LEGAL MATTERS: Why an anti-dissipation interdict might be legal remedy you need

By Hilary Muza

At THE centre of the majority of legal disputes invariably lies a thing, commonly referred to in legal parlance as the “res”. These can be physical things like immovable property, motor vehicles, specialised industrial and mining equipment or incorporeal things like intellectual property rights or shares in a company.
It is common that when such disputes arise, one party has direct effective control over company assets, while the other party does not, hence litigation.

During the pendency of the said litigation, it is critical that all assets to which the litigation relates stay where they are and not be dissipated. Dissipation refers to a situation where a party with control over the assets under contestation unlawfully moves them out of the reach of the other party for their personal benefit. The term is defined in Black’s Law Dictionary as “the use of an asset for an illegal or inequitable purpose, such as a spouse’s use of community property for personal benefit when a divorce is imminent.”

In commercial disputes, dissipation may occur where the shareholders are engaged in, say, an all-out war for the shareholding of the company.
The party who has effective control of the company may try to move assets out of the company to either reduce the value of the shares or to finance another enterprise altogether. Whatever the reason may be, the intention is to frustrate the judgment in the matter before the court, should it be granted against them.

An anti-dissipation interdict functions to counter the party who looks to engage in self-help to the other party’s detriment. It also serves to uphold the integrity of the court’s decision when it is finally granted.
It makes little sense to pursue litigation when you know that what you are fighting over is diminishing in value by the day. An anti-dissipation interdict therefore, ensures that when a court hands down an order, that order is capable of being given effect.

Makarau J (as she then was) in the case of Karimakwenda v Bushu & Ors HH 156/04 at pages 2-3 succinctly summarised the purpose of anti-dissipation proceedings:
“The purpose of an anti-dissipatory interdict is to stop a respondent from dissipating his property to frustrate the satisfaction of a judgment that the applicant hopes to obtain against the respondent. The right that the applicant therefore needs to establish in an anti-dissipatory interdict is that he will be entitled to obtain satisfaction of his judgment against the property that the respondent is dissipating.”

The honourable judge’s words reveal the wide application which anti-dissipatory interdicts enjoy. In deciding to pursue and anti-disspitation interdict, one must make a few fundamental considerations. For instance, is the thing you are litigating over under the power and control of the other party?
Are they already dissipating the property or do you have a reasonable apprehension that they could do so? If the property were to be dissipated, would it negatively impact on the judgment of the court in the matter you are currently litigating?

If the answer to these questions are all yeses, then you probably have a good case for an anti-dissipation interdict.
In deciding such applications, the courts will consider that in the event that the property is transferred to a third party, that will not only further complicate matters, but will effectively put the property beyond the reach of the applicant should they succeed in obtaining judgment.

The courts in doing justice between man and man, tend to avoid creating situations that will land litigants in a more difficult position than they are already in.
In determining an anti-dissipation application, the court must also take into consideration the likelihood that if the property is dissipated, the applicant might not have a cause of action against a third party to whom the property may have been sold.

The inconvenience of returning to court to claim transfer of property dissipated to a third party is a situation that everyone would rather avoid. It not only unnecessarily detains the court but also needlessly costs litigants legal fees. In certain instances, it might even rob a litigant of a valid cause of action.
Since an anti-dissipation application is in the nature of an interdict, it is worth mentioning that the requirements for an interdict must not be forgotten. Your legal practitioner can recite these in their sleep.

It is worth noting however, that where a clear right in the property is established, an applicant need not establish that they will suffer irreparable harm should such property be transferred to a third party. It is also worth noting that the respondent must show that the balance of convenience favours the dismissal of the application, because they will be prejudiced if it is granted.

They must demonstrate clearly the nature of any such prejudice. These are only a few of the things to take into account when making an anti-dissipation application.
Ultimately, this procedure is an important tool in ensuring protection of assets, which are the subject of litigation.
The fact that this application is normally instituted on an urgent basis speaks to its strategic importance in protecting litigants’ interests in property pending the outcome of the main matter.

Muza is an admitted legal practitioner. He writes in his personal capacity and is reachable at hilarykmuza@gmail.com and on 0719 042 628.