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[2013] ZAKZDHC 33
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M G B v D E B (4316/2013) [2013] ZAKZDHC 33; [2013] 4 All SA 99 (KZD); 2013 (6) SA 86 (KZD) (21 June 2013)
In the KwaZulu-Natal High
Court, Durban
Republic of South Africa
REPORTABLE
Case
No : 4316/2013
In
the matter between :
M
G B
....................................................................................................................
Plaintiff
and
D
E B
.................................................................................................................
Defendant
Judgment
Lopes J
[1] The parties in this
divorce action were married to each other at Johannesburg on the 13
th
March 1999. They have
three minor children, two sons aged 14 and 13 respectively,
and a daughter aged five.
[2] The plaintiff seeks a
decree of divorce, the primary care of the parties’ minor
children, and maintenance for herself
and the minor children,
together with an order directing the defendant to pay to her an
amount equal to one half of the difference
between the accrual in
their respective estates.
[3] The defendant
counterclaims for a similar primary care order, together with an
order declaring that the plaintiff has forfeited
all the benefits
arising from the marriage between the parties,
save
for those set out in an annexure to the defendant’s plea.
[4] The litigation
between the parties has a long and acrimonious history. As that
history is relevant to some of the findings in
this judgment I
summarise it as follows :
(a) pursuant to an
application instituted by the defendant on the 8
th
November 2011, an order was granted by consent directing the
plaintiff to vacate the matrimonial home. That order also contained
provisions that the children remain with the defendant, with the
plaintiff to have contact at certain times. No order for costs
was
made on the 8
th
November 2011, but the application again
came before the court on the 17
th
August 2012 when the
plaintiff sought to vary the terms of the order. The variation
application was eventually adjourned
sine die
with the
question of costs reserved;
(b) on the 13
th
January 2012, the plaintiff launched Rule 43 proceedings for a
variation in the contact arrangements and for maintenance
pendente
lite
for herself and the minor children, as well as a
contribution towards her costs. On the 27
th
July 2012 an
order for maintenance was made together with an order that the
defendant pay a contribution to the plaintiff’s
legal costs in
the sum of R20 000;
(c) on the 27
th
November 2012, the defendant brought an application to vary the
contact arrangements with the children. The matter was heard on
the
28
th
November 2012 and an order was granted dealing with
the contact arrangements in the interim, and reserving the question
of costs
for decision by the trial court;
(d) the defendant also
brought an application in November of 2012, for an order setting
aside a warrant of arrest issued in terms
of an interim protection
order, which had been granted in favour of the plaintiff. That
application was heard on the 30
th
November 2012 and an
order reserving the costs of that application was made on the 13
th
December 2012;
(e) on the 18
th
April 2013 the plaintiff instituted Rule 43 proceedings for a
contribution towards her costs in the sum of R350 000. That
application was adjourned to the first day of the trial with the
question of costs reserved, and to be decided by the trial court;
(f) on the 23
rd
April 2013 the defendant brought an application seeking that the
plaintiff be compelled to submit herself for interviews and
assessments
with the defendant’s clinical psychologist. An
interim order was granted by me on the 24
th
April 2013,
returnable on the 13
th
May 2013;
(g) on the 25
th
April 2013 an application for leave to appeal against the order of
the 24
th
April 2013 was refused by me,with the costs of
the application for leave to appeal reserved for decision by the
trial court;
(h) on the 13
th
May 2013 an application was brought by the defendant to compel the
plaintiff to make herself available for the interviews and
assessments with the defendant’s psychologist on her own, and
without the benefit of any legal representative accompanying
her.
That application was adjourned to the 16
th
May 2013 with
costs reserved;
(i) on the 16
th
May 2013 the matter was heard on an opposed basis and on the 17
th
May 2013 judgment was handed down in favour of the defendant with the
costs of the amended notice of motion, supplementary affidavits
and
the plaintiff’s opposition reserved for determination by the
trial court;
(j) on the 23
rd
May 2013 the plaintiff brought an urgent application for an order
that it was unnecessary for her to attend on the defendant’s
psychologist because she had conceded the relief sought by the
defendant in his counter-application with regard to the care of
the
minor children. That application was adjourned to the first day of
the trial. The costs of the urgent application were again
reserved
for decision by the trial court.
[5] At a Rule 37
conference held in my chambers on the 29
th
May 2013 the
parties agreed that there were four issues remaining in the trial :
(a) whether the defendant
was entitled to his claim that the plaintiff forfeit the benefits of
the accrual regime;
(b) if not, which party
bore the onus with regard to the nature and quantum of the assets
which are excluded in the antenuptial
contract from forming part of
the accrual regime;
(c) whether the plaintiff
was entitled to maintenance, and the quantum and duration thereof;
and
(d) costs.
[6] Although not
specifically recorded as such, it was anticipated by all concerned
that, in the event that the forfeiture order
was not successful, the
plaintiff would seek a monetary order in respect of her accrual
claim. Indeed, the defendant suggested
that the parties’
chartered accountants get together to discuss a possible agreement on
the accrual calculation, and the
ultimate destination of assets
excluded from the accrual calculation in the ante-nuptial contract.
[7] The trial came before
me on the 3
rd
June 2013, and the evidence and submissions
by counsel were completed on the 7
th
June 2013. At that
stage, by consent, I granted a decree of divorce together with a
further order awarding the defendant full parental
rights and
responsibilities of the minor children with their primary place of
residence to be with him. I also made an order that
the defendant
continue to pay maintenance to the plaintiff pursuant to the
agreements reached in the Rule 43 proceedings, pending
this judgment,
which deals with the remaining issues between the parties.
[8] The plaintiff
confirmed that she did not oppose the order for care of the minor
children of the parties and that their primary
place of residence
would be with the defendant. She recorded that she was satisfied with
the arrangement because she also retained
full rights and
responsibilities in respect of the minor children, and the contact
arrangements were working satisfactorily
[9] Two witnesses
testified for the plaintiff – Mr Peter James Duncan and the
plaintiff herself. It is more logical for me
to deal firstly with the
evidence of the plaintiff.
[10] The plaintiff
outlined the history of her married life with the defendant, and her
evidence may be summarised as follows :
(a) the parties initially
lived in Johannesburg during which time the defendant worked as an
agent for Aristocrat Leisure Ltd;
(b) the plaintiff
initially worked as a model, and then as a marketing assistant in
Care Assist giving telephonic advice on various
aspects;
(c) after the birth of
their son D in June 2000, the plaintiff stopped working. She stated
that this was because the defendant did
not want her to work. She
also conceded she wanted to be with her son and raise him;
(d) the plaintiff then
maintained the matrimonial home and started studying when M was
approximately 18 months old. Both her sons
had health difficulties
which made the first four years of their lives very stressful for the
plaintiff and she had to dedicate
large amounts of time and effort to
ensuring that they obtained the necessary occupational therapy and
physiotherapy;
(e) the plaintiff began
her studies through the University of South Africa for a degree in
psychological counselling. She has completed
all but five subjects of
that degree which will take approximately three more years to
finalise;
(f) during this time the
defendant worked full-time and frequently went overseas for work
related matters. The plaintiff took care
of the home and the
children;
(g) in 2001 the parties
purchased a townhouse in Johannesburg, referred to in the documents
as ‘Tonquani’. The property
was purchased for
approximately R950 000 and required superficial renovations
which were carried out by the plaintiff who
painted the bedrooms,
renovated the bathrooms and attended to all the soft furnishings;
(h) in 2002 and 2003 the
defendant was mostly in Australia, and the plaintiff decided to
attempt to set up an interior decorating
business with her brother’s
wife;
(i) the defendant was
opposed to the business and said that he preferred the plaintiff to
concentrate on her studies and the home
and the family;
(j) notwithstanding his
objections, the interior decorating business started in 2004 and
continued sporadically until the defendant
decided to move the family
to Durban in 2007;
(k) in 2004 the Tonquani
home in Johannesburg was sold and a house at Laura Lane was
purchased. This was a substantial home, comprising
five bedrooms and
three bathrooms with a guest toilet, situated on an acre of land in
Johannesburg. Once again the plaintiff attended
to all aspects of the
renovation of the home. It was an extensive project which took time.
The plaintiff always sought to curtail
expenditure because she was
under the impression from the defendant that there was not a great
deal of funding available. This
home featured on the cover of ‘The
Property Magazine’ in Gauteng, and it is obvious from that
photograph that it is
a magnificent residence, demonstrating that, at
that stage, the parties lived a life of considerable opulence;
(l) during this period
the plaintiff continued to care for the children, albeit with
domestic assistance. At some stage the plaintiff
was offered the
opportunity to feature their home in the Garden and Home magazine
which she envisaged would be very good for her
interior decorating
business, but the defendant would not allow her to do so;
(m) the Laura Lane home
had been purchased for approximately R4 000 000 and was
eventually sold for R10 000 000.
The defendant gave the
plaintiff R100 000 to thank her for her efforts. The plaintiff
was not expecting to be paid and was
surprised and appreciated the
gesture;
(n) when the parties
moved to Durban they first stayed in a rental apartment in Umhlanga
Rocks. They then purchased, and moved into
a home at South Ridge
Road. Because of the extensive renovations which the plaintiff had to
undertake over a period of nine months
the parties at one stage had
to move out of the house to accommodate the renovations. During this
time their minor daughter was
born;
(o) when the parties
moved to Durban they also purchased the land on which a Mooi River
house was built during 2009 and 2010. These
projects overlapped and
the plaintiff had to divide herself between running the home and
dealing with the various properties. In
addition, the defendant had
become involved in Full House Taverns, a business which purchased and
renovated three pubs, two in
Cape Town and one in Durban. The
plaintiff was extensively involved in the design and renovation of
these pubs in order to assist
the defendant;
(p) as a result of the
increasing pressure placed upon the plaintiff by trying to juggle all
her roles, she became unwell and was
eventually admitted to the
Riverview Manor Clinic in July of 2011. She was also admitted at some
stage to St Augustine’s
Hospital where she was diagnosed with a
serious illness. She then returned to the Riverview Manor Clinic and
was eventually discharged
on the 30
th
September 2011;
(q) the plaintiff
testified in detail as to how the pressures under which she was
placed, and the conduct of the defendant, led
to the breakdown of her
health and their marriage relationship. I do not believe it necessary
or desirable to set out all the circumstances
which she related. I
deal with the conclusions I arrived at after hearing that evidence in
my analysis of the evidence;
(r) the plaintiff also
explained how, partly because of the involvement of her brother and
partly because she was somewhat overambitious
in the redecorating
jobs she tackled, the interior decorating business failed. Although
she still sporadically does consulting
work in interior decorating,
she had lost the confidence to continue in that line as a full time
business.
[11] The plaintiff
expanded on her matrimonial experiences in cross-examination and
described the circumstances leading up to the
time when the defendant
sought an order evicting her from the matrimonial home. She also
related in detail the problems which the
defendant had with her
family and her business dealings.
[12] The second witness
was Peter James Duncan, a chartered accountant. He did not give
evidence as an expert, the plaintiff’s
counsel having placed on
record that the expert notice which had been given in respect of his
evidence was withdrawn. Mr Duncan’s
evidence may be summarised
as follows :
(a) he was given seven
lever arch files by the plaintiff’s attorneys containing the
defendant’s discovered documents.
He was also given the
original antenuptial contract concluded between the parties which was
annexed to the defendant’s plea.
(In the antenuptial contract
the value of each parties’ estate is set out, together with
certain assets which are to be excluded
from any accrual
calculation.) Mr Duncan transposed the figures which he obtained from
the defendant’s tax returns for the
years 1999 to 2012 onto a
schedule. He obtained the figures from the statements of assets and
liabilities which were attached to
each of the tax returns, with the
exception of the 1999 tax year;
(b) with regard to the
1999 tax year there was no schedule of assets and liabilities
attached to the defendant’s income tax
return. A number of
requests were made for that document, but it was never forthcoming
from the defendant. In order to establish
values for the 1999 tax
year Mr Duncan used a personal financial statement compiled by the
defendant for submission to the Gambling
Board, and which was also
contained in the defendant’s discovered documents. From the
Gambling Board statement, Mr Duncan
extracted certain asset values as
they were recorded there and included them in his schedule;
(c) some of the values of
the assets recorded on the first page of the Gambling Board statement
were supported by a schedule attached
to the statement setting out
the details of various bank accounts, companies in which shares were
held, business investments, real
estate and other assets such as
household goods, jewellery and various insurance and provident fund
investments;
(d) the net worth of the
defendant according to the Gambling Board statement was the sum of
R1 413 164;
(e) Mr Duncan pointed out
that the first seven assets, which were excluded in terms of the
antenuptial contract, are to be found
in the Gambling Board
statement. With regard to the eighth and last asset to be excluded in
the antenuptial contract – i.e.
the value of the rights arising
in respect of an option to purchase sharesin Aristocrat Leisure
Limited - there is no reference,
nor is mention made of it in the
Gambling Board statement;
(f) in his declaration of
the value of his assets in the antenuptial contract, the defendant
declared one amount of R1 438 000
consisting of his
interest in immovable property, cash on hand, claims receivable,
shares and interest in companies and corporations,
investments and
movable assets. A further amount of R1 105 939 is stated as
being the value of the option to purchase
the shares at an agreed
price in Aristocrat Leisure Limited. With the exception of the items
listed above, the difference between
those amounts andthe net worth
reflected in the Gambling Board statement was approximately R24 000;
(g) Mr Duncan was unable
to find any other documents contained in the seven lever arch files
comprising the defendant’s discovered
documents which evidenced
any other assets;
(h) also contained in the
defendant’s discovered documents were letters addressed to the
defendant reflecting his right to
take up the option to purchase
shares in Aristocrat Leisure Limited;
(i) Mr Duncan recorded
that a large number of statements and parts of statements referring
to bank accounts held by the defendant
were omitted from his
discovered documents. For example there were no documents relating to
the Investec Bank account referred
to as one of the excluded items in
the antenuptial contract;
(j) on the schedule
compiled by Mr Duncan, he recorded the page number which he had
assigned to the defendant’s tax schedules,
which he had
extracted, placed in order and numbered.
[13] In cross-examination
by Ms
Julyan
SC who appeared for the defendant together with
Mr
Humphrey
,Mr Duncan confirmed that he could not vouch for
the accuracy of the figures which he extracted from the various tax
returns and
the Gambling Board declaration because he had not audited
them. He had basically drawn a line at the 2012 tax year, and had
compiled
the 2013 tax year figures from the assets and liabilities
document which he found in the defendant’s discovered
documents,
and carried forward some figures from the 2012 tax year.
[14] Mr Duncan accepted
that the value reflected in his schedule for the Mooi River house of
approximately R2,5 million was not
a true valuation for the purposes
of accrual but had been retained in the accounts at cost. Similarly
the jump in value of the
house at South Ridge Road from R8 000 000
to R12 600 000 between 2009 and 2010 was done on the basis
of cost
of the alterations. Mr Duncan conceded that if the property
had been over-capitalised, the figures would need to be adjusted. He
also conceded that he was unable to express a view on the values of
the properties and that the net asset value he arrived at for
the
2012 tax year of R28 760 038 was an extrapolation from the
defendant’s documents. The only valuation which
he had seen for
the fixed properties was the valuation for the Mooi River house, for
R1,65 million.
[15] Mr Duncan was also
cross-examined on the valuations attributed to the Aristocrat Leisure
Ltd share options in the antenuptial
contract. It was put to him that
that value may have been out of kilter with the true market values.
Mr Duncan said that he had
tried to reconcile the value in the
antenuptial contract with various share prices found in the
documents, but was unable to do
so to his satisfaction. He was also
unable to comment on the proposition that theloan account reflected
for Full House Taverns
may be irrecoverable, because he had not seen
the annual financial statements of that concern. He did say that he
had seen a document
reflecting the loan account as being in the sum
of R11.01m. He also suggested that the taverns had been sold and
receipted after
the 2013 tax year for R4 million – this was not
disputed by Ms
Julyan
.
[16] Mr Duncan agreed
that it was necessary to trace the assets recorded in the antenuptial
contract to see what was done with the
proceeds of those assets
including the share options, and conceded that he had not been able
successfully to trace all the proceeds.
This was because of the
incomplete documents with which he had been furnished. He did concede
that on the court day but one before
the trial commenced the
plaintiff had been furnished with further documents, but that he had
not had time to investigate them.
[17] Mr
Stokes
SC,
who appeared for the plaintiff, recorded that not all the banking
documents had been received by the plaintiff notwithstanding
what was
alleged by the defendant’s attorneys. Mr Duncan was further
cross-examined by Ms
Julyan
regarding various figures on his
schedule. A document was handed to Mr Duncan during cross-examination
(‘the defendant’s
asset list’) being a calculation
compiled by the defendant’s chartered accountant, a person who
had formerly assisted
Mr Duncan in his office, and who had been
present in court throughout the proceedings.
[18] At the end of the
plaintiff’s evidence, Mr
Stokes
indicated that the
defendant accepted the values set out in the defendant’s asset
list regarding the values ofthe South Ridge
Road property and the
Mooi River property. The plaintiff’s case was then closed.
[19] At that stage
Ms
Julyan
placed on record that the defendant was not pursuing
his claim for forfeiture of the benefits of the accrual system
applicable
to the marriage and she then made a tender on the
defendant’s behalf. That tender was :
on the basis that no
accrual existed in defendant’s estate, accordingly no capital
payment was due to the plaintiff;
an amount of maintenance
of R30 000 per month together with medical aid contributions
for two years, such maintenance to
terminate thereafter; and
no tender was made as to
costs.
[20] It was recorded that
the parties had reached an agreement on the 26
th
January
2012 in terms of which the defendant had paid to the plaintiff a sum
of R700 000 and donated two motor vehicles to
the plaintiff. It
was agreed that if a divorce ensued, the amounts reflected in the
agreement could be deducted from any amount
agreed upon or found to
be payable by the defendant. The tender included the fact that the
plaintiff could retain the R700 000
and that the motor vehicles
would be transferred into her name and into that of her mother. The
case for the defendant then closed
without leading any evidence.
[21] With regard to the
issues which I have to consider, the first issue – i.e. whether
the defendant was entitled to his
claim that the plaintiff forfeit
the benefits of the accrual regime – falls away with the
defendant’s concession that
he would no longer seek that
relief. Given the fact that he had not testified, this was hardly
surprising. At no stage in the cross-examination
of the plaintiff was
anything put to her which in my view would have constituted the
necessary ‘substantial misconduct’
which may have
entitled the defendant to that order. Had the concession not been
made I would undoubtedly have found against the
defendant on that
issue. Both the plaintiff and Mr Duncan gave their evidence in a
satisfactory manner, and I have no reason to
doubt that what they
said was the truth.
[22] With regard to the
onus of establishing the nature and quantum of the assets which were
to be excluded from the accrual calculation,
I refer to the statement
by Cloete AJ in
AM v JM
2011 JDR 0091 (WCC), where at
paragraph 43 the learned Acting Judge stated :
‘
Although
defendants counsel argued that plaintiff bears the onus to establish
that defendant’s alleged excluded assets should
form part of
the accrual in his estate, it is clear that the defendant bears the
onus to persuade this court that such assets should
indeed be
excluded from the accrual.’
It seems to me that in
circumstances where the defendant is in possession of all the facts
relating to the assets reflected as being
excluded in the antenuptial
contract, he 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 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 that calculation, and why.
[23] The defendant has
led no evidence to demonstrate how the excluded assets were dealt
with by him from time to time. In the absence
of deductions which can
reasonably be made from the extracts from the defendant’s tax
returns and the Gambling Board statement,
I am unable to determine
what happened to those excluded assets, and whether or not they
formed any part of the defendant’s
present day assets.
[24] In argument Mr
Stokes
handed up a
document setting out a computation of the amount of the defendant’s
estate and the claim made by the plaintiff
as her share of the
accrual.
[25] Ms
Julyan
submitted that there was no acceptable evidence before
me as to the value of the defendant’s estate. In this regard
she referred
to
s 3
of the
Matrimonial Property Act, 1984
which
provides :
‘
(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.’
[26]
Ms
Julyan
submitted
that there had been no agreement reached between the parties as to
the admissibility of the documents referred to in the
evidence for
the plaintiff, save for the antenuptial contract and the plaintiff’s
list of current assets and liabilities.
It was common cause that
there was no accrual in the estate of the plaintiff.
[27] Ms
Julyan
submitted that the evidence of Mr Duncan was irrelevant because :
no election had been
made by the plaintiff as to which of Clauses 7 or 8 of the
antenuptial contract should be held to be
pro non scripto
(Clause 7 dealing with the parties’ assets and Clause 8
dealing with the excluded assets of the defendant – and as
the
assets of the defendant appear to be the same as the excluded
assets);
the fact that the
figures adduced by Mr Duncan only go up to the end of February 2012
and it is now June of 2013;
Mr Duncan did not have
all the documents available to him, and his evidence in regard to
the matters about which he testified
were hearsay and accordingly
inadmissible;
no-one was called to say
that the documents referred to by Mr Duncan were in fact the
defendant’s discovered documents.
The suggestion here was that
the plaintiff’s attorney should have testified that the
discovered documents were given by
them to Mr Duncan. This is what
happened in the matter of
Maize Board v Hart
2005 (5) SA 480
(OPD) where the plaintiff’s attorney testified that certain
documents of third parties were obtained by the plaintiff’s
legal representatives at inspections at the relevant premises;
as there was no proof of
the current assets of the parties , there was no need to do any
accrual calculation.
[28] The election by the
plaintiff not to declare either paragraphs 7 or 8 of the ante-nuptial
contract
pro non scripto
because of the contradiction in
including and excluding the same assets in those two paragraphs is
not, in my view, determinative
of the calculation. The plaintiff
relies on figures put up by the defendant, and the defendant bears
the onus to show which figures
should be excluded.
[29] Ms
Julyan
submitted that it is clear that the assets and liabilities of the
defendant have to be determined as at the date of divorce, although
there is authority for the proposition that the appropriate date is
when
litis contestatio
occurs. This emerges from a judgment of
Brassey AJ in the matter of
MB v NB
2010 (3) SA 220
(GSJ). I
was referred to a criticism of this judgment by Van Niekerk in his
work
A Practical Guide to Patrimonial Litigation in Divorce Acts
page 3 – 14.
[30] Van Niekerk refers
to the matter of
Le Roux v Le Roux
[2010] JOL 26003
(NCK) a
judgment of Olivier J, who held that upon a proper interpretation of
s 3
of the
Matrimonial Property Act, the
plaintiff is not entitled to
proceed with a claim for an accounting of the value of a defendant’s
estate and an abatement
thereof together with an order that the
defendant pay to the plaintiff half of the amount to her in terms of
an accrual calculation,
prior to the dissolution of the marriage. His
view is that a plaintiff does not have an acquired and complete cause
of action to
claim payment in terms of
s 3
, until a divorce order is
granted.
[31] I have read and
given careful consideration to the views of Olivier J. I am in
respectful disagreement with the conclusion
at which he arrives with
regard to the time when a court may hear evidence regarding the
actual accrual in the estates of the respective
parties. In my view
it is wholly impractical that parties to a divorce should go to the
lengths of establishing a right to accrual
in the divorce action and
then have to embark upon a further litigious exercise in order to
decide the extent of such accrual.
I have grave reservations whether
it could have been the intention of the legislature to devise a
procedure which seems only calculated
to prolong the settlement of
disputes between parties to a marriage, and to greatly increase the
legal costs of being able to resolve
their differences.
[32] I prefer the
approach of Brassey AJ in
MB.
Having referred to
Reeder v
Softline Ltd and another
2001 (2) SA 844
(W),
Brassey AJ stated at page 233 C :
‘
The
decision establishes the moment at which a contingent right becomes
perfected and, in consequence, the spouses become invested
with
legally enforceable entitlements. This is, as the learned judge makes
clear, at the moment when the divorce court makes the
applicable
order. What the decision does not do is establish the moment by
reference to which the respective estates of the parties
must be
assessed. This problem is one of procedure, nor substance, and owes
its origin to the fact that litigation takes time to
complete. On
this matter the established principle is that the operative moment is
litis
contestatio,
for
that is the moment when the dispute crystallises and can be presented
to the court for decision.’
In that case Brassey AJ
granted a decree of divorce together with other relief, including the
payment of a specific amount in terms
of the accrual system.
[33] With regard to the
various values to be attributed to the assets of the defendant with
regard to the accrual claim, I have
used the figures presented by
both parties, many of which are not disputed. That those figures were
presented to me with no real
distinction between what they may have
been at the point of
litis contestatio
and
what they were at the time of hearing is in my view of little moment,
no such distinction having been drawn, or sought, by either
of the
parties.
[34] I now deal with the
suggestion that the plaintiff has not established the values upon
which an accrual calculation can reasonable
be made.In this regard Ms
Julyan
relied upon
Zungu NO v Minister of Safety and
Security
2003 (4) 87 (D) at 90 D where McCall J stated :
‘
It
is clear that the mere handing in of the document in terms of
Rule
35(10)
does not make its contents admissible in evidence against the
defendant. The contents are hearsay and would be admissible as
evidence
against the defendant only if they could be brought under
one of the exceptions to the hearsay rule.’
[35] Ms
Julyan
also stated that the annexure to the defendant’s
plea,
being the defendant’s balance sheet
as at the 27
th
June
2012,
and which is referred to in the defendant’s
claim in reconvention,
had been denied by the
plaintiff and accordingly could not be relied upon by the plaintiff.
[36] This matter is
distinguishable from
Zungu
, because in
Zungu
the
statement handed in was a statement of an employee of the minister
sought to be held liable. The court held the statement to
be
admissible in any event. Here the statements alleged were made by the
defendant himself.
[37] Even if the
statements used by Mr Duncan constitute hearsay evidence, I have also
given consideration to
s3(1)
of the
Law of Evidence Amendment Act,
1988
. That section provides that a court may admit hearsay evidence
where it is of the opinion that such evidence should be admitted
in
the interests of justice and having regard to the following factors :
(a) the nature of the
proceedings;
(b) the nature of the
evidence;
(c) the purpose for which
the evidence is intended;
(d) the probative value
of the evidence;
(e) the reason why the
evidence is not given by the person upon whose credibility the
probative value of such evidence depends;
(f) any prejudice to a
party to which the admission of such evidence might entail; and
(g) any other factor
which should in the opinion of the court be taken into account.
[38] With regard to those
factors;
(a) the nature of the
proceedings. In this matter I am not dealing with a contractual issue
between parties at arm’s length
where technical defences may
easily be raised, and sometimes relied on. This is a matter between
two people who have been married
for approximately 14 years. They
have three children and have built a life pooling their resources,
abilities and efforts;
(b) the nature of the
evidence sought to be adduced by the plaintiff. This refers to the
accumulated wealth of the parties in general,
and the defendant, in
particular. This was not information easily available to the
plaintiff and was contained in tax returns compiled
on the
defendant’s behalf, and presumably, authorised and signed by
him for submission to the Receiver of Revenue. One must,
in those
circumstances, assume that the documents were as accurate a
reflection of the defendant’s assets and liabilities
as he
could in the circumstances have given;
(c) the purpose for which
the evidence is tendered. This was to substantiate the plaintiff’s
claim to her share in the accrual
of the defendant’s estate.
That the parties would share their assets in this matter was
something which was agreed to between
the parties when they set out
on their life together;
(d) the probative value
of the evidence. In my view it is of such a nature that it should not
easily be dismissed unless contradicted
by the defendant. That has
not happened;
(e) the evidence which
was led via Mr Duncan could otherwise only have been given by the
defendant. It is unrealistic to have expected
the plaintiff to call
him on her behalf;
(f) there can be no
prejudice to the defendant if the information contained in his income
tax returns are used in order to calculate
the accrual in his estate.
I say this because it was open to him at all stages to contradict, or
lead evidence to contradict the
accuracy of the figures transposed
from his discovered tax returns to Mr Duncan’s calculations;
(g) a further factor
which in my view should be taken into account is that no indication
was given by the defendant’s legal
representatives that the
defendant would adopt the view that the tax returns could not be
relied upon because they constituted
inadmissible hearsay evidence.
That was never put to either the plaintiff or Mr Duncan.
[39] In my view
litigation is not a game where parties are able to play their cards
close to their chest in order to obtain a technical
advantage to the
prejudice of the other party. This is even more so in matrimonial
matters where the lives of the parties have
been inextricably bound
together and, as in this case, the efforts of both parties made a
significant contribution to the defendant’s
estate. Indeed Ms
Julyan
put it to the plaintiff during cross-examination that
she was a talented, energetic decorator and designer, and that there
was
no doubt about her work ethic.
[40]
The disclosure of financial information in divorce cases has also, on
occasion, been the focus of English Courts .
In
J
v J
[1955]
P 215
at 227 Sachs J said:
‘
In
cases of this kind; where the duty of disclosure comes to lie on a
husband; where a husband has – and his wife has not
–
detailed knowledge of his complex affairs; where a husband is fully
capable of explaining and has had the opportunity to
explain, those
affairs, and where he seeks to minimise the wife's claim, that the
husband can hardly complain if, when he leaves
gaps in the court's
knowledge, the court does not draw inferences in his favour. On the
contrary, when he leaves a gap in such
a state that two alternative
inferences may be drawn, the court will normally draw the less
favourable inference – especially
where it seems likely that
his able legal advisers would have hastened to put forward
affirmatively any facts, had they existed,
establishing the more
favourable alternative.
…
the obligation of the
husband is to be full, frank and clear in that disclosure. Any
shortcomings of the husband from the requisite
standard can and
normally should be visited at least by the court drawing inferences
against the husband on matters the subject
of the shortcomings –
in so far as such inferences can properly be drawn.’
In
NG v SG
(Appeal
: Non-Disclosure)[2011] EWHC 3270 (Fam)Mostyn J began his judgment
with these words:
‘
The
law of financial remedies following divorce has many commandments but
the greatest of these is the absolute bounden duty imposed
on the
parties to give, not merely to each other, but, first and foremost
to
the court
,
full frank and clear disclosure of their present and likely future
financial resources. Non-disclosure is a bane which strikes
at the
very integrity of the adjudicative process. Without full disclosure
the court cannot render a true and certain and just
verdict. Indeed,
Lord Brandon has stated that, without it the court cannot
lawfully
exercise
its powers (see
Jenkins
v Livesey (Formerly Jenkins)
[1985]
FLR 813
HL. It is thrown back on inference and guess-work within an
exercise which inevitably costs a fortune and which may well result
in an unjust result to one or other party.’
Mostyn J continued :
‘
Pulling
the threads together it seems to me that where the court is satisfied
that the disclosure given by one party has been materially
deficient
then :
(i) The court is duty
bound to consider together by the process of drawing adverse
inferences whether funds have been hidden;
(ii) But such inferences
must be properly drawn and reasonable. It would be wrong to draw
inferences that a party has assets which,
on an assessment of the
evidence, the court is satisfied he has not got;
(iii) If the court
concludes that funds have been hidden then it should attempt a
realistic and reasonable quantification of those
funds, even in the
broadest terms;
(iv) In making its
judgment as to quantification the court will first look to direct
evidence such as documentation and observations
made by the other
party;
(v) The court will then
look to the scale of business activities and at lifestyle;
(vi) Vague evidence of
reputation or the opinions or beliefs of third parties is
inadmissible in the exercise;
…
(viii) The Court must be
astute to ensure that a non-discloser should not be able to procure a
result from his non-disclosure better
than that which would be
ordered if the truth were told. If the result is an order that in
unfair to the non-discloser it is better
that the court should be
drawn into making an order that is unfair to the claimant.
(In the light of the
citation of
J v J
[1955] P 215
it would seem that a “than”
is missing prior to “that” in the second last line of
this citation).’
In
R
v Inland Revenue Commissioner and Another, Ex parte TC Coombs &
Co
[1991]
2 AC 283
, 300, Lord Lowry stated :
‘
In
our legal system generally, the silence of one party in face of the
other party's evidence may convert that evidence into proof
in
relation to matters which are, or are likely to be, within the
knowledge of the silent party and about which that party could
be
expected to give evidence. Thus, depending on the circumstances, a
prima facie case may become a strong or even an overwhelming
case.
But, if the silent party's failure to give evidence (or to give the
necessary evidence) can be credibly explained, even if
not entirely
justified, the effect of his silence in favour of the other party may
be either reduced or nullified.
’
In
Prestv Petrodel
Resources and Others
[2013] UKSC, 34
Lord Sumption stated at
paragraph 45 :
‘
There
is a public interest in the proper maintenance of the wife by her
former husband, especially (but not only) where the interests
of
children are engaged. Partly for that reason, the proceedings
although in form adversarial have a substantial inquisitorial
element. The family finances will commonly have been the
responsibility of the husband, so that although technically a
claimant,
the wife is in reality dependent on the disclosure and the
evidence of the husband to ascertain the extent of her proper claim.
The concept of the burden of proof, which has always been one of the
main factors inhibiting the drawing of adverse inferences
from the
absence of evidence or disclosure cannot be applied in the same way
to proceedings of this kind as it is in ordinary civil
litigation.
These considerations are not a licence to engage in pure speculation.
But judges exercising family jurisdiction are
entitled to draw on
their experience and to take notice of the inherent probabilities
when deciding what an uncommunicative husband
is likely to be
concealing. I refer to the husband because the husband is usually the
economically dominant party, but of course
the same applies to the
economically dominant spouse whoever it is.’
That case concerned the
powers of a court to order ancillary relief in matrimonial
proceedings.The approach adopted in these cases
accords with my
understanding of how a court, in South Africa, should approach the
evidence in divorce proceedings.
[41] I was assured by Mr
Stokes
that the defendant’s discovered documents were
not only incomplete, but also presented in a confusing manner which
required
time and effort to collate the documents in a proper way.
[42] In the circumstances
I have no hesitation whatsoever in accepting that the defendant’s
discovered documents, from which
Mr Duncan extracted the figures from
the defendant’s tax returns and correctly transposed those
figures onto the schedules
which he produced, can be used to
demonstrate his worth.
[43] It then falls upon
me to place a value upon the accrual in the defendant’s estate.
In this regard I am mindful of the
fact that where the evidence is
imperfect, it is incumbent on me to do the best I can in the
circumstances.
[44] With regard to the
antenuptial contract, at Clause 7 it sets out the values of the
defendant’s estate. The first item
which is in the sum of
R1 438 000, appears to comprise the first seven items which
are then excluded in Clause 8. The
second item is in the sum of
R1 105 939 being the value of the option to purchase the
shares at agreed prices in Aristocrat
Leisure Ltd. The last excluded
item, however, is the value of the rights which arise in respect of
the exercise of the option to
purchase shares. The preamble to Clause
8 which sets out the excluded assets reads as follows :
‘
That
the assets of the parties or either of them, which are listed
hereunder and all liabilities presently associated therewith,
or any
other asset acquired by such party by virtue of his possession or
former possession of such assets, shall not be taken into
account as
part of each party’s estate at either the commencement or the
dissolution of the marriage.’
The obvious contradiction
then is that the R1 438 000 consisting of interest in
immovable property, cash on hand, claims
receivable, shares and
interest in companies and corporations, investments and movable
assets are effectively excluded in Clause
8. Whilst Clause 7 refers
to the value of the option to purchase the shares in Aristocrat
Leisure Ltd as an asset of the defendant’s,
the value of all
rights arising from the option to purchase are excluded in Clause 8.
[45] The parties were
agreed upon the current value of two assets, being the house atSouth
Ridge Road in a net asset value amount
of R36 433.23,
and
the Mooi River house in the sum of R1 650 000. Neither
property was in existence at the outset of the marriage and
it does
not appear that those assets were acquired using the proceeds of any
excluded asset. The third item claimed by the plaintiff
is the
valuation of the Full House Taverns (Pty) Ltd loan account in the sum
of R11 001 528,00. This loan account is
reflected by Mr
Duncan in the 2012 tax year as being R7 502 636. In
cross-examination by Ms
Julyan
,
Mr Duncan disclosed that he had seen a document amongst the
defendants’ discovered documents showing that the 2013 loan
account in Full House Taverns was R11 001 528,00. It was
put to him by Ms
Julyan
that
Full House Taverns had incurred a loss of R10 900
000,
and in fact the loan account was irrecoverable. Mr
Duncan’s comment was that one would have to look at the annual
financial
statements of the company to see if that is accurate. Mr
Stokes
submitted that
it was accepted in cross-examination that the amount of the Full
House Taverns loan account was in fact as stated
by Mr Duncan. He
submitted that the effect of putting something to a witness in
cross-examination means that it becomes proof of
what was put, and
the other party need no longer prove it. In this regard he relied
upon the dicta of McCall J in
Zungu
(see page 92 B – I of the judgment).
[46] Mr
Stokes
also submitted that the fact that Ms
Julyan
had put to Mr
Duncan that that loan account was irrecoverable because of losses
incurred by Full House Taverns was neither here
nor there. This was
because no effort had been made on behalf of the defendant to put up
any documentation or adduce any evidence
with regard to that loss. A
mere suggestion in cross-examination of a fact in favour of the party
on whose behalf the cross-examination
is being conducted, does not
necessarily constitute proof of that fact. It is quite unlike a
statement which is against the interests
of the party on whose behalf
the cross-examination is being conducted. On that basis Mr
Stokes
submitted that I was entitled to accept the Full House Taverns loan
account figure as testified to by Mr Duncan and ignore the
suggestion
that it was irrecoverable. There was no suggestion in argument or in
the documents that the origin of the monies advanced
and which
constituted the Full House Taverns loan account came from any of the
assets excluded in the antenuptial contract.
[47] It is true that
neither the books of account nor the annual financial statements of
Full House Taverns were proved in evidence
before me. It may be that
the company is in financial difficulty, and the loan which forms an
asset of the defendant is irrecoverable.
But, at the end of the
plaintiff’s case, the defendant must have realised that he was
at risk in not electing to lead evidence
regarding the financial
position of the company. No documents regarding the companies’
financial position were put to either
Mr Duncan or the plaintiff in
cross-examination.
[48] The defendant’s
failure to back-up what was put in cross-examination by Ms
Julyan
(i.e. that the loan was irrecoverable) must strengthen the prima
facie case established by the plaintiff to enable me to answer
the
question – ‘is it more probable than not that the loan is
an asset in defendant’s estate?’ –
the answer, in
my view, is ‘Yes’!
[49] The most equitable
manner in dealing with this asset is, in my view, to exclude it from
the accrual calculation of the defendant’s
estate and to
declare the right of the plaintiff to recover half of that loan
account. If the loan account is indeed recoverable,
justice will be
served.
[50] The remaining assets
listed by Mr Duncan consist of :
(a) various investments
in Lentus Asset Management International Equity Holding in a total
sum of R13 707 539,13;
(b) a Landrover Discovery
motor vehicle in the sum of R224 000;
(c) cash in three cheque
accounts totalling R115 676,67;
(d) an Investec Money
Market Fund in the sum of R126,58.
[51] The net asset value
of the aforegoing, excluding the loan account, is R14 047 342,38.
There is no indication in any
evidence led before me that the amounts
in the Lentus Asset Management Equity Holdings and the cash in the
bank accounts represent
the increased value of any of the assets
excluded in the antenuptial contract. To that amount, falls to be
added the values of
the immovable properties.
[52] Against the total of
those amounts, there falls to be offset amounts totalling R23 806,35
being debts owed to Standard Bank
on overdraft and a credit card,
together with the R700 000,00 advance payment, and the two cars,
valued at R260 000,00
and R100 000,00 respectively. The
accrual in the defendant’s estate (excluding the loan account)
is thus R14 649 969,26.
[53] In those
circumstances, and in view of the fact that there was no accrual in
the estate of the plaintiff, she is entitled to
be paid half of the
accrual in the value of the defendant’s estate in the sum of
R7 324 984,63.
[54] Given the extent of
the asset value to which the plaintiff is entitled to be paid by
virtue of her right to share in the accrual
of the defendant’s
estate, I do not believe it would be reasonable for the defendant to
continue to pay maintenance to the
plaintiff. I am mindful of the
fact that the defendant will have to gather together funds in order
to pay the plaintiff her share
of the accrual in his estate. This
will no doubt take some time, and, in the order which I make below I
have made provision for
the defendant to continue to pay maintenance
to the plaintiff, pending the payment to her of the amount due,
within a specified
period.
[55] With regard to
costs, the plaintiff has been substantially successful, because right
up until the end of the trial, the defendant
refused to tender to pay
her anything as her share of the accrual in his estate. Although the
defendant was successful with regard
to the primary residence of the
minor children, in the exercise of my discretion, I would regard it
as fair that he pay the costs.
This accords with what I consider to
have been the reasons for the breakdown of the marriage as testified
to by the plaintiff.
In the absence of any contrary evidence from the
defendant, her assertions in that regard remain uncontested. In
arriving at the
order below I have deducted the sum of R700 000
referred to and paid pursuant to the agreement of the 26
th
January 2012 together with the value of the two motor vehicles from
the amount to be paid to the plaintiff. The plaintiff, however,
was
unreasonable in her conduct in refusing to consult with the
defendant’s psychologist and in attempting to evade the initial
order I made. She must pay the costs of those
hearings.
[56] In the premises I
make the following order :
(a) the defendant is to
pay to the plaintiff the sum of R7 324 984,63 by no later
than the 31
st
August 2013;
(b) the plaintiff is
declared to be the owner of one half of the defendant’s loan
account in Full House Taverns (Pty) Ltd
;
(c) in the interim, and
pending the payment of the amount in (a) above by the defendant to
the plaintiff, the defendant is to continue
paying maintenance to the
plaintiff pursuant to the agreement reached between the parties in
the
Rule 43
proceedings;
(d) the defendant is to
pay the plaintiff’s costs of the action, including all reserved
orders for costs, save those with
regard to the applications to
compel her to attend on the defendant’s psychologist and the
plaintiff is to pay the defendant’s
costs of those
applications;
(e) all costs are to
include the costs of senior counsel, and two counsel, where
applicable;
(f) in any report of this
judgment, no person other than the advocates, the attorneys
instructing them, or persons (other than the
parties, members of
their extended families and their children) identified by name in the
judgment itself, may be identified by
name or location. In particular
the anonymity of the children and the adult members of their family
must be strictly preserved.
If reported, it shall be the duty of the
Law Reporters to carry out this part of the order.
Date of hearing : 3
rd
to 7
th
June 2013
Date of judgment : 21
st
June 2013
Counsel for the Plaintiff
: A Stokes SC (instructed by Shepstone & Wylie)
Counsel for the Defendant
: J A Julyan SC with S I Humphrey (instructed by Benita Ardenbaum)