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[2014] ZAGPPHC 242
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J.C.K v R.K (38878/200) [2014] ZAGPPHC 242 (7 March 2014)
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REPUBLIC
OF SOUTH AFRICA
IN
THE GAUTENG DIVISION OF THE HIGH COURT, PRETORIA
CASE
NO: 38878/200
In
the matter between:
J.
C. K.
Plaintiff
and
R.
K.
Defendant
JUDGMENT
J W LOUW, J
[1]
The plaintiff and the defendant were [….] to each other in
White River on [……]. Two […..]
were born
of the […..]. The plaintiff instituted divorce
proceedings against the defendant during August 2007.
At the
time, the two sons were minors, but they have since attained
majority. The disputes between the parties relating
to the
children have been resolved. The remaining disputes are of a
proprietary nature. The plaintiff alleges in his
particulars of
claim that the parties were married out of community of property but
subject to the accrual system in terms of the
Matrimonial Property
Act, 88 of 1984
. He further alleges that certain of his assets,
to the value of R650 000,00, and furniture belonging to the
defendant,
to the value of R10 000,00, were excluded from the accrual
system. He claims a decree of divorce but does not claim any
relief
in respect of the accrual of the parties’ estates.
[2]
The defendant filed a counterclaim which was amended several times.
The relief claimed therein which is relevant for present
purposes is
the following:
“
18.1.7
A declaratory order that:
18.1.7.1
the ante-nuptial contract be declared ab initio null and void,
alternatively the ante-nuptial contract be declared
of no legal force
and effect;
18.1.7.2
in the alternative an order that clauses 4 and 5 of the ante-nuptial
contract be declared ab initio null and
void;
18.1.7.3
in the alternative that clause 5 be declared ab initio null and void;
18.1.7.4
further alternatively that the latter portion of clause 5 be declared
to be null and void and non scripto and
accordingly that the
following words be deleted from the ante-nuptial contract:
“
en/of enige
besigheidsbelang welke tydens die bestaan van die huwelik bekom mag
word.”
18.2.1 The
party whose estate has shown a greater accrual, if applicable, than
the estate of the other party, is hereby
ordered to pay 50% of the
difference of the net accrual of the parties’ estate to the
other.
18.2.2
Alternatively, division of the joint estate, if applicable.
18.3.1
That it be declared that the C. K. Family Trust is the alter ego of
the Plaintiff.
18.3.2 That it be
declared that the assets and the property ostensibly belonging to the
C. K. Family Trust are in fact the assets
and property of the
Plaintiff.
18.3.3
That as such the assets and/or property of the Caro K. Family Trust
shall for the purposes of this
action, be deemed to be the personal
property of the Plaintiff and therefore to form part of his estate
and to be taken into account
in determining the accrual in the estate
of the Plaintiff, alternatively the joint estate.
18.4.1
That it be declared that the OJHC K. Trust is the alter ego of the
Plaintiff.
18.4.2 That it
be declared that the assets and the property ostensibly belonging to
the OJHC K. Trust are in fact the assets
and property of the
Plaintiff.
18.4.3
That as such the assets and/or property of the OJHC K. Trust shall
for the purposes of this action, be
deemed to be the personal
property of the Plaintiff and therefore to form part of his estate
and to be taken into account in determining
the accrual in the estate
of the Plaintiff, alternatively the joint estate.
”
[3]
The parties agreed that the issues to be decided during the present
hearing are the following
(a) The
interpretation of the ante-nuptial contract.
(b) The
issue of mistake.
(c) The
issue whether the above-mentioned two trusts should be regarded as
the plaintiff’s
alter ego.
The remaining issues were
postponed
sine die
by agreement.
The
interpretation of the ante-nuptial contract
[4]
On the fifth day of the hearing, plaintiff’s counsel presented
defendant’s counsel with a bundle of documents which
had not
previously been discovered by the plaintiff and which included
documents relating to the registration of the ante-nuptial
contract.
One of those documents was a copy of the special power of attorney
which the plaintiff and the defendant had signed
for purposes of the
registration of the ante-nuptial contract. It appeared that the
name of the person who had to be authorised
to act on behalf of the
plaintiff and the defendant for purposes of the registration of the
ante-nuptial contract was not inserted
in the space provided in the
power of attorney. It appears from the registered ante-nuptial
contract that one C. E. d. B.
appeared before the notary Gerrit van
den Burg, allegedly having been authorised by the plaintiff and the
defendant, for the required
notarial execution of the ante-nuptial
contract which was subsequently registered. It is clear that
the name of d. B. must
have been inserted in the power of attorney
after it was dispatched by the plaintiff’s partner, Mr. Doman,
to his Pretoria
correspondents, Messrs Solomon Nicolson Rein &
Verster with instructions to attend to the registration of the
ante-nuptial
contract. The plaintiff and the defendant did not
authorise d. B., or for that matter anyone else, to appear before the
notary
for purposes of the notarial execution of the ante-nuptial
contract.
[5]
After being provided with the above documents, the defendant applied
to amend her counterclaim by inserting a further paragraph
therein in
which it is pleaded that, as the identity of the person to be
authorised was not inserted in the power of attorney,
the power of
attorney was invalid and that the ante-nuptial contract was, as a
result, null and void. The amendment was granted.
Counsel
for plaintiff indicated that the plaintiff would file a plea to the
amended counterclaim, but this was not forthcoming.
[6]
In the absence of the appointment by the plaintiff and the defendant
in the power of attorney of a person who is authorised
to represent
them, the power of attorney is clearly invalid and, as a result, the
registration of the ante-nuptial contract on
the authority of an
unauthorised person was also invalid.
[7]
Counsel for the plaintiff did not argue that the power of attorney
was valid despite the absence of the appointment of a representative
therein. What was submitted is that, if de Beer had no
authority to appear before the notary on behalf of the parties, then
her unauthorized conduct was ratified by the parties’
acceptance of the validity of the registration of the ante-nuptial
contract for more than twenty years. Ratification was not
pleaded by the plaintiff. But even if it was, there would
have
been no merit in such a plea. The defendant became aware of the
lacuna
in the power of attorney for the first time during the
trial. There can be no ratification without knowledge of the
defect.
[8]
It was further submitted on behalf of the plaintiff that the
invalidity of the registered ante-nuptial contract was irrelevant
as
it was common cause that the parties had orally agreed to marry on
the terms set out in the written ante-nuptial contract and
that such
agreement was binding
inter partes.
Again, this defence
was not pleaded by the plaintiff. But if it had been, the
following difficulty would have faced
the plaintiff.
[9]
Clauses 4 and 5 of the ante-nuptial contract read as follows:
“
4.
Dat vir die doel van bewys van die netto waarde van hul onderskeie
boedels by die aanvang van die voorgenome
huwelik die voorgenome
gades verklaar het dat die netto waarde van hul onderskeie boedels
soos volg is:
dié
van: JOHAN CASIMIR K.
te
wees: R650 000,00 (SESHONDERD EN VYFTIGDUISEND RAND) te
wees
(sic)
bestaande
uit: Meublement, BMW 325I Motorvoertuig, Beleggings, Aandeel in
Dolprin BK, Besigheidsbelang in Doman en K. Prokureurs,
dié
van: RONEL VENTER (gebore Coetzee)
te
wees: R10 000,00 (TIENDUISEND RAND) te wees
(sic)
bestaande uit: Meublement.
5.
Dat die bates van die partye of van een van hulle twee wat hieronder
gelys word en wat die getoonde waardes
het, asook alle laste wat tans
daarmee in verband staan, of enige ander bate verkry deur sodanige
party uit hoofde van sy besit
of vroeëre besit van sodanige
bate, nie by of die aanvang of die ontbinding van die huwelik in
aanmerking geneem word as deel
van sodanige party se boedel nie.
Die
bates van:
(no name inserted)
aldus
uitgesluit te word, is: SOOS VOORMELD
Die
bates van: JOHAN CASIMIR K.
aldus
uitgesluit te word, is die belang in Doman en K., Prokureurs praktyk,
Dolprin Beslote Korporasie h/a Club Tropicana en/of
enige
besigheidsbelang welke tydens bestaan van huwelik bekom mag word
Die
bates van RONEL VENTER (gebore Coetzee) aldus uitgesluit te word, is
NUL”
[10]
Clauses 4 and 5 are clearly contradictory. Clause 4 refers to
assets of the plaintiff which will be subject to the accrual
system,
whereas clause 5 provides that two of those assets, being the
plaintiff’s interest in Doman & K. Attorneys and
in Dolprin
CC, will not be taken into account as part of the plaintiff’s
estate either at the commencement or at the dissolution
of the
marriage, i.e. will not form part of the accrual of his estate.
The two clauses are irreconcilable. It was submitted
on behalf
of the plaintiff that the inclusion of those two assets in clause 4
was a mistake and that they should either be deleted
or ignored.
It was then argued that, if they are deleted or ignored, the value of
R650 000.00 declared in clause 4 will
be an incorrect value
which will result in the commencement value of the plaintiff’s
estate being nil by virtue of the provisions
of
s. 6(4)
of the Act.
Rectification of the written contract was not pleaded, neither was
any evidence presented by the plaintiff which
could justify such
rectification. In my view, a plea of rectification would, in
any event, not have succeeded. The
fact that the plaintiff
placed a value of R650 00.00 on all the assets mentioned in clause 4,
speaks against an intention that
the two assets in question should
not have been mentioned in clause 4. If they had not been
mentioned, the total value of
the assets would not have been placed
at R650 000.00.
[11]
It was not argued on behalf of the plaintiff that clauses 4 and 5 are
not material and that if they are contradictory and therefore
void
for vagueness, the rest of the ante-nuptial contract, whether as a
validly registered ante-nuptial contract or as one which
is only
valid
inter partes
, will still be valid and enforceable.
In my view the two clauses are clearly material and the fact that
they are contradictory
renders the ante–nuptial contract as a
whole void for vagueness, whether it was validly registered or only
valid
inter partes.
[12]
A similar situation arose in
Bath
v Bath
[1]
,
where
clause 4 of the ante-nuptial contract in question provided that for
purposes of proof of the net value of the spouses’
separate
estates at the commencement of the marriage certain specified assets
were declared to be the net value of their separate
estates (without
their values being mentioned), whereas clause 5 provided that those
same assets would not be taken into account
as part of each spouse’s
estate at either the beginning or the dissolution of the marriage.
What is said in the following
paragraphs in the judgment of Lewis JA
applies equally to the present matter:
“
[19]
It is clear to me that the parties did intend to exclude community of
property and profit and loss and to adopt the system
of accrual: but
it is far from clear
how
they
intended to do that. If the contract had included only the first
three clauses they would effectively have achieved a contract
out of
community of property, subject to the accrual system regulated by the
Act. But the clauses that followed are so contradictory
and
incoherent that in my view they vitiate the contract as a whole. No
certainty has been achieved as to what the contract meant
–
what the parties intended to achieve. The contract does not
embody terms that enable this court to give effect to
what their
intention might have been.
[20]
And it is trite that a court cannot make a contract for the parties.
This court cannot determine whether the parties intended
to exclude
certain assets from the accrual, or stated values of assets from the
value of the accrued estate. Nor can it ascertain
what was meant by
clause 5 where it stated that particular assets ……..
would not be taken into account at the beginning
or the dissolution
of the marriage. And since they did not have a common continuing
intention as to what they wished to do, rectification
(one of the
alternative claims by Mrs Bath) is also not possible.”
[13]
The result of the conclusion that the ante-nuptial contract is void
for vagueness, is that the parties’ marriage has
to be regarded
as one in community of property.
Mistake
[14]
In view of the conclusion that the ante-nuptial contract is void for
vagueness, it is unnecessary to deal with the defendant’s
alternative plea of unilateral mistake.
Are
the trusts to be regarded as the plaintiff’s
alter
ego
?
[15]
During 1998 the parties decided to purchase an immovable property
known as Portion 64, a portion of Portion 59 of the farm
White River
64 as a dwelling house for the family. The property is 8,6468
hectares in extent. On 5 March 1998, the
plaintiff signed the
purchase agreement in his own name for a purchase of R935 000,00.
An amount of R635 000,00
was payable against registration of
transfer and the balance within twelve months of the signing of the
purchase agreement.
In terms of the agreement, the plaintiff
had the right to nominate a third party as purchaser.
[16]
On 14 July 1998, the plaintiff caused a discretionary trust known as
the C. K. Familie Trust (the family trust) to be registered.
The plaintiff was the founder of the trust and the plaintiff and the
defendant are the joint trustees. The plaintiff, the
defendant
and the two children are the income beneficiaries and the two
children are the capital beneficiaries of the trust.
A shelf
company, Komodo Properties (Pty) Ltd (Komodo), was acquired by the
plaintiff and it was nominated by the plaintiff to be
the purchaser
of the property (the Komodo property). The plaintiff and the
defendant respectively contributed R349 135,77
and R100 000,00
towards the purchase price, for which amounts loan accounts were
created for them in Komodo. The amount
of R349 135,77
which the plaintiff paid was the net proceeds which he received from
the sale of the dwelling house in
which the parties had lived
up to that stage and of which he was the owner. The amount of
R100 000,00 contributed by
the defendant was part of an
inheritance which she received after the death of her mother. A
mortgage bond for an amount
of R350 000,00 was registered over
the Komodo property in favour of Standard Bank. The family
trust became the sole
shareholder of Komodo and the plaintiff and the
defendant were appointed as the only directors. According to
the defendant,
the arrangement was that the plaintiff would attend to
the business of Komodo and that the firm of attorneys Doman and K.,
of which
he was a partner, would attend to the necessary
administration of the family trust and of Komodo.
[17]
During the period 1998 to 2003 the parties appear to have co-operated
as far as the affairs of Komodo and the family trust
were concerned.
The plaintiff and the defendant co-signed the cheques which were
issued against the bank account of Komodo.
Most of the cheques
appear to have been issued for improvements and repairs to the Komodo
property. No large transactions
were concluded. The
parties contributed on a pro-rata basis towards payment of the
monthly bond instalments. The defendant
stopped contributing
when she sold her cigarette vending machine business in 2004 and no
longer had an income.
[18]
During March 2004, the parties attended a property investment course
presented by a Mr. Hannes Dreyer. The advice they
received was
that, when an immovable property is purchased, the transaction should
be structured in such a way that the purchase
price is financed by a
loan obtained from a bank and that the income derived from the
property should then pay for the obligations
to the bank. In
other words, the property should pay for itself. They were also
advised that one should not put all your
eggs in one basket.
[19]
On 13 April 2004, the plaintiff caused the OJHC Trust (the 2004
trust) to be registered. The plaintiff was the founder
thereof
and the plaintiff and the defendant are the joint trustees. The
plaintiff, the defendant and the two children are
the income and
capital beneficiaries of the 2004 trust. A shelf company by the
name of Thundercats Investments 55 (Pty) Ltd
(TCI) was also acquired
by the plaintiff and the 2004 trust became the sole shareholder
thereof. The plaintiff became the
sole director.
[20]
What gave rise to the purchase of TCI and the registration of the
2004 trust was that the plaintiff had become aware of a complex
consisting of 27 flats which could be purchased at a very reasonable
price of R2,95 million. His intention was to purchase
the 27
flats in the name of TCI. Absa Bank was willing to lend a
portion of the purchase price to TCI against registration
of ten
separate mortgage bonds over ten of the flats. Standard Bank
was prepared to advance a further amount against registration
of a
mortgage bond over the remaining flats. These loans were,
however, not enough to finance the whole purchase price.
The
plaintiff’s evidence was that he was advised by Standard Bank
to raise the additional amount needed by increasing the
existing bond
over the Komodo property. As a result, a second mortgage bond,
a so-called access bond, was registered over
the Komodo property for
an amount of R1,6 million, increasing the total amount available to
R1,95 million. At the stage when the
loan for R1,6 million was
granted, the outstanding amount on the first bond was R284 516,02.
[21]
By the time the 2004 trust was registered, the marriage relationship
between the plaintiff and the defendant had substantially
deteriorated. What is significant is that, unlike the family trust
deed, the 2004 trust deed, in clause 21.8 thereof, gives the
plaintiff the power to require the defendant to resign as trustee.
In terms of clause 4.2, the sole power to appoint new
trustees vests
in the plaintiff during his lifetime.
[22]
The defendant’s evidence was that the agreement between the
parties was that the loan of R1,6 million would be used for
extensive
alterations and improvements to the house on the Komodo property.
According to the defendant, the parties agreed
to subdivide the
Komodo property by cutting off three erven of approximately one
hectare each and to encumber two of those erven
as security for the
loan of R1,6 million. They did not want to encumber the part of
the property on which the dwelling house
was situated. This
evidence is corroborated by a written resolution of a meeting of the
directors of Komodo, prepared by
the plaintiff, in terms whereof it
was resolved that a mortgage bond be registered over Portion 370 (a
portion of portion 64),
9872 square metres in extent, and over
Portion 372 (a portion of Portion 64), 1,0792 square metres in
extent, as security for the
loan of R1,6 million. The
resolution was signed by the plaintiff and the defendant.
[23]
At the time the resolution was adopted, the subdivision of the Komodo
property had not yet been effected. On 26
May 2004, Ms
Hester Joubert, a conveyancing secretary in the employ of Doman &
K., sent the following letter by facsimile to
Standard Bank:
“
Ons mnr K., die
eienaar van bogemelde maatskappy het aansoek gedoen vir ‘n
tweede verband oor sy vaste eiendom – julle
hou reeds die
eerste verband. Ons het opdrag gekry om die verband te
registreer maar oor gedeelte 3[…] en 3[…]
van die plaas
W[…] R[…].
Die registrasie van die
onderverdeling het nog nie plaasgevind nie, en om hierdie te doen
plus al die verwante transaksies, vertraag
dit nou die registrasie
van die tweede verband.
Kan julle vir ons ‘n
gewysigde opdrag gee wat betref die eiendomme wat verbind moet word –
enigiets om hierdie verband
so gou moontlik te registreer. Die
opbrengs van hierdie verband moet gebruik word om die hereregte van
Thunder Cats te betaal
– jy is bewus van hierdie transaksie.
Bel asb vir Cas (the
plaintiff) by (two numbers are provided) en laat weet wat die gouste
en maklikste is om die tweede verband
te registreer. Ons kan
dan na registrasie van die tweede verband oor die restant van die
eiendom die Onderverdeling met die
bank se toestemming ens
registreer.”
[24]
Although the letter was prepared by Ms Joubert, she obviously would
only have done so on the instruction or with the approval
of the
plaintiff.
The plaintiff’s denial of any knowledge of
the letter is unconvincing. The defendant’s evidence was
that the plaintiff
did not discuss this change of instructions with
her. He also did not tell her of the transfer duty payable by
TCI and which
he intended to pay from the proceeds of the loan by way
of a loan from Komodo to TCI. A general theme of the
defendant’s
evidence was that their discussions were always of
a general nature and that, if she asked for more information, the
plaintiff’s
response was always that if she didn’t trust
him, she could do what she liked. She attended the course
presented by
Mr Hannes Dreyer and her understanding was that the 2004
trust and TCI would be used to implement the advice which they had
received,
to which I referred above. Her understanding was that
TCI would be the owner of the 27 flats and that there would be no
connection
between Komodo and TCI. She was not informed that
any of Komodo’s money would be used for the purchase of the TCI
flats.
[25]
The plaintiff’s evidence was that the purpose of the R1,6
million loan was to purchase the TCI flats, and that the defendant
was aware thereof.
However,
in an affidavit deposed to by the plaintiff in an unsuccessful
application brought by the defendant to liquidate Komodo,
the
plaintiff states that R300 000,00 of the loan was lent by Komodo
to TCI to enable it to make payment of the transfer duties
and
transfer costs for the acquisition of the flats and that the
remaining portion of the facility was used to effect improvements
to
the property and also to pay for sundry household expenses and, from
time to time, to pay accounts as and when needed.
No mention
was made in the affidavit of any further amounts which were lent to
TCI by Komodo.
[26]
At the time that the proceeds of the loan became available, the
plaintiff had gained internet access to Komodo’s bank
account.
The defendant did not have such access. From what is referred
to below, the plaintiff must also have had internet
access to TCI’s
bank account and to his personal bank account. The
plaintiff’s evidence was that during
June 2004, an amount of
between R500 000,00 and R700 000,00 was lent by Komodo to TCI.
He could not recall the exact
amount. Presumably this
represented the additional amount needed to pay the purchase price of
the 27 flats over and above
the amounts advanced by Absa Bank and
Standard Bank. Despite being requested at a
pre-trial conference to make
the financial statements of TCI
available, they were only made available by the plaintiff during the
course of the trial.
The statements which he provided did not
include the statements for the 2004 to 2007 financial years. It
was therefore not
possible to determine exactly how much money flowed
from Komodo to TCI. The defendant had no knowledge of any such
payment
or payments.
[27]
What appears from the bank statements of Komodo and TCI is that an
amount of R310 000,00 was debited to Komodo’s
account on
18 June 2004 and that the same amount was credited to TCI’s
account on the same date. On 12 July 2004, amounts
of
R339 000,00 and R711 000,00 were debited to Komodo’s
account and the same amounts were credited to TCI’s
account on
the same day. On 29 April 2005 an amount of R127 000,00
was debited to the account of Komodo and the same
amount was credited
to TCI’s account on the same day. It is therefore clear
that transfers of substantial amounts of
money were made by the
plaintiff from the account of Komodo to the account of TCI. The
defendant had no knowledge of these
transactions. The
plaintiff’s evidence also did not shed any light on what these
transfers were for.
[28]
The summons in the divorce proceedings was issued by the plaintiff
during August 2007. In April 2008, the defendant appointed
Mr.
Werner Bouwer, a forensic investigator, to investigate the use of
Komodo’s funds. The investigation, and investigations
by
the defendant’s legal team, revealed many more transactions by
the plaintiff in which Komodo’s funds were utilised
for the
benefit of the plaintiff or for personal transactions. I
mention the following.
[29]
During December 2004 and February 2005 a total amount of R200 000,00
was lent to PC 2000, an entity which belonged to Mr. Pierre
van den
Heever, a friend of the plaintiff, which was in financial
difficulty. The money was first transferred to PCI, which
in
turn paid it over to van den Heever. This transaction was done
without the defendant’s knowledge or consent.
The
plaintiff testified that he did not inform the defendant about the
transaction as he knew that the defendant would not have
approved
it. PC 2000 was apparently not able to comply with its
repayment obligations and the plaintiff, again making use
of Komodo’s
funds, purchased a second hand Mercedes SL 500 from van den Heever
“as security” for the debt.
The plaintiff then sold
the vehicle at a profit of R50 000,00, thereby reducing the
outstanding amount of PC 2000’s
debt. The plaintiff
alleged that the full amount of the loan was recovered from van den
Heever, but Bouwer only found evidence
of repayments in a total
amount of R178 000,00, inclusive of the R50 000,00
profit from the sale of the Mercedes.
The amounts repaid by TCI
to Komodo were, on the instructions of the plaintiff to Komodo’s
and PCI’s accountant, credited
to the plaintiff’s loan
account in Komodo. It is difficult to understand why this was
done.
[30]
During February 2005, the plaintiff and a Mr. Weitsz bought the
members’ interests in a close corporation called Fintrom
CC,
which was the owner of a farm called Peebles Plaas, for an amount of
R500 000,00. The plaintiff withdrew an amount
of
R424 000,00 from the Komodo account as a loan to himself.
The money was, however, transferred to TCI’s account
and paid
from there to the plaintiff. An amount of R420 000,00 was
subsequently raised through a mortgage bond over
Peebles Plaas and
this amount was paid to Komodo during March 2006. No interest
was paid to Komodo. The plaintiff subsequently
sold his 50%
member’s interest at a handsome profit. Although the
defendant was aware of the transaction, she assumed
that the
plaintiff had financed the transaction from the income from his
practice. She was not informed by the plaintiff
that Komodo’s
funds had been used. The defendant conceded that the
transaction could have been done in the name of
Komodo for the
benefit of the trust.
[31]
On 8 May 2007 TCI, represented by the plaintiff, purchased two
properties which were referred to as the Waterkant erven.
In
order to be able to purchase the properties, the plaintiff
transferred an amount of R540 000,00 from Komodo’s account
to his personal bank account and from there to TCI’s account.
It does not appear from any of the bank statements before
the court
that this amount was ever repaid to Komodo.
[32]
On 3 September 2007, the plaintiff withdrew an amount of R230000,00
from Komodo’s account. Although he alleged
that the
amount was repaid, no confirmation of such repayment appeared from
the documentation provided.
[33]
During April 2009, TCI, of which the 2004 trust owns all the shares,
registered a mortgage bond over ten of the TCI flats in
favour of
Absa Bank as security for a loan of R3,15 million which Absa Bank had
granted to Scarlet Ibis Investments 46 (Pty) Ltd.
The plaintiff
holds all the shares in the company.
[33]
In an affidavit which the plaintiff deposed to in November 2007 in a
Rule 43
application, the plaintiff referred to the fact that he owed
SARS an amount of R150 137,37 and that he would have to use the
last available funds of the access bond of Komodo to pay SARS.
[33]
As I have mentioned, the plaintiff instituted the divorce proceedings
during August 2007. On 12 February 2008, the defendant’s
attorneys wrote to the plaintiff’s attorneys and demanded an
undertaking that the plaintiff not take any decisions relating
to
Komodo or the family trust without the written authority of both
directors or trustees and an undertaking that the defendant
not
withdraw or transfer any money from the accounts of Komodo or the
family trust without the written approval of both directors
or
trustees. The required undertaking was provided in a letter
written by the plaintiff’s attorneys on 29 February
2008.
It was common cause that the plaintiff complied with the undertaking.
[34]
It was argued on behalf of the defendant that the evidence showed
that, during the period June 2004 until the undertaking was
given on
29 February 2008, the two trusts were the plaintiff’s
alter
ego
. Counsel relied in this regard on the judgment in
Badenhorst v Badenhorst
2006 (2) SA 255
(SCA), where the
following was said at 260I to 262A:
“
[9]
The mere fact that the assets vested in the trustees and did not form
part of the respondent's estate does not
per
se
exclude
them from consideration when determining what must be taken into
account when making a redistribution order. A trust is
administered
and controlled by trustees, much as the affairs of a close
corporation are controlled by its members and a company
by its
shareholders. 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 and but for the trust
would have acquired and owned the assets in his
own name. Control
must be
de
facto
and
not necessarily
de
iure
. A
nominee of a sole shareholder may have
de
iure
control of the affairs of the company but the
de
facto
control rests with the shareholder.
De
iure
control of a trust is in the hands of the trustees but very often the
founder in business or family trusts appoints close relatives
or
friends who are either supine or do the bidding of their appointer.
De facto
the founder controls the trust. To determine whether a party has such
control it is necessary to first 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 the marriage.
It may be that in
terms of the trust deed some or all the assets are beyond the control
of the founder, for instance where a vesting
has taken place by a
beneficiary, such as a charitable institution accepting the
benefit. In such a case, provided the party
had not made the bequest
with the intention of frustrating the wife's or husband's claim for a
redistribution, the asset or assets
concerned cannot be taken into
account.
[10]
The present case is a classic instance of the one party, the
respondent in this case, having full control of the assets of the
trust and using the trust as a vehicle for his business activities.
The extent of his control is evident from the provisions of
the trust
deed. The founder of the trust was the respondent's father whose only
contribution to the trust property was an initial
amount of R1 000.
The respondent and his brother are the trustees. The capital
beneficiaries are the children of the marriage
and any children of a
subsequent marriage entered into by the respondent. The appellant was
an income beneficiary. The rights of
the beneficiaries (income and
capital) only vest on a date to be determined by the trustees. The
respondent has the right to discharge
his co-trustee and appoint
someone else in his place. The terms of the trust can be altered with
the consent of the founder
during his lifetime and with the consent
of the children after his death. The trustees have an unfettered
discretion to do with
the trust assets and income as they see fit.
The deed further provides for the respondent to be compensated for
his duties as trustee,
thereby ensuring an income stream should
he wish to make use of it.
[11]
From the evidence of the appellant it is clear that in his conduct of
the affairs of the trust the respondent seldom consulted
or sought
the approval of his co-trustee, his brother. He was, in short, in
full control of the trust. Furthermore, he paid scant
regard
to the
difference between trust assets and his own assets. So, for
instance…….(
I
omit the details).
It is evident that, but for the trust, ownership in all the assets
would have vested in the respondent.”
[35]
In the present matter, the facts are different.
The trusts did not acquire any of the assets to which I have
referred.
On the evidence before me, their only assets are the
shares which they hold in the two companies. The trusts have
been inactive
from the time they were registered and the only control
which the plaintiff exercised over the affairs of the trusts related
to
their administration, which the defendant had left in the
plaintiff’s hands. What is clear, however, is that during
the said period the plaintiff was in
de facto
control of the
affairs of the two companies and that he used Komodo’s money as
if it were his own to acquire assets for himself
and for TCI.
But the defendant’s claim is not that the two companies are the
plaintiff’s
alter ego
and that there should therefore be
a lifting of their corporate veils. It follows that the
defendant’s claim that the
two trusts be declared to be the
plaintiff’s
alter ego,
and the ancillary relief claimed
in that regard, cannot succeed.
[36]
At the conclusion of the argument on behalf of the plaintiff and the
defendant and at the request of the parties, I granted
a decree of
divorce, it being common cause that the marriage relationship has
broken down irretrievably. Apart from the orders
which I intend
to make in respect of the issues that were agreed I should decide
during these proceedings, referred to in paragraph
[3] above, the
remaining issues were, as I have mentioned, postponed
sine
die
.
[37]
As far as costs are concerned, the defendant has been substantially
successful and she is accordingly entitled to her costs.
[38]
In the result, I make the following order:
(a)
It is declared
that the ante-nuptial contract concluded between the plaintiff and
the defendant is void
ab
initio
and
that the parties are married in community of property.
(b)
It is ordered
that the joint estate of the parties be divided.
(c)
Prayers 18.3.1
to 18.3.3 and 18.4.1 to 18.4.3 of the defendant’s counterclaim
are dismissed.
(d)
The plaintiff
is ordered to pay the defendant’s costs of the action.
J
W LOUW
JUDGE OF THE GAUTENG
DIVISION, PRETORIA
HEARD
ON
: 27,28,30,31 January 2014; 3 to 7, 10, 11, 13 February 2014; 5
to 7 March 2014
FOR
THE PLAINTIFF
: Adv. A. B. Roussouw SC
INSTRUCTED
BY
: Jaco Roos Attorneys
FOR
THE RESPONDENT
: Adv. R. Ferreira
INSTRUCTED
BY
: Eunanda Fourie Inc.
[1]
(952/12) [2014] ZASCA (24 March 2014)