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[2014] ZAGPPHC 145
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Van Dyk v Gromer and Others (55018/2011) [2014] ZAGPPHC 145 (28 February 2014)
IN THE HIGH COURT
OF SOUTH AFRICA
GAUTENG DIVISION,
PRETORIA
Case
number: 55018/2011
Date:
28 February 2014
In the matter
between:
DOROTHEA LOUISE
VAN DYK
..............................................
Applicant
And
INGRID MARIA
GROMER
.......................................
First
Respondent
INGRID MARIA
GROMER N.O.
.........................
Second
Respondent
JAN
ERASMUS
.........................................................
Third
Respondent
JAN ERASMUS
N.O.
..............................................
Fourth
Respondent
THE MASTER OF THE
HIGH COURT
...................
Fifth
Respondent
JUDGMENT
PRETORIUS J,
[1] This is an
application based on an allegation of contempt of court where the
applicant is seeking the following orders:
“1. That it be
declared that the first to fourth respondents (hereinafter referred
to as “the respondents”) are
in contempt of the Court
order granted on 3 November 2009 under case no. 6079/2008
(hereinafter referred to as the “November
2009 order”)
2. That the first to
fourth respondents be committed to prison for such period as the
honourable court may direct, or until such
time as they have purged
their contempt.
3. That a chartered
accountant agreed to by the parties within 14 days, alternatively and
in the event of no agreement being reached,
as nominated by the
President of the Institute of Chartered Accountants for the time
being, be appointed as an independent trustee
of the Leo Gromer
Family Trust.
[2] On 3 November
2009 Sapire AJ made an order which, inter alia, provided as follows:
“4.3 First
applicant [the present applicant] shall be entitled to full access to
all financial records of the Leo Gromer
Family Trust and of the
companies in which the Trust owns shares, which shall be arranged
with reasonable notice to the first respondent
[who is also the
current first respondent], but which will be limited to access once
every six months. Management accounts of the
Trust and companies in
which the Trust owns shares shall be provided to the first applicant
every three months.”
Background:
[3] The applicant
and first respondent are sisters. Their father passed away on 8 March
2004. The interpretation of his will and
the trust deed of the Leo
Gromer Trust lead to a dispute between the two sisters.
[4] An application
was launched by the applicant under case number 6079/08 (the first
application). The applicant sought relief,
inter alia, relating to
the proper interpretation of the will and the trust deed.
[5] In that
application the applicant sought to have Mr Ehlers removed as a
trustee, which was duly done. The parties agreed that
an independent
Afrikaans or German speaking trustee were to be appointed in his
place. A further proviso was that the applicant
would resign as
trustee as soon as the independent trustee had been appointed.
[6] Mr Erasmus, an
Afrikaans speaking chartered accountant, was appointed as trustee in
August 2010 and the applicant duly resigned
as a trustee.
[7] The 3 November
2009 order provided that the applicant would be entitled to the
equivalent of 25% of the net assets of the trust
less R 2 million
within 5 years of the date of the order. Thus the applicant will be
entitled to this amount on 3 November 2014.
[8] In order to
safeguard the applicant’s interests the order provided that
certain transactions by the Trust or companies
in which the Trust
owns shares were prohibited, unless the applicant consented thereto.
This was ordered to prevent any irregular
depletion of these entities
to the detriment of the applicant.
[9] Paragraph 4.3,
as set out above, was to let the applicant have access to the
financial management statements of the trust and
companies in
question. The purpose was to monitor whether the court order was
complied with regarding the property of the trusts.
Contempt of Court
:
[10] In Fakie NO v
CCII Systems (Pty) Ltd
[2006] ZASCA 52
;
2006 (4) SA 326
(SCA) in paragraph 42 the
court held:
“[42] To sum
up:
(a) The civil
contempt procedure is a valuable and important mechanism for securing
compliance with court orders, and survives constitutional
scrutiny in
the form of a motion court application adapted to constitutional
requirements.
(b) The respondent
in such proceedings is not an 'accused person', but is entitled to
analogous protections as are appropriate to
motion proceedings.
(c) In particular,
the applicant must prove the requisites of contempt (the order;
service or notice; non-compliance; and wilfulness
and mala fides)
beyond reasonable doubt.
(d) But, once the
applicant has proved the order, service or notice, and
non-compliance, the respondent bears an evidential burden
in relation
to wilfulness and mala fides: Should the respondent fail to advance
evidence that establishes a reasonable doubt as
to whether
non-compliance was wilful and mala fide, contempt will have been
established beyond reasonable doubt.
(e) A declarator and
other appropriate remedies remain available to a civil applicant on
proof on a balance of probabilities.”
[11] It was made
clear by the Supreme Court of Appeal that contempt of court must be
proved beyond a reasonable doubt as the criminal
standard of proof
applies.
[12] It is
undisputed that the first and third respondents were aware of the
court order which had been granted by agreement on
3 November 2009.
[13] The draft order
that the applicant seeks, has been mitigated by the applicant as the
court is requested to declare that the
first and fourth respondents
did not comply with the court order granted on 3 November 2009,
instead of finding that the respondents
were in contempt of the court
order.
[14] The respondents
admit in the answering affidavit that:
“Whereas, as
at the writing of this affidavit the management statements for the
last three periods have as a fact not been
provided, the audited
annual financial statements for the period ending 28 February 2013
have been provided, and having been engaged
with the audit, I have
instructed that;
Management
statements for the periods the 31 May 2013 and 31 August 2013 be
prepared for those to be provided to the applicant as
soon as they
become available.”
[15] This is a clear
admission that the respondents knew that they had not complied with
the court order. On 17 January 2014 management
financial statements
for L Gromer, IG Boerdery, In die Kom and Leo Gromer Trust were
provided for the periods May, August and November
2013. This in spite
of the application having been instituted at the end of June 2013. It
took almost 7 months for the respondents
to provide these statements,
in spite of their knowledge of the pending litigation and the court
order.
[16] It is evident
that from 28 June 2010 there had been queries by the applicant
regarding a R12 million loan to the first respondent
by the Trust.
This had not been resolved at a meeting of the trustees held on 2
February 2011. It seems that it has still not been
resolved and the
information is still outstanding.
[17] The court has
to decide whether the first and third respondents acted mala fide or
is in wilful disregard of the court order.
The wording of 4.3 of the
order, which is relevant in this application is:
“Management
accounts of the trust and companies in which the trust owns shares
shall be provided to the first applicant every
three months.”
[18] Although Mr
Davis, for the respondents, argued that it was either impractical or
impossible to grant these quarterly financial
management statements,
such statements were provided to the applicant on 17 January 2014,
putting paid to this argument. The first
respondent had been aware of
the order since November 2009 and failed to comply with the
provisions of the order. It is also of
importance to note that the
order by Sapire J on 3 November 2009 was made:
“In full and
final settlement and by agreement between the parties, the following
court order is granted:”
[19] At that stage
it was agreed by the parties that the management accounts of the
trust and the companies in which the trust owns
shares shall be
provided to the first applicant every three months. There can be no
doubt that at the time the first respondent
was a party to the court
order and did not raise any objections to providing quarterly
statements. She cannot in this application,
contend that it was
impossible to comply with the order as she was a party to the order.
[20] The first
respondent admitted it as set out above. She deposed to the answering
affidavit on 2 August 2013, where she admitted
that she was in
arrears with her obligations to provide quarterly statements.
Nevertheless she waited until 17 January 2014, a
further five months,
before providing the management statements. The inference the court
makes is that she did not regard it serious
to disobey a court order.
[21] This court
finds that the order and non-compliance have been proved beyond a
reasonable doubt. Therefor the onus shifts to
the respondents to
prove that their non-compliance was not wilful and mala fide.
[22] Mr Davis’s
argument, on behalf of the respondents that the applicant’s
disgruntlement at not receiving 50% of her
father’s estate,
lead to this application is spurious. He argued that her insistence
on management accounts where it was
impractical or impossible to
provide such statements should not be entertained. The first
respondent’s explanation:
“Management
Accounts were never prepared for either the Trust or In-Die-Kom
Landgoed (Pty) Ltd simply because firstly it was
impractical and
unnecessary, and secondly because the rental paid were reflected in
both the Management Statements of the two operating
companies L
Gromer (Pty) Ltd and IG Boerdery (Pty) Ltd, and ultimately in the
annual financial statements of not only those companies
but also that
of the Trust and In-Die-Kom Landgoed (Pty) Ltd.”
cannot be true, as
this was not raised when the court order was made on 3 November 2009
and did not seem to be a problem when the
order was made with full
knowledge of the first respondent.
[23] The
interpretation of the court order by the respondents can never be
correct as the wording of paragraph 4.3 is extremely
clear. It can
never be read that these statements should be made available only if
they are in existence. There is no such an indication
at all in the
court order and no such intention can be gleaned from the order.
[24] It is further
important to note that the first respondent sets out in her answering
affidavit that she would purge this lack
of compliance with the court
order – thereby acknowledging that she was in default.
Nevertheless she takes a further 5 months
to do so.
[25] I cannot find
that this application by the applicant to access the quarterly
financial management accounts is frivolous as
stated by the
respondents. There is a court order, which the respondents failed to
comply with, which resulted in the launching
of this application.
[26] The first
respondent admitted:
“However from
an account point of view and having undertaken to provide management
accounts in terms of the Order, this was
as a fact impossibility
firstly because of the resignation of Shultz and Harris (both
chartered accountants) as trustees and secondly
because of the
breakdown of our familial relationship, and those functions had
fallen in arrears.”
[27] Mr Erasmus was
appointed as trustee and it is not explained how the resignation of
Schultz and Harris is relevant. The breakdown
of the family
relationship was a fact in 2009 when the order was granted by
agreement. This cannot be a reason not to comply with
the court order
as the three financial management statements were provided on 17
January 2014 more than 4 years after the court
order had been
granted. The defence of impossibility cannot be upheld and raising
such a defence does justify the inference of
mala fides.
[28] The assertion
by the first respondent that:
“the immediate
absolute compliance with the order was a physical impossibility and
that in accordance with the guidance received
from Erasmus and having
pro-actively initiated an updating of all the financial affairs and
financial statements of the farming
enterprise comprising the
companies and the Trust, as at the writing of this affidavit the
applicant is, but for the actual financial
records kept at the
administrative offices in possession of as much financial data as we
are.”
cannot be true, as
the first respondent herself distinguishes between management
accounts and financial statements. According to
her understanding
management accounts provide timely and statistical information
required by managers to make day to day and short
term decisions.
This shows that the management accounts were available to enable the
managers of the enterprises to make day to
day decisions.
[29] Financial
statements according to the first respondent are:
“Financial
Statements on the other hand comprises a statement of financial
position (assets, liabilities and ownership equity),
a statement of
comprehensive income (income, expenses, profits, sales and the
various expenses incurred during the particular period)
and generally
a cash flow statement.”
[30] There can be no
doubt that she knew exactly that the court order provided for
management accounts. This court therefor makes
the inference that she
wilfully decided not to comply with this provision of the order by
Sapire J.
[31] Mr Erasmus was
aware of the state of affairs since August 2010, when he was
appointed as trustee and as a trustee he must have
been and should
have been aware of the non-compliance by the trust of the court
order.
[32] The court has
to agree with Mr Vorster, counsel for the applicant, that the fact
that the audit of the companies impacted on
the ability to provide
quarterly management accounts is fallacious. The fact that these
statements were provided in January 2014
puts paid to the first
respondent’s assertion in this regard. The court infers mala
fides on the part of the respondents
due to these actions by the
first and third respondents.
[33] The court takes
cognisance of the point raised by Ms Gromer, the first respondent,
that she had not received any of the correspondence
addressed to Mr
Erasmus prior to 21 Augustus 2012. Both Ms Gromer and Mr Erasmus
failed to address this after they had been invited
by the applicant
to file further affidavits declaring that the first respondent was
not aware of the correspondence between the
applicant and Mr Erasmus.
The only inference this court can draw is that the correspondence was
forwarded to Ms Gromer and/or she
and Mr Erasmus had discussed the
contents of these e-mails. This indicates mala fides on the part of
the respondents as they do
not take the matter any further where they
were expressly challenged to do so.
[34] Mr Erasmus was
appointed as trustee on 25 August 2010. It is abundantly clear from
Ms Gromer’s affidavit that Mr Erasmus
had known from the date
of his appointment what the state of affairs was:
“I accept now,
with the benefit of hindsight and the guidance that I have
automatically received from Mr Erasmus that it was
my duty and
obligation to have acted proactively as far as these things were
concerned.”
[35] Mr Erasmus does
not deal at all with the “legal advice” he had obtained.
In S v Abrahams
1983 (1) SA 137
(A) at 146 D – H van Winsen AJA
found:
“In dealing
with this plea TINDALL ACJ stated in the course of his judgment in
that case at 711 that if an accused wished
the Court to have regard
to this advice as a mitigating factor, then it could be expected of
him to produce the advice if it was
in writing. In addition the Court
would require to be satisfied that the advice was given on a full and
true statement of the facts.
In the absence of such safeguards the
fact of the advice having been given was held to be of no avail as a
mitigating factor. These
remarks are pertinent to the present
enquiry, more particularly as the attorney on whose advice the
appellant claimed to have relied
was not called to testify in regard
to all the circumstances relevant to the giving of such advice.”
[36] Although
Abrahams was a criminal case these principles should be applicable in
this instance as well, The principles must be
equally applied in
civil matters. Mr Erasmus became a trustee through the provisions of
the court order and therefor he stepped
into the shoes of the
trustee, which would make the court order applicable on him as well.
He cannot escape the consequences of
not complying with the court
order. He does not attach an affidavit by the person whom he
allegedly obtained legal advise from.
[37] In Twentieth
Century Fox Film Corporation and others v Playboy Films (Pty) Ltd and
another
1978 (3) SA 202
King AJ found on p 203 C - D:
“A director of
a company who, with knowledge of an order of Court against the
company, causes the company to disobey the order
is himself guilty of
a contempt of Court. By his act or omission such a director aids and
abets the company to be in breach of
the order of Court against the
company. If it were not so a court would have difficulty in ensuring
that an order ad factum praestandum
against a company is enforced by
a punitive order,”
[38] These
principles should equally be applied to a trustee of a trust for the
same reasons as enunciated by King AJ above and
Mr Erasmus cannot
escape his culpability.
[39] The fact that
Mr Erasmus indicated to Mr Harris, on behalf of the applicant, when
further enquiries were made as to when the
statements would be
available that:
“Ek verstaan
nie regtig hoekom Doris nou, nadat sy hoe lank geneem het om op my
vorige navrae te reageer, van mening is dat
sy spertye vir die lewer
van verdere inligting kan stel nie. Wat my aanbetref is dit ‘n
geval van die stert wat die hond
wil swaai.” (Court’s
emphasis)
[40] The court has
to agree that Mr Erasmus can no longer be regarded as independent if
he had made these disparaging remarks regarding
the applicant and it
is understandable that she does not trust him to look after her
interests.
[41] This statement
by Mr Erasmus was made in October 2011 where no statements had been
forthcoming for 2009, 2010 and August 2011
and Mr Harris the previous
trustee, on behalf of the plaintiff, enquired about the compliance
with the court order.
[42] If I have
regard to the Fakie case (supra), I find that contempt of court has
been proved beyond a reasoable doubt. However,
Mr Vorster, for the
applicant, indicated that the applicant is seeking a declarator as
set out in the draft order which was provided
to the court. In these
circumstances a declarator will be granted instead of making an order
as set out in prayer 1 of the notice
of motion.
[43] It has been
conceded by the respondents that an independent additional trustee
should be appointed. Therefor I will not deal
with the facts leading
to the request for an additional trustee to be appointed.
[44] The respondents
had abandoned the counterclaim and I will not deal with it at all.
[45] In this
instance, where the court finds that a court order had been wilfully
and with mala fides disregarded, a punitive cost
order should follow
to indicate the court’s displeasure at parties not complying
with a court order. However, in this instance,
if I grant a cost
order against the second and fourth respondents, the applicant, as
being entitled to 25% of the trust, will be
burdened by paying 25% of
the respondent’s costs. Such an order will be untenable under
these circumstances.
[46] I make the
following order:
1 It is declared
that the first to fourth respondents did not comply with the Court
order granted on 3 November 2009 under case
no. 6079/2008 until 17
January 2014 when management statements for the periods May, August
and November 2013 were provided to the
applicant;
2 No order is made
in respect of prayer 2 of the application, but leave is granted to
the applicant to renew the application by
supplementing the papers
should the said respondents commit further acts or omissions in
contempt of the said order;
3 A chartered
accountant agreed to by the parties within 14 days, alternatively and
in the event of no agreement being reached,
as nominated by the
President of the Institute of Chartered Accountants for the time
being, be appointed as an independent trustee
of the Leo Gromer
Family Trust;
4 The costs of this
application are to be paid by the first and third respondents in
their personal capacities, jointly and severally
on the attorney and
client scale. The one to pay, the other to be absolved;
5 The first and
second respondent’s counter-application is dismissed;
6 The costs of the
first respondent’s counter-application is to be paid by the
first respondent in her personal capacity.
Judge C Pretorius
Case number :
55018/2011
Heard on : 3
February 2014
For the Applicant
/ Plaintiff : Adv SM Maritz
Instructed by :
Mills & Groenewald
For the
Respondent : Adv JE Ferreira
Instructed by :
HW Smith & Marais
Date of
Judgment : 28 February 2013