IN THE HIGH COURT OF SOUTH AFRICA KWAZULU-NATAL, DURBAN CASE NO: 13338/2008 NHLANHLA AZARIAH GASA

Transcription

1 IN THE HIGH COURT OF SOUTH AFRICA KWAZULU-NATAL, DURBAN CASE NO: 13338/2008 In the matter between: NHLANHLA AZARIAH GASA Applicant and CAMILLA JANE SINGH N.O. First Respondent ANGELINE S NENHLANHLA GASA Second Respondent N.A. GASA N.O. A.S. GASA N.O. M.B. GASA N.O. P.D. JACOBS N.O. (In their capacities as Trustees of the Thabela Trust) Third Respondent THE MASTER OF THE HIGH COURT JUDGMENT Fourth Respondent

2 Page 2 SKINNER AJ: [1] This application arose out of the decree of divorce granted between the applicant and the second respondent on 24 May 2006 in this court. In terms of such order, inter alia, the first respondent was : Appointed in terms of section 19bis of Act 59 of 1959 as a referee to enquire into the joint estate subsisting between the parties and to report to this honourable court in writing as to 2.1 what assets constitutes [sic] the joint estate and what values are to be attributable to such assets; 2.2what the liabilities are of the joint estate; and 2.3 how best the joint estate may be divided between the parties. [2] The present first respondent brought an application in this court under Case No. 541/07 during August 2007 for an order vesting her, in addition to the powers set out in the

3 Page 3 order of divorce, with the power to brief senior counsel for the purpose of obtaining a written opinion on the manner in which the Gasa Family Trust and the Thabela Trust, and the assets which they own, should be dealt with in the dissolution of the joint estate which subsisted between the parties. [3] The present applicant opposed such application. After the exchange of affidavits and the hearing of an opposed motion, an order was ultimately granted on 5 February 2008 granting the present first respondent the power which she sought and directing the present applicant to pay the costs of the application on the scale as between attorney and client while the present second respondent was directed to be responsible for half of the costs of the application on an unopposed basis on the scale as between attorney and client. [4] The opinion of senior counsel was accordingly duly obtained which opinion was to the effect that the Thabela Trust was nothing more than the alter ego of the present applicant. (For the sake of clarity I should add that the present applicant had conceded that the assets of the Gasa Family

4 Page 4 Trust should be taken into account in the distribution of the joint estate). The applicant in this application disputes the correctness of the opinion obtained from senior counsel and seeks an order declaring that the net assets of the Thabela Trust do not form part of the joint estate, that the first respondent is directed to prepare her account in respect of the dissolution of the joint estate on the basis that the net assets of the Thabela Trust are excluded therefrom and that in the interim she is interdicted and restrained from incurring any expenditure in connection with the dissolution of the joint estate pursuant to the aforesaid opinion of senior counsel that the net assets of the Thabela Trust did form part of the joint estate. [5] As appears subsequently it is relevant that a rule nisi was granted in accordance with the relief sought in the notice of motion save that there was no interim relief. An undertaking was given by the first respondent and recorded in such order that pending the determination of the application the first respondent would not incur any unreasonable and unnecessary expenditure in connection with the dissolution of the joint estate of the applicant and the second respondent. The effect of this for present purposes is

5 Page 5 apparently that the first respondent has not, since the launching of this application and the granting of the interim order, sought to value the assets of the Thabela Trust and prepare a final report incorporating such assets in her proposed distribution of the joint estate. The entire distribution of the joint estate has accordingly been held in abeyance pending determination of the present application. [6] At the hearing of this matter counsel were in agreement that there were disputes of fact on the papers such that the matter should be referred for the hearing of oral evidence if the court did not uphold either of the two points in limine raised by the second respondent. These were that it was not appropriate for the court at this stage to grant the final declaratory relief which the applicant seeks in this application and that secondly the application cannot properly be decided on affidavit and since the applicant was aware at the time that he launched the application that disputes of fact were bound to develop, he should not have proceeded on motion. [7] Although the points in limine were raised in the opposing affidavit by the second respondent, they were dealt with

6 Page 6 somewhat cursorily by the applicant in reply. With regard to the first point in limine his response was that further expense would be incurred in the first respondent investigating the position and compiling a report but that there was also likely to be additional delay which was not justified and that the second respondent was in as good a position as the first respondent to deal with the situation without the necessity of a report. He further submitted that practical considerations and justice dictate that the dispute regarding whether or not the net assets of the Thabela Trust form part of the joint estate should be resolved in the manner envisaged in this application. Once the dispute has been resolved, the first respondent will be able to prepare a liquidation and distribution account. He did not amplify the practical considerations. [8] With regard to the second point in limine he submitted that certain disputes were not bona fide and were not as extensive as the second respondent had averred. He further contended that application proceedings had been necessary in any event to protect the value of the joint estate in the interim by seeking the interdict restraining the first respondent from incurring any expenditure in connection

7 Page 7 with the dissolution of the joint estate. As far as this lastmentioned point is concerned I do not believe that it assists the applicant because, as was correctly pointed out by Mr Acker SC, to the extent that an interdict was necessary, this could have been met by seeking an interdict pending the determination of an action. [9] Mr Hollis SC on behalf of the applicant submitted that because the first respondent had not been able to determine in law whether the assets of the Thabela Trust formed part of the joint estate, she had conceded that it was necessary to seek the opinion of senior counsel. In the circumstances she could not take the matter any further than she has done and indeed she abided the decision of the court. He also submitted that considerations of justice, convenience and equity dictate that evidence should be heard on this narrow issue [as to whether the net assets of the Thabela Trust form part of the joint estate] and once this has been determined, the first respondent can complete her report. [10] In my view this approach begs the question of which the application was necessary in the first place. In the absence of the application, the first respondent could well have

8 Page 8 finished the report and the matter already be awaiting hearing. [11] With regard to criticism from the second respondent that the present application would result in a piecemeal approach with the consequence that (since disputes were anticipated from the outset) a court may find itself having to make credibility findings on witnesses prior to the actual dispute, if any, regarding the division of the joint estate being heard by the court, Mr Hollis SC submitted this was no different to the normal situation in Road Accident Fund matters where there was a separation of quantum and liability. In my view however the situation is not analogous in the Road Accident Fund matters the separation is a matter of convenience, firstly because if the court were to find that the plaintiff failed on the issue of liability, the question of quantum would never arise and secondly because the failure to separate would result in extensive costs being incurred by all the parties as well as lengthy evidence from expert medical witnesses when all of it may have been unnecessary. This is not the situation in the present matter for the reasons set out hereafter.

9 Page 9 [12] The provisions of the divorce order in terms of which the first respondent was appointed required her, as I have indicated, to enquire into the joint estate and report inter alia as to what assets constituted the joint estate. It is undoubtedly correct as Mr Hollis SC submitted that in the absence of the present application the first respondent would be obliged to report to this court on certain matters of a legal nature (being whether the assets of the Thabela Trust should in law be regarded as forming part of the joint estate because of the Trust being the alter ego of the applicant). This still falls within the compass of the order of divorce. [13] Although section 19bis of the Supreme Court Act was inserted some 45 years ago, there has not been much litigation concerning its effect or the powers with which a referee may be vested. The section provides that a referee may be appointed with the consent of the parties (an aspect which I shall refer to later) in three instances - the court may refer : (a) any matter which requires extensive examination of documents or scientific, technical or local

10 Page 10 investigation which in the opinion of the court cannot be conveniently conducted by it; or (b) any matter which relates wholly or in part to accounts; or (c) any other matter arising in such proceedings for enquiry and report to a referee. [14] The purpose of this is that either where there are highly technical aspects where the assistance of a neutral expert is required or where the bulk of the documentation is such that a referee can streamline the process, the report of the referee would not only assist the court but help to limit the length of the proceedings by highlighting (through its analysis of the documents or the factual situation relating to accounts) exactly which aspects or incidents or transactions are in dispute between the parties. The report of the referee does not bind the court but assists it by in essence summarising the results of the referee s investigations.

11 Page 11 [15] In matrimonial matters, a referee has to my knowledge only been appointed where there are a multitude of corporate entities or a Trust (which one party is alleged to control) and the accounts and financial transactions of the entities or Trust need to be analysed. In the present matter for instance the referee would be able in her report (as already foreshadowed in the opinion of senior counsel) to pinpoint the incidents or transactions on which she relies for coming to the conclusions that the Trust was or was not the alter ego of the applicant. It is then a straightforward matter for the parties to ascertain which specific areas of the report or which incidents or transactions are in dispute and for a hearing to proceed on those aspects only. Without the report of the referee a great deal of unnecessary evidence may be led as well as extensive discovery having to be made with the consequent exchange of documents before the issues in dispute become clear. The normal Rule 37 procedures in this context are rather cumbersome and would not be of the same assistance in resolving issues and delineating the areas of dispute in relation to the significance or otherwise of particular transactions. Similarly pleadings containing as they do only the factual framework and legal conclusions relied upon are also not of great assistance.

12 Page 12 The report of the referee however, if properly compiled, will focus on those transactions that are pertinent. [16] Accordingly in the present instance while an accountant may well not be too familiar with the legal approach to be adopted in reaching a conclusion that the assets of the Thabela Trust do or do not form part of the joint estate, the more important aspect of her report would relate to her analysis as to why she reached whatever conclusion she did. [17] The eminent senior counsel who was briefed to furnish the opinion (consequent upon the application by the present first respondent under Case No. 9541/2007 to which I have previously referred) illustrated this by his analyses of various financial statements of the Trust. He concluded that given all that information the applicant for all intents and purposes controlled the Thabela Trust. [18] This opinion was dated 28 May The first respondent accordingly had approximately five months thereafter to continue with her investigations into the joint estate and prepare a report prior to the present application being

13 Page 13 launched. Whether or not this was ample opportunity for her is not an issue before me but it is clear that without the present application the first respondent would have been able at some stage to complete her investigations and report to this court as required by the divorce order. [19] It is therefore apparent that a large portion of her sphere of activities has been effected by the launching of this application which again raises pertinently the issue as to why the application needed to be brought in the first place. For all I know, even if the application is granted and the first respondent confines her report to assets which it is not disputed belong to the joint estate, disputes may well arise regarding either the value of such assets or how they should be divided which would necessitate a hearing. [20] In this regard it is significant that the final paragraph of the divorce order requires the present second respondent to set the matter down for hearing within two months of the referee purporting to effect a final division of the joint estate. Such hearing has to take place because, unlike a liquidator or receiver of a joint estate, a referee has no power to effect a division the procedure necessitates a further hearing by

14 Page 14 the court. Indeed as I understand it, a referee is appointed in circumstances such as the present, precisely because it is foreseen that there will be disputes necessitating a further hearing. If it were not for that factor, a liquidator of the joint estate with the usual powers would have been appointed to divide the joint estate. That to my mind seems to be the essential difference between appointing a referee in matrimonial matters and appointing a liquidator in the former instance the need for a further hearing is anticipated and the order makes provision for that while in the latter instance it is only if disputes arise that a party approaches the court to raise objections to the division effected by the liquidator. Accordingly if in the present instance there will in any event be a further hearing, there is no reason why this should be done in two stages rather than one. [21] I am in agreement with Mr Acker SC that the present application effectively pre-empts the report of the referee and the decision of the court regarding the joint estate and its division. I further agree that the relief sought in effect gives rise to a variation of the divorce order and that no case has been made out for such variation. Mr Acker SC on that aspect raised a further point namely: a referee can only be

15 Page 15 appointed with the consent of the parties. The wording of section 19bis makes this clear. He submitted that if at the outset the applicant had wished the assets of the Thabela Trust to be excluded from the enquiry and report of the referee, the second respondent would not have agreed to such separation and accordingly the referee would not have been appointed in the first place. The same should apply to any variation (whether sought formally or as a consequence of the present application) of the referee s powers or duties or indeed the role she was to play. For that reason he contended this court should decline to alter in any way the ambit of the referee s powers or duties. [22] I agree with this submission. It makes no sense that the powers, role, scope, duties and investigations of a referee have to be agreed upon between the parties before an order can be made appointing such referee but that thereafter any of these aspects can be circumscribed or indeed varied or deleted despite the opposition of one of the parties. For that reason too I do not believe that the relief sought in this application should be granted.

16 Page 16 [23] It is of course trite that a final order which correctly expresses the decision of a court cannot be altered by such court subsequently. The applicant does not contend for any variation of the order in terms of Rule 42 or under common law on the recognised grounds such as fraud, justus error and the like. Even if the order appointing the referee and defining the ambit of her powers can be regarded as an interlocutory order open to reconsideration, variation or rescission, such can only be where it is just and equitable and in the interests of justice to do so. (Duncan N.O. v Minister of Law and Order 1985 (4) SA 1(T) at 2F-3C; Zondi v MEC Traditional and Local Government Affairs 2006 (3) SA 1 (CC) at [28] [36]). [24] A court will be inclined to grant a variation of an interlocutory order where it is purely procedural or incidental or where fresh facts have arisen since the granting of the order or the order does not reflect the intention of the applicant or serve the object for which it was granted and where variation will not affect the final judgment (Meyer v Meyer 1948 (1) SA 484 (T) at 490; Sayprint Textiles (Pvt) Ltd and Another v Girdlestone 1984 (2) SA 572 (Z) at 574G-575H). None of these factors are present in this application save for a

17 Page 17 possible argument that the application is purely procedural in nature. It is however clearly not purely procedural because while it effects the procedure which is to be followed before a division of the estate can be determined, its effect is far reaching with regard to the role of the referee, and irreparably anticipates or precludes some of the relief which would or might be given at the hearing (Duncan NO. v Minister of Law and Order supra at 2F) [25] Even if I am incorrect on such approach I believe that this application unnecessarily incurs the disadvantage of a piecemeal approach and should be refused. [26] For all these reasons I find that a case has not been made out as to why the present application is necessary or indeed competent. [27] As regards the second point in limine the applicant in his founding affidavit had stated : Clearly, issues of fact may arise in this application and it may not be able to be resolved on the papers. This would

18 Page 18 entail a time delay before the application is able to be determined. In the meantime, I seek to protect the value of the joint estate and seek an interim interdict preventing the first respondent from doing any work in connection with the dissolution of the joint estate on the basis that the net assets of the Thabela Trust form part of the joint estate. [28] I have already indicated that after the second respondent raised the second point in limine in her opposing affidavit, the applicant accepted that there were issues of fact which could not be resolved on the papers but submitted that they were not as extensive as contended by the second respondent. He continued I submit further that the institution of proceedings by way of action would have caused further delay, which is not in the interests of any of the parties. [29] I have already pointed out the delay that this application has caused in the finalisation of the referee s report. A referral to oral evidence (particularly where there is no basis for urgent dates being granted) would mean much the same delay. Further a court should be reluctant to countenance

19 Page 19 proceedings by way of application where disputes of fact are anticipated. [30] In this regard there has been a long line of cases commencing from Room Hire Company (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd 1949 (3) SA 1155 (T) dealing with the approach to be adopted where disputes of fact arise. In one of the more recent judgments on the issue it was held that where a party is not barred from instituting a claim by way of notice of motion the latter proceeding is pursued at a claimant s own peril should a factual dispute arise which turns out to be incapable of being resolved on the papers; the risk being a dismissal of the application should the court, in the exercise of its discretion, decide not to refer the matter for trial, nor direct that oral evidence be placed before it. (Gounder v Topspec Investments (Pty) Ltd 2008 (5) SA 151 (SCA) at 154B-C paragraph [10]). [31] It must be borne in mind that the relief which was being sought by the applicant was a declaratory order that the net assets of the Thabela Trust do not form part of the joint estate while the interim relief was specifically aimed at

20 Page 20 interdicting the first respondent from incurring any expenditure in connection with the dissolution of the joint estate pursuant to the opinion of senior counsel. As I have indicated senior counsel had analysed the various financial statements available and based on that reached the conclusion that the Trust was no more than the alter ego of the applicant. In those circumstances it must have been apparent (and indeed is foreshadowed by the procedure of appointing a referee as well as the applicant himself raising the prospect of disputes of fact) that there would be disputes of fact. The applicant s entire case in this application is based on rejecting the view formed by senior counsel in relation to various activities of the Trust and actions of the applicant. Further, the affidavit on behalf of the second respondent makes it clear that there is in the first place no agreement as to precisely what constitute the assets of the Trust. [32] In the premises it was inevitable that disputes would arise not so much in relation to the actual steps taken by the Trust and/or the applicant but in relation to the surrounding circumstances of each transaction as to whether the applicant was acting purely as trustee or utilising the Trust

21 Page 21 as his alter ego. I therefore do not consider that this is the type of matter where the applicant should have proceeded on motion. The fact that interim relief was being sought does not mean that the main relief had to be sought by way of application proceedings as I have already stated, an application for relief pending the determination of an action could have achieved the same effect. [33] I am accordingly of the view that on this ground too the present application should not have been brought. [34] Both the applicant and the second respondent employed the services of senior and junior counsel. The matter had some complexity and there does not appear to be any clear precedent involving this type of application. Consequently the employment of two counsel was in my view justified. I see no reason to part from the normal practice that costs should follow the result. [35 ] In the circumstances I grant the following order : 1. The application is dismissed.

22 Page The applicant is directed to pay the costs incurred by the second respondent in opposing the application including those costs consequent upon the employment of two counsel. SKINNER AJ DATE OF HEARING 12 JUNE 2009 DATE OF JUDGMENT 25 JUNE 2009 APPLICANT S COUNSEL APPLICANT S ATTORNEYS MR N D HOLLIS SC with MR K NAIDU SHEMBE ATTORNEYS 2 ND RESPONDENT S COUNSEL MR B A ACKER SC with MR M D C SMITHERS 2 nd RESPONDENT S ATTORNEYS RETHA MEIRING