Love, Deceit, and Money: The Legal Tangle of a South African Husband, Wife, and Mistress. – H.W and Another v R.S (18246/2019) [2023] ZAGPJHC 1354 (24 November 2023).

Introduction

The case in question delved into a tangled legal narrative encompassing marital infidelity, financial dealings, and the classification of funds transferred in the milieu of an extramarital relationship in South Africa. The crux of the case revolved around a dispute between the plaintiffs, HW and his wife SJW, and the defendant, RS, over a significant amount of money transacted during HW’s affair with RS.

Case Background

HW, married in community of property to SJW, had embarked on an extramarital affair with RS circa 2015. It was during this affair that substantial financial dealings occurred, becoming the focal point of the legal conflict. Notably, HW had withdrawn an amount exceeding R850,000 from an investment account in his name across three occasions: 30 January, 1 February, and 3 February 2017. His testimony revealed that these withdrawals were strategically made to restrict SJW’s access to the funds, anticipating divorce proceedings he was contemplating against her. A portion of this cash was stored in RS’s bedroom, while the rest was retained by HW.

Financial Transactions Under Scrutiny

Subsequent to the withdrawals, HW handed over R610,000 to RS. The pivotal question in this case centred on the nature of this transaction: whether it constituted a loan intended for RS’s personal expenses or a gift amidst HW’s plans to leave his wife for RS. HW maintained that it was a loan, disbursed in two segments (R210,000 and R400,000), and was repayable upon demand. On the other hand, RS argued that it was a donation meant to aid in the closure of her floundering close corporation, as she sought to resume salaried work due to the stresses of business ownership.

Contrasting Perceptions and Expectations

RS’s account underscored her expectation that HW would divorce SJW and commit solely to her, interpreting the money as associated with this expectation. Meanwhile, HW exhibited a more cautious attitude; he had intentions to leave his wife, yet remained uncertain about forming a permanent and exclusive relationship with RS. This indecision led him to a stance of “wait and see” regarding the divorce.

Relationship Dynamics and Outcome

As time progressed, RS started to question HW’s true intentions regarding his marriage. Evidence indicated that by late 2017 and early 2018, the relationship between HW and RS grew tumultuous. In December 2017, HW first demanded the repayment of what he termed as the loan. Ultimately, HW resolved against proceeding with the divorce. On 3 June 2018, he definitively conveyed to RS his decision to stay married to SJW, leading to the termination of their affair.

Legal Proceedings and Claims

HW subsequently initiated legal action for the recovery of the funds he had transferred to RS. RS contested the claim, asserting that the money was not a loan to her, but rather a donation to her close corporation. Prior to assessing these arguments, it was essential to address a special plea of prescription raised by RS’s legal representation.

The Principle of Prescription

In South African law, the concept of prescription relates to the lapse of time after which a legal claim becomes unenforceable. The Prescription Act of 1969 stipulates that an ordinary debt prescribes three years after the plaintiff becomes aware of the facts giving rise to the claim.

Original Claim and the Amendment

Initially, HW’s claim, as stated in the particulars of the original claim, sought the repayment of R710,000, purportedly advanced to RS in a single transaction in February 2017. HW’s demands for repayment began in December 2017, marking the commencement of the prescription period. The summons and initial particulars of the claim, served on 4 June 2019, were within the time frame to interrupt the prescription. However, HW amended his claim in February 2022, altering the nature of the debt to two separate amounts (R210,000 and R400,000) advanced in February and March 2017, respectively.

Arguments and Legal Interpretation

Mr. van der Merwe, representing RS, contended that this amendment fundamentally altered HW’s cause of action, introducing a new claim that had already prescribed. However, Section 15 (1) of the Prescription Act 68 of 1969 clarifies that prescription is interrupted by the service of any process whereby the creditor claims payment of the debt. The term “debt” in this context has a broad meaning and is not restricted to the technicalities of the cause of action in pleadings.

Court’s Ruling on the Prescription Plea

Upon examining the facts, the court concluded that there was no substantial difference between the debts claimed in the original and amended particulars. While the amounts and timings of the alleged advancements differed, they were not so distinct as to constitute completely separate transactions. The court determined that HW was referring to the same debt in both the original and amended particulars. The mere alteration in details regarding the time, amount, and manner of payment did not change the essence of the debt claimed.

Dismissal of the Prescription Plea

Consequently, the court dismissed the special plea of prescription. The amendment to the particulars of the claim did not introduce a new debt but merely adjusted the details of the existing claim. Therefore, the claim had not prescribed, and the legal proceedings could continue to address the substantive matters of the case.

Evaluation of Evidence and Witness Testimonies

Witness Testimonies: HW and RS were the sole witnesses in support of their respective cases. The evidence presented comprised their testimonies, a record of WhatsApp exchanges, and limited documentation related to HW’s investment account and RS’s close corporation.

Sparse Material: The material presented was limited, placing the onus on HW to convincingly demonstrate that the money he gave to RS was a loan. If HW succeeded in proving it was a loan, judgment would be in his favour; if it was found to be a donation, the claim would be dismissed.

Analysis of HW’s Testimony

Prima Facie Case by HW: HW put forth a basic case, asserting that the amounts given to RS were loans. He detailed the withdrawals and how he transferred the funds to RS, along with WhatsApp conversations demanding repayment, which RS did not explicitly deny.

Credibility Concerns: Despite HW’s prima facie case, his credibility was questionable. Central to his case was the dishonest act of hiding assets from his wife. The court was unconvinced that HW’s sole intent was to keep the money from his wife, as giving it to RS suggested a motive beyond mere concealment.

Unconvincing Rationale for Loan: HW’s explanation for the loan – for RS’s “personal expenses” without detailed documentation or witnesses – was found lacking in credibility.

Analysis of RS’s Testimony

RS’s Credibility: RS was deemed a more credible witness. She maintained that HW donated the money to assist in winding up her business, viewing it as a step towards a future together with HW.

WhatsApp Conversations: HW’s persistent demands for repayment in the WhatsApp exchanges, met with RS’s non-denial or vague promises, were critical. RS attributed her non-denial to avoiding conflict and understanding HW’s demands as spiteful.

Entry in Close Corporation’s Books: Entries in RS’s close corporation’s books labeled the deposits as “Loan H[W]”. RS claimed this was a tax avoidance strategy advised by her bookkeeper, which the court found not conclusively supportive or disproving of either claim.

Court’s Conclusion

  1. Neither Version Fully Supported: The court faced two conflicting accounts: HW’s, which was somewhat supported by documents but marred by credibility issues, and RS’s, which was clear and consistent but not fully corroborated by the documentary evidence.
  2. Judgment Based on Balance of Probabilities: Given the conflicting evidence and the court’s reservations about both parties’ credibility, the court could not conclusively determine whether the transaction was a loan or a donation. The lack of definitive evidence led to an impasse, with neither version being entirely credible nor decisively disproved.

Conclusion on the Case

Inconclusive Proof: The court concluded that neither HW nor RS successfully proved their respective cases. Given the conflicting evidence and lack of conclusive support for either a loan or a donation, the court found itself in a position where a definitive judgment in favor of either party was not possible.

Onus on HW: The responsibility to prove the claim rested with HW. Since he failed to provide sufficient evidence to conclusively establish that the money given to RS was a loan, the court could not rule in his favor.

Court’s Order

  1. Dismissal of the Special Plea: The court dismissed the special plea of prescription. This decision was based on the determination that the amendment to the claim did not introduce a new debt but rather modified the details of the existing claim, thereby not affecting the prescription period.
  2. Absolution from the Instance: The court ordered absolution from the instance for RS. This legal outcome means that the case against RS was dismissed without a determination on the merits of the case. Essentially, the court found that there was not enough evidence to make a definitive ruling.
  3. Costs: The defendant, RS, was absolved from the instance with costs. This implies that HW, the plaintiff, would bear the legal costs incurred by RS in this case.

Summary of the Judgment

The final judgment in this case reflects the complexity and ambiguity of the evidence presented. The court’s decision to absolve RS from the instance with costs, while dismissing the special plea, underscores the challenges in proving claims of loan versus donation in the absence of clear, unambiguous evidence. The ruling highlights the importance of concrete evidence and credible testimony in legal proceedings, especially in cases involving personal relationships and financial transactions.

Summarised by Bertus Preller, a Family Law and Divorce Law attorney and Mediator at Maurice Phillips Wisenberg in Cape Town. A blog, managed by SplashLaw, for more information on Family Law read more here.

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