KSL v AL

The appellant (husband) and respondent (wife) were married out of community of property with the accrual system on 3 April 1992. They have two major children. Divorce proceedings commenced in May 2009 and the marriage was ultimately dissolved on 14 March 2019. The divorce court postponed the proprietary rights issue (accrual claim) to be determined later. Prior to the divorce being finalized, during July 2018, the appellant founded a trust named the Lovell Children Educational Trust and donated R1,800,000 to it for the children's financial support. In October 2018, the appellant invested R5,114,740.75 in a living annuity with Investec. In December 2018, the appellant made a 'with prejudice' rule 34 tender offering R550,000 in full settlement of the wife's accrual claim, which the respondent rejected. In May 2021, the appellant sold his immovable property. The respondent became aware in June 2021 and instituted an anti-dissipation application in July 2021 seeking to preserve the net proceeds of the sale pending determination of her accrual claim. The high court granted the relief sought. The appellant's application for leave to appeal was dismissed by the high court but granted by the Supreme Court of Appeal.

• Whether the respondent satisfied the requirements for an interim anti-dissipation interdict
• Whether intention to dissipate assets is a requirement for an anti-dissipation interdict or whether a lesser threshold applies
• Whether the high court applied the correct legal principles in granting the anti-dissipation order
• Whether a rule 34 'with prejudice' offer amounts to an acknowledgment of liability
• Whether an interim interdict order is appealable
• Whether there are exceptional circumstances in matrimonial matters that warrant a different standard for anti-dissipation interdicts

1. The application to submit further evidence is dismissed with costs. 2. The appeal is upheld with costs, such costs limited to the costs of one counsel. 3. Paragraphs 5 and 6 of the order of the high court are set aside and replaced with: 'The anti-dissipation application is dismissed with costs.'

The binding legal principles established in this judgment are: 1. The requirements for an interim anti-dissipation interdict are: (a) a prima facie right; (b) injury actually committed or reasonably apprehended; (c) balance of convenience; and (d) absence of similar protection by any other remedy. 2. For an anti-dissipation interdict specifically, an applicant must show (on the basis of interim interdict requirements): (a) a claim against the respondent; and (b) that the respondent is intentionally secreting or dissipating assets, or is likely to do so with the intention of defeating the applicant's claim (per Knox D'Arcy). 3. An applicant must demonstrate that the respondent possessed a particular state of mind in his conduct - i.e., acting mala fide with intent to prevent execution of the applicant's claim. There is normally no justification to compel a respondent to regulate bona fide expenditure to retain funds for disputed claims. 4. A rule 34 tender, whether with or without prejudice, is an offer to settle and does not amount to an acknowledgment of liability. Such offers are often made to save costs and time, and cannot be used as evidence of admission of a claim. 5. High courts are bound to follow decisions of the Supreme Court of Appeal as precedent. Following precedent is a manifestation of the rule of law, which is a founding value of the Constitution. 6. The interests of justice standard has subsumed the common law test for appealability of interim orders. Whether an interim order has final effect or disposes of substantial relief is merely one consideration, not the only or always decisive consideration. 7. It is important to assess whether a temporary restraining order has immediate and substantial effect, including whether the harm flowing from it is serious, immediate, ongoing and irreparable.

The Court made several non-binding observations: 1. The Court acknowledged that Knox D'Arcy left open the possibility of "exceptional circumstances" where intention might not need to be shown, but declined to definitively determine whether matrimonial matters with accrual systems constitute such exceptional circumstances. The Court stated that "something more" than simply the existence of a marriage out of community of property with accrual system would be required. 2. The Court noted that the criteria for admitting further evidence on appeal (need for finality, undesirability of permitting remiss litigants to produce evidence late, and need to avoid prejudice) should be applied sparingly and only in exceptional circumstances where the evidence would be practically conclusive. 3. The Court observed that following precedent "is not simply a matter of respect for higher authority, [i]t is a manifestation of the rule of law itself, which in turn is a founding value of our Constitution" (citing Ayres). 4. The Court commented on the reasonableness of employing two counsel, noting that it must consider the importance and complexity of legal questions and number of authorities. In this case, the Court found the issues were not sufficiently complex to warrant costs for two counsel. 5. The Court noted that the respondent was offered an opportunity to forensically examine the appellant's financial position in the rule 34 offer but declined to do so, suggesting this was relevant to the overall assessment of her case. 6. The Court observed that often offers to settle are made to avoid incurring further costs and to save time, emphasizing the practical purposes served by rule 34 procedures.

This case is significant in South African law for several reasons: 1. It reaffirms and clarifies the requirements for anti-dissipation interdicts as established in Knox D'Arcy Ltd v Jamieson, particularly the requirement that an applicant must show the respondent has the intention to dissipate assets to defeat the applicant's claim. 2. It corrects a line of high court judgments (including JLT v CHT, Gernetsky v Gernetsky, and SM v JM) that had incorrectly held that intention is not essential if conduct is likely to frustrate judgment. The SCA emphasizes that Knox D'Arcy is binding precedent that must be followed. 3. It clarifies that a rule 34 tender (whether with or without prejudice) is an offer to settle and does not constitute an acknowledgment of liability. This protects the integrity of settlement negotiations. 4. It confirms the modern approach to appealability of interim orders under the Constitutional Court's jurisprudence in City of Tshwane v Afriforum and United Democratic Movement v Lebashe Investment Group - that the interests of justice standard has subsumed the common law test, though the common law factors remain relevant considerations. 5. It reinforces the importance of following precedent as a manifestation of the rule of law, citing Ayres v Minister of Justice. 6. It provides guidance on when exceptional circumstances might justify a different approach to anti-dissipation interdicts, though finding no such circumstances in matrimonial matters based solely on the accrual system. The judgment provides important clarity for practitioners dealing with anti-dissipation applications, particularly in matrimonial matters, and emphasizes the continued importance of the Knox D'Arcy requirements.