MS v MJ GAUTENG HIGH COURT JOHANNESBURG CASE NUMBER 2022/218731 – 13 June 2023
Introduction
In this case the Applicant had sought urgent relief, aimed at prohibiting the First and Second Respondents (“the Respondents”) from selling or otherwise disposing of the former matrimonial residence, located in, Midrand (“the property”), while the divorce proceedings between the Applicant and the First Respondent were ongoing. Alternatively, the Applicant had requested an anti-dissipation order if the property had already been sold, requiring that the revenue from the property sale be held in trust until the divorce proceedings had been finalised.
The Facts
The parties had gotten married on 9 February 2017, out of community of property, but with the inclusion of the Accrual system. On 13 December 2016, they had entered into an Antenuptial Contract (“the ANC”), wherein the starting values of their individual estates were declared. On 21 June 2022, the Applicant initiated divorce proceedings against the First Respondent, citing physical and emotional abuse. The Applicant claimed that the couple had cohabitated in the property until November 2019, when the Applicant and their minor child left the residence. The divorce process was contentious and had not yet reached a conclusion. The Applicant had filed a criminal charge against the Respondent, and both parties had sought restraining orders against one another.
On 22 March 2023, the Applicant discovered that the First Respondent had listed the property for sale on Property 24. During the hearing of the case, the Respondents’ attorney verified that the property had not been sold.
The Applicant contended that the First Respondent, by disposing of the property before the accrual claim comes into effect, was prejudicial to her claim as it diminished the assets prior to the decisive date of the accrual claim, consequently reducing, if not eliminating, the disparity in accrual between the two estates. Additionally, the Applicant asserted that the property was a significant asset in the marriage and that she had invested both her finances and project management expertise in constructing the house on the property. The cost of building the property was around R12,000,000.00, but it was listed for sale at R11,600,000.00. The Applicant argued that the property was being sold under cost for swift disposal and to dissipate the sale proceeds, to her detriment.
The Respondents objected to the requested relief and raised various preliminary objections, the first being that the application was not urgent. The First Respondent claimed that the Applicant had failed to explicitly state the circumstances which, in his opinion, made the matter urgent. Furthermore, he argued that the Applicant had not explained why she would not receive substantial redress at a hearing in the future.
Urgency
The court dealt with the issue of urgency and referred to the case of East Rock Trading 7 (Pty) Ltd and Another v Eagle Valley Granite (Pty) Ltd and Others 2011(ZAGPJHC) 196 (23 September 2011) in paras 6 and 7, where Notshe AJ stated:
“The import thereof is that the procedure set out in Rule 6(12) is not there for the taking. An Applicant has to set forth explicitly the circumstances which he avers render the matter urgent. More importantly, the Applicant must state the reasons why he claims that he cannot be afforded substantial readdress at a hearing in due course. The question of whether a matter is sufficiently urgent to be enrolled
and heard as an urgent application is underpinned by the issue of absence of substantial readdress in the application in due course. The rules allow the court to come to the assistance of a litigant because if the latter, were to wait for the normal course laid down by the rules, it will not obtain substantial redress.
It is important to note that the rules require absence of substantial redress. This is not equivalent to irreparable harm that is required before the granting of an interim relief. It is something less. He may still obtain redress in an application in due course, but it may not be substantial. Whether an Applicant will not be able to obtain substantial redress in an application in due course will be determined by the facts of each case. An Applicant must make out his case in this regard.”
The court also referred to the matter of Mogalakwena Local Municipality v The Provincial Executive Council, Limpopo and others (35248/14) [2014] ZAGPPHC 400; [2014] 4 All SA 67 (GP) (19 June 2014).
Upon reviewing the initial affidavit and hearing arguments regarding the urgency of the matter, the Judge was convinced that the Applicant had presented sufficient facts justifying why the application should be considered urgently and why the Applicant wouldn’t receive substantial redress in a future hearing. Prior to initiating this application, the Applicant had sought assurance from the First Respondent and her legal representatives had requested a commitment from the First Respondent’s attorneys that the property wouldn’t be sold. The First Respondent failed to provide such a guarantee and indicated that he would proceed with the sale.
The Applicant claimed that she would face irrevocable harm if the property was sold, as the First Respondent would squander the sales proceeds. The property had been listed for sale on October 25, 2022. It was uncertain when the property would be sold. The First Respondent had not disclosed his financial circumstances, the reason for the property’s sale, or what influenced the Second Respondent’s decision to sell the property. It remained unclear whether the First Respondent would be able to pay the Applicant the difference in the accrual if the property was sold and the proceeds were used by him.
The Judge was assured that the Applicant wouldn’t obtain substantial relief in a subsequent hearing and therefore granted forgiveness for the Applicant’s non-adherence to the Rules of Court concerning service and time periods under Rule 6(12).
Marriages subject to the Accrual
On dissolution of the marriage neither spouse is entitled to any of the assets of the other spouse, because section 3(1) of the Matrimonial Property Act expressly states that:-
“At the dissolution of a marriage subject to the accrual system, by divorce or by the death of one or both of the spouses, the spouse whose estate shows no accrual or a smaller accrual than the estate of the other spouse, or his estate if he is deceased, acquires a claim against the other spouse or his estate for an
amount equal to half of the difference between the accrual of the respective estates of the spouses.”
In MB v NB 2010 SA 3 SA 220 GSJ AT para 41 and 233 F-G Brassey AJ stated:
“Under the accrual system contemplated by the Matrimonial Property Act 88 of 1994, the parties have an interest in the amount by which each other’s estate improves in value over the marriage. The interest is purely equitable for, questions of dissipation aside, it becomes exigible only ‘at the dissolution of the marriage … by death or divorce’ in terms of s 4(1) of the Act. Simply put, the effect of the provision is that each party receives, in terms of the operative order, a half share of the amount by which the other spouse’s estate has increased in value during the course of the marriage.”
In N D V M D, (24953/2019) [2020] ZAGPJHC 228; [2021] 1 All SA 909 (GJ) (16 September 2020), Gilbert AJ stated:
“this brings with it the difficulty that one spouse may seek to dissipate his or her assets in anticipation of the dissolution of the marriage and the resultant determination of the value of the accrual claim. A
dissipation of assets before that determinative date has two direct negative effects on the accrual claim, the alienator spouse has less assets in his or her estate at the determinative date, which reduces the extent of the difference in accrual between that estate and the estate of the beneficiary spouse, the less assets there are in the alienator spouse’s estate once the value of the accrual claim has been determined upon the dissolution of the marriage, the less assets there are available to satisfy that accrual claim once awarded by the court. It is not unusual that the spouse who believes that he or she will have an accrual claim against the other upon dissolution of the marriage will be fearful of the other spouse dissipating assets and so would take steps to protect his or her contingent right to that accrual claim.”
The court in the cases of Langebrink v Langebrink 2017 JDR 1059 (GJ) and Gernetzky v Gernetzky 2007 JDR 0247 (E) concluded that the potential accrual claim could be safeguarded via an interim interdict, thereby preventing the depletion of assets until the claim has vested and been determined. This holds true irrespective of the contingent nature of the accrual right, as long as an applicant can demonstrate prima facie, despite some doubt, that an accrual claim will come into his or her favour once it has vested, even though the extent need not be established.
When evaluating the Applicant’s request for interim interdictory relief, the guidelines in Webster v Mitchell 1948 (1) SA 1186 (W) 1189, as adjusted in Gool v Minister of Justice 1955 (2) SA 682 (C) at 688 D – E, are applicable. The prerequisites for interim injunction relief, as established in Setlogelo v Setlogelo 1914 AD 21, are well-known and include:
(a) The existence of a prima facie right, even if it is subject to some doubt, on behalf of the Applicant,
(b) A well-founded fear of significant harm if the interim relief isn’t provided,
(c) The balance of convenience leaning towards the provision of the injunction, and
(d) The lack of any other suitable remedy accessible to the Applicant.
The Judge evaluated whether the Applicant had met the criteria for an interim interdict. The starting value of the Applicant’s estate was documented at R2,800,000.00, while that of the First Respondent was at R5,300,000.00. It was noted that paragraph 5.1.4 of the ANC was reflected in the Applicant’s initial value. This detail was pertinent as it demonstrated that both parties intended for the property to be part of their estates. This was further evidence that even though the property was registered under the name of the Second Respondent, this was not seen as an impediment to the property’s inclusion.
The Applicant claimed that she had a contingent right to share in the accrual upon the dissolution of the marriage and was therefore entitled to protect such a contingent right. Additionally, she asserted that the First Respondent’s 100% stake in the Second Respondent was part of the First Respondent’s estate and would therefore need to be included in the accrual calculation. The First Respondent countered by arguing that the Applicant had not established a prima facie right to a share in the accrual and that the Applicant’s claim to the accrual vests upon the dissolution of the marriage, asserting that at this point, she didn’t have a claim, but only a right.
The Respondent put forth that he had proposed that the quantification of the actuarial claim be referred to a referee for investigation and report under section 38 of the Superior Courts Act and that the Applicant should forfeit all the patrimonial benefits of the marriage. The Applicant had not responded to this plea.
The Applicant had requested an assurance from the First Respondent that the property wouldn’t be sold pending the divorce, but this was denied. The property had been on the market since 25th October 2022 and was being marketed for less than its market value. The parties were entangled in a bitter divorce, and the First Respondent acknowledged that it would take a considerable time to finalise the divorce. The Applicant was at risk of suffering irreparable harm if the property was sold and the proceeds of the sale were squandered by the First Respondent. The First Respondent had not outlined his financial position to indicate whether he would be able to pay the difference between the accrual of the respective estates to the Applicant upon dissolution of the marriage, despite the property’s sale. Consequently, the Applicant had a well-grounded fear of irreparable harm.
It was an undisputed fact that the property had served as the marital home of the parties until the Applicant moved out. Despite the property being registered in the name of the Second Respondent, there was no indication in the documents before the Judge that the property had ever been used by the Second Respondent for business operations or for any other purpose other than as the marital home where the family resided.
The First Respondent argued that the property, registered in the name of the Second Respondent, didn’t form part of the joint estate of parties married in community of property and that simply labelling the property as a matrimonial property didn’t convert it into one. The First Respondent offered no explanation as to why the property was included in the ANC of the parties, nor did he dispute that the property had been used as a marital home by the parties.
The alternative claim, anti-dissipatory relief.
Pending dissolution of the marriage, the right to share in the accrual of the other spouse’s estate is no more than a contingent right. The right becomes vested only when the marriage is dissolved and only if there is indeed an accrual. See P A F v S C F (788/2020) [2022] ZASCA 101; 2022 (6) SA 162 (SCA) (22 June 2022). If, during the marriage, one of the spouses fraudulently intends (i e with the intention to prejudice the other spouse) to alienate his or her assets, the spouse who stands to be prejudiced may, in principle, apply for an interdict to prohibit the alienation in order to protect his or her right to share in the other spouse’s accrual, see Reeder v Softline Ltd & Another 2001(2) SA 844 (W). The Appellate division in the leading case of Knox D’Arcy Ltd v Jamieson (283/95) [1996] ZASCA 58; 1996 (4) SA 348 (SCA); [1996] 3 All SA 669 (A), (29 May 1996), observed that:
“anti-dissipation” suffers from the defect that in most cases, and certainly in the present case, the interdict is not sought to prevent the respondent from dissipating his assets, but rather from preserving them so well that the applicant cannot get his hands on them. Since the purpose of the interdict is to prevent a
person (the intended defendant) who can be shown to have assets and who is about to defeat the plaintiff’s claim, or to render it hollow, by secreting or dissipating assets before judgment can be obtained or executed, and thereby successfully defeating the ends of justice by doing so, the applicant who bears
the onus to establish the necessary requirements for the grant of the interdict, need show a particular state of mind on the part of the respondent, i e, that he is getting rid of the funds, or is likely to do so, with the intention of defeating the claims of creditors. But it is not essential to establish an intention on the part of the respondent to frustrate an anticipated judgement if the conduct of the respondent is likely to have that effect”.
In the case of RS v MS & others 2014 (2) SA 511 (GJ), the wife requested an anti-dissipation interdict against her husband, seeking to prevent him from withdrawing or receiving funds held in his name pending the conclusion of the spouses’ divorce proceedings. The court highlighted that one spouse does not possess a vested right in any of the assets invested or registered in the other spouse’s name. Prior to the divorce, the spouse whose estate displays the smaller accrual merely has a contingent right to claim half of the difference between the accruals in the spouses’ estates upon divorce.
The Court was of the view that to successfully safeguard a contingent right through an interdict pendente lite, the applicant must establish that: (a) the respondent holds assets within the court’s jurisdiction; (b) the respondent, on the face of it, lacks a credible defence against the applicant’s alleged contingent right; (c) the respondent plans to thwart the applicant’s claim by dissipating or hiding assets; and (d) the applicant harbours a well-grounded fear of irrevocable harm, should the interdict not be granted.
In this case, the court determined that the applicant had failed to establish that these conditions were met. The evidence did not demonstrate that the husband intended to obstruct the wife’s claim by dispersing his assets. His fund withdrawals and the scale of those withdrawals were not so unusual as to imply bad faith. Moreover, a significant portion of his financial investments could not be accessed for another thirteen years. Furthermore, the husband offered to preserve assets amounting to roughly R9 million, which he asserted would cover any claim his wife might eventually validate against him. These facts indicated a lack of bad faith on the husband’s part. The wife also failed to demonstrate a well-founded fear of irreparable harm, as her husband would be capable of satisfying whatever claim she could substantiate in the divorce proceedings. Additionally, if the interdict were granted, the husband would have been deprived of the operating capital required to run his business, leading to significant prejudice to his business operations and cash flow.
The Ruling
In the matter at hand, the First Respondent didn’t deny that the property was on the market, and it was clear that he fully intended to proceed with the sale. He offered no rationale for why the property was on the market and how he would be disadvantaged if it was not sold. His stance was straightforward: the property wasn’t his, it belonged to the Second Respondent. He wasn’t selling the property; the Second Respondent was. The property wasn’t part of his initial value, and paragraph 5.1.4 of the ANC should be detached from the rest of the contract. Furthermore, the First Respondent failed to present any details about his finances or the business operations of the Second Respondent to the court. From the evidence, it appeared that the Second Respondent wasn’t conducting business from the property.
The First Respondent suggested that the property wasn’t a matrimonial property, but didn’t challenge the Applicant’s claim that the parties had lived in the property as a family until November 2019. The Respondent raised various preliminary objections but neglected to address the allegations of dissipation raised against him, preferring instead to rely on technical defences, which, in my opinion, didn’t assist him.
It was undisputed that the property was situated within the jurisdiction of this court. The First Respondent didn’t provide any explanation as to why the property was being sold. As noted earlier, he had not presented any information to the Court demonstrating that the Applicant’s claim for accrual wouldn’t be disadvantaged, even if the property was sold upon divorce.
The fact that the First Respondent relied on the argument that it was the Second Respondent who owned and was selling the property, and failed to provide an explanation as to why such property featured in the commencement value in the ANC, or how he was able to include the property despite not being the owner, suggested that the First Respondent intended to prejudice the Applicant’s claim.
The First and Second Respondents had been interdicted from selling or disposing of the property until the finalisation of the divorce proceedings between the Applicant and the First Respondent.
Should the property have already been sold, the proceeds from the sale were to be paid over and kept in the Trust Account of an Attorney until the divorce proceedings were finalised.
The First and Second Respondents were ordered to cover costs on an attorney and client scale.
Summarised by Bertus Preller, a Family Law and Divorce Law attorney at Maurice Phillips Wisenberg in Cape Town. A blog, managed by Lawsplash, for more information on Family Law read more here.
Read the full Judgement here: