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1989
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[1989] ZASCA 42
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Katz v Katz (437/87) [1989] ZASCA 42; [1989] 2 All SA 353 (A) (31 March 1989)
/wlb Case No 437/87
SUPREME COURT OF SOUTH AFRICA APPELLATE DIVISION
In the appeal of:
BARRY ELI KATZ
Appellant
and
HAZEL PAMELA
KATZ
Respondent
CORAM
: CORBETT CJ, HOEXTER, NESTADT, MILNE JJA et NICHOLAS AJA
DATE OF HEARING
: 6 March 1989
DATE OF JUDGMENT
: 31/3/89
JUDGMENT
MILNE
JA/
-3-
(a)
the existing means and
obligations of herself and defendant;
(b)
the
contributions direct and indirect made by her to the maintenance or increase of
the estate of defendant during the subsistence
of the marriage, both by the
rendering of services and the saving of expenses which would otherwise have been
incurred, it is just
and equitable that defendant be directed to transf er to
plaintif f one half of the total assets amassed by him from the inception
of the
marriage between the parties to date."
The claim for
a divorce was based upon the incompatibility of the parties, the fact that they
had, during September 1986, agreed to
live apart and the fact that the marital
relationship between them had broken down irretrievably.
The relief which the respondent claimed included: (1) An order directing the
defendant to furnish a statement of account relating
to the disposition of the
respondent's immovable property, and to pay the amount
-4-
due to the respondent in terms of that account,
(2) An order directing the appellant "as prescribed in terms of
section 7
of the
Divorce Act No 70 of 1979
" to transfer to her one half of the appellant's assets
up to the date of dissolution of the
marriage,
(3)
A decree of
divorce,
(4) Maintenance f or the respondent at the rate of R1 000 per month (with a
proviso to the effect that this sum should be increased
by R1 000 per month "for
each R100 000 by which the sum payable to plaintiff (in terms of
section 7)
falls short of R1 000 000", and also for payment of maintenance to the
respondent to be increased in accordance with rises in the
consumer price index,
as notified by the Director of Statistics.
(I have
omitted certain of the claims made by the respondent because the appellant, in
his plea, made detailed
-5-
tenders some of which were accepted by the respondent in a document called
"acceptance of tender", subsequently incorporated in the
order of the court
a
quo
. These related to the custody and maintenance of the children of the
marriage and nothing more need be said about these matters.)
The appellant made a conditional counterclaim for a decree of divorce, and an
order incorporating the terms of certain paragraphs
of the tender. The action
was heard by COETZEE J. During the course of the trial a decree of divorce was
granted and on 20 August
1987 an order was made incorporating those terms of the
tender which had been accepted; this order is not in issue in this appeal.
The appellant was also ordered to pay to the respondent the sum of R278 000,
and the sum of R3 500 000 on or before the second day
of October 1987. The trial
judge granted leave to
-6-
appeal against the whole of the judgment, but in fact it was only
the
order for payment of the sum of R3 500 000 that was in issue
in the appeal.
The sum of R278 000 represented the net proceeds
of what was described as
"the former common home of the parties"
found by the court to be the
respondent's property. It was,
furthermore, not part of the appellant's case
that no award
should have been made in terms of the provisions of s7(3) of
the
Divorce Act No 70 of 1979 (the Act). The objection was to the
quantum.
It was submitted that the award of R3,5 million -
"should be reduced substantially to reflect a transfer by the appellant to the
respondent of an amount which this Court deems just
and equitable in terms of
section 7 of the Act in addition to the payment of the amount of R278 000 as
ordered in para. 1 of the
Order, and the retention by the respondent of the sum
of R26 000."
The amount of R26 000 was the amount
standing to the credit of
the respondent in a savings account. The original tender in
the
appellant's plea, which was dated 7 August 1987, included a
tender to pay or deliver to the respondent:
-7-
(a)
the sum of R2 000 per month
as maintenance for herself;
(b)
the sum of
R300 000;
(c) all household furniture and effects in the parties former matrimonial home
excluding certain
items;
(d)
a motor car in the respondent's
possession;
(e) R10 000 as a contribution towards the purchase of another motor vehicle by
the respondent; and
(f) the respondent's costs as between party and party up to the date of the
tender.
On 17 August 1987, when the trial had been
running for several days, the appellant's tender was amended by deleting the
offer to pay
maintenance of R2 000 per month, and increasing the amount of R300
000 to R750 000. This was described by the appellant's senior
counsel as "a
clean break tender". What was obviously contemplated by this was that the court
should make only a redistribution order
in terms of ss(3), and no
maintenance
-8-
order in terms of ss(2) of s7 of the Act. Cf
Beaumont v Beaumont
1987(1) SA 967 (A) at 993B-C. It was the appellant's case, in
other words,
that the court should, instead of making a
maintenance order in terms of
ss(2), award a lump sum in terms of
ss(3). This, in fact, appears to be what the trial judge had in
mind at
one stage in his judgment. He quoted the following
remarks of BOTHA JA in
Beaumont
's case at 993A-E:
"In other words, the English legislation now seeks- to foster the imposition of
a 'clean break' in appropriate cases (Cretney (op
cit at 835)). Our legisiation
contains no corresponding provision, but in this instance I do not consider the
concept underlying
it to be foreign to our law. On the contrary, there is no
doubt in my mind that our Courts will always bear in mind the possibility
of
using their powers under the new dispensation in such a way as to achieve a
complete termination of the financial dependence of
the one party on the other,
if the circumstances permit. The last-mentioned qualification is, of course,
very important; I shall
return to it in a moment. The advantages of achieving a
'clean break' between the parties are obvious; I do not think they need be
elaborated upon. The manner of achieving such a result is, of course, by making
only a redistributión order in terms of ss(3)
and no maintenance order in
terms of ss (2) . What I have said earlier with regard to
the
-9-
Court taking an overall view, from the outset, of the possibility of making an
order or orders under either ss(2) or ss(3) or both,
does not mean that the
Court will not consider specifically the desirability in any case of making only
a redistribution order and
awarding no maintenance, having regard particularly
to the feasibility of following such a course. With regard to the latter and
to
the gualification I stressed a moment ago ('if the circumstances permit'), there
will no doubt be many cases in which the constraints
imposed by the facts (the
financial position of the parties, their respective means, obligations and
needs, and other
relevant factors) will not allow justice to be
done
between the parties by effecting a final termination of the financial dependence
of the one on the other. In the end everything will
depend on the facts and the
Court's assessment of what would be just."
The learned trial judge then says:
"In my order I follow the clean break principle
aforementioned."
As one would expect in these
circumstances, the trial judge then
examined, in detail, the respondent's
claim for maintenance, and
also her evidence as to her capital requirements
for the purchase
of a town house, and a new motor car, and the expenses
incidental
-10-
to such acquisitions. He came to the conclusion that the respondent's capital
requirements amounted to R300 000 and that "... R6 000
per month would be ample
to cater f or the needs of the plaintiff so as to maintain the same life style
to which she was accustomed."
The order for the sum of R3,5 million which he made was, however, quite
unrelated to these findings. It seems that he awarded this
sum upon the
following basis:
(a)
the net assets of the
appellant were R7 539 200;
(b) throughout the marriage there was a universal partnership between the
parties in which they held equal shares;
(c) that, accordingly, it would be just and equitable that: "... the parties
should share equally."
It would seem
that in arriving at the figure of R3,5
-11-
million the trial judge first divided R7 539 200 in half, and then deducted
approximately the net proceeds of the sale of the respondent's
house in Melrose
namely R278 000. I say "approximately" because the figures do not work out
exactly, but the learned judge stated
earlier in his judgment that the amount of
R278 000, and the respondent's savings of R26 000 constituted " .... factors I
must have
regard to when considering my order in terms of s.7(3), namely as
being part of the means of the plaintiff." (Presumably in terms
of
s7(5)(a).)
The finding that the net assets of the appellant at the date of conclusion of
the trial were R7 539 200 was not challenged, and appears
to be correct. The
appellant's counsel initially contended that, on a proper reading of s7, it was
necessary to determine the parties'
assets at the date when they separated,
namely in September 1986, but he abandoned this contention in argument. In my
view it is
quite clear that the
-12-
court, in making an order in terms of s7(3) is required to have regard, so
far as that is practicable, to the assets and liabilities
of the parties as at
the date of the order. Ss(2), which deals with the payment of maintenance,
requires the court to have regard
to "... the existing or prospective means of
each of the parties, their respective earning capacities, financial needs and
obligations
...". Ss(3) which deals with a redistribution order, requires the
court to consider the provisions of ss(4),(5) and (6) before making
an order in
terms of ss(3). Ss(5) expressly refers in sub-para (a) to "the existing means
and obligations of the parties". There
is nothing to indicate that the
legislature had in mind any date other than the date of the court's order and,
indeed, if the original
contention of the appellant were to succeed, it could
give rise to highly anomalous consequences.
Despite the submissions of the respondent's counsel
to
-13-
the contrary, it is quite clear that the trial court arrived at the
conclusion that it was just and equitable to award the respondent
R3,5 million
on the basis that a universal partnership in equal shares existed between the
parties throughout the marriage, and on
no other basis. Certainly no other basis
is suggested in the judgment, and the words used in the judgment leave no doubt
in my mind
that this is what the trial court found. The learned judge dealt at
length in his judgment with a letter which the appellant wrote
to the respondent
on 11 November 1978 (to which I shall refer later). In this letter the appellant
said "... I have always considered
our marriage a universal partnership ...".
The trial court found that certain statements in that letter were the truth,
"... and
that a universal partnership existed between the parties at the time of
the marriage and during the marriage." He then went on to
say, "I find that this
was an equal affair." At a later stage in his judgment after dealing with the
factors to be taken into account
-14-
in making an order under s7(3) of the Act, the learned judge
says:
"I am of the view that the parties should share equally. I find as a fact that
the parties at all times intended that their assets
during the marriage belonged
to both equally. The letter of 11 November 1978 corroborates the plaintiff's
version as to 'what is
mine is yours and what is yours is mine. The defendant's
denial of this attitude is rejected. The redistribution order I make will
reflect this position."
In adopting this approach it
is plain that the trial court misdirected itself. In the first place the
respondent's case was not based
upon a claim for distribution of the assets of
an equai partnership. It was based upon the provisions of s7(3) of the Act. That
is
clear from the pleadings and the evidence, and, indeed, it was common cause
between counsel at the hearing of the appeal. Secondly,
it is quite clear from
the respondent's evidence that there never was a legal partnership between them,
and the respondent's counsel
conceded as much in argument. Even
-15-
if spouses agree to pool their resources such an agreement,
unless it has
the requisites of a legal partnership, is not
irrevocable and may be resiled from at any time.
Kritzinger
v
Kritzinger
1989(1) SA 67 (A) at 77C-E. Reliance was sought to
be
placed cm certain remarks in the judgment of the Full Court of
the Cape Provincial Division in
Sloane v Sloane
, delivered on
26
February 1988 (as yet unreported), and in particular the
following
remarks of TEBBUTT J:
"It is not necessary in the case of what, for want of a better phrase, I shall
call a matrimonial partnership that the four reguisites
usually required for a
partnership referred to by POTHIER on
Partnership
and cited with approval
in many South African cases (see e.g.
Joubert v Tarry & Co
1915 TPD
277
at 279;
Rhodesia Railways v Commissioner of Taxes
1925 AD 438
at 465;
V's case
supra
p615A-B;
Muhlmann v Muhlmann
1981(4) SA 632 (W) at
634C-D) should be present."
Reliance is then placed
upon certain remarks by BERMAN J in the
Kritzinger
case in the court
below. To the extent that this
passage is in conflict with what was held by
this court in the
appeal in
Kritzinger
's case
supra Sloane
's
case must be taken to
-16-
have been overruled. I should, perhaps, add that on the facts of
Sloane
's case the wife had undoubtedly made a contribution which would
have justified an order in terms of s7(3) of the Act. Furthermore,
in the
instant case the only properties that were "acquired by the joint endeavours and
out of the joint resources of the spouses
during marriage" were the three
matrimonial homes, namely the properties at Glenhazel, Waverley and Melrose, and
it is the Melrose
property which the respondent claimed as her sole property,
and the entire proceeds of which were separately awarded to her in the
trial
court's order.
On the facts of this case it certainly cannot be said that a legal
partnership existed; still less a universal partnership, and even
less a
partnership in equal shares. The respondent was obliged to concede in
cross-examination that there had never been any express
agreement of partnership
(despite her evidence in chief that there had been) and that the sole basis
-17-
for her contention that she and the appellant were equal partners was the
letter of 11 November 1978. As already mentioned, the trial
court found the
contents of this letter to be true, and based the finding that there was a
universal partnership in equal shares
upon it. I accordingly reproduce it in its
entirety.
"Dear Hazel,
I feel that it is necessary, having regard to my recent disclosure to you of my
having had an affair with another woman, to set your
mind at rest in regard to
what your position would be if we were to become divorced from each other.
Firstly, I would like to make it perfectly clear that I acknowledge that I would
not be in the financial position which I am in,
were it not for your assistance;
and by that I mean your financial assistance quite apart from your moral support
and the manner
in which you have discharged your duties as my wife and the
mother of my children (in which respects your behaviour has been
impeccable).
I therefore feel that it is no more than right that you should not have to
change your lifestyle if we became divorced from each
other. Our marriage has
been a partnership in all respects and I would certainly not seek to deprive you
of your just deserts.
I undertake in
the aforegoing event to ensure that-
-18-
1.
The house in which we reside
and the entire contents thereof (save for my clothing and personal effects) will
become your sole and
exclusive property.
2.
The remainder of our assets (save for my share in my practice and our
respective cars) will be divided equally between us.
3.
We shall each retain our respective cars and I shall remain liable to
make all payments in respect of the lease of your car.
4.
To the extent that your income from your share in half of our assets
is insufficient to afford you and the children a sufficient amount
to maintain
yourselves adequately, I shall pay to you as maintenance for yourself and the
children a monthly amount equivalent to
such
shortfall.
You may rest assured that I shall not go
back on my undertaking even if you ultimately feel that you are unable to
forgive me for
what I have done, or are unable to continue with our marriage as
a result thereof, and we become divorced by virtue thereof; whether
or not such
divorce is against my will.
5.
In point of fact I would be
most disappointed in myself if I were to go back on my word and I sincerely
believe that any judge who
may read this letter would justifiably be
hard-pressed to grant a divorce on any terms more favourable to
me.
6.
I reiterate that I have always
considered our marriage a universal partnership and I should imagine that that
is how you have seen
it.
7.
I am indeed sorry
that this situation has arisen and I obviously assume full responsibility for
it.
-19-
In fact there is nothing to assume - I am fully responsible for it."
The background to the writing of this letter was as follows. In about 1975
the appellant had commenced an affair with another woman.
On the morning of
Sunday 5 November 1978 the respondent asked the appellant whether he was
involved with another woman, and he admitted
that he was, and on that day he
left the matrimonial home. The next day however, after discussing the matter
with respondent's mother,
the appellant moved back. The letter of 11 November
was thus written a few days after the appellant had returned. At that time the
respondent's stepfather, a Mr Emdin, was terminally ill and he died of cancer in
January the following year. The appellant was on
extremely good terms with
Emdin, and wanted to set his mind at rest about what would happen to the
respondent if the reconciliation
did not work out, and the parties were
divorced.
-20-
The appellant's evidence was that many of the statements in this letter were
quite untrue, and that Emdin would have known that they
were untrue. Thus the
appellant said that Emdin would have known that there was no partnership between
the appellant and the respondent.
The trial judge found that this evidence could
not be true since the letter would be cold comfort to Emdin if he knew that the
-statements
in it were untrue. This is a misconception of the position. There
was no need for Emdin to accept that there was a partnership. On
the appellant's
evidence and, indeed, on all the facts, there was no partnership. The point is
that Emdin knew that the letter could
be used by an attorney as a tactical
weapon against the appellant. The appellant indicated as much in evidence:
"Mr Katz, what you are saying is this letter had a
self-destructive device in it because it contained a statement
which Sonny Emden must have known to be
absolutely false? He knew it to be false, I have no
doubt but he knew that it could be used in case I
misbehaved."
-21-
The appellant also said that he knew Emd in would be taking the letter to an
attorney. Indeed, as matters turned out, the letter proved
to be a potent weapon
in the hands of the respondent in the trial. There are, however, a number of
reasons why this letter does not
assist the respondent. In the first place the
very terms of the letter are themselves inconsistent with the notion of a
universal
partnership although the appellant is an attorney who, one would
think, would normally use such terms accurately. The respondent's
own case, both
on the pleadings and in her evidence, was that she never, at any time, regarded
any of dwelling houses successively
occupied by the parties as being anything
but her own exclusive property. On her own evidence therefore, there was no
inclusion of
any of the dwelling houses in the so-called "universal
partnership". Secondly, the letter itself excludes the appellant's interest
in
his legal practice, and also excludes the parties' motor cars. Also on the
facts,
22-
with which I shall deal more fully in a moment, theré was no
partnership between the parties, universal or otherwise, and a.
fortiori
no equal partnership.
Quite apart from these considerations however, the letter of 11 November,
whether it be regarded as an undertaking or a declaration
of intent, was
obviously related to the particular situation which subsisted at the time when
it was written. At that time the appellant
was the guilty party, and he was
acutely stricken with remorse. The respondent, at that stage, was completely
innocent. Within a
few months the situation had changed, because the respondent
herself had committed adultery and had admitted as much to the appellant.
The
letter in its opening paragraph refers to the disclosure of the appellant's
affair with another woman, and to his intention to
set the respondent's mind at
rest in regard to what her financial position would be "if we were to become
divorced from
-23-
each other". Read in context, this clearly means "if we were to
become
divorced from each other as a result of my adultery".
True, the parties had
been back together for a few days but the
wound was still raw and it is clear
that the appellant
contemplated that his adultery might prove too much for
the
respondent to stomach. He says -
"You may rest assured that I shall not go back on my undertaking even if you
ultimately feel that you are unable to f orgive me f
or what I have done, or are
unable to continue with our marriage
as a result thereof
, and we become
divorced
by virtue thereof
; whether or not such a divorce is against my
will." (My underlining)
Secondly, it must be borne
in mind that at that stage the
appellant's estate was relatively modest. It
was common cause
that its value was then of the order of R350 000. If at
that
stage the respondent had got half the appellant's estate she
would
not have been particularly well off and, indeed, the letter
contemplates this
because it provides that -
"To the extent that your income from your share in
half
-24-
of our assets is insufficient to afford you and the children a sufficient amount
to maintain yourselves adequately, I shall pay to
you as maintenance for
yourself and the children a monthly amount equivalent to such
shortfall."
The letter also refers to "our
respective cars" being retained by
each, and the appellant says "I shall
remain liable to make all
payments in respect of the lease of your car",
which indicates an
intention to deal with the situation then pertaining. This
letter appears to me to have little relevance to the situation in
August
1987, when the trial took place. By that time, as already
mentioned, the net
value of the plaintiff's assets was
R7 539 200.
The letter, therefore, afforded no good ground for the finding that there was
an equal partnership. Since this finding coloured the
whole approach of the
learned trial judge this court is now free to consider the matter afresh.
-25-
I think it must be borne in mind that the respondent not only claimed a
redistribution order in terms of s7(3) of the Act, but also
a maintenance order
in terms of ss(2). These two subsections refer to a variety of matters which are
to be taken into account when
orders under them are sought. Some of thése
factors are to be found in both subsections, e.g. ss(2) refers to the means and
obligations of the parties as does ss(5)(a) which, together with ss(4), lays
down matters which must be taken into account by a court
making an order under
ss(3) in addition to those set out in ss(3) itself. There are, of course, clear
differences between these two
subsections. It is a prerequisite to the grant of
an order under ss(3) that the spouse seeking such an order has made a
contribution
of the nature described in ss(4). No such contribution is required
under ss(2). The two subsections are, however, interrelated, because
one of the
matters required to be taken into account when considering the grant of a
maintenance order is "an order in terms of ss(3)".
-26-
What is more, it is clear that in the
Beaumont
case,
supra
,
at
992E-F read with the passage cited above, this court decided that
the
legislature intended the court to be able to take -
"..... an overall view, from the outset, of how justice
could best be achieved between the parties in the light of possible orders under
either ss(2) or ss(3) or both subsections, in relation
to the means and
obligations, and the needs of the parties, and all the other relevant
factors."
When a court makes an order for
maintenance in terms of s7(2) it may have regard to the factors there set out,
including "an order
in terms of subsection (3) and any other factor which in the
opinion of the court should be taken into account". There is nothing
in ss(5)
which specifically provides that in the determination of the assets to be
transferred as contemplated in ss(3), regard may
be had to the fact that no
order is being made in terms of ss(2). Nevertheless, such regard is not
excluded. (See ss5(d)). In terms
of the decision in
Beaumont
's case
supra
-27-
the 'clean break' concept is not foreign to our law. It is obvious that a
"complete termination of the financial dependence of one
party on the other"
cannot be achieved so long as there is to be an order for the periodical payment
of maintenance. It follows that
it will frequently (one may almost say
generally) be necessary, if a clean break is to be achieved, that the amount of
the determination
should be at least such that the spouse concerned will be in a
financial position to maintain herself or himself. In such circumstances
a court
will ordinarily take into account the spouse's maintenance needs.
I have already referred to the trial court's findings as to the capital sum
required to provide the respondent with a new town house
and a new motor car,
and as to what sum she would
reasonably require to maintain herself. On the
basis of these findings and on the basis of a calculation contained in a
document which
formed part of the agreed bundle of documents, the
-28-
amount needed to maintain the respondent would be in the vicinity of R500
000. This is on the assumption that the R300 000 needed
for the house and car
and incidental expenses would be provided for by the amount of the net proceeds
of the Melrose home together
with the respondent's R26 000 invested in a savings
account. The calculation referred to indicated that R500 000 would purchase an
annuity which would provide a monthly income of approximately R6 000 per
month.
The respondent's claim was, however, not confined to one for maintenance. The
trial court found that the respondent had, indeed, contributed
to the increase
or maintenance of the appellant's estate, and that she had done so in various
ways. For the sake of convenience these
may be divided into three broad
categories. The first consisted of contributions made by the respondent's
parents. The second consisted
of contributions to the matrimonial home made
directly by the respondent. The third
-29-
consisted of her indirect contributions in the shape of her "services" as a
wife.
I exclude from the first category any contribution by the respondent's
parents to the acquisition of the matrimonial homes of the
parties. The trial
court found that the respondent "... brought into the marriage a top class
trousseau, so much so that almost never
since was there a major replacement
other than the odd item, such as, e.g., duvets. The trousseau consisted of
linen, cutlery, bedding,
cloths, towels, crockery etc. She also brought into the
marriage a large number of pieces of valuable antique furniture." Reference
was
also made to "... curtains provided by the plaintiff through her mother." It was
also found that, early in the marriage, the
respondent's father had provided the
appellant with R8 000 which was "advanced" to the appellant to enable him to pay
for his share
in a legal partnership. There was some uncertainty about this
amount; an uncertainty which, I
-30-
may say, was shared by the respondent. (In her further particulars she
alleged that the sum was "R5 000 to R8 000.") It was also found
that because of
the generosity of the respondent's mother the children of the marriage had
better quality clothing etc. when they
were babies than the parties could have
afforded at the time, and that the parties were able to have holidays in Cape
Town which
they would not have been able to afford then but for the fact that
the respondent's mother allowed them to use her flat in Cape Town.
I am not certain that these contributions constitute contributions by the
respondent within the meaning of ss(3). They were certainly
contributions made
for the benefit of the family, but were probably made mainly on account of the
love and affection which the respondent's
parents had for the respondent.
Possibly they were also made out of affection for the appellant. Assuming,
without deciding, that
they do constitute contributions
-31-
within the meaning of the subsection, I do not think that they should play a
material part in arriving at the value of the respondent's
contributions. I say
this because the contribution which the appellant made to the respondent's
estate was at least equal in value
to the contributions made to his estate by
the respondent's parents. I refer here to the increase in the respondent's
estate caused
by the appellant's conduct in enhancing the value of the
matrimonial homes of the parties which were the respondent's property.
As I have already mentioned the parties had three homes during the course of
their marriage. The first was the Glenhazel property
which was bought for R24
500, of which the appellant's father donated the sum of R4 750, and the
respondent's father the same sum.
A bond was taken for R15 000. This property
was sold for R45 000, the net proceeds being R30 000. The second home of the
parties,
which I shall call the
-32-
Waverley property, was bought for R85 000, R25 000 having been raised on
bond, R30 000 being the monies received by the respondent
from a trust of which
she was the beneficiary, and R30 000 representing the net proceeds from the
Glenhazel property. The Waverley
property was, in turn, sold for R105 000 net,
and the balance after paying off the bond, was R78 000. The last home of the
parties,
which I shall call the Melrose property, was bought for R55 000, of
which R40 000 was raised on bond and R15 000 was used from the
proceeds of the
sale of the Waverley property. The Melrose property was finally sold in or about
March/April 1986, some six months
before the parties finally agreed to part
company. The proceeds of the sale of the Melrose property was R278 000 net.
There can be
no doubt that on the evidence it was as a result of the appellant's
expertise that each of the three successive matrimonial homes
was bought
relatively cheaply, and sold for a high price. It was also not in dispute that
the appellant had spent approximately R3
000 in
-33-
improving the Glenhazel and Waverley properties and approximately R57 000 in
improving the Melrose property. It is unnecessary to
go into the precise
arithmetical proportions in which each contributed to the homes since, in terms
of the judgment of the court
a guo
, the respondent received as her
property the whole of the net proceeds of the sale of the Melrose property. On
that basis she was
more than fully repaid the R30 000 that she put into the
Waverley property from the trust even if this sum is scaled up to allow
for the
depreciation in the value of money between 1970 and the date of the trial. In
addition she received the value of the improvements
already mentioned, which had
been effected to the homes at the appellant's expense.
Before dealing with the value of the respondent's "services" as a wife, I
should refer to the argument of the respondent's counsel
that the respondent had
also contributed to
the increase in the appellant's estate with regard to his
-34-
property dealing. There can be no doubt that the appellant's large estate at
the time of the trial came into being because the appellant
made money out of
property dealings, and then, at the right time, sold his total property
portfolio for approximately R3 000 000
and put all his money into the stock
market which then rose spectacularly. At the time of trial the stock market was
just about at
its peak before the crash of October 1987. It is correct that, as
submitted by respondent's counsel, the appellant received the benefit
of
interest from time to time on certain of the proceeds of the sale of the
matrimonial homes, but his evidence that it was his money
and not hers that went
into his property portfolio and property developments was not really challenged.
In fact, the trial court
found that the appellant used his own cash funds in the
building of his property portfolio.
There is no doubt that it was, to an overwhelming
-35-
degree, the appellant's own energy, ability, knowledge and courage that
enabled him to make extremely profitable investments in property,
and even more
profitable investments in. the stock market. The evidence is that he was
constantly on the look-out for what he regarded
as potentially valuable
industrial or commercial properties; that he bought such properties at very
reasonable or even bargain prices
largely with borrowed money; that he sold such
properties extremely profitably; and that he got out of the property market and
into
the stock market at precisely the right time, and stayed in the stock
market while it rose to the level it had reached by the date
of judgment.
Respondent's counsel sought to attribute to good fortune the phenomenal rise in
the value of the appellant's assets
from the time of the writing of the letter
in November 1978 to the date of the trial. No doubt good fortune played a part,
but anyone
who has experience of investments in property and the stock market
must be aware of the fact that "the higher the stakes the greater
-36-
the risk" and, as the trial judge put it, the appellant displayed a "finely
honed business acumen." Such acumen may be in part a natural
gift, but a
constant attention to what is going on in the market appears to be an
indispensable ingredient for success and acumen
is at least in part the product
of painfully gained knowledge and experience. True, the respondent has some
recollection of the properties
being purchased, as she was kept generally
informed in regard to what was happening, and perhaps it is fair to say that the
appellant
used her on some occasions as a "sounding board" in respect of his
proposed investments. It is clear however that, as contended by
appellant's
counsel, the respondent played no role in the decisions to acquire any assets
which constituted the appellant's property
portfolio, and later his share
portfolio. She took no part in the business of running the properties or
realising them.
The respondent must therefore rely upon the
performance
-37-
by her of "services" as a wife, in order to establish that she
contributed
to the maintenance or increase of the appellant's
estate. Her role in the
marriage was confined to the traditional
one of being wife, mother and
manageress of the household. This
role is rather more fully described in the
respondent's pleadings
as follows:
"Throughout their marriage, Plaintiff afforded Defendant moral support in
respect of all his undertakings and ventures, and was a
dutiful and loyal wife
to Defendant and mother to the children. At Defendant's insistence Plaintiff was
totally and actively involved
in the running of the home and the caring for the
children and Defendant. At his insistence she was always home when the children
returned from school and personally supervised their extra-mural activities,
both educational, sporting and social. In order to free
Defendant on weekends to
enable him to attend to his weekend activities, Plaintiff was obliged to bear
the entire burden of attending
to the children's weekend social and sporting
activities. Plaintiff attended to all Defendant's personal needs, even to the
extent
of purchasing his toiletries and always being at home when he returned
from work. Whenever reguired to, sHe accompanied him to social
functions and
entertained business associates by holding numerous dinner parties and Christmas
parties for Defendant's staff, clients
and
business
-38-
associates. Plaintiff assumed total responsibility for the running of the home
and attended to the needs of the children so as to
leave Defendant completely
free to further his career, investment and other
interests."
I doubt whether it can accurately be
said that it was "at
Defendant's insistence" that the respondent undertook
what was
primarily a domestic role, and furthermore the pleading omits
to
state that the parties had three servants and "all of the
accoutrements
of a comfortable home". The respondent had regular
holidays and overseas
trips, she acquired jewellery and furs and
her own estate was substantially
improved by the appellant's
efforts. I refer here to the efforts he made,
which were
successful, to increase the value of the matrimonial home which
was hers.
It is also the case that the appellant encouraged the
respondent to pursue
her own occupations, and she did at various
times work for an auditor, for ten months as a real estate agent
during
which time she earned some R16 000 (which she retained to
spend as she wished), as was the case with her earnings as a
-39-
public relations officer for an aerobics establishment. She was
encouraged
to attend university, and other courses, and these
courses were paid for by
the appellant. Furthermore it was clear
that when Christmas parties were held
for the.appellant's staff,
caterers were called in to assist. Nevertheless,
in my view, the
trial court was right in holding that
"Throughout the years the plaintiff ... assisted defendant by rendering him
services in his home. In pursuit of his practice and
his property speculation,
he relied on her implicitly to keep the home fires burning and he lived in great
comfort."
There is no evidence which enables one to
put a money value on
these services. Nor is there evidence that if the
respondent had
not performed them the appellant would have employed someone
to
perform them, nor as to what it would have cost to employ such
a
person. In
Kretschmer v Kretschmer
1989(1) SA 566 (W) FLEMMING
J
appears to have thought that such evidence was a prerequisite to
a
finding that the plaintiff in that case had made a contribution .
within the
meaning of ss(3) and (4) of s7. (p580H-581C.) What
-40-
is more, he appears to have thought that the spouse seeking to prove a
contribution would have to prove that the contribution exceeded
"... the amount
of the duty to contribute to own support". (p579C-582E.)
It seems to me, with respect, that this reasoning involves a confusion
between the jurisdictional facts which have to be proved before
the court can
make an order in terms of s7(3), and the manner in which the court is to
exercise that power once it is established.
Before the court can make an order
in terms of ss(3) it must be established (a) that the party seeking such an
order has made a contribution;
(b) that such a contribution has increased or
maintained the other party's estate; and (c) that it would be just and equitable
to
make such an order because of (a) and (b). It does not follow that the manner
in which the court is to arrive at what is just and
equitable is limited to what
has been contributed. In the first
-41-
place this is not what the section says. In the second place
this court in
Beaumont
's case
supra
has held quite clearly that
this is not
what the section means. It is quite clear from the
judgment of BOTHA JA that
factors other than purely monetary ones
may properly be taken into account.
See e.g. the reference to
the remarks of VAN DEN HEEVER J quoted in
Beaumont
's case at
p987E-G. Furthermore at p996B-997H the argument was
considered
that the legislature could not have intended a contribution
by
either spouse made purely in the discharge of the common law duty
of
support, to qualify as a contribution which entitled the
spouse making it to claim compensation in the form of a
distribution
order. This argument was specifically rejected and
at p997F it was held that
the plain meaning of the words in ss(4)
was so wide that:
"... they embrace the performance by the wife of her ordinary duties of 'looking
after the home' and 'caring for the family'; by
doing that, she is assuredly
rendering services and saving expenses which must necessarily contribute
indirectly to the maintenance
or
-42-
increase of the husband's estate." I think furthermore it is relevant to bear
in mind that KRIEGLER J in the court
a quo
in the
Beaumont
case
had plainly taken into account not only the services which the wife had rendered
to the plaintiff in his business, but also
the services in his home. There does
not appear to have been any evidence led of the nature contemplated by FLEMMING
J in
Kretschmer
's case. KRIEGLER J, nevertheless, held that
inter
alia
on the basis of such contributions there should be a substantial
redistribution order. This court at p998C found that KRIEGLER J's
findings in
this regard could not be faulted. Indeed, when appellant's counsel referred to
Kretschmer
's case, and it was put to him that the reasoning in that case
was inconsistent with the judgment of this court in the
Beaumont
case, he
did not even attempt to argue the contrary.
I return therefore to the question as to the
evaluation
-43-
of the wife's "services". This is a difficult task. I have already dealt in
detail with the nature and extent of the respondent's
contribution to the
appellant's estate. The following are also factors which I regard as
relevant:
(a) The net value of the appellant's assets at the time
when the court
a
quo
made its order was R7 539 200
(excluding the value of his share in the legal
practice).
(b) The net value of the respondent's assets at that time
(excluding
household furniture and fittings, clothing,
jewellery and furs) was R26 000
and in terms of the
court's order she was to receive a further R278
000
being the net proceeds of the Melrose property and it
was common cause
that this part of the order would
stand.
(c) While it is reasonably
possible
that the respondent may
take up
some occupation which would provide some
income
-44-
it is reasonable to proceed on the basis that she probably will not. In the
first place on the evidence she is not qualified for
any particular profession,
occupation or job. Secondly, she is no longer a young woman and apart from brief
periods when she worked
as an estate agent and later as a public relations
officer she did not have a job of any kind during the marriage.
(d)The appellant has a substantial legal practice and is obviously highly
successful in the investment field, and is more likely
than not to continue to
be successful.
(e)The marriage had its ups and downs and, as already mentioned, each of the
spouses committed adultery, but they had three children
who are now grown-up and
the marriage lasted some 23 years.
(f)The appellant has always provided satisfactorily for the maintenance of the
children, and will continue
to
-45-
do so. (g) On the facts of this case there is not such a
conspicuous disparity of fault between the conduct of the appellant and that of
the respondent in bringing the marriage relationship
to an end as to warrant
this being taken into account, even on the very limited basis that it was taken
into account in
Beaumont
's case
supra
at 995E-J. (In the court
a quo
both parties, through their counsel, expressly disavowed any
reliance on the misconduct of either party as a factor to be taken into
account
in making a redistribution order and the trial court accordingly approached the
matter on that basis.)
I have already referred to
the fact that the sum of R500 000 would purchase the respondent an annuity which
would provide her with
approximately R6 000 per month for the rest of
-46-
her life. This is, however, an unrealistic calculation since it fails to take
into account the effect of inflation. For some years,
the annual rate of
inflation in the Republic has been substantial and there does not appear to be
any ground for believing that it
is likely to decrease appreciably in the
foreseeable future. What is more, the Republic is subject to
artificial
pressures in the form of sanctions which have an
effect on the economy.
Interest rates have fluctuated very considerably over the past few years. In
these circumstances it is difficult
for the average person to invest safely and
at the same time receive a reasonable return while avoiding the ravages of
inflation.
Furthermore, the calculation referred to does not take into account
the tax which the respondent would have to pay on the R6 000
per month.
In the light of all the circumstances I consider that, on the facts of this
particular case (and I stress that I am
-47-
laying down no principle nor even a general guide) it would be just and
equitable to make a redistribution order which would, so far
as is reasonably
practicable, enable the respondent to maintain the same standard of living as
the parties enjoyed when the marriage
broke up. This order is intended, again so
far as is practicable, to give the respondent financial security for the rest of
her life.
What is more, it is intended to be sufficient to cater for the
respondent paying for expert advice on her investments on a continuing
basis,
and even to cater for occasional losses on investments. It is only possible to
proceed on this relatively generous basis because
the appellant has a very large
estate. This may seem anomalous because, in the case of the person of average
means and even more
so in the case of a poor person, the spouse may actually
have worked a great deal harder and had a much more demanding married lif
e than
the respondent; yet because of the limited nature of the other . spouse's
resources, be entitled to very limited maintenance,
and
-48-
in the case of poor persons to virtually nothing. This is, in the nature of
things, unavoidable and, in any event, it is no more anomalous
than taking into
account the standard of living of the parties prior to the divorce which ss(2)
expressly enjoins the court to do
when making a maintenance order. It is not
possible to make anything like a precise calculation, partly because of the
difficulty
in putting a money value on the respondent's services and partly
because of the impossibility of forecasting what interest rates
are likely to be
during future years. In the light of all the factors I have referred to I have
come to the conclusion that it would
be just and equitable to make a
redistribution order in favour of the respondent in the sum of R1,5 million.
As the appellant has achieved substantial success on the appeal he is
entitled to the costs of the appeal. There is, however, no good
reason to
interfere with the order for costs
-49-
made in the court below with regard to the costs of the trial.
It was common cause at the hearing of the appeal that the respondent was
granted leave to execute upon the judgment of the court
a quo
, and we
have been furnished with a copy of the order of court in this regard. It appears
from this that leave to execute was granted
on 21 October 1987 and that the
respondent was ordered to furnish security to the appellant
de
restituendo
in the sum of R3 028 000 "...... including an undertaking to pay
interest
at the legal rate on such amount up to R3 028 000 as the respondent may become
entitled as a result of the judgment of the
Appellate Division". The reference
here to "the respondent" is to the respondent in the application for leave to
execute, namely
the appellant.
The order of the court is accordingly as follows: (a) The appeal succeeds
with costs, including the costs
-50-
consequent upon the employment of two counsel.
(b) The judgment of the court below is altered by substituting in para. 4 of the
order the sum of R1,5 million for the sum of R3,5
million.
(c) The respondent is ordered to refund to the appellant the sum of R2 million,
and, in terms of the undertaking referred to above,
to pay interest thereon at
the legal rate calculated from the date upon which the judgment of the court
a quo
was carried into execution until the date of
payment.
A J MILNE
Judge of Appeal
CORBETT CJ ] NICHOLAS AJA]