CASE LAW UPDATE

Facts: Dimension Data is a famous brand which has been part of South Africa’s commercial history for more than thirty years. It is alleged that six White males, who can be described as captains of industry in the country, have conspired to gain surreptitious control over and beneficial ownership of the Dimension Data Campus, which is a flagship Johannesburg property in Bryanston. The six main protagonists accused of the conspiracy are the co-founders of the Dimension Data brand: Jeremy Ord and Bruce Watson; three of their co- executors in the Group – Jason Goodall, Grant Bodley and Athanasios Missaikos; and Steven Nathan who is a close business associate of all five men and who was employed as an independent contractor to provide management and advisory services to the group.

Application: Nathan was called upon to identify an opportunity and to negotiate a transaction which would allow for the improvement of the score of, at least, the South African holdings under the Broad-based Black Economic Empowerment Act 53 of 2003 (the BEE Act). The Transaction entailed the disposal of the Campus to what purported to be an empowerment structure which was 100% Black woman owned. The main relief sought by the applicants is the setting aside of the Transaction. This relief is sought on the basis of section 75 of the Companies Act 71 of 2008, alternatively, the common law relating to conflict of interest and fraud. Section 75 deals with directors’ personal financial interests and disclosure to the board or shareholders.

Discussion: The defence raised to this section 75 issue is that, at the time the relevant resolutions approving the Transaction were taken by the Protagonists, they had not yet decided to become involved in the funding of the Transaction and thus cannot be said to have had the requisite interest which required disclosure. It is alleged by the applicants that the acquisition of the Campus was achieved through a conspiracy which employed the mechanisms of en Commandite (also known as silent or limited) partnerships and which allowed the interests of these ultimate beneficiaries, in what was intended by the applicants to be an empowerment transaction, to be concealed, not only from the public and the empowerment control structures and auditors, but also from the applicants and their Japanese Holding structures. The applicants rely on email communications between or involving the Protagonists to show a conspiracy by the Protagonists to obtain secret beneficial ownership of the Campus and the rights and other assets arising from such ownership.

Findings: Section 75 cannot be evaded by clever structures which seek to conceal the interests of parties. The BEE Act and its scorecard and codes of good practice were deliberately subverted by the Protagonists at the origin and conception of the Transaction. It is an aberration and not capable of being remedied. On the undisputed facts, the purpose of the Transaction was to benefit the six White Protagonists. It had nothing to do with BEE. The Protagonists entered into an illegal scheme designed to appropriate for themselves a secret financial benefit which placed them in conflict with their boards, both from a section 75 perspective and their common law duties as directors. The scheme was brazen and dishonest. From a South African Black empowerment perspective, it is of grave concern that these White captains of industry have subverted the empowerment legislation for their own benefit. Nominee arrangements and secret en commandite partnerships such as those which have been abused – whilst they have their place in corporate structure – must of necessity entail the implementation of checks and balances which serve to prevent them being used to make corrupt relationships possible.

Order: The Transaction, including the sale of rental enterprise agreement, the property management agreement and the facilities agreement, is declared to be void and invalid. The first applicant is entitled to restitution of the Rental Enterprise comprising the campus property and the infrastructure assets and goodwill attaching to the Rental Enterprise.

FISHER J

Facts: The parties were married to each other in community of property. Their marriage still subsists. Their marital relationship has broken down irretrievably. The respondent vacated the former matrimonial home in August 2018. The applicant still resides in the former matrimonial home. There are two major children born from the marriage. The respondent instituted divorce proceedings against the applicant in July 2020 seeking a decree of divorce, forfeiture of the benefits of the marriage and legal costs. The applicant is defending the divorce action. She seeks an order for the division of the joint estate and costs of suit. The respondent opposed the application. Despite pleadings closing, the applicant did not set down the application for hearing. She also did not withdraw it. The respondent’s version is that he started making contributions towards the applicant’s maintenance needs as sought by the applicant in the notice of motion. It is for that reason that the applicant did not persist with the application. The applicant has filed an amended notice of motion. She seeks leave to file a supplementary founding affidavit. In it, she sets out grounds on which she contends that the respondent’s contributions towards her maintenance are insufficient.

Application: This is an application for spousal maintenance pending litigation in terms of Uniform Rule 43. In an amended notice of motion, the applicant seeks relief against the respondent consisting of cash payments as well as specific payments in respect of the former matrimonial home and her motor vehicle and medical expenses. She also seeks an order in terms of which the respondent is held liable for contributing to her legal costs as well as the costs of the Rule 43 application.

Discussion: The applicant contends that she is unemployed, continues to be, and is entirely financially dependent on the respondent. The respondent alleges that the applicant can generate an income as an independent interior designer and landscaper. He also accuses her of being dishonest regarding her income for the 2022-2023 tax year. He relies on her tax return to sustain this claim. In response to these allegations, the applicant refers to her employment history and alleged lack of ability or means to generate an income. Notably, she has not dealt with the allegation regarding her income as reflected in her tax return. After the applicant instituted the Rule 43 application in March 2022, the respondent started contributing towards her maintenance needs. He continues to do so. There has not been an inflationary increase to the respondent’s cash contribution of R39,600 since the respondent started making that payment in March 2022. He contends that considering the other payments he makes towards the applicant’s living expenses, she does not need such an increase. The applicant complains that the respondent has continued to cut her off from the benefits of the joint estate. Although he has been making certain contributions to her maintenance needs, he fails to do so adequately, while the respondent and his girlfriend unduly benefit from the joint estate. She further complains that she finds herself in a position where she is unable to make payment of her day-to-day expenses and to start making repayments of her debts, which have increased due to her not being maintained adequately by the respondent.

Findings: Several difficulties arise in respect of the basis for applicant’s claim. She has baldly alleged a change in her personal circumstances without providing any particularity. It is striking that having launched the Rule 43 application in March 2022, she did not persist with it until June 2024. This sustains the respondent’s contention that the contributions he currently makes to the applicant’s living expenses is adequate. The applicant alleges that the respondent and his girlfriend live a lavish lifestyle, while she struggles to make her ends meet, so he can afford to meet her increased maintenance needs. She does not complain that the respondent is failing to maintain her according to the lifestyle she was accustomed to during their marriage. The respondent is maintaining her according to what she had demanded in her March 2022 notice of motion. The parties have been separated since 2018. The respondent has clearly moved on. The lifestyle he is living with his girlfriend is not a measure by which the applicant’s right to maintenance pendente lite ought to be determined. The applicant only has herself to blame for incurring increased liabilities. She is operating what appears to be a business that is unable to covers its expenses. These factors would ordinarily lead to any party being insolvent. She has not established a legal right to demand that the respondent covers these losses. The applicant has further not made out a proper case for an order for contribution towards legal costs.

Order: The application is dismissed with costs.

MODIBA J

Facts: The applicant and the respondent were married under Islamic law. The marriage was terminated in 2008 by Talaaq. During the tenure of the marriage, the parties jointly purchased a property for R320,000. The property is mortgaged to Absa Bank, the remaining balance being approximately R175,000. The current municipal valuation is R2,320,000. After their separation, the applicant remained on the property with the couple’s two children. The applicant states that the respondent paid the bond and municipal accounts as part of his maintenance obligation. He moved out in 2006. The applicant remarried in 2013 and her husband took up residence with her on the property. The respondent stopped paying maintenance. The applicant and her husband paid the bond and the municipal account. The applicant alleges that she maintained and improved the property. The applicant contends that she effected about R550,000 in improvements and restoration work to the property over the years she occupied it. Sometime this year, the applicant and her spouse decided to relocate elsewhere. The respondent had since rented out the property.

Application: The applicant and the respondent desire to terminate the joint property ownership. The applicant offered her half share in the property to the respondent at a fair market value price. The respondent denied that the applicant was entitled to any ownership right but offered her R150,000 for her share. The applicant rejected the offer. The applicant, in turn, proposed that the property be sold and the proceeds divided equally after the necessary deductions. The respondent did not react to the counter-proposal. The parties are unable to finalise the division of the property as they cannot agree on how the property should be divided and the method of terminating the joint ownership.

Discussion: The applicant contended that the property began as bound co-ownership but was now free, and its division could be determined under the actio communi dividundo. The court agrees. The question is whether the applicant has satisfied the requirements for the actio communi dividundo, namely proof of the co-ownership of the property with the respondent, that she no longer wishes to be co-owner, and the parties have not agreed upon the mode of division of the property. The applicant provided a copy of the title deed, which indicated that they took a joint transfer of the property in 2002. The respondent admitted that he also sought termination of the joint ownership of the property. All that remains is for the court to determine the mode of division of the property. The respondent’s contentions that his financial contribution to the property is more substantial as he paid the initial deposit, the bond, the municipal charges and the costs of maintenance and repairs do not withstand scrutiny. These allegations cannot be sustained. The evidence before the court is that he did pay all of those costs before 2013, but after the applicant’s remarriage, she undertook to pay them, and she did.

Findings: The applicant is entitled to a half share of the property as she contributed to the property in cash and kind, the former, her direct financial contributions, and the latter encompassing all of the other duties required of her during the co-ownership of the property from the date of the parties marriage to the date that there no longer existed any further extrinsic legal relationship that bound them. The next issue is how the property should be divided, i.e., by actual division if that is possible, or by ordering that one party purchase the property or allocating the property to one party and ordering the other to pay the equivalent of the half share to the other, or by sale on the understanding that the parties would be entitled to a half share of the proceeds of the property. The parties themselves are agreed that the property should be sold. The court considered the respective submissions and found both inadequate and unhelpful. The applicant failed to provide a minimum selling price for the property or a timeline for its sale. There is no reason why the parties cannot agree among themselves on the logistics involved in the further conduct of the matter now that the court has decided on the co-ownership of the property.

Order: The joint ownership in respect of the property is terminated. The property shall be sold by private treaty at market value, the sale of which shall be by agreement between the parties. The proceeds of the sale, after the deduction of all amounts encumbering the property and the costs of selling it, shall be shared equally between the applicant and the respondent.

BHOOPCHAND AJ

Facts: The applicant had previously been unsuccessful in applications for cover with the respondent, Liberty Group, due to her pre-existing medical conditions. She informed the respondent of all her pre-existing medical conditions generally and more specifically of the fact that she had previously suffered a heart condition (cardiomyopathy), a depression/anxiety disorder, as well as hearing loss. During December 2020, the applicant felt the need to obtain cover against severe bodily injury. She came across the respondent’s website on the internet and found an advertisement of a policy. She submitted an application for cover telephonically. During that telephone call she was asked a number of personal and health related questions. Her application was successful. The policy in question was “a salary protection cover: injury only”. In March 2021, she fell victim to an attempted hijacking at her place of residence and her right arm and hand were injured. Her services were terminated by her employer as a consequence of the injury. She submitted a claim to the respondent based on the insurance policy, but it was rejected. Her complaint with the Ombud for Long-Term Insurance was not successful.

Application: The applicant seeks an order that the respondent has failed to comply with Policyholder Protection Rules (PPRs) promulgated under section 62 of the Long Term Insurance Act 52 of 1998 when it repudiated the salary protection claim and cancelled the Liberty policy. She seeks payment of the amount payable in terms of the temporary disability for the period from March 2022 to date of this order.

Discussion: Applicant was informed that she does not have a valid claim as the agreement between the parties is considered null and void on the basis of non-disclosure of pertinent medical information. It is applicant’s contention that this information was at the respondent’s disposal due to the fact that she had disclosed same during her previous applications. It is further contended by applicant that by failing to provide her with sufficient reasons for cancellation, the respondent acted contrary to the PPRs. The respondent contends that there is no duty on the insurer to fossick around its records to unearth information which should have been disclosed to it.

Findings: When she was issued with the policy, there was a document attached which contained her answers to the medical questions she was asked. The repudiation letter was compliant with the provisions of the PPRs in that the applicant was informed in plain language of the reasons for the decision to repudiate her policy in sufficient detail. It mentioned her being unable to work due to issues with her hearing apparatus, depression and problems with communication. During the telephonic interview, her interviewer made it clear that because they were dealing with a new policy, a new assessment was going to be done. The interviewer asked if there was any other illness or symptoms, activity or occupational risk that she had not mentioned. Her answer was “no”. The assessment took place there and then, based on her answers to questions posed to her.

Order: The application is dismissed with costs.

BESHE J