About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Western Cape High Court, Cape Town
SAFLII
>>
Databases
>>
South Africa: Western Cape High Court, Cape Town
>>
2006
>>
[2006] ZAWCHC 30
|
|
K.T.P v P.M.P (821/2005) [2006] ZAWCHC 30; [2007] 2 All SA 309 (C); 2007 (1) SA 483 (C) (27 July 2006)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
and
SAFLII
Policy
IN
THE HIGH COURT OF SOUTH AFRICA
(CAPE
OF GOOD HOPE PROVINCIAL DIVISION)
Case
no. 821/2005
In
the matter between
K[…]
T[…] P[…]
……………………………………………………………………..
Plaintiff
v
P[…]
M[…] P[…]
…………………………………………………………………
Defendant
JUDGMENT
GIVEN THIS THURSDAY, 27 JULY 2006
CLEAVER
J:
[1]
The plaintiff has instituted a matrimonial action against the
defendant in which she claims divorce, custody of three children
born
of the union with the defendant and maintenance for herself and her
children. The relief which she claims stems from
a marriage
entered into between the parties in Australia. In addition, she
claims repayment of the sum of €1 337 386,
said to have been
lent and advanced by her to the defendant.
[2]
The defendant denies that the marriage entered into by the parties in
Australia was valid. As to the alleged loans, he
contends that
the money paid to him by the plaintiff was his own money and that the
agreement in terms whereof the plaintiff had
received the money was a
sham agreement which, to the knowledge of the plaintiff, had been
entered into with the object of protecting
the plaintiff’s
money from his creditors. The defendant accordingly denies that
he is liable to refund any money to
the plaintiff.
[3]
On 16 February 2006, and by agreement between the parties, an order
was granted in terms of Rule 33(4) of the Rules of Court
to the
effect that the issue of the validity of the parties’ marriage
and the issue of the loans claimed would be determined
separately
before the remaining issues in the divorce action are determined.
THE VALIDITY OF
THE MARRIAGE
[4]
The plaintiff was previously married to P[…] S[…] in
Italy and the defendant was previously married to M[…]
P[…],
also in Italy. Defendant and M[…] P[…] were Irish
citizens and domiciled in Ireland.
[5]
In August 1993 the plaintiff obtained a divorce from P[…] S[…]
in the Dominican Republic. The relationship
between the
defendant and M[…] P[…] broke down and the defendant
and plaintiff began a relationship. At the
time divorce was not
recognised in Ireland. The defendant then commenced proceedings
against his wife M[…] P[…]
in the Dominican Republic
and obtained a divorce from her in that country on 16 April 1996.
Thereafter the plaintiff and
the defendant underwent a ceremony of
marriage in Australia on 29 June 1996 and three boys, now aged
eight and six were born
from this union. The youngest two are
twins. The ordinary residence of the plaintiff and the
defendant at the time
of the commencement of their relationship, the
time of their seeking divorces in the Dominican Republic and at the
time of the
ceremony of marriage which the parties underwent in
Australia, was the Republic of Ireland.
[6]
The parties are agreed that the applicable law that determines the
validity of the marriage which they concluded in Australia
is that of
New South Wales, Australia (
lex loci
celebrationis
).
[7]
The defendant called an expert on Australian law, Mr Max Meyer, to
support his contention that the marriage in Australia was
not valid.
The only evidence relied upon the plaintiff regarding the validity of
the parties’ marriage was the marriage
certificate obtained in
New South Wales, Australia.
[8]
At the conclusion of the hearing, the following agreement was reached
between the parties in regard to of the issue of the validity
of the
marriage:-
8.1
The plaintiff admits that in accordance with the current Irish law,
the divorces obtained in the Dominican Republic are not
recognised
and the marriage ceremony entered into between the parties was not
valid as neither party had the capacity in
Irish law to enter into a
legally binding marriage;
8.2
This court, when determining the validity of the marriage concluded
between the parties in Australia, must assume that the Dominican
Republic divorces were validly obtained by the parties in that
country.
It
was also agreed that in the event of me finding that the marriage of
the parties is valid (based on the assumption that the Dominican
Republic divorces were validly obtained), the matter would be
postponed so as to enable the defendant to lead evidence with a view
to establishing that the divorces obtained in the Dominican Republic
were in fact invalid
[9]
The plaintiff admitted Mr Meyer’s qualifications to testify as
an expert on Australian law. He is a senior lawyer
in a firm
specialising in family law in Sydney, Australia. The plaintiff
did not lead any expert evidence regarding the law
in Australia and
relied only on the cross-examination of Mr Meyer. His evidence
was to the effect that the law relating to
married persons and their
relationship to one another is set out in the Family Law Act 1975
(“the Act”), a law of the
Commonwealth of Australia,
which applies in each of the Australian states. The law
relating to the recognition of what are
in the Act referred to as
“
overseas decrees”
is set out in section 104 of the Act. Section 104(3) of the Act
records a number of factors which, if applicable, would permit
a
divorce granted in an overseas jurisdiction to be recognised in
Australia. All the subsections of section 104(3) have to
do
with either party to a marriage being ordinarily resident in the
Dominican Republic, the Dominican Republic having being the
last
place of cohabitation of the parties, either party being domiciled in
the Dominican Republic, citizenship of the Dominican
Republic and in
the case of subsection (f), a combination of factors. Since it
is clear from the evidence which I heard that
neither the defendant
nor M[…] P[…] ever set foot in the Dominican Republic,
none of the criteria required for the
divorce to be recognised in
Australia as set out in section 104(3) were fulfilled.
[10]
Section 104(5) of the Act does however create a separate ground upon
which a foreign divorce may be recognised in Australia.
It
provides
“
Any
divorce or any annulment of a marriage, or any legal separation of
the parties to a marriage, that would be recognized as valid
under
the common law rules of private international law but to which none
of the preceding provisions of this section applies shall
be
recognized as valid in Australia, and the operation of this
subsection shall not be limited by any implication from those
provisions.”
Mr
Meyer testified that in Australia two common law principles would, if
applicable, permit recognition of the Dominican Republic
divorce in
Australia even if recognition could not be afforded in terms of
section 104(3) of the Act. He identified these
principles as
being those of reciprocity and what he termed the ‘real and
substantial’ connection.
[11]
The reciprocity principle stems in Australia from the decision of the
Court of Appeal in
Travers
v Holley and Holley
[1]
where the court held that the domicile of both spouses at the time of
the proceedings was not the sole test of jurisdiction in
divorce, as
had previously been the case. Prior to
Travers
v Holley
,
the English courts had not recognised a decree of a foreign court
unless the parties were at the time of the proceedings domiciled
in
the jurisdiction of the foreign court, or, if domiciled elsewhere,
such decree would have been recognised by the law of the
domicile.
The position in England had been altered by statute which provided
that where a wife had been deserted by her husband
and the husband
had immediately before the desertion been domiciled in England and
Wales, the court would have jurisdiction for
the purpose of any
proceedings. In
Travers
v Holley
the
wife had been granted a divorce in New South Wales on the grounds of
her husband’s desertion even though the husband had
abandoned
his domicile of choice in New South Wales on a date after the
desertion. In the course of his judgment, Hodson
LJ expressed
himself as follows:-
“
It
is unnecessary to consider the effect of these later statutory
provisions since, at the material time when the New South Wales
proceedings were instituted, the Act of 1937 was in force and s. 13
of this Act corresponds in substance with the provision under
which
the New South Wales counterclaimed jurisdiction between the parties
to this appeal. It seems to me, therefore, that
Parliament has
cut the ground from under the argument put forward on behalf of
husband. If English courts will only recognise
foreign decrees
of divorce where the parties are domiciled in the territory of the
foreign court at the time of the institution
of proceedings because
that is the jurisdiction which they themselves claim, what is the
situation when the courts of this country
arrogate to themselves
jurisdiction in the case of persons not domiciled here at the
material date? It must surely be that
what entitles an English
court to assume jurisdiction must be equally effective in the case of
a foreign court.
Lord
Watson in the Le Mesurier
case (1) used
the following language ([1895] A.C. 528):
‘…
a
decree of divorce a vinculo, pronounced by a court whose jurisdiction
is solely derived from some rule of municipal law peculiar
to it
forum, cannot, when it trenches upon the interests of any other
country to whose tribunals the spouses were amenable, claim
extra-territorial authority.’
Conversely, it
seems that where it is found that the municipal law is not peculiar
to the forum of one country, but corresponds
with a law of a second
country, such municipal law cannot be said to trench on the interests
of that other country. I would
say that where, as here, there
is in substance reciprocity, it would be contrary to principle and
inconsistent with comity if the
courts of this country were to refuse
to recognise a jurisdiction which mutatis mutandis they claim for
themselves.”
[12]
Travers
v Holley
was expanded on in a later decision of the House of Lords in
Indyka
v Indyka
[2]
.
In
Indyka
,
the husband had married his first wife in Czechoslovakia. Both
were Czech nationals domiciled in Czechoslovakia. The
husband,
who had joined the Czech army in 1939 later joined Polish forces and
at the end of the war he was demobilised in England
where he acquired
a domicile of choice. His wife remained in Czechoslovakia.
Under Czech law nationality formed the
relevant basis for divorce
jurisdiction. In 1949 the marriage of the parties was dissolved
at the instance of the wife by
a court in Czechoslovakia. The
Law Reform (Miscellaneous Provisions) Act of 1949 which came into
operation in December 1949
permitted a wife in England to obtain a
divorce after three years residence in that country. In 1959
the husband remarried
in England and in proceedings by his second
wife for divorce he contended that his remarriage was void as the
English court would
not recognise the decree of the Czech court
issued in January 1949. The court held that because the first
wife had been residing
for more than three years in Czechoslovakia
before the divorce in that country, the fact that the decree preceded
the Law Reform
Act of 1949 did not prevent recognition of the divorce
after that act on the principle that the English courts should
recognise
the jurisdiction which they themselves then claimed by
virtue of the Law Reform Act. In this connection
Travers
v Holley
was approved because there had been a substantial connection between
the first wife and Czechoslovakia, where she had lived all
her life,
had married and had had her matrimonial home. Explaining the
need to assist the wife and to depart from the strict
rule that
domicile was the only basis for jurisdiction for a divorce,
Lord
Wilberforce
said the following during the course of his speech:-
“
How
far should this relaxation go? In my opinion, it would be in
accordance with the developments that I have mentioned and
with the
trend of legislation -- mainly our own but also that of other
countries with similar social systems -- to recognise divorces
given
to wives by the courts of their residence wherever a real and
substantial connexion is shown between the petitioner and the
country, or territory, exercising jurisdiction.
Significantly
for the facts in the case before me
Lord Wilberforce
went on
to say:-
“
Equally
they would enable the courts (as they habitually do without
difficulty) to reject residence of passage or residence, to
use the
descriptive expression of the older cases, resorted to by persons who
properly should seek relief here for the purpose
of obtaining relief
which our courts would not give. I draw support in this form
from the opinion of le Mesureir v Le Mesurier
(183)
where it was said (184):
‘
Bona
fide residence is an intelligible expression, if, as their lordships
conceive, it means residence which has not been resorted
to for the
mere purpose of getting a divorce which was not obtainable in the
country of domicil.’ ”
[13]
Both these decisions have been accepted as good law in Australia.
[14]
Mr Meyer was of the view, based on the fact that neither party had
ever set foot in the Dominican Republic, that the principles
of
reciprocity and the “
real and substantial connection”
could not apply and that therefore the divorce between the defendant
and M[…] P[…] would not be recognised in Australia.
[15]
Counsel for plaintiff did not challenge Mr Meyer’s evidence.
Instead he put it to him that because it was at the
time impossible
for the defendant and M[…] P[…] to obtain a divorce in
Ireland, an Australian appeal court might
on the grounds of hardship
recognise the Dominican Republic divorce. For this proposition
he relied on the final sentences
of the judgment in “
In
the marriage of DORNOM, G.B. and DORNOM, K.J.”
a
decision of the Family Court of Western Australia
[3]
,
namely that
“
The
mobility of larger numbers of people increases each year. The
mores of the community are continually changing. The
statutory
law has been substantially reformed. The common law must change
or extend in conformity with all these factors.”
What
counsel overlooked was that these remarks were made by the judge in
support of his view that the husband in the proceedings
had a “
real
and substantial connection”
with
the state of California where he had obtained a divorce. The
portion quoted is no authority for the proposition that
the law as
presently understood in Australia likely to accommodate the view put
forward by counsel for the plaintiff that the divorce
in the
Dominican Republic will be recognised in Australia because of the
hardship which faced the parties at the time, namely that
they could
not legally be divorced in Ireland. In
Dornom
the parties, who were Australian citizens domiciled and ordinarily
resident in Australia, were married in Australia and lived there
for
some three years before the husband went to live in California in
late 1974. In June 1975 the husband filed for divorce
in
California on the grounds of “
irreconcilable
differences which have caused the irremediable breakdown of the
marriage”.
The basis for
jurisdiction in matters of dissolution of marriage under the American
Civil Code is residence of one of the
parties in the state for six
months and in the county in which the proceedings are filed for three
months next preceding the filing
of the petition. In May 1993
the wife filed an application in the Family Court of Western
Australia for the dissolution of
her marriage, contending that the
divorce granted in California ought not to be recognised in
Australia.
[16]
On the evidence, the judge in Australia found that the husband had
met the American statutory residential provisions. Although
he was
unable to find that the husband had acquired a domicile of choice in
California, he was satisfied that there had been a
‘real and
substantial connection’ between the husband and the state of
California as a result of some seven to eight
months continuous
residence there preceding the filing of the petition. On the
authority of
Indyka
and
Travers v Holley
,
he was satisfied that “
the sacred
power of domicile is no longer the yardstick, and that recognition
should no longer be afforded under the Indyka principle
to decrees
obtained only by wives”.
The Californian decree was accordingly recognised as valid.
[17]
During the course of his argument counsel for the plaintiff relied
heavily on the decision of the Family Court of Australia
in the
marriage of
E
E Barriga and B F Barriga (No 2)
[4]
.
In
that marriage the parties had been married to each other in
Argentina. Unable to obtain a divorce in that country, the
husband obtained a divorce in Mexico and five days later married the
applicant in Mexico, although the domicile of both parties
at the
time was Argentina. After moving to Australia the parties went
through a form of marriage in New South Wales.
When the
applicant’s wife filed for dissolution of the marriage and for
a decree of nullity, the court firstly determined
the application for
nullity. It held
1.
When determining the validity, the court must have regard firstly to
the form of marriage and secondly to each party’s
capacity to
marry.
2.
The form which the marriage took was in accordance with both the law
of Mexico and of Argentina, but the capacity of the parties
to marry
depended on the domicile of the parties at the time that the marriage
was contracted.
3.
The Mexican divorce was incapable of recognition in Argentina
pursuant to the rules of private international law and the marriage
in Mexico was therefor void.
4.
The validity of the Australian marriage was dependent on the
husband’s capacity to marry and consequently the recognition
by
Australia of the Mexican divorce.
5.
The applicant and respondent in the Mexican divorce proceedings were
neither resident, nationals nor domiciled in Mexico and
the divorce
was therefor not capable of recognition in Australia.
The
portion of the judgment relied upon by counsel was the following:-
“
The
case of Travers v Holley
[1953] P 246
is
authority for the proposition that an English court will recognize a
foreign decree of dissolution of marriage where the foreign
court
assumes jurisdiction in a factual setting which, had the same facts
arisen within the forum, would have entitled the forum
to exercise
jurisdiction to dissolve the marriage. The principle of
reciprocity espoused in the latter mentioned case would
suggest, for
example, that if a Mexican court dissolves the marriage of a Mexican
citizen there is in effect reciprocity with Australia
because an
Australian court has jurisdiction to dissolve the marriage of an
Australian citizen. Reciprocity in that context
means
equivalent facts, not a parallel in the law relating to
jurisdiction.”
[18]
The portion quoted was not the basis for the judgment.
Furthermore, and with respect to the learned judge, his understanding
that a foreign court will assume jurisdiction in a factual setting,
which, had the same facts arisen within the forum, would have
entitled the forum to exercise jurisdiction to resolve the marriage,
does not appear from
Travers v Holley
. In any event, the
issue seems to have been put beyond doubt in the
Indyka
judgment
where it was made clear that the courts would reject residence of
passage. Furthermore, in his judgment in the
Dornom
matter the learned judge stated clearly that
“
Recognition
cannot be extended to a decree of the court of a foreign country to
which the applicant resorted merely to obtain a
dissolution of the
marriage. If recognition is to be extended outside the
exemptions of sec. 104(3)(a) to (f) within sec.
104(5) under the
Indyka
principle, the residence must be
‘bona fide residence’.
[19]
In the circumstances I am satisfied that the defendant has discharged
the onus of establishing that the divorce obtained by
him and M[...]
P[...] in the Dominican Republic will not be recognised in
Australia. In the result the marriage of the plaintiff
and the
defendant in Australia is not valid.
THE LOAN
AGREEMENT
[20]
The case as pleaded by the plaintiff is that she lent and advanced
various sums of money totalling €1 337 386 to the defendant;
that it was a term of the loans that defendant would repay the
amounts loaned on demand, alternatively, in the event of their
relationship breaking down irretrievably and that since their
relationship had in fact broken down, she was entitled to repayment
of the said amount.
[21]
It is common cause that on the 11 March 2002 the parties entered into
a written agreement in terms of which the defendant agreed
that €1
337 386 out of the proceeds of the sale of an immovable property
owned by him would accrue to plaintiff and that payment
of that
amount was made on behalf of the defendant to plaintiff. The
background to the conclusion of the agreement is set
out in
succeeding paragraphs.
[22]
The defendant was a very successful businessman in Ireland, having
made his name in the meat packing industry. In 1988
and acting
on the advice of professional advisers he exercised a so-called “
put
and call”
option in terms of
which he “
put”
his shares to the other shareholder in the company which operated and
controlled his businesses. He did so because he believed
that
the other shareholder, one Taher, would not accept the offer made by
him. To his surprise, the offer was accepted and
he was bought
out for an amount of £2,75 million. The defendant says
that he later discovered that the purchase of
his shares had been
engineered and financed by his major competitor in the meat market
industry in Ireland, one Goodman who subsequently
assumed control of
the company which he had founded and from which he had been bought
out. In 1989 he instituted action in
the High Court of Ireland
against Goodman and Taher claiming some IR£13 million as
damages resulting from what he contended
to be Goodman’s
illegal takeover of his company. It seems that the litigation
which lasted until 2001 became something
of a cause
celebré
in Ireland and enjoyed much attention in the press.
[23]
In 1993 the defendant purchased a property known as Lyrath Demesne
(“Lyrath”) measuring some 170 acres of farmland
in
Kilkenny, Ireland for IR£590 000. The historic house
on the property measured approximately 10 000 square
feet and
required major repairs and refurbishment to restore it to what both
the plaintiff and defendant termed its former glory.
The
defendant employed a professional team for this purpose. The
refurbishment was completed in 1995 at a cost of some IR£557
500. Upon their return from Australia after their marriage in
that country, plaintiff and defendant took up residence at
Lyrath.
[24]
The litigation between the plaintiff and Goodman was protracted and
extremely expensive. In order to finance the litigation
and to
maintain his standard of living, the defendant was obliged to
increase the mortgage bond over Lyrath which he had obtained
from the
Irish National Bank in the late 1990’s. By 2001 his
fortunes were declining and according to him “
things
were getting tight”.
He was
accordingly obliged to sell Lyrath. This occurred in January
2002 when the property was sold for €5 523
360, with the sale
becoming final in March of that year.
[25]
Something else which had adversely affected the defendant’s
fortunes was the collapse of a restaurant business which
he had set
up in the United States of America and in which he had invested a
large sum of money. The business collapsed after
the September
11, 2001 attack on the World Trade Towers in New York.
[26]
According to the plaintiff the defendant came to her in late 2001 and
advised her that he was “
out of
the door with litigation costs and that really we need to sell our
family home, the biggest asset we had, the equity was
in the house
and he couldn’t believe how much it had escalated since the
time he had bought the house”.
[27]
It is not disputed that towards the end of 2001 the defendant was
involved in extensive litigation and that in the result his
assets
were at risk. The defendant says that when he came to the
realisation that he would have to sell Lyrath he decided
to put
portion of the proceeds of the sale into the plaintiff’s name
so as to shield that portion from possible attack by
his creditors.
In order to make his transaction “
bullet proof”
and to ensure that it would stand up in the face of his creditors he
devised a scheme to protect these assets from attachment.
Acting on the advice of his accountant and his sister, who appears
also to have assisted him on the financial side in regard to
his USA
venture, a scheme was set up with the plaintiff, who according to the
defendant, was a willing and active participant.
Elaborate
steps were taken to set up an agreement which would give the
appearance of being genuine and above board. In order
that the
agreement would appear to have been concluded by parties who were at
arms length to one another, the defendant arranged
for the plaintiff
to consult a solicitor and furnished her with information to support
a claim by her to a portion of the proceeds
of the sale. He
says that the information furnished to the solicitor was discussed
with and agreed to by the plaintiff.
The plaintiff’s
solicitor then prepared a preliminary statement by the plaintiff
based on the information which she had given
him. This was to
be forwarded to counsel for opinion as to what amount plaintiff might
reasonable be beneficially entitled
to were a court to be
approached. A copy of the statement was sent to plaintiff who
in turn discussed it with the defendant
and certain alterations were
made to it by both plaintiff and the defendant. The purpose of
the statement was to record the
contribution made by plaintiff to
Lyrath, both financially and otherwise. This was followed by a
letter from plaintiff’s
attorneys to the defendant. After
recording that on the basis of evidence given to the solicitor that
the plaintiff’s
marriage to the defendant was not a valid legal
marriage, the purpose of the letter was stated, namely
“
The
purpose of this letter is to put you on notice of our client’s
beneficial interest in the premises and to state that in
our view,
having taken Senior Counsel’s opinion on the matter such
beneficial interest amounts to 50% of the net proceeds
of the entire
premises, which we understand comprises a large house, gardens and a
farm of 170 acres.
Assuming
our interpretation of your marital status and that of our client is
correct i.e. that you are not legally married in accordance
with the
laws of this jurisdiction, we consider you and our client to be an
engaged couple since Christmas 1995 or thereabouts.
Our
client’s claim to a beneficial interest in the premises is
based on the following grounds:
A.
The fact that she is engaged to you and further the representations
made by you to her in relation to her interest in the premises
and
her reliance thereon;
B.
A contribution by our client of approximately £150,000 to the
resources put into the premises and family, financed from
: i) the
sale of her own premises in Goatstown, ii) the sale of her interest
in a commercial premises in Kilkenny and iii) the
proceeds of a High
Court personal injury award.
C.
Unclaimed expenses of our client in respect of work carried out on
your behalf in overseeing the refurbishment of Lyrath Demesne
prior
to taking up occupation therein.
As we are sure
you are aware our client expended a considerable amount of time and
effort in overseeing the refurbishment of the
house which comprises
approximately 10,000 square feet.
While
we are advised that the relationship between you and our client
remains excellent at this point in time our client is concerned
to
establish her separate interest in order to protect herself and the
three children from any financial jeopardy which might arise
out of
the operation of your business.
In
the event that an agreement cannot be reached in relation to the
actual amount of our client’s beneficial interest we propose
that an acceptable sum of money be placed in a deposit in the joint
names of you and our client pending a final resolution of the
matter.
We
await hearing from you.”
[28] The defendant
responded to this letter in writing in the following manner:-
“
I
accept and agree the basis of how you have approached K[…]’s
beneficial interest in our home. However I do
not accept that
her contribution entitles her to 50% of the net proceeds of the
entire estate.
What I have
proposed to K[…], who wants to seek your advice on the matter,
is that she would receive 50% of the net proceeds
of the sale of our
residence, after the full repayment of the mortgage with National
Irish Bank.
Subject
to agreement in principal I will have my solicitors do the necessary
calculations.”
[29]
A draft agreement was then prepared by plaintiff’s solicitor
and forwarded to her for consideration. The amounts
which were
to be inserted in the agreement recording the price for which the
property had been sold and the division of the net
proceeds were left
blank. It is common cause that the defendant made all the
calculations necessary to arrive at the figures
which were to be
inserted and the figures were then filled in by the defendant
whereupon the plaintiff then sent a letter to her
solicitor by way of
facsimile transmission recording that she and the defendant had
filled in the figures and that the defendant’s
solicitor would
be faxing a letter to him that afternoon “
to
confirm the same”.
[30]
The agreement which was then signed by the plaintiff and the
defendant on 11 March 2002 contained the following provisions:-
“
WHEREAS:
1.
The Husband and Wife became engaged in or about December 1995 and
intermarried in Australia on the 29th day of June
1996 pursuant
to the Marriage Act 1961.
2.
The Husband acquired the premises know as Lyrath Demesne Co. Kilkenny
comprising a large period residence with gardens
(herein called ‘the
Premises’) together with a farm of circa 170 acres (herein
called ‘the Farm’).
The Premises and the Farm were
financed by the Husband primarily from his own resources and also by
a Mortgage from National Irish
Bank.
3.
Following acquisition of the Premises the Wife extended considerable
time effort and money in relation to the development,
refurbishment
and improvement thereof.
4.
There are three children of the marriage namely B., O. and P.
(twins).
5.
The Husband admits that notwithstanding that the Premises were
purchased in his name that the Wife has acquired a beneficial
interest therein on the following grounds:
i)
the fact that the Husband and the Wife have been engaged to each
other since December 1995 and were intermarried as referred
to above
and on the basis of representations made by the Husband to the Wife
to the effect that she had an interest in the Premises
and her
reliance thereon.
ii)
A contribution by the Wife of approximately €190,000 to the
resources put into the development, refurbishment, maintenance
and
care of the Premises.
iii)
Unclaimed expenses of the Wife in respect of work carried out on
behalf of the Husband prior to their engagement in overseeing
refurbishment of the Premises prior to taking up occupation therein.
6.
The Husband has entered into an agreement with a third party for the
sale of the Premises and the Farm at the price or sum of
€5,523,360.
It has been agreed between the Husband and the Wife and the Purchaser
of the Premises and the Farm that
a proper apportionment of the sale
proceeds between the house and the farm is as follows:
-
€2,920,397 in respect of the Premises.
-
€2,602,963 in respect of the Farm.
The
Premises and the Farm are currently charged to National Irish Bank
and a sum of €2,533,429 remains outstanding thereon
of which
€245,624 relates to the mortgage on the premises.
7.
NOW IT IS AGREED AS FOLLOWS that for consideration already paid and
given by the Wife to the Husband and in further consideration
of the
Premises the Husband agrees to pay to the Wife out of the proceeds of
sale of the Premises the sum of €1,337,386 and
the Wife agrees
to accept same in full and final settlement on account of her
beneficial interest therein.
8.
Both the Husband and the Wife confirm that they have received
independent legal advice in respect of this Agreement and are
satisfied that it represents a fair division of the sale proceeds of
the Premises in all the circumstances.
Pursuant
to the agreement the sum of €1 337 386 was paid over to the
plaintiff.
[31]
After holidaying in Cape Town in October 2001 the plaintiff and
defendant decided to move to Cape Town. The defendant
found a
property to purchase in Fresnaye, Cape Town and it is common cause
that in February 2002 an amount of €150 000 was
transferred from
an account in the name of the plaintiff in the First Active Bank in
Ireland to defendant and was used to finance
the purchase of the
property. Thereafter €50 000 was transferred to defendant
for the renovation of the Fresnaye property.
It is also common
cause that in March 2003 €1 million was transferred from
plaintiff’s account with First Active Bank
to the defendant
which amount was utilised for the purchase and / or development of a
property known as Claridges Hotel in Green
Point.
[32]
The defendant testified that after being in court for forty days in
his action against Goodman he achieved a major success
when Goodman
made a concession in court on 11 September 2001, the effect of which
was that he had all but won the case. The
concession did not
bring about an immediate end to the litigation for Goodman’s
counterclaim remained, as did the defendant’s
claim against
Taher. The litigation with Goodman was settled on 13 February
2002. In terms of the settlement, the defendant
received
payment of some €1 million, but this was entirely consumed
by the costs of the action. The litigation
with Taher was
settled on 21 February 2002. In terms of that settlement the
defendant received a nominal award of £1.
[33]
The defendant was also involved in other litigation. In 1993
one Maher had instituted action for damages against him
claiming that
he was entitled to the value of 15% of the issued share capital in
the defendant’s group of companies.
The defendant did not
believe that there was any merit in the litigation, and says that it
had been instituted against him so as
to divert his attention from
the Goodman case and that the litigation was funded by Goodman.
The action was dormant for years,
but around Christmas 2001 the
defendant received information from one of his brothers that Maher
had heard about the sale of Lyrath
and that he intended to place an
injunction on the defendant’s funds. That Maher’s
information was obtained from
another of defendant’s brothers
appears from papers filed in the Maher action. In May 2002
Maher successfully launched
an application for a Mareva injunction
against the defendant’s assets, contending that the defendant
was intending to leave
Ireland with a view to avoiding his liability
to him. This resulted in all the defendant’s funds being
frozen and necessitated
proceeds from the sale of Lyrath, which had
been paid to plaintiff, being used for the day to day expenses of the
family.
The Mareva injunction was eventually lifted in terms of
a judgment handed down in the High Court of Ireland on 12 July 2002.
[34]
The plaintiff denies that the arrangement whereby she received €1
337 386 from the proceeds of Lyrath was a scheme designed
to
warehouse portion of defendant’s assets from his creditors.
She maintains that the agreement represented a genuine
transaction
concluded at arms length from the defendant and that she was in fact
entitled to the amount which she received from
the sale because of
the contributions which she had made. It is accordingly
necessary to review both her actual contributions
as well as the
contributions recorded in the statement prepared by her solicitor
prior to her entering into the agreement with
the plaintiff.
[35]
Although the onus of proving the loans as set forth in the pleadings
rests on the plaintiff, it is first necessary to decide
whether the
defendant has established that the transaction which resulted in the
funds being paid over to the plaintiff was in
fact a simulated
transaction. In this regard it must be remembered that the
defendant is not suing for the recovery of amounts
paid to the
plaintiff in terms of the agreement. In that event, the
plaintiff would have been saddled with the full onus
of establishing
that there was a real intention, definitely ascertainable, which
differs from the simulated transaction.
The agreement is more
of the nature of a background to the loan transaction and as such I
am of the view that what onus there is
on the defendant is no more
than what is termed a “
weerliggingslas”
.
In order to consider this aspect it is necessary to have regard to
the evidence of the plaintiff and the defendant who were the
only
persons to testify in this connection.
[36]
Plaintiff met defendant at the end of 1993. Their relationship
was on and off and they had a major break up in September
1995.
In December 1995 the defendant proposed marriage to the plaintiff
whereafter she moved into Lyrath. She testified
that the
contribution she made to the property was as follows:-
“
The
house that he bought in Kilkenny, I made large contributions to the
house from the point of view that I helped him furnish it.
I
did furnishings and fine touches, I bought things like pot plants,
and the plant holders, I went on a shopping trip with him,
we went to
Harrods, we bought all the towels for the different – there was
about seven bathrooms in the house, so we bought
towels for all the
bathrooms in different colour coordinations, we bought soap dishes,
we bought toilet brushes, we bought tissue
holder boxes, I mean I was
the person who, with him some of the time and not all the time, most
of the time I did it on my own,
picked up the nice finishing touches
for the home.”
She
also testified that she made financial contributions to the
maintenance of Lyrath. This comprised £85 525, 34 from
the proceeds of the sale of a property which she had owned in
Goatstown, Ireland, £54 000 from the proceeds of the sale of
Florentina Shoe Boutique which she had owned and £50 000 from
compensation which she had received for injuries sustained
in a motor
accident. In her evidence in chief she testified that the
amount of £85 525, 34 which she had received from
the sale of
her Goatstown property, was an amount which “
in
turn I ploughed into Lyrath Demesne in soft furnishings”.
When questioned about this, she testified “
some
of the money I invested in our home the rest of the money and I
opened a shoe and bag boutique called Florentino”.
The
figures given by plaintiff in her evidence do not tally with the
figures which she gave to her solicitor for the purpose of
drawing up
the agreement with the defendant. In her statement she recorded
that she had contributed £150 000, comprising
£60 000
from the sale of her Goatstown property, £40 000 from the sale
of the shoe boutique and £50 000
from her compensation award.
[37]
The defendant denied that the plaintiff made any major financial
contribution towards the upkeep of Lyrath. He admitted
that she
had added a feminine touch to the choice of furnishings and
decorations in the house, but pointed out that when the plaintiff
moved in late in December 1995 the renovations and refurbishing had
already been completed at his expense. Any financial
contribution which she might have made in respect of decoration or
the acquisition of ornaments was insignificant. Apart
from
defendant’s denial of plaintiff’s allegations as to the
relatively large amount of money which she allegedly spent
on the
house, I found her evidence as to what she had spent the money on,
and the amount she says to have spent, entirely unconvincing.
The photographs of the house which she tendered in evidence showed
the house as it was when she moved in. As to the amount
which
she says she received from the sale of the shoe boutique, namely £54
000, she says it was used to purchase items for
the house “
be
it plants, and pots and maybe buying new towels, or just generally,
like maybe buying a new chair for a room or a desk for the
children’s
room, I mean I can’t – as P[…] likes to say, I
like to spend money, I live to shop, so I never
had a problem buying
things for our home. I constantly bought for our home. It
was the only home I had. I bought
for it constantly.”
Apart from the vagueness of plaintiff’s evidence in regard to
the amounts allegedly spent out of the proceeds of the
sale of the
shoe boutique (it would seem that in fact it was the lease which was
sold), such documentary proof as was available
hardly supports her
version. Copies of what are presumably the final accounts for
the business which were produced by the
defendant reflected that the
business had no stock on hand and had net liabilities over assets of
IR£55 374. Furthermore,
she conceded that some of the
proceeds may have been used for general living expenses. When
questioned about the amount of
£60 000 which she says she
received as a compensation award, she conceded that the amount
received by her was £50 000
and not £60 000.
When questioned as to how much was spent on the house she testified
“
I really can’t remember the exact amount”.
Later she stated “
he asked me for money and I gave him £10
000
and I would say that the balance of that money more or
less found its way into the house”.
It
is also not clear how or why a financial value should be placed on
the advice and opinions which may have been given by the plaintiff
in
respect of the colour scheme, furnishings and her “
feminine
touch”
. All the plaintiff’s evidence about the
amount she spent on Lyrath was very vague and significantly, in my
view, no
documentary evidence in the form of bank statements or paid
cheques or anything else was produced in order to substantiate any of
the alleged payments.
[38]
Plaintiff was cross-examined at length about the contents of the
statement prepared by her solicitor. Clearly her alleged
contribution of £150 000 was an important part of her case for
an entitlement to a share of the proceeds of the property.
The
cornerstone of her claim is recorded in the following fashion in the
statement:-
“
Relationship
: K[…] / P[…] / Property Refurbishment:
Following
her separation from P[…] S[…] K[…] lived in her
house in Birchfield Avenue, Goatstown. She
worked as a self
employed display / interior designer. She met P[…] and
began to work for him on a professional basis
in relation to the
refurbishment of his premises at Lyrath Demesne which he had
purchased in 1993 for circa IR£600,000 (€761,842.85).
This was part financed by a mortgage from AIB in the sum of £224,000.
The
property comprised a house of circa 15,000 square feet, gardens and
170 acres of farmland. The house was in dire need
of repair.
Work started in September 1993 (or thereabouts). K[…]
was paid fees for her work as an interior designer
advising generally
and sourcing materials / furniture etc. She was retained
professionally for about 6 months after which
their personal
relationship had developed to the extent that they lived together in
Dublin (date to be confirmed if required).
K[…] says she
spent a huge amount of time and effort working on the property buying
furniture dealing with workmen, sourcing
materials and generally
managing much of the refurbishment works. At weekends she and
P[…] would go down to the property.
She says the house
was completed in or about Christmas 1994 but they only moved into the
house full time before Christmas 1995
when she moved there
permanently with her child (B[…]).
They
got engaged at this time and married in 1996.
Children:
The
first child born to P[…] and K[…] was called B. who was
born on the 1[….]. They then had twins (O.
and P.) on
the 2[…]. Up until September 1997 K[…]
effectively worked full time looking after the children and
directing
the continuing works to the premises which were ongoing. There
is one workman employed full time at the premises
and she would
effectively direct his work on a daily basis. In addition she
would purchase furniture and organize repairs
maintenance and general
upkeep of the property and the grounds. The farm of circa 170
acres is leased out to a farmer and
Karen has no involvement in same.
In
September 1997 she opened a shoe shop in Kilkenny named Florentina
Shoes. She closed this down in March / April 2001.
She
had little income in the first year or so but thereafter she took a
small weekly allowance (circa £150).
Financial
Contributions:
When K[…]
sold her house in Goatstown before moving to Kilkenny she realized a
net sum of circa £70,000. She
says the majority of this
sum (perhaps up to £60,000) was spent by her on the premises.
In March / April 2001 she sold
her interest in the shoe shop for
£60,000 and after tax she believes that she had circa £40,000
available the majority
of which was spent on the property. In
addition she was injured in a road traffic accident and as a result
she was awarded
compensation in the sum of £50,000 in the year
2000. Again the majority of this was spent on the property.
In
this regard she says that certain of the monies would have been
spent on furniture / contents as well as the fabric of the building.
[39]
As I have already remarked, plaintiff’s solicitor sent a copy
of this statement to her for approval before the agreement
was
finalised. Apart from the inadequacy of plaintiff’s
evidence in regard to her alleged financial contributions to
the
property, a number of facts recorded in the statement to support her
claim for an entitlement to portion of the proceeds are
not correct.
She did not work for the defendant on a professional basis in regard
to the refurbishment at Lyrath; she was
not paid fees for her work as
an interior designer and she was not retained professionally for
about six months. She was
hard pressed to explain why incorrect
information appeared in the statement and could do no more than
tentatively suggest that
it was merely a preliminary statement and
that she must have amended it later. She also testified that
she would have given
her solicitor documentary proof of the amounts
expended by her on the property. Her response is dealt with
more fully in
paragraph [63]
infra
.
[40]
The defendant’s fears that his creditors might seek to lay
claim to his financial resources were of course realised when
the
Mareva injunction was taken out against him. Plaintiff’s
counsel made much of the fact that since the Goodman case
had been
settled in February 2002 there was no longer any threat against the
defendant’s assets when the agreement was concluded
with
plaintiff on 11 March 2002. Therefore, he argued, the
inference was to be drawn that the agreement was what it
purported to
be. The fact is, however, that the preliminary work for the
agreement had already been done before the Goodman
case was finally
settled on 13 February 2002.
THE
ALLEGED LOAN AGREEMENTS
[41]
In the pleadings as initially drafted the plaintiff alleged that the
full amount of €1 337 386 which she had
obtained from
the sale of Lyrath had been readvanced to the defendant by way of
separate loans. These allegations were repeated
in affidavits
filed by her in two Rule 43 applications, the dates on which the
affidavits were sworn to being 1 February 2005 and
14 March 2006.
In the defendant’s plea he admitted that the full amount of €1
337 386 which was paid to the plaintiff
out of the proceeds of the
sale of Lyrath was repaid to him. In the plaintiff’s
reply to the defendant’s request
for further particulars, she
stated that she had no recollection of the precise dates when the
parties had entered into the loan
agreements pursuant to which she
had paid over the various amounts to the defendant, but averred that
these were concluded before
10 February 2003. At the pre-trial
conference the plaintiff was requested to identify precisely how she
had made payment
to the defendant in the sum claimed by her and in
response she answered as follows:-
1.
“
On 10 February she transferred
the amount of €1 000 000 from her First
Active
bank account to the parties’ joint investment bank account and
which was withdrawn by the Defendant on 17 March 2003;”
2.
“
On 9 March
(sic
May)
2002 the Plaintiff transferred an
amount of €150 000 from the First Active bank account,
which amount was utilised by
the Defendant towards payment of the
purchase price of the parties’ family home in Fresnaye;”
3.
“
On 1 November 2002 the Plaintiff
transferred a further amount of €50 000 from her First Active
bank account which was used
by the Defendant to pay for the
renovations costs in respect of the Fresnaye family home;”
She
also stated that she intended to amend her particulars in due course
to reflect the total amount claimed by her to be €1
201 994.
[42]
By the time the trial commenced, no application for amendment had
been filed by the plaintiff. In her evidence at the
hearing she
testified that she readvanced the money received by her from the
proceeds of the sale of Lyrath pursuant to three oral
loan agreements
concluded between March 2002 and February 2003. She testified
that
1.
An amount of €150 000 was advanced to the defendant as her
investment in the family home in South Africa.
2.
A further amount of €50 000 was paid by her to the defendant in
respect of renovations of the Fresnaye property.
3.
In February 2003 she advanced a sum of €1 000 000 to the
defendant which was utilised in the property investment of the
Claridges Hotel which he was developing in Green Point.
[43]
During cross-examination the plaintiff was asked why her evidence as
to amount which she had readvanced to the defendant (i.e.
€1 200
000) differed from the amount claimed in her particulars of claim.
She testified that she was not seeking repayment
of the full amount
that she had received from the property because she had spent money
on “
different things”
and was not looking for that
money back.
“
What
I would like to say there is that when we looked at the whole thing –
when I got my money a lot of the money that I spent
was because of
the (?) and living expenses with P[…]. So basically I
felt that at the time that I had actually given
most of my money back
….
To
fund our lifestyle. We had a
(Mareva)
against us – well against my
husband, and as it happened I had got my money before the
(Mareva)
was put into situ. My husband’s
funds were frozen and we didn’t have much of a choice but to
live off the money
I luckily had, otherwise we would have had not
funds and no way of feeding even our children. So initially
when I looked
at the situation I felt well, I was entitled to
probably get all my money back from my husband but then when I looked
at it I thought
that things that were very provable and that were
possible to get my money and made my loan obviously that I had given
to him credible,
because I didn’t want to look wrong in what I
was trying to do because in the years gone by as the husband and wife
he had
supported me, I had supported him and I wasn’t trying to
nit pick. So I thought at a later date it was fairer to look
at
the sums that were the biggest sums that I had paid towards things
that I had genuinely – the loan that I had given him
and also
towards my family home that I had been evicted from
…
I
thought I will claim all the money that I had used in due course with
my husband, that I had lent to him, used in the transition
time that
we were coming here. In retrospect I looked at it and thought
in fairness he had often – he had often paid
things for me and
I looked at the situation, I did my housekeeping and thought that the
bigger amounts of money were the important
things and to try and
trace where I spent 5 000 or I gave him 10 000 and to remember
all those details is pretty hard so I
decided to be fair and to just
look for the bigger amounts that I lent to him.”
[44]
Although the plaintiff in giving her evidence restricted her claim in
respect of the alleged loans to €1,2 million, it
is in my view
also necessary to examine the circumstances in which additional
amounts were repaid to the defendant. The plaintiff
testified
that the following amounts were also repaid by her to the defendant
at the request of the latter.
1.
€50 000 which she discovered in a bank account in Ireland and
which it is not disputed belonged to the defendant.
She
deposited this amount into her personal Nedbank account in South
Africa at the request of the defendant. The funds were
used to
pay the family expenses and R230 000 was paid into the
defendant’s Rand Merchant Bank account to enable him
to
purchase a farm property in South Africa.
2. €50 000
which was withdrawn from the plaintiff’s building society
account in Ireland on 5 June 2002 and which
payment was
necessitated by the defendant’s funds having been frozen upon
the grant of the Mareva injunction on 29 May
2002. The
funds were used to pay for the family’s living expenses as well
as for payment of certain of the defendant’s
debts.
3. €46 000
which according to the defendant was used inter alia for moving costs
to South Africa, the purchase of aeroplane
tickets and cash for use
by the family on arrival in South African.
4. A further amount
of €50 000 which was deposited into the parties’ joint
Investec account in South Africa at the end
of July 2002 which was
also used to fund the family’s living expenses.
5. €15 000
which was transferred to South Africa in April 2004 and utilised to
pay for the purchase of a four wheel drive motor
vehicle used by the
plaintiff.
The
significance of this evidence is that amounts which totalled some
€161 000 were utilised to pay for the family’s
living
expenses and the move to South Africa and certain of the defendant’s
personal expenses. On plaintiff’s
own evidence these
payments could never have been loans from the plaintiff to the
defendant.
THE
ALLEGED LOANS TOTALLING R1,2 MILLION
[45]
These comprise the sum of €150 000 repaid by the plaintiff to
defendant on 9 May 2002, €50 000 repaid in November
2002
and €1 million repaid in February 2003. The two payments
made in 2002 related to the property purchased by the
defendant in
Fresnaye.
[46]
The plaintiff testified that she regarded the property in Fresnaye as
half hers and that the €150 000 which she had repaid
to the
defendant was her money and she wanted to make it work by investing
it in the property. The difficulty about this
evidence is that
it was not what had been pleaded by the plaintiff. When the
evidence was led, defendant’s counsel
pointed out that the
evidence did not accord with the pleadings and the following
interchange between counsel and me then followed:-
“
MR
McCLARTY
: His Lordship,
may I just interrupt my learned friend? I must say I’m
somewhat surprised to hear what appears
to be a case which hasn’t
been pleaded.
COURT
:
Yes.
MR
McCLARTY
: The case pleaded
is that about 1.3 million euros was re-advanced to the Defendant.
The case as pleaded is not
that the Plaintiff invested
…(intervention)
COURT
:
Got a half interest.
MR
McCLARTY
: Invested these
moneys in property and unless my learned friend is going to suggest –
because I don’t want
him to lead evidence and then say at a
later stage ‘Oh, but I’ve got a claim for half the
property in Cape Town’,
because that’s not the case that
we’ve come here to meet here, M’Lord. So I must say
I’m somewhat
at a loss to understand this evidence because it’s
certainly not what’s pleaded.
MR
WEINKOVE
: M’Lord, I’m
just leading evidence what’s in her mind, I’m not
claiming half the house in Fresnaye,
I can’t claim that, that
would have to be a written document signed by the parties. I
don’t have a claim of that
nature. I’m just proving
that 1.2 million euros was paid by my client to the Defendant, that’s
the amount of
the loan that I’m claiming back, partly, I can’t
treat it more than a loan and I don’t claim that ‘I own
part of the house’.
COURT
:
Alright, you’ve got 150 000 and 50.
MR
WEINKOVE
: It’s the 150 000 euros
plus the 50 plus later on Your Lordship will hear about the million.
COURT
:
Alright.
MR
WEINKOVE
: It brings it up
to 1.2 million euros. But just, the house was never put into
your name, you’re not claiming
that you own half the house
today? --- No.”
[47]
In the light of plaintiff’s evidence and the response of her
counsel to defendant’s counsel’s concern about
plaintiff’s evidence not according with her pleading, it is not
surprising that defendant’s counsel objected to an
amendment to
plaintiff’s particulars of claim which was moved by plaintiff’s
counsel after the close of both the plaintiff’s
and the
defendant’s cases and at the time of argument. In
terms of the amendment plaintiff seeks to delete the
particulars
relating to the alleged loans totalling €1 337 386 and to
replace these with two separate claims. The first
claim is for
payment of €1 million, being the sum which the plaintiff alleges
she on 7 February 2003 undertook to lend to
the defendant and did in
fact pay over to the defendant on 10 February 2003. The
amendment records further that it was an
express alternatively an
implied / tacit term of the loan agreement that the defendant would
repay the €1 million on demand,
alternatively on the event of
their relationship breaking down irretrievably and that since the
relationship had broken down irretrievably
plaintiff demands
immediate payment of the sum of €1 million. The second
claim relates to the monies advanced in respect
of the Fresnaye
property and is set out in the following terms:-
11.1
On or about 9 March 2002 and at the parties’ family home in
Ireland Defendant orally requested Plaintiff to contribute
the amount
of €150 000 towards the acquisition of a new family home at
Avenue Protea, Fresnaye in Cape Town (‘the
Fresnaye property’).
11.2
On the aforementioned occasion Defendant orally undertook to cause
the Fresnaye property to be registered in the parties’
joint
names.
11.3
Pursuant to the aforesaid undertaking Plaintiff in the bona fide and
reasonable belief that Defendant would cause the Fresnaye
property to
be registered in the parties’ joint names, as promised,
transferred an amount of €150 000 from her First
Active bank
account to Defendant, at his special instance and request, to be used
by him towards the payment of the purchase price
of the Fresnaye
property.
11.4
On or about 1 November 2002 and at the Fresnaye property Defendant
orally requested Plaintiff to contribute an amount of €50 000
towards the renovation costs of the Fresnaye property. In the
bona fide and reasonable but mistaken belief that the Fresnaye
property had in fact been registered in the parties’ joint
names, Plaintiff transferred a further sum of €50 000 from
her
said First Active bank account to Defendant at his special instance
and request to be used by him towards the payment of the
aforementioned renovation costs.
11.5
In fact, the Fresnaye property was never registered in the parties’
joint names.
11.6
Plaintiff has accordingly effected the aforementioned payments to
Defendant in error and hereby repeats her demand for payment
of
same.”
[48]
The effect of the amendment is to reduce the plaintiff’s claim
to €1,2 million. There was no objection
to the
amendment relating to the alleged loan of €1 million, but
as I have already remarked, the portion of the amendment
relating to
the Fresnaye property was opposed. Counsel for the plaintiff
submitted that on the authority of
Van
der Spuy and Another v Malpage
[5]
the amendment should be granted. In
Van
der Spuy
’s
case an application to amend the pleadings was made to the court of
appeal but the principle to be applied is equally apposite
to an
application made after the close of pleadings. The principle
relied upon by plaintiff’s counsel, which is referred
to very
briefly in the judgment and is well known and trite, is to the effect
that a court of appeal will only allow an amendment
of pleadings only
in order to give effect to existing facts which have been fully
canvassed before the lower court. In the
present case, there is
no question of the facts having been fully canvassed before me.
The amendment seeks to introduce a
new cause of action, namely an
undertaking by the defendant that the Fresnaye property would be
registered jointly in the names
of the plaintiff and the defendant.
To start with, this cause of action was specifically disavowed by
both plaintiff and
her counsel. No evidence was led to support
allegations that the defendant orally undertook to cause the property
to be registered
in the parties’ joint names. As to the
allegation that the property was to be registered in the names of the
parties,
it is clear from the evidence given by both plaintiff and
the defendant and from documentary evidence before me that a local
attorney
who had assisted the parties with their move to South Africa
had informed them that it would be preferable for the property to be
owned by a company or a trust rather than the property being held in
the name of an individual. Acting on this advice the
property
was registered in the name of a company. The proposed amendment
clearly introduces an entirely new cause of action
and since the
facts necessary to sustain that new cause of action have not been
canvassed at all due inter alia to both plaintiff
and her counsel
disavowing any intention to rely on the new cause of action, the
amendment relating to the Fresnaye property cannot
be allowed.
The amendment relating to the loan of €1 million was not opposed
and will be allowed. This means that
the plaintiff’s
claim has been reduced to one for payment of €1 million.
Clearly the evidence given by the plaintiff
relating to the payments
of €150 000 and €50 000 utilised in respect of the Fresnaye
property does not support the allegations
that these sums constituted
loans.
THE
€1 MILLION LOAN
[49]
The plaintiff’s evidence as to the terms of the loan is not
entirely clear. She started off by saying that in early
February 2003 at a time when they were getting on “
amazingly
well”
defendant asked her how much money she had and she
told him that she had about “
a million”
left.
He then asked her to lend him the money as it would be in the best
interests of the family and it would help him to
buy the Claridges
Hotel which he wished to purchase without the need to borrow funds
for that purpose. Asked by her counsel
whether any time was
fixed for the repayment of this money, the plaintiff testified no,
“
there was no fixture of when I would get the money back”.
She testified that the defendant told her that he intended to
establish a rental pool. She then went on to say:-
“
Yes
initially when the first time when he brought up the issue of me
lending him the money I wasn’t so keen because my idea
was we
had no family base in Ireland and I actually had been keenly looking
on the Internet to maybe buy something that would have
a base in
Ireland with, so I wasn’t so keen initially and then as he
talked me through it and whatever, I thought okay and
he said also he
was willing to give me 4 one-bedroomed apartments in the complex, 2
at the front and 2 at the back and…
(intervention).”
At
that stage plaintiff’s counsel made it clear that the plaintiff
was making no claim to four apartments and the plaintiff
then went
on:-
“
So
those four apartments would be given to me so that I could put them
into the rental pool. I would generate an income from
them and
also it would be a nice thing for my children to have one each, say,
in my will when I, you know, would die. So
I thought that was a
nice idea and I was quite happy after a lot of consideration to go
along with it. I felt that the money
wasn’t really doing
much for me, as I said, in the Irish Bank and although I wanted to
buy something in Ireland, Irish property
had actually gotten very
expensive and for a million Euro’s you won’t be able to
buy too much, so I decided it best
to help him out and let him make
the investment and hopefully help – it would also be an
advantage for the whole family.”
[50]
The circumstances leading up to the payment of the €1 million to
the defendant were explored during the course of her
cross-examination. On 31 December 2002 an altercation occurred
between the parties at their home in Fresnaye. The plaintiff’s
version is that the defendant was in a bad mood that day and
criticised her for being ‘lazy’ and ‘fat’
and
for spending money excessively. The defendant’s version
is that he criticised her only for her excessive spending.
When
she emerged from taking a shower, she found that the defendant had
bent and effectively destroyed an Investec credit card
which she had
been using. She became hysterical and reported the incident to
her parents who were living with them at the
time. It is also
common cause that the parties then had words about €1 million
which the plaintiff had in her First
Active Account in Ireland at the
time. As a result of the altercation the defendant did not go
out with the family for dinner
that evening, but took the children
out with him. The plaintiff’s version is that the
defendant telephoned her while
he was away with the boys and
threatened that she would never see the children again unless she
repaid the €1 million to him.
Defendant denies this.
His version is that he raised the question of the €1 million
with the plaintiff at the time of
the altercation and in the presence
of plaintiff’s parents, saying that he wanted her to repay the
amount in question as
he required the money for the Claridge’s
project. The plaintiff’s father attempted to diffuse the
situation saying
“
What’s a
million euros?”
. This
remark was highlighted by plaintiff’s counsel during the course
of argument as I will explain in due course.
[51]
As I have mentioned, the defendant denies that he ever threatened not
to return the children or that he coupled that threat
with the demand
for repayment of the €1 million. He admits that he
telephoned the plaintiff while he was away from home
with the boys.
He says that during the conversation he told the plaintiff that he
would return with the boys, but that she
should get her father and
mother out of the house. He found it difficult to get on with
plaintiff’s mother who was
domineering and treated his house as
if it were her’s and that that was why he wanted them out.
Plaintiff duly booked
her parents into a hotel at the defendant’s
expense.
[52]
Plaintiff testified that as a result of defendant’s threats she
spoke to her medical doctor who advised her to consult
an attorney.
She attempted to consult an attorney in the “
forecourt”
,
but was unable to make contact with the attorney as his offices were
closed over the Christmas period. Thereafter she made
no
further attempt to consult an attorney. Her version is that she
loved her husband who apologised to her for the incident
and that she
then forgave him. Thereafter she says that their relationship
improved to such an extent that she likened it
to a honeymoon period,
so much so that on 7th February she was prepared to repay the €1
million to the defendant.
The defendant does not deny that he
attempted to make a go of the marriage, but he denies that it every
reached the ecstatically
happy state which the plaintiff described.
[53]
Plaintiff’s counsel submitted that I should disbelieve the
defendant because of false statements made by him in
1.
His replying affidavit in the Maher proceedings;
2.
His “
means”
affidavit in proceedings with M[...] P[...] which, it would appear,
are not yet finalised; and
3.
Letters and affidavits after the disposal of Lyrath.
[54]
In my view the false statements in the Maher proceedings are not of
any great moment. The defendant stated on oath that
he had
purchased a holiday property in South Africa and would let the
property when not required for use by his family. He
also
stated that he intended to remain resident in Ireland. Even though
the defendant did in fact relocate to South Africa and
obtained the
right to carry on a business and to reside with his family in this
country, it is clear that he and the plaintiff
continued to regard
Ireland as their country of domicile.
[55]
As to the proceedings instituted by M[...] P[...], the defendant
indicated that although he had entered into a settlement with
his
first wife M[…] P[…] the proceedings in question were
instituted by her as a result of her allegations that he
had failed
to comply with the terms of the settlement. The defendant’s
version is that M[…] P[…] had
in fact agreed that
certain payments could be discontinued. As to the contents of
the means affidavit, the defendant’s
explanation is that he
sought to minimise his assets and to maximise his liabilities and it
is clear that in doing so certain of
the information furnished by him
in the proceedings in question was false.
[56]
In regard to the sale of Lyrath, plaintiff’s counsel
understandably argued that since the defendant had made a number
of
statements in letters and affidavits in which he confirmed that the
plaintiff had acquired a right to portion of the proceeds
of the sale
of the property, those statements should be believed.
Furthermore he submitted that the plaintiff would in any
event be
entitled to some portion of the proceeds.
[57]
Defendant’s explanation is that information was furnished to
the plaintiff’s solicitor in order to make out a case
for
plaintiff to be able to share in the proceeds of the sale as set out
in the agreement which the parties concluded. His
attitude is
that once the agreement had been entered into, he perpetuated the
sham. In fact it suited him to do so in the
M[...] P[...]
matter. While one would normally have serious misgivings about
the credibility of a witness who is shown to
have made false
statements under oath, this case is somewhat different, for clearly
if the agreement was in fact a sham, it would
have been necessary to
make false statements.
[58]
The plaintiff admitted that she assisted the defendant in signing a
letter in which it was recorded that certain valuable paintings
which
had been given to her by her family had been sold and that she was to
receive the net proceeds of the sale amounting to €76
000.
In cross-examination she admitted that the letter was false and that
the paintings had belonged to the defendant and
were hanging in the
house of Lyrath when she moved in. To her knowledge the letter
was to have been used and was in fact
used in defendant’s means
affidavit in the M[…] P[…] proceedings. Her
explanation as to why she signed
the letter, like some of her other
evidence, had a very hollow ring to it.
“…
but
I remember him calling me into his office as he often did to sign a
document or witness a document and I read a very quick thing
and it
said something like, and I think we have discovered that these were
from my family – which is not true – and
he said he was
doing it as a tax liability. So he’s my husband, I signed
it. It wasn’t a correct document
I admit it was wrong but
at the time if it was to save him some tax so I told a white lie but
I knew there was a paper trail to
actually show that that wasn’t,
they weren’t my family home photographs, sorry pictures.”
…
..
“
I
actually never got that money and he physically didn’t owe it
to me it was my husband’s money and it was a total scam
of some
sort which I’m sure you can cross-examine him in time about it
but I did sign it, it is my signature that document
and yes I did
read through it, I did understand that it was a white lie, but it was
a lie but he had some issue with tax he said
with me so I did do
that.”
[59]
Plaintiff sought to attribute some significance to a letter addressed
to her by the defendant in March 2004. This was
a letter in
which the defendant recorded his views as to the reason for the
breakup of the relationship with the plaintiff and
in which he set
out terms on which he was prepared to deal with the plaintiff in the
future. The portion of the letter relied
upon by plaintiff’s
attorneys is the following:-
“
Be
prepared for P[…] S[….] or your father/mother ‘What
is a million euros’ to be slow to put their hands
in their
pockets.”
According
to the plaintiff the reference to ‘What is a million euros’
was an admission by the defendant that he owed
the plaintiff the sum
of money referred to. In my view there is no merit in this
submission, which was supported by plaintiff’s
counsel.
The defendant was the author of the letter and explained that he used
the term ‘What is a million euros’
as a nickname for the
plaintiff’s father who, though not well off, had used the
expression when the defendant mentioned to
him in December 2002 that
the plaintiff was spending excessively and that he wanted the return
of his €1 million.
[60]
As to the agreement signed by the parties, it is clear that the
defendant was the guiding hand to the instructions given to
the
solicitor whom he had suggested the plaintiff should consult in order
to set up the agreement. The basis on which the
agreement was
approved by counsel is set out in the recordals made in the agreement
and which I have quoted in paragraph [30].
I am not satisfied,
on the evidence before me, that the plaintiff made any meaningful
contribution to the value of Lyrath before
her marriage to the
defendant. The defendant’s evidence was that the
refurbishment and improvements to Lyrath were
funded entirely by him
and full details as to the amount making up the total of IR£557 500
were placed before the court.
As to the division of the
proceeds of the sale, the defendant’s testimony, borne out by
documentation, demonstrated that
in fact the plaintiff received a
larger share of the net proceeds of the property including the farm
than did the defendant.
The defendant allocated the outstanding
mortgage bond almost exclusively to the farm and only a small amount
was attributed to
the house. He also paid all the expenses
relating to the sale such as conveyancing costs, stamp duty and other
payments.
These amounts were deducted from his share of the
property and after the payment of Capital Gains Tax, he ended up
receiving a
lesser amount from the sale of the proceeds of the
property than did the plaintiff. Having regard to the fact that
the parties
had been “
married”
for less than six years when the agreement was signed, the legal
justification for the division of the proceeds seems highly
questionable.
Although the agreement was apparently approved by
counsel, it is clear that this was on the strength of false
information in regard
to the involvement of the plaintiff and the
amounts allegedly ploughed into Lyrath by her.
[61]
In my view the probabilities strongly favour the defendant’s
version relating to the agreement entered into by the parties.
The suggestion that the agreement was an arm’s length
transaction based on independent advice furnished to the plaintiff
is
not sustainable. The hand-written notes made on the preliminary
statement prepared by plaintiff’s solicitor, effected
at a time
when plaintiff and defendant went through the statement together,
include the notations “
2M”
and “
50%”
.
This is presumably an indication that each party was to receive 50%
of the approximately €2 million which would be
available.
In the result the plaintiff did in fact receive an amount slightly in
excess of €1 million. Then there
is the correspondence
between plaintiff and defendant and between defendant and
plaintiff and plaintiff’s solicitor
preceding the signing of
the agreement, and indeed also plaintiff’s visit to her
solicitor, which must attract suspicion.
In a letter addressed
by the defendant to the plaintiff and dated 15 November 2001,
the following was recorded:-
“
Dear
K[…]
In
order that the signing of the contract for the sale of our home at
Lyrath may proceed today I confirm that I am agreeable that
the
proceeds of the sale of the house of £2.3m less our mortgage
will be apportioned between us, on the basis of our legal
advice, to
be agreed before the closing date of February 28th 2002.”
(The
defendant testified that this letter was actually written on 25
January 2002 and backdated to 15 November 2001 and his file
copy of
the letter bears an inscription to this effect.)
This
was followed by the letter from plaintiff’s solicitor to
defendant on 6 March 2002 putting him on notice and the
immediate response on the following day by the defendant which I have
quoted on paragraphs [27] and [28].
[62]
The question which springs to mind is why the defendant should write
a letter in the form of that contained in the letter dated
15
November 2001. It is a peculiar letter for a husband to write
to a wife. The correspondence which then ensued certainly
creates the impression that negotiations had ensued between the
parties in order to give some form of credibility to the agreement
they subsequently signed. Having regard to the gross inflation
if not falsification of amounts allegedly contributed by the
plaintiff to the value of Lyrath and the involvement of both parties
in arriving at the figures, the value to be placed on such
‘negotiation’ is questionable, to say the least.
[63]
The plaintiff’s evidence as to the information contained in the
statement given to her solicitor is not satisfactory.
I have
already remarked on the unsatisfactory nature of her evidence as to
which amounts she expended in effecting improvements
to the
property. In cross-examination she conceded that the amounts
reflected in her statement were incorrect. Pressed
as to why no
documentary proof had been supplied to verify her claims in respect
of these amounts, she testified:-
“
I
would probably have submitted my sale of my home, I would have
submitted the sale of Florentina Shoe Boutique. I would have
given him paperwork to substantiate these figures, and probably at
the time I could have even given him bank statements …
He
would have wanted proof and documentation, which I must have provided
with him at the time. So the figures were all a
bit confusing
in this preliminary draft because they are not the right figures and
I think to get to the appropriate proportion
of the 190 Euros, which
is about 150 Pounds, I would have had to shown (sic)
him
some resources. I don’t think he would have just taken my
advice willy nilly and drawn up a document without those
details.”
The
file of plaintiff’s solicitor was obtained during the course of
the trial and from this it is apparent that only limited
corrections
were effected to the preliminary statement of the plaintiff and that
it was this document that was sent to senior counsel
for his advice.
It is also evident from the solicitor’s file that no documents
had been given to him with regard to
the breakdown of the amounts,
nor had he been supplied with any proof in support of plaintiff’s
claims as to the amounts
she had allegedly expended on the property.
The plaintiff’s testimony that her solicitor could have
misunderstood the
information given to him is unconvincing and is not
borne out by the solicitor’s documentation. His notes
indicate
that she advised him that she had in fact been paid fees for
refurbishing the house for some six months. This is patently
not true. Plaintiff also denied that she had ever had sight of
the letter written by defendant to her dated 15 November
2001 in
which the defendant indicated that he was agreeable to the proceeds
of the sale of the house being apportioned between
the two of them on
the basis of legal advice, yet a copy of this letter was found in her
solicitor’s file and could only
have come from her.
Plaintiff
was reluctant to concede that save for minor amendments which she and
the defendant had made to the preliminary statement,
that statement
was the document relied upon to formulate the agreement, saying that
it was merely a draft and that there could
have been another
statement which was used. The fact is however that no other statement
was found in her solicitor’s file
and the incorrect information
and incorrect figures appearing in it found their way into the final
agreement.
[64]
I must also deal with the impression which I formed of the parties in
court. I did not find the plaintiff to be credible
witness.
She seldom answered questions put to her in cross-examination
directly. Not only did she appear to attempt
to anticipate the
purpose of the questioning and then to tailor her answers
accordingly, but she repeated, sometimes ad nauseum,
evidence which
she had previously given. All of this was, if I am not
mistaken, done in an attempt to persuade me of her
attributes as a
caring wife and mother; and of course that she had made major
financial contributions to the refurbishment, maintenance
and upkeep
of Lyrath. She was loquacious in the extreme and, having regard
to the country in which she and the defendant
had lived, one might be
excused for thinking that she had been in close contact with a
certain stone in Blarney.
[65]
In cross-examination the plaintiff conceded that the purpose of the
preliminary statement made to her solicitor was in order
to secure an
agreement which would have to be “
bullet proof”
to
stand up in the face of her attack from the defendant’s
creditors. When she realised that this evidence supported
the
evidence of the defendant, she insisted that there had been no risk
to the defendant’s assets after 11 September
2001 as the
defendant’s action against Goodman had been settled on that
day. The plaintiff’s evidence, supported
by
documentation, was that the action was settled only in February 2002,
but in spite of documentary evidence to this effect, the
plaintiff
continued to insist that the case had been settled or effectively
settled on 11 September. There is also a question
mark over her
evidence that she remembered telling her solicitor that she had never
been paid fees by the defendant and that her
solicitor had
misinterpreted what she had told him. The plaintiff could also
not explain why the document that was eventually
sent to senior
counsel for his opinion as to her right to share in the proceeds of
the sale of Lyrath had not been amended prior
to the dispatch thereof
to counsel. Her cross-examination in this regard proceeded as
follows:-
“
The
question is that the document contains statements which are not
correct and if this was not a fabrication, why did you allow
the
incorrect statement to go through? That’s the question.
--- Okay.
MR
McCLARTY
:
What’s your answer? --- I don’t
know. I can’t remember exactly all those details.
So I don’t
know what I was thinking at the time.”
When
asked to explain why the statement recorded that she had been
professionally retained by the defendant, her answer was that
she was
a professional and that that was why the statement reflected that she
had been professionally retained. This explanation
is not
understandable.
Importantly,
the plaintiff led no evidence to indicate that any portion of the
amount received by her from the proceeds of Lyrath
was used for her
own purposes, which one might have expected had she been the only
party entitled to the funds.
[66]
As to the defendant’s credibility, plaintiff’s counsel
urged that his evidence should be discredited because of
the false
statements which he had made in the Maher proceedings, in the
proceedings with M[...] P[...] and in connection with the
disposal of
Lyrath. These I dealt with in paragraphs [53], [54] and [55].
Other aspects on which he was criticised
were his version as to why
the investment of €1 million in the plaintiff’s name was
recorded in two accounts with the
bank and the fact that he had
continued with the sham after the Goodman and Taher actions had been
settled. His difference
as to the reason for two accounts being
created in the plaintiff’s bank is in my view of no great
importance and even though
plaintiff’s counsel submitted that
once the Goodman and Taher cases had been settled, his funds were no
longer at risk and
there was no need for him to maintain the sham,
the fact is of course that what the defendant says he had feared came
to pass when
the Mareva injunction was taken out against him.
As far as the defendant’s evidence was concerned, I found him
to be
a credible witness. The documentation submitted by him
supports his version that the plaintiff had readvanced to him the
full amount of the proceeds which she had received.
Importantly, the amounts were used for the general living expenses of
the family, the purchase of a home and an investment in a hotel in
Green Point. As and when he required the funds, they were
paid
over to him by the plaintiff.
[67]
Notwithstanding a natural reluctance to recognise an agreement which
has been set up on the basis of false statements and recordals,
I
conclude that the defendant has, at least on the balance of
probabilities, established that the agreement concluded with the
plaintiff in March 2002 was a sham and was concluded in order to
protect his assets from attack by a third party. In my view
the
fact that the plaintiff actively involved herself with the defendant
in compiling her statement and gave false information
to her
solicitor for the purpose of setting up the agreement makes this
clear and in fact confirms the defendant’s evidence.
I
would have come to the same conclusion even if the onus resting on
the defendant were a full onus.
[68]
Having reached a conclusion as to the sham agreement, it is strictly
speaking not necessary to deal with the plaintiff’s
claim for
repayment of the loan, which has now been reduced to one for payment
of €1 million. I will nevertheless deal
with this issue,
in case it should be necessary. The plaintiff bears the onus of
proving the terms of the loan account.
On the plaintiff’s
own evidence it is in my view clear that the money was repaid to the
defendant with the intention that
it was to be invested in the
Claridge’s Hotel developments. After testifying that the
defendant had asked her to lend
him her money to help buying the
hotel as that would be in the best interests of the family, she was
asked whether there was any
time fixed for the repayment of the
money. Her answer was:-
“
No,
there was no fixture of when I would get the money back, he did say,
…”
And:-
“
He
did, he said it was already a rundown hotel and that he was going to
develop into a six star state of the art hotel and that
it was gong
to be a six star development and that the idea was that there would
be a rental pool where people, overseas investors
and stuff, would
come, buy a hotel, put it back into the rental pool when they weren’t
using it and then the hotel would
utilise these rooms as hotel room
as well. So it was an investment opportunity.”
This
was followed by the testimony which I quoted in paragraph [49]
relating to the four apartments and the proposed rental pool
agreement.
Interestingly,
and contrary to the plaintiff’s evidence, the rental pool
agreement only got off the ground in September 2004
and not at the
initial stage as testified by the plaintiff.
[69]
I am satisfied that on the plaintiff’s evidence, she did not
intend to loan the €1 million to the defendant,
but rather
intended to invest it in the hotel development in return for which
she would receive four apartments from which she
was to receive the
rental income. Added to this is the unsatisfactory nature of
the plaintiff’s evidence in regard
to the altercation with the
defendant concerning the €1 million which led to a credit card
being bent and the contradiction
between her evidence relating to the
€1 million payment and that of the defendant which is more fully
referred to. I
accept the defendant’s version as to this
discussion. Having regard to the fact that on her version it
was necessary
to conclude the agreement relating to the division of
the proceeds of the Lyrath sale at a time when the relationship
between the
parties was very good, it is difficult to understand why
plaintiff did not take steps to record the terms of the alleged loan
of
€1 million to the defendant in writing. After all,
there had been a serious disagreement between them when the
€1 million
was discussed and plaintiff’s evidence was
that as a result of defendant’s threat not to return the boys
to her unless
she repaid the €1 million, she sought out an
attorney so that she could obtain legal advice. Her evidence as
to where
and how she attempted to find an attorney and who this
person was was extremely vague and her evidence that the relationship
with
the defendant improved so dramatically that by early February
she was prepared to repay the €1 million to the defendant
without recording the arrangements, is difficult to accept. In
all the circumstance, I conclude that the plaintiff has failed
to
establish her claim that she loaned the defendant €1 million.
[70]
Defendant’s counsel submitted that in the event of the
defendant being successful, plaintiff ought to be ordered to pay
the
defendant’s costs of bringing Mr Meyer to court to give expert
evidence on an attorney and client basis. The submission
is
that since it was clear what evidence Mr Meyer was to give and since
plaintiff had declined to put her view to him, notwithstanding
being
requested to do so, her failure to concede that the marriage in
Australia was void, should be visited with a punitive costs
order
against her. I am not disposed to grant such an order.
Plaintiff’s counsel indicated that plaintiff was
not possessed
of sufficient funds to employ an expert witness and chose to rely
instead on cross-examination of Mr Meyer in order
to persuade me to
hold contrary to the view expressed by him. Although the
cross-examination was relatively ineffective,
and although
plaintiff’s counsel ultimately argued this aspect of the matter
on a ground not fully explored with the witness,
I do not consider
that a punitive costs order would be appropriate.
[71]
In the result, the plaintiff’s claim is dismissed with costs,
which costs shall include the costs attendant upon the
employment of
two counsel.
____________________
R
B CLEAVER
[1]
.
[1953] 2 All ER 794
[2]
.
[1967] 2 All ER 689
[3]
.
(1984) Fam LC 91 - 556
[4]
.
(1981) 7 Fam LR 909
[5]
.
[2005] 2 All SA 635
(N)