Oberholzer v Loots and another (SA 33-2021) NASC [2023] (22 November 2023)
Facts
The appellant (Oberholzer) and first respondent (Loots) lived together as husband and wife from 2011 until the end of 2016, despite the fact that they were not married to one another. On two occasions during this period, they publicly got engaged to be married. The relationship came to an end when Oberholzer left the common home of the parties in January 2017.
The appellant instituted an action against the first respondent to compel her to transfer certain property at Henties Bay (the property) as well as the total membership in the second respondent, a Pub & Grill close corporation (the Pub & Grill) to him. His claim was premised on Loots holding both the property and the membership in the Pub & Grill as his nominee/trustee in terms of an informal trust, and not in her own right.
Oberholzer, through an engineering close corporation, of which entity he was the sole member, attracted lucrative projects. Loots gradually became involved in the day-to-day administration and finances of the business accounts and Oberholzer’s personal account, and moved monies between the various accounts as she deemed fit. The proceeds from these projects were used to acquire the property and the membership in the Pub & Grill for their mutual benefit, but as stated above, their relationship came to an end when Oberholzer left the common home during January 2017.
When Oberholzer left the common home, Loots was the registered owner of the property, from which property she conducted business (the Pub & Grill) in the name of the second respondent and as the sole member of the second respondent.
Loots maintained that she held both the mentioned interests in her own right, and that the Deeds Registry and amended founding statement of the Pub & Grill reflected the correct position. Loots filed a counterclaim for damages amounting to N$50 000 in respect of the breaches of promise by Oberholzer to marry her.
According to the particulars of claim, the alleged holding of the property and membership interest by Loots came about in the following circumstances: Oberholzer was previously married. He laboured under the wrong impression that his ex-wife, to whom he was married in community of property, would be entitled to lay claim to one half of his property (even the property acquired after their divorce). An arrangement between Oberholzer and Loots was triggered when a dispute arose in respect of arrear maintenance payable by Oberholzer to his children. Because of this, Oberholzer entered into an oral agreement, described as an informal trust, with Loots in that whenever he wished to acquire property, this would be done in her name, and she would then hold such property(ies) as his undisclosed nominee/trustee, and should their relationship flounder, she would transfer the property back to him. In evidence, Oberholzer readily conceded that the idea was to keep the property away from his ex-wife.
The court a quo (the High Court) dismissed Oberholzer’s claim with costs, and granted the counterclaim in the amount of N$5 000 with interest and costs. The dismissal of the claim in convention (Oberholzer’s claim) was based on a credibility finding against Oberholzer whose evidence was stated to be ‘vague and inconsistent’, contained contradictions between the particulars of claim, and his evidence was thus ‘unreliable and untruthful’.
Oberholzer filed a Notice of Appeal against the whole judgment of the court a quo. There was, however, no attack on the judgment in respect of the counter-claim in the grounds of appeal, or in the heads of argument filed on behalf of Oberholzer in the Supreme Court. Counsel for Oberholzer in his oral submissions also made no reference to it, and it was thus not necessary to deal with the counterclaim in this judgment, save to confirm it.
Issues for determination, arguments and discussion
On appeal, the purpose or motive for the agreement relied upon and sought to be enforced by Oberholzer, on the face thereof, appeared to be one in fraud or attempted fraud of a creditor (his ex-wife). The Supreme Court directed a letter to the parties’ legal practitioners to address it on whether the agreement the appellant was relying on was not an agreement in fraud of a creditor, and by necessary implication also fraud upon other potential creditors? And if so, can it sustain the cause of action as pleaded? As the particulars of claim sought to compel specific performance of this unenforceable agreement, which is not competent in law, and not some relief on an equitable basis, the question that the Supreme Court had to determine was whether there was any other basis in the particulars of claim as framed, for Oberholzer to be granted relief.
FRANK AJA (MAINGA JA and HOFF JA concurring) considered the matter and held that:
The analyses of the evidence by the court a quo as supported by counsel for Loots is obviously a useful one when considering the evidence in any trial, but this should not be done in isolation and without reference to other evidence presented. The other evidence may put a different gloss on the evidence being analysed, or may assist in putting the evidence in a different context. Whereas it is correct to weigh contrasting stances up against one another with reference to the evidence, this normally cannot simply be done by analysing each stance on its own without reference to the evidence that intersects the opposing stances. Such intersecting evidence may be of importance to establish the full picture, and may affect the probabilities.
With regards to the informal trust agreement alleged in the particulars of claim, Oberholzer has on a balance of probabilities established that he was motivated by the desire to conceal the fact that he was the part- owner of the property and the Pub & Grill from his ex-wife so as to undermine any maintenance claim she may have against him on behalf of their children. He thus entered into an agreement with Loots that she would as an undisclosed nominee/trustee hold for him his share of the acquisition of the property and the Pub & Grill, and that as the purpose for Loots acting as his nominee/trustee has fallen by the wayside, he is entitled to seek the re-transfer of his share of the property and membership interest to him.
The above general finding is based on the assumption that it is a valid agreement.
The background to the alleged agreement and its terms were abundantly clear from Oberholzer’s evidence and whether it proved effective or not, did or did not prejudice the maintenance claim against him, affected other creditors of his or not, and whether he was insolvent or not is of no moment as pointed out by Lazarus AJ in Maseko v Maseko 1992 (3) SA 190 (W). This is so as it was clear that the purpose of the informal trust agreement between him and Loots was to hide the assets from his ex-wife, and was thus morally reprehensible.
The agreement relied on by Oberholzer is against public policy, and hence unenforceable. Loots did not raise this as a defence, but it is clear from the pleadings and it also emerges from the evidence that it is against public policy. It is thus the duty of this Court to not enforce the agreement, and there is nothing to prevent this point from being raised mero motu by this Court. No order can thus be given which would amount to the enforcement of the agreement
The approach set out in Jajbhay v Cassim 1939 AD 537 as endorsed by this Court in Ferrari v Ruch 1994 NR 287 (SC) and Moolman & another v Jeandre Development 2016 (2) NR 322 (SC) applies. This approach allows the court to do simple justice between ‘the persons involved’ in the unenforceable agreement. The court must consider the following factors: whether one of the parties would be unjustly enriched at the expense of the other if relief is not granted; the relative degrees of turpitude attaching to the conduct of the parties in entering into and implementing the particular agreement, and after taking into account all the relevant circumstances come to a decision, what justice requires in a particular case.
To do justice between the parties in the present matter and taking into account each party’s contribution to the acquisition of the property and the Pub & Grill, appellant and the first respondent should be awarded 60% and 40% respectively of both the erf and the Pub & Grill.
Conclusion
As a result, the appeal succeeded, and the judgment of the court a quo was set aside as reflected in the order. The order of the court a quo in the counterclaim was confirmed.
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