest either in RMF trust, VIP trust or in any other trust
conducting business in the vacation timeshare property market and
the
interests held by Mr M[...] in Shajo, Milcar or Capmarb.
Consequently, I have to conclude that Mr M[...] has failed to
discharge
the
onus
he
bore to prove that the assets in question should be excluded from the
accrual.
“
Alter
Ego”
[68] In regard to
Mrs M[...]’ claim “B” and claim “F”,
Mrs M[...] alleges in her particulars of claim
that during the
subsistence of their marriage, but at the time when the marital
relationship had already broken down or was in
the process of
breaking down, Mr M[...] established two trusts, namely, Shajo and
Capmark. She also alleges that these trusts were
established by Mr
M[...] with the purpose of concealing his assets and/or as a vehicle
which he intended to use to defeat her patrimonial
claims against
him.
[69]
Mrs M[...]’ claim “E” is that RMF trust is the
alter ego
of
Mr M[...]. I shall not in this judgment deal with this claim as I
have already concluded that it has been rendered academic.
[70] Consequently,
the relief Mrs M[...] seeks in respect of claims “B’’
and “F” is for an order declaring
a. that at no time
was there in reality a separation of the assets of Shajo and Capmark
from the personal assets of Mr M[...];
b.
that Shajo and Capmark are the
alter
ego
of
Mr M[...];
c. that the assets
of Shajo and Capmark are the assets of Mr M[...] and accordingly such
assets be taken into consideration for
purposes of determining the
accrual in the estate of Mr M[...]; and
d. that Mrs M[...]
is entitled to execute against the assets of Shajo and Capmark in
satisfaction of her patrimonial claim against
Mr M[...].
[71]
To succeed in a claim that trust assets be included in the estate of
one of the parties to a marriage there needs to be evidence
that such
party controlled the trust assets and but for the trust would have
acquired and owned the assets as his or her own.
8
[72] In this
instance, Mrs M[...]’ claims are based on the manner in which
Mr M[...] operated and controlled the trusts, which
may justify a
finding that the assets which are placed in these trusts in truth
belong to him and not the trusts.
[73]
It has been held that in such circumstances control must be
de
facto.
The
test to determine whether or not a party has
de
facto
control
of assets is first to have regard to the terms of the trust deed, and
secondly, to consider the evidence of how the affairs
of the trust
were conducted during marriage.
9
[74] Shajo and
Capmarb are classic instances where a party having full control of
the assets of a trust and using the trust as a
vehicle of his or her
business and personal activities. The extent of the control in these
trusts is evident from both the terms
of the trust deeds and the
manner in which it is alleged Mr M[...] operated the trust.
[75] In terms of
Shajo’s trust deed, Mr M[...] is the founder and together with
Mr Forssmann, his long-time accountant and
acquaintance, they are the
first trustees. Whilst in terms of Capmarb’s trust deed, Mr
M[...] is the sole trustee. In both
these trust deeds, Mr M[...]’
children, any of his further descendants and an institution for the
advancement of science
and art, or which is charitable, educational
or Christian, are the primary capital beneficiaries. The trust deeds
authorise the
trustees to determine what the nature of the benefits
will be, who the beneficiary from the beneficiaries, mentioned in the
respective
trust deeds, will be and what the reason for the payment
is. The trustees also decide if the payment should be in the form of
cash
or goods and if it should be paid directly to the beneficiary or
to someone else on behalf of the beneficiary. The trust deeds further

allow the trustees to beep the trust assets in their name although in
their capacities as trustees.
[76]
This in my view indicates that the terms of the trusts give Mr M[...]
absolute control of the trust assets in a way that he
is not able to
separate his estate from that of the trusts. These trusts are
discretionary trusts and the beneficiaries thereof
may be extended to
include Mr M[...] still being a trustee. He has in terms of the trust
deeds the full
de
facto
control
of the management, acquisition and sale of assets of the trusts. He
can also appoint and dismiss trustees at will. He can
also choose
which beneficiary should benefit from each trust. The submission by
Mr M[...]’ counsel that the trust deeds empower
Mr M[...] to
administer the business activities of the respective trusts and is,
therefore, empowered to act in the manner in which
he does, is
unfounded.
[77]
It is now acknowledged that a trust is not a separate legal entity
such as a company. The assets and liabilities of a trust
vest in the
hands of its trustees who are required to keep trust assets separate
from their personal assets and enjoyment.
10
In
this instance, there is sufficient evidence tendered by Mrs M[...] to
establish that Mr M[...] controlled the trusts and conducted
them as
vehicles for his personal and business activities. There is no
separation between the trust assets, his personal assets
and business
assets.
[78] Mr M[...]
conceded that he used the funds of any of the trusts to pay his
personal liabilities. For example, payments made
on the BMW motor
vehicle and different personal accounts, payments to his credit card
accounts, maintenance to the children - education
and medical aid,
and had his loan account credited with these amounts. He also
conceded to shifting monies between accounts. For
example, Capmark
was a business trust and he moved funds to and from Capmark to either
RMF trust or Shajo, including to his personal
accounts, the accounts
of his businesses and other trust accounts. He took out money from
whichever trust had money to pay his
personal liabilities and the
accounts would be later reconciled by his accountant.
[79] Mrs M[...] in
her evidence provided me with examples by which it was established
that Mr M[...] did not separate the respective
trusts between his
personal assets and his business assets. For example the loan account
in Capmarb in favour of KVC, led to the
sequestration of Capmarb. Mr
M[...] moved money between the trusts’ banbing accounts when
paying for the maintenance of the
children or their school fees. Mr
M[...]' explanation is that the children are the beneficiaries and
are entitled to benefit from
the trust. This is indeed so, but the
banb accounts and /or financial statement do not indicate that the
expenses were for the
beneficiaries. What is apparent is that the
moneys or payments were allocated to Mr M[...]. They went into his
personal loan account.
[80] There is no
proper delineation between the various payments made from the
respective trusts’ banb accounts. The payments
made are
collated in the loan accounts of Mr M[...]. This he does apparently
on the advice of his accountant and co-trustee. But
this does not
explain why the expenses were not paid directly into the accounts of
the beneficiaries.
[81] The tax returns
which indicated income received by either Shaylene or Jodie do not
prove that the income was in respect of
them as beneficiaries in RMF
trust. Mrs M[...]’ evidence is that the children never received
this income. For instance, at
the time the returns were submitted
J[...] was 4 years old. Mr M[...]’ explanation in this regard
is that such income comprises
the daily expenses of the children and
their school fees. The problem for me is that there is nowhere in the
financial statements
where this amount is set out or rather
delineated in order for everyone reading the financials to understand
how Mr M[...] distributed
the profits.
[82] There is also
evidence that indicates that Mr M[...] used this trusts accounts as
his personal accounts. There are numerous
transfers of money to and
from the trusts’ banb accounts to his credit card accounts, for
example his American Express card
and Australian banb account. Mr
M[...] confirmed in his testimony that he moved funds around
depending on what was available. He
also conceded in evidence that he
pays his personal liability in terms of legal maintenance obligations
from Shajo’ banb
account. He would then open a loan account so
that Shajo would owe him the money which he paid on behalf of the
children. He also
conceded using Shajo funds to pay his bond account.
[83] Voluminous
documents were discovered which pertain to the various bank accounts
and financial statements of the trusts. It
is evident that it would
not have been possible for Mrs M[...] to provide evidence in respect
of each of the accounts and financial
statements. I therefore have to
accept the examples referred to by Mrs M[...] as a sample of what is
recorded in some of the papers
discovered. These discovered documents
were not put in issue. It is common cause that the parties had agreed
at the commencement
of the trial that the documents discovered are
what they purport to be. It was also conceded on behalf of Mr M[...]
during trial
that the financial statements in respect of all the
entities in issue were signed by him. Mr M[...] also during his cross
examination
accepted the correctness of the financial statements.
From the examples I was referred to by Mrs M[...] in her evidence I
would
hold that such examples are enough for me to make a ruling on
this issue.
[84]
It is indeed so that the trust deeds authorised the trustees to
nominate one or more of the trustees to sign documents on behalf
of
the trust or to handle transactions on behalf of the trust. This does
not mean that the trustees should not act jointly. For
a trustee to
act on behalf of the other trustees he or she must be authorised by
them to do so. There is no evidence on record
that indicates that Mr
M[...] was authorised to act on behalf of the other trustees. There
is no evidence before me which indicates
that there were resolutions
taken or meetings held by the trustees to authorise Mr M[...] to act
as he did. What is available on
record is only one signed minute
dated 2011 in respect of Shajo. This can be accepted as essentially
confirming that Mr M[...]
had been in
de
facto
control
of that trust and of the other trust.
[85] Another example
is that even in the current proceedings Mr M[...] conceded that he is
acting in this case in his capacity as
a trustee of Shajo without the
authority of his cotrustee.
[86]Mr
M[...] in his testimony does not
per
se
dispute
Mrs M[...]’ evidence. His assertion being that he conducted
himself as such because he was mandated by the respective
trusts and
was also advised by his accountant to operate the trusts’
respective bank accounts as he did. What he fails to
understand is
that the trust deeds do not provide him with the authority to act
unilaterally without the joint decision of other
trustees, to move
funds around, to mix the funds of the respective trusts with his
personal funds, to in fact have the trusts pay
his own personal
liabilities. As is trite trustees should act together and take
decisions together. This did not happen.
[87] Mr M[...]’
counsel in his closing argument contends that it would have been
cumbersome to require of Mr M[...] to every
time, for instance, when
the school fees of the present minor child is to be paid, that the
two trustees must sign a resolution,
go together to the bank, draw
the money and together pay it over into an account in respect of
which both of them have signing
powers. This, in my view, is not what
Mrs M[...] implied in her evidence. In practice what will happen is
for a general resolution
to be signed by both trustees authorising Mr
M[...] to do what his counsel refers to as the day-to-day
administration of the trusts.
Even though in terms of the trust deeds
the trustees have the right to determine administration procedures to
administer the business
of the trust, this does not mean that any of
the trustees should act without the authorisation of the other
trustees. As it is,
there is no resolution that was produced which
authorised Mr M[...] to deal unilaterally with the day-to-day
administrations of
the trusts.
[88]
Referring to the judgment in
Ebrahim
and Another v Airport Cold Storage
11
,
Mr M[...]’ counsel contends also that Mrs M[...]’ claim
in this respect should fail because there is no evidence of
misuse,
abuse or unfair advantage before this court. His contention is not
correct.
[89]
The court in
RP v
DP
12
,
a
judgment which I am in alignment with, relying on the judgment in
Ebrahim and
Another v Airport Cold Storage
above,
stated the following:
“
[19]
The point of departure is that courts, when dealing with companies,
should not lightly disregard a company’s separate
personality,
but should strive to give effect to and uphold it, ‘(b)ut where
fraud, dishonesty or other improper conduct
... is found to be
present, other considerations will come into play’.
(Cape
Pacific Ltd
(supra)
at 803H - I;
Ebrahim
v Airport Cold Storage (Pty) Ltd2008
(6)
SA 585 (SCA) ([2009]
1 All SA 330)
para 22.)
[20] Examples of
‘improper conduct’ on which basis our courts have pierced
the corporate veil are, for instance, when
a legal entity is found to
be ‘instrumentality’ or ‘alter ego’ or
‘agent’ or ‘puppet’
or ‘mask’ of
its shareholders. In those cases the owner or owners of the shares
have managed the company in such a
way as not to separate their
personal affairs from those of the legal entity...
[21] Having regard
to the fact that a trust is not a separate legal personality such as
a company with limited liability, the question
arises whether the
principles of piercing the corporate veil also apply to trusts; and
if so, to what extent. Our case law clearly
shows, . . . that those
principles also find application in the law of trusts... a trust does
not have a corporate veil which can
be pierced ... Rather, what is
pierced in the trust context is the veil which separates the trust
assets from the personal assets
of the trustee...
[23] ... Because a
trust does not have a separate personality, the sanctity of
preservation of the separate legal personality finds
no application
to trusts. Rather, the court must strive to give effect to and uphold
the sanctity of separation of trust property
and the personal estate
of the trustee. This separation is explicitly recognised by s 12 of
the Trust Property Control Act 57 of
1988."
[90]
Consequently, where it is found that a trustee manages the trust in
such a way as not to separate his or her personal affairs
from those
of the trust or the trust is found to be the
alter
ego
of
the trustee, there is improper conduct. In such circumstances, the
court pierces the trust veil and enquires into the separateness
of
the trust assets from the personal assets of the trustee.
[91]
I have already made a finding, in this instance, that Mr M[...]
conducted the trusts as vehicles for his personal and business

activities. In his management of the trusts, the separateness of the
trust assets and his personal and business assets is not evident.

This is an improper conduct hence I hold that the two trusts are Mr
M[...]’
alter
ego.
[92]
On the totality of the evidence before me, I have to conclude that
the two trusts are the
alter
ego
of
Mr M[...]. There must, as already stated, be separation between
control and enjoyment. In this instance, there was no separation

between the manner in which Mr M[...] dealt with the assets of the
trusts, the trusts’ bank accounts and control of the trusts.

The trusts were used to fund personal liabilities and businesses.
Personal liabilities led to loans the effect of which is that
the
assets for the capital beneficiaries are not preserved. The trust
assets of the two trusts should, in my view, be taken into

consideration in determining the accrual of Mr M[...]’ estate.
CONTRIBUTIONS TO RMF
TRUST
[93] In terms of
clause 6 of the ante-nuptial agreement all contributions made to RMF
trust after date of marriage and the growth
on such contributions, is
subject to the accrual system between Mr and Mrs M[...]. Mrs M[...]
is, in her particulars of claim,
accordingly seeking an order
declaring all contributions made to the trust and growth of such
contributions, subject to the accrual
system between the parties.
[94] According to
the evidence of Mrs M[...] there have been various contributions made
to the trust and the value of such contributions
has grown as
follows:
The bare dominium.
Cape Town property
..................................
R893
629, 00
49% members interest
in Kyros
...............................................
R2
322 541, 40
Loan due to the
trust
.....................................................................
R349
059,00
Trust
Capital
.................................................................................
R310
000,00
Undistributed
profits
....................................................................
R210
012,00
Bank
and
Cash
................................................................................
R1
994, 00
TOTAL
CONTRIBUTIONS
...................................................
R4
087 335, 40
[95] Mr M[...] in
his plea and in his evidence does not specifically deny these
contributions and/or the values placed by Mrs M[...]
thereon.
However, his counsel submits that Mrs M[...] cannot succeed in this
claim mainly because she has not been able to prove
a contribution to
the trust. According to counsel, a contribution is not all the assets
which are in the trust. Counsel’s
contention is that a
contribution in clear, common language is something that is
contributed by someone. The ante-nuptial contract
does not say who
has to contribute, but it is clear that the mere fact that there is
an asset within the trust does not in itself
constitute a
contribution. He makes an example that, if there is an asset in this
trust which generates income and the income accrues
in an account,
and eventually it is worth Rl million on investments it is not a
contribution, it is the fruits of the asset. His
further assertion is
that there was no evidence placed before me that those amounts which
are claimed as contributions, were in
fact contributions which Mr
M[...] made. Those are simply assets. The origin and source of which,
no evidence was led that they
are contributions by Mr M[...], so he
argued.
[96] It is so that
the trust deed does not mention how the trust is to acquire its
assets except by contributions. In terms of the
trust deed, the
parties have a claim to the contributions and growth on such
contributions made to RMF trust after date of marriage,
for accrual
purposes. The ante-nuptial contract does not state how these
contributions are to be made and by whom. What is evident
to me is
that the ante-nuptial contract envisages the accumulation of assets
by such contributions for the benefit of its beneficiaries.
It is my
view, that, if the clause is read in the light of the accrual system,
and the totality of the evidence before me, it must
have been the
parties’ intention to share in all the assets which may form
part of the trust assets after the date of the
marriage. I am, as
such, prepared to accept that by the word ‘contributions’
it is meant any asset that accumulated
in the trust after the
marriage, irrespective of how it was accumulated.
[97] Mrs M[...] is
therefore entitled to a share in 75% of the assets in this trust
which amounts to R3 065 501. 55.
ACCRUAL
[98] In her
particulars of claim, Mrs M[...] alleges that her estate shows no,
alternatively, a smaller, growth than that of Mr
M[...]. On that
basis, she is at the dissolution of their marriage, entitled to an
amount equal to half of the difference between
the accrual of the
parties’ separate estates. Consequently, Mrs M[...] seeks an
order directing Mr M[...] to make payment
of an amount equal to half
of the difference between the accrual of the parties’ separate
estates, such accrual to be determined
in terms of Chapter 1 of the
Matrimonial Property Act read
together with the parties’
ante-nuptial agreement and with regard to any pension interest of Mrs
M[...] and Mr M[...].
[99] Mr M[...] in
his plea denies that his estate accrued at all and in reconvention
seeks the implementation of the accrual system
subject to the
exclusions and commencement values declared in the parties’
ante-nuptial contract. Mrs M[...] called Mr Leon
Reinich to testify
on her behalf in respect of the accrual claim. Mr M[...] testified on
his behalf and called no expert witness.
[100]
Mr Reinich is a qualified chartered accountant. He is part of the
South African Institute of Chartered Accountants of South
Africa and
a member of the independent regulatory board of auditors. He declared
himself an expert in understanding financial statements
and
interpreting them. He gave both expert and factual evidence in
respect of the accrual value. Mr Reinich is a director in the
firm
FIN5. FIN5 was engaged by Mrs M[...] through her attorneys Snyman de
Jager to perform a lifestyle profile of Mr M[...], in
order to
calculate Mr M[...]’ financial capability to pay for
maintenance as well as to calculate Mrs M[...]’ accrual

benefit. FIN5 was further tasked to establish the net asset value of
Mr M[...]’ personal estate including the value of his
various
entities. As
per
their
engagement letter, Mr Bernie Lategan was the engagement manager and
Mr Reinich the engagement partner.
[101] The lifestyle
profile, according to Mr Reinich, covers: the tracing of assets in
respect of Mr M[...] as well as establishing
names and details of
entities where Mr M[...] is a director or member and also
establishing the registration number of these entities;
scrutinising
the financial statements, of which Mr M[...] has a direct, or
indirect interest; obtaining the shareholding and member's
interest
where information is available; identifying properties registered in
the name of Mr M[...] and entities where he is a
shareholder, member,
trustee or beneficiary or has an interest directly or indirectly. In
short the lifestyle profile determines
the worth of Mr M[...]. The
exercise was in essence to list or summarise the interest of Mr
M[...] in certain entities. The valuation
that was performed, as a
result, was the net asset value of the entities or trusts because no
other valuations were provided in
the financial statements.
[102]
Mr Reinich prepared a report which forms part of the record.
According to him, the report is based on the information on the

financial statements provided to FIN5 by Snyman de Jager, obtained
from the accounting officers and accountants of the representatives

of Mr M[...]. The report as such is solely based on the facts as
per
the
information received from the annual financial statements derived
from the representative auditors or accountants of Mr M[...].
The
report was compiled using all the financial statements and from time
to time supporting documentation to the financial statements.
Mr
Reinich could, however, not guarantee the accuracy of the underlying
information.
[103] The entities
which have been scrutinised are: Shajo; RMF trust; Capmarb; Mr M[...]
in his personal capacity; KVC, Baytower
12 CC; Sweet Dreams, Trading
80 CC and Praxa 7 CC. FIN5 was not provided with the signed financial
statement of Milcar even though
they were requested on numerous
occasions. Only a draft unsigned financial statement was provided.
[104] Mr M[...]’
counsel objected to the admission of Mr Reinach’s evidence on
three grounds, namely, that the evidence
was irrelevant, firstly,
since Mrs M[...] has in cross examination conceded that was it not
for Mr M[...] involvement in the industry
these entities would not
have existed; secondly, on the basis that Mr Reinach was not
qualified to give expert evidence on valuations;
and thirdly, that
the report was not compiled by him but by Mr Lategan who should be
giving evidence. I allowed the witness’
evidence provisionally
and undertook to rule at the end of the case whether the evidence is
admissible or not.
[105] As regards’
the allegation that Mrs M[...] conceded to the exclusion of some of
the assets, I have since made a ruling
that the assets are not
excluded in terms of the antenuptial agreement, therefore, I have to
rule that Mr Reinich’s evidence
is admissible for purposes of
determining the accrual.
[106] The evidence
of Mr Reinich that he relied in his report on the financial statement
and supporting documents provided to him
by Mr M[...] and or Mr
M[...]’ accountant is unchallenged. These financial statements
were discovered and are not in dispute.
The parties agreed at the
commencement of the trial that the documents discovered are what they
purport to be and they were not
challenged during trial. It was also
conceded on behalf of Mr M[...] during trial that the financial
statements in respect of all
the entities in issue were signed by
him. Mr M[...] also during his cross examination accepted the
correctness of the financial
statements. I am of the opinion that Mr
Reinich correctly extrapolated the figures he used from these
statements. Mr Reinach’s
uncontested evidence under cross
examination confirmed that although he has not testified in court
before about valuations, he
has on numerous occasions valuated
businesses and can as such regard himself as an expert in that
regard. He also testified that
the report was prepared by him with
the information compiled for him by Mr Lategan. He stated without any
hesitation that he satisfied
himself as to the validity and integrity
of the information in the report. There being no other evidence to
the contrary, I am,
as such, persuaded to accept his evidence as that
of an expert witness in relation to the issues he testified on.
[107] Mr Reinich’s
report refers to the net asset value of the entities and this value
is determined when the total amount
of liabilities are reduced from
the total amount of assets, as stated in the balance sheet of the
financial statements of each
entity. The net asset value calculations
are done as at 28 February 2011 and the agreed date for purposes of
the accrual in this
trial is 19 October 2011 the date of divorce.
[108]
Mr M[...]’ counsel objected to the use of the net asset
valuation method as a valuation that should be used for purposes
of
calculating the net worth of the assets in this instance. I am,
however, in agreement with the submission by Mrs M[...]’

counsel that the net asset valuation method is an accepted method of
valuation and has been accepted by our courts. I was referred
to
various judgments by both counsel in this instance and in those
judgments the net asset valuation method is the method used
therein
as well. For example, the unreported judgment in
Pringle
v Pringle
13
,
the
court made an order that the net value of the trust be taken into
consideration in the assessment of the accrual of the estate
of the
defendant; in
M
v M
14
the net asset value method was employed to determine the accrual in
the estate of the defendant. Mr M[...] in his evidence under
cross
examination, without conceding the method used, admitted that he
accepts the values placed on the entities by Mr Reinich
using the net
asset value method. In fact, Mr M[...] used the same method in the
valuation of the interest in Milcar and the asset
value of KVC in
2004. Without any other evidence to the contrary, I am constrained to
accept the testimony of Mr Reinich that such
method is a conservative
method and should be utilised in this instance.
[109] Section 3 of
the Act provides that
“
(1)
At the dissolution of a marriage subject to the accrual system, by
divorce .. . ,the spouse whose estate shows no accrual, or
a smaller
accrual than the estate of the other spouse,..acquires a claim
against the other spouse ... for an amount equal to half
of the
difference between the accrual of the respective estates of the
spouses. ”
Section 4 of the Act
stipulates that
“
(1)
The accrual of the estate of a spouse is the amount by which the net
value of his or her estate at the dissolution of the marriage
exceeds
the net value of his or her estate at the commencement of that
marriage.”
[110]
As a point of departure, it is thus important to first determine
whether Mrs M[...] has a claim for accrual against Mr M[...]’

estate. In order for Mrs M[...] to succeed in this claim she must
prove that her estate shows no accrual
or
a
smaller
accrual than the estate of Mr M[...]. This she can do by showing that
the net value of Mr M[...]’ estate at the dissolution
of their
marriage exceeded the net value of his estate at the commencement of
the marriage.
[111] The parties
have agreed what the commencement value of their respective estates
will be. The ante-nuptial contract of the
parties deals in clause 5
thereof with the commencement values. The ante-nuptial contract
declares the net asset value at the inception
of the marriage as R2
245 000 for Mr M[...] and R 341 000 for Mrs M[...].
[112]
There must be an adjustment of these amounts in terms of the consumer
price index in order to reflect the current value of
the assets (s 4
(1)
(b)
(iii)
of the Act). For Mrs M[...] to succeed in her claim, she has to show
that the estate of Mr M[...] accrued more than the commencement

value, adjusted to present day value in terms of the consumer price
index.
Pro non
Scripto
[113]
In his opening address and repeatedly during the hearing as well, Mrs
M[...]’ counsel submitted that in so far as the
assets which
are referred to in the ante-nuptial contract represent the starting
value of the parties’ respective assets,
that is, the amount in
respect of the starting value and the reference thereto, is
pro
non scripto.
According
to counsel, since the values attached to the excluded assets in the
ante-nuptial contract are
pro
non scripto
they
should be regarded as nil. In this regard he referred me to a
judgment in
MvM
15
,
which
according to counsel is ‘on all fours’ with the current
case.
[114]
The contention by Mr M[...] counsel is that the issue of the
ambiguity and/or interpretation of the ante-nuptial contract
has not
been raised as in dispute nor is the issue of
pro
non scripto
pleaded
in the papers before me and as such the two issues cannot be raised
by Mrs M[...] at this stage of the proceedings. He further
asserts
that the commencement values are
per
agreement
and the parties are contractually bound thereto. Mrs M[...] has not
in her papers applied for the rectification of the
agreement, that
is, it is not Mrs M[...]’ case in the pleadings that the values
should be rectified to read nil, so he argued.
[115]
The argument by Mr M[...]’ counsel is also that if one reads
the judgment Mrs M[...]’ counsel referred to, the
M
v
Adjudgment,
in that judgment the court found that that portion of the
ante-nuptial contract was regarded as
pro
non scripto
because
it read that those assets, the assets with the commencement values,
shall not be taken into account at the dissolution of
their marriage
or at the start of the marriage. According to counsel, the crux of
the judgment was that one cannot say that it
is not taken into
consideration at the commencement and the dissolution of the
marriage, and therefore it was regarded as
pro
non scripto.
In
this specific ante-nuptial contract which was entered into between Mr
and Mrs M[...], the assets shall not be taken into account
as part of
the other party's estate and/or form part of the accrual system on
the dissolution of the marriage only. There is no
reference to the
commencement.
[116]
I agree that the current judgment is distinguishable from the
M
v M-
judgment.
In both the
M v M
-
judgment
and the current judgment, although the aspect in question is not
specifically dealt with on the pleadings, the parties
are agreed that
the assets and/or values reflected in the ante-nuptial contract,
being the commencement values of their respective
estates, are the
same assets as those which were excluded by the parties in terms of
the ante-nuptial contract. A distinguishing
feature, however, is that
the parties in the
M
v
M
-
judgment
excluded, in terms of their ante-nuptial contract, the assets which
reflects the commencement values as contained in clause
4 of the
ante-nuptial agreement from the operation of the accrual system at
the commencement or dissolution of the marriage. Whereas
in the
present judgment, the ante-nuptial agreement does not exclude the
assets which reflect the commencement value as contained
in clause 5
of the ante-nuptial contract from the operation of the ante-nuptial
agreement at the commencement of the marriage but
only excludes them
at the dissolution of the marriage.
[117]
The Act makes it very clear that, assets which are excluded in
accordance with s 4 (1)
(b)
(ii)
of the Act cannot be taken into account as forming part of the estate
of a party at the date of commencement of the marriage
or at
dissolution of the marriage. Section 4 (1)
(b)
(ii)
of the Act stipulates that
“
(b)
in
the determination of the accrual of the estate of a spouse -
(ii) an asset which
has been excluded from the accrual system in terms of the antenuptial
contract of spouses, as well as any other
assets which he acquired by
virtue of his or her possession or former possession of the first
mentioned asset is not taken into
account as part of that estate at
the commencement or the dissolution of the marriage.”
[118]
It is my view that the provisions of this section are peremptory and
cannot be side stepped by a contractual obligation between
the
parties. The provisions of the Act are lucid and require no other
interpretation. Once an asset has been excluded from the
accrual
system it remains excluded and cannot be brought back in terms of a
stipulation in an ante-nuptial contract of spouses.
Even on the
reading of the ante-nuptial agreement itself, the only interpretation
is that the common intention of the parties must
have been for the
provisions of clause 5 to be regarded as
pro
non scripto.
Based
on those grounds, the provisions of clause 5 of the ante-nuptial
contract, in this instance, must be regarded as
pro
non scripto
as
well - it is as though it had not been written. Consequently, I rule
that the amounts in respect of the starting values and the
reference
thereto are
pro
non scripto.
It
would mean therefore that the value of the estate of Mr and Mrs
M[...] at the commencement of their marriage was nil.
[119] According to
Mrs M[...] in her testimony and banb statements discovered, the
present net asset value of her estate amounts
to R249 930.
[120] Section 7 of
the Act reads
“
When
it is necessary to determine the accrual of the estate of a spouse
..., that spouse ..., shall within a reasonable time at
the request
of the other spouse . .. furnish full particulars of the value of
that estate."
[121]
It is trite that in an accrual claim, the spouse making the claim
often has little or no knowledge of the assets which make
up the
estate of the other party. Consequently, Mrs M[...] requested, in
terms of s 7 of the Act, Mr M[...] to provide her with
full
particulars of the value of his estate. According to Mr M[...]’
response to Mrs M[...]’ request, the value of
his estate as at
28 February 2011 amounted to R5 403 093. Mrs M[...] did not accept
the value of all the assets so stated.
Per
her
counsel, only the following assets and their respective values were
accepted:
Property, Plant
& Equipment
..............................................................
R2
526 371
51% investment in
KVC
........................................................................
2
417 539
Loans
receivable
.......................................................................................
294
970
All the other assets
and their respective values were placed in dispute.
[122] I must also
say that the statement of assets and liabilities presented in the s 7
request, although as at 28 February 2011,
differed with the one
presented to Mrs M[...]’ auditors in some respect. As such, Mr
Reinich’s testimony was based
on the statement presented to
them even though Mrs M[...] did not object to the one filed in terms
of s 7. According to Mrs M[...]’
counsel, the s7 response was
received only on the morning of the first day of trial. On that
basis, I shall for purposes of this
judgment rely on the statement
which was presented to Mrs M[...]’ auditors since it is the
statement on which preparations
for trial were made.
[123]
The evidence of Mrs M[...] in respect of Mr M[...]’ assets is
based on the financial statements provided by Mr M[...]’

accountant. As
per
his
personal financial statement as at 28 February 2011, his assets and
liabilities showed a net asset value of a negative R1 243
565, which
means that Mr M[...]’ liabilities exceeded his assets with that
amount. According to Mr Reinich this is not a
correct reflection of
Mr M[...]’ net asset value of his estate. As such, in his
testimony, Mr Reinich suggests that the amount
of the net asset value
be adjusted by the loans which Mr M[...] has with related entities as
these loans seem to be repayable at
his discretion. The revised net
asset value will then amount to R2 274144.
[124] It is common
cause that Mr M[...] loaned money to several of his close entities
and to himself. There is no evidence that
he has or will ever repay
any of the debts referred to in his loan accounts. The majority of
the loans are unsecured, bear no interest
and have no fixed term of
repayment. The evidence, however, shows that he has a history of
liquidating and/or sequestrating the
entities when their debts become
insurmountable, for example, he liquidated KVC and sequestrated
Capmarb. I, as a result, have
to accept that Mr M[...] will
eventually write off these debts as bad debts or at most liquidate
and/or sequestrate the entities
involved. Mr Reincih’s
suggestion of adjusting the net asset value does make sense and it
should be so adjusted.
[125]
The net asset value of other entities is in the trusts and
corporations. I have since ruled that the exclusion clause in terms

of the ante-nuptial contract does not apply to Mr M[...]’
assets held in Shajo and Capmark. I have also concluded that Shajo

and Capmark are the
alter
ego
of
Mr M[...] and as a result the net asset value of Shajo and Capmark’s
assets should be taken into consideration for purposes
of determining
the accrual in Mr M[...]’ estate.
[126] The net asset
value of Shajo as at 28 February 2011 amounts to Rl 000 according to
its financial statements. It is common
cause that Shajo has a 50%
members’ interest in Milcar. Mr M[...] was appointed as a
member of Milcar in his personal capacity
on 5 December 2005 but
resigned on 15 November 2007. Shajo was then appointed as a 50%
member from 16 November 2007 in the place
of Mr M[...] which resulted
in Mr M[...] transferring his 50% member’s interest in Milcar
to Shajo. The value of the said
50% interest is reflected in the
financial statement of Shajo as at 28 February 2011 at a value of
R50. The contention, however,
is that the interest has been
undervalued. According to the evidence of Mr Reinich as at 31
December 2006 the interest was valued
in the books of Milcar at
R317140 for purposes of the abovementioned transaction. His assertion
is that if the valuation is put
in perspective, the correct value of
Shajo’s interest in Milcar should be valued on the basis of the
net asset value of Milcar
as at 28 February 2011 which was R33 935
732 (excluding members loans) and Shajo’s 50% interest would,
therefore, have been
estimated at R16 967 866.
[127] According to
Mr M[...]’ testimony there is no value in the member’s
interest held by Shajo in Milcar, simply because
one will not be able
to dispose of the interest in the open market. And, in his
submission, Mr M[...]’ counsel argues that
if one applies
normal common sense to the facts which have evolved before this
court, any person who purchases those shares will,
with the greatest
of respect, be very badly informed or not very clever for the simple
reason that if one looks at the balance
sheet of Milcar, which Mr
Reinich concedes, the short term assets does not cover the short term
loans, and a purchaser who purchases
that member’s interest is
going to purchase a huge liability with the hope of recovering 60%,
or perhaps, 70% of the long
term book debts of the specific close
corporation, and that it is a bad investment.
[128] I have to
accept the evidence of Mr Reinich as the expert in this regard. The
figures he relies on have been provided to him
by Mr M[...]. Milcar’s
financial statement, even though unsigned, reflects those numbers.
The evidence is also that even
though there is an indication of a
huge liability, the recoverability rate of 60% or 70% of the long
term boob shows good prospects
for the entity. The argument by Mr
M[...]’ counsel that refers to possibilities of the sale of the
entity does not hold water.
The valuation is based on the figures
which are in the financial statement of Mr M[...] and are not meant
for the sale of the business
but shows how much the worth of the
business is.
[129]
The net asset value of Capmarb as at 28 February 2011 is not in
dispute. Mrs M[...] has accepted the value placed on the assets
as
per
the
financial statements provided to his attorneys of record as R517 054.
[130] In view of the
fact that the current value of Mr M[...]’ estate exceeds that
of Mrs M[...], Mrs M[...] is entitled to
be paid half of the accrual
in the value of Mr M[...]’ estate.
[131] It is,
therefore, my view that Mrs M[...] has been able to prove the
following amount for accrual:
Mr
M[...]
....................................................................
R2
274 144
Shajo
...........................................................................
16
967 866
Capmarb
...........................................................................
517
054
Contributions
from RMF trust
…..................................
3
065 501.55
TOTAL
......................................................................
R22
824 565. 55
I have ruled that
the commencement value of the parties is nil, therefore Mrs M[...] is
entitled to half of the amount of R22 824
565. 55, which is the
amount by which Mr M[...]’ estate has accrued. The amount she
is entitled to is R11 412 282.77.
COSTS
[132] As far as
costs are concerned, Mr M[...]’ counsel referred me to the
schedule of the previous history of enrolments
and postponements. The
schedule shows that the first time this matter was on the roll, it
was removed at the insistence of Mrs
M[...] and a costs order was
made against Mr M[...]. The matter was subsequently postponed on
numerous other occasions and costs
thereto were reserved on each and
every occasion. Counsel’s submission is that should I dismiss
Mrs M[...]' claims as prayed
for by Mr M[...], I should order her to
pay the costs, and that such order for costs should include the
previously reserved costs
of postponements. Even in the event of a
finding that Mrs M[...] is entitled to costs or a portion of her
costs on any of these
claims, counsel still submits that Mrs M[...]
should pay the reserved costs, because the postponements were at her
insistence on
each and every such occasion, which resulted in her
whole case eventually changing. In the light of the nature of and
amount of
claims instituted by Mrs M[...] against Mr M[...], and the
complexity of the matter concerning the facts of the trusts and the
involvement of the trusts, such costs should include costs of senior
counsel.
[133] Although this
has been a protracted case, I am of the view that Mrs M[...] has
substantially been successful with her claims
and is entitled to her
costs of suit. This should serve as an indication that her claims
were not frivolous and/or vexatious.
ORDER
[134] In view of the
foregoing, I make the following order:
1. In respect of
Claim “A":
a. The first
defendant is ordered to effect that the plaintiff obtains fixed
property to the value of Rl 144 004.
b. The fixed
property is to be transferred to the plaintiff within three (3)
months from date of this order.
c. The first
defendant shall pay the transfer and bond registration costs and
instalments of such fixed property if bonded by a
financial
institution.
d. Failing which,
the first defendant is to pay to the plaintiff the sum of R1144 004
plus the value of transfer costs of the fixed
property within three
(3) months from the date of this order.
2. The first
defendant is to pay to the plaintiff the sum of R11 412 282. 77 no
later than three (3) months from the date of this
order.
3. The first
defendant is to pay the plaintiffs costs of suit, which costs shall
include:
a, the wasted costs
occasioned by the postponement of the 14 September 2007.
b. all reserved
orders for costs not dealt with in paragraph 3 (a) of this order.
E.M. KUBUSHI
JUDGE OF THE HIGH
COURT
APPEARANCE
HEARD
ON THE:
22-31
JULY 2014
DATE
OF JUDGMENT :
03
FEBRUARY 2015
PLAINTIFF’S
COUNSEL:
ADV
C. WOODROW
APPLICANT’S
ATTORNEY :
RITA
JORDAAN ATTORNEYS
1
st
, 2
nd
, 3
rd
, 4
th
& 6
th
DEFENDANTS' COUNSEL :
ADV
P. VAN NIEKERK, SC
1
st
, 2
nd,
,3
rd
,
4
th
& 6
th
DEFENDANTS* ATTORNEY :
DE
KORTE DU PLESSIS
1
Dinath
v Breedt
1966
(3) SA 712
(T) at 717.
2
Dinath
u Breedt
1966
(3)
SA 712
(T) at 717B
3
Presto
Parcels v Lalla
1990
(3) SA 287
(ECD) at 289I
- J
and
290A.
4
Selamolele
v Makhado
1988
(2) SA 372
(V).
5
MB
v DB
2013
(6) SA 86
(KZD) para [22].
6
Johnson
v Leal
1980
(3) SA 927
(A) at 943B and KPMG Chartered Accountants (SA)
v
Securefin
Limited and Another
2009 (4) SA 399
(SCA)
7
2012 (1) SA 233
(ECPD)
8
Badenhorst
v Badenhorst
2006
(2) SA 255
(SCA) para [9] - [11]
9
Badenhorst
v Badenhorst
above
para [9] - [11]
10
Braun
v Blann and Botha NNO and A not her
[1984] ZASCA 19
;
1984
(2) SA 850
(A) at 859E - 860A
11
[2008] ZASCA 113
;
2008 (6) SA 585
(SCA) ([2009]
1 All SA 330)
para 22
12
2014 (6) SA 243
(ECP) para [19] to [23]
13
H36/2006
(18754/2007) delivered on 27 March 2009
14
(8954/10)
[2010] ZAWCHC 226
15
(8954/10)
[2010] ZAWCHC 226