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Estate sequestration during divorce

An application for the sequestration of your former partner under the law of insolvency where a Rule 43 order, interim maintenance order, has already been granted. – Gobel v Gobel (6935/13) [2013] ZAWCHC 91 (28 June 2013)

Recent case law dealing with sequestration of an estate in the middle of divorce proceedings is that of Gobel v Gobel. In this case the applicant alleged that the respondent owed her R289 557.31 for arrear maintenance in terms of a Rule 43 order. She claimed that R170 500 was owed to her in respect of short payment of the monthly maintenance payment in terms of the order. The maintenance arrears were broken down as R34 000 as a cash portion and the balance was owed in terms of other expenses incurred in terms of the order, such as bond payments, rates and taxes, medical expenses, etc.

In terms of the order the respondent had to pay amounts totalling R140 000 per month. The respondent claimed that he complied with the order until such stage as he had brought an application in terms of Rule 43(6) to vary the order. In that application for variation, the respondent had applied to have the monthly cash maintenance reduced from R34 000 to R10 000 per month.

The court looked at the nature and purpose of Rule 43, which is to provide for maintenance before the divorce is finalized. The court mentioned that Rule 43 provides for a “speedy, inexpensive and robust assessment of the issues on motion proceedings”. The court further mentioned that Rule 43(6) allows for the court to vary its decision under rule 43(5) “in the event of a material change taking place in the circumstances of either party or a child”.

The current application was launched by the applicant on an urgent basis for the provisional sequestration of the respondent’s estate, together with relief preventing the respondent from disposing of any assets. The respondent opposed the application for the sequestration of his estate on the grounds that the applicant did not have locus standi as a creditor, that he had not committed any act of insolvency, that he was not insolvent, and that the application was an abuse of process.

The court’s determination was that the application be dismissed with costs. The court found that the applicant did not make out a case that the respondent’s conduct in disposing of certain of his assets was mala fide. Even on the applicant’s own papers, the averment had been made that the respondent had for some time been contemplating the sale of assets with a view to reducing debts and releasing funds. The court also looked at the fact that the respondent had sold his interest in Darling Golf and Country Estate for R700 000 but that the proceeds of the sale had not yet been received. The court found that given the brief period for which the interim relief would operate, the balance of convenience clearly favoured the granting of the relief sought but only to the extent of the quantum of the applicant’s claim.

As far as costs were concerned, the court found that the precedent has been set in our case law for the granting of attorney and client costs against the litigant in circumstances where there has been an abuse of process. The court found that the application was an abuse of process on two scores, namely that the applicant’s claim was, to her knowledge, disputed, and that the application was brought for an ulterior motive. The court found further that the respondent was put to unnecessary expense in resisting the application. Costs were granted on the scale of attorney and client.